Since Filippo has graciously allowed me to post this episode on my website, I encourage you to check out the rest of his show at LifeChangesNetwork.com.
Since Filippo has graciously allowed me to post this episode on my website, I encourage you to check out the rest of his show at LifeChangesNetwork.com.
It is time for the states to lead.
Every once in awhile in the history of this great country of ours, the federal government just can’t get the job done. Partisan gridlock, constitutional uncertainty, public distrust all play a role. But one of the great strengths of the American system is that the states — those laboratories of democracy, as Louis Brandeis called them — can act when Washington will not. Abolitionism, women’s suffrage, health care reform, gay rights: All started at the state level.
This is one of those times. Our national system is inert. Our national leaders are mired in the muck of inaction.
And yet there is hope. For today is Election Day, and on this day, we will elect 36 governors. This is no time to stay home when the polling places are open. This is a time to choose leaders who will act where Washington has not.
I can think of no better example of the choice we face as a country today than the minimum wage.
After World War II, Congress set the minimum wage at approximately half the average wage in the country. In today’s dollars, it was over $10 an hour. Earning the minimum wage, one full-time worker could support a family of three above the poverty line.
Unlike Social Security or Medicare payments, the minimum wage is not indexed to the cost of living. Only Congress can raise it. The last time they did so was 2009. Democrats proposed raising it again earlier this year, but the majority of senators opposed it.
The feds have failed to act. It’s time for the states to lead.
And we have ample evidence that they can. Twenty-three states already have minimum wages higher than $7.25. Five states — Alaska, Arkansas, Illinois, Nebraska, and South Dakota — have an initiative on today’s ballot to increase theirs.
But not everyone is onboard.
“I don’t think it serves a purpose,” said Wisconsin’s Republican governor Scott Walker last month.
“I don’t think as governor I want to be the cause of someone losing their job,” said Greg Abbott, the Republican candidate for governor in Texas, in explaining his opposition to raising the minimum wage. Pennsylvania’s Republican governor Tom Corbett made a similar argument when stating his opposition last year.
At least they pretended to know what they were talking about. When Republican Governor Rick Scott was asked what Florida’s minimum wage should be, he said, “How would I know?”
These men are on today’s ballot in four of our nation’s largest and most influential states.
And they are tragically out-of-step with the lessons of economic history. In a recent study, the economists Hristos Doucouliagos and T.D. Stanley survey the vast research that economists have done measuring the impact of the minimum wage in recent decades — 64 papers in total — and they find “little or no evidence” that minimum wage increases caused job losses.
On the contrary, raising the minimum wage is a clear boost to the economy. In another recent paper, the economist Arindrajit Dube found that raising the minimum wage significantly reduces the poverty rate, a finding that is consistent with the other 12 studies economists have published in recent years measuring the same effect in different ways.
Only a politician severely out-of-touch with the modern economy could think otherwise. Today’s corporations don’t have to cut back jobs when wages rise. They have to cut back profits, which are at an all-time high. In the long run, they might not have to cut back anything. Higher wages lead to higher productivity, better health, fewer strikes, lower turnover, and higher consumption, which in turn leads to more demand for their products and therefore higher profits.
Individual companies may not want to raise wages if their competitors won’t, but when everyone does it, everyone benefits.
Trying to save money by keeping the minimum wage low is like trying to improve your health by starving yourself. It’s classic shortsighted behavior, hardly the visionary leadership that we’d like to see in the governor’s mansion.
That’s why today’s election matters. In this age of do-nothing politics, it’s easy to despair, but we must remember the intent behind the design. The same founding fathers who created a federal system that resists radical change also created a state system that encourages experimentation. Today we celebrate their creation, and we direct its attention to the challenges of our time.
If the feds do not act, the states will. We the voters will make sure of it.
This op-ed was originally published in the Huffington Post.
You’re going to hear a lot about Obamacare this fall, especially from Republicans. They’ll try to convince you that it was a bad deal. They’ll throw numbers at you to make you think that the cost of health insurance is spiraling out of control. In all likelihood, those numbers will be wrong, but how will you know? There are so many numbers flying around out there that even the experts are having trouble keeping track.
That’s why it’s time for a math lesson. After reading this article, you’ll know what the numbers mean — and which ones you should trust. No candidate will be able to fool you.
And you won’t even need a calculator.
First of all, you have to understand that we’re only talking about the individual market, where people buy insurance if they’re not covered by their employer or a government program. That means the “individual mandate” and the “government-run exchanges” only affect 7 percent of the population. For the majority of the population covered by their employer, the cost of health insurance rose less in 2014 than it had in any year since the Milliman Medical Index started keeping track. We can probably thank Obamacare’s cost control provisions for some of that achievement, but that’s a conversation for another day.
For now, let’s focus on the individual market. Before Obamacare, insurers charged low rates to healthy people and high rates to sick people, making insurance unaffordable for the people who needed it the most. Obamacare banned discrimination against sick people and mandated that all people must purchase insurance. Without that mandate, insurers would have raised rates to cover the new sick customers, and healthy people would have refused to pay the new high rates, driving rates up even higher as the population became sicker on average.
When the law was passed, the Congressional Budget Office predicted that premiums would increase 10 to 13 percent, but only because people would be receiving more generous coverage. Obamacare required every health insurance plan to meet basic minimum standards. Additionally, by making it more affordable, more people would want to buy more generous coverage. If you compared plans with the same level of coverage, the CBO predicted that premiums would actually go down.
When states started announcing the premiums for their new “exchanges,” you probably started hearing about “sticker shock.” By comparing the new premiums to old quotes from health insurance websites, Obamacare critics claimed that the law had drastically raised prices. The problem with their argument was that the quotes on the old websites were very unreliable. They rarely reflected what insurers would actually charge you, once they factored in your medical history, age, gender, etc. In fact, many Americans would be denied coverage altogether. Anyone who knew anything about health insurance knew that the website quotes were lowballing the cost.
State governments like California countered by making a more reasonable comparison. They argued that the new exchange premiums were actually lower than premiums for small group coverage, for which they had better data. Obamacare critics weren’t satisfied. Small group plans may have been more expensive than the plans on the new exchange, but that’s because they offered more generous coverage.
The Manhattan Institute, led by conservative health expert Avik Roy, tried to find a middle ground by adjusting the quotes on the health insurance websites, raising the estimates for people who were “surcharged” or denied, and finding that Obamacare increased prices by 41 percent.
The problem with Roy’s analysis was that his adjusted numbers didn’t match reality. Before Obamacare, Roy suggested that 27-year-olds — the ones who were being hit the hardest, he argued — paid between $1,596 (men) and $1,980 (women) in average annual premiums. But the Kaiser Family Foundation conducted a survey in 2010 and found that they were actually paying closer to $2,630. Across the board, Roy had underestimated the pre-Obamacare cost of health insurance, and he wasn’t including costs that consumers paid out of their own pockets.
Last month, three Wharton economists used the Current Population Survey to calculate a more accurate estimate of the average pre-Obamacare premium. They found that it was basically identical to the lowest-cost plan available on the Obamacare exchanges. Compared to more expensive plans, of course, it was cheaper, but when they factored in out-of-pocket costs, they found that the new plans were 14 to 28 percent more expensive than the old ones, only slightly higher than the CBO’s original predictions.
But wait. The Wharton study only counted people who purchased insurance, not people who were denied or who refused because the insurer’s quote was too expensive. We’ll never know what that quote was, but we can assume it would significantly raise our estimate of the average premium. To ignore those people — and there were millions of them — is to say that they don’t matter, even though Obamacare was designed specifically with them in mind.
The Wharton study also doesn’t include the tax credits that the federal government uses to subsidize low-to-middle income buyers on the exchanges. Last month, the government announced that 87 percent of shoppers received a subsidy on the federal exchange, bringing their average monthly premium down from $346 to only $82!
That’s a 76 percent reduction, and it more than makes up for the 14 to 28 percent premium increase, which may not be much of an increase after all if you include people who didn’t buy insurance in the past.
Bottom line: On average, Obamacare clearly lowered the cost of health insurance.
Sure, some people will pay higher rates, but you have to remember that those people only paid low rates in the past because insurers were discriminating against sick people. The new market is much fairer and more affordable for more people — a fact that you might want to point out to Republicans on the campaign trail this fall.
Want to know how to get rich? Wilbur Ross has the answer: Go to school.
“Education is the way that people get out of the ghetto and into, if not the One Percent, something close to it,” said the billionaire investor in an interview earlier this year.
That’s it. So simple.
So simple, in fact, that you have to wonder: Why doesn’t everybody do it? Why don’t we all study our way into the One Percent?
Actually, many have tried. Over 73 million adults have a college degree in this country, but less than 2 million of them are members of the One Percent. Most earn less than a fifth of what they’d need to qualify for the One Percent.
The same is true of postgraduate degrees. Approximately 38 million adults have a master’s, professional, or doctoral degree, and over 37 million of them earn less than the One Percent. Most aren’t even close. To be a member of the One Percent, you have to earn more than $393,000 a year. The average PhD grad earns less than $93,000.
And it’s getting worse. New college graduates entering the workforce today are earning wages 5 percent lower, after adjusting for inflation, than their predecessors earned a decade earlier. Over half of them can’t find full-time work, and half of the ones who do get a job aren’t using their degrees. Even law school grads only have 50/50 odds of finding full-time legal jobs. As a result, college graduates are this nation’s fastest-growing group of food stamp recipients.
That’s a far cry from the lucrative lifestyle that Wilbur Ross promised them.
It’s not hard to see why Ross would make this mistake. The average member of the One Percent is more educated than the average member of the 99 Percent. Ross looks around at his fellow One Percenters and sees their education and assumes that’s how they got there. It’s like the old joke about the guy who was born on third base and assumed he’d hit a triple.
Ross’s own life is a classic example. His father was a graduate of Yale, one of the most elite universities in the world. He sent his son to the college preparatory Xavier High School in Manhattan, where the current annual tuition is $14,450. From there, Ross went to — surprise, surprise — Yale, where his faculty adviser got him his first summer job on Wall Street.
Contrast that story with the childhood that most Americans experience.
The divergence starts before they even set foot in a classroom. By the age of 3, low-income children hear 30 million fewer words than their wealthier peers. Kids whose parents can afford to send them to high-performing preschools are more likely to graduate from high school, half as likely to get arrested, and almost three times more likely to own a home in adulthood.
If they overcome those odds, lower-income children attend schools that have lower education ratings, and they spend less time in those schools because they have to work or take care of family members. They also miss more days because they’re more likely to be sick.
It’s a myth that lower-income parents spend less time exploring school options or engaging their kids in home-learning activities. Contrary to what Wilbur Ross may tell you, low-income parents are just as committed to their kids’ education as their wealthier counterparts, according to studies of thousands of families across America. The problem is, they are less able to navigate the educational system because they are less informed. They also have less money to spend — and the gap in money spent on “enrichment activities” has been growing for the past four decades.
These problems become painfully clear when it comes time to apply to college. Most high-achieving, low-income students don’t even apply to elite universities like Yale because they don’t know how. No one encourages them. No one shows them how to pay for it. They see high tuition costs — and financial aid that has been going more and more to wealthy students in recent years — and they opt for lower-rated schools instead. If you take a rich kid and a poor kid with equally high achievements and test scores in high school, the rich kid is twice as likely to attend an elite university, simply because he comes from a wealthier family.
And even if the average American child manages to overcome all of these obstacles, they still face daunting odds to reach the hallowed One Percent. According to the Pew Economic Mobility Project, “rich kids without a college degree are 2.5 times more likely to end up rich than poor kids who do graduate from college.” It turns out that education isn’t a silver bullet after all.
Wilbur Ross is right about one thing, though. “I think the right focus would be how do you help the lower classes elevate themselves,” he said in the same interview. “And I think what’s disappointing with all the rhetoric, they’re not doing anything to fix the educational system.”
It is possible to give all Americans the same opportunities that young Wilbur Ross enjoyed. We can pay for all children to attend preschool. We can create home visitation programs that read to kids at an early age and help parents create a healthy environment for them. We can raise the minimum wage and create more jobs for parents so their kids don’t have to skip school to pay the bills. We can equalize funding for public schools between rich and poor school districts so all students have the same level of quality education. We can return to the days when Pell grants and other financial aid allowed kids to go to the college of their choice without onerous student loans. And once they’re in the workforce, we can invest in the kind of research and development that puts those advanced degrees to use.
But every one of those solutions requires Wilbur Ross and his fellow One Percenters to share a little of their good fortune with the 99 Percent. The only question is, do they really want to be a part of the solution? Or is “education” their scapegoat for an unjust inequality of opportunity that they are content to enjoy as long as it benefits them?
This op-ed was originally published in the Huffington Post.
Linda Bilmes and Joseph Stiglitz predicted the VA scandal.
Back in 2008, the eminent researchers — one a professor at the Harvard Kennedy School, the other a Nobel laureate in economics — published a book called The Three Trillion Dollar War, where they argued that most Americans were drastically underestimating the cost of the Iraq War. They didn’t specifically describe the events that have unfolded in recent weeks, but they did point out the enormous burden that would be placed on the VA system as veterans returned from Iraq — a burden that we were not preparing for.
And that was before the surge in Afghanistan.
Upon taking the oath of office, Barack Obama tripled U.S. troop levels in Afghanistan, sending over 60,000 troops into combat. Only now, five years later, have troop levels reverted to the level they were at when he took office. So you can add 60,000 troops for five years on top of the costs projected by Bilmes and Stiglitz — projections that were verified and replicated by the Joint Economic Committee of Congress, as well as Nobel laureate Lawrence Klein, the father of modern economic forecasting.
And yet, Congress refused to boost the VA budget.
For years, discretionary funding for the VA health care system had been growing at approximately 6 percent per year, slightly less than health care costs for the average American family, making it the most cost-efficient system in the country. Meanwhile, it ranked at the top of quality rankings, better than all its private competitors, year after year. It was the best medical care system in America.
That is, until the troops came home.
“Republicans beat back a Democratic attempt to provide almost $2 billion in additional health care funding for veterans,” reported the Washington Post in 2005, “rejecting claims that Department of Veterans Affairs hospitals are in crisis.”
The following year, Bilmes told ABC News, “In 2004, the VA had a backlog of 400,000 cases. Last year it was 500,000 cases. Now the backlog is 600,000 cases. That’s just in two years. And the big wave of returning Iraqi veterans has not even hit yet.”
And yet, the VA budget kept growing by 6 percent per year, as if the war didn’t exist at all.
As if that wasn’t a big enough problem… “Proposed cuts in Department of Veterans Affairs spending on major construction and non-recurring maintenance threaten to derail efforts to update the department’s aging infrastructure,” reported the Washington Post in 2012. And so, Democratic Senator Patty Murray led the charge to boost the VA’s construction funding, only to have it beat down by Republicans.
Later that year, Paul Ryan, the Republican chair of the House Budget Committee, released the party’s annual budget proposal. Had it become law, the VA would’ve sustained billions of dollars in budget cuts, forcing smaller facilities to shut down in rural areas.
So it wasn’t surprising to Senator Murray when allegations surfaced of VA hospitals lying about the number of veterans on their waiting lists because they didn’t want the world to know that they were unable to give their patients lifesaving treatments. “In an environment where everybody is told, ‘Keep the cost down. Don’t tell me anything costs more.’ — it creates a culture out there for people to cook the books,” she said in a recent interview.
Who would’ve ever thought, after years of relentless cost-cutting in the halls of Washington, that the federal government actually spends our money on important stuff? Who would’ve thought that wars cost money, and tax cuts cost money, and maintaining our infrastructure costs money? Not the Republicans, that’s for sure. While the Bush administration plunged us into two wars and cut taxes on the rich, who were already taking a bigger piece of the pie than they had since the Roaring Twenties, Republicans in Congress were blocking every Democratic attempt to give the VA the funding they needed to give our veterans the medical care they were promised. And then, when the Obama administration tried to correct this funding crisis, Republicans responded by proposing deeper spending cuts.
Let this be a warning to every politician and every voter who thinks we can cut our way to prosperity: Those dollar figures represent real services that the government provides to real people. Every cut has a cost, and not just in money. In lives.