'Tax Reform Is Hard. Keeping Tax Reform Is Harder': Highlights from the House Tax Cuts Hearing
The House Ways and Means Committee held a three-hour hearing Wednesday on the effects of the Republican tax overhaul. We tuned in so you wouldn’t have to.
As you might have expected, the hearing was mostly an opportunity for Republicans and Democrats to exercise their messaging on the benefits or dangers of the new law, and for the experts testifying to disagree whether the gains from the law would outweigh the costs. But there was also some consensus that it’s still very early to try to gauge the effects of the law that was signed into effect by President Trump less than five months ago.
“I would emphasize that, despite all the high-quality economic research that’s been done, never before has the best economy on the planet moved from a worldwide system of taxation to a territorial system of taxation. There is no precedent,” said Douglas Holtz-Eakin, president of the American Action Forum and former director of the Congressional Budget Office. “And in that way we do not really know the magnitude and the pace at which a lot of these [effects] will occur.”
Some key quotes from the hearing:
Rep. Richard Neal (D-MA), ranking Democrat on the committee: “This was not tax reform. This was a tax cut for people at the top. The problem that Republicans hope Americans overlook is the law’s devastating impact on your health care. In search of revenue to pay for corporate cuts, the GOP upended the health care system, causing 13 million Americans to lose their coverage. For others, health insurance premiums will spike by at least 10 percent, which translates to about $2,000 a year of extra costs per year for a family of four. … These new health expenses will dwarf any tax cuts promised to American families. … The fiscal irresponsibility of their law is stunning. Over the next 10 years they add $2.3 trillion to the nation’s debt to finance tax cuts for people at the top – all borrowed money. … When the bill comes due, Republicans intend to cut funding for programs like Medicare, Medicaid and Social Security.”
David Farr, chairman and CEO of Emerson, and chairman of the National Association of Manufacturers: “We recently polled the NAM members, and the responses heard back from them on the tax reform are very significant and extremely positive: 86 percent report that they’ve already planned to increase investments, 77 percent report that they’ve already planned to increase hiring, 72 percent report that they’ve already planned to increase wages or benefits.”
Holtz-Eakin: “No, tax cuts don’t pay for themselves. If they did there would be no additional debt from the Tax Cuts and Jobs Act, and there is. The question is, is it worth it? Will the growth and the incentives that come from it be worth the additional federal debt. My judgment on that was yes. Reasonable people can disagree. … When we went into this exercise, there was $10 trillion in debt in the federal baseline, before the Tax Cuts and Jobs Act. There was a dangerous rise in the debt-to-GDP ratio. It was my belief, and continues to be my belief, that those problems would not be addressed in a stagnant, slow-growth economy. Those are enormously important problems, and we needed to get growth going so we can also take them on.”
“Quite frankly, it’s not going to be possible to hold onto this beneficial tax reform if you don’t get the spending side under control. Tax reform is hard. Keeping tax reform is harder, and the growth consequences of not fixing the debt outlook are entirely negative and will overwhelm what you’ve done so far.”
Steven Rattner: "We would probably all agree that increases in our national debt of these kinds of orders of magnitude have a number of deleterious effects. First, they push interest rates up. … That not only increases the cost of borrowing for the federal government, it increases the cost of borrowing for private corporations whose debt is priced off of government paper. Secondly, it creates additional pressure on spending inside the budget to the extent anyone is actually trying to control the deficit. … And thirdly, and in my view perhaps most importantly, it’s a terrible intergenerational transfer. We are simply leaving for our children additional trillions of dollars of debt that at some point are going to have to be dealt with, or there are going to have to be very, very substantial cuts in benefits, including programs like Social Security and Medicare, in order to reckon with that.”
This Is America’s Favorite Credit Card
According to consumers, it does pay to Discover.
For the second year in a row, Discover has ranked the highest in customer satisfaction among credit card issuers, according to the results of a new survey by J.D. Power.
Discover received a score of 828 out of 1,000 in the survey, based on credit card terms, billing and payment, rewards, benefits and services, and problem resolution. American Express placed second with a score of 820, and Chase ranked third at 792.
Overall satisfaction with credit cards hit a record high of 790, up from 778 last year.
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Consumers were more likely to use their rewards last year, with more than half having done so in the past six months. That could be because rewards are getting better as banks get more creative with wooing and keeping customers, many of whom are still lukewarm about spending.
“When customers feel the rewards are attractive and when they redeem rewards more frequently, satisfaction improves, they spend more, and they are more likely to recommend the card to friends and family members,” Jim Miller, J.D. Power senior director of banking services, said in a statement.
Customers who redeem rewards spend an average of $1,128 per month, compared to $645 by those who don’t redeem rewards.
Even though they’re more satisfied with their credit cards, Americans are still concerned about ID theft. Less than a third of those surveyed felt their personal information was very secure, and just 16 percent thought that security had improved since last year.
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Long Hours at Work Are Costing You More Than Your Social Life
Putting in long hours at the office might impress your boss, but they’re certainly not helping your health.
A new study published in The Lancet found that individuals who worked 55 hours per week or more had a 1-3 times greater risk of a stroke compared to those who worked 40 hours a week. Long working hours were also associated with an increased chance of coronary heart disease, but this association was found to be weaker than that for a stroke.
The analysis was the largest study conducted thus far of the affiliation between working hours and cardiovascular health, including data on more than 600,000 individuals in Europe, the U.S., and Australia.
Researchers believe the constant triggering of the stress response from overwork induces the stroke, often resulting in sudden death. In addition, behavioral activities that stem from the longer hours also contribute to the heightened chance of a stroke.
Employees who work longer hours are found to rely more on heavy alcohol consumption as a way to reduce stress, but drinking only increases the risk for all types of strokes. In addition, more time at a desk means long periods of physical inactivity, which can increase the risk of stroke.
A study by Credit Loan shows that employees worldwide are working more than 40 hours per week. The U.S. leads the pack with the highest percentages of overtime workers – 85.8 percent of males and 66.5 percent of females.
Someone ought to tell Jeb Bush before he repeats what he said early in the campaign -- that Americans need to put in more hours at work.
Why Millennials Are Waiting So Long to Buy Their First Homes
They may finally be moving out of their parents’ basements, but don’t expect those boomerang kids to be taking out a mortgage any time soon.
Today’s first-time homebuyer rents for an average of six years before buying his or her first home, according to a new analysis by Zillow. Time spent renting has been marching mostly upward since the 1970s, when first-time buyers rented for just 2.6 years before purchasing a home.
Today’s first-time buyers are also more likely to be single and older (with an average age of 32.5) than previous generations.
“Millennials are delaying all kinds of major life decisions, like getting married and having kids, so it makes sense that they would also delay buying a home,” Zillow Chief Economist Svenja Gudell said in a statement.
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Part of the reason for that delay could be that homes cost much more than they did decades ago. Today’s homebuyer makes roughly the same amount of money in inflation-adjusted terms as a buyer in the 1970s, but the homes that they’re purchasing are about 60 percent more expensive.
There are other roadblocks for first-timers. Limited inventory and strong competition make the home buying process difficult for property virgins and student debt can make it tougher to get a mortgage.
Those six years spent renting aren’t coming cheap, either. In 2013, almost half of all renters were spending more than 30 percent of their income on housing, with more than a quarter sending half their income to their landlord every month, according to the “State of the Nation’s Housing 2015” report issued in June by the Harvard Joint Center for Housing Studies. That makes it pretty tough to save for a down payment.
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Remember the Ice Bucket Challenge? It Actually Did Some Good
It turns out all those videos of people dumping buckets of ice water on their heads that clogged your newsfeed last summer helped scientists make a major breakthrough in ALS research. (ALS stands for amyotrophic lateral sclerosis, a neurodegenerative disease also known as Lou Gehrig’s disease.)
A new study published in the journal Science last week details a new understanding of an important protein – TDP-43 – that is dysfunctional in more than 90 percent of ALS cases. The Johns Hopkins scientists behind the research thanked the Ice Bucket Challenge for helping them with the discovery by raising $115 million in donations for the ALS Association.
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“We want to encourage all of you to continue this Ice Bucket Challenge to really push this work forward,” professor Philip Wong said in a YouTube video.
More than 17 million videos were uploaded to Facebook of people pouring cold water on themselves, including celebrities like Taylor Swift, Oprah, and Bill Gates. The money raised through the challenge helped the ALS Association triple the amount it typically spends on research for the disease each year.
The ALS Association has been encouraging people to once again participate in the challenge this August, having introduced the hashtag #EveryAugustUntilACure. And it’s working – every Major League Baseball team has pledged to take the Ice Bucket Challenge some time this month.
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You Won’t Believe How Much Diabetes is Costing the U.S.
The budget-busting price of Sovaldi, a drug used to treat hepatitis C has generated wave after wave of media attention, but it’s far from the only drug creating cost problems for patients and insurers.
As Michelle Andrews of Kaiser Health News points out, diabetes affects 29 million Americans, or 10 times as many people as hepatitis C, and the costs of treating it have been rising quickly. And because it’s a chronic condition, people require lifetime care.
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In 2011, the average annual health spending for individuals with diabetes was $14,093. Two years later, it had risen to $14,999, according to the Healthcare Cost Institute. In contrast, a person without diabetes spent about $10,000 less in medical costs in 2013. Pharmacy provider Express Scripts said earlier this year that 2014 marked the fourth year in a row that medication used to treat diabetes were the most expensive of any traditional drug class.
In all, diabetes costs totaled an estimated $245 billion in 2012, including both direct medical expenses and indirect costs from disability and lost work productivity.
While some of the most popular diabetes drugs aren’t particularly expensive, the new brand-name drugs that are continually being introduced offer more effective treatment and fewer side effects — but also come with a higher price tag. Less than half of the diabetes prescription treatments filled in 2014 were generic.
Nearly a century after its discovery in 1921, insulin is still a common form of treatment for the millions of people with type 1 diabetes, yet there is still no generic form available. Patent protection has been extended in some cases due to improvements in existing formulations. Once those patents expire, Andrews notes, biologically similar drugs could replace them and reduce the price by up to 40 percent.
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The financial ramifications of diabetes don’t just stem from the cost of drugs or medical treatment — it’s also been proven that people with diabetes have a high-school dropout rate that is six percentage points higher than those without the disease, according to a Health Affairs study. In addition, young adults with diabetes are four to six percentage points less likely to attend college than those without the disease.
Diabetes also contributes to lower employment and wages. On average, a person with diabetes earns $160,000 less over the course of their lives than people who don’t develop the disease. By age 30, a person with diabetes is 10 percent less likely to be employed.
So even if it’s not generating as many headlines as hepatitis C at any given point in time, the costs of diabetes can’t be ignored.
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