Supreme Court ACA Ruling

When the Chief Justice made a majority
To uphold the Prez' priority,
It wasn't because
Of the old commerce clause,
But the Congress' taxing authority.

In a landmark decision that delighted liberals, enraged conservatives and gave everybody something to ponder, the Supreme Court upheld President Obama's Affordable Care Act 5-4, with Chief Justice John Roberts siding with the majority - sort of. The rejectionists, led by usual swing voter Justice Kennedy, found the ACA "invalid in its entirety." The more liberal justices, led by Ruth Bader Ginsburg, sided with the President and his Solicitor General on the basis of Congress' ability to regulate interstate commerce. The Chief Justice, perhaps splitting hairs, would not validate the "commerce clause" argument, but did reason that the individual mandate in the ACA amounts to a tax, which the Congress has broad powers to impose. Part of the Court's ruling may be read as enabling the states to opt out of funding the expanded Medicaid coverage mandated by the ACA, which means that - even assuming the President is re-elected in the fall - we're not done fighting over Obamacare.

Cause of Death

Said the mayor of a municipality
Whose failure was filed with finality:
"The medical fees
Of our retirees
Were the cause of our fiscal mortality."

The city of Stockton, California is the latest US locality to conclude that the cure is worse than the disease. The city declared bankruptcy with $700 million in debt overwhelming the resources of its 300,000 residents. Among the insurmountable costs were Stockton's pension and healthcare outlays for its retired workers, along with falling property values and an expensive downtown-revitalization project. The Wall Street Journal reports that healthcare costs are expected to rise for all of the US states, regardless of the outcome of the Supreme Court decision on the Affordable Care Act, indicating much work to do to bring health care costs on a sustainable path.

A Matter of Degree

Asked a socially relevant chronicle:
"Is a college degree economical?
Well, the lifetime return
On the extra you earn
Is substantial, but not astronomical."

Dr. Goose had occasion to visit Loyola University of Maryland as part of an adult entourage in an orientation program for incoming freshmen. Loyola impressed with many outstanding qualities, beginning with its president, the Rev. Brian Linnane, SJ, a clear-thinking, no-nonsense advocate of cura personalis – "Care of the whole person."

I also had occasion to note that the cost of one year at this fine institution has reached $57,000, as has that of many private universities. While listening to a presentation on financial aid, I did a back-of-the-napkin calculation and found that, in order to yield a 4% return on the four-year investment in education over a 40-year time horizon, a graduate would have to earn $11,000 a year more than they would have with only a high school diploma. Those who strive for an 8% return would have to earn an additional $19,000 a year. Studies show that such incremental earning power is within the reach of the typical college graduate, but probably not those who indulge in "coasting", against which Father Linnane inveighed ominously.

Road Trip

Dr. Goose is on the road Monday and Tuesday, and will return to economic limerick writing on Wednesday.

Bringing Down the Price of Oil

When there's negative news from abroad
And the US recovery's flawed,
It precipitates shocks
To oil and stocks
In Chicago, New York & Riyadh.

"Be careful what you wish for; you just might get it." Everybody wants cheaper oil, but it often comes with a cloud over it, bringing lower stock prices along for the ride. On Thursday, the Dow Jones industrials fell 1.96% as negative economic news from Europe and China combined with the announcement of a manufacturing slowdown in the Philadelphia Fed district to cast a pall over US growth prospects. US crude oil prices responded to the weak data by falling to $78.20 a barrel, a new low for the year.

Like We Did Last Summer

Said the Fed: "The economy's gist, again,
Is that lackluster data persist again;
In short, we have found
That it's coming unwound,
So come on now baby - let's twist again!"

The policy makers of the Federal Reserve Open Market Committee conclude their latest two-day meeting this afternoon with a Ben Bernanke press conference at 2:15 EDT. Most observers expect that, in view of lingering economic weakness in the US, and the downside risks posed by the euro zone debt crisis, the Fed will continue with the so-called Operation Twist.

Under this groovy program of monetary stimulus, the Fed sells short-term Treasury bills and notes, and invests the proceeds in long-term bonds (either Treasuries or mortgage-backed). In so doing, Chairman Bernanke and his cohort hope to stimulate credit activity by holding down the cost of long-term borrowing. As we have seen, this program has had mixed results, in part due to many Americans' limited access to credit. Then again, the tools of the Fed are also limited.

Unqualified Interest

As a primary task of the Fed, it
Should cheapen the cost of our credit,
Which would help a lot more
If the mean credit score
Would qualify many to get it.

The Wall Street Journal's Jon Hilsenrath reports that the Fed's efforts to spread the stimulant of low interest rates throughout the US economy is stymied by the many borrowers who are over-leveraged, underwater and therefore unqualified to refinance at lower rates. Moreover, the fortunate few who can refi at will tend to reinvest rather than spend the proceeds, as they were already able to buy whatever they wanted. In a response that is short on verbiage but long on sarcasm and contempt, the Zero Hedge blog suggests that our national economic model - borrowing to fund consumer-driven growth - may not be sustainable.

#Grelex

A political analyst noted,
On the day that Athenians voted,
That whoever's elected,
An exit's expected -
From euro to drachma demoted.

"Europe can exhale." So enthused the Munich-based Süddeutsche Zeitung after pro-European parties narrowly won the most closely watched Greek election in modern times. The radical-left Syriza Party, which wanted to reject the austerity measures forced on the country as a condition of continued eurozone membership and financial support, made a strong showing, if even in defeat. So, Europe stays together.

But, can the eurozone members collectively exhale? Despite the narrowly pro-European election result, the financial and political pressures on the Greek people remain immense, and the road to stability and prosperity is long and treacherous.

Rope-Walking Wallenda

A rope-walking man named Wallenda
Crossed the Falls on a cable so slenda;
Though tied to a tether,
One didn't know whether
He'd slip and impale his pudenda.