Congressional and presidential exemptions from ACA (Obamacare)

The opponents of Obamacare continue to use the exemptions afforded to congress and the White House as evidence that even those who passed the law don't think it will work.  The problem (one of them, rather) is that this claim is simply false.  Nevertheless, opponents continue to use this canard as a talking point that their followers can use unquestioningly (such as Erick Erickson over at redstate.com).  The conversation is too important for us to allow it to be high-jacked by empty rhetoric (at best, lies as worst).

Marginal Tax Rates Explained (in part).

Small businesses and those on the lower end of the wealthy (those making around $250,000) seem to have found a way to make it through the fiscal cliff and Obamacare.  If the cliff is avoided by raising taxes on those who make over $250,000, these top earners and small businesses will simply make sure they do not earn more than $249,000 in a year.  After all, after you pass the magic number, your tax rate goes up, right?  Sort of.  A marginal tax rate doesn't quite work that way.  After an earner passes $250,000, his or her tax rate goes up, but only on what he or she has earned beyond $250,000.  That is, if you make $260,000 in a year, only $10,000 of that will be taxed at a higher rate.  Thus, if you try and keep your income below that magic number, you're only screwing yourself.  If you're going to invite a small business expert on your show, this is one of the things he should know--and if you are going to play the journalist on your show, you should call him out if he doesn't know this basic fact.

More info here, and here.

(This is not an endorsement for raising taxes).

WTF is a mandate?

Now that the election is over, you're going to hear the word mandate--a lot.  But what is a mandate?  In its basic usage, mandate simply refers to a term--in this sense, Obama has just won is second mandate.  But that is not the way the pundits and commentators are using the term.  Instead, they use the term to refer to a political carte blanche.  Hence, to say that Obama has a mandate by virtue of having been reelected means that he has the voters' permission to do whatever he wants.  This kind of mandate does not exist (cannot exist) in a democracy.  As Obama has noted after both of his elections, he is the president of all citizens, not just those who voted for him.  This means that his job is to defend everyone (as much as possible--there are necessarily losers in any election--but more on that in a follow up post), and that will mean compromise (that dirty word) on his policies.  One might rightly say that he has a mandate to move ahead with the ACA (that is because the bill has been passed and defended as constitutional by SCOTUS), but that doesn't mean he can steamroll the congress in the process (any more than that congress can steamroll POTUS on tax policy).  Let's stop using this word.

A followup on Layoff Bomb-gate.

Here is a quick followup to my previous post regarding what is being called the Layoff Bomb (a phrase coined, as far as I can tell, by Michelle Malkin of Twitchy.com).  To be sure and to repeat, I am interested in the argument, not in defending ACA nor scolding businesses that may have legitimate reasons to downsize.  The problem here is the narrative.  Malkin's claim was that Obama would be (and now is) responsible for these jobs lost.  As I suggested in my previous post, it is awfully difficult to argue that ACA (Obamacare) was responsible for the losses, since it has yet to be implemented.  In addition, it is designed to have little negative affect on small businesses (as in, they will not be forced to participate).  As it turns out, and as Media Matters is reporting, many of the larger businesses have cited reasons for the layoffs that are entirely unrelated to ACA.  Have a gander.

Obamacare and the Layoff Bomb.

I will say this before I begin: I am not defending the Affordable Care Act in this blog post.  In general, I am not interested in defending one position or another in this blog.  I'm simply interested in distinguishing good arguments from bad ones.  If you are following the politicos on Twitter, you may have noticed the trending story about the 'Layoff Bomb'.  On October 31, Michelle Malkin of Twitchy.com predicted that President Obama's reelection would lead to businesses large and small making massive layoffs.  It would appear that she was right (Boeing, Pepsi, ING among many others, including small businesses have announced such immanent layoffs).  Further, there is no doubt that many of these come as a reaction to the reelection, and especially to the perceived consequences of Obamacare.  It is a massive phenomenon with many contributing factors, affecting many employers and employees.  So, for now I will limit my comments to small businesses.  I would like to point out that there is a difference between claiming that businesses are laying off employees as a result of Obamacare and claiming that Obamacare is forcing small businesses to lay off employees--the first is a matter of perception, the second of economic causation.  The first is most certainly true, but the second is a ridiculous claim (for now).  First, Obamacare has yet to take effect.  But more importantly, Obamacare will have different consequences for small businesses than it will for large businesses.  If you define a small business as less than 50 employees, then Obamacare will have no deleterious affect on any small business, since businesses with fewer than 50 employees are exempt from the employer responsibilities requirement.  Businesses with fewer than 50 employees make up between 93% and 96% of American businesses.  Thus, the businesses affected will be fewer than 7% (at most).  In addition, small businesses with fewer than 25 employees who opt into the system will receive subsidies to offset the costs of ensuring their employees--up to 35%, up to 50% after 2014.  In the end, certain businesses which are already providing insurance to their employees will actually save money.  All of this is stated in the bill itself, which you can read here.  Thus, Malkin was absolutely right, small businesses (and large ones) do seem to be making layoffs due to the reelection, and specifically our of fear that their businesses could be negatively affected.  In addition, and in general, there will be a tax increase for certain businesses--about a .9% increase for about 3% to 6%.  And I am generally wary of encouraging tax increases that do not affect me (it is always easy to say the other guy should pay for it).  But to claim that Obamacare is destroying small business is tantamount to claiming that Caspar the friendly ghost ate my homework--Caspar does not exist (yet) and even if he were to exist, he is a ghost and doesn't have a digestive system.