Alzheimer’s Awareness: Barriers to Diagnosis, Treatment and Care Coordination

Finance, Health Care, Alzheimer’s Awareness: Barriers to Diagnosis, Treatment and Care Coordination, November 20, 2019

Alzheimer’s is a very sexy topic. It demands dollars for research and drug development. There is a better way to approach the topic. In her book, Dementia Reimagined, Dr. Tia Powell shows that curing Alzheimer’s should not be our goal, as current and future treatments are unlikely to produce significant rewards for patients. Managing dementia, which is low tech but not inexpensive, is a better and more necessary course. We are already spending money to do it and there is value in doing it better. She should be scheduled as a future witness.

Her book is available on Amazon at https://www.amazon.com/dp/073521090X/ref=cm_sw_r_cp_apa_i_jcAZDbVW4198M
She gave a talk on C-SPAN book TV that can be viewed at https://www.c-span.org/video/?460544-1/dementia-reimagined

As I stated in the recent full committee hearing on Drug Misuse, employers who hire their own doctors and pharmacists, whether as part of a cooperative purchase program or as an offset to a single-payer program (whether it is Single Payer Catastrophic or Medicare for All) will provide better treatment for dementia patients at lower cost. Including franchise and 1099 employees in the employee pool would also be advantageous to employees, companies, and society. Please see Attachment One for more on Employee Ownership.

Attachment One
A. Employee-Ownership, March 7, 2019  

B. Hearing on the 2016 Social Security Trustees Report

Reexamining the Economic Costs of Debt

House Budget, Reexamining the Economic Costs of Debt, November 20, 2019

The existence and size of the national debt does not harm the economy at all, at least not until the European Union consolidates the debt of its members and supports it with a joint progressive income tax. Then the party is over. The real impact of the debt on the economy comes from other aspects of fiscal policy.

Spending aggregates are fairly stable over time, which is why it is so hard to cut the budget by following this path. Most of the volatility is in tax policy. When taxes are increased, the budget deficit goes down. When they are cut, the budget deficit increases.

Revenues are usually about 18% of GDP. Currently, they are 16.5%. Unless you are funded by rich donors or their foundations, this is a real problem. Apologists for Wall Street justify tax cuts as a boon to the economy. It is not unless you make your money on inflating asset prices. My response to such nonsense can be found in Attachment One, which examines the impact of the Tax Cut and Jobs Act.

Inflation is an increase in prices chasing the same goods, which also increases the supply of goods of lesser quality, such as Cryptocurrency and private equity financing of mortgage backed securities. These are the next asset crisis. The money has already been sucked out of these ventures, so a crash is imminent.

Cutting current discretionary or entitlement spending simply makes the problem worse. Both of these increase consumption in the same way that tax cuts fund the savings and speculation sector. Plant and equipment still follows from expected sales (consumption), not the cost of credit.

If any witness ever comes before this committee and claims that the problem is entitlement spending (I can think of a few who do), inquire about who their donors are after swearing them in.

When Republicans control tax policy, tax cuts result in higher savings and lower wages for the non-CEO class (again, as explained in Attachment One). The only way to keep consumption going is to keep the economy moving is to borrow as much as taxes are cut, plus the cost of net interest rolled over into further debt. After this point, increased spending is necessary for increased growth.

The reason the economy continues to grow is increased spending. For details, see Attachment Two, which is an excerpt from our comments to the committee from last February’s budget hearings, as updated in June and enclosed in our opposition to S. 2765, The Bipartisan Congressional Budget Reform Act.

S. 2765 ignores the problems with the TCJA, so we must oppose it. Dealing only with spending cuts harms the general population, leading to a slower economy. Indeed, any spending cuts must be avoided. If anything, secular stagnation is an endemic issue because low marginal rates on high income CEOs invites the rent-seeking we warned about in 2017. This can be remedied by tax increases, a higher minimum wage and increased transfer payments and salary levels.

When Democrats control fiscal policy, taxes on the wealthy go up. This not only fuels the economy with increased spending, but it extracts money from savings for consumption directly, rather than through bond markets (at interest). Because spending is mostly stable (most increases are simply catch up spending), a GDP growth rate of around 3% results.

The way to increase growth beyond average is to increase federal and contractor wages and transfer payments, especially the latter. The recipients spend most of the money. Eliminating welfare as we know it under President Clinton helped balance the budget, but cutting capital gains taxes created the tech bubble and the resulting recession. Lower transfer payments made the recovery that much harder.

The answer cannot be shifting liability down or claiming that we owe debt on a per capita basis. It is raising taxes enough so that the debt is reduced and incomes for most households are increased.

The current factor is $13 if debt for every dollar of income tax. Using tax distribution and debt levels from the last available year, the top 1% owe $7 Trillion. The next 9% owe $6T. The next 40% owe $5T. The bottom 50% owe $570 Billion. The top 1409 households owe more than half the nation at $610B. No wonder many of the rich give money to Americans for Tax Reform. See Attachment Three for more on Debt Liability.

To sell a tax increase on high incomes (or wealth, for that matter), we must make the wealthy want to pay more. They won’t do so to fund Medicare for All, the Green New Deal or to decrease abortion by increasing the Child Tax Credit. They will do so to get their children and grandchildren out of hock.

Attachment One – The Tax and Job Cuts Act

Attachment Two - The Budget and Appropriations Process, February 27, 2019

Attachment Three - Debt, The Future is Calling: It Wants a Refund, 2019

U.S.-Japan Trade Agreements

Ways and Means, Trade, U.S.-Japan Trade Agreements, November 20, 2019

Our prior assessment of the President's trade policy seems to be bearing out, although it would be interesting to investigate any side deals. Perhaps Mr. Nadler's Committee or the Eastern District of Virginia are better venues for this topic. Until their work is done, talk of future trade issues is premature. Perhaps Speaker Pelosi can provide a better read on trade policy for the near future.

Attachment One - 2019 Trade Policy Agenda, June 19, 2019

Trade negotiations with China, Japan, the EU, and the UK threatening tariffs have taken on the character of economic gunboat diplomacy, but without the Navy. These occur because the President is ill equipped by his background as a businessman to work cooperatively, which is the essence of governance in a free society. He has a freer hand in trade negotiations. Sadly, his experience as a CEO has not served the nation well. The modus operandi of most executives is to break things in order to be seen fixing them.  This must stop. The public is not amused, including the Chamber of Commerce, farmers and the stock and commodity markets.

The solution to these problems lies not with oversight of trade policy but through using criminal contempt proceedings against the leadership if the Internal Revenue Service, the Secretary of the Treasury and anyone in the White House, possibly, if not probably, including the President for not releasing the tax information requested by the Chairman. The penalties for refusing to do so are quite clear and the opinion that a sitting President cannot be indicted can no way apply to this matter.

Today's witness is not likely to say his boss is a vainglorious idiot, so allow me to. It is well known that in this Administration, professional diplomatic expertise is not valued. Mr. Trump prefers to shoot from the lip. The incompetence of this president is tragic for our ongoing trade policy, which relies on a high degree of professionalism and careful work over a period of several administrations. NAFTA negotiations and it's successor, as well as similar free trade agreements are an example of this. The Trans-Pacific Partnership was one such effort, but it was derailed by presidential politics on both sides. In trade, what is good politics is often not good economic policy.

Caring for Aging Americans

Ways and Means, Caring for Aging Americans, November 14, 2019

Based on the hearing title, we assume that this hearing covers nursing home care rather than congressional pay or plans for incarcerating Prisoner 45. We submitted comments to the Senate Finance Committee in July and March of this year. Please find them in Attachment One. These comments expand our approach to providing better care for aging Americans.

Being cared for in retirement takes money. Social Security, Medicare and Medicaid are significant improvements in the quality of life for most of our nation's elderly. People with means are no worse off, while those without them can now expect a better and longer life, as can their families, mostly their daughters and daughters-in-law. Those who say differently are suffering from nostalgia for a time that never was.

The same people believe that setting Old Age, Survivors and Disability Insurance creates a moral hazard to discourage savings. This is non-sense. Lack of money is what decreases savings for retirement and other things. There are a variety of methods to increase income for seniors, as well as the population as a whole.

The best way to care for the aged is to care for everyone. People who have adequate income are less likely to be ill, especially the aged. Having enough money to shift from a cheap higher carbohydrate intensive diet to one with adequate protein reduces obesity, diabetes, heart attack and a host of other maladies. In the interim, higher Food Stamp allocations provide a Band-Aid.

The real benefits occur with an adequate minimum wage.  Welfare economics (Econ 101) shows that higher wages mean more potential workers, not less jobs. Higher wages lead to higher incomes for the remainder of the bottom 90% of families and less economic rent for the top 10%. Higher wages lead to the recalculation of wage history levels for the retired and disabled. Any shortfall in the Trust Fund because of this will be made up with more payroll tax income with debt financing of immediate shortfalls.

A more generous refundable child tax credit at middle class levels, also called a negative income tax as proposed by radical economist Milton Friedman, will result in larger families, fewer abortions and a larger economy. Larger economies reduce burden on workers for a more generous OASI, payment. See Attachment Two for more information on how to fund this through an employer paid Subtraction Value Added Tax (S-VAT).

Another tax reform change proposed is to shift funding for the employer contribution to OASI (and all of DI and HI) to an invoice VAT (I-VAT), with equal dollar crediting for current and future beneficiaries. The same distribution rule would be applied to the distribution of insured personal retirement accounts invested in employer voting stock.

As stated in comments to the Finance Committee last month on Drug Misuse, care provided through a cooperative employer for both workers and retirees would be superior and less costly. Pardon me for burying the lead.

We mentioned in our comments to the Committee in June of this year on paths to single-payer insurance, Medicare for All is really Medicaid for All (no co-payments or premiums, current provider rates). This would certainly improve budgets for many of the Aged (and Disabled), although it would depend on higher funding, such as the S-VAT described in Attachment Two.

To improve funding for the Aged, money is not everything (although it effects everything). We are on record favoring shifting all Medicaid funding to the Federal government, eliminating the largest contingent liability faced in the near future by the states. (Adding the base costs for public pensions to Social Security would also do so).

Shifting management of those funds to the federal government can also improve care for the aged. As I am sure the invited witnesses will tell you, long-term care for aged Americans is sub-optimal. Private providers cut corners to increase profit and regulation is under-funded. Federalizing inspection systems with the same inspectors only shifts flags. It will not improve service and does not justify a shift in management.

To truly improve services, the more radical idea (perhaps more radical than employee-ownership), is to mandate that all providers be managed by a current or retired member of the Uniformed Public Health Service, with at least one such doctor on staff, even if the manager is a Registered UPHS nurse.

This profoundly improves quality and will push bad actors out of the system, reducing the number of corporate providers. Under-performing facilities be publicly purchased until they can be refitted and sold to non-profit providers or employee-owners. To current investors who put profit before care, we say good riddance. The nation should as well.

The size of the UPHS service must expand under this proposal, moving us closer to the British system. This would not be a bad thing, except for the ideologues who would defund social services anyway, until they need better care themselves.

Attachment One: Senate Finance: Not Forgotten: Protecting Americans Abuse and Neglect in Nursing Homes, March 6, 2019/Promoting Elder Justice: A Call for Reform, July 23, 2019 
Attachment Two - Tax Reform, Center for Fiscal Equity, November 13, 2019

The Economic Outlook: The View from the Federal Reserve

House Budget, The Economic Outlook:  The View from the Federal Reserve, November 14, 2019

A second witness should have been called. Nomi Prins is THE expert on the relationship between monetary policy and the economy, or rather the inability for quantitative easing to actually trickle down to the Main Street economy, both here and abroad. Her latest book, Collusion, is a must read on these issues.

My conclusion from her work is that quantitative easing has done wonders for the financial sector, precisely because it creates Monopoly money for Mergers and Acquisitions, “new products” such as Collateralized Debt Obligations and cryptocurrency, and currency speculation. It is a pure form of Modern Monetary Theory, which is fine until it is loosed into the general economy, which is when asset bubbles become Ponzi schemes.

Asset Bubbles would not be a problem, except that the pawns in these games are real workers, both here and abroad. Treating workers in this way is part of the global race for the bottom. When the bubbles burst, the speculators can usually walk away (or have already done so) with plenty of personal liquidity. Workers, however, cannot cash their paychecks without massive federal intervention, assuming they keep their jobs. When these jobs are lost, they find out how the other half lives – which is badly on the meager assistance provided by government.

 The Obama Administration felt that mortgage borrowers who bought at the top of the market had only themselves to blame, which was odd considering that the economic adviser, who will remain nameless, set up the financial “reforms” that caused the housing boom in the first place (along with help from the Federal Reserve). 

 A non-inflationary cure for what had become a Depression, one we are finally coming out of, would have been mortgage asset write-downs. As money is created from a keyboard, it could have been destroyed – as these debts are included in M3. Deflation had, in fact, occurred. This is the very definition of a depression. Write-downs would have simply acknowledged this.

The recent Tax Cut and Jobs Act is another form of trickle-down economics. It has enriched the CEO class, which profits from increasing rent-seeking – the coin of the realm in earning bonuses. See attachment one for further analysis.

Attachment Two contains analyses from last month’s hearing on the Fiscal Tool Kit.

If the witness indicates that Federal Reserve policy can have an impact as a financial cure, please do not drink the Kool-Aid. That Fed Economists still believe that asset inflation is a form of investment tells you all you need to know about the soundness of their advice.

Attachment One – TCJA
Attachment Two - Strengthening Our Fiscal Toolkit: Policy Options to Improve Economic Resiliency, October 16, 2019  

S. 2765: The Bipartisan Congressional Budget Reform Act

Senate Budget, Markup of S. 2765: The Bipartisan Congressional Budget Reform Act, November 6, 2019

S. 2765 ignores the problems with the TCJA, so we must oppose it. Dealing only with spending cuts harms the general population, leading to a slower economy. Indeed, any spending cuts must be avoided. If anything, secular stagnation is an endemic issue because low marginal rates on high income CEOs invites the rent-seeking we warned about in 2017. This can be remedied by tax increases, a higher minimum wage and increased transfer payments and salary levels.

We deal with the provisions of the bill mentioned in the hearing announcement in turn.

Move the budget resolution to a two-year cycle, while maintaining annual appropriations.

It is more important to enact automatic appropriations than to adjust the budget cycle.

Require more involvement from Senate spending and taxing committees, including by requiring detailed spending and revenue plans to better inform budget development.

The opposite strategy is preferable. Embargo detailed information until an agreement is reached. If one cannot be reached, spending caps should be used to allocations, although such caps should be adjusted to conform with those enacted in the Bipartisan Budget Act of 2019.

Focus on fiscal sustainability by requiring the budget resolution to establish a debt-to-GDP target backed by a deficit-reducing special reconciliation process to promote adherence to the budget plan.

Debt to GDP ratios are not important. A better measure is the relationship of debt to income taxes collected. The usual ratio is $6 to $9 of debt for every dollar of income tax collected. The current ratio is $13 to one. This is unsustainable and points to the need for both higher tax rates and increased income for contractors, beneficiaries and government employees and a higher minimum wage.

Create a mechanism within the regular budget process to end the brinksmanship surrounding the statutory debt limit by conforming the limit to levels called for in the budget resolution.

Ideally, the requirement for a Debt Limit should be revoked. According to the 14th Amendment, default is unconstitutional. 

Establish an optional new bipartisan budget pathway through which the budget would set a glideslope of deficit reduction that includes health care, revenue levels, and appropriations, and tax expenditures. Such bipartisan budgets would require the support of at least 60 Senators, including at least 15 members of the minority party, and would be considered in the Senate under expedited procedures jointly agreed to by the Majority and Minority Leaders.

and

Provide a more orderly, deliberative process for Senate consideration of budget resolutions that preserves the ability of Senators on both sides of the aisle to offer amendments.

Proposing bipartisanship is helpful, although it should not be used to hold the Budget hostage to demands that no revenue increases be considered. Giving the minority a veto on the process is a sure path to continued gridlock and financial ruin for the United States. This provision, like the one following, is a sure sign that the Majority Party is expecting to become the Minority. Revenue measures will be among the reasons for this. When the people speak, bipartisanship should not hamper the change called for.

Enhance fiscal transparency by requiring that up-to-date tabulations of congressional budget action be publicly posted and that information on the interest effects of authorizing and revenue legislation be included in cost estimates prepared by the Congressional Budget Office (CBO).  The legislation also supports transparency efforts underway at CBO.

The Center agrees with these provisions, but urges the committee to address alternatives proposed by the Minority.

Require CBO and the Government Accountability Office to regularly review and report to Congress on portfolios of federal spending to help lawmakers make more informed budgetary decisions

The Center urges CBO and GAO to also address the impact of revenue enactments, including whether their stated goals have materialized. So far, regarding the TCJA, they have not. Sadly, our predictions were more accurate than those provided at the time. Rent-seeking has resulted in anemic increases in wages and huge benefits for the Donor Class of CEOs.

These provisions, nor our suggested alternatives, are likely to go further than markup. The near future will be taken up with an impeachment trial, lest the Majority convince the President to resign. Vice President Pence’s record as Governor of Indiana bespeaks a willingness to support a bipartisan process, so he may sign this legislation, provided he is not prosecuted for his role in the Trump Presidency.

President Pelosi will not sign this bill, or any process reform that does not raise marginal tax rates on salaries and increased tax rates on capital gains, corporations, dividends and pass-through payments. Given the economic ideology of the Majority, compromise on revenues will be likely. Without such compromise, this markup is a waste of time.

Attachment One - Fixing a Broken Budget and Spending Process: Securing the Nation’s Fiscal Future, June 26, 2019