A New York Times article reports that the Equal Employment Opportunity Commission has approved new regulations that allow employers to reduce their operating costs. Unfortunately, the reduction comes at the expense of those 65 and older. Thie new regulation affects health care coverage, and allows employers to create two classes of retirees. One class (those under 65) will receive full benefits. The other class (those who are 65 and over) will receive reduced benefits. It is estimated that more than 10 million retireees depend on employer sponsored health benefit either as a primary benefit or as a supplement to Medicare. The rising cost of health care (premiums for employer health care since 2001 has risen 78 percent), and the fact that people are living longer means that employers no longer want to provide retiree health benefits.
While I am against any type of workplace practice that discriminate against one group, I understand the need for employers to reign in health care costs. I believe the solution to our health care crisis should come from the government in the form of universal health care. Other countries such as England and Great Britain and even Cuba are doing it to tremendous success, why can’t we?
The collapse of the housing bubble is having a profound impact on our economy. The way it impacts you will depend upon who you are and where you live in the country. Those who took out subprime loans that began with a low teaser payment, may find themselves with payments they can’t afford after their loan adusts. Many will default because they can’t afford the higher payment. Others deprived of the opportunity to use their home as an ATM may have to seriously tighten their belts.
Who is to blame? Although, there is plenty of blame to go around, including lack of regulation of the housing industry, bad brokers also share in the blame. Bad brokers put individuals who could not qualify for regular loans into subprime loans, an indication that they could not afford the house. They steered others who could qualify for regular loans into subprime loans because of the higher profits they generated for them. Some of the profits were in the form of kickbacks and questionable fees. If you are in the second category, you might consider taking legal action if only for the satisfaction of holding brokers responsible for their actions.
Those who escaped the sub prime mess may still lose because of decreasing home values, and it is believed the housing market has still not bottomed out. This is hard news for many people who bought homes expecting them to increase in value, not lose. For instance if two years ago you bought a home selling for $600K counting on the value to go up you may now be stuck with a home that is only worth $500K. Houses that were going for $300K a few years before were suddenly selling for $600K.
The federal plan that is designed to contain the mess has been criticized for being inadequate. Los Angeles is one place that is trying to take serious action. Democrats there recently passed a resolution that if adopted allows local government to go after bad brokers. This is a logical idea that seems to have been lost on federal regulators such as past feds chairman, Alan Greenspan. They also want to hire counselors to act as a mediator between the homeowner and the lender. Researchers show that fifty percent of home owners never talk to their lenders.
According to a New York Times report, as early as 2001 Alan Greenspan had been warned about irregularities in the housing industry, but chose to ignore them. Those who tried to warn him included Edward M. Gramlich, a Federal Reserve governor, and Sheila C. Blair, a senior Treasury official. Had he listened this whole housing mess could have been avoided.
A reason for his indifference has to do with his and the federal reserve’s commitment to a freemarket ideology. This is a commitment the White House shares.
A primary focus of free marketers is to make sure that industries keep making outsides profits, even if the profits are tainted by poor judgment and sometimes fraud. This allegiance to ideology at the expense of sound economic judgment comes at enormous cost to not only individual homeowners, but also to the economy as a whole. Those of us with limited income are particularly at risk.
