On Thursday, House Republicans will vote on an anti-Obamacare bill that could toss up to 1.5 million Americans off their employer-sponsored health plans. To make the case that this is a good idea, top GOPers are misrepresenting what the legislation would do. They claim the measure would help prevent companies from reducing worker hours in order to cut employees' health insurance benefits. Yet the legislation would likely encourage businesses to decrease hours so the firms could avoid providing health insurance to workers. "While political leaders often stretch the truth to make their case, they usually don't claim the opposite of the truth," Robert Greenstein, the president of the left-leaning Center on Budget and Policy Priorities (CBPP), noted Wednesday. "That, however, is essentially what Republican congressional leaders are doing."
The bill House Republicans introduced Wednesday would change the way the Affordable Care Act defines full-time work and, thus, who is eligible for employer-sponsored health care. Currently, the ACA requires companies with 50 or more employees to provide affordable health coverage to 95 percent of their full-time workers or pay a penalty. This measure, called the employer mandate, begins to go into effect this year. Under the 2010 health care law, full-time work is defined as 30 or more hours per week. The GOP bill would change the law's definition of full time to 40 hours per week.
Such a move would obviously lead to the loss of employer-sponsored health insurance for many people who work between 30 and 39 hours per week. But there's the bill would have another impact too: It would give employers a powerful incentive to cut the hours of Americans who work 40-plus hours per week to escape the obligation to provide them health insurance. And health care policy experts note that it is more likely that a firm would slice the hours of a 40-hours-per-week worker than an employee who toils 30 hours a week. (More on that below.) Changing the full-time threshold to 40 hours would put some 1.5 million Americans at risk of having their hours docked and their insurance yanked, according to a recent report by the Congressional Budget Office.
Yet top Republicans are claiming the opposite. On Tuesday, Rep. Paul Ryan (R-Wis.) said the bill would enable "more people [to] work full time." Late last year, House Speaker John Boehner (R-Ohio) and Senate Majority Leader Mitch McConnell (R-Ky.) argued the measure would protect the 40-hour work week by "removing an arbitrary and destructive government barrier to more hours and better pay created by the Affordable Care Act."
As I reported Monday, here's why companies would be more likely to reduce workers' hours under the GOP bill's 40-hour threshold than under the current 30-hour per week cutoff:
The 30-hour threshold was intended to discourage companies from cutting workers' hours. Nearly half of Americans work 40 hours a week or more—meaning that, under current law, employers would have to cut those workers' hours by more than 25 percent to avoid buying them health insurance. But if the threshold were 40 hours, as the GOP envisions, many employers would only have to cut workweeks a tiny bit to avoid buying health insurance for their employees. "Raising the threshold to 40 hours would place more than five times as many workers at risk of having their hours reduced," Paul van de Water, a senior fellow at the [CBPP], wrote in 2013.
A flock of prominent conservatives—including political analyst Yuval Levin and columnist Ramesh Ponnuru—have also chimed in against the 40-hour bill.
On Wednesday, President Obama vowed to veto the law if the Senate approves it. But that doesn't mean the bill won't become law. It's possible that Republicans will attach the measure to a must-pass spending bill this year that would be extremely difficult for Obama to oppose.
Update, Wednesday, January 7, 2015: On Wednesday, President Barack Obama vowed to veto this legislation.
One of the first things House Republicans plan to do after Congress reconvenes Tuesday is vote on a bill that would gut Obamacare—and could deprive up to 1.5 million Americans of their employer-sponsored health insurance. After the GOP-controlled House passes the bill, the newly Republican Senate is likely to pass the measure too. What's more, President Barack Obama may be forced to sign this legislation if it is attached to a must-pass budget bill later this year.
Here's the background. The Affordable Care Act requires companies with 50 or more employees to provide affordable health insurance to 95 percent of their full-time workers or pay a fine. This regulation, known as the employer mandate, goes into effect this year. Here's the catch: The law defines employees who work 30 or more hours per week as full time. The legislation that House Republicans are expected to bring to the floor this week would change the definition of full time to 40 hours per week for purposes of the law.
This may sound harmless, but it's not—because companies that don't want to provide health insurance for their employees can avoid doing so by cutting workers' hours.
"I call this the 'send people home a half hour early on Friday and deny them health insurance' bill," says Tim Jost, a health care law scholar at the Washington and Lee University School of Law who has consulted with the Obama administration on implementation of the Affordable Care Act.
The 30-hour threshold was intended to discourage companies from cutting workers' hours. Nearly half of Americans work 40 hours a week or more—meaning that, under current law, employers would have to cut those workers' hours by more than 25 percent to avoid buying them health insurance. But if the threshold were 40 hours, as the GOP envisions, many employers would only have to cut workweeks a tiny bit to avoid buying health insurance for their employees. "Raising the threshold to 40 hours would place more than five times as many workers at risk of having their hours reduced," Paul van de Water, a senior fellow at the left-leaning Center on Budget and Policy Priorities, wrote in 2013.
If Obama approves the 40-hour legislation, a half million workers could lose health insurance entirely, according to a recent report by the Congressional Budget Office. And up to a million people could be moved into Medicaid or the health exchanges created by Obamacare, increasing the federal deficit by $73.7 billion over 10 years, according to the Congressional Joint Committee on Taxation.
The White House is waiting to weigh in on the legislation until after Congress comes back into session, but Obama issued a veto threat when the House passed a similar bill last year. "We remain firm in our opposition to attempts to repeal or undermine the Affordable Care Act," a White House official told Mother Jones.
Nevertheless, Republicans could attach the measure to a must-pass spending bill this year, which Obama would be hard-pressed to veto. In 2013, House Republicans attempted to add similar legislation to a spending bill—and the Democratic-controlled Senate blocked them. But this year, the Republicans run the Senate.
The wealth gap between the richest 20 percent of Americans and everyone else is the widest it's been in three decades, according to a report released last week by the Pew Research Center. Many factors contribute to this great divide: tax rates on the rich have been falling for decades; the Great Recession decimated the assets of a lot of low- and middle-income folks; and technology is replacing workers. One often-overlooked factor, though, is that 16.7 million poor Americans don't have a bank account. Lack of access to this basic financial tool cramps poor Americans' ability to prove credit-worthiness and build assets, and forces them to rely on expensive alternative financial services, trapping them in a cycle of debt and instability.
Here's a look at banking access in the US and how it affects Americans' ability to grab onto the lowest rung of the socioeconomic ladder.
The percentage of Americans without bank access has fluctuated since the Great Recession. In 2009, 7.6 percent of Americans lacked a bank account. In 2011, that number was 8.2 percent, and in 2013, 7.7 percent—or approximately 16.7 million adults—had no banking access, according to the Federal Deposit Insurance Corporation (FDIC).
Eighteen percent of people in the bottom 40 percent of the income spectrum lacked an account at a formal financial institution in 2011, according to the World Bank. Non-whites are less likely to have a bank account:
The main reason people don't open bank accounts is that they lack sufficient funds to open one or can't afford the fees associated with the account. But some people simply don't trust financial institutions.
Bank fees associated with checking accounts have skyrocketed over the past few years, with the percentage of truly free checking accounts falling from 76 percent in 2009 to 38 percent in 2013,according to the most recent data from Bankrate, a consumer financial services company. The average minimum balance required to open a checking account rose nine percent over the past year to $66, and the average overdraft fee reached $32.74, a record high. ATM fees are at all-time highs, too.
"Even plain vanilla checking accounts have gotten more expensive," Abby McCloskey, a program director at the American Enterprise Institute, wrote at Forbes last year. "Free checking was long championed by the FDIC to bring the unbanked into mainstream banking, and it has all but disappeared as banks cut costs." (The Consumer Financial Protection Bureau, which Congress created in the wake of the 2008 financial crisis to protect average Americans from banks' predatory practices, is weighing new regulations on overdraft fees.)
When low-income customers close their accounts to avoid minimum balances and fees, they're forced to rely on alternative financial services including payday lending, money orders, check cashing, and pawn shops—which often charge even more exorbitant fees and penalties. The average household that uses these alternative financial services spends $2,412 per year on interest and related fees, according to a report released this year by the Postal Service's inspector general. A 2011 Pew survey of 2,000 low-income families in Los Angeles found that using alternative financial services consumed 6 percent of an average household's income, whereas buying the same services at a bank ate up just half a percent of an average family's income.
Americans without bank accounts also tend to miss out on tax benefits such as the Earned Income Tax Credit—mostly because people without bank accounts are less likely to file tax returns. More than two-thirds of families with bank accounts in Pew's LA study filed their tax returns. Just 38 percent of the families without bank accounts filed. Three quarters of the families that filed got a tax refund.
Not surprisingly, low-income people with access to bank accounts are more likely to save money and have better overall economic health. Check it out.
Marine Infantry Officer Course students stand by before a helicopter drill in Arizona.
The cost of US war-making in the 13 years since the September 11 terrorist attacks reached a whopping $1.6 trillion in 2014, according to a recent report by the Congressional Research Service (CRS).
The $1.6 trillion in war spending over that time span includes the cost of military operations, the training of security forces in Afghanistan and Iraq, weapons maintenance, base support, reconstruction, embassy maintenance, foreign aid, and veterans' medical care, as well as war-related intelligence operations not tracked by the Pentagon. The report tracks expenses through September, the end of the government's 2014 fiscal year. Here's a breakdown of where most of that money went:
The key factor determining the cost of war during a given period over the last 13 years has been the number of US troops deployed, according to the report. The number of troops in Afghanistan peaked in 2011, when 100,000 Americans were stationed there. The number of US armed forces in Iraq reached a high of about 170,000 in 2007.
Although Congress enacted across-the-board spending cuts in March 2013, the Pentagon's war-making money was left untouched. The minimal cuts, known as sequestration, came from the Defense Department's regular peacetime budget. The Pentagon gets a separate budget for fighting wars.
In the spending bill that Congress approved earlier this month, lawmakers doled out $73.7 billion for war-related activities in 2015—$2.3 billion more than President Barack Obama had requested. As Mother Jones' Dave Gilson reported last year, US military spending is on pace to taper far less dramatically in the wake of the Iraq and Afghanistan wars than it did after the end of the Vietnam War or the Cold War.
Other reports have estimated the cost of US wars since 9/11 to be far higher than $1.6 trillion. A report by Neta Crawford, a political science professor at Boston University, estimated the total cost of the wars in Iraq and Afghanistan—as well as post-2001 assistance to Pakistan—to be roughly $4.4 trillion. The CRS estimate is lower because it does not include additional costs including the lifetime price of health care for disabled veterans and interest on the national debt.
Last week, Congress did Wall Street a solid. When lawmakers passed a giant spending bill that funds the government through September, they included a provision written by Citigroup lobbyists that allows banks to make more risky trades with taxpayer-insured money. Then, on Thursday, bankers got another giveaway: The Federal Reserve announced it would delay for up to two years implementation of a crucial section of the Volcker rule—one of the most important regulations to come out of the 2010 Dodd-Frank financial reform bill. The rule generally forbids the high-risk trading by commercial banks that helped cause the financial crisis. The move by the Fed pushes the deadline for banks to comply past the next presidential election and gives Wall Street lobbyists more time to weaken it.
"Less than a week after Wall Street slipped a bailout provision written by Citigroup into the government spending bill, the Fed has given the big banks another victory," Sen. Elizabeth Warren (D-Mass.) said in a statement Friday.
"It's really hard to see an excuse for this," says Marcus Stanley, the financial policy director at Americans for Financial Reform, an advocacy group.
The Volcker rule ensures that financial institutions don't engage in something called proprietary trading, which is when a bank trades for its own benefit as opposed to for the benefit of its customers. Banks were supposed to comply with the Volcker rule by July 21, 2014. Last year, when banking watchdogs finalized the rule, the Fed granted banks a year-long extension. The Fed's Thursday announcement gives banks another year to get rid of certain investments—including those in private equity firms and hedge funds. The central bank also noted Thursday that it plans to push out the deadline again next year, by another 12 months. That brings the new compliance deadline to July 2017, far past the 2016 election. If the new president is a Republican, he could fill his administration with Wall Street insiders opposed to the rule, making it even easier for lobbyists to gut it.
Before the Volcker rule was finalized last year, the financial industry fought like mad to weaken it. The regulation could slash the total annual profits of the eight largest US banks by up to $10 billion, according to an estimate by Standard & Poor's. Banking reform advocates were fairly happy with way the final reg turned out. But now the financial industry has extra time to take a few more whacks at rule before banks actually have to obey it. "Wall Street’s loophole lawyers and other hired guns will… continue to hit at the rule as if it were a piñata," Dennis Kelleher, the president of the financial reform advocacy group Better Markets, said when regulators completed the rule in 2013.
The Dodd-Frank law already contains a provision allowing banks that will have difficulty getting rid of particular investments before the initial compliance deadline to request an extension from banking regulators. The Fed's announcement yesterday amounts to an unnecessary "blanket" extension, Stanley says. "It's hogwash."