Things to Read on the Evening of May 7, 2014

May 7, 2014

Should-Reads:

  1. Richard Rubin and Margaret Collins: Early Tap of 401(k) Replaces Homes as American Piggy Bank: “The Internal Revenue Service collected $5.7 billion in 2011 from penalties, meaning that Americans took out about $57 billion from retirement funds before they were supposed to. The median size of a 401(k) is $24,400 as of March 31, with people older than 55 having $65,300, according to Fidelity Investments. Those funds can disappear quickly in retirement, and the early withdrawals indicate that the coming retirement crisis could be even more acute than expected…”

  2. Simon Gilchrist et al.: Monetary Policy and Real Borrowing Costs at the Zero Lower Bound: “For the ZLB period, we identify two policy surprises: changes in the 2-year Treasury yield around policy announcements and changes in the 10-year Treasury yield that are orthogonal to those in the 2-year yield. The efficacy of unconventional policy in lowering real borrowing costs is comparable to that of conventional policy, in that it implies a complete pass-through of policy-induced movements in Treasury yields to comparable-maturity private yields…”

  3. Mary C. Daly and Leila Bengali: Is It Still Worth Going to College?: “Earning a four-year college degree remains a worthwhile investment for the average student. Data from U.S. workers show that the benefits of college in terms of higher earnings far outweigh the costs of a degree, measured as tuition plus wages lost while attending school. The average college graduate paying annual tuition of about $20,000 can recoup the costs of schooling by age 40. After that, the difference between earnings continues such that the average college graduate earns over $800,000 more than the average high school graduate by retirement age…”

  4. Charlie Crist: “I left the Republican Party because the Republican leadership went off the cliff… so unfriendly to the African-American president. I’ll just go there…. Because I was a Republican, I saw the activists and what they were doing, and it was intolerable to me… and I saw how the party–some of them–were treating the African-American president and I couldn’t take it anymore. That’s a big part of why I left the party…”

Should Be Aware of:

  1. Alex Wayne: Insurers Say Most Obamacare Customers Paid First Premiums: “As many as 90 percent of WellPoint customers have paid their first premium by its due date, according to testimony the company prepared for a congressional hearing today. For Aetna, the payment is in the ‘low to mid-80 percent range’ the company said…. Health Care Service Corp… said that number is at least 83 percent. Making the first monthly payment is the last step to confirm enrollment in plans sold under the Patient Protection and Affordable Care Act, and Republicans have made the question of how many paid a line of attack on the law. ‘What you have here is very solid first year enrollment, no matter how you slice it,’ Dan Mendelson… of Avalere Health… said…. ‘This thing is, at this point, well entrenched.’… Republicans on the House Energy and Commerce Committee… publish[ed] a report last week claiming only two-thirds of people who signed up had paid their first premium. ‘That was just foolishness on the part of the committee to even publish that number because it was completely out of context’, Bob Laszewski, an insurance industry consultant… said…. The Republicans… surveyed insurers only on payments received by April 15. At least 3 million people signed up for coverage that didn’t begin until May 1 or later; their premiums weren’t due until at least April 30…”

  2. Daryl Gregory: Afterparty: “Dr. G. had followed me out. ‘You’d be better off staying with her and finishing your sentence inside,’ she said. ‘Less temptation. You were staying clean, Lyda.’… ‘Listen to yourself,’ Dr. Gloria said. ‘You’re pissed off. Have you considered that you’re overreacting to the girl’s death? You have a blind spot for little lost girls.’ ‘F– off.’ ‘Lyda—’ ‘I’m responsible….” A car pulled up to the curb, a decrepit Nissan hybrid…. Bobby was a could-have-been-handsome white boy…. A former ward-mate, and batshit crazy. But a good kid. More importantly, he lived in Toronto, and he owned a car. ‘You look all healthy,’ he said…. He opened the passenger door for me, then hustled around to the other side. Dr. Gloria said, ‘I can’t protect you if you don’t listen to me.’ ‘Then stay here.’ ‘Oh, you don’t get away that easy.’ Dr. Gloria’s wings unfurled from her back with a snap, and the world vanished in a blaze of heavenly radiance. I winced and looked away. ‘Lo, I am with you always,’ she said. I opened one eye. She pulsed like a migraine aura, throwing off megawatts of holy glow. Then her wings convulsed, and she was airborne…”

  3. Robert Reich: The Six Principles of the New Populism (and the Establishment’s Nightmare): “More Americans than ever believe the economy is rigged in favor of Wall Street and big business and their enablers in Washington. We’re five years into a so-called recovery that’s been a bonanza for the rich but a bust for the middle class. ‘The game is rigged and the American people know that. They get it right down to their toes’, says Senator Elizabeth Warren…. Which is fueling a new populism…. Who made the following comments? (Hint: Not Warren, and not Bernie Sanders.) A. We ‘cannot be the party of fat cats, rich people, and Wall Street’. B. “The rich and powerful, those who walk the corridors of power, are getting fat and happy…’ C. ‘If you come to Washington and serve in Congress, there should be a lifetime ban on lobbying.’ D. ‘Washington promoted moral hazard by protecting Fannie Mae and Freddie Mac, which privatized profits and socialized losses.’ E. ‘When you had the chance to stand up for Americans’ privacy, did you?’ F. “The people who wake up at night thinking of which new country they want to bomb, which new country they want to be involved in, they don’t like restraint. They don’t like reluctance to go to war.’ (Answers: A. Rand Paul, B. Ted Cruz, C. Ted Cruz, D. House Republican Joe Hensarling, E. House Republican Justin Amash, F. Rand Paul.) You might doubt the sincerity behind some of these statements, but they wouldn’t have been uttered if the crowds didn’t respond enthusiastically–and that’s the point…. And it’s not only the rhetoric that’s converging. Populists on the right and left are also coming together around six principles: 1. Cut the biggest Wall Street banks down to a size where they’re no longer too big to fail…. 2. Resurrect the Glass-Steagall Act…. 3. End corporate welfare–including subsidies to big oil, big agribusiness, big pharma, Wall Street, and the Ex-Im Bank…. 4. Stop the National Security Agency from spying on Americans…. 5. Scale back American interventions overseas…. 6. Oppose trade agreements crafted by big corporations…”

And:

Already-Noted Must-Reads:

  1. Sarah Kliff: The former Obamacare czar wants to make single-payer happen: “Don Berwick last job was running Obamacare’s implementation at the Department of Health and Human Services, where Republicans berated the former doctor for supporting the British health service. His next goal: bringing single-payer health care to Massachusetts. The former Medicare administrator is the only candidate in the Massachusetts governor race running on a single-payer platform. He says he settled on the idea when he was thinking through the different goals he wanted to achieve–slower health care cost growth, better quality care–all seemed most attainable when the government was the one paying everybody’s health care costs. ‘I began to list the policies I wanted to pursue, and then I came to the payment side…and I started to talk to the people who helped shape Vermont, looked at Vermont, and I just said, ‘oh my, there is just one straight shot here, it’s going to single-payer’. At that point it was more about thinking about putting it on the table. Now it is the entire table’…”

  2. Jennifer Taub: What Tim Geithner Got Right: “I believe Mr. Geithner correctly recognized that restoring bank profitability could be hastened by undermining efforts to rescue homeowners. What he got wrong was choosing banks over people. Mr. Geithner was right when he told Liaquat Ahamed in an interview published in the New Republic that ‘there is an ongoing political effort to legislate a weakening Dodd-Frank or block political appointees’, but he was wrong when he added, ‘That effort does not have much political force now’. Mr. Geithner is right when he notes that the 2008 crisis rescue presented an ‘extreme real-time challenge’. But it would be wrong to assume that means the government had no models…. Franklin D. Roosevelt‘s administration managed a rescue and reform that was (in comparison with the Bush administration and later, the Obama Administration) far tougher on failing banks and easier on struggling homeowners. The Home Owners Loan Corporation that was established in 1933, for example, refinanced more than a million (or 20 percent of all) home mortgages in the country…. I do concur that the country is indebted — not to Mr. Geithner, but perhaps because of him. Consider the more than nine million homeowners who still owe more on their mortgages than their property is worth. This collective negative equity still holds back the economy and housing market…”

  3. Janet Yellen: Testimony: The Economic Outlook–May 7, 2014: “Valuations for the equity market as a whole and other broad categories of assets, such as residential real estate, remain within historical norms…. Bank holding companies… have improved their liquidity positions and raised capital ratios to levels significantly higher than prior to the financial crisis… stress tests mandated by the Dodd-Frank Act have provided a level of confidence in our assessment of how financial institutions would fare…. For the financial sector… leverage remains subdued and measures of wholesale short-term funding continue to be far below levels seen before the financial crisis…. The Federal Reserve finalized a rule implementing section 165 of the Dodd-Frank Act to establish enhanced prudential standards for large banking firms in the form of risk-based and leverage capital, liquidity, and risk-management requirements…. The Federal Reserve is considering whether additional measures are needed to further reduce the risks associated with large, interconnected financial institutions. While we have seen substantial improvements in labor market conditions and the overall economy since the financial crisis and severe recession, we recognize that more must be accomplished. Man… are still unemployed, inflation continues to run below the FOMC’s longer-run objective, and work remains to further strengthen our financial system…”

May 7, 2014

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