Obamacare and the Economy

Background: Today, the Congressional Budget Office (CBO) estimated that the Affordable Care Act (ACA) will cut 2.5 million full-time jobs from the US economy. The Affordable Care Act, also known as Obamacare, has been a point of contention among Republicans and Democrats. The CBO report helped the Republicans’ argument that the ACA will hurt the economy (LEFT). Among other points, Democrats have responded by saying that ACA will only cut jobs voluntarily, as workers no longer must work to keep insurance (RIGHT).

Report fuels Obamacare debate with estimates of job loss

February 4  NBC

“…Congressional Budget Office (estimated the ACA) will lead to the eventual loss of about 2.5 million full-time jobs… Obamacare will reduce the total number of hours worked by about 1.5 percent to 2 percent from 2017 to 2024. Even though total employment will increase over the coming decade, the CBO said, “that increase will be smaller than it would have been in the absence of the ACA.” CBO director Douglas Elmendorf told reporters… “the effect of the Affordable Care Act on labor supply would be a good deal larger than we had thought originally.” … Elmendorf also told reporters that the employer mandate – the requirement that firms offer health insurance to workers– “will reduce the demand for labor in the short term because employers face this extra cost. It is analogous in some ways to raising the minimum wage.” The CBO report said that “workers will choose to supply less labor—given the new taxes and other incentives they will face and the financial benefits some will receive.” …”

Getting the Math Wrong on ObamaCare

February 4  Newsweek

“…Congressional Budget Office (report says) people will choose to cut back their work hours because they will have insurance available elsewhere, because subsidies will offset the cost of insurance… The report concludes that the job supply will grow; even though more people will choose to cut back on their hours, total employment and compensation will increase. Put simply: almost all the folks in that  two million number (which is not two million jobs, but the man-hours equal to two million jobs) will not lose a job, but will choose to leave it or cut back their time committed to work. For example, people who choose to retire early because they would now have insurance available outside of employment can be counted among those two million… The claim that the report shows increased deficits is also wrong… the law, in total, will decrease the deficit… The CBO has reduced its estimates for (the number of people who will obtain insurance) because of the lousy rollout of the Obamacare exchanges. The total impact on insurance coverage by the law, however, has not changed…”

DOD Surplus to Local Police

Background: The Department of Defense has given military equipment from the Iraq War to local police departments. Some outlets point out this equipment will improve police productivity during natural disasters and is given based on need (LEFT). Other outlets discuss the opponents to ‘police militarization,’ who argue it escalates violence and is superfluous to law enforcement needs (RIGHT).

OTM Police Departments Get Surplus Military Equipment

October 28  Over The Mountain Journal

“If a tornado or severe storm makes streets impassable… several local police departments are more prepared to navigate these treacherous roads–thanks to the U.S military… The Humvees are some of the larger items both police departments have acquired through the military, but the departments have also received trucks, rifle scopes, rifle racks, backpacks, sleeping bags, cots and even pots and pans… “Almost anything you can think of that would be benefit the military at some point in time becomes available through this program,”… Law enforcement agencies must make a formal request for the item or equipment and must justify their use of the equipment (based on need)… The program has been a blessing to local law enforcement agencies, particularly during a slumping economy… “

More Defense surplus equipment heading to local police departments; ACLU concerned

Nov 24  Washington Post

“Coming soon to your local sheriff: 18-ton, armor-protected military fighting vehicles with gun turrets and bulletproof glass that were once the U.S. answer to roadside bombs during the Iraq war… The American Civil Liberties Union criticizes what it sees as the increasing militarization of the nation’s police… “One of our concerns with this is it has a tendency to escalate violence”… a disproportionate share of the $4.2 billion… has been obtained by police and sheriff’s departments in rural areas with few officers and little crime… The Albany County sheriff rejected the idea… “Our problem is we have to make sure we are prepared to respond to every type of crisis.”…”

Obamacare’s Effect on Jobs

Background: Many argue Obamacare has led employers to cut employee hours. The White House has denied this and points to a Bureau of Labor Statistics study to bolster its position (LEFT). In opposition, one outlet highlighted certain BLS measurement methods, implying Obamacare could be more consequential than the White House claims (RIGHT).

Little evidence yet that Obamacare costing full-time jobs

October 22  Reuters

“…there is little discernible impact in the employment figures released in recent months, including the September numbers out on Tuesday. The number of people with part-time jobs who want full-time work, for example, was essentially flat in September at 7.9 million. “We are not seeing any effect in the data,” Jason Furman, chairman of the White House Council of Economic Advisers, told Reuters Insider…”

White House ObamaCare Math: 29.5-Hour Week = 30

October 29  Investor’s Business Daily

“The White House sees no sign that ObamaCare is affecting Americans’ work hours. But its data have a problem: Government economists count workers limited to 29.5 hours as 30-hour-per-week workers… ObamaCare’s impact on the work hours of people clocking 30 to 34 hours per week is of particular interest because these workers are already considered part-time… Thus, their hours could be cut below 30 per week without any official rise in part-time employment.”

Default and Wall Street

Background: A new Congressional fiscal year began last week. Politicians couldn’t decide on what to include in the budget, so the government has shut down due to lack of approved funding. As soon as October 17, the US may also default on paying back its debts. Many have predicted this default could send the world into another recession. Several outlets are bewildered that Wall Street’s reaction doesn’t reflect this reality (LEFT). Other outlets imply investors’ reaction is reasonable considering default may not have the catastrophic results many claim (RIGHT).

Little Fear on Wall St. of Default, at Moment

Oct 8  New York Times

“Wall Street is showing few signs so far that it is fearing the financial panic (if) the government default(s)… the market reaction to date has been muted compared with past crises. “We all tell ourselves, ‘This is something that is not going to happen,’ ”… (investors) fear the markets will not signal to politicians the true danger of hitting the debt ceiling until it is too late… Staley (said) a default could create a crisis that would be worse than the 2008 financial upheaval. That is, paradoxically, why markets have been relatively sanguine…”

Default May Not Be a ‘Catastrophe’ After All

Oct 8  The Wall Street Journal

“For the most part, investors haven’t been too worried about the government shutdown, just annoyed. But when it comes to a default, the words “disaster” and “catastrophe” get thrown around… A technical default “would be bad, but not necessarily catastrophic.”… (Investors) won’t flee just because the Treasury is a couple days late with an interest payment.. provided any default were seen as temporary and ‘technical,’ rather than reflecting a fundamental inability to pay, the fall-out should be limited and far less severe than that which followed the collapse of Lehman Brothers…”

Protests in Sudan

Background: On Monday, the Sudanese government ended gasoline subsidies that led to price increases of approximately 100%. Widespread, violent riots have ensued for the last four days, with the internet down for at least a day. One outlet in Sudan is ambiguous as to which side is responsible for the escalating violence. This outlet also discusses Sudanese officials’ rationale for cutting fuel subsidies: US sanctions, a pending economic collapse, and the loss of South Sudan’s oil (LEFT). Many other outlets paint the Sudanese government as corrupt, its use of force excessive, and imply the internet shutdown was the government’s handiwork (RIGHT).

Deadliest day in Sudan’s fuel subsidies protests, nationwide internet acccess cut off

September 25  Sudan Tribune

“…the army was asked to move in against “outlaws”… protesters setting fire in police stations and even buildings belonging to the ruling National Congress Party… Despite government assertions that police did not use force, several eyewitnesses (saw) dead friends or family members with bullet shots on their bodies… security agents in plain-clothes fire live ammunition at protesters and beating some of them violently… Security agents drove away some 20 protesters in pick-up trucks… The Sudanese embassy (said the lift) was due to the US economic sanctions (and) denied imposing an internet blackout… the only alternative would be an economic collapse… Sudan’s oil boom (fueled) growth… (which) came to an end with the independence of South Sudan…”

Death toll rises in Sudan fuel protests

September 26  Al Jazeera

“…Police fired tear gas to disperse hundreds of demonstrators… prompted by a government decision to cancel fuel subsidies… escalating protests are the largest in Sudan since President Omar al-Bashir… seized power in 1989… sources said most of them were shot dead by security forces… “Freedom, freedom,” and “The people want the fall of the regime,” chanted the protesters, many of them students, borrowing the refrain of Arab Spring protests that toppled several governments in 2011… The Internet was restored.. after a one-day cut for unexplained reasons. Social media was filled with calls for fresh protests… The International Criminal Court has urged US authorities to arrest Bashir, who is wanted by the court in The Hague on 10 counts of war crimes, crimes against humanity and genocide in the Darfur conflict…”

Food Stamps

Background: Formerly called food stamps, the US Supplemental Nutrition Assistance Program (SNAP) has recently faced both harsh criticism and great support. Some are calling for tightening reforms (RIGHT), while others imply SNAP requires expansion (LEFT).

On the Edge of Poverty, at the Center of a Debate on Food Stamps

September 4  The New York Times

“…(as lawmakers consider cutting SNAP, some) warn of a spike in “food insecurity” among Americans (who) “look like we are fine,” but live on the edge of poverty, skipping meals and rationing food… the Department of Agriculture released a 2012 survey showing that nearly 49 million Americans were living in “food insecure” households…“People have a lot of misimpressions about hunger in America… it is working poor families, it’s kids, it’s the disabled.” Hunger is often invisible… “I don’t buy milk because it’s so expensive,” she said. “I don’t buy cheese.”… food stamps have long been a cornerstone of the federal safety net… Recipients say the money (that should last one month) typically lasts a little more than two weeks… “You hate to tell your child, ‘You can’t eat this, you have to save it for another day,’”… The cuts would push four million to six million low-income people, including millions of “very low-income unemployed parents” who want to work but cannot find jobs, off the rolls…”

House Republicans Expected to Reform Food Stamps Program

September 5  The Weekly Standard

“The federal government paid more than $74.6 billion last year to provide 46.6 millions Americans with food stamps… an astonishing increase… Four years earlier the comparable figures were $34.6 billion in benefits for 28.2 million recipients… (If SNAP reforms) succeed, benefits would still be higher than they were when Obama took office… (Suggested reforms include) able-bodied adults who are not responsible for any dependents would have to fulfill certain work requirements—including paid employment or participation in workfare, public service, volunteer work, or a qualifying state training program—in order to receive SNAP benefits… “(to) help those in the program build the skills and gain the experience they need to become self-sufficient…” It’s not just the economic hard times of the last four years that have caused SNAP participation to skyrocket. The USDA has long encouraged and rewarded its employees for increasing dependency…”

Emerging Markets Stumble

Background: Last quarter, emerging markets (EMs) fell behind developed economies in contributions to world growth for the first time since the beginning of the financial crisis. In addition, EMs’ currencies have begun to rapidly lose value. These events occurred as the US Federal Reserve began discussing tapering back Quantitative Easing (QE). While QE  previously led investors to pour money into EMs, the Fed’s tapering announcement has led investors back to the US market in expectations of a strengthening economy. Most outlets report EM inflation as a result of the Fed’s most recent tapering announcements. Such outlets argue the announcement is leading to a loss of investors in EMs–a loss that has led to currency devaluation when coupled with EMs’ dependence on dollar-denominated goods (LEFT). Others argue the recent inflation and slow growth in EMs is due to panic, not recent Fed announcements (RIGHT).

The Vulnerability of Asian Markets Then (1997) and Now (2013)

August 20  The Wall Street Journal

“…The Fed is expected to usher in the beginning of the end of its bond-buying program, put in place after the financial crisis to stimulate growth. Whether the Fed makes a move in September or December will ultimately become a footnote in history. What’s important is that this tapering right now looks inevitable… No wonder emerging markets in Asia are freaking out. By any measure, that’s a lot of money that’s going to stop making its way into the financial system. Say bye-bye to the search for yield and those “hot money” flows that propelled those markets higher. Asian emerging-market currencies are bearing the brunt of the pain. In the four months since April, the Thai baht is down 10% against the dollar, the Indian rupee has fallen by more than 16% and the Indonesian rupiah is down 11.4%. The question remains: Is this 1997 all over again? …”

India’s currency is collapsing. Is it Ben Bernanke’s fault?

August 20  The Washington Post

“…Suddenly, the problem facing… emerging economies (is) capital moving out and leaving behind a less valuable currency… The Fed has telegraphed the tapering (of) its QE policies with increasing specificity for months now, so you would expect… for currency and bond markets to have long ago priced in the plans of Bernanke & Co… (This) seems to be a classic tale of how markets can behave irrationally when there is panic in the air. The sell-off in the Indian rupee and Indian bonds leads interest rates up and sparks fear of what it will mean for the price of imported oil and other products… That in turn sparks fears of political unrest and/or higher government budget deficits to contain the economic damage, which in turn make the rupee and Indian bonds even less attractive…”

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