Wednesday, December 22, 2010

And Now For This Commercial Message

Check out this great new website -- The newsle service allows you to track news, the best news, about people. It works on both Facebook friends and on public figures.

This is my son's brainchild, along with his Harvard roommate, hence the full disclosure in this posting's title.

As Axel says, "The goal of Newsle is to make sure you never miss an important story about a friend, professional contact, or public figure you care about."

Go ahead, plug your favorite academic, businessperson, investor, or politician into it and see what news they are making or what is being said about them. Or maybe an ex-boyfriend or girlfriend, or the person who is threatening to sue you. I thought the CEO of BAA (operator of Heathrow airport) would make for an interesting search, which it does.

Key thing is newsle's ability to follow lots of people, with a very wide source of news, automatically for you.

Anyone have any commercialization ideas for this? Applications?

Sunday, December 19, 2010

Chaos at Heathrow

Due to "heavy" snow -- about 7 inches, as far as I can tell -- and freezing conditions (15 degrees F tonight) -- the situation at Heathrow airport is chaotic at best. Some poor folks will be spending their their second or even third night at the terminal, with flights having been cancelled since Friday on. No flights left Saturday, and very few today.

What a mess.

Perhaps the chaps who run Heathrow should take a visit to Logan or even better O'Hare. Six to seven inches of snow will not shut them for two days! But, there is the question of optimal investment in snow plows. If these events are rare at Heathrow, they should have less capability. Offsetting this, however, is the very large cost imposed in those rare circumstances. The concept of insurance comes to mind.

And the rarity of the circumstances seems to be changing! Last December Heathrow got belted with snow as well. Some government official was quoted as saying they were consulting with their chief science officer. I would love to hear that discussion.

It does make one wonder how well the climate models do in regard to regional effects.

Wednesday, December 15, 2010

Where's the Outrage Over the Tax Bill?

When the Democratic Congress was loading the health care bill with sweeteners such as the Nebraska Medicaid exception (the Cornhusker Kickback) and other beauties like money for a new hospital in Connecticut, in order to buy votes, there was a nationwide outrage. Much of the pork, of course, remained, and one of the things I really don't like about the ACA is the amount of pork it spreads around. But there was outrage, especially from Republicans, and it did have some effect.

Now we have a Republican goal, extension of the Bush tax cuts, and the bill that emerges....surprise, surprise, it has a bunch of pork in order to buy support. Not only extension of unemployment benefits, but ethanol subsidies, investment credit, extension of child and marriage benefits....and the huge surprise of a one year reduction in the FICA payroll tax!! Where did that one come from? That I have to say makes no sense to me at all. We do not need more Keynesian stimulus financed by debt, and there is certainly no significant supply-side incentives created by a one year tax break that does not lower the marginal rate for anyone earning above the social security maximum earnings, a bit over $100,000. This one is truly a giveaway.

It really does seem that the Democrats and Republicans together are just trying to one up each other in how much money they can pretend to throw back to the taxpayers. Shameless.

But where is the outrage that we saw with the pork-laden health care bill?

Ah, hypocrisy. If one worries too much about all the hypocrisy in the world, one could work up to a real artery-buster.

If Obama wants to, I think the opportunity is there to show some real leadership by re-shaping the tax system.

Tuesday, December 14, 2010

Social Security vs. Individual Mandate: Constitutionality?

It is interesting to ask the question of constitutionality about the Social Security system in the United States: Social Security seems on the surface to be a requirement that everyone purchase retirement and survivors' insurance, so how did that pass muster with the Supreme Court?

Well, a little study of history shows that this was a big controversy back in 1937, when the Supreme Court took the case Helvering v. Davis. The Court ruled that Social Security was constitutional under the Tax and Spending Clause, Article I Section 8 of the US Constitution.

The US government, in that case, went to great lengths to argue that Social Security was not an insurance plan. It was just public policy to provide for the general welfare of the country, and it was supported by a tax system not directly related to the specific policy. The Court agreed.

Note the difference with health care insurance today, and the individual mandate. It seems pretty clear that the individual mandate is to buy insurance -- a real contract with a private company, not a "maybe we will give you something when you retire" sort of scheme with the Federal government (again, the government argued that social security was NOT an insurance contract in the general meaning of that phrase). And you could avoid social security by not working and not paying the tax. The penalty of the individual mandate is a funny kind of tax for sure, which you avoid by engaging in the activity.

Remember that the individual mandate exists to avoid folks gaming the system, waiting until they get sick to buy insurance. Such behavior results in pre-exisiting conditions clauses, something most of us find very disturbing. But there are other ways around this problem, as in requiring insurance companies to issue to anyone who has continuous coverage (see my earlier posts). To save the folks who still game the system and end up sick and at our doors begging for mercy, there could be a high risk pool (as there now is) funded by general tax revenues...or even a tax on the insurance that the rest of us buy. Such a plan would seem to be on safer constitutional ground as it does not mandate that anyone do anything.

Such a plan is not without its problems, and would still be subject to gaming unless the high risk pool carried a significant cost, as in substandard coverage. Such a plan also would have would have made the price tag of dealing with those who try to avoid buying insurance real obvious, with the cost to everyone clear in the taxes they paid.

So in order to get the Bill passed (and I think to be able to say that the US has mandatory coverage) the Administration opted for the tactic of making everyone buy insurance, thereby avoiding the price coming to the government and having to be funded by taxes. And we are in the midst of a long protracted legal battle -- with declining support in the public and in Congress for the bill. Again, go back to the Social Security court fight -- there we had increasing public and Congressional support for the legislation.

Monday, December 13, 2010

Individual Mandate Ruled Unconstitutional

Here is but one choice quote from the judge in Virginia (see here for the whole decision: "The use of the term "tax" appears to be a tactic to achieve enlarged regulatory license."

There were a couple main parts of the decision; this quote was a summary of why the penalty for not buying insurance cannot now be construed as a tax, and therefore constitutional under the taxing power.

The main part of the decision lays out the arguments for why inactivity cannot be regulated under the Commerce Clause, and why regulation of inactivity cannot be construed as constitutional under the Necessary and Proper Clause.

All in all, a very intriguing development. It concerns me that so little thought was put into this issue during the legislative process -- recall Nancy Pelosi's comments almost questioning someone's intelligence for even thinking that the law might be unconstitutional. "When asked House Speaker Nancy Pelosi (D-Calif.) on Thursday where the Constitution authorized Congress to order Americans to buy health insurance--a mandate included in both the House and Senate versions of the health care bill--Pelosi dismissed the question by saying: “Are you serious? Are you serious?”"

Was so little thought also put into other elements of the health care bill, as in the employer mandates?

I think our country, through employers primarily, are in for a major regulatory burden because of this law. And it did not need to be that way.

See posts below on thoughts of avoiding the individual mandate. There are ways to get much of what we need to do in health insurance reform without an individual mandate. We will have to, however, be willing to face the consequence that someone who willingly goes without health insurance will be put into a high risk pool with limited coverage.

Admirers of European socialist-leaning democracies and health care reform zealots will bemoan the lack of Federal power in prescribing behavior of US citizens. I view this decision as a firm reminder that some principles stand above even health care -- as in, our system of a constitutional democracy whereby the Federal government has limited and enumerated powers. As much as we might like the ends here, the means are simply not justified, and that is a more important principle than getting health care for all through an individual mandate.