Baum on Money: The Obamacare Trickle
Good morning, readers. Here are your daily reads for Tuesday.
Yellen in the hot seat
The Senate Banking Committee will hold a confirmation hearing Thursday on Janet Yellen's nomination for Federal Reserve chairman. No one questions her credentials as an economist or central banker. She is less experienced when it comes to "being a pawn in the political game that is a high-profile congressional hearing," writes the Washington Post's Neil Irwin. Yellen is known as a meticulous preparer. Yes, there will be questions from Republicans on her perceived dovishness on monetary policy and the sideshow of those who want to use her confirmation to extract political concessions. But "a particular minefield could be fiscal policy," Irwin says. Just once I'd like some Fed official to respond to questions about fiscal policy with: "That's your job. I'm doing mine; you do yours."
Stronger growth = baby boom
It's been well-documented that birth rates fall during bad times: the Great Depression, the Great Inflation, the Great Recession. Now Bloomberg's Kasia Klimasinska reports that states with low unemployment rates, such as North and South Dakota, are experiencing a baby boom, evidence of the relationship between "fertility and economic well being." A bigger family means a bigger house and more stuff all around, which means faster economic growth. The Fed should find the news encouraging. However, I would caution policy makers against setting a threshold of births per person as a precondition for tapering or raising rates.
More good news on jobs
Outplacement firm Challenger, Gray & Christmas says holiday hiring got off to its best start in 14 years, with 159,500 (unadjusted) retail jobs created in October. "Strong October hiring does not necessarily mean that holiday hiring will surpass last year’s level, but it is certainly a good sign," Challenger said in a press release. While consumer confidence is shaky and another government shutdown is always possible, the 16-day shutdown in October "did not appear to have any effect on retail hiring." Or, for that matter, on other sectors of the economy.
Obamacare numbers start trickling out
Fewer than 50,000 people have signed up so far on Healthcare.gov, according to the Wall Street Journal. Avalere Health, a consulting firm, reports a similar number of enrollees via 12 state-run exchanges. The Obama administration has been trying to lower expectations ever since it claimed that heavy traffic caused Healthcare.gov to malfunction on opening day. Initial expectations of 500,000 enrollments the first month and 7 million by March aren't likely to be realized, especially when the web portal isn't functioning smoothly. That Nov. 30 deadline for fixing the website isn't realistic either. The administration plans to release actual numbers sometime this week. Not that there's any way to validate them.
Don't forget spending
Income inequality is a hot topic, and the Tax Foundation's latest study on the redistribution of income in the U.S. provides some interesting results. First, focusing exclusively on tax distribution at the expense of spending provides a distorted picture, according to the study's authors. Taken together, government tax and spend policies redistribute $2 trillion annually from the top 40 percent to the bottom 60 percent. (More than two-thirds is from the federal government.) The bottom 60 percent of American households receive more from the government than they pay in taxes. And before you cry foul about any attempt to flatten tax rates, the authors say it can be matched "with an equal increase in progressivity on the spending side." As if that were the only obstacle standing in the way of tax reform.
(Caroline Baum is a Bloomberg View columnist. Follow her on Twitter.)