Wednesday, October 30, 2013

Letting students rate professors can lead to drop in academic standards

On Monday, October 28. 2013, the Wall Street Journal offered an interesting perspective on student rating of teachers, on p. A15, by Lyell Asher, “When students rate teachers, standards drop” with a subtitle, “Why do colleges tie academic careers to winning the approval of teenagers? Something is entirely amiss”, link here

The article deals mainly with the college environment, although the same may apply to many schools.
When I was in college, I found it pretty easy to gauge what a professor was likely to ask on an examination.  Graduate school was a challenge at first, but I adjusted in the first semester of it.  We actually had hour examinations with some professors, and in mathematics, practically all questions required applying a couple of theorems, maybe in combination, to some “hypothetical” scenario. 

That’s pretty much the case in studying for tests in most of the sciences, including physics and chemistry.  The one big exception is medicine, where there is just so much memorization at first.  (Yup, there are gay men in the clubs also in medical school, and they tell me all about it.  The history of HIV has provided plenty of incentive to consider medicine as a career.)  You learn to memorize in organic chemistry.
The article suggests that professors have an unhealthy incentive to grade easy and to please students, even to sell the subject matter.  Perhaps.  When I was an assistant math instructor at KU in the 1960s as a graduate student, I got the “remedial” sections.  The fact is, many of the students weren’t college material by the notions of the time, and this was a sensitive issue because of the draft.  And, yes, there was some serious flak, especially in the first semester that I taught (spring 1966). 
I did perceive teachers and professors as having a lot of “power” in those days, because there wasn’t a lot of check on them.  Now, the world has indeed changed, as teachers have to be concerned about standard test scores, and many examinations and assignments are departmental and no longer under the control of the teacher. 

Tuesday, October 29, 2013

Cancellations of existing individual policies are becoming a huge problem for Obamacare, and NBC reports that the administration knew this would happen

People with individual plans around the country are sometimes getting notices from their insurance companies warning them that their policies will be cancelled, because the plans are not in compliance with Obamacare.  That forces the policyholder to go to the exchange in his state (possibly the federal plan, with its non-functional website) and possibly pay much higher premiums. The notices often say that policies cannot be renewed after December 31, 2013.
All the plans (bronze to platinum) offer pretty much the same mandatory coverage.  It sounds like everyone is forced to pay premiums to support services that they may not personally need, like mental health or pregnancy. Not only are people paying for those with pre-existing conditions (in the sense of juvenile diabetes, for example); they are paying for demographic uses that others need but that don’t affect them personally. Critics say this like the federal government requiring everyone to own a Cadillac if they own a car at all. 
Individual health plans in New York State are all already in compliance with Obamacare, which was apparently heavily influenced by a few states (like New York, Massachusetts, Vermont, Minnesota, etc). 
I have not heard anything all from my Medicare Supplemental, which seems unaffected.
However, I’m told that doctors are being dropped from the Medicare plan.  I just made my Medicare physical appointment yesterday (for early November, in Arlington VA) and found the doctor had not changed any of his own practice. 

Lisa Myers and Hannah Rappleye report on NBC that the Obama administration knew that many, perhaps even most people on individual health insurance in many states, would not be able to keep their individual health insurance, link here
The president has been saying, though, that if you like your insurance you’ll be able to keep it. 
Kaiser reports on the matter, saying that the cancellation notices started in August, here

However, on ABC World News Tonight, some from the Obama administration say that individuals are still having trouble finding the cheapest plans. to which they will be entitled by law, because the website is not fully functional.  The prices available should improve when the website is fixed. 
The stories on whether employers are putting people into part time over Obamacare (as they reportedly did for the first half of 2012) are mixed.  But there really do seem to be real problems in smaller communities, especially in the South and Midwest.   

Monday, October 28, 2013

American Academy of Pediatrics recommends that parents put their teens on media diets

The American Academy of Pediatrics is recommending that parents limit their teens’ access to all media (including television, Internet and cell phone use) to two hours a day.  Previously, the AAP had recommended that children under two not see any television at all because of the possibility of developmental disruption caused by fast-moving images. Online homework would not be included in the two hours.

It seems that when I was in high school, on week nights, that’s about what I did.  I think I often watched the news, and sometimes one program.  But homework – those term papers written on the kitchen table – took a lot of time.
WJLA has a link to the story here.The rather strongly worded AAP statement is here
I think you can play devil’s advocate with this recommendation.  Some kids become prodigies and use media to do so.  Do you want to stop the high school student who plays musical instruments, acts in plays, and also knows how to edit music and film – you actually need “media” to support feedback into ‘real world” activities.  One techie who came by from Geek Squad to fix a desktop computer at the end of 2008 said that he had learned to code java at the age of 12. 

What seems to matter is whether teens get “real world” social and practical interaction and accomplishment.  What should matter is not how many Facebook friends you can count, but how many in the real world you can count on.

Yet, below the top of the line, misuse of media by kids, is, of course, rampant. 

As someone who uses media all the time as a single adult, I sometimes "LOL" at the idea of a "family computer" in a public area of a house.  And I wonder how long I can sustain myself. 

How does a parent who works in media handle this?  It strikes me that it would be hard to be a journalist and raise a family, because the latter activity goes against being “objective”.  

Thursday, October 24, 2013

My own case history with a 1998 hip fracture: do the privileged "get in front of the line" for health care?

On Tuesday, January 6, 1998, I was at my mainframe computer terminal at work at ReliaStar in downtown Minneapolis, when the  connection hung.  I walked across the street to a Tom Thumb, in a Skyway extension of the Churchill Apartments in which I lived, to get coffee.  People had tracked in snow into the corridors and of course they were wet, as was the store.  As I made a sharp left turn to walk into the store, I slipped and fell, and sustained a severe acetabular fracture of the left hip.  Had the normal friction mats been put down, I would not have slipped, but somehow the store had forgotten to do so.
First, I did litigate, and did get a pre-trial settlement finally, from which ReliaStar’s insurance company could subrogate.  But the real story is both with the care I got and how the insurance policy worked, and it does bear on today’s debate on Obamacare, as well as broader ethical and social problems.
I was taken to an emergency room at Methodist Hospital all the way in St. Louis Park, eight miles away, where I was xrayed, before being moved to Riverside, part of the University of Minnesota system, near downtown Minneapolis.  I was able to get a major MRI or cat scan that day, and a top flight surgeon was called in.  I was moved across the river to the main campus hospital in the University of Minnesota system.  On Thursday, January 8, I did have a six-hour operation to set the pelvis fracture with a new titanium implant rod, which is still in place.  It does not create issues at airports.  There was no hip replacement; it was the hip socket that was cracked, not the femur head, which is more common.
Recovery seemed slow at first.  One week later, I was moved back to Riverside, but into a different building for “Acute Care Rehab”, with an environment that seemed like a nursing home.  But I did have two physical therapy sessions a day, in a large room that had a spectacular view of the Mississippi River – as did my own room, where I had visitors and conversations with my attorney.  At one point, I saw an amputee take his first steps with an artificial limb.

I reached an inflection point, and then made progress on crutches very rapidly, being able to walk on crutches to the cafeteria myself (about 1000 feet) after five days there.  There was one scare with foot swelling, which happens when one cannot put weight on a limb.  I was discharged after one week, and managed to take care of myself at home, with some friends bringing groceries.  I got back to week on Tuesday, January 27, after just three weeks. 

I sometimes took cabs to the movies, like in Uptown, and found what it was like to sit in a handicapped seat.  At the Gay 90’s, I got an elevator ride to the dance floor.  By March 1, I was able to walk short distances without crutches.  By March 23, I was able to ditch crutches completely for an evening at the Orpheus Theater on Hennepin for a Minnesota AIDS Project Benefit for the Academy Awards (now it’s held in February).   This was actually a great time in my life.

The health insurance company was Health Net, which was supposed to be non-profit, rather like a BCBS plan.  Still, the company tried to get out of paying much of the claim, saying I had been sent to a non-network hospital.  Pressure from my attorney got the claim settled, they paid.  That was important, because the “list price” for the room stay in each hospital went down about 70% once Health Net accepted responsibility.   The stay at the rehab listed at $4400 for seven days, but once Health Net acknowledged a contractural responsibility, the list price dropped to about $1300 for the same period, a huge discount.  Also, it appeared that the surgery itself and the titanium device never appeared on the bill.  I was told that the device was offered free because I was one of the first patients ever to receive the device from the company.  It did work properly.  I did recover 95% function in the hip.  Today, 15 years later, there is sometimes some arthritic pain which is controlled by medication. A need for a hip replacement is unlikely.
I also got full pay during the three weeks out, because ReliaStar had short-term disability at 100%.  It also offered long-term disability for very low premiums.  That is significant because Social Security also pays for a long term disability plan – a small part of your FICA funds this. It is “mandatory” and nobody considers it politically controversial (not even Ted Cruz).
What’s the moral of this story?  I had good insurance, but I had to fight to get it to work. I won the fight because I had good “connections” through an influential employer with deep pockets and the ability to exert legal and political pressure.  I also got state of the art treatment.  Had this accident happened in Britain or Canada, I wonder if I would have lay in traction much longer, risking pneumonia, and out of work much longer, and with a much less successful result. 
We do indeed have a system where the people with money or connections can get ahead in line, and avoid the risks that others must take.  That is indeed a major cause of social instability and the brazenness of some crime. 
We have the ability to deliver state-of-the-art care, but not the means or money to do it for everyone.
We’re seeing that medicine can offer much more in the area of lifesaving treatments than were possible when I was growing up.  For example, ABC anchor Robin Roberts received a bone marrow transplant, with great media coverage and support, for an early malignancy.  This could not have been done until recently and could not be done with a lot of support from others.  The availability of new medical treatment is a factor in eldercare.  My mother received open-heart coronary bypass surgery at age 85 in 1999, and I was surprised that it could be offered at all at that age.  Fortunately, I did not have to come back from Minneapolis, but for a while I was concerned that my flexibility could have become a bargaining chip in her eligibility.
Getting beyond the problems with the website, Obamacare does seem to be resulting in more disruption of full-time employment markets than had been expected, and higher premiums than expected for individual insurance.  Self-only premiums, paid with pretax dollars, in employer groups have always been cheap compared to what individuals can buy even under Obamacare, and were also cheap compared to family coverage.  But I don’t see any way out of the anti-selection problem in the individual market (with pre-existing conditions) other than mandatory insurance (subsidized for the poor), which sets up examples in other areas of society.    

Does this add to the “entitlement” mentality, as conservatives claim?  No, because you have to pay a premium, just as you have to pay a FICA tax for future Social Security.  I do think we have to look at countries with private-public plans that really work (like Switzerland and Germany) for guidance.  I think we need to look at portability, and, as with social security, give people more “ownership” over their own health care funds.   

Wednesday, October 23, 2013

Southwestern VA coal country, even with its own mountaintop removal, disappoints GOP

The Washington Post has a story Wednesday October 23, 2013, on the front page, about weakening GOP support in the coal country of southwestern Virginia, particularly with respect to gubernatorial candidate Ken Cuccinelli II.  The link to the story by Ben Pershing is here

The GOP has behaved like the proverbial ostrich when it comes to limiting carbon emissions and protecting mountaintops, and streams.  
The story caught my eye because one of the three short stories in my upcoming “DADT III” book reports on an “Expedition” I made with a former graduate school roommate in the spring of 1972 to the coal country in southwestern Virginia.  The “mountaintop removal” in southern West Virginia is fairly well known, but it extends into the far triangular vertex of extreme SW Virginia.  The Post story includes some pictures from the coal area, including an image of the Red Onion surface mine near Pound.
The damage to the mountains along state highway 83 and then US 23 (“The Trail of the Lonesome Pine”) had been extreme in 1972 but had largely been cleaned up and replanted before another visit I made to the area in 1990.  I visited the area also in 2005.

Picture: VA-KY border, 2005.  

Tuesday, October 22, 2013

Washington Examiner recaps GOP confrontation over budget, debt in visible print issue; more on McConnell Rule

The Washington Examiner, which has changed its business model to printing once a week, displayed a bold issue last week “Thunder on the Right”.  Ironically, there were free copies right outside Freddie’s Beach Bar in Crystal City in Arlington.
A typical article now is a missive about Ted Cruz, here

There were many articles, the general tone of which was that using a shutdown and particularly a debt ceiling confrontation was the only practical way a “minority party” had to gain leverage against an authoritarian majority. 
The main argument against blaming the GOP for the shutdown seemed to be that the GOP sent separate bills up to open most of the government.  It’s true, in the past, appropriations and funding have often been split into many bills, so Harry Reid sounds wrong on this.
It is also true that the debt ceiling has been a low profile negotiating poker chip in the past.  That was before the Internet.  It simply is not acceptable for Congress to raise questions about making the cash available to Treasury to pay liabilities already incurred.  Only Congress can actually provide money, legally (oh, yes, there’s the 14th Amendment, maybe).
The biggest focus in Congress during the budget negotiations does need to be on reforming all entitlements, not just Obamacare.  And Congress should provide Social Security beneficiaries (present and future) with some legal ownership based on FICA taxes already paid, so that currently promised benefits can’t become cannon fodder for politicians. 

The Examiner has generally not seemed quite as conservative as The Washington Times


The New York Times has an editorial today saying that the "McConnell Rule" was used quietly to broker the debt ceiling extension last week, link here. The rule allows the president to raise the debt ceiling, and Congress gets a chance to disapprove, which the president could veto, requiring 2/3 votes in both houses.  The editorial links to a National Review interview with Mitch McConnell.  The the McCoinnell rule really "the law"? If so, why did we go through all this?

Monday, October 21, 2013

Libertarian quizzed on pre-existing conditions problem in health care market, doesn't have convincing answer

A panel discussion on AC360 tonight on CNN (the "later" show at 10 PM) presented "Freedom Works" head Matt Kibbe (who often emails me begging for support) challenged by Andrew Sullivan, Charles Blow, and Gloria Borger, as well as Anderson himself. 

Everyone kept asking Kinne if he believed that people with pre-existing conditions should be able to get individual health insurance/  Kibbe said yes, that he had one himself.  But the only suggestion he made to fix the pre-existing problem in an anti-selection environment was to give individuals the same tax break to pay premiums with pre-tax dollars that employers get.  He said that was a simple fix.  But it's obvious that this would not stop the pre-existing conditions problem.  

The other panelists accepted the general idea that society should provide a public safety net for people with medical disadvantages.  There was no mention of "behavior".  

Kibbr also noted that the government was forcing people to buy mandatory insurance when "Obama's Website" was still struggling and clumsy to use.  A private company could never get away with this.   True. 

Saturday, October 19, 2013

Arlington CROP Walk gets people working together to raise money to end hunger; is this more just about social capital?

As we get back away from finance to the problems of “real life”, I did a little “Adventuring Hike” this morning in Arlington VA with the CROP Hunger Walk, which kicked off from the Arlington Forest United Methodist Church at 9 AM, link here

The same church, which has a belfry tower right out of “Vertigo”, also plays host to the Arlington Chess Club, on Friday nights, link.  It also has a people-sized model railroad outdoors on the property (last picture below).  

Chess is the ultimate individual sport, with considerable metaphor to political fights like what we just saw. 

So I was quite struck by the groupiness of the Walk.  I simply made my donation in cash, which was put in an envelope which I filled out.  But other envelopes were for teams, some with 20-30 names on them having raised hundreds or even thousands of dollars. 


It’s a personality thing, and it’s also a personal strategy thing. I don’t like to recruit people for causes and wear other people’s uniforms.  And I don’t like to be recruited.  But I can see the importance of the “social capital” issue.  

Friday, October 18, 2013

"Real world" infrastructure issues come back; ABC reports that a teen in Florida asks to be adopted, at a church service

Finally, we can get off talking about default and the budget.  It’s a good time to remember that our way of life faces other existential threats, like WMD domestic terror and cyberattacks.  In fact, I have very mixed feelings about the Snowden-NSA-Wikileaks issue, even as I support the ACLU and went to a reception about it last weekend (main blog, Oc. 13).  We just can’t afford to miss anything.

There’s another issue that keeps coming back, social capital.  Yes, Rick Santorum preaches about it, but so do libertarians like Charles Murray, and social scientists like O.S. Guinness and Edward O. Wilson.  When it’s weaker, a whole civilization is more vulnerable to enemies or to collapse from natural pressures.

Steve Osunsami and Christiana Ng of ABC Good Morning America report on a 15-year-old African-American boy, who stood up before a congregation in the Tampa, FL area and asked of the congregation for someone to “adopt me”.  The story did not report that an adoption had happened, but apparently hundreds of families, mostly in Florida,  have responded. The story was also carried on World News Tonight by Diane Sawyer, link here. 

Are we headed toward a day when sharing raising the next generation, whether having children or not, will be viewed (again) as a moral responsibility of everyone?  The idea would compel everyone to have a personal stake in those who follow one in future generations, and put a new spin on sustainability issues like climate change. 

Thursday, October 17, 2013

High school students studying for a US government test: here is what you need to know, here is what the teacher will ask (about the "budget deal")

Do I think this food fight will happen again this winter?  I hope not, but let’s just review a few concepts.

First, I think high school seniors taking government classes this year know what will be on the test. They are terms like “debt ceiling”, “sequester”, “Patient Protection and Affordable Care Act”, “Hastert Rule”, “discharge petition”, “cloture” "pork", "earmarks", "gerrymandering", and “filibuster”.  I would love to have subbed a government class during the shutdowm. Teachers, have at it.  They’ll even be on the SOL’s.  Rather than matching or multiple choice questions, I’d like to see free response, letting students explain in their own words what these terms mean and why they can become significant to the well-being of everyone.
Should the debt ceiling law be removed?  The Wall Street Journal has argued that it actually acts as a brake against majority rule.  (What if the “majority” insisted that all bloggers have liability insurance, using the example set by Obamacare?) 

But the mere existence of the ceiling logically implies that there is always the possibility of default, particularly that some entitlements, especially Social Security payments for “better-off” retirees, could even stop forever, according to scenarios I outlined on my Retirement Blog Oct. 7.  Others, including the conservative Washington Times, argue that unpopular foreign investors, like China, could get cut off by angry politicians. And guess what, despite Obama's "no negotiations", there is pork in the final bill that he signed. 
I think there is a better way.  Have a law, or even constitutional amendment, that limits future spending (that is, any spending that creates obligations that do not yet exist on the books) as a fixed percentage of GNP, or even a slightly variable percentage.  The only exception would be declared war or some kinds of natural catastrophes or WMD terror attacks.  The sequester is a bit like that, but not completely. (Teachers – that makes another good essay question for a test.)  As for entitlements, benefits already imputed by previous FICA and Medicare taxes, and determined by actuarial present value computations (with due allowance for elements that truly are just “premiums” like disability) should be considered as already enforceable debt obligations.  That is, as for already owed debts, seniors should be on the same playing field as China. Similar concepts should apply to veterans’ benefits and military and federal worker and contractor pay for work or service already performed.  But other entitlements, like Medicaid and various safety net programs, could become vulnerable, and the role of social capital, family, and volunteerism as a moral expectation needs to be on the table, too.

The “individual mandate” portion of Obamacare could be cushioned by subsidies, but then that tends to add to new debt.  The fact is, young adults are better off if they are properly insured.  In the real world, tragedy can happen even for a college-age Clark Kent or Spiderman. (“With great powers come great responsibility.”  And, yes, Bryce Harper and RG-III have health insurance.)  I think that GOP ideas of “ownership” of health accounts, much like retirement counts, as a replacement of the individual mandate. Could be worked into the discussion. The inducement for employers to go part time in service businesses sounds serious and needs real attention.  OK congressman James Lankford told a story of a husband and wife who, owning franchises, were forced to divorce to be able to afford Obamacare for their employees.  What an irony for the “heterosexual marriage debate”.  

Wednesday, October 16, 2013

Varied reports on how close we are to a vote in both houses on a final debt ceiling deal

Early this morning, the headlines on both Washington Post and New York Times websites warned about the collapse of debt talks Tuesday, but didn’t report the progress on “new” talks between McConnell and Reid over night.
CNN now reports that a deal is again at hand, and it doesn’t seem very different from other proposals, story here
It’s unknown whether Ted Cruz will try to hold up a vote. It is thought that Boehner will finally break the Hastert Rule and allow it to be voted on in the House and pass without a majority of Republican support.
But some commentators say that there might not be a vote until the weekend, because supposedly some people, especially investors, have calculated that Treasury would make all payments until at least Tuesday Oct. 22 without a raise in the ceiling.
It appears that the deal extends the debt ceiling until Feb. 7. There is a minor tweak to Obamacare in verifying recipients seeking aid, and it is hoped that the president doesn't see this as "negotiation". 

The Washington Post tells me in tweets that it really is not possible to calculate the “drop dead” date on default reliably from public data on the Treasury website, because there are numerous other smaller bills that aren’t shown in major projections, as from the Bipartisan Policy Center. The newspapers are aware of the data on the site and have looked at it.   But it’s hard to see why Treasury doesn’t have precise numbers of what is due each day.

Update: 12:30 PM

The deal has been announced in the Senate and Senator Ted Cruz has said he will not try to hold up the vote. 

Once Tea Party congressman, when interviewed by Wolf Blitzer, when quizzed as to whether it was important to protect vulnerable Americans from the possible consequences of a default, answered nonsenically that Obamacare was a bigger threat than default.  Really? That "reasoning" scares me.  

Update: 10:30 PM.  Temporary re-open and debt ceiling extension passes

NFL scores:   Senate  81-18  (a blowout)
                     House  285-144    but without a GOP majority anti-Hastert. 

Tuesday, October 15, 2013

Boehner, Cruz still appear able to "veto" a deal and hurl the nation closer to default; Treasury nervous about Thursday's rollover

Everyone has heard that the Senate is close to a deal, and that Harry Reid (D-NV) reports “tremendous progress”, as in the Washington Post story by Lori  Montgomery and Rosalind S. Heldeman, which gives the details, link.  It sounds like it kicks the can down the road, a phrase Obama used early in his first term a lot.
The biggest immediate dangers appear to be (1) another Ted Cruz filibuster, which could delay a vote until at least early Thursday (while the Treasury has to do a rollover, on its last day of “accounting gimmicks”) and (2) John Boehner doesn’t allow a vote.  It would be a good question as to whether a discharge petition would be possible, if necessary. 

I am still confused about the political difficulty in bringing a vote.  There are 90 or fewer hardliners in the Tea Party or sympathetic to it.  That leaves over 110 Republicans who are more moderate who would not want to take even the slightest chance of default on the debt now.  Why isn’t this a (Hastert Rule) “majority of the majority” now?  

Update:  The latest news as of 10 AM is that the House is close to a bill that will reopen government and raise the debt ceiling temporarily.  Here is the kiddish "Yes, but".  It would prohibit extraordinary measures by Treasury.  That's a poison pill.  I'm not sure they can be stopped.  That contradicts the idea of prioritization, which "default deniers" in the GOP have tried to use to play both sides of the arguments. 

A White House spokeswoman said that the president would reject the House bill because the add-ons are still a kind of ransom.  But the provision requiring Congress to pay individual rates for its own health insurance sounds reasonable enough to me. Maybe break into multiple bills?  

Update 2:  I can't keep up with all these versions of the House bills and the poison pills.  We can do without Nancy Pelosi's saying "The House vote will be a vote for default."  Please!

Fitch has placed the U.S. on negative warning. Reason: "political brinkmanship"  The link is here.  Note that Fitch views an internal delay (as with paying the Social Security Trust Fund" as a true default. That is in contrast to what some of the GOP have claimed, and even some law professors.  

Monday, October 14, 2013

With no debt ceiling increase, Treasury can make payments until Nov. 1; Could FDIC be a problem? Would Congress jump if even one payment is delayed?

The Washington Post is all gloom and doom Columbus Day morning, maintaining that the McConnell and Reid are stalled in negotiations because they don’t get along personally. Zachary Goldfarb and Jim Tankersley have a particularly gray story about how the federal safety net could shred quickly (“Debt-ceiling breach would push economy into free fall, without a government safety net”, here

I’m surprised they doesn’t go into the idea of very quick means testing to restore Social Security only to people who absolutely “need” it.  I covered that Oct. 7 on my retirement blog.

CNN’s coverage is gloomy (here) but other newspapers around the country seem to be ignoring the crisis, putting on back pages.  It’s a big deal in Washington and New York, CNN, the WSJ and Fox, but not so much elsewhere.
Since the Treasury would have about 30 billion in cash on Oct 17, the immediate risk is the rather large Treasury rollover on that day, if there has been no debt agreement by then. From Oct. 18 to 31, it appears that the Treasury owes “only” $23 billion, including small Social Security Trust Fund and investor bond interest payments.  There’s a huge market basket of $60 billion on November 1.
Treasury’s website suggests that since the start of the new fiscal year (Oct. 1), the Treasury has taken in typically about $10 billion per business day, with a lot of variability.  Look here.  It looks like Treasury took in 2.5 trillion last fiscal year.   It’s hard to estimate, but the Treasury would be likely to have taken in about $50 billion more by Nov. 1.  It may help a little that extended tax returns are due Oct. 15, so there might be a little extra push from rich people of the “Revenge” (Nolan Ross) type.
If the rollovers work, we would probably get into real trouble about Nov. 1 or shortly thereafter.  Social Security starts sending most of its benefit checks the second Wednesday, so there is a little time (Nov. 13).
On the other hand, if the government makes its debt payments and finally misses on Social Security (indirectly, through the Trust Fund), Veterans, Military, or Federal Employees, there will be an outcry that would seem to force both sides to settle immediately.  One missed payment, what does really happen in Congress?  What do Tea Party members say?  They want to end all entitlements now?  Wat does Boehner say? 

One grim possibility is that the FDIC does not get a repayment.  Should a major bank fail, depositors could lose money even though it is supposed to be insured.  Some hardliners on the Right have said that they oppose deposit insurance.

Again, I think that the President does have the authority to pay bond holders directly (with extra borrowing or printed money) without permission from Congress.  The president does not have the authority to pay entitlements.  So the only guarantee on them is the enormous political outcry.  This would be a tsunami.

The Tea Party hardliners do try leverage contradictory arguments.  They want to use the threat of a debt debacle to "leverage" policy changes, yet they turn around saying default won't happen anyway, that the debt ceiling is no big deal.  The difference between new appropriation and paying bills already owed gets glossed over with intentional intellectual sloppiness.   
One other thing to remember.   National security is at risk.  What more opportune time for a terrorist to try some sort of unconventional WMD attack, or a cyber attack?  This, as Ben Stein said, is all nuts.
 Again, why can’t Boehner do a “discharge petition” because a clean bill on the debt should pass?
Democrats should settle now, thought, and not put the nation in jeopardy of all this.  Don’t ask for deals on the sequester now. Pay the bills first.  

There was a platitude common during the dire talk about the 1975 New York City financial crisis. It was "They would never let that happen/"  But, there is no "they".  It's we.  

Update: Later today.

CNN is reporting major progress in the Senate.  Possibly a debt deal until Feb. 15 (sounds like a good day for a layoff().  There would be a deadline of Dec. 13 for a budget deal. 

Gay Patriot (a site with libertarian views on everything, generally) has its own analysis of why default would not happen, here.  Some other posts there are worth a look, too. 

Sunday, October 13, 2013

For GOP "default deniers", "Rollover Risk" could prove fatal to the economy (Stansberry again?)

Saturday evening, before “going out”, I held a mock negotiation with Ezra Klein of the Washington Post on Twitter, as we posed the major questions that it seems Congress and the president won’t face when facing one another. I played the GOP side.
So, Democrats, why do you maintain that it’s “extortion” to negotiate over the debt ceiling when so many previous presidents did.  I said, ask Bill Clinton.  One thing that makes this difference is that “extremists” tried to overturn existing law (the Patient Protection and Affordable Care Act, or “Obamacare”) rather than simply enforce a future budget negotiation. Another difference is that the Internet is available now, and makes the “extortion” argument get much more traction with the public. The president maintains that only Congress can raise the debt ceiling to pay bills previously incurred from spending it had already appropriated. So it is Congress's "job" to do this, not the Executive Branch's.  So it would be Congress's "fault" if there is a debacle soon. But since "negotiation" has been acceptable in the previous presidents, it may be hard for the general public to understand why this time it is "different".  The president should not count on the public's seeing it this way forever.  
I said that Treasury really can prioritize payments, because modifying mainframe I.T. systems would enable segregating payments and sequencing them before they go out.  I had jobs doing this for thirty years.  However, there is a really serious risk of “rollover risk”, as suggested in this link from the Bipartisn Policy Center, here  or explained in dire terms on CNN here.  While Lew has admitted that the Rollover can lead to higher interest rates quickly, CNN suggests that the rollover, even on Oct. 17, could fail completely, leaving the Treasury much shorter than expected on Oct. 18. Is this related to the theories of Porter Stansberry about the dollar as a reserve currency?  If the rollovers work, there probably is no real risk of missing any payments until at least Nov. 1. 

Treasury Secretary Lew mentioned the rollover risk before the Senate Thursday, but not by name amd not in quite these dire terms.  There is a fear that if you throw the term around it goes viral, it really could spook the markets early.  So I'll throw it around to help shock the Congress into stopping this game of playing with people's lives for partisan or power-grabbing reasons.  Do you want to seize power over a devastated economy?  That's like wanting nuclear war or "Revolution" so that you can rule what's left. 
There is a legitimate reason to resist automatic extension of the debt ceiling (or to have it at all) if there is a risk of a financial freeze anyway if debt becomes excessive.  That's what Stansberrry and even Orin Hatch say.  It's hard to predict where that point is.  
I also raising the question again about the Social Security Trust Fund, it’s legal standing, and the apparent lack of legal status of Social Security beneficiaries with respect to any future benefits.  A sudden cutoff of many beneficiaries with other assets or income could be part of a necessary deal.
All in all, I don’t think that the GOP position is as weak as the media believes, and the belligerence of both sides is downright dangerous. 
Reid and McConnell are supposed to be talking Sunday and we hope there is some outline of a deal before the markets open Monday morning for Columbus Day.  The GOP is not as weak as the mainstream media (outside of Fox) presumes, and if there is an economic meltdown, some of the blame will indeed fall on Democrats and the president.  It seems that the Democrats do need to accept the idea of "negotiation" on budget issues with respect to the dent ceiling, because that is established practice, supposedly to prevent dangerous debt explosion -- even if it means that there is always a remote risk that some individual parties can get stiffed after the fact.  That's true with any creditor.  In two days, there is little that could be done, except maybe a slight upping of Social Security retirement age, a chained CPI, or something like that.  Maybe a small concession on Obamacare is appropriate.  There needs to be an immediate repopening of the government, and a quick if relatively short term extension of the debt limit (through the end of 2014 at the most) but a new framework for how these problems will be solved long term.  Maybe the Gang of Six should try again. 

Update: 1 PM. Harry Reid addressed the Senate on CNN live.  

Saturday, October 12, 2013

Mixed reports on progress toward a debt-ceiling, re-opening deal; a "change in tone"; Is Paul Ryan the main broker now?

The latest on the budget talks is that the center of the negotiation now seems narrow down to Obama and libertarianesque Senator Paul Ryan (R-WI).  Obama has asked Republicans to figure out what they would need to re-open the government at the same time there was a short term extension on the debt ceiling.  The core CNN story is here.  The Senate is moving in this direction (with a longer debt limit extension).  As of Saturday morning, no clean vote on even a temporary extension of the debt limit had been scheduled in the House yet. 
In my own mind, two big questions remain.

To Boehner, why not call a vote in the House on a “clean” bill when major media polls show that the votes are there to pass, assuming the breaking of the “Hastert Rule”?  This requires a discharge petition

To Obama: you don’t have a completely convincing answer to why “negotiating” over the debt ceiling is giving in to “extortion” when most previous presidents have done it.  It’s true, the circumstances are more challenging this time, as hardliners in the GOP are trying to overturn a law they wouldn’t have the votes to oppose with normal majority rule.

To both:  what are the numbers on debt reduction over the years?  What entitlement reforms (accepting that Obamacare does require some federal support, possibly especially to take care of the anti-selection, pre-existing conditions and mandatory coverage issues) will bring down the debt to levels that safeguard the dollar as a reserve currency?  (Is Porter Stansberry right about this?)  Can you give Social Security recipients (future and current) some “ownership” of their FICA “contributions” to protect them from politicians?  I think we all need to understand the social implications of right wing objections to "another entitlement program".
 Senator Tom Coburn (R-OK) has said the current generation should accept the personal sacrifice of a "managed catastrophe" now for the benefit of future generations.  (Not good if you didn't have kids.)  Sounds like war! Tne Business Insider story is here


We're stalled again, and slipped bacj.  As of mid Saturday afternoon, the Senate rank-and-file House Republicans and debt-ceiling deniers went home to their districts (where they'll get riled up about Obamacare again), and a Senate Cloture vote failed 45-53.  WSJ story.   

Thursday, October 10, 2013

A short term clean deal? GOP even wants to eliminate "extraordinary measures" by Treasury

So, they’re talking.

There is scuttlebutt is a possible six-week extension of the debt ceiling, but no immediate ending to the government shutdown.  The current CNN story is here, but it could change again this evening. 

However, the Washington Post reports, the GOP wants to eliminate the “extraordinary measures” that the Treasury has used since May to get around the debt ceiling.  Given the Fourteenth Amendment, that might well be unconstitutional.  The Wonkblog story is here

There also some rumors that Obama had rejected a short term deal without reopening the government, but the rumors change every fifteen minutes. The most accurate account seems to be that there are competing plans even among “those Republicans”, link I think we need Barney Frank back. As of 8:30 PM, CNN says there is “no deal” yet but talks continue.

There were some stories, as on ABC, that a few Republicans still want to hold the line and overturn Obamacare completely, to avoid another “entitlement program”.  Never mind that it is private insurance.

What happened to the supposed Clean Vote in the House, where there were supposed to be enough votes? What happened to Obama's bypass of the fact that other presidents have allowed negotiations over the debt ceiling?
The debt ceiling deniers continue to talk.  It seems extremely probable to me that the Treasury can pay bond interest first.  It’s also scary to me that apparently there is no legal obligation to pay Social Security recipients, because technically FICA is a “tax”.  The only real pressure is “political”.  As I’ve noticed, some right wing commentators want to go cold turkey on benefits, or at least heavily means test them immediately.  Most Republicans in the Tea Party, however, claim publicly that the federal government will be able to pay all entitlements (including Social Security), military and veteran’s payments as well as bond payments without raising the debt ceiling.  But the math just doesn’t support that “faith”. John Cassidy had opined that America needed a mild stock market crash over this issue now to bring both the debt and dent ceiling deniers to their senses, link here. 

Wednesday, October 09, 2013

Major default on bonds would occur by Nov. 15, but Stansberry's "No-No" on dollar as reserve currency could happen suddenly at any Treasury rollover

Here’s your wakeup news this morning.  Brad Plumer gives us a (liberal’s) take on the debt ceiling timeline on the Wonkblog, link (url) here

Actually, the US hit the ceiling May 19.  Extraordinary measures are exhausted Oct. 17 ( a week from tomorrow) although there is a chance of miscalculation. 

The US probably doesn’t default on Oct. 18.  But on Oct. 31 the first big bond interest payment is due.  Social Security is due a payment on Oct 23 of $12 billion, and a much larger one of $25 billion on Nov. 1.  I got my payment this morning.  Without Social Security getting the Nov. 1 payment, I might not get the next one Nov. 13.  The bond interest payment Oct. 31 is small, $6 billion.  There’s a huge balloon payment on the debt Nov. 15 (that sounds like something a lot of churches deal with, in my experience).  That’s the big one.

But the Treasury has to roll over securities Oct. 17, 24, and 31.  What if it is unable to do so because of market turmoil right before default?  That’s the so-called Porter Stansberry scenario.  The rest of the world could suddenly stop accepting the dollar as "reserve currency" at all, and that's permanent, folks,  It's like a super "No-No".  
That’s why some hardline conservatives say that raising the debt ceiling alone doesn’t save us.  We may not have much time before we really have to go cold turkey on entitlements.  As I wrote on the Retirement Blog Oct. 7, I might never see another Social Security deposit again, in some scenarios, because technically the government is not obliged to pay it, the way it has to pay China.

Treasury Secretary Lew will lay out the timetable before the Senate Thursday, probably on C-Span.  What will Ted Cruz say?
It’s a good thing that Obama reportedly is willing to accept a short-term clean deal to get discussions going. CNN covers this story here.
Still, this morning, the two biggest questions are (1) why won’t Boehner call a vote when media counts show that a clean bill can (barely) pass in the House, and (2) Why won’t Obama honor the precedent that previous presidents have indeed negotiated on the debt ceiling?  What was different in the past is that there was no Internet and social media to keep the “hostage” idea up front in front of the public. 

Update: Later, Oct. 9

I'm not sure how much power the hardliners within the Tea Party have, but some are saying "No" to backing off from anything less than total defunding of Obamacare.  They till tank the country, to keep it a "Right wing" republic, just to prevent another "entitlement" from being accepted. Unbelievable! ABC's story is "Inside the Tale-no-prisoners Behind the Shutdown". I don't know if I've seen this before.