Professional Documents
Culture Documents
Northwestern Callahan Esman Neg Ndtatwichitastate Round3
Northwestern Callahan Esman Neg Ndtatwichitastate Round3
Northwestern Callahan Esman Neg Ndtatwichitastate Round3
1NC
Rate Setting
The counterplan achieves the universality and cost savings of single payer while
preserving employer-based insurance and Medicaid---that’s key to public
acceptance and policy durability
Jacob S. Hacker 18, the Stanley Resor Professor of Political Science at Yale University, 1/3/18,
“The Road to Medicare for Everyone,” http://prospect.org/article/road-medicare-everyone
But Democrats should not make the opposite mistake either. A proposal must have a realistic path to enactment.
But it also has to be ambitious enough to inspire supporters, and compelling and understandable enough to
convince others to become supporters. It has to be grounded in policies that are popular and known to
work—policies that can actually reach universal coverage and restrain health-care
prices .
Perhaps most important, it has to be able to command support not just before it passes, but also
afterward . If the troubled saga of the exchanges tells us anything, it’s that even the most technically
sound policy will fall short if it does not generate and sustain pressure for
continuing expansion and improvement . Successful policies do not just reflect the
politically possible; they reshape it .
I’ve already said I don’t think the public option is robust enough to create such pressure, even though it would do
much good. As a rallying cry, “Make Medicare available to the 12 million people buying insurance through the ACA marketplaces!”
leaves much to be desired. Instead, the message should be at once simpler and bolder: “Make Medicare available to
everyone.” All Americans should be guaranteed good coverage under Medicare if they don’t
receive it from their employer or Medicaid.
To achieve this goal, a new part of Medicare would need to be created for those not already covered by the
program. I’ve been calling this new component “Medicare Part E” (for “everyone”)—a term that’s been used before by
Johns Hopkins’s Gerard Anderson and others. Medicare Part E would cover the broad range of benefits covered
by Medicare Parts A (hospital coverage), B (coverage of physicians’ and other bills), and D (drug coverage).
The central feature of Medicare Part E is guaranteed insurance. All Americans would be presumed to
be covered. They would not need to go through complicated eligibility processes or hunt down
coverage that qualified for public support or even re-enroll on an annual basis. Once someone was in Part E, they
would remain in Part E unless and until they were enrolled in a qualified alternative —whether an
employment-based health plan with good benefits or a high-quality state Medicaid program.
Thus, the centerpiece of Medicare Part E is the same as that of single-payer : a
guarantee that Medicare is there for everyone. Unlike single-payer , however, Medicare Part E
seeks to improve employers’ role rather than replace it . It does so by establishing new
standards for employment-based plans and requiring that all employers contribute to Medicare if
they do not provide insurance directly to their employees.
In this respect, Medicare Part E builds on the ACA’s requirement that large employers provide
coverage or pay a penalty. Under the 2010 law, companies with more than 50 full-time workers are
already required to pay a penalty if they don’t offer insurance and their workers get subsidized
ACA marketplace coverage. The penalty, however, is modest compared with the cost of health benefits, and there’s no
guarantee workers whose employers pay it actually get marketplace coverage.
Democrats knew this was a problem back in 2010. In fact, they tried to fix it: The House version of the Affordable Care Act required
that employers that didn’t insure their workers not only pay a fee, but also provide the federal government with the information to
enroll those workers in health coverage though the marketplaces. Like the public option, however, this provision was dropped in the
Senate.
It should be resurrected. Under the proposal I’m describing, employers would either provide insurance that was
at least as generous as Medicare Part E’s or they would contribute to the cost of Medicare Part E,
which would automatically enroll their workers. Because the contribution requirement is central to signing people
up, it should cover the entire workforce—including independent contractors and other self-
employed workers (who would pay the contribution directly, as they do Medicare and Social Security taxes). But the level
of contribution should vary with wages. That’s how the House bill worked: The contribution would have risen from
nothing for the lowest-wage firms up to 8 percent of payroll for the highest-wage firms.
Health policy wonks call this “play or pay .” Employers would either play by offering qualified coverage to their workers
(and their workers’ families) or pay the federal government to cover their workers (and their workers’ families) through Medicare
Part E. Under this system, everyone who worked or lived in a family with a worker—including the self-
employed—would be automatically covered. Those without any tie to the workforce could be
signed up when they received other public benefits or filed their taxes or sought care
without insurance . But just as important as signing people up is making sure they remain signed up. Once people
were enrolled in Medicare Part E, they would remain enrolled for as long as they didn’t have
verified alternative insurance.
1NC
IRS Tradeoff
The IRS is focused on implementing the new tax reform bill---it will take all of
their resources
Roger Russell 18, senior editor for tax with Accounting Today, “Tax reform means tough times
at the IRS,” 1/30/18, https://www.accountingtoday.com/news/tax-reform-means-tough-times-
at-the-irs
Everson noted that the IRS will have to be very careful about prioritizing the guidance they will
need to promulgate. “Taxpayers will try to figure out what is most beneficial and still be within the law,” he explained. “ The
IRS has to clarify what the proper interpretation of the law is. There will be litigation on top of that,
and many challenges will go to court. It will take a long time to get these new issues resolved.”
“Anytime you have a tax bill of this magnitude, a lot of people will be waiting for the IRS take on how the bill
will work,” agreed Roger Harris, president of Padgett Business Services. “Most tax professionals are concerned about IRS
funding because whether you like them or not, they are a reality and they need to do their job properly.”
A junkyard dog
The IRS is overloaded and underfunded, but they will do what is absolutely necessary to
administer the new law, according to Marty Davidoff, CPA, Esq., of E. Martin Davidoff & Associates CPAs. “The IRS is
going to do what it has to do , minimally, to make sure the new law is enforced,” he said. “They’re
not going to help people learn it or answer questions about it, because they don’t have enough personnel to answer questions on the
existing law. Their dramatically reduced budget and dramatically reduced personnel over the last seven years has caused a
diminution in services, and a diminution in enforcement.”
Davidoff cited a recent phone call from an Appeals officer as evidence of the degree to which the service is constrained: “We had
already agreed on the adjustment, had agreed on the numbers, and all we needed was a conversation regarding the wording in the
report they asked us to sign, because the wording was unclear. I wanted clarification of the wording, and she basically told me,
‘Marty, accept the wording as is or I’m going to close the case as unagreed.’ She was going to take the deal off the table, which would
have meant dozens of hours to start over. It wasn’t normal for this Appeals officer to act this way. She just seemed under intense
pressure.”
“What’s happening to the IRS is that they’re so pressured by a shortage of staff, and the work doesn’t go
away, that they’re not allowing processes to happen the way they’re designed,” Davidoff continued. “Imagine a dog that’s well-
cared for and which the owner likes. It’s a friendly, happy dog. But take the exact same dog, don’t feed it regularly, and the owner
says, ‘You’re a bad dog.’ It ends up as a nasty dog in a junkyard. That’s what is happening. Congress — the owner — is turning the
IRS into a junkyard dog.”
The plan drains IRS resources and causes backlash which crushes tax compliance
Kristin E. Hickman 16, Harlan Albert Rogers Professor of Law at the University of Minnesota
Law School, “The IRS's Multi-Mission Mismatch Problem,” 3/14/16,
http://www.taxanalysts.org/content/irss-multi-mission-mismatch-problem
Congress has burdened the IRS with too many secondary social welfare and regulatory programs, most of which
have little to no relation to its primary function: collecting taxes . These secondary functions
divert too many resources from the IRS's core mission. The IRS and its personnel lack the
expertise to assess the political consequences of many of the day-to-day administrative decisions
that must be made. Politically controversial decisions upset taxpayers and give rise to
skepticism regarding the fairness and legitimacy of the tax system, thus imperiling tax
compliance. Spinning off some of the largest and most politically fraught non-revenue-raising functions from the IRS, such as
exempt status determinations or health policy administration, would allow the IRS to avoid this political turmoil and return its focus
to its core expertise.
Dems win the midterms in a wave now, but health care policy saves the GOP
Peter Roff 3-2, U.S. News & World Report contributing editor for opinion, formerly senior
political writer for United Press International, visiting scholar at Asian Forum Japan, senior
fellow at Frontiers of Freedom, 3/2/18, “How to Win in 2018,”
https://www.usnews.com/opinion/thomas-jefferson-street/articles/2018-03-02/how-
republicans-win-the-2018-midterms
IN CASE YOU MISSED IT, a new USA Today/Suffolk University poll has more than eight out of every 10 Democrats
and seven out of 10 independents saying the country is on the wrong track. That's bad news for
the GOP because it suggests the upcoming November 2018 contest is going to be a change election .
Sure, seven out of 10 Republicans in the same survey said things are on the right track. If the GOP could win elections all by its
lonesome, that wouldn't be a problem. But if Republicans are going to keep control of Congress and of the
various statehouses and governorships they won during the Obama years, they're going to have to convince at least some
of those who self-identify as independents to come along. So far, at least according to this one poll, they're not
doing that .
There's already enough evidence to allow for the possibility of a big, blue wave in November . Nearly
40 state legislative seats, which admittedly is a fraction of the total, have flipped from R to D since Trump was
elected despite the fact some of these districts went to Trump by overwhelming numbers in 2016.
The Republicans have also had to fight tooth and nail to keep control of seats in the U.S. House that have come vacant since Trump
was elected. These include several that are among the safest in the country like Georgia's Sixth Congressional District. That should
have been an easy win for the GOP after Tom Price resigned; instead, it turned into a very expensive almost loss.
The key finding in this phone survey of 1,000 registered voters nationwide is "By close to 2-1, 58%-32%, those surveyed say they
want to elect a Congress that mostly stands up to the president, not one that mostly cooperates with him."
60 percent of those surveyed said they disapproved of the job
That should come as no surprise. According to the poll,
Trump is doing as president. Outside his base, which is considerable, he's not popular. His policies may be
working but, seeing as how he and his appointees are hounded at every turn by his opponents in the advocacy media as well as by
no one should
those who pretend to be actual, authentic conservatives but are instead simply solid "never Trumpers,"
expect his numbers or his image to improve in time to make a meaningful
difference .
If they're going to hold on to power, the Republicans need to look to other leaders besides Trump to
expand their electoral coalition. If they were smart, and there's no reason to believe they're not, House Speaker Paul Ryan
and Senate Majority Leader Mitch McConnell should use the next recess period to schedule a summit meeting of the parties
legislative leaders with an eye to hammering out something like 1994's Contract with America to develop an agenda GOP
majorities can begin work on in the summer and through the fall and which, if they are returned to office in the majority,
they can finish implementing.
One issue that has started to show up with considerable consistency is the cost of health care .
Continually rising premiums and drug costs are breaking family budgets. The voters want relief , but congressional
Republicans, having failed on several occasions to repeal Obamacare (admittedly by a single vote, at least when it mattered)
are reluctant to take the issue up again.
It may be that those who say Obamacarewill never be repealed "root and branch" are right. That means
alternatives that work within the existing system or which can be achieved by tinkering with it need to be pursued.
The focus must change from repealing what Obama and the Democrats hath wrought to finding ways to bring
costs down and generally make the system more consumer friendly. The president has taken the first step in
this regard by expanding the availability of temporary policies that can be purchased outside the annual window in which policies
can be changed, but there's more to be done.
Working together federal and state leaders can develop a pathway forward to make it easier for states to engage in experimentation
in the insurance markets. They can find ways to make it possible for insurance to be bought across state lines – something that
would alleviate the problem that has arisen for some many families now that so many of the nation's counties are served by only one
or two providers.
Kentucky Republican Gov. Matt Bevin is leading the way by establishing sensible work requirements for able-bodied individuals
enrolled in Medicaid, which, thanks to Obamacare, many states have expanded. There's more to be done in this regard. Bevin and
the Republican leaders in the Kentucky legislature could point the way for other states, as well as advise McConnell and Ryan on just
what is needed from Washington to get the bureaucracy out of the way.
There are perhaps a thousand good ideas out there for health care reform. If the debate centers
on the repeal of Obamacare, most of them will never get off the ground . McConnell and Ryan
could provide the forum and the impetus for making them reality . What works can be replicated, what fails
can be set aside – but only if the GOP maintains the majority of the majorities it currently holds.
That's means congressional leaders need to take the polls seriously, get the focus off Trump as much as
possible as fast as possible and onto the exchange of ideas that will improve the quality of life for the
average American much like the tax cuts are doing. Trump can always come along later and
claim credit . He's not being cut out of the process, he's just being put in the place where the
voters the GOP needs to earn re-elected majorities next November seem to
want him .
The public expects a Dem wave now---failure means they’ll assume Russia hacked
the results---sparks mass controversy over the election’s legitimacy
Charlie Savage 3-3, Washington correspondent for The New York Times, 3/3/18, “What if
Republicans Win the Midterms?,” https://www.nytimes.com/2018/03/03/sunday-
review/what-if-republicans-win-the-midterms.html?
mtrref=www.google.com&assetType=opinion
A sizable portion of the American population has been convulsing with outrage at President
Trump for more than a year. Millions of people who previously took only mild interest in politics have participated in protests,
fumed as they stayed riveted to news out of Washington and filled social media accounts once devoted to family updates and funny
videos with furious political commentary.
Yet public life on the whole has remained surprisingly calm. A significant factor in keeping the
peace has surely been anticipatory catharsis : The widespread expectations of a big
Democratic wave in the coming midterm elections are containing and channeling that
indignation, helping to maintain order.
What will happen if no such wave materializes and that pressure-relief valve jams shut?
The country was already badly polarized before the plot twist of election night in 2016, of course, but
since then liberals and much of what remains of America’s moderate center have been seething in a
way that dwarfs the usual disgruntlement of whichever faction is out of power . While nobody can know
for sure whether Mr. Trump would have lost but for Russia’s meddling, many of his critics clearly choose to believe he is in the White
House because Vladimir Putin tricked the United States into making him its leader.
For Mr. Trump’s opposition, this premise — to say nothing of the question of whether his campaign conspired with
Russia or merely benefited from its manipulations — has
thickened the faint stink of illegitimacy that would hover over any
president who lost the popular vote, supercharging policy disagreements into nearly existential
threats to democracy . The regular cycles of consternation spun up by Mr. Trump’s unconventional approach to the job
of being president help keep that wound raw.
Despite simmering unrest, there have been only a few extraordinary moments that broke the mold of public stability. Those include
peaceful demonstrations, like the post-inaugural women’s march and the airport protests against Mr. Trump’s initial ban on
travelers from seven Muslim countries. Far more disturbing, they also include the near-fatal shooting of a Republican congressman
and several other people at a baseball practice by a man who was furious at Mr. Trump and Republicans, and the spectacle of
throngs of white supremacists emboldened by the era to march in Charlottesville, Va. — culminating in an apparent neo-Nazi
sympathizer plowing his car into anti-racist counterprotesters, injuring dozens of people and killing a woman. Fortunately, those
two moments of extreme political violence have been exceptions.
For a counterexample of how a time of intense political bitterness can start to tear this country apart, look back exactly half a century
to 1968. In that chaotic year, America slashed and clawed at itself amid the assassination of the Rev. Dr. Martin Luther King Jr. and
the riots that followed; the assassination of Robert F. Kennedy as he ran for president; swelling antiwar demonstrations on college
campuses amid growing recognition that the government had been lying about the course of the Vietnam War; and the police
beatings of protesters in Chicago outside the Democratic National Convention.
Factors like the draft and the race relations of the period made that tumultuous year a particular historical moment. But one
difference between then and now is salient: Arguably, there was little reason to believe that the November 1968 election was likely to
provide immediate relief.
We are lucky that so far 2018 does not look like a new 1968. But the relative
calm may be like an unexploded
bomb , its volatility not so much defused as contained by the thought that Trump
Republicans will be punished in the Nov. 6 midterm elections. These expectations are widespread.
After the big Democratic special election victories in places handily carried by Mr. Trump in 2016, from Virginia and Alabama to
Wisconsin, Republican lawmakers in purple districts are retiring to avoid ending their careers in humiliating defeats.
Democrats, meanwhile, relish visions of a new congressional majority wielding its subpoena power
to flay the Trump administration with oversight investigations. They can see it now: Making public Mr. Trump’s hidden
tax returns and otherwise laying bare any financial dealings between foreign governments and his businesses. Inviting the women
who have accused him of sexual misconduct to testify at a televised hearing. Unearthing what his appointees have been doing in
places like the Environmental Protection Agency, where collection of fines from polluters has plummeted.
Almost taking a House flip for granted, Democrats whisper that a tsunami-level wave would also flip the Senate and stop Mr.
Trump’s assembly line for turning conservative lawyers into life-tenured federal judges. Some even fantasize about impeachment.
Such vivid anticipation steers those sputtering at Mr. Trump's presidency to take deep breaths and bide their time until Nov. 6,
which draws closer every day: The 2018 campaign cycle formally starts this week with primary voting in Texas.
But a significant Democratic wave may not materialize . Good economic news, for example, tends to blunt
anti-incumbent sentiments. The country is still mostly using House districts that were redrawn after the 2010 census, just as
Republicans’ big 2010 midterm wave victory gave them an unusual degree of control over state legislatures. Beyond deliberate
partisan gerrymandering, the impact of a Democratic turnout surge would be partly diluted by their voters’ disproportionate
concentration in cities, piling up extra votes in districts Republicans would have lost anyway.
But inevitably , many eyes would turn to Russia . It appears to still be covertly spreading disinformation and
amplifying tensions on American social media with the intention of having “an impact on the next election cycle,” Mike Pompeo, the
Central Intelligence Agency director, told Congress last month.
Another poll-defying election night surprise, like 2016’s, would further fuel suspicions of
unseen manipulation . After all, the public only later found out — apparently thanks to the National Security Agency
contractor Reality Winner, whom the Justice Department is prosecuting for leaking — that shortly before the 2016 election, Russian
hackers infiltrated the servers of an elections systems software supplier and tried to trick 122 state elections officials into
downloading malware. While there is no evidence that Russian hackers tampered with Election Day
results last time, the government has disclosed that it thinks they probed elections systems in 21
states and penetrated several.
“There should be no doubt that Russia perceives its past efforts as successful and views the 2018 U.S. midterm elections as a
potential target for Russian influence operations,” Dan Coats, the director of national intelligence, recently testified. “Throughout
the entire community, we have not seen any evidence of any significant change from last year.”
disappointed Trump opponents will be primed to believe the worst :
Against that backdrop,
that Russia rigged two elections in a row for Republicans. And if their anticipatory catharsis and
faith in the democratic process evaporates, the anger could seek a different outlet — in turn
risking a backlash from Trump supporters and a downward spiral .
The White House’s approach to issues raised by Russian election meddling has been backward-
looking, minimizing the problem in a way that seems to preclude focusing on protecting the country from future threats.
Preoccupied with defending the legitimacy of the 2016 results, Mr. Trump repeatedly
insists not only that his campaign did not collude with Moscow, but also that Russia’s effort to
torque that election was either “ a made-up story ” or had no impact on the outcome. Asked recently whether Mr.
Trump has specifically directed the Federal Bureau of Investigation or the N.S.A. to take actions to confront and
blunt continuing Russian influence operations , their respective directors testified that the
president has not done so.
Intelligence community leaders say their agencies are nevertheless trying to mitigate the risk, helping
states strengthen cyberdefenses and hinting at other, classified steps. Such efforts to bolster the credibility
of the election system are crucial, but may prove insufficient if there is another
expectation-defying result .
Three days after the directors’ testimony, the Justice Department announced that a grand jury had indicted a group of Russians
accused of running the social media manipulation operation. The unsealed indictment quoted internal Russian
documents obtained by Robert Mueller, the special counsel. In them, the Russians were said to have described the
original stated goal of what they called “information warfare against the United States of America,” before it morphed into
helping Mr. Trump win, as spreading mistrust toward “the American political system in general .”
if the wave turns out to be a mere trickle, we could see the
This November,
relations” between the two powers, the fate of our planet may well hang in the balance . We
need to examine the Trump-Russia scandal with sangfroid and figure out where it is leading us internationally. Nowhere good, it
turns out. But I’m getting ahead of myself.
To clarify the facts – or lack thereof. Just about every day new accounts from mostly anonymous sources in the United States and
now the United Kingdom emerge in the press and allege that Trump and his team colluded – or are still colluding — with the
Russians. The most authoritative wellspring for suspicion is, however, a report jointly produced by U.S. intelligence agencies and
released in January, “Background to ‘Assessing Russian Activities and Intentions in Recent US Elections’: The Analytic Process and
Cyber Incident Attribution.” (Read it here, if you haven’t already.)
The report merits a quick review now. What strikes careful readers of the document is not flagrant evidence of Trump’s treason, but
the guarded language the authors deploy in presenting “assessments” (essentially, speculation, with varying degrees of confidence)
about the Russian government’s motives, intentions, preferences for candidates, and cyber tactics. In sum, the report does not so
much as state facts but make a case.
The report’s main conclusion: as the 2016 campaign progressed, the Kremlin developed a preference for Trump over Hillary Clinton
and decided to help put him in the White House. Through its GRU intelligence service, the Kremlin (on orders from President
Vladimir Putin personally) arranged for the purloining of emails from the Democratic National Committee and passed them on to
Wikileaks and other collaborating sites, and, additionally, used trolls and state-controlled media (mostly the satellite channel RT,
formerly Russia Today), to “undermine public faith in the US democratic process, denigrate Secretary Clinton,” and swing the odds
against her. Critically, the report does not “assess” that Russia hacked American voting machines. The Kremlin, says the document,
will likely continue its efforts to undermine the American democratic enterprise.
A species of peculiarly American blindness and hypocrisy characterizes the report and much of the anti-Russian hysteria deriving
therefrom. Exempli gratia: the authors saw fit to republish as an annex information from the Open Source Center that first appeared
in 2012 and provides quotes and commentary on programming from RT. The Open Source Center noted that, “RT’s leadership has
candidly acknowledged its mission to expand its US audience and to expose it to Kremlin messaging. However, the leadership
rejected claims that RT interferes in US domestic affairs.”
Let’s pause to consider this statement, so indicative of the aforementioned American blindness and hypocrisy. RT is licensed
(through TV Novosti, a subsidiary) to broadcast in the United States and has a legal right to offer American viewers whatever it sees
fit. It may surprise someone somewhere on the planet that the Kremlin heavily influences what the network airs; informed viewers
might have already suspected as much, given that RT is, well, Russian state media, and not, say, the Voice of America or Radio
Liberty, which the U.S. Congress funds, or CNN or MSNBC, both beholden to corporate masters. Does presenting a point of view to
Americans, even one held by the government of another country, constitute “interference” in “US domestic affairs”? If it does, one
would assume, Russia has every right to jam the Voice of America and Radio Liberty. The Soviet Union did this; Russia does not.
And just how much could RT have “interfered in US domestic affairs” with its nefarious shows? That depends on how many watch
them. It’s tough to say how big RT’s American audience is. The annex tells us that, “RT states on its website that it can reach more
than 550 million people worldwide and 85 million people in the United States; however, it does not publicize its actual US audience
numbers (RT, 10 December).” But the real figure may only be a fraction of that – a number so small that the Nielsen Company does
not bother to rate the channel. RT’s “social media footprint” is impressive on Youtube, but not so at all – critically – on Twitter or
Facebook, where in “likes” and followers, CNN and the BBC crush it. In sum, RT’s “interference” in the American democratic process
could not have amounted to much.
The same cannot be said about the hacked DNC emails, which the report accuses Russia of providing to Wikileaks and other sites
last summer for subsequent, well-timed release to the public. The emails showed that the DNC skewed the primaries against Senator
Bernie Sanders, Clinton’s contender for the nomination; news of this led to the resignation, in disgrace, of DNC chairperson Debbie
Wasserman Schultz.
No one contests the veracity of these emails. That the DNC so mistreated Sanders in favor of Clinton should outrage American voters
and be the key issue for Democrats today. After all, Sanders, polling data showed, would have defeated Trump in November by as
many as fifteen points. That it has not been the issue has everything to do with the Clinton campaign’s decision to dispense with the
inconvenient affair by declaring, in effect, that a vote for Trump was a vote for Putin; and Clinton’s insistence, even now, that Russia
helped win the election for Trump.
Moving away from the intelligence agencies’ report, we need to ask questions rarely raised in all the Trump-Clinton-Russia hubbub.
The Russian media did openly broadcast in favor of Trump; and Russians did, by and large, hope he would win. Why? There are
objective reasons. For starters, the Obama administration had openly opposed Putin’s reelection to the presidency in 2012, with Vice
President Joseph Biden showing up in Moscow the previous year to announce that the White House did not want Putin to run;
Obama had dissed Putin publicly and spoken disparagingly of Russia, and, lest we forget, overseen the imposition of a burdensome
sanctions regime on Russia following the outbreak of the Ukraine crisis. The sanctions in particular have made life harder for
Russians, and they blame Obama for them. Clinton, held to be Obama’s chosen heir, had compared Putin to Hitler and promised
more of the same hard line. Trump, in contrast, famously declared his desire to repair relations with Russia and cooperate with it in
Syria in the fight against ISIS; and, of course, he had voiced his admiration for the Russian leader many times.
Despite all this, solid grounds exist for assuming that the Kremlin would not have wanted to mount a
clandestine operation to help Trump win. In retrospect, they seems obvious, but in prospect, not so much. The
Kremlin had to believe that American pollsters and media would be correct in predicting a Clinton victory. A cyber campaign against
her, the certain victor, carried the risk of discovery. Would Putin – who is nothing if not calculating – really have wanted
to risk making a future President Clinton even more hostile toward him than she seemed to be
in her public pronouncements? Privately, Putin, Wikileaks revealed, had an amicable working relationship with Clinton
when she was secretary of state. He surely knew her to be reasonable and forthright, someone he could do business with. Trump,
in contrast, appeared impetuous, unpredictable, and irrational, with a penchant for lying and no
demonstrable political skills – something he could not do without if he had to , say, persuade a
hostile Congress to go along with a future deal with Russia . A candidate who evinced almost daily his sui
generis lack of qualification for the White House might reasonably have appeared dangerous to the Russian leadership (just as he
did to most of the rest of us).
As for Trump, if he really were colluding with Russia, would he have so recklessly asked Russia to find Clinton’s thirty thousand
missing emails? Would he have so often expressed a desire to “get along with Russia” if he thought he might be unmasked as
conspiring with the Kremlin to steal the elections? One has to assume he would do just the opposite.
All the ifs and assumptions and anonymous sources and innuendo are wearying. We need a nonpartisan
investigation to settle the whole affair. That Republicans and the White House are doing their best to prevent this
is worrisome, but not proof of guilt. We just do not know the truth.
The question of Russia’s possible role in Clinton’s loss aside, from the tornado of Russia-related accusations swirling around Trump
and his team, one might be tempted to conclude that meddling with elections was a peculiarly Russian sin committed against a
uniquely chaste United States, the institutions and practices of which stand as paragons of probity unparalleled in the annals of
human history. One would, of course, be wrong.
A peculiarly American sin in this mess is one of omission. Those bewailing Russia’s evil ways do not mention the longstanding U.S.
penchant – covertly indulged but thoroughly documented – of influencing the outcome of elections abroad and even overthrowing
governments. Russians certainly have not forgotten how Americans engineered the 1996 reelection of President Boris Yeltsin, a U.S.
ally, who, by then, was ailing and alcoholic, with popularity ratings in the single digits, a corrupt entourage, and a legacy of national
ruin. Remember that, and much of the indignation over Russia’s alleged misdeeds in 2016 evaporates. We at the very least need
some historical perspective – and, of course, the facts an objective Trump-Russia investigation would give us.
The intelligence agencies’ report has served as a backdrop for what amounts to a bipartisan campaign
in political circles and the media to discredit and eventually unseat Trump and compel him to
renounce his oft-expressed hopes for a rapprochement with Russia . Secretary of
State Rex Tillerson has visited Moscow and met with Putin, which may have reduced tensions between the
But this may last only until the next Trump tweet or Trump
two countries somewhat.
The United States federal government should establish a national system of health
care financing for pharmaceutical and prescription drugs in the United States,
compensating future treatments on the basis of therapeutic value.
Econ Advantage
Economy growing now
Katy Ruth Camp 2/5, feature editor at the Cobb Business Journal, citing Dr. Roger Tutterow,
Professor of Economics, Director of the Econometric Center at Georgia State, Kennesaw State
University, Ph.D. in Economics from Georgia State, 2-5-18, “Economist expounds on economy,”
http://www.mdjonline.com/cobb_business_journal/economist-expounds-on-
economy/article_3be9107a-0854-11e8-87f5-b7504f6e43e4.html
Dr. Roger Tutterow, one of the state’s most preeminent economist and a noted economics professor at Kennesaw State University,
spoke last month to the Kiwanis Club of Marietta to provide insight into where the economy has been the past few years, where it is
now and what to expect in the future.
Here are some highlights of his speech:
Due for a recession?
We’ve strung together four quarters at 3 percent or better GDP growth . It’s the second-
longest expansion in the post-World War II era. It’s exceeded only by the one from March 1999 to March 2000.
Does that necessarily mean we’re due for a recession? I would suggest not . The truth is,
economies aren’t ever due for a recession . We get expansions that turn into recessions
because of bad politics. Because asset pricing bubbles pop. Because of inventory overaccumulations. And because of a
plethora of what on-economists would call, “weird stuff that happened.”
With a forecast for global growth of about 4 percent this year — some of that is because of China and India —
here in the U.S., it’s quite likely we’ll have 2.8, 2.9 percent GDP growth in 2018 .
Causes of growth
There are two various parts of the economy that are doing quite well. One of them is
manufacturing and the other is consumer sentiment .
When the value of the dollar ran up by 3 percent from early 2014 to a peak in early 2017, it made U.S.-produced products more
expensive on global markets and hurt our exports.
The good news is, in
2017, the value of the dollar dropped. Manufacturers were increasing
their output again. We were making gains in terms of exports.
The other is consumer confidence retail sales. For three months between October and
January 2017, we saw consumer sentiment go up by 11 points . That was a result of the election.
Current economic climate
Health care growth is high---volatility has upsides and won’t collapse the sector
Brad Sorensen 17, CFA, Managing Director of Market & Sector Analysis, Schwab Center for
Financial Research, “Health Care Sector Rating: Outperform,” 9/14/17,
https://www.schwab.com/resource-center/insights/content/healthcare-sector
In general, health care companies’ balance sheets are solid , their stocks have offered
attractive dividend yields and the sector’s overall cost structure appears to have
improved. Demand appears to be on the rise for health care products and services. On the other hand, political rhetoric around
the Affordable Care Act can be expected to fuel continued volatility.
Market outlook for the health care sector
The health care sector has a lot of positives going for it and has had a good run as of late: Valuations
appear fair to slightly
below average, balance sheets are solid, stocks generally have good dividend yields, and the overall cost
structure appears to be much improved. Also, demand appears to be on the rise for health care products and services,
partly as a result of an aging population.
The Affordable Care Act continues to be a source of volatility for the sector, but we believe this has
created potential opportunities for investors and are currently rating the group at
outperform. While the most recent effort to “repeal and replace” the ACA has now been effectively shelved, both sides of the
aisle agree the status quo can’t continue, so some changes seem likely to occur, but what form those will come in is virtually
impossible to know at this point. This is a story that will continue to develop over the next several months, at least. This will likely
keep the health care sector a bit more volatile than usual, but also create some opportunities for
investors willing to ride the potential roller coaster. Another factor potentially helping the group, the Federal
Reserve continues to raise rates and—according to BCA Research—the sector has outperformed during Fed hiking cycles on average
since 1970. Since past performance does not guarantee future results, we acknowledge that there are risks and it could be a bit of a
bumpy ride, but we
believe that brighter prospects are ahead and remain comfortable with our
outperform rating on the group.
premiums before increasing taxes to cover them. Loosely speaking, it would be like dumping the
entire Obama stimulus package on the country in one year .
Over time, Friedman
thinks the push largely from government spending will bring the U.S. back to
full employment. As the labor market gets tighter, the improved economy will attract more immigrants, expanding the size of
the workforce, and employees will simultaneously become more productive. More people producing more stuff per hour will then
sustain the relatively speedy pace of growth under President Sanders, even as things like tax increases take more of a bite.
Is that really so absurd?
The problem with Friedman's forecast is that it involves a series of questionable assumptions that,
stacked on top of each other, aren't really credible.
Take his stimulus math. In general, economists believe that government spending is more effective at
sparking growth—in academic speak, it has a higher “fiscal multiplier”— when the economy is weak than
when it's strong. If we're in a severe recession, $1 of extra federal cash could create $2 or so in growth, as businesses rev back
up and the unemployed return to work. But if the economy is already firing on all cylinders, that same dollar
probably won't lead to much extra growth at all , since there won't be a lot of jobless Americans to hire or
unused factory lines to turn back on. Instead, it's more likely to bring about inflation , in which case the
Federal Reserve would likely intervene by raising interest rates to slow the economy and
keep prices from rising.
Friedman believes government spending could be enormously helpful at first because, again, in his view the U.S. is still stuck in a
ditch. He told me he thinks the economy would be roughly $1 trillion larger if it were operating at its potential. The Congressional
Budget Office, in contrast, thinks the output gap is about half that size, and its guess is on the high end. Even if Friedman is right on
that point—and he might be, since estimating this stuff is tricky— he still assumes that new spending will have an fairly strong
effect way past the point at which the economy should hit full employment in his model, when you'd expect the fiscal multiplier to be
closer to zero. All the while, inflation
averages 3 percent , which is above the Federal Reserve's target, and yet the
bank never steps in to cool things off. Both the inflation estimate, which still seems a bit low, and the
idea that the Fed would stand pat seem like a stretch .
And it goes on. In order for more spending to grow the economy once you hit full employment, the U.S.
either needs a larger or more productive labor force. Friedman argues that in spite of retiring Baby Boomers, the
influx of ready-to-work immigrants he envisions will still boost the country's employment-to-population ratio to 65 percent. That
has never happened before. He also thinks productivity growth will average 3.2 percent per year, which the
U.S. has also never managed on any kind of sustained basis in the modern era. His basis for that particular prediction is
a concept known as Verdoorn's law, which says that lower unemployment drives productivity higher. It's a very interesting idea, but
not exactly a mainstream one.
There are more bits to nitpick—Friedman’s estimates about the effect of minimum-wage increases on consumer spending growth
seem atypically large, for instance—but you probably get the idea. In a vacuum, any one of Friedman's predictions about productivity
or the labor force or inflation might just seem a bit sunny. But in the end, he's predicting one low-probability outcome after another.
As Jared Bernstein from the liberal Center on Budget and Policy Priorities said to me, “ When you throw all those
assumptions together, they’re implausible .”
probably the biggest risk for markets in 2018 ,” says Larry Hatheway, chief economist at GAM
Investments and head of GAM Investment Solutions.
Economists like Hatheway aren’t expecting runaway inflation , as in the days of disco and leisure suits,
when prices rose by double digits. They’re girding for an annual increase of 2% to 2.5% at the most.
Yet the return of inflation would change market psychology. “You don’t really need inflation
of a great
magnitude here to get an inflation surprise,” says Don Rissmiller, chief economist at Strategas Research Partners.
“ Just a little bit more inflation from where we are today is probably enough to
generate an inflation scare in 2018.”
Such a jolt could reshuffle the market. Since 1950, stocks have traded at an average multiple of 18.1 times earnings when inflation
has ranged between zero and 2%—the “sweet spot,” says SunTrust Chief Market Strategist Keith Lerner. At 2% to 4%, the multiple
slips to 17.2.
Inflation is “the ultimate enemy of financial assets,” says Lloyd Khaner, president of Khaner Capital Management.
“Name your financial asset—inflation tends not to help, if not kill it.”
Stocks that are sensitive to rising interest rates —from utilities to telecom companies—would be particularly
vulnerable, while financial, energy, and materials stocks could ride a wave of accelerating growth in prices.
IN THE PAST TWO WEEKS, investors got an early taste of what could happen during an inflationary period, as weakness in the
dollar helped send copper up 8%, even as stocks gained just 1.3%.
Bonds face a more dangerous reckoning. It won’t take much to turn investment-grade bonds into ugly
investments, says David Lafferty, chief market strategist for Natixis Investment Managers. “Unless you think the economy is
going to tank and rates are going to fall, the returns to high-quality bonds are somewhere between unimpressive and somewhat
negative,” he says. Inflation could increase the pain “even if core CPI goes from 1.7% to 1.9%,” he adds.
Making the outlook so unpredictable is the peculiar economic cycle that followed the global financial crisis. Ultralow interest rates
around the world inflated the value of some assets, but not wages or the prices of goods and services, leaving central bankers
befuddled.
If the postcrisis recovery had followed a more typical pattern, the U.S. would have faced more aggressive inflation years ago.
It wasn’t for a lack of trying. Inflation ramped up briefly with the Obama administration’s stimulus package and payroll tax cuts, and
the Fed’s aggressive quantitative easing. Some items, including rent and auto prices, spiked for brief periods, but those increases
never spread to the rest of the economy.
In 2012, then-Fed Chairman Ben Bernanke issued a target inflation rate of 2%, a landmark move for the Federal Reserve, whose
leaders had never before made explicit inflation targets. But just saying the words “two percent” failed to make prices and wages rise.
Fed Chair Janet Yellen called the lack of inflation a “mystery,” one that will soon be Jerome Powell’s to solve.
A CONFLUENCE of factors has weighed on prices. Indeed, the low-inflation trend precedes the recent recovery, as the Fed has
grown more aggressive about responding to price increases, and free trade has led to cheap consumer goods.
Other factors have also tamped down price growth. Banks didn’t lend all of the money that the Fed pumped in because they needed
to shore up their balance sheets to account for bad loans and adhere to new regulations. Businesses, coming out of a long period of
economic uncertainty and global instability, were slow to spend capital. Prices of goods haven’t risen because the postrecession
period coincided with an aggressive shift to e-commerce and price comparison. Apparel prices alone fell 1.3% in November, as
clothing stores cut prices to keep up with cheaper online competitors.
Labor markets have changed, too, with workers less able to demand the higher wages that historically have coincided with greater
inflation. Unions are weak and borders are porous, allowing businesses to shift production to lower-cost countries rather than raise
employee pay. And a talent gap is outweighing the wage gap right now: Businesses often can’t find workers because people don’t
have the right skills, not because the pay isn’t high enough. Other macro factors have kept prices low. Oil crashed in 2014,
restraining prices of related goods. A strong dollar has likewise damped inflation by making imports cheaper.
As a result, inflation as measured by the core CPI has risen at an average rate of 1.76% since 2009. The inflation tracker that the Fed
prefers—the core Personal Consumer Expenditures, or PCE, index—was up 1.5% as of November.
Most economists expect prices to rise at the same gradual pace next year. By next December, the
broader CPI, which was growing at 2.2% as of November, will probably have risen 2.1% from today’s level, according to 52
economists surveyed in Blue Chip Economic Indicators. The Fed sees core inflation rising 1.9% next year. The 10-
year break-even inflation rate, a proxy for the market’s inflation expectations, sits at 1.9%, around where it was at the start of the
year.
WITH SUCH A LOW BAR , however, Wall Street easily could trip .
“People have gotten really used to 1.5% inflation ,” says Natixis’ Lafferty. “The service economy and wage pressure
are going to gradually continue to put upward pressure on interest rates. It’s not a shock story; it’s more like we’re going to wake up
in six or eight months and the Fed will be saying, ‘I think we’re there.’ ”
Strains on prices are already evident higher up the supply chain, says Rissmiller of Strategas. Deliveries by suppliers to
manufacturers have slowed in recent months, according to the Institute for Supply Management, a sign that the suppliers are
becoming busier. That kind of pressure can force prices higher. “With less slack, if something has to get done, you may have to pay
up,” Rissmiller says.
The producer price index, which measures the prices that goods and services producers get, rose 3.1% on a year-over-year basis in
November, the fastest rate since January 2012. Lumber prices have risen this year and are expected to continue trending higher next
year, potentially forcing home prices higher, too. The Federal Reserve Bank of New York introduced an inflation measure this year,
the Underlying Inflation Gauge, which tracks consumer and producer prices, commodity prices, and real and financial asset prices.
Based on prior data, it is at an 11-year high, near 3%.
And wages seem to be reacting, rising at an annual rate above 2.5% this year, faster than since the end of the recession. Growth has
been choppy and unimpressive, but expect a steeper slope next year. Job openings are at the highest level since records were first
tracked, in 2000.
Already, prices are rising in some quarters, although not in a sustained fashion. Restaurants have been increasing prices over the
past year or so to deal with new city and state minimum-wage laws and higher food prices. Apple clearly feels comfor charging
higher prices, as evidenced by its $1,000 iPhone X. And Netflix raised its monthly streaming fee for the first time in two years.
Fiscal policy also points in an upward direction. The tax cut passed at the end of December should spur business investment and,
potentially, employment. An infrastructure plan, while still a difficult sell in Congress, would stimulate even more investment.
Minimum-wage laws are pushing up wages in several cities.
President Donald Trump’s aggressive posture on trade raises the possibility of trade restrictions that boost prices. Lumber prices
have already spiked in part because of new U.S. duties. “Trade wars are inflationary,” Khaner of Khaner Capital says.
An inflationary market isn’t a bad place to invest, particularly if earnings are still rising. Indeed, some inflation would be heralded as
a sign that economic growth has fully taken hold. But investors would have to step gingerly.
Stocks that trade like bonds would probably be at a disadvantage. Jim Paulsen, chief investment strategist at the Leuthold Group,
tracked the performance of Standard & Poor’s 500 sectors since 2010, and found that relative returns for bond-like stocks trailed the
overall market considerably during weeks when the 10-year-note yield rose.
Utilities underperformed by the widest margin, a staggering 36% annualized. Beloved for their dividends, utilities get less attractive
as yields on less-risky assets rise. And because most utilities are highly regulated, they would probably have a harder time raising
prices to keep up with inflation. Telecom stocks would likewise lose their shine as dividend investments. And consumer staples, seen
as havens, have tended to trail.
On the flip side, inflation tends to lift commodities, which have risen by over 15% since the summer. If the dollar weakens,
commodities—most of which are priced in dollars—generally become more valuable. And a rise in inflation would probably coincide
with greater economic growth, sparking more demand for oil, agricultural products, and other building blocks of the economy.
Materials could rise because of the same factors.
Other sectors would be in a strong position, too. Presuming that long-term interest rates rise faster than short-term rates, banks
could make money off wider spreads between the money they take in and the money they lend out. They could earn higher returns
on the customer deposits they hold.
Still, inflation rarely proceeds in a predic fashion. It can be spurred by geopolitical events that drive oil prices higher, by Fed policy
or currency shifts, or some combination.
The last time core CPI rose above 2.5% for a sustained period, a nine-month stretch starting in June 2006, telecom and utility stocks
rose more than 20%, while financials lagged behind. The prior period of price growth above 2.5% coincided with the dot-com crash.
Consumer staples, financials, and materials led the market, while tech, utilities, and telecom fell.
In short, it’s tricky to prepare for accelerated inflation. Even investors who believe that conditions
are ripe for price growth say they’re not making large changes to their portfolios in
anticipation. Risk, profits, and valuations remain the best ways to evaluate an investment. Inflation adds a new
wrinkle, for sure. And if it complicates the Fed’s job and causes it to ramp up rates before the economy is ready, it could
spur a recession .
Their Cassidy card says they cause wage growth---that causes a market crash and
fast interest rates hikes---recent reports assuage fears now---no alt causes
Pedro da Costa 3/13, senior correspondent at Business Insider, 3/13/18, “Wall Street gets a
reprieve on 2 of its biggest worries about the economy,” http://www.businessinsider.com/low-
inflation-lack-of-wage-growth-should-calm-wall-street-fed-fears-2018-3
Two of Wall Street's biggest worries on the economy, inflation and wage growth , showed
signs of moderation in February.
Labor Department data shows not only a subdued inflation trend but also suggests wage
growth is moderating rather than picking up steam.
Diplomatic tensions with No rth Ko rea. A criminal investigation into possible conspiracy against the United States.
The sudden, unexpected firing of Secretary of State Rex Tillerson.
Such massive turbulence has barely registered on the market's radar . Instead, traders
are fretting over the possibility that slightly higher inflation might drive the Federal Reserve to raise
interest rates more aggressively , possibly compromising the economic expansion.
Two major economic reports out Tuesday allowed investors to put their concerns into
perspective: Consumer prices rose only modestly and, more importantly, median wages are
actually trending lower.
It was a surprise spike in wages reported last month that sparked a large selloff in stocks that
reintroduced volatility into placid financial markets, a wild ride that has since persisted.
US consumer prices rose 2.2% in the year to February while prices excluding food and energy rose just 1.8%. Fed officials target a 2%
rate on another inflation measure, the personal consumption expenditures index, which has remained below the central bank's goal
for much of the recovery.
A separate Labor Department report was even more instructive. It showed average hourly earnings adjusted for inflation are
weakening, not strengthening— as Fed officials hope and market participants fear. Not only did earnings stagnate last month,
the following chart shows just how much conditions have deteriorated in the last year — for workers across the board
and for non-management employees in particular .
The Fed has telegraphed its intention to raise interest rates three times this year. Wall Street, accustomed to the stunted optimism of
recent years, shifted rapidly from not believing officials would move more than twice to suddenly pricing in the possibility of four
interest rate hikes for 2018.
The latest inflation figures should, at the very least, assuage worries that the central bank will
need to react more rapidly to an unexpected spike in consumer prices — and/or wages.
Fed Rate hikes cause recession---low threshold for the link because the fed is
skittish
Mark Kolakowski 18, M.B.A. in finance from the Wharton School of the University of
Pennsylvania, 1/16/18, “Why The 1929 Stock Market Crash Could Happen In 2018,”
https://www.investopedia.com/news/1929-stock-market-crash-could-it-happen-2018/
After the experience of 1929 , the Fed has been indisposed to tighten monetary policy in an attempt
to deflate asset bubbles. However , as economic growth reports improve, the Fed is
increasingly concerned today about keeping inflation in check. Any miscalculation that
raises interest rates too high, too fast could spark a recession and send both stock and bond
prices tumbling downwards . (For more, see also: How The Fed May Kill The 2018 Stock Rally.)
Quick rate increases pop the renewable energy bubble---crushes the industry
Peter Schiff 3/8, CEO and chief global strategist of Euro Pacific Capital Inc., a broker-dealer,
“Could Rising Interest Rates Pop the Renewable Energy Bubble?,” https://schiffgold.com/key-
gold-news/could-rising-interest-rates-pop-the-renewable-energy-bubble/
Could rising interest rates pop the renewable energy bubble ?
As the Federal Reserve and other central banks try to turn off the easy money spigot, we
will likely see a growing
number of corporate bankruptcies in the coming years. The renewable energy sector is
particularly vulnerable and exemplifies broader problems in the global economy.
Last year, we saw a number of high-profile corporate bankruptcies, particularly in the retail sector. Toys R Us was probably the most
high profile. It ranks as the second-largest US retail bankruptcy ever, according to S&P Global Market Intelligence. The story behind
the Toys R Us bankruptcy gives us a glimpse at a fundamental problem eroding the strength of the economy – easy money created
by Federal Reserve monetary policy. The ability to borrow a lot of money at low interest rates fueled borrowing and speculation.
Malinvestment has distorted the economy and inflated bubbles that will eventually pop. This is exactly what happened at Toys R Us.
The rate of bankruptcies will likely accelerate over the next several years and spread into other sectors if the Fed follows through on
its monetary tightening policies. The ugly truth is that these overleveraged companies simply can’t survive in anything remotely
resembling a normal interest rate environment.
As economist Daniel Lacalle noted in an article on the Mises Wire, the past eight years of easy money and massive liquidity enabled
companies to increase imbalances and create complex debt structures. Two facts bear this out.
Corporate net debt to EBITDA levels is at record highs. About 20% of US corporates face default if rates rise, according to the IMF.
The number of zombie companies has risen above pre-crisis levels according to the Bank of International Settlements (BIS).
The incredible transformation of the renewable energy sector over the last decade was
built on easy money and government subsidies. Lacalle said understanding that disruptive technologies
cannot be more leveraged than traditional technologies is key to understanding what’s
going on in the renewable energy sector.
When technology reduces costs and disrupts inflationary models, basing the business on ever-increasing subsidies and higher prices
and financing it with massive debt is suicidal. In
the era of cheap money and extreme liquidity, many companies
used the ‘green’ subterfuge to implement an extremely leveraged builder-developer model, ignoring demand,
costs, and competition . A model whose sole objective was to install for the sake of installing
capacity , whether there was a demand or not, and that pursued subsidies while stating that it is very competitive.”
Even in a period of low interest rates and ample liquidity, we’ve seen a number of spectacular
bankruptcies in the renewable energy sector . In fact, solar company bankruptcies have exceeded those of
coal and fracking companies combined. As Lacalle says, if the renewable sector is already struggling, imagine what will
happen as interest rates rise.
Extinction
Yangyang Xu 17, Assistant Professor of Atmospheric Sciences at Texas A&M University; and
Veerabhadran Ramanathan, Distinguished Professor of Atmospheric and Climate Sciences at
the Scripps Institution of Oceanography, University of California, San Diego, 9/26/17, “Well
below 2 °C: Mitigation strategies for avoiding dangerous to catastrophic climate changes,”
Proceedings of the National Academy of Sciences of the United States of America, Vol. 114, No.
39, p. 10315-10323
We are proposing the following extension to the DAI risk categorization: warming greater than 1.5 °C
as “dangerous”; warming greater than 3 °C as “catastrophic?”; and warming in excess of 5 °C as
“unknown??,” with the understanding that changes of this magnitude, not experienced in the last 20+
million years, pose existential threats to a majority of the population. The question mark denotes the
subjective nature of our deduction and the fact that catastrophe can strike at even lower warming levels. The justifications for the
proposed extension to risk categorization are given below.
From the IPCC burning embers diagram and from the language of the Paris Agreement, we infer that the DAI begins at warming
greater than 1.5 °C. Our criteria for extending the risk category beyond DAI include the potential risks of
climate change to the physical climate system, the ecosystem, human health, and species
extinction . Let us first consider the category of catastrophic (3 to 5 °C warming). The first major concern is the issue
of tipping points . Several studies (48, 49) have concluded that 3 to 5 °C global warming is likely to be the
threshold for tipping points such as the collapse of the western Antarctic ice sheet, shutdown of
deep water circulation in the North Atlantic, dieback of Amazon rainforests as well as boreal forests, and
collapse of the West African monsoon, among others. While natural scientists refer to these as
abrupt and irreversible climate changes , economists refer to them as catastrophic events (49).
Warming of such magnitudes also has catastrophic human health effects . Many recent studies (50,
51) have focused on the direct influence of extreme events such as heat waves on public health by evaluating exposure to heat stress
and hyperthermia. It has been estimated that the likelihood of extreme events (defined as 3-sigma events), including heat waves, has
increased 10-fold in the recent decades (52). Human beings are extremely sensitive to heat stress. For example, the 2013 European
heat wave led to about 70,000 premature mortalities (53). The major finding of a recent study (51) is that, currently, about 13.6% of
land area with a population of 30.6% is exposed to deadly heat. The authors of that study defined deadly heat as exceeding a
threshold of temperature as well as humidity. The thresholds were determined from numerous heat wave events and data for
mortalities attributed to heat waves. According to this study, a 2 °C warming would double the land area subject
to deadly heat and expose 48% of the population . A 4 °C warming by 2100 would subject 47% of the land
area and almost 74% of the world population to deadly heat, which could pose existential risks to
humans and mammals alike unless massive adaptation measures are implemented, such as providing air
conditioning to the entire population or a massive relocation of most of the population to safer climates.
Climate risks can vary markedly depending on the socioeconomic status and culture of the population, and
so we must take up the question of “ dangerous to whom? ” (54). Our discussion in this study is
focused more on people and not on the ecosystem, and even with this limited scope, there are multitudes of categories of people. We
will focus on the poorest 3 billion people living mostly in tropical rural areas, who are still relying on 18th-century
technologies for meeting basic needs such as cooking and heating. Their contribution to CO2 pollution is roughly 5% compared with
the 50% contribution by the wealthiest 1 billion (55). This bottom 3 billion population comprises mostly subsistent farmers, whose
livelihood will be severely impacted, if not destroyed, with a one- to five-year megadrought, heat waves, or heavy
rise in sea
floods; for those among the bottom 3 billion of the world’s population who are living in coastal areas, a 1- to 2-m
level (likely with a warming in excess of 3 °C) poses existential threat if they do not relocate or migrate.
It has been estimated that several hundred million people would be subject to famine with warming in excess
of 4 °C (54). However, there has essentially been no discussion on warming beyond 5 °C.
Climate change-induced species extinction is one major concern with warming of such large
magnitudes (>5 °C). The current rate of loss of species is ∼1,000-fold the historical rate, due largely to habitat destruction. At
this rate, about 25% of species are in danger of extinction in the coming decades (56). Global warming of 6 °C or more
(accompanied by increase in ocean acidity due to increased CO2) can act as a major force multiplier
and expose as much as 90% of species to the dangers of extinction (57).
The bodily harms combined with climate change-forced species destruction, biodiversity loss, and threats
to water and food security, as summarized recently (58), motivated us to categorize warming beyond 5
°C as unknown??, implying the possibility of existential threats . Fig. 2 displays these three risk categorizations
(vertical dashed lines).
Single-payer doesn’t solve costs---usage will increase and administrative costs will
stay high
Jodi Liu 17, associate policy researcher at RAND, “Savings from a Single-Payer Health System
Would Not Be Automatic,” 9/26/17, https://www.rand.org/blog/2017/09/savings-from-a-
single-payer-health-system-would-not.html
Discussion of single-payer health care systems increased somewhat last week with the introduction by Sen. Bernie Sanders (I-Vt.) of
his Medicare-for-all legislation. Polls have shown increasing public support for single payer. Yet there is no agreement on how to set
up and pay for a single-payer system in the U.S. or how much that system would cost. Advocates assert that a single-payer
system would cost less than the status quo, but the savings are not automatic , and how much it would save is far from
clear.
The spending required for a single-payer system depends on the price of care and the services used. When health care is
free, people tend to use more health care services, some of which is beneficial and some is not. Under Sanders's Medicare-for-all
plan, the use of health care services would almost certainly increase .
First, everyone would be covered, compared with the 28 million uninsured under current law. Second, Sanders's plan would cover
nearly 100 percent of health care costs, meaning that people would not be charged deductibles or copayments except for some
prescription drugs. While the Sanders plan involves nearly no cost sharing, nothing about a single payer precludes having some level
of cost sharing or other cost control strategies.
Single-payer advocates argue that prices will decrease by more than enough to offset the increased use of services. Several studies,
primarily by authors affiliated with the Physicians for a National Health Program, have compared administrative costs between the
U.S. and other countries and between public and private health insurance within the U.S.
Although administrative costs could be reduced by a considerable amount in a national single-payer program,
reaching levels achieved in other countries or even in some existing U.S. public programs —
serving segments of the population and often involving private contractors — may be aspirational and is not
guaranteed .
How much a single-payer system can cut administrative costs depends on how the plan is designed and implemented. Insurer
administrative costs are typically lower for public health insurance programs compared to private insurance.
But who would administer a single-payer plan that covers every U.S. resident? Even Medicare
now involves private insurers that administer Part C (Medicare Advantage), Part D (prescription drug coverage),
and supplemental plans (e.g., Medigap and employer-sponsored plans). It's difficult to imagine a scenario in which
private companies are not involved at least as third-party contractors .
In addition, some administrative costs such as for tax collection and fraud detection could
increase with an insurance program that covers the entire U.S. population . Health care
provider administrative costs may decrease to some extent, as billing procedures could be simplified and streamlined with a single
payer.
Any provider administrative savings may mean that providers would receive lower total reimbursement (payment for health care
services along with associated administrative expenses), in which case providers may need to restructure their administrative and
billing functions in order to maintain their bottom lines.
Reductions to provider reimbursement are possible but depend on negotiated levels and payment models. Prices could be set by the
government as the single payer, but would likely involve negotiations with provider and industry groups. Given the American
Medical Association's historical opposition to single-payer efforts and the influence of the health
insurance and pharmaceutical lobbying groups , it remains to be seen if the
government could successfully negotiate lower rates.
What happens if the administrative savings and reimbursement reductions are not enough to offset the increased use of health care
services? The
government could establish a cap on overall spending, but enforcement could be
an issue if costs are overrun . The benefits covered by the plan could be reduced, or cost sharing could be increased.
Or taxes could be increased to fund the program. But large tax increases could be a deal breaker: Vermont's single-payer effort failed
in 2014 with the governor's office citing high expected tax increases for individuals and businesses, and the recent legislation in
California stalled largely due to the lack of a financing plan.
To curb the potential of dramatic tax increases, a single-payer plan should include explicit approaches to address increased spending
due to greater use of health care by more people.
it's a mistake to assume that a single-payer health care system will automatically come with
In short,
cost savings. It might be easy to support the concept of single-payer, but serious consideration should be given to addressing
how to pay for the plan and control costs.
individual not macro-level effects : for example, they did not find stronger voting for these
parties in nations with higher unemployment rates . 43 In a five-nation comparison, Niedermayer also found that white
collar employees and professionals are consistently underrepresented in the electorates of radical right parties, although he also demonstrated that the
proportion of blue-collar workers and those with low educational achievement varied substantially among different parties such as the Austrian FPÖ,
previous research suggests
the German Republicans, and the Danish Progress Party. 44 At the same time, however,
several reasons to doubt the more mechanical version on the economic argument . Hence a decade ago one
study concluded that: “We should look skeptically upon the idea that the radical right is purely a
phenomenon of the politics of resentment among the ‘new social cleavage’ of low-skilled and low-qualified workers in inner-city areas, or that their rise
can be attributed in any mechanical fashion to growing levels of unemployment and job
insecurity in Europe. The social profile is more complex than popular stereotypes
suggest .”45 Mudde is equally doubtful about purelyeconomic explanations for the
rise of populism. 46 Moreover populist parties have also arisen in several of the most egalitarian
European societies, with cradle-to-grave welfare states, containing some of the best educated
and most secure populations in the world, exemplified by Sweden and Denmark .
Pharma
The drug pipeline is full of innovative new medical treatments
AG 17---Analysis Group, economic consulting firm. 7/17/17, “The Biopharmaceutical Pipeline
Innovative Therapies in Clinical Development” http://www.phrma.org/report/the-
biopharmaceutical-pipeline
The biopharmaceutical pipeline contains thousands of significant and innovative new
treatments with the potential to address unmet medical needs, save lives and improve
patients’ health. A new report by the Analysis Group, “The Biopharmaceutical Pipeline: Innovative Therapies in Clinical
Development,” examines the state of the drug development pipeline and provides insights into new approaches researchers are
pursuing.
Key Findings:
74 percent of medicines in clinical development are potentially first-in-class medicines, meaning
they represent a possible new pharmacological class for treating a medical condition.
822 projects – defined as unique molecule-indication combinations – are designated by the U.S. Food and Drug Administration
(FDA) as orphan drugs, which is critically important given only 5 percent of rare diseases have an approved medicine.
A range of novel scientific approaches are being pursued, including cell and gene therapies ,
DNA and RNA therapeutics and conjugated monoclonal antibodies.
The aff causes political uncertainty and revenue decline for pharma companies---
that causes them to cut new RnD programs
David Epstein 17, executive partner at Flagship Pioneering. March 17. “The next horizon of
innovation for pharma” http://www.mckinsey.com/industries/pharmaceuticals-and-medical-
products/our-insights/the-next-horizon-of-innovation-for-pharma
You also have to look at the external environment and think about what could go wrong. We should always
worry when there’s political change . For instance, when payors—which is the government in most
parts of the world—come under economic pressure, changes in legislation could disrupt the
innovation process. If all of a sudden investors had no hope of being able to take their
companies public and make a good return, that money would dry up, as would innovation . If
pharma companies saw prices fall so far that their margins came under huge pressure, they
would cut costs and reduce R&D as well as other spending. Eventually there would be an industry shakeout,
and it would correct itself, but you’d have several years or longer where things slowed down or paused, and
that’s an ongoing risk .
ABR won’t get close to extinction, intervening actors solve it, their internal link
can’t
Ed Cara 17, science writer for The Atlantic, Newsweek, and Vocativ, 1/27/17, “The Attack Of
The Superbugs,” http://www.vocativ.com/394419/attack-of-the-superbugs/
A nti b iotic- r esistant infections kill at least 700,000 people worldwide a year right now, according to an exhaustive
report commissioned by the UK in 2014, and without any substantial medical breakthroughs or policy changes that slow down
resistance, they may claim some 10 million deaths annually by 2050 — eclipsing cancer in
general as a leading cause. These deaths largely won’t come from pan-resistant infections , just tougher ones.
A preventable death there, a preventable death here.
Leaving that aside, antibiotics, along with proper sanitation and nutrition, gird our entire way of living. Most every invasive surgery,
pregnancy, organ transplant and chemotherapy session we go through will become riskier. Other diseases like HIV, malaria or
influenza will become deadlier, since bacteria often exploit the opening in our immune system they leave behind. And already
precarious populations like those living with cystic fibrosis, prisoners, and the poor will lose years off their lives.
For all the warranted gloom, though, Farewell does think there are reasons to be hopeful. “I don’t think we are
doing enough, but the
scientific community along with many governmental and private foundations
are very actively involved in finding not only new antibiotics, but new solutions to this problem,” she
said. There’s been a noticeable change in attitude and increased urgency surrounding antibiotic resistance,
she said, one that she hadn’t seen even five years ago, let alone twenty.
Until recently, that attitude change could be seen from places as high up as the U.S. federal government. In 2014, former President
Obama issued an executive order aimed at addressing antibiotic resistance , the first real
acknowledgement of the problem from an administration, devoting funding and outlining a national action for combatting
resistance. Through its federal agencies, the administration pushed to reduce antibiotic use on farms and encouraged doctors to stop
using them in excess.
“There has been a lot of work done the last couple of years, much of it spurned by [Obama’s] National Action Plan,” said
Dr. David Hyun, a senior officer for Pew Charitable Trusts’ Antibiotic Resistance Project. The CDC, in particular, has used its
funding to open up regional labs that allow them to better detect and respond to antibiotic-resistant outbreaks like the Nevada case,
he said. They ultimately hope to create an expansive surveillance system that can easily keep track of resistance rates on a national,
state and regional level. A parallel system also exists for monitoring resistance in the food chain, shepherded by the CDC and the
U.S. Department of Agriculture.
In fact, it was this sort of cooperation between national and local health agencies that enabled Nevada
doctors to stop the worst from happening, said Dr. Lei Chen. The swift identification of a possible CRE strain by the
hospital, coupled with the woman’s medical history, led to a precautionary quarantine, while also prompting Chen’s public health
department and eventually the CDC into action. And it may help prevent future cases from spilling into
the public . According to Chen, the CDC has allocated funding this year to all of Nevada’s state public health departments so
they can better detect CRE and other dangerous resistant strains.
Under the Trump administration, there’s no telling how these small victories will hold up or whether they will advance. All
references to antibiotics once found on the Whitehouse.gov site have been removed, including a link to the Obama administration’s
national action plan, and the fact that they’re already tried to bar USDA scientists from discussing their work with the public while
stripping funding from other public health agencies isn’t encouraging.
Even with the best public policy , however, there’s no clear light at the end of the tunnel.
Antibiotic resistance has gradually been worsening, even within the last 15 to 20 years, when superbugs like
methicillin-resistant Staphylococcus aureus (MRSA) first became widely known, said Hyun. The effort needed to develop
new drugs has been in short supply, hamstrung by pharmaceutical companies’ inability to
recoup the costs of bringing new antibiotics to market. That’s because, unlike the latest heart medication, any
new antibiotics will have to be treated like the last drops of water during a drought, used as little as possible — the exact opposite
way to make money off a new product. Yet, much like climate change, the financial toll of not doing anything will total in the trillions
years down the road. And it already numbers in the billions now, according to the CDC.
Of course, we need bacteria to survive. And most need or pay no mind to us in return. Even pan-resistant bacteria don’t really mean
harm. Some have been found in perfectly healthy people, a fact that’ll either comfort you or keep you awake at night, only causing
no army of sentient E. coli that will rise up
problems when our immune system wavers. There’s
NHI creates uncertainty that stops venture capitalists from investing in medical
tech
Ray Leach 11, CEO of Jumpstart, expert in technology entrepreneurship. 10/17/11, “Medical
Technology: How Regulations, Reforms Threaten To Stifle U.S. Healthcare Innovation”
http://www.huffingtonpost.com/ray-leach/medical-technology-how-re_b_1015689.html
Regulatory burdens and healthcare reform are causing big uncertainties for venture capital
investors . That could limit the ability of young drug and medical device companies to bring
products already in the pipeline to market, thwarting billions of dollars of investment. It also
could stop promising drugs, therapies, and devices from being developed for patients who
really need them.
From my perspective, lack of new healthcare investment could limit the economic impact and jobs created by entrepreneurs. In
regions like Greater Cleveland, where a growing medical economy is powered by assets like the Cleveland Clinic and University
Hospitals, and where my own nonprofit venture development organization regularly supports biotech and
biomedical device entrepreneurs, this limitation could have devastating effects.
Consequently, the U nited S tates as a whole could lose its global lead in medical innovation , job
creation, and access to life-giving treatments for the first time in decades. Patients, workers, and
the national economy would suffer.
Here are a few of the factors impacting healthcare investing:
• FDA burden: According to a Vital Signs survey of more than 150 venture firms by the National Venture Capital Association’s
MedIC Coalition, U.S. Food and Drug Administration (FDA), regulation was cited as the top reason for a recent pull-back in
healthcare investing. I serve on the NVCA board and this pull-back was a major topic of discussion during our early October board
meeting, with conversation centering on the cost, time, and unpredictability the FDA’s current approval process can add to the
development of innovative products.
While the coalition found that a little over one-third of firms expect to cut their biopharmaceutical and medical device investing
(both regulated by the FDA), they expect to boost their investment in non-FDA regulated healthcare services and health information
technology companies. Meanwhile, other U.S. venture capital firms are putting more of their healthcare dollars in Europe and Asia,
where regulatory and product development costs are lower. Investors and their portfolio companies can show clinical and economic
efficacy of their treatments more quickly offshore. Overseas, “that means companies earn revenue — and investors realize returns —
sooner,” explains Mike Bunker, managing director at Early Stage Partners, a Northeast Ohio-based venture capital firm.
The good news is that the FDA seems aware of the risks of falling investment in U.S. healthcare companies. The agency already has
proposed, among other steps, to streamline and reform regulation to remove its process as a barrier to innovation. Still, more must
be done to improve predictability, clarity and transparency during the approval process in order to ease investors’ concerns and
ensure that America keeps its competitive edge in medical technology.
• Investment challenges: “FDA regulatory costs are only half the reason why investors have shied away from healthcare,” says Baiju
Shah, CEO of BioEnterprise, a JumpStart partner and Cleveland-based bioscience company developer. “There is an ongoing
contraction in venture capital available to later-stage companies.”
As institutional investors allocate fewer dollars to venture capital overall, many find themselves over-allocated in healthcare. So
when VC firms ask for new healthcare dollars, the investors say there aren’t any more. “The problem we all are facing is finding
alternative sources of capital,” adds Shah.
• Healthcare reform: In theory, healthcare reform should expand U.S. markets for innovative healthcare products and
services by providing insurance coverage — and new buying power — to the uninsured. An aging population also should fuel
healthcare markets. But investors are worried that potential cost controls and lower Medicaid and
Medicare reimbursements imposed by reforms could limit medical innovation and their
returns. Some investors are steering clear of healthcare companies except those that provide services for which government
reimbursements are not a factor.
AT: Payment Switch
Providers say no---consolidation gives them leverage to refuse contracts that
incentivize quality
Douglas Singleterry 17, attorney who specializes in healthcare litigation and is co-author of
New Jersey Uniform Commercial Code, “Healthcare debate must confront industry
monopolization,” Mar 31 2017, http://thehill.com/blogs/pundits-blog/healthcare/326702-
healthcare-debate-must-confront-industry-monopolization
Some contend that alternative payment models, such as accountable care organizations (ACOs), contribute to industry consolidation. Since passage of the Affordable Care Act
both Medicare and private insurers have shifted towards payment reforms (replacing the
(ACA),
fee-for-service) that use performance based incentives to hold health care providers
traditional
accountable both for cost and quality of care.¶ ACOs coordinate a patient’s care across a network of
providers. A global budget is set for an entire patient population , with incentives to control spending and improve
healthcare outcomes. Approximately 30 percent of Medicare payments are now tied to value based incentives. But these reforms have prompted concern that providers would
consolidate in order to absorb the financial risks they pose. ¶ However, according to a new study published by Health Affairs there is little
evidence that health providers are consolidating to support ACOs. The study found no discernible differences in the pace of consolidation in markets with ACOs compared to
other healthcare markets. While participating physician groups did experience an increase in size, this was due to the addition of specialists and not directly related to ACOs.
“defensive reaction” to payment reform. In other words, facilitated to resist entering into such
arrangements. Interestingly, most of the Medicare savings from ACOs derives from independent
physician groups, not from larger health systems that have been less successful in controlling costs.¶ As the Harvard researchers
explain “Organizations that own hospitals and specialty practices have weaker incentives than those
that do not to limit use of inpatient and specialty care under ACO contracts, and evidence from Medicare and commercial
ACO initiatives suggests that providers can influence the use of care in multiple settings without formal ownership arrangements [i.e. consolidation] that unite providers.”
Profit motive means consolidated providers game the aff’s payment system---
causes high costs and low quality
Phillip Longman 11, senior editor at the Washington Monthly and the policy director at the
Open Markets Institute, “The Cure,” Washington Monthly, November/December 2011,
https://washingtonmonthly.com/magazine/novdec-2011/the-cure/
But not to worry, say defenders of “Obamacare”; we’ve got a plan to speed up those reforms. The ACA contains billions of dollars to incentivize the
creation of “accountable care organizations.” Just what are they? It’s hard to say, since the language of the bill on this subject is so vague. An essential
feature, though, is that an ACO is an institution that contracts with Medicare to serve a specific population and promises to
deliver specific quality metrics, such as keeping infection rates down or offering primary care services to patients. In return, it receives
the right to retain a large share of any resulting savings.¶ So far, ACO pilot programs have proved disappointing,
producing little if any savings. And there are good reasons to believe that most ACOs will never
deliver the quality and cost-effectiveness of truly integrated nonprofit health care
systems like the Mayo Clinic or the VA. Under newly minted regulations, there is nothing to prevent ACOs from being just loose
networks of colluding, profit-driven, fee-for-service providers who go through the
motions of pursuing quality. Even stalwart defenders of ACOs now acknowledge their large potential for abuse. As Donald Berwick,
administrator for the Centers of Medicare and Medicaid Services, recently told a forum at the Brookings Institution, “There will be parties out there
who want to repackage what they do and call it an ACO.” ¶ Berwick went on to warn, as have many others, that many ACOs are
likely to be
effective monopolies in their local markets, given the massive consolidation already going on in
the health care industry. This means they will be tempted to abuse their market power by, for
example, raising their rates for non-Medicare patients. This “would ultimately undermine any short-term savings
achieved by Medicare,” notes Merrill Goozner of the Fiscal Times, “since increases in a region’s top line health care tab would eventually force Medicare
to raise its own rates.”
around the world. Especially considering that years of antibiotics overuse has begun to lessen their
efficacy, a looming public health crisis that medical researchers have been warning about for decades.
In 2014, in fact, President Obama signed an executive order specifically geared toward combating the
rise of antibiotic- resistant disease. The stakes are high, given just how much of modern medicine is dependent on
snuffing out potentially debilitating infections through the use of antibiotics.
According to this latest research, Komodo dragon blood might help in that effort. That’s because it contains many
different cationic antimicrobial peptides, chains of amino acids that help the giant lizards stave
off infection, some of which have never previously been studied before. And, as George Mason University professor Barney
Bishop (the lead author of the study) told Motherboard’s Farnia Fekri, this could have implications for future drug
development. Said Bishop:
The peptides may themselves become drugs down the pipe. Or they could provide models and
templates for the development of drugs. This has many potential medical applications .
The public is suspicious of government and would hate the transition from paying
premiums which are hidden costs to taxes which are highly visible---that turns the
case because it means single payer shreds the public support necessary for
continued policy improvement
Jacob S. Hacker 18, the Stanley Resor Professor of Political Science at Yale University, 1/3/18,
“The Road to Medicare for Everyone,” http://prospect.org/article/road-medicare-everyone
These are questions I’ve struggled with for a long time. As a health policy expert, I’m one of the many social scientists and historians
who’ve sought to understand why the American framework of health insurance looks so different from the systems found in other
nations. Why do we spend roughly twice as much per person as any other nation while leaving
tens of millions of people without insurance and many times more with inadequate protection—all
with worse health outcomes?
The basic answer is simple: Americans are distrustful of government , and America’s fragmented
political institutions make transformative policies hard to enact, especially when they’re
opposed by powerful interest groups. Even at the height of the Great Depression, with overwhelming Democratic
majorities in Congress, FDR decided not to include health insurance in the Social Security Act of 1935, because he feared the
opposition of physicians would kill the whole bill.
FDR’s decision turned out to be fateful. With America’s entry into World War II, the nation’s agenda shifted away from domestic
affairs. Unions, corporations, and private insurers stepped into the breach—thanks in part to favorable tax laws and federal support
for collective bargaining—and by the 1950s, the majority of working-age Americans got health benefits at
work. By the time advocates of government insurance finally had another bite at the apple after LBJ’s landslide election in 1964,
they had strategically retreated to the goal of covering those left out of the employment-based system: the elderly and the poor. The
result was Medicare and Medicaid—the biggest step toward universal health care until the passage of the Affordable Care Act.
The system was a mess, but it was also a minefield. You had a huge insurance industry, allied with a range of profitable sectors that
benefited from its open checkbook, from drug manufacturers to medical device makers to highly paid specialists. You had excessive
costs that government could finance only with hefty taxes. Most important, for every unfortunate American who fell through the
cracks, you had eight or nine more who had benefits at work or through Medicare or Medicaid. To make matters worse, most of
had no idea how much their health benefits really cost , because the
these eight or nine
expense was hidden in their pay packages or spread across all taxpayers.
It would be hard to design a less welcoming context for single-payer .
sharply higher interest rates, potentially casting the world into recession – suggesting the
world economy is in a sweet spot and can sustain the healthy performance .
“World growth forecasts have been upgraded again as the eurozone recovery powers ahead, US
fiscal policy is eased by more than anticipated and higher commodity prices underpin the emerging-
market recovery,” said Fitch.
Confident companies in advanced economies are investing more, strong jobs markets are
boosting consumer spending and even choppier financial markets do “not look like a signal of
rising recession risk”.
“The balance of inflation risks has clearly shifted – cementing the move towards normalisation by the world’s
major central banks – but Fitch does not foresee a disruptive outburst of inflation that would
prompt sharp, growth-negative monetary policy adjustments in 2018,” the analysts said.
Fitch now estimates GDP growth hit 3.2pc last year and will come in at 3.3pc for 2018 and 3.2pc for 2019, up from 2.5pc in 2016 and
an average of 2.8pc over the past four years.
Britain’s growth is predicted to slow from 1.7pc in 2017 to 1.4pc this year before bouncing back to 1.7pc in 2019.
This is expected to result in one interest rate hike this year and two next year, as the economy is deemed to be close to full capacity.
Globally, Fitch said “central banks are becoming less cautious in their approach to normalising monetary policy as labour markets
tighten and spare capacity disappears.”
The economists predict four interest rate hikes in the US this year as growth stays strong , while the
European Central Bank is gradually moving towards tightening – which could mean a rate rise in late 2019.
Although Fitch does not expect a sharp rise in rates it does acknowledge this is a
key risk to world growth .
One threat is “a sharp pick-up in US core inflation, prompting Fed tightening on a much more
aggressive scale than assumed in the forecast, and a major global interest rate shock ,”
the report said.
“A rapid pick-up in wage growth in the context of increasing labour shortages would be the most
likely catalyst for this . This would be growth negative .”
Powell’s a hardline wage inflation hawk and signals of wage increases spook the
market
Robert L. Borosage 18, president of the Institute for America's Future, 2/9/18, “The Real
Reason Workers Can’t Get A Raise,” https://www.thenation.com/article/the-real-reason-
workers-cant-get-a-raise/
Yet the mere hint of rising wages creates warning flags at the Federal Reserve, America’s central bank.
Corporations could pass on rising wages to consumers by raising prices, and rising prices could feed inflation. The Federal
Reserve has the dual mandate of fostering the highest levels of employment and stable prices . The
Fed governors have decided—arbitrarily—that steady 2 percent inflation is the target they hope to
sustain. They maintain, despite little evidence, that once inflation starts it can spiral out of control, so they assume that they
must act preemptively to slow the economy by raising interest rates. In turn, the economy slows,
workers lose jobs, their ability to demand wage hikes is reduced , and inflation is slowed.
Last week, the country got what appeared to be good economic news—a decent jobs report, top-line unemployment
remaining at 4.1 percent, and average hourly wages inching up 2.9 percent over the 12 months ending in January, which
was the highest increase in the nine years of the recovery. Yet the stock market tanked . The fear that rising
wages could lead the Fed to hike interest rates faster, and slow the economy, helped trigger the
stock selloff.
That panic is testament to how much the game is rigged against workers. Inflation—at 1.5 percent in 2017—remains below the Fed’s
target. Prices aren’t rising too fast; they are rising too slowly. The economy has grown slowly in each of the past three years. Rising
wages are more of a dream than a reality. In real terms, wages rose a nearly invisible 0.6 percent in 2017. In previous expansions,
they’ve gone up over 4 percent without America turning into Weimar. Unit labor costs are up all of 0.2 percent in 2017—the lowest
gains ever at this point in an expansion.
The 2.9 percent wage hike reported by the Bureau of Labor Statistics in January measures the increase over the year of annual
hourly earnings of all workers. But as Doug Henwood writes in Jacobin, workers didn’t pocket most of the increases; managers did.
The BLS also reports on the earnings of workers who are not supervisors. Those rose only 2.4 percent in January over the previous
year—that is about the same that they rose in January 2016 over the previous year. Workers’ wages are barely keeping ahead of the
cost of living. Supervisors are doing better—and will do even better when the regressive tax cuts kick in.
Meanwhile, workers’ bargaining power has been decimated. Unions represent about 6.5 percent of the private workforce. Union
contracts no longer have built-in cost-of-living hikes. Workers capture a dramatically smaller percentage of corporate earnings than
they did in the 50 years between 1950 and 2000. One analyst estimates that if the worker share of earnings had stayed the same in
this century, employees would have pocketed a staggering $10 trillion more in wages over the last 17 years.
That’s the reality. Despite Trump’s boasts, the economy isn’t taking off. The growth of real wages is near zero. The wage share of the
economy is near record lows. Profit margins are near record highs. And as Paul Krugman notes, demand has been sustained not by
rising business investment but by consumers’ drawing down their savings. Consumer debt reached record heights in 2017.
Obviously, for workers to recover, wages have to be allowed to grow. With the Fed poised to pump the economic brakes whenever
wages begin to stir, stagnant wages will remain a feature—not a bug—of the current economic consensus.
These shackles on workers’ wages have little to do with who is in the White House. Obama’s Fed Chair, Janet Yellen, at times wisely
ignored right-wing Cassandras who were rending their garments about imaginary inflation while the economy was barely breathing
after the worst financial collapse since the Great Depression. But under Yellen the Fed did begin to preemptively raise interest rates,
even though the economy hadn’t come close to the Fed’s supposed target of 2 percent inflation.
Donald Trump foolishly replaced Yellin, and his nominee, Jerome Powell,
is likely to be much more receptive
to the arguments of inflation scaremongers . In any case, the wage increases that workers
desperately need are virtually ruled out by the doctrine that the Federal Reserve’s governors
follow.
AT: Full Employment
The fed believes we are at full employment---that’s what matters for the DA, not
their economists quibbling about the numbers
Jeff Cox 18, Finance editor for CNBC, 2/23/18, “Fed sees economy past full employment, but
with only 'moderate' wage gains” https://www.cnbc.com/2018/02/23/fed-sees-economy-past-
full-employment-but-with-only-moderate-wage-gains.html
Fed eral Reserve policymakers see an economy that may be past full employment, financial market
prices that are high and overall growth that continues to gather steam .
Those conditions remain appropriate for further interest rate increases, though inflation pressures remain
fairly muted for now, according to a key report to Congress the central bank released Friday.
The monetary policy report provided a wide-ranging view of conditions for new Chairman Jerome Powell, who took the Fed's reins
earlier this month. Powell will present the report along with remarks during congressional testimony Tuesday.
"The FOMC expects that, with further gradual adjustments in the stance of monetary policy, economic activity will expand at
a moderate pace and labor market conditions will remain strong," the report said, echoing language from prior
Federal Open Market Committee meetings.
The report comes after a year when the Fed hiked its benchmark interest rate three times and at a time of market unease over policy.
sparks of inflation will prompt the FOMC to move more quickly than
Investors worry that
anticipated with rate increases.
The Fed’s locked in to three rate hikes this year---the economy’s growing as fast as
it can without overheating---an additional rate hike would spook the market
Paul Davidson 3-21, USA Today economics reporter, 3/21/18, “Fed raises rates, keeps forecast
for 3 hikes in 2018,” https://www.usatoday.com/story/money/2018/03/21/fed-powell-hikes-
interest-rates-consumer-loans/444986002/
Citing a brighter economic outlook, the Federal Reserve raised its key short-term interest rate Wednesday but
maintained its forecast for a total of three hikes this year amid still-modest inflation.
The move is expected to ripple through the economy, nudging consumer and business borrowing costs higher, especially for
variable-rate loans such as adjustable-rate mortgages and credit cards.
Investors cheered the unchanged rate forecast for 2018 , pushing up the Dow Jones industrial average
about 250 points initially before stocks pared their gains.
The Fed’s policymaking committee, as widely anticipated, lifted the federal funds rate — what banks charge each other for overnight
loans — by a quarter percentage point to a range of 1½% to 1¾%.
That’s still low by historical standards but it marks the central bank’s fourth rate increase in the past 12 months
and another vote of confidence in an economy that’s picking up steam nearly nine years after the Great
Recession ended.
"We'retrying to take that middle ground " on rate hikes, boosting rates enough to head off an
eventual spike in inflation without derailing the economic expansion , Fed Chairman Jerome
Powell said at a news conference. The meeting was the first led by Powell, a Republican and Trump appointee, who took the reins
from Democrat Janet Yellen last month.
A breakdown of how the Fed sees:
How fast rates will rise
Wednesday’s rate hike was all but certain. Most of the suspense centered on whether the Fed would bump
up its forecast from a total of three quarter-point increases this year to four. It held steady at
three but raised its projection from two to three hikes next year as inflation picks up.
The Fed expects its key rate to climb to about 2.1% at the end of the year and 2.9% by the end of 2019 and over the longer run. It still
expects “further gradual” rate increases.
With federal tax cuts and increased spending set to juice growth over the next couple of years, some
analysts expected policymakers’ median projection to factor in an additional hike in 2018. That could have
unnerved already volatile markets . But surprisingly tame consumer price increases
likely convinced Fed officials to stand pat, at least for now .
The Fed raises rates to head off excessive inflation and lowers them to spur faster growth.
The economy
The Fed foresees the economy growing faster than it did in December. It expects growth of 2.7% this year, up from its December
forecast of 2.5%, and 2.4% in 2019, up from its prior 2.1% estimate. Both top the tepid 2.2% average during the nearly 9-year-old
recovery.
“The economy is healthier than it's been since before the (2008) financial crisis," Powell said,
The Fed statement said, "The economic outlook has strengthened in recent months,” an apparent nod to the $1.5 trillion
Republican tax cuts and a budget blueprint that increases federal spending by $320 billion over the next
decade.
The stimulus
measures are poised to further jolt an economy that had already gained
momentum , expanding at more than a 3% annual pace in the second half of 2017 on solid job and
income growth and a strong global economy .
But while the Fed said economic activity has been rising “at a moderate rate,” it added that growth in consumer spending and
business investment “have moderated from their strong fourth-quarter readings.”
Some economists worry the tax cuts and additional federal spending eventually could drive up inflation too quickly and add to the
$21 trillion national debt — both of which could push interest rates higher, eventually curtailing borrowing and economic activity.
AT: Other countries solve
Sustained low interest rates are key to renewables globally ---hikes shift the fuel
balance back towards coal and gas
Angus McCrone 16, Chief Editor at Bloomberg News Energy Finance, 9/26/16, “McCrone: If
interest rates turn, clean energy will find it tougher,” https://about.bnef.com/blog/mccrone-
interest-rates-turn-clean-energy-will-find-tougher/
In the decade since, interest rates globally have plumbed depths never seen before – or even imagined. In the
US, the Fed Funds Rate spent almost seven years at 0.25%. The main European Central Bank refinancing rate was cut to zero in
March this year, and at one point earlier this month, the German 10-year bond yield (the rate at which investors are prepared to lend
to the government in Berlin for 10 years) was minus 0.4 percent. The Bank of Japan benchmark interest rate is currently at -0.1
percent.
Amazingly enough, there is a chance that some central banks could lower rates further still. That was certainly the way the markets
were thinking in the aftermath of the U.K.’s surprise vote on June 23 to leave the European Union. However, there are also
grounds for thinking the trend might be about to turn, and wondering what the implications would be for the clean
energy and transport sectors.
One is that U.S. rates have already been raised once (in December 2015), and may be lifted again after the presidential election in
November, in response to signs of incipient inflation. Where
the U.S. goes on interest rates, other countries
tend to follow . Or at least that is what happened in other cycles.
Even in countries that have not matched the U.S. on economic growth recently, it may be that interest rates will be heading up – for
the simple reason that current policies do not seem to be working. Many developed economies remain weak, and negative interest
rates may be damaging, rather than boosting, the confidence of banks in Europe and Japan, and causing headaches for the pension
system. Perhaps something new should be tried, so the thinking goes, to stimulate growth – maybe a combination of fiscal loosening,
monetary tightening and structural reforms, or ‘helicopter money’ created by the central bank and used to fund new infrastructure
programs.
The other reason interest rates might turn upwards is the Donald Trump factor. The U.S. Republican presidential candidate told the
Economic Club of New York on September 15 that he would renegotiate the North American Free Trade Agreement, brand China as
a currency manipulator, and if necessary impose import duties, in an attempt to “bring vast new jobs and wealth to America.” The
Trump plan – if he wins the presidency on November 8 and if the plan is actually implemented (two big ‘ifs’) – might boost the U.S.
economy in the medium term, or might not – there would be a period of great uncertainty. However, its logical economic
consequence would be to substitute higher-priced, home-made goods for cheap imports, push up prices and wages, and so mean an
end to the rock-bottom-interest-rate era in the U.S.
For the first few years after the financial crisis, while central bank rates dropped to near-zero, the actual interest rates paid by
renewable energy project developers stayed stubbornly high. Banks had rediscovered risk premiums, and were using them to repair
their balance sheets.
Over the past three years, however, those low
rates started to be passed on, and clean energy has grown to
like them . They have served to bolster investment in renewables in several ways. They have
slashed the all-in cost of debt for projects, and the rates at which utilities can borrow from bond
markets, improving the economics of technologies with high upfront costs and low operating-
stage costs, such as wind, solar, hydro-electric and geothermal.
They have also brought new waves of money – from institutions and private investors – into renewables. They
have been attracted partly because wind and solar have matured as an asset class and are no longer seen as high-risk, but also
because those investors have had to look further afield for steady yields of 5-6 percent in the era of super-low interest rates.
Bloomberg New Energy Finance can claim to have glimpsed the low-interest-rate boost coming for renewables. In a VIP Comment
article in August 2010, Watch the Debt Markets for Clues on the Next Twist for Clean Energy, we postulated that “we might be
moving into a new phase of easier credit for project developers”. But we certainly did not foresee just how far it would go – in
Germany, for instance, onshore wind developers in 2015-16 have been enjoying an all-in cost of debt of just 2 percent for new
projects, down from 5 percent in 2010.
Impact on Costs
How would the sector stand if interest rates were to turn and, within a year or two, rise significantly
above current levels? My analyst colleagues will soon be publishing BNEF’s latest Levelized Cost of Electricity estimates for
all the main generating technologies. The results are likely to show electricity from onshore wind and solar photovoltaics falling in
price yet again, with the global central estimates below the $81 and $99 per megawatt-hour shown in our first-half 2016 report,
published in April.[1] Offshore wind’s LCOE is also likely to be down from six months ago, reflecting aggressive pricing in recently
announced projects, such as by Dong Energy A/S for Borssele 1 and 2 in the Netherlands and Vattenfall AB for Vesterhav Sud and
Nord in Denmark.
Falling financing costs have played as much of a part in the long slide in LCOEs for onshore wind and PV as reductions in equipment
costs, more efficient construction and installation, and streamlined operation and maintenance. The switch to tenders and reverse
auctions has also caused all parts of the supply chain to address their overheads and trim margins, in order to enable winning bids to
be tabled.
Let’s look at the impact higher interest rates would make, compared to the H1 2016 LCOE estimates. If all-in costs of debt were
to rise by 200 basis points, this would raise the LCOE of a U.S. solar project by $7, to $94 per megawatt-hour,
assuming it was financed pre-construction with a debt-equity ratio of 70:30 and a 20-year loan; and the LCOE of a Germany PV
project by $9, to $112 per megawatt-hour, assuming an 80:20 debt-equity ratio and a 12-year loan. And by the way, if you think a
200-basis-point rise in debt costs sounds extreme, and therefore very unlikely, I would point out that this would only return all-in
borrowing costs in northern Europe to where they were in 2012.
These estimated increases in LCOE, of 9 percent or so, would not kill renewable energy stone dead –far from it. But they would
tilt the balance back towards coal and gas (and biomass), where the upfront capex is a smaller fraction of
lifetime costs and where operating-stage expenses, notably the purchase of the fossil fuel feedstock, are a far bigger part.