Monday, September 25, 2023

Big-City Mayors Are Getting Kicked Out of Schools

https://www.governing.com/education/big-city-mayors-are-getting-kicked-out-of-schools

Big-City Mayors Are Getting Kicked Out of Schools

Having mayors run school districts became a big trend 30 years ago. Now most cities are returning power to independently elected school boards.

Aug. 9, 2023 •

Alan Greenblatt

In Brief:

Major cities such as New York, Chicago and Boston moved to mayoral control of schools in the 1990s.

They pushed through some reforms, but many voters found their approaches heavy-handed.

Only a dozen mayors are still responsible for schools, but almost all mayors still seek influence.

Chicago residents will get to do something next year that they haven’t done since the 1990s. They will cast votes for members of the school board. Thirty years ago, Chicago was in the vanguard of major cities where mayors took direct control of schools. That idea is now in retreat.

Los Angeles, Detroit and Oakland, Calif., have already moved away from mayoral control of schools. In Boston, nearly 80 percent of voters approved a nonbinding resolution in 2021 to restore an independent school board, but Mayor Michelle Wu vetoed a proposal earlier this year from the City Council to do just that.

For the most part, running schools has come to be seen as a complicated endeavor that is just one plate too many to juggle for the person also in charge of parks, public health, transit, crime and much else. “What you’re seeing is that the idea you can hold a mayor accountable at the ballot box for the performance of our schools has just not borne fruit,” says Ricardo Arroyo, a member of the Boston City Council.

It’s a dim memory at this point, but mayoral control of schools was a buzzy policy approach back in the 1990s. The experiment was ultimately run in only about two dozen major cities — there are just under a dozen where mayors are still in control — but they included some of the nation’s largest districts. Michael Bloomberg and his handpicked Superintendent Joel Klein drew national attention for pushing competition in New York, while the embrace of charters in Washington, D.C., and other cities became the subject of a high-profile documentary.

The clout of mayors offered a counterweight both to teachers unions and sometimes stodgy educational bureaucracies. At least in some places. “When you had a strong mayor who was invested in it, it created coherence and a focus on school performance that was otherwise lacking in these big urban centers,” says Frederick Hess, director of education policy studies at the American Enterprise Institute, a conservative think tank in Washington.

That didn’t happen everywhere. Not all mayors were as transparent about their plans for schools as elected school boards had been. Nor were all of them willing or able to take the political risks involved in driving real change. And it proved difficult to find compelling evidence that mayors running schools worked any miracles, compared with the performance of peer cities.

“In the scheme of things, how big were these impacts?” Hess asks. “It’s hard to argue they were that big.”

Problems With the Model

A couple of things are driving this move away from mayoral control. For instance, the changing racial and ethnic mix within many cities means many residents believe they will be better represented when they can vote for multiple members of a school board, rather than letting the mayor appoint everyone. “A school board can make everybody in the community feel like somebody is articulating their agenda, where you had folks who felt they were locked out of the mayor’s agenda,” Hess says.

There have been other downsides. Members of appointed school boards who’ve crossed swords with mayors on key decisions have found themselves booted out of office. Even as they sometimes seem to act as rubber stamps, they can also serve to insulate mayors from taking responsibility for unpopular decisions.

It’s the school board who did it, not me, a mayor might say. “What makes an elected school committee more responsive is that the constituency believes it’s working for them, rather than an appointed committee that essentially works for the mayor,” Arroyo says.

Mayors Still Get a Say

When Phillip Jones took office as mayor of Newport News, Va., he knew he had no formal control over schools. Not only does his office not run the schools, he has no say at all about policy or priorities. But he understood that schools are essential to the health of his community, so he’s done everything he can to prod them in the right direction. He intends to spend time this fall working as a substitute teacher to draw attention to classrooms and their needs.

“I have zero agency, but I have been the first mayor to attend school board meetings,” Jones says. “I am deep in their budget. I am actively participating.”

If contemporary mayors mostly don’t want to be in charge of schools — and their constituents don’t want that, either — that doesn’t mean mayors will have no say. Schools are too important. They represent the biggest item in the typical city budget and are often the largest local employer. Months before Tuesday’s one-day strike brought many city services to a halt in Los Angeles, Mayor Karen Bass stepped in to mediate a strike that shut down schools for several days.

Mayors concerned with schools are finding lots of other ways to make their wishes known. Some are pushing for specific policies, whether early childhood education or afterschool programs. Dozens of mayors have created children’s cabinets meant to coordinate services for children and youth. All mayors spend plenty of time visiting schools and meeting with parents and school officials.

“Instead of direct, formal control, mayoral leadership is picking up through these other mechanisms,” says Kenneth Wong, an education professor at Brown University. “Mayors are not shy to take on districtwide initiatives, but they’re using cross-sector collaboration to support this work.”

The idea that mayors were going to take over schools and save education has come to an end. Today’s mayors have gone back to the old way of doing business, trying their best to make schools better while standing safely on the sidelines. And that’s where voters seem to want them.

AIPAC Targets Black Democrats — While the Congressional Black Caucus Stays Silent

https://theintercept.com/2023/09/21/aipac-cbc-progressive-black-democrats/?ref=am-quickie.ghost.io

AIPAC Targets Black Democrats — While the Congressional Black Caucus Stays Silent

AIPAC has given at least $3.6 million to the CBC’s old guard since last year, while members of the Squad draw the Israel lobby’s ire.

Akela Lacy

September 21 2023, 6:00 a.m.

The American Israel Public Affairs Committee, the country’s most influential pro-Israel lobbying group, is recruiting candidates to challenge progressive members of the Congressional Black Caucus in primaries next year.

The CBC has been silent on the AIPAC bid to challenge at least three of its members who are part of the so-called Squad, a loose group of progressive representatives. According to media reports and The Intercept’s investigation, the only incumbents AIPAC has targeted so far in this election cycle are CBC members.

The CBC’s silence on the electoral challenges reflects the divide among Democrats on Israel — with progressives increasingly willing to buck Capitol Hill orthodoxies and speak up for Palestinian rights — and fundraising dynamics among caucus members. AIPAC has endorsed more than half of CBC members. The AIPAC-backed members of the caucus, some 31 lawmakers, have received a previously unreported total of at least $3.6 million from AIPAC since February 2022, according to Federal Election Commission records.

“AIPAC and its Republican donors are intentionally targeting progressive members of the Congressional Black Caucus with right-wing primary challenges.”

The silence has given rise to calls for the CBC to speak up for members under attack — especially given AIPAC’s propensity for directing Republican money to challenge incumbent progressive Democrats in primaries.

“AIPAC and its Republican donors are intentionally targeting progressive members of the Congressional Black Caucus with right-wing primary challenges,” said Alexandra Rojas, the executive director of Justice Democrats, which backed all five CBC members from the Squad. “The CBC — and every caucus in Congress — has the opportunity now to demonstrate their power and stand up for all incumbents against AIPAC’s role in funneling GOP dollars into Democratic primaries.”

Bhavini Patel, a council member in the city of Edgewood, Pennsylvania, is reportedly planning to run against Lee. Jewish Insider reported that it was unable to confirm if AIPAC had met with Patel. (Patel did not respond to a request for comment.)

While AIPAC declined to respond to specific questions about its involvement in the challenges against CBC members, the pro-Israel lobby defended its record supporting Black candidates for Congress.

“AIPAC proudly endorsed more than half the Black Caucus last cycle and United Democracy Project” — an AIPAC-backed super PAC — “helped ensure pro-Israel African American Democrats in Ohio, North Carolina, and Maryland won their elections,” an AIPAC spokesperson said in a statement to The Intercept. “While we have not made any decisions on specific races this cycle, we are constantly evaluating every seat held by a detractor of the U.S.-Israel relationship, and we base our assessments exclusively on their anti-Israel votes and statements.”

The CBC did not respond to a request for comment.

Old Guard Versus the Squad

Five Black progressive officials have joined the CBC’s ranks since 2019. Their additions strained already shifting dynamics in the caucus, which has long been governed by traditional structures of seniority and patronage.

The caucus has sometimes stood against the new crop of rising Black progressives. The CBC bet against Rep. Ayanna Pressley, D-Mass., in 2018 and backed her white incumbent opponent, former Rep. Mike Capuano; Pressley won and joined the CBC. Bowman angered the old guard of the caucus when he endorsed progressive candidate Cori Bush in her 2020 primary in Missouri against Rep. William Lacy Clay, a centrist who had been a CBC member for two decades. Bush also won and joined the CBC.

Divisions on Israel in the CBC, however, go beyond election alliances to policy stances and votes. Since taking office, progressive CBC members — including Omar, Bowman, Lee, Bush, and Pressley — have criticized human rights abuses against Palestinians or voted against military aid to Israel. They were among the 10 House Democrats who voted against a July resolution to absolve Israel of being an apartheid state. The critical stance on U.S. support for Israel drew AIPAC’s ire, with the group ramping up its efforts to challenge the CBC incumbents.

AIPAC’s shifting campaign strategy presents contradictions for the CBC. The caucus’s leaders have close relationships with AIPAC, but the group has also historically put an emphasis on the importance of protecting incumbents.

Since 2022, the CBC’s top AIPAC recipients include Rep. Glenn Ivey, D-Md., who has taken $756,000 from the group; House Democratic Caucus Leader Hakeem Jeffries, D-N.Y., who has taken $485,300; Rep. Valerie Foushee, D-N.C., who has taken $456,800; Rep. Ritchie Torres, D-N.Y., who has taken $459,900; and Rep. Shontel Brown, D-Ohio, who has taken $349,600.

Jeffries, who has led congressional efforts to protect incumbents against primary challengers, is a close ally of AIPAC, as are CBC leader Rep. Steven Horsford, D-Nev., and CBC PAC leader Rep. Gregory Meeks. CBC members have regularly led and attended AIPAC’s annual trips to Israel, conferences, and other events. (Horsford, Meeks, and CBC PAC did not provide comment for this story.)

The alliance has put CBC members at odds. Omar and Bush joined other progressives in protesting an official congressional address by Israel President Isaac Herzog in July amid efforts to radically politicize the country’s judiciary system. Jeffries said he welcomed Herzog “with open arms.” The next month, he led AIPAC’s annual congressional delegation to Israel.

More centrist CBC members and their political allies have been involved in combatting progressive gains in the Democratic Party. In June 2021, Jeffries, along with Reps. Josh Gottheimer, D-N.J., and Terri Sewell, D-Ala., another recipient of AIPAC cash, launched Team Blue PAC to protect Democratic members facing primary challenges from their left. And last June, Democratic operatives closely aligned with CBC leaders launched a new dark-money group to fend off primary challengers.

In their individual capacities, however, some of the centrist CBC members are supporting their progressive colleagues. After news broke that AIPAC was recruiting Omar’s challenger, Jeffries endorsed her last month.

For some observers, Jeffries’s ascendency in Democratic leadership, and many CBC members’ support of it, complicates the political calculus. To invite a fight with an influential group like AIPAC could prove folly for Jeffries, souring relationships in the wider Democratic caucus where the group still holds sway. “Some of the older members have trouble letting go,” said one senior Democratic strategist who requested anonymity in order to speak freely. “And I think more than anything, they want a Black speaker of the House, not protecting progressive members.”

Jeffries’s spokesperson Christie Stephenson declined to say whether Jeffries planned to endorse Lee and Bowman but said Jeffries would keep backing Democratic incumbents across the political spectrum.

“Leader Hakeem Jeffries intends to continue his practice of supporting the reelection of every single House Democratic incumbent,” she said, “from the most progressive to the most centrist, and all points in between.”

AIPAC’s Republican Money

The rift between AIPAC and progressive CBC members reflects a broader disconnect between more senior and moderate CBC members and the caucus’s small but growing progressive wing. Those frictions have bled into other recent primary elections. CBC members reportedly pushed former Rep. Mondaire Jones to run against Bowman last year. Bowman is one of the five progressive Squad members who are also part of the CBC.

“The CBC should be sounding the alarm and should be concerned,” said Democratic strategist Camille Rivera, a partner at New Deal Strategies. “We need to be very careful about letting power and influence change the overall goal of the caucus, which is to protect Black incumbents and expand representation, especially those that have been doing the work and representing their constituents. We shouldn’t let any entity try to divide and conquer.”

AIPAC’s attacks on Black progressives are not new. The group funneled money from GOP donors to back the more centrist Brown’s successful House campaigns against Ohio progressive Nina Turner. And the group spent $4 million to try to thwart Lee’s insurgent 2022 campaign.

Even powerful progressives have fallen amid the Israel lobby’s attacks. Endorsements from former Democratic presidential nominee Hillary Clinton and Rep. Nancy Pelosi, D-Calif., weren’t enough to help former Rep. Donna Edwards, D- Md., overcome the $6 million AIPAC spent against her in her bid to reclaim her House seat. Pelosi, a pro-Israel stalwart and at the time the speaker of the House, rebuked AIPAC for its attacks against Edwards. Her opponent, Ivey, the top CBC recipient of AIPAC cash, won the primary by 16 points and went on to win the general election by a landslide.

AIPAC’s strategy fits into a larger trend of Republicans and Democrats teaming up to defeat progressive candidates critical of U.S. support to Israel. Republican donors poured last-minute cash into former New York Rep. Eliot Engel’s reelection campaign in the face of Bowman’s insurgent 2018 challenge. Pennsylvania billionaire Jeffrey Yass, a major GOP donor and funder of the Israeli think tank leading the rightward lurch in the country’s judiciary, also funded a PAC run by Democrats and dedicated to challenging progressives in Democratic primaries.

Lee told The Intercept that AIPAC used Republican money to fund ads meant to discourage Black voters from coming out on Election Day.

“AIPAC funneled money from Republican billionaires to spend $5 million attacking me with baseless lies and racist tactics.”

“AIPAC funneled money from Republican billionaires to spend $5 million attacking me with baseless lies and racist tactics,” Lee said. She said political ads accused her of having ties to far-right figures like former President Donald Trump “in order to keep Black voters from showing up to vote.”

Lee drew a contrast to AIPAC’s support for scores of “insurrectionist” Republicans who supported election denial and “shared the same goals as a mob of armed white supremacists and antisemites.”

“Now they’re targeting Black incumbent champions for poor, working-class, Black folks in districts where they’ve never been represented,” she said. “These attacks add fuel to the fire of fascism tearing away the history, civil rights, and lives of Black Americans, who are the base of the Democratic party.”

Marketing Medicare – How Health Insurers and Brokers Use TV Ads to Attract Enrollees.

Hello,

Thank you for your interest in today's web event, Marketing Medicare – How Health Insurers and Brokers Use TV Ads to Attract Enrollees. The archived recording of the event and slides are now available.

Check out the new KFF analysis of television ads that aired during last year’s open enrollment season and insights from focus groups with enrollees about their perceptions of the marketing efforts.

For more information on past and upcoming KFF virtual events, please visit KFF's newsroom.

Watch the Event

The independent source for health policy research, polling, and news.

Medicare Watch

New Reports Examine the Impact of Medicare Advantage Advertising

By Lindsey Copeland
September 21, 2023

https://www.medicarerights.org/medicare-watch/2023/09/21/new-reports-examine-the-impact-of-medicare-advantage-advertising?utm_source=Medicare+Rights+Center&utm_campaign=4a6e45f9ce-medicare-watch-09212023&utm_medium=email&utm_term=0_1c591fe07f-4a6e45f9ce-84733457&mc_cid=4a6e45f9ce

Two new KFF research reports capture the prolific—and often problematic—nature of Medicare Advantage (MA) television advertisements during Medicare’s fall open enrollment period, as well as the impact of such marketing practices on beneficiaries. Yesterday, Medicare Rights joined KFF to discuss this important topic, including potential solutions for some of the identified problems. This week, we examine the first report, How Health Insurers and Brokers Are Marketing Medicare. We will continue our analysis with the second report, What Do People with Medicare Think About the Role of Marketing, Shopping for Medicare Options, and Their Coverage?, in next week’s Medicare Watch.

The open enrollment period for MA and Part D runs from October 15 through December 7 each year. Beginning October 1, insurers, brokers, and other third-party entities can begin marketing their plans, including through television ads. In advance of this year’s ad blitz, KFF reviewed television spots that aired last fall, examining plan marketing strategies in depth. Key takeaways include:

MA ads were common during the annual enrollment period.

TV airways were flooded with ads for Medicare plans. There were 643,852 airings of English-language Medicare ads run on broadcast television and national cable between October 1, 2022, and December 7, 2022, an average of more than 9,500 airings per day. This is more than were seen for any individual Healthcare.gov open enrollment period between 2013 and 2018. Most—four of every five ads—were sponsored by health insurers, with the remaining sponsored by brokers and other third-party entities, such as marketing companies. Some TV ads used celebrity endorsements to promote MA.Joe Namath was featured more often than any other celebrity, appearing in nearly 10% of all MA ads.

Many MA ads were misleading or confusing by design.

Ads often implied Medicare’s endorsement. Over 27% of ads included a government-issued Medicare card or image that resembled it, and 16% urged viewers to call a privately-run phone line described as a “Medicare” hotline. Importantly, new rules that take effect before this year’s open enrollment period should help prevent this, by prohibiting the misleading use of the Medicare name, logo, or card in private marketing and communication materials.

Other ads used language to suggest viewers were “missing out” on benefits they were “entitled to,” or receiving incomplete coverage under OM. Such framing can give viewers with OM the incorrect impression they need to take action, have inadequate coverage, or have overlooked a necessary enrollment step.

Medicare Advantage ad airings often featured active “enrollees” engaged in physical activities (26%) but few (less than 5%) showed people who appeared to have a serious health problem or visible disability. This may represent an effort by insurers to target people in good health, but it fails to mirror the demographics of the Medicare population: One-fifth (22%) of Medicare beneficiaries are in fair or poor self-reported health, and more than one-quarter (28%) have at least one functional impairment.

Many of the ads mentioned possible benefits of MA, but none of the trade-offs.

Most ads (92%) emphasized supplemental benefits, such as dental, vision, and hearing care. However, not all benefits are available to all enrollees, which can get lost in a commercial. The lack of data about supplemental benefit usage and access means plan promises could be largely empty. Notably, services that may appeal to people in poorer health—including allowances for food or grocery spending (20%), transportation services (20%), and meals (10%)—were marketed much less often than others. As with depictions of physically active plan members this may represent an effort to attract lower-cost, healthier enrollees.

The majority of ads (85%) touted lower out-of-pocket spending, such as $0 co-pays, no additional premiums, or reductions to the standard Part B premium. These ads may also imply a benefit is more available than it is. For example, in 2023, Part B rebates were offered by just 17% of plans, with an even smaller share of enrollees (10%) having access. New CMS rules now prohibit marketing of benefits that are not available in the service area where the ad is aired, with an exception for regional ads. This change may improve marketing accuracy, but additional unbiased consumer education, outreach, and enrollment assistance is still needed.

Ads rarely mentioned Original Medicare, or the potential limitations of MA coverage. MA-specific features,such as limited and ever-shifting provider networks or prior authorization requirements, were absent from the ads, leaving beneficiaries with an incomplete view of their coverage options and the tradeoffs among them.

The KFF reports come as MA is becoming more complex for beneficiaries, more costly for Medicare, and more lucrative for insurers. Critically, these dynamics are interdependent. Fueled by surging profits, seemingly endless numbers of MA plans are coming to market: In 2023, beneficiaries had access to 43 MA plans, more than ever before. MA enrollment is also climbing, in part due to increased advertising by plans and brokers. Such ads often feature “extra” benefits not available to people with Original Medicare (OM), like dental coverage and gym memberships. The MA overpayments that help fund these heavily marketed services are also on the rise, worsening concerns about MA efficiency, Medicare sustainability, and parity between OM and MA. Troublingly, many of the ads are misleading and aggressive. Beneficiary marketing complaints grew sharply in recent years, leading to heightened attention from policymakers, including new rules that will apply to plan and third-party marketers during the upcoming Medicare open enrollment period. Medicare Rights welcomes these regulatory updates and will remain vigilant during the open enrollment period and beyond to ensure successful implementation. We will continue to urge Congress and CMS to more fully protect people with Medicare through further reforms, including setting and enforcing standards for the marketing of supplemental benefits, restoring recently weakened consumer protections, boosting plan oversight, filling gaps in marketing rules, and providing adequate funding for unbiased beneficiary education, including State Health Insurance Assistance Programs (SHIPs). We also urge improvements to simplify enrollment, such as BENES 2.0, and greater attention to Medigap restrictions as well as inaccurate provider directories and mid-year network changes that may leave MA enrollees without access to care and their providers of choice.

Policy Issues: Medicare Advantage

Monday, September 18, 2023

Strikes and Bidenomics - Matt Stoler

https://www.thebignewsletter.com/p/strikes-and-bidenomics?utm_source=post-email-title&publication_id=11524&post_id=136785351&utm_campaign=email-post-title&isFreemail=true&r=3qu3t&utm_medium=email

Strikes and Bidenomics

The White House is trying to sell 'Bidenomics,' but poll after poll shows that the public is extremely unhappy with the economy. What does the public see that the bureaucrats don't?

Matt Stoller

Sep 16, 2023

Welcome to BIG, a newsletter on the politics of monopoly power. If you’d like to sign up to receive issues over email, you can do so here.

Today’s issue is about the incoherence of the Biden economic agenda, so-called ‘Bidenomics.’ With strikes in the auto industry and Hollywood, as well as sour polling numbers, something about the White House framework for policy isn’t working.

First, I want to offer a brief summary of the Google trial, which seems to be going well for the government. Trials are where the rubber meets the road on antitrust, so we set up a special site, Big Tech on Trial, where we’re covering the daily drama of the case. Here’s the TLDR so far of the trial. The government has shown pretty clearly that the search giant is paying large sums of money to block rivals from entering the market. In addition, Google’s gotten busted covering up evidence - or as I put it, Google is following the Stringer Bell rule. In addition, in a separate Google trial, a judge tossed the search firm’s dirty tricks attempt to go after the head of the Antitrust Division Jonathan Kanter as biased.

It hasn’t been all roses for the government, Google drew some blood showing that consumers, when faced with the choice of Bing, do switch to Google. But the basic narrative of Google as a monopolistic liar is working, and Google’s attempt to show this trial as just the government trying to help Microsoft isn’t resonating. The biggest win for Google is Judge Amit Mehta blocking a public audio feed, so the public just isn’t tuned in. You can follow along by signing up at Big Tech on Trial.

This is a real book for sale in D.C. next to bobblehead RBG and Pelosi dolls. This is not a joke. Well it is, but it’s also true.

Strike!

I’ve been out in Los Angeles for the last few days, and the big economic problem here are the strikes against the movie studios, which have shut down production. More broadly, as I read the news, the biggest economic stories are the high cost of living, and then the United Autoworkers going on strike against the big three car companies. The Washington Post had a good article asking workers why they are striking. Most cited inflation and fairness. “We’re not making enough money” said Petrun Williams, a 58 year-old Ford repairman. “People should be able to buy their own houses, but right now it’s not possible.”

It’s a hard problem to tackle, because GM, Ford, and Stellantis are giant wildly inefficient bureaucracies with high costs optimized to make $75,000 trucks, and electric vehicles are a completely different product. But ‘Bidenomics’ isn’t necessarily helping.

In fact, Biden’s White House staff just doesn’t seem to have the capacity to hear what’s going on, or address it. Earlier this month, Biden gave a speech in Philadelphia celebrating Labor Day, and ahead of it he said “I’m not worried about a strike,” and “I don’t think it’s going to happen,” comments that are clearly a result of his senior staff giving him bad info. These delusional comments prompted a Detroit Congresswoman to call up senior White House advisor Steve Ricchetti and scream, “Are you out of your f---ing minds?”

And this gets to a common question I hear in D.C., which goes as follows. Why is the public so unhappy? The economy looks, by most conventional measurements, as if it’s doing so well. Dave Dayen summarized the statistics as follows. Unemployment is low, inflation is down, consumer spending is rolling along, and certain manufacturing areas are booming. “Several measures,” he wrote, “like economic growth and prime-age employment, have actually rebounded to their trends from before the 2008 financial crisis, an almost unthinkable scenario just a few years ago.”

According to consistent polling, the public thinks inflation is high and getting worse, and that Biden has done very little to address any of their problems. What explains how the White House is floundering? One problem is plenty of people in the political class believe that the public is simply wrong to be angry. Paul Krugman, for instance, wrote a column saying that normal people believe the economy is bad, even if it isn’t. I see White House officials interviewed on CNBC periodically, and while they don’t say that outright, it’s clear they think the economy is doing well and inflation is down, and their job is to sell their accomplishments.

There are two reasons why the White House simply cannot seem to govern effectively. The first is that the tools the political class uses to understand inflation are misleading them. The second is that Biden doesn’t have one unified policy agenda, but has a bunch of policy agendas that work against each other. The result of these two factors is that Biden’s story - look at all this prosperity I have delivered - doesn’t work in the face of strikes and anger.

Sticker Price Versus Reality

Let’s start with why the White House doesn’t see a problem. It’s true that key members of Biden’s senior staff are mismanaging the situation, but that doesn’t explain why Krugman, as well as many economists in the administration, don’t see one either. Sure you can look at individual strikes, but those are noisy events, not economy-wide.

How does the government perceive the experience of ordinary people in the economy? There’s a mess of information out there, what information matters, and what doesn’t? The President can’t ask 100 million Americans how they are doing before making a decision. Over the last century, bureaucrats have answered these questions by inventing a host of measurements to serve as proxy for what normal people experience.

The government has been measuring prices using some variant of the Consumer Price Index (CPI) since 1913. When there’s a change to inflation, what that usually means is that the CPI is going up or down. And a change to inflation isn’t a change in absolute price levels. If inflation is, say, down, it doesn’t mean prices are down, only that the rate prices are increasing is less rapid than it was before.

Since 2021, prices have spiked fairly dramatically, with a CPI reaching up to 9% at certain points in 2022 before settling back to 3.7% last month. Once again, that doesn’t mean prices are down, just that the rate of increase is down. The crazy expensive fourteen dollar sandwich is still a crazy expensive fourteen dollars, it’s just not going up to seventeen dollars. One of the bigger contributors to the CPI last month was housing, jumping by 7.3% over the past year.

But does the CPI really show how people experience price increases? After all, one of the most significant changes in what we pay is higher interest rates, which the Federal Reserve has hiked dramatically over the past few years. The Fed’s actions have increased credit card rates, mortgage rates, auto financing, and corporate and government borrowing costs. Surprisingly, none of this is directly included in our inflation metrics. “The CPI’s scope,” writes the Bureau of Labor Statistics, “excludes changes in interest rates or interest costs.” The price of money, which is an input into everything, isn’t included in how we see inflation today.

That’s crazy.

When I was in the archives learning about Congressman Wright Patman, the Chair of the House Banking Committee in the 1960s and 1970s, I found that back then, people included the cost of interest rates in how they understood inflation. The 1960 Democratic Party platform discussed inflation in precisely this manner, saying that high interest rates enacted a “costly toll from every American who has financed a home, an automobile, a refrigerator, or a television set,” and was “itself a factor in inflation.”

This logic made sense. When you borrow to buy a car or a house, the cost of that car or house is your monthly payment, not the sticker price. But in the 1980s, the government changed its method of measuring inflation, so today, the CPI works under different assumptions. So what does this change mean? Well, the two biggest purchases for an American family are a car and a house, and in both of these categories, the CPI excludes the key factor for normal people, which is how interest rates affect the monthly payment. The sticker price for a car is an important number, but it’s the monthly payment that matters.

With that in mind, let’s take a look at the price of cars over the last ten years.

New car prices spiked from the beginning of 2021 to the end of 2022, but price levels are starting to come down, ever so gently. But is the monthly payment coming down?

No. According to Edmunds, in Q2 of 2022, the average monthly payment for a car was $678, in Q2 of 2023, it was $733. So it’s a slight price decline for the CPI due to new vehicle pricing, but an 8% inflation for what people actually pay. Why are monthly payments going up if sticker prices are going down? It’s simple - the price of money has gone up. The average interest rate for a new car jumped to 6.63% in the second quarter of this year. It was 4.60% in Q2 of 2022, and 4.17% in Q2 of 2021.

And housing? Here’s chart from the Daily Shot of the monthly mortgage payment for a median home price.

Redfin reports the typical mortgage payment is up 20% from a year ago. And while most homeowners have mortgages they got prior to 2021, and so aren’t paying the higher prices, the exceptionally high currently monthly payment means people can no longer move, and they have to watch their children struggle to find a place to live. Housing prices are social, since the home is so central to the American order, so even if you are financially unaffected, seeing a lot of people be unable to move, buy a home, or rent affordably gives everyone a sense of economic insecurity. That’s why striking auto workers mentioned the price of housing.

The calculation for housing in the CPI is a bit more complicated than that for new cars, but the key piece to understand is that in 1983, the Reagan administration chose to exclude interest costs, instead asking homeowners what they think they would be paying in rent if they didn’t own the home they lived in. The government simply “underestimates changes in housing costs,” according to an economist at Redfin, especially when interest rates are spiking. “And that’s because housing costs for the person who is actually active in the market experiences much greater fluctuation.”

The reason to change this measurement was so that inflation would look lower than it actually was. Over time, subsequent administrations sustained this shift. Lying about the symbols used to govern has a short-term political benefit in that it perhaps gets you some good media coverage, but over time, it meant that the CPI for housing costs isn’t necessarily reliable.

So basically, the price of money is a big deal in terms of our experience paying for things, and it’s being excluded from the inflation metric that policymakers use to look at the economy. So that’s why policymakers are confused. Some of their key tools aren’t reflecting reality, and the people who originally broke the tools for political purposes aren’t there anymore. Today’s political class doesn’t even know what they don’t know.

What Is Bidenomics?

Of course, housing and cars aren’t the only things people buy. Food is much more expensive than it was just a few years ago, as are everything from hotels to airfares to consumer packaged goods to seeds. I mean, Visa and Mastercard, who are barely affected by inflation, are jacking up their swipe fees to merchants. None of that is a secret, the CPI on food shows that inflation might be coming down, but prices are still high. So what is Joe Biden, and the Democrats in Congress, doing about that? Well, White House officials call their plan ‘Bidenomics.’

The best way to explain Bidenomics is to listen to a judge Biden recently appointed to the D.C. district court, Ana Reyes, who was hostile to the Antitrust Division when they brought a case against two smartlock makers. Last month, Reyes sat on an American Bar Association panel where she attacked the idea of stronger antitrust enforcement, focusing specifically on her skepticism around labor-related claims. She bragged to the audience of defense attorneys that during the antitrust case she heard, she 'pranked' government lawyers by spending three minutes pretending to dismiss their key witness, before saying ‘April Fools. "I have never in my life heard stunned silence," she later said gleefully.

Having a corporate lawyer bully turned judge appointed by Biden killing an antitrust suit brought by Biden officials is a great example of Bidenomics, because it shows the lack of coherence of this administration’s policy. I’m a big fan of Federal Trade Commission Chair Lina Khan, but another Biden judge - Jacqueline Corley - let through the largest big tech merger of all time, when Microsoft bought Activision, after Khan challenged the deal.

These judges matter in terms of inflation. Had Biden picked actual populists for the judiciary instead of Corley and Reyes, the White House’s ability to govern would look very different, and corporate America would be changing their pricing behavior due to fear of crackdowns. In early 2022, there was a flurry of interest in using antitrust to attack how corporations were informally colluding to raise prices. But an aggressive legal theory needs judges willing to take market power seriously, and Biden instead chose people who thwart his own administration. It’s not just judges. Factions in the administration - in this case the White House Council of Economic Advisors - explicitly opposed the corporate profit-inflation link.

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I think a lot about antitrust, but the incoherence is systemic across most policy areas (and Democrats in Congress). The pro-labor administration indicated support for the strikes in Hollywood against powerful studios, then a few months later the former White House Domestic Policy Council head - Susan Rice - rejoined the board of Netflix. For every attempt to make electric vehicles in America there’s Treasury Secretary Janet Yellen pushing hard to ensure these cars are made abroad.

Normally, policy disagreements would be decided by the President and his staff. But Joe Biden is a procrastinator, and doesn’t like making choices. He’s also very old. As for his staff, well, while Biden’s former chief of staff Ron Klain was aggressive in terms of policy goals, his new chief of staff, Jeff Zients, is a relentlessly cheerful former management consultant wholly focused on process. Other important figures, such as Tim Wu and Brian Deese, have also left. With Klain gone, there’s an insular clubbiness at the top, and an inability to provide a vision or pay attention to policy implementation. Even if you were to make the point that housing prices need attention, there’s just no one there who could or would do anything about it.

And that brings us back to the strikes. The Biden administration should have headed off the UAW labor action with discrete steps to help the workers, but the White House just doesn’t have any coherence. And so while Biden is saying pro-labor things and agreeing the CEOs are paid too much, there’s this.

There is also a sense among some Democrats and labor officials that Biden’s team miscalculated the standoff and hasn’t understood the severity of labor’s frustration or concerns. Even the news this week that the Biden administration was considering providing aid to auto suppliers rankled some in the union world, who thought it could undermine the strike and saw it as evidence that there are always funds available for companies, but not workers.

This isn’t to say there aren’t significant achievements. Biden’s industrial policy push is real, with increases in investment in semiconductor production, electric vehicles, and batteries, as well new factories in general. His competition policy approach is also real, with new merger guidelines, as well as crackdowns in pharmaceuticals, mergers, the prohibition of non-competes, and the Google suit.

There are routinely good decisions coming out of some of the regulators. The other day, for instance, the Department of Labor proposed a rule opening up 4 million more workers to overtime pay. Meanwhile, the Securities and Exchange Commission begins a crackdown on private equity.

Unlike the Obama administration, which was ideologically oriented to push wealth and power upward, the Biden administration has a few populists trying to do the opposite. But in an inflationary environment where the stats are juiced to mislead policymakers, that’s not good enough.

What Happened to Biden’s State of the Union?

In February, Biden gave a State of the Union speech focused on making things in the U.S., going after junk fees, and taking on corporate power. His polling temporarily spiked. Since then, there has been no messaging follow-up from the White House on anything he said in that speech, almost as if Zients and the rest of the White House were embarrassed that Biden put forward a populist set of arguments.

Instead, various officials are out there on TV saying ‘look at these charts!’ They want credit for inflation being down, economic growth being up, and unemployment being low. But without recognizing that the actual costs of housing and transportation are increasingly unaffordable and going up, that just looks weird. Moreover, there’s no actual policy regime, just a disjointed set of factions trying to get as much done as possible according to their preferred view. It’s mostly unclear how Biden is actually affecting people’s lives, and the only genuinely organized groups of workers, are showing that things aren’t ok.

The economy isn’t great, and there’s no point in trying to pretend it is. That said, Biden can save his administration. He has accomplishments, and his State of the Union messaging resonated. He can argue that his first term was about having America recover from Covid by re-shoring factories, restoring full employment, and fixing supply chain problems. He can brag about all the big companies suing him, like various pharmaceutical firms mad that the White House is imposing price caps. Then he can pledge that he’ll focus on bringing down housing costs in his second term. Will such a story work? I don’t know. Maybe the current pitch will work, in the 2022 midterms, Biden out-performed expectations. But it’s at least more relatable than ‘Eat some charts!’

Thanks for reading! Your tips make this newsletter what it is, so please send me tips on weird monopolies, stories I’ve missed, or other thoughts. And if you liked this issue of BIG, you can sign up here for more issues, a newsletter on how to restore fair commerce, innovation and democracy. And consider becoming a paying subscriber to support this work, or if you are a paying subscriber, giving a gift subscription to a friend, colleague, or family member.

cheers,

Matt Stoller

Tuesday, September 12, 2023

NYC Labor Day Parade Showdown: Retirees Challenge Union Leaders On Medicare Advantage Push

https://www.work-bites.com/view-all/nougnesb242r1g8nr8z58i2fhtegwt?

NYC Labor Day Parade Showdown: Retirees Challenge Union Leaders On Medicare Advantage Push

Top Story

Sep 11

NYCOPSR President Marianne Pizzitola engages with NYS AFL-CIO President Mario Cilento [l] and NYC Central Labor Council President Vinny Alvarez [r] following Saturday’s Labor Day Parade. Photos and video by Joe Maniscalco

Video follows story…

By Joe Maniscalco

This weekend’s New York City Labor Day Parade saw municipal retirees fighting to retain their Medicare coverage tangle with the heads of both the state AFL-CIO and NYC Central Labor Council over the duo’s opposition to Intro. 1099 — the City Council bill aimed at shielding traditional health insurance from Medicare Advantage and privatization.

The exchange happened at 5th Avenue and 64th Street after the retired civil servants marching behind the DC37 Retirees Association banner finished the parade route and spotted New York State AFL-CIO President Mario Cilento and NYC Central Labor Council President Vinny Alvarez near the reviewing stand.

“Shame,” New York City Organization of Public Service Retirees [NYCOPCR] Treasurer Carol Whitton told Cilento, while an increasingly antsy Alvarez looked on. The UFT retiree reminded the head of the New York State AFL-CIO that it was civil servants like her who helped the City of New York survive the financial crisis of 1975.

“My pension was put at risk in 1975 to save this city from bankruptcy and this is how you thank me?” Whitton told Cilento. Fellow municipal retirees wearing DC 37 green held up signs supporting passage of Intro. 1099 and chanted, “New York City, Don’t You Dare Touch My Medicare.”

New York City municipal retirees, along with their counterparts in other cities around the country, have long maintained union leaders pushing profit-driven Medicare Advantage programs are helping to destroy traditional Medicare and jeopardizing the future of the entire American labor movement.

"There was a very large contingent of both DC37 Retirees and NYCOPSR members marching with DC 37 in the parade,” Council of Municipal Retiree Organizations President Stu Eber later said. “We were chanting to save our Medicare and to enact Intro 1099."

Last month, the Municipal Labor Committee [MLC], the umbrella organization representing the city’s public sector unions, sent out a letter to City Council Speaker Adrienne Adams [D-28th District] trashing Intro. 1099 as “an attack on fundamental tenets of collective bargaining” and urging its demise. The names of both Cilento and Alvarez headed a list of labor leaders in apparent support.

New York City municipal retirees vehemently deny Intro. 1099 impacts collective bargaining in any way — and they keep winning in court.

NYC municipal retirees fighting the privatization of their traditional Medicare coverage march in this year’s NYC Labor Day Parade.

So far, however, less than 20 City Council members have signed on in support of Intro. 1099.

Retired EMT and NYCOPSR President Marianne Pizzitola briefly engaged the labor leaders ahead of Whitton. Parade Grand Marshal Nancy Hagans, president of the New York State Nurses Association, and Parade Chair Mark Henry, vice-chair of the Amalgamated Transit Union, stood nearby.

“I went up to Mario Cilento and Vinny Alverez,” Pizzitola later told Work-Bites. “I told Vinny I wanted to speak with you, but you didn’t want to speak to me. So, we came to you as retired labor to be seen and heard — because no union — and no president of a labor organization — should advocate for diminishing benefits or privatizing Medicare against a retired union worker.”

Pizzitola then implored Cilento for a meeting to discuss the issue and urged Hagans to support municipal retirees in their defense of traditional Medicare health insurance coverage.

“I said you’re a union leader — you should be standing by our side,” Pizzitola told Work-Bites. “You should be explaining to Mario and Vinny that no union should be advocating for diminishing a retired union worker’s benefits — and should not be privatizing Medicare. She said, ‘That’s why I stand for the New York Health Act.’”

Work-Bites has reached out to Cilento, Alvarez and Hagans — and is awaiting comment.

Last week, UFT President and MLC leader Michael Mulgrew, expressed his disdain for the NY Health Act, saying, “You cannot bankrupt your state's economy to make a point."

Meanwhile, back at the parade — Jenny Roper, a municipal retiree who left the Human Resources Administration in 2010, talked about losing her husband to cancer last year.

“He was covered by my insurance,” she told Work-Bites following the parade. “And I think if we had lost this [Medicare] battle, I would have lost him sooner.”

Neal Frumkin, vice-president of Inter-Union Relations for the DC37 Retirees Association, sounded energized following the exchange with union leaders.

“We’ll turn out anywhere — anytime,” Frumkin said. “We’re in this fight for the long haul. We’re winning — and we’re not gonna be turned around.”

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Norm's Notes

Monday, September 25, 2023

Big-City Mayors Are Getting Kicked Out of Schools

Big-City Mayors Are Getting Kicked Out of Schools