Michael Maiello's picture

    Home Economics With Destor

    So I got paid on the 15th and something bugged me about the number I took home.  It was lower than it was in December and yet it shouldn't have been.  This pay cycle was the first one where I benefitted from the 2% payroll tax holiday, something I believe I touted here before when Obama agreed to it.

    Well, I finally got to sit down with some pay stubs to figure out what happened.  That payroll tax holiday was quite generous and I would love to spend it except that all my stimulus got eaten up.  The biggest offender was our health insurance provider which jacked our rates by more than 100%.  This isn't Obama's fault in that the health care reform doesn't even get implement for another 2 years but it kind of is Obama's fault for not even addressing the issue of rising insurance rates.  See, the problem with health care reform is that it left us all at the mercy of the very same people who were delivering expensive health care coverage and rising rates.  A massive transfer of wealth from working people like me to health care providers like United Health is not stimulus.  This is money I can't put to productive use.  It is, in fact, a tax.

    Another increased expense was my transit check because New York raised subway and bus fares for the third time in as many years.  Public transportation is a service I'm happy to pay for but we all have to get to work somehow and this does, in effect, take money out of the consumer economy.  My costs went up by about 12%.  I can only assume that people elsewhere in the country have seen many local service fees go up as local government struggle to pay their bills.  It's a serious problem if every small tax cut by the government is just going to get eaten up by DMV fees, trash collection fees or whatnot.

    So all in all I had one triple digit deduction hike and one double digit hike.  In exchange I got 2% off my payroll taxes.  That's not stimulus.  I have less money to spend in January than I did in December.  Thanks, Mr. President!

    Okay, it's not fair to blame him for this, but you have to realize that when he heads into the election claiming he gave 90% of the country a tax cut that people aren't going to believe him.  I got his tax cut but I only know because I looked.  I still have less at the start of this year than I did at the end of last. That's reality and Obama needs to face that for most people that's the case.



    What we really need to know here is how many paystubs look like yours this month.  If the answer is "most," then the stimulative effects of the tax deal will be much as the skeptics predicted: slim to negative.  Will they also prove correct about the pressure that this deal could put on social insurance down the road?

    Yeah, one of the reasons I posted this was to see what other people around here are experiencing.  Looks like Donal's paycheck went up, but not at the same rate as his expenses.  I suspect that given how we understate inflation this will be true for many.

    If that's the case for most and there's no real stimulus out of this then it doesn't bode well for Social Security long term since its solvency really depends on growth in wages more than anything else.

    I think the focus on how accurate measures of inflation are (which is really what that debate is about) misses the big picture.  US income inequality has been rising since around 1970.  Whereas we should probably look like Canada (and the EU), we look like Mexico and China.  The kvetching about how much geometric weighting and hedonics bias inflation measures is nothing compared to the fact that we've managed to turn the clock back to 1929 with respect for income inequality.

    I would weigh in on how recent policy changes have affected my income, but I won't know precisely until later on as I'm self-employed.  As long as it doesn't go down after taxes, I should be pretty much where I am now since my costs are not rising.  In the meantime, I'll be waiting patiently for Wikileaks to inform the world about who's been robbing the nation most diligently in recent decades.

    We got the insurance hit last year - my paycheck went down then, and just came back up now. A few months ago my brother was blaming Obama for his company switching to an HSA plan.

     how we understate inflation 

    So crucial to so much of the fucking that the working/middle class has gotten ever since Reagan invented "dynamic" scoring...(Well, not Reagan, actually, he was too addled to invent anything, but one of his minions)

    BCBS is really jumping on the "lets fleece the working folk and blame it on Obama" bandwagon. I just happen to have my 2011 Open Enrollment brochure from my hospital employer in front of me.It states:

    Changes in 2011 resulting from the Healcare Reform legislation signed into law in March 2010. These changes are listed below.

    Understanding the Impact of Healthcare Reform on (facility) benefits:

    Lifetime Limits eliminated - Lifetime limits on the dollar value of your (facility) benefit coverage will no longer apply.

    100 percent coverage for preventive care - Preventive services include things like annual physical exams, well woman exams, or immunizations for you and your children.

    My premiums for family coverage (since I work part time) went up $120 bucks a month. I was already paying over $500 a month as it was, now it is $620.

    Imagine all of those folks, not as politically informed as we are, seeing their insurance going up astronomically and the insurance companies openly blaming healthcare reform (and Obama by extension) for it.

    The thing that really ticks me off is that the above measures will save the insurance company money. They really think we are stupid. Getting preventive care so you don't get really sick and use more healthcare cost more?

    This stuff eerily reminds me of gas stations fradulently raising their gas prices every time there is unrest in the mid-east (or oil spill for that matter).

    Demonstrating the flaw in going only half way towards making health care insurers a regulated utility.

    Thus, imposing costs, and establishing only the vaguest control on premiums (setting a medical cost disbursement level, whether 80 or even 85%) without frankly and vigorously seizing full control of premiums leaves the public open to just such bullshit.

    Of course, opening the VA to all (thus single provider) or medicare to all (thus single payer) would obviate these problems through the supposedly sacred free market competition principle.

    That, somehow, is "off the table"...


    My paycheck increased about twenty dollars per two weeks, but my rent went up $40/month and the landlords now demand that we buy their crappy renter's insurance with them as a $100K beneficiary, so that's another $10/month, and net/phone/tv went up about $20/month, and electrical rates are going up and I've already mentioned food prices.

    Are they actually allowed to demand that you buy insurance with them as the beneficiary?  I have renters insurance too but it protects me.  It's up to my landlords to insure themselves (though that cost is no doubt factored into my rent).

     to demand 

    Ahh, yess, the beauty of free men having a meeting of minds, the willing buyer and the willing seller in the marketplace, blah blah blah.

    The key here is the verb "allowed"

    They are not disallowed, therefor...I wonder if in a rent controlled environment this would not be seen for what it is, and attempt by an owner to reduce his own incurance premium by permitting him to raise his deductible at no risk, by cleverly shifting the cost to his renter?

    They threatened to toss us out if we don't get it. I'm frankly annoyed enough to start looking around again.

    They threatened to toss us

    The beauty of contract..especially where there is no real equality between the parties, altho, as you say, you can thell them to shove their place.  I understand that in the very depths of the recent recession (ed note: these aren't the depths?) the balance of power between landlords and renters had shifted some.

    If so, it has shifted back

    Yeah, they were desperate to get us in here a year ago.

    Landlords count on the high transaction costs (economic, psychic, etc.) of moving once they have your ass installed.

    Isn't that called an 'adhesion contract'?

    Yes and no...Let's start with the company store/sharecropper model, where your entire economic wellbeing is at stake if you don't agree.  That's clearly adhesion.

    Modifying the terms of occupancy when the lease comes around, absent a poicy of just cause eviction in your jurisdiction, maybe not so much.

    I guess if you are in a duplex and your landlord wants to put in a clause that you have to walk his dog and scoop the poop, some judge might give you a break, but who know, maybe not.

    It's spelled justice, but it really means "just us"..

    Oh Destor, it is fair to blame the President. He got the health care bill he wanted, and it left the insurance companies in charge. He wants to reduce the deficit, a strategy that shifts costs from federal to state and local governments. He supported the Republican side in the so-called bipartisan tax compromise, which further shifts the cost of managing this country from those who can afford it to you and me. 

    There's plenty of blame to spread around, but "Yes, we can" blame the President.

    He seems to have made the calculation that he can skate on the failure of his stimulus to reduce unemployment as long as he can point to macrolevel "growth"

    I guess he counts on the unemployed being too discouraged to vote, just as they are too discouraged to find work. Besides, (heh-heh) who're they gonna vote for?  Nader?

    Hell, I bet a quarter (ed note:what a sport!) he's right.

    Seems fair to blame him (or at least the Democratic Party) for failing to be incredibly clear that cutting payments and services at the federal level is just going to move the costs to local governments. It gets said, but for some reason the message gets lost in the messaging.....

    On one hand it's stunning that everybody doesn't get this.  The money has to come from somewhere.  The New York City subway, as with the subways in all major cities, are subsidized to one extent or another by federal funds.  If you cut those funds the local administrators will raise your fares.

    But, then... none of my federal representatives made a peep about this.  I didn't seek Chuck Schumer out there trying to bring home more transportation funds to stop the fare hike.  I did see him out there pulling teeth out of Finreg, though, so some local matters do get his attention.

    True. I always wonder why nobody seems to point out that when it comes to the financial stuff, government is really a giant co-op. Rich people can afford to buy one of everything, poor people not so much. The same people who take advantage of Walmart's low, low prices ought to understand that government is trying to offer them the same deal they get from Walmart.

    But, as JR points out below, they just....don't.

    Schumer now, fighting Christie over Port Authority priorities:


    Last year, with Dodd, asking for $ 2 billion:



    'Public Transportation Preservation Act of 2010’

    To provide emergency operating funds for public transportation.


    Schumer requested stimulus funds for transit that was expressly not allowed to be used for debt or debt service and thus would not help the MTA avoid an economy slowing fare hike.


    Partly it's the ridiculous rules around stimulus funds but I notice Schumer tends to deliver more for other interests.

    But, then... none of my federal representatives made a peep about this.

    You mean the ones who have cars and drivers who take them where they want to go?

    payments and services

    I forget who it was on the blogosphere was just alluding to the fact that war on fed employees is a backdoor war on people of color, and, of course, those services, like the subway, are patronized by whom?

    There is little doubt that the tea party antipathy to Health (Care) Insurance Reform is informed by a conviction that it is a subtle redistributive program, seeking to ameliorate the lives of "others"

    Which, of course, goes a long way towards explaining the otherwise perplexing conundrum of why so many lumpen proletariat vote counter to their actual economic interests--it's not that they can't count, it's that when they count they impute a discount for anything that might also redound to the advantage of anyone not white.

    I can't imagine New Yorkers feel that was about our beloved subway.  It's a truly equal opportunity delayer!

    I bet they never would have cut the A train to the pitiful late night frequency it now runs if Duke  Ellington were still alive!

    Unless you are paying 100% of your health insurance premium via payroll deduction then United Health also took part or all of any raise you may have reasonably expected.  

    From an employers perspective, how much you are paid includes what are deceptively described as the employer's portion of FICA, insurance premiums and all the other benefits we have been misled to believe are not part of our pay.  If the cost of providing those benes goes up, base pay raises go down.

    From an employer perspective wages have not been stagnate for the past few decades, they have actually gone up quite a bit.

    When employers inevitably want their share FICA reduced by a matching 2%, that will be an actual pay cut.  

    When employers scale back or drop health insurance coverage; that is a pay cut.  

    When employers scale back or drop pension plans in favor of 401(k) and/or profit-sharing plans; that is a pay cut.

    A reminder that classic, honest conservatives expect state and local taxes to go up if they were to get their dream to minimize the federal government--they are for doing things locally, not sending the money to Washington and then having the Feds give it back after they take their cut for maintaining the bureaucracy. Except for defense, of course.

    But yeah, as to the game of robbing Peter to pay Paul and then saying you cut the taxes, it usually doesn't work out as looking like any more money for most people. Even if you live in a run down low tax locality, you end up paying for a lot of the missing services yourself from private cos. if you want quality of life. It's why those special tax rebate checks are so popular, they are actual cash in hand, looks like the recipient is getting actual money.

    How do you like how we are paying for unemployment insurance:

    Speaking of robbing Peter to pay Paul, how do you like how we are paying for unemployment insurance:


    Among other repercussions, that will probably ironically result in layoffs from state government jobs.

    Jubilee 2012: Debt forgiveness for ourselves, by ourselves...

    Good idea.

    But so quick on the reply, you didn't let me edit my mistakes-waaaah.

    I was going to add more on the tax rebate check trick. Politicians like those, even if they are little, because they get the credit for an actual check that the recipients actually see in hand, so it seems like they really did get some money back. But don't be fooled. Here's how Bloomberg has been doing that past years with property tax for owners of single family homes that live in the homes. He sends 'em a refund of $400. (With an actual letter from him saying "here's your refund I promised!") Then the next year he orders re-assessments, so your property taxes go up, so he can send you another refund....

    NYC tax structure has been blatently favoring the single family home model over the tenement for generations.

    I think people who don't like other people (trans: want a curtilege to defend their manse) should have to go to humanity avoidance education classes and be rehabilitated.

    I'd really love to own property in NY but unless you're rich and buy modestly it seems that property taxes would price you out even if you've paid off the mortgage.

    No property taxes in NYC are actually quite low compared with many other cities, including the surrounding tri-state. Compare with someone in Florida and they laugh out loud., it's like 4 or 5 times as much there. They don't use it to fund the schools like nearly everyone else does Don't forget we have city income tax, which virtually no one else does and like one of the highest sales taxes around, including quite a cut for the city, plus tons of business taxes and fees (like that unincorporated self-employed person tax to squeeze more out of  free-lancers or the fire extinguisher inspection fee for incorporateds, or gignormous hotel and parking taxes...etc. etc.) They have other ways to torture homeowners. if you're a homeowner and they decide to replace your sidewalk, you can get a bill for half your annual tax bill with not much recourse-not exactly a nice surprise for someone retired on fixed income. Or those permits for getting stuff fixed that needs fixing.....

    You don't have to believe me, destor, it's very easy to check for yourself, the Sunday New York Times real estate section, page 3 sales and lots of other pages, always tell you the taxes, and they always put a mix of  homes from around the region and of high and low values. You'll see how much higher the real estate taxes are outside the city line, especially in those locales with the preferred school districts. But again, don't forget, there aren't a lot of the other city taxes there, including lower sales taxes.

    There is one very specific reason. They want ti keep a mix of working and middle class homeowners with investment in the neighborhoods to be living in the boroughs, they don't want them to have only landlords who don't live there and don't care about the neighborhood. Manhattan, being sooo high dollar and so desirable, doesn't have the same problem of absentee landlords seeing a great investment in building buildings for commuters to Manhattan. And it's not such a large number of people, they would never get that much from raising them and they would lose a lot.

    Of course, get yourself in a mortgage for life and there's no guarantee somebody some day will change the property taxes, and that is a real serious consideration for retired people on fixed income who are lucky enough to have succeeded in a plan to have a paid-off mortgage. They are screwed if property taxes change radically .

    What I don't get is the reason MTA Port Authority (edited after published first time) has problems. The tolls are shockinglly high, just really shocking, have been for a long time and go up all the time. I can't imagine how all the people that use the brridges etc. regularly afford them. It's funny how people from elsewhere expect to be picked up at the airport if they know someone with a car here, to save cab fare. Not realizing that the tolls to pick them up cost their friend nearly half the cab ride. Millions and millions and millions of those really high tolls paid every day across the tri-state area....

    I see what you're saying.  The city income tax is pretty darned high.  But we went looking for places a few months back and found pretty high monthly tax bills but long term abatements.  I worry what happens when the abatements run out.

    I think this is the right response.  If the states aren't too big to fail, what is?

    This isn't Obama's fault in that the health care reform doesn't even get implement for another 2 years but it kind of is Obama's fault for not even addressing the issue of rising insurance rates.

    That's not true destor. It is Obama's fault. Many of the provisions have already been implemented, and we are already seeing the pinch of their cost. Here is a timeline that you can use to track them:


    Most of these provisions cost a great deal of money. If an insurance company can't deny coverage to children with pre-exiting conditions, for example, then they are going to have to pay out more in benefits for all those new policy beneficiaries they are being forced to take on. They have to get the money from somewhere, and where they get it is from higher premiums, higher deductibles and diminished benefits.

    Obama knew these things were going to cost a lot of money, and he had to make some choices about whom the charges would be imposed on.

    Is he charging Jamie Dimon and Lloyd Blankfein, and their vampire army in the financial sector? No. Is he charging Bill Gates? No. Is he slicing some of the extras off the profits and exhorbitant compensation packages of the suppliers, executives and coddled professionals in the ravenous and wasteful health-industrial complex? No. Is he doing it by putting intense comeptitive pressure on the insurance companies and private sector health providers in the form of either a not-for-profit public insurance option or a public provision component, and thereby forcing them to deliver more for less, or go belly-up? No. Is he getting the money by forcing health care complex CEOs like Angela Braly and H. Edward Hanway to accept smaller salaries than the $10 million plus fortunes they pay themselves out of the pockets of sick and dying Americans? No. Is he charging Big Pharma? Is he forcing them to make do with fewer yachts, third homes and expensive junkets for the doctor-whores who pander their wares onto the drug-ingesting public? No, he made a backroom deal with Big Pharma and left them completely off the hook.

    This is America. That means the rich get everything they want, and so if the rest of us want to assist the needy, the charges have to fall on ordinary schmucks like you and me.

    If the nation's richest and greediest citizens had formed an actual cabal and said, "How do we drive a wedge between the middle class and the needy?, they couldn't have come up with a better approach than that followed by the hapless Barack Obama.

    hapless Barack Obama

    As if...Hapless gives him too much credit.

    Well it is depressing and you're right, he's not ever going to be able to sell the middle class on broad benefits for the working poor again.  It's not just the class divide, it's that people can't afford it.  I should probably have added this to the original post but when the executives sent a note to the rest of us in late November warning us that our premiums were going to rise, there was a snide comment about Obama's attempts to "reign in costs."  I assume that will stick with some people who looked at their stubs with sticker shock this month.

    I've been a broken record on this issue but the mistake, and this was so frustrating, was that Obama and the party set out with only the goal of universality.  Any plan that covered the uninsured was acceptable.  This was way too modest a goal.  It should have been about getting everyone more care for less money.

    They are so damned unimaginative and small-minded.  Or, as you say, they have other goals in mind entirely and maybe they're quite creative about getting them accomplished.

    reign in costs.

    Worse than snide..."rein in costs" is snide. the us of "reign" is clearly meant to implicate the tea party meme of Obama as king...

    It should have been about getting everyone more care for less money.


    Precisely.  But that's not how Harvard liberals view the world.

    Perhaps. On the other hand.....

    As I was just reading his latest piece, and it seems to me that "getting everyone more care for less money" (though destor actually should have said "better care for less money" because iatrogenic complications are a major part of the cost problem these days) has been Dr. Atul Gawande's main interest for a least a couple years now, and then I saw your comment. I decided to look his bio up and turns out he is M.D. from Harvard Medical School, and M.P.H. from the Harvard School of Public Health. I know what you mean, just razzin' ya; just had to share that it turns he is another Hahvahd guy.


    The reality is that if we were going to implement a national health care system as you describe, taxes for just about everyone would have to go up.  The notion that just the wealthiest of this country could foot the bill is unrealistic, to put it nicely. The rich and the middle class would have assist the needy.  And that was not going to happen.  As Destor's blog points out, people are concerned about what they taking home at the end of the day. 

    I'm all for a national health care system and would be willing to accept higher taxes to achieve it.  But I am in the minority.  Obama's challenge was to get some HCR implemented that was budget neutral (in large part because of the stimulus bill that had recently passed).

    So one passes higher insurance costs onto the consumers or higher taxes onto the workers.  People are still complaining about helping the "needy."

    Then again maybe you think it is only the top 1% in European countries that pay income taxes.

    Show me the math Another Trope.  But please note that I also called for using government options to reduce costs, not just expand access.  The United States spends a huge amount per capita on health care in comparison to its peer developed nations:


    and gets worse outcomes in some cases than countries that spend much less per capita.   My view is that the reason for that is that the private US health system faces inadequate cost-cutting pressure from either competition or public regulation.  Far too many resources are devoted to enriching the participants in the system.   I'm convinced we could all be getting much better health care for much less money spent overall.  But we need to drain a lot of waste, exploitation and mindlessly uneconomical profiteering from our racketeering system.

    As for whether taxes go up or not, the thing people should be focussed on are their total expenditures on health care.  If my taxes go up but my health insurance payroll deductions go down, and my out-of pocket deductibles go down or are eliminated, then I might easily be a net economic gainer.  But my guess is that, done right, taxes wouldn't have to go up.

    The reason Obama did not go further with health care reform and take bolder steps to cut costs is simply the political pandering to nfluential lobbies.  He views all of the people who are making money off the system in its current form as "stakeholders", and wanted to reform the health care system while making sure all of those people get to make as much money as they were making before.

    My view is that the reason for that is that the private US health system faces inadequate cost-cutting pressure from either competition or public regulation.

    That very well might be one reason, but I think another reason might be that "an ounce of prevention is worth a pound of cure." Most of our poor do not get that ounce of prevention, so we end up paying for the pound of cure in the ERs.

    I agree with you that about us able to get more with less, the need for competition, etc.  But the positive outcomes would occur over time.  Prices wouldn't immediately come down in any noticeable way.  In order to put the government into the game and make it possible for low-income people to participate would require money up front.   It would require an entire new health care structure to be implemented nationwide which from a bureaucratic point of view is mindboggling in its scope.  If the goal was just to get pricing down so that more could find it affordable then that would be a little less expensive.  But that would still leave people uninsured in the short run.  Basically it would be the same system we have now except the government was one of the competitors. 

    And I agree that what people should be is focused on their total expenditures.  But one would have to first get people to agree to a tax hike with the promise that down the road, because of increased government involvement, they would be seeing more money at the end of the day stay in their pockets.  A tough sell.  Plus the short-term increase for many in the middle class would not increase the quality of their health care, but help provide health care to the lower-income households.  So it would have to been basically in part a subsidy as built within the system as opposed to a feature of premiums which has the potential to decrease over time.   

    And one has to keep in mind that this was occurring right after the stimulus and during bad economic times.  Going into even greater debt or raising taxes to pay for a new national healthcare infrastructure was about as politically impossible as they come.  And that was without the huge special interests spending a dime basically on fighting it out in the media.  Even with them standing on the sidelines for the most part we still had death panels, etc. 

    It's true that Obama sees those special interests as some of his "stakeholders," as it is also true that Obama had no interest in removing the private for-profit sector from the health care system.  But the nature of the health care system that emerged had to do with a lot of factors, one of the most important being the Senate.  Had there been the political will in the Senate to push forth a public option, it would have happened. But one can argue that there was not enough grassroot support nationally for going down that path - i.e. people were not willing to sacrifice a little in the short run for the potential payoff in the long run. Had Obama been more bold and pushed for something more along the lines of what you are calling for (which I think is a great idea), it is very likely that nothing would have been accomplished and Obamacare would have gone the way of the Clintoncare.  Of course that is one view of it, others can make the argument about rallying the people to make it happen via the bully pulpit, etc.  This particular debate has been going around and around here and eleswhere for the blogosphere.  None of the sides can really prove how things would have gone down had Obama did this or that differently along the way.

    Ultimately, I'm concerned about what I get to keep at the end of the day.  Taxes would have to go up to fund national health insurance, sure.  But the insurance premium taken from my check every two weeks isn't fundamentally different than a tax.  So the question becomes: would taxes go up more than what I already pay in premiums or less?  The whole objection that taxes would have to go up in order to fund government health care would only make sense if the current system was free.  But in essence most of us already pay a health care tax.  It pays C-level bonuses at health care companies.

    I agree with you. 

    But it was the fact that most people already have some kind of health care insurance that in part made it so difficult to sell significant reform.  Among the features that was part of the national debate was that for these folks that health care tax pay for their own household's health care.  Reform measures had to be sold on paying a "tax" that also provided to health care for other households.  Since we weren't getting rid of the private sector, we would still have the executive bonues, plus increased subsidies for the lower-income households.  Most people wouldn't go to the lengths you would to calculate whether you going to come out better at the end of the day, which wouldn't have begun to show up until after some time.  People in general don't like their health care plans, nor do they like the executive bonuses, but they are more afraid of losing what little they do have in the hopes of something better.  Few people, left right and center, don't trust the government to do a good job that they were in effect willing to trust them to go down a national healthcare path, at least not enough so that they didn't put any pressure on their Senators.

    What's funny about that is that the premiums you pay for your insurance don't just go to your household's health care needs.  In a good year where the actuaries did their jobs right, your health care costs come in way below your premiums and the rest is either profit for the insurance company (up to regulated limits) or it's used to cover your neighbor who ran up costs in excess of premiums.  If people want a system where their money goes to their health care and that's that... well... that's not the current system!  It's also an entirely inadviable system.

    Your comments on HCR are a reason I believe the Republicans truly have no interest in repealing the Affordable Care Act. Yesterday was political theater, period. They knew it would never get past the Senate or Obama, so they got to stand up and yell and scream loudly so their base could hear.

    In the end, the Health Insuance companes will make a fortune on this. The GOP would never stand in the way of that.

    I agree. If the Republicans controlled both houses of Congress, they would have changed their agenda to one of modifying the health care law, not repealing it.

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