I’ve been trying to write about what’s happening with the debt ceiling for hours, but every time I do, something new happens, and I have to start over. This morning the proposal on the table from Senate leaders Harry Reid and Mitch McConnell was to reopen the government ... but only until Jan. 15, because the Democrats hope that before then they’ll be able to renegotiate the hated sequestration spending cuts, which are scheduled to take place shortly thereafter. It would raise the debt ceiling until Feb. 7, because the Republicans apparently want to have another theatrical negotiation in three months -- sort of an early Valentine’s Day gift to the nation. There would be increased scrutiny of subsidy eligibility for health insurance. And the deal would delay for one year the reinsurance fees that health insurers pay in exchange for help defraying their costs if they end up with too many old and sick people in their pool.
Later in the day, it came out that the House Republicans had their own plan, which was the same in the first three elements, but pushed back the tax on manufacturers of medical devices for two years, instead of delaying the reinsurance fees for one. Republicans also wanted to get rid of insurance subsidies for members of Congress, the president, the vice president and the cabinet. At least give them this: The deal will cost them thousands of dollars a year, which they’re willing to spend in order to make a statement. Or sort of willing; it later emerged that House Speaker John Boehner might not have the votes for his own proposal.Read more »
This is one of the most interesting pieces of news I’ve seen in a while: Netflix is looking to hook up with cable companies, allowing them to put a Netflix app on their set-top boxes. Talks are in early stages, so it’s too soon to flip out about a sea change in telecoms. But if this moves forward, it will represent a dramatic change in Netflix’s strategy -- and possibly a blow to the dreams of cord-cutters everywhere.
In the minds of many fans (including, at one point, me), Netflix was supposed to be the cable-killer. I explained why this was folly a few years back, after the brief and tragic life of Qwikster, Netflix Chief Executive Officer Reed Hastings's attempt to separate its DVD business from the streaming:Read more »
A few weeks back, at a friend’s birthday party, we were served macaroni and cheese made in mini-muffin cups. Basically, this meant that the mac and cheese was all crunchy edge bits. And the Official Blog Spouse loves crunchy edge bits. In fact, he loves anything crunchy. “Could you make that for me?”
“I guess,” I said. We don’t have mini-muffin tins, but we do have regular muffin tins. And I have a pretty good recipe for macaroni and cheese. Armed with these two things last weekend, I prepared for an experiment.Read more »
Exactly how bad are things on the federal health-care exchanges? The working assumption among most journalists, including me, is that they would be fixed in a few weeks -- that is, by the end of this week. But yesterday’s New York Times brought a deeply reported piece from Robert Pear, Sharon LaFraniere and Ian Austen. There is too much information in the piece for an excerpt to do it justice, so I’ll summarize, with some editorial comments -- but you should read the whole thing to get the full flavor:
-- One person familiar with the project says it’s only about 70 percent of the way there, and has heard estimates of somewhere between two weeks to two months to fix it. As a programmer I know points out, “two weeks to two months” is the programming equivalent of “40 days and 40 nights”: “A long time, but I have no way of knowing how long.” When I used to hear estimates like that, I used to assume it would be coming in on the late end of that range, earliest.Read more »
And the Nobel Prize in economics goes to … Eugene F. Fama, Robert J. Shiller, and Lars Peter Hansen. None of these three is a surprise candidate; it’s mostly been a matter of “when,” not “if,” with the caveat that since they don’t award posthumous Nobels, there was always the possibility that the Grim Reaper might get there before the committee did. But thankfully not the case!
Robert Shiller will be known to most of you for his work on the housing market. The S&P/Case-Shiller index of home prices is now the standard measure of activity in the housing market, and Shiller was the go-to economist for quotes on the housing bubble -- before and after it popped. However, this is not the work for which he is being awarded the prize; the committee’s press release cites his earlier pathbreaking work on stock markets.Read more »
A few days ago, when I remarked that U.S. pharmaceutical prices subsidize much of the research that benefits the rest of the world, I got various forms of push back, so it seems worth running, briefly, through the logic:
1. Both critics and boosters of pharma agree that prices are higher here than elsewhere.Read more »
I was in business school during the stock market bubble, which means I've heard all the rationalizations about how unprofitable companies will eventually make money.
There were companies such as Kozmo.com, which delivered stuff via bike messenger; it was losing money on every unit, but planning to make it up in volume. (How do you scale up bike messengers?, asked a perspicacious vice president I worked for in Merrill Lynch’s technology investment banking group.)Read more »
Howard Schultz is a really nice guy. He runs a nice company that gives people somewhere they can always stop for a hot drink, a comfy chair and a clean bathroom. Starbucks is consistently ranked as one of the best places to work, because of its decent wages, excellent benefits and free coffee. Schultz, the chief executive officer, is obviously a big reason that those things happen (though of course an affluent demographic also makes a big difference).
Anyway, Schultz is clearly a nice guy. But he seems to be suffering from a common delusion of nice guys, which is that if folks only understood how much they were dismaying nice guys like Howard Schultz, they would stop whatever misbehavior is causing the anguish.Read more »
A few days back, David Goldhill, whose writing about health care I have long admired, wrote a column for Bloomberg View suggesting that the Obamacare health insurance exchanges would actually raise prices for insurance, as insurers converge around a single price for the reference product that sets the subsidies to be offered.
Goldhill’s argument is complicated. Here’s the gist: First, the subsidies are determined by the price of the second cheapest silver plan on the exchange. The system calculates what percentage of your income you’re supposed to pay -- for a family of four making $32,500, that amount is 3.29 percent of income, or a little more than $1,000 a year. The system looks at the second cheapest silver plan, and subtracts the amount that you’re supposed to pay. What’s left is your subsidy. If you buy a cheaper “bronze” plan, you can pay little or nothing, with the subsidy covering the whole thing. If you buy a more expensive plan, you have to make up the difference.Read more »