Representatives Upton and Walden are correct in one of their complaints about the Obama administration: the threat of retroactive regulation by the FCC (How Obama Puts the Brakes on Business. Wall Street Journal, October 17, 2013: A15).

Retroactive legislation or regulation is odious. The great uncertainty it generates makes it impossible for anyone to make informed decisions about their actions. The FCC should withdraw that aspect of their rules.

As for the problems induced by Obamacare in terms of reducing employment to get under the 50 person limit, this shows the stupidity of not enacting a completely changed system that disconnected health insurance from employment. Alas, politics got in the way of sensible reform.




Sent to Wall Street Journal

Demonizing Opponents

I agree with Mr Jacoby that the demonizing of opponents has contributed to the gridlock in Congress. Unfortunately from day one, Republicans have worked relentlessly to make President Obama either a one term President or to overturn every legislative program he proposes.

There has been no hint of accommodation on the Republican side and, in the first term, the President was attacked by liberals for compromising too much (e.g., no single payer option in Obamacare).

I do take exception to Mr. Jacoby's context free comment about then-Senator Obama's vote against raising the debt limit in 2006.

At that time, the US was in the wake of President Bush's tax cuts. GDP was then at an all time high of about $12 trillion and was rising at an annual rate of 6%.  Now 7 years later GDP, after declining during the financial crisis, has risen to $16 trillion; but the rate of increase has been a sluggish 3%.

In 2006, the good times, it was a good idea to close the gap by increasing revenue rather than raising the debt limit. Today, either increasing revenue or cutting expenditures would be a very bad idea indeed.


Sent to Boston Globe

Medicare: How about help across state lines

It is indeed "outrageous that millions of the poorest people in the country will be denied health insurance because of decisions made mostly by Republican governors and legislatures." (A Population Betrayed. New York Times, October 4, 2013: A30).

However there may be something that we can do about it. Perhaps Massachusetts which will face the fewest demands under Obamacare could rewrite its regulations for Medicaid eligibility so that those denied insurance through Medicaid in say Tennessee would be eligible for Medicaid in Massachusetts.

This would be relatively simple to manage at a distance, all that Massachusetts would be providing is insurance. Care would still be provided in Tennessee and providers would have to conform to the Tennessee standards.

This generosity would cost Massachusetts nothing as the Federal Government would be paying the additional Medicare costs (at least for the first three years, and by then Tennessee and the other non-expansion states might have seen the error of heir ways).

As an experiment in being good neighbors, this would be well worth doing.


Sent to New York Times

Yvonne Abraham (Laboring over a position, Boston Globe, October 3^rd., 2013:B1) finds the arbitration award to police officers excessive. She derides arbitrators as being split the difference automatons. There is a better way: final offer arbitration.

This is the best procedure to use in public sector bargaining if the parties cannot come to agreement themselves.. In final offer arbitration, the city and the union would put forward heir best and final offers. The arbitrator would hen select from the two positions. This process forces both parties to come up with “reasonable offers.”

I would take strong exception to her acceptance of the norm that “workers all over the city are taking no pay increases, or worse.” This is not what we should expect; we should expect that workers share in the productivity increases that the county has enjoyed. This has not happened since the 1970's. Prior to 1970, employees shared the wealth. Pay increases averaged 4.2% per year. between 1948 and 1970. Since 1975, pay increase have averaged 0.3% per year in constant dollars..

We need to return to a society that values the contribution of all its members.


Sent to Boston Globe

Rating Agencies

The games played by the ratings agencies are a function of the business model they use (Since Relaxing its Bond Rating Standards, S.&P. Has Seen Its Business Increase. New York Times, Sept. 18 2013: B1, B7).

In their model,  the issuers of the financial instruments chose and pay the rating agencies; thus competition will result in a drive to the bottom, with raters giving high ratings to worse and worse debt issues. The problem is that an investor cannot detect a low quality AAA rating until after the issuer has defaulted.

In my view, there are only two solutions. Either, have the raters paid by the purchasers of the instruments, perhaps through a tiny Tobin-type tax, or nationalize the rating agencies and have a government agency carry out the ratings. I would favor the prior approach as competition would encourage accuracy in the ratings.




Sent to the New York Times

Your lead editorial, The Other Targeting Scandal (WSJ, August7, 2013:A12) exaggerates the threat to corporate political speech.

What I want is for corporations to speak with the voice of their owners -- the shareholders -- rather than with the voice of the top managers or members of the Board of Directors.

That seems to me to be a very reasonable position to take. I hope that you will come support such a position.

Sent to Wall Street Journal

Health Insurance and Employment

The past few months have demonstrated the difficulties resulting from continuing to link health insurance to employment.

First, we see some with strong religious convictions, including the Catholic Church, fighting to exclude the coverage of contraception and abortion from the insurance they will purchase on behalf of their employees. Their claim is based on the first amendment "free exercise of religion" clause. The Catholic faith forbids contraception -- a rule much honored in the breach by Catholic families. So providing contraceptive coverage violates that rule. The Department of Health and the Church came up with an awkward compromise, but legislation by private firms to avoid providing such coverage is on-going.

Second, only full-time workers (over 30 hours per week) are required to be covered by employer based Obamacare. Accordingly we see firms working toward reorganizing their work forces so that the normal work period is about 29 hours per week. The result being that firms will not have to provide health insurance to the bulk of their employees. Of course, senior management will continue at 40 plus hours and retain their "Cadillac" health insurance plans.

With the delay in the implementation of the employer mandate, states are free to experiment. It would be very fruitful if scenarios could be devised that removed the employer role in health insurance. Perhaps we could begin by ensuring that the employees of small employers (say less than 50 employees) were required to receive their insurance through the exchanges rather than through employers.

This would be beneficial to small businesses who now pay higher premiums than large businesses and would be advantageous to the 25% of the employees of small business who are presently uninsured.

Working out the details for disentangling healthcare from employment may be tricky. Firms that cease to provide healthcare should increase cash wages so that employees will be able to afford insurance bought through the exchanges. There will need to be some oversight to ensure that this is done.

Taking these first steps with small firms would provide a wealth of experience to guide the process when we dissociate, as we must, health insurance from  employment for larger firms.



Sent to New York Times