Moneybox
A blog about business and economics.

June 22 2016 6:09 PM

Burger King’s Mac n’ Cheeto Is Our Future

Following in the grand culinary tradition of Taco Bell's Doritos Locos Tacos, Burger King has unveiled a delightfully trashy new fast food hybrid: The Mac n' Cheeto. Yes, the dish consists of deep-fried macaroni and cheese sticks with a Cheeto-flavored shell—five for $2.49. They are weird and silly and already causing a minor freakout on Twitter, as these products are meant to do, and will be on sale for a limited time starting June 27.

This is, of course, yet another sign of the great divergence in fast food, in which brands have decided to either head upmarket, embracing fresher and more expensive ingredients, or downmarket into the world of high-calorie novelty noshes. McDonald's, for instance, has been busy trying to elevate its image a bit by dallying with custom burgers and American regional cuisine—hello lobster rolls and Gilroy garlic fries. But the private-equity owners of Burger King seem to have taken a cold, hard look at their brand and concluded that rather than try to industrialize semi-current food-blog trends, they should just lean into their inner freak with bright red hamburger buns and chemically enhanced, deep-fried noodles. Which, by the way, don't sound that bad. Cheetos are a tasty cheese-flavored product, and adding mac is mostly just going to create a pleasant textural contrast, I imagine. The early reviews, anyway, seem positive.

June 22 2016 2:50 PM

Republicans Left the Single Most Important Detail Out of Their Plan to Replace Obamacare

Half a decade after winning back the House of Representatives, Republicans in Congress have yet to pass a bill to fully repeal and replace the Affordable Care Act. They have failed to do so both because the party is barely cohesive enough to carry out the elementary functions of government—like moving basic spending bills—and because giving an up-or-down vote to actual health care legislation requires getting specific about the potentially unpopular trade-offs in their approach. But because Speaker Paul Ryan wants to provide some semblance of an intellectual counterweight to Donald Trump's frothing lunacy, he has been unveiling a series of policy proposals he hopes will help define the modern GOP. And on Wednesday, we got a paper outlining a Republican substitute for Obamacare.

It contains little that is new. It is also missing what is by far the most important detail of the entire plan—namely, how much money it will give Americans to buy coverage.

The truth is that Republican policy thinkers have long had a basic outline for how they would replace the ACA. Erstwhile presidential candidates like Marco Rubio and Scott Walker offered variations on it during their campaigns. Even Donald Trump sort of haphazardly managed to follow its contours when he issued his extremely bare-bones health reform agenda. It goes something like this:

  1. Eliminate Obamacare. Kill it dead.
  2. Allow Americans to purchase health insurance across state lines, so they can find cheap, catastrophic plans in states that allow companies to sell coverage with limited benefits.
  3. Give Americans who don't get insurance through their employers, Medicaid, or Medicare a refundable tax credit—which is to say, a monthly subsidy—to help them purchase said catastrophic coverage.
  4. Expand tax-exempt health savings accounts so that people with cheaper insurance can (maybe) afford to pay out of pocket for routine care, like check-ups.
  5. Create special, state-subsidized “high-risk” pools to cover people with pre-existing conditions.

These are the main ingredients in the burrito bowl that is GOP health policy. You can add garnishes if you like. Most Republicans would like to gradually cut Medicaid spending and hand control of it over to the states by turning the program into a block grant, which would be a massive change to the welfare state but also basically tangential to replacing the ACA, sort of like dumping a double order of guac on top of your carnitas. The major questions all concern how much money Republicans would be willing to spend to make their system work, since that will determine the kind of insurance Americans will find affordable, and whether anybody would actually order this particular hodgepodge off the menu.

The plan Ryan debuted Wednesday checks off all of the major GOP health care boxes: insurance across state lines, health savings accounts, high-risk pools, tax credits. Meanwhile, it keeps some of Obamacare's most popular features, like allowing young people to stay on their parents' health plans through age 26 and preventing insurers from canceling insurance for customers who get sick.1 The document also includes one very important number: $25 billion. That's the minimum that Ryan would be willing to spend in order to fund those high-risk pools. That may or may not be enough, and it's unclear that rabid anti-government Republicans would really vote for such a sum, or the taxes to pay for it, but it's at least a hard number that can be debated.

But again, one number is conspicuously absent. The GOP plan does not spell out how much Americans can expect to receive in tax credits to buy coverage. Instead, it merely says that, "Given the increased flexibility in the insurance market, the new fixed credit would be large enough to purchase the typical pre-Obamacare health insurance plan.” This is vague to the point of meaninglessness. In 2013, before Obamacare's major reforms were finally implemented, Americans on the individual market paid an average premium of $235 per month. Last year, the average Obamacare insurance subsidy was $268 per month. If the ACA's subsidies are supposedly an unaffordable expense for the federal government, as Republicans generally seem to feel, it is difficult to imagine that they really plan to give people enough money to buy a “typical” pre-reform plan. What they actually intend is left to our imaginations.

The Republican health care plan, as it has been for years now, is to give Americans a small amount of money capable of helping them purchase cheap, not very comprehensive insurance. The most important question is: How cheap? Paul Ryan still isn't willing to give us an answer.

1 The plan says it would stop insurers from denying coverage to people based on pre-existing conditions but doesn't mention whether it would allow companies to charge new customers higher rates for being sick, which is kind of key.

June 22 2016 2:24 PM

Ford Is Testing out a New Car-Sharing Program, and Literally No One Has Signed Up 

Back in March, Ford’s financial-services division, Ford Motor Credit Company, launched a pilot program in Austin called Credit Link, through which prospective car buyers could split a lease with two to five other consumers rather than lease or buy one by themselves. The idea was to test out an alternative car-ownership model. In this case, one in which the leasers would create a schedule to determine who has the car, when they have it, and to split car payments however they chose. Channeling the gospel of the bourgeoning sharing economy that has powered companies like Airbnb and Uber, Credit Link program boasts that “it’s time for a new kind of mobility.” Unfortunately, Ford can’t seem to mobilize anyone to sign up.

June 22 2016 5:45 AM

Trump’s Campaign Wishes It Were a Garbage Fire. Garbage Fires Get the Job Done.

As surely as the presidential contest is a horse race, the Trump campaign—and, more broadly speaking, the GOP nomination fight—has been a garbage fire. The Huffington Post and Salon have both used the term for the candidate’s campaign, and New York Magazine can’t seem to write about him without it.

Samantha Bee called Trump a “trash can fire.” FiveThirtyEight’s Nate Silver and Harry Enter likened his nomination to a “dumpster fire,” a formulation that has also been employed by Mother Jones and theAmerican Conservative. In March, the Hillary Clinton campaign referred to the debate where Rubio and Trump sparred over the size of the latter’s penis as a dumpster fire. (And who could forget Slate’s own, excellent headline from this January, envisioned by writer Michael Beeman, “Hot Mess Endorses Dumpster Fire”?)

The political press covering the Trump campaign has not so much trashed Orwell’s rule of good English writing—“Never use a metaphor, simile, or other figure of speech which you are used to seeing in print”—as crumpled it up, thrown it away, and turned it into a rhetorical inferno.

In this case, our whole crew boarded the good ship Garbage Fire without pausing to think much about garbage fires at all. If we had, we would have realized it wasn’t a very good metaphor for Donald Trump’s terrible campaign, because actually, garbage fires are good.

June 21 2016 6:23 PM

Could a Brexit Actually Save Europe?

With Britain's referendum on whether to depart the European Union fast approaching, Europe's political leaders and major media organizations have been busy more or less begging U.K. voters not to bail. "Please don't go!" the German magazine Der Spiegel urged on its cover earlier this month (German Chancellor Angela Merkel, true to form, was a little more restrained.) Sweden's biggest financial newspaper resorted to an ABBA joke—“Take a Chance on EU”—while Hungary's prime minister went and bought a full-page ad in the Daily Mail imploring the U.K. to stay. Then there's European Council President Donald Tusk, who sounds like he's one step from crooning some Al Green to the next Brit he spots on the street.

It's understandable why Europe's elite ain't too proud to beg. The great fear among many is that a Brexit could encourage other nationalist movements and kick off a partial unraveling of the entire EU. Even if no other countries bid goodbye, the departure of Britain would still diminish and weaken the European project, the thinking goes.

But could that conventional wisdom be wrong? What if a Brexit is precisely what Europe needs in order to get over the seemingly intractable economic and political problems that have hobbled it these past several years? That's the theory Andrew Lilico, a British economist at the consulting firm Europe Economics, puts forward in an interview Tuesday with Vox, which the site calls “the best argument for Britain to leave the European Union.” That's slightly misleading. It's more of an argument for why the EU should be happy to see Britain go.

Lilico argues that Great Britain is essentially holding back the rest of the EU from fulfilling its destiny as a fully integrated United States of Europe, which it needs to become in order to resolve the contradictions that have trapped it in an unending economic crisis. The eurozone, it is often noted, is a monetary union without a fiscal union. Members are required to live under the same interest-rate policies, which can make or break their economic growth. But there isn't any system to transfer money from flourishing countries to struggling ones, the way the Washington transfers money from New York to Mississippi, for instance. As a result, you see massive disparities in unemployment and growth between countries like Germany and Spain (or, worst of all, Greece). The way to fix that, of course, is to become more like the United States: “they need eurozone-wide taxes, a eurozone treasury, an elected eurozone president, a eurozone parliament, and eurozone civil servants to manage expenditures,” Lilico writes.

The problem is that a handful of countries in the EU, including the U.K., don't use the euro, and therefore won't allow the necessary changes that would stabilize the currency union (after all, the British are already ticked off about the money they're sending to Brussels).1 A Brexit, the argument goes, would fix that:

Once the UK is out, there will be enormous pressure on other countries to say when they will be joining. Countries that refuse to join will get rolled together with Norway (which isn’t in the single market but has a free trade arrangement with the EU). Then the eurozone can take full control of the EU's institutions and be able to function properly to make it work as a currency union.

In short, the EU needs to reach a point where all of its members use the euro and therefore share the same common set of interests for the future. Brexit helps make that happen.

It's not a totally crazy notion. The idea that the euro will continue to be a shambling disaster until Europe creates some sort of system in which rich Germans can lend a hand to poor Greeks is pretty much taken for granted among American observers, and a tighter fiscal union is most definitely a key part of the EU leadership's long-term plan. And, who knows, maybe this would be easier to achieve if every country in the EU also was stuck with the euro.

But there are two problems. First, this isn't really a reason for Great Britain to leave the EU—right now, it still gets the best part of membership (access to Europe's free trade zone) without having to suffer through the worst aspect (being stuck in a bum currency bloc). And, unless you believe the pro-Brexit camp's promises that the U.K. will be able to instantly negotiate wonderful free trade deals once it’s off on its own, seceding is still probably going to require some economic sacrifice for at least the medium term. In this case, what's (maybe, theoretically) good for Paris and Berlin might not be so great for London.

Second, it's not really clear that freeing itself from Britain will really bring Europe much closer to a glorious federal future. As Pew has found, people also have a pretty unfavorable view of the EU in eurozone countries like France, Germany, and Spain—and the idea of national governments handing even more power to Brussels doesn't go over particularly well anywhere. As of now, the notion of a U.S. of E. has next to no democratic legitimacy, and attempting to force it on voters seems like a recipe for more referendums like what's happening in Britain.

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Pew

Still, Lilico does make a fundamentally good point. So long as Britain is part of the EU, the fate of the eurozone will probably rest in part on the whims of a country that's not part of it. Europe can't live with Britain, even if it can't live without 'em.

1 He argues that the eurozone countries themselves could create their own rules and institutions separate from the EU's existing infrastructure with some new treaties, but that's unlikely to happen. Which sounds about right.

June 21 2016 3:32 PM

Check Your Freezer: There’s Another Listeria-Related Frozen Food Recall

If you pick up your frozen vegetables at Walmart or Target, check your freezer. National Frozen Foods Corporation, the company behind the brands Bountiful Harvest, First Street, and Great Value, has announced a recall of frozen green peas and mixed vegetables distributed between September 2, 2015 through June 2, 2016, which may be contaminated by listeria.

June 21 2016 2:21 PM

Check Your Amazon Account: You Might Have a Free Credit

If you bought an e-book from major book retailers between April 2010 and May 2012, chances are good that you could soon be enjoying some free e-books.

June 20 2016 12:00 PM

The Future of Journalism Is a Deadly Swarm of Buzzwords, According to Tronc

A few weeks ago, the Tribune Co., that storied and financially strained pillar of American newspaper journalism, announced that it was rebranding itself as “Tronc”—an acronym standing for “Tribune Online Content.” This misbegotten act of corporate self-defacement was much mocked as the desperate decision of a baffled old company that, in its trend-chasing, had come up with a nonsense name that sounded like a combination of Tron and Gronk (which is, weirdly, a movie I might watch). The press release that explained the rechristened corporation's direction was arguably even sadder. “The vision calls for perhaps the most concentrated mess of buzzwords that digital publishing has ever seen,” wrote the Washington Post's Erik Wemple, “and that’s some feat.”

On Monday, the name change became official and the buzzwords were given new life, in the form of an employee introductory video. It is a horror—an unrelenting circular saw of vapid media-consultant clichés.

"This is the future of journalism. This is the future of content! It doesn't get much better than that,” begins Malcolm CasSelle, Tronc's seemingly well-meaning chief technology officer. Chief Digital Officer Anne Vasquez piggybacks: "It's about meeting in the middle, having a tech startup culture meet a legacy corporate culture, and then evolving and changing, and that's really the fun part, that's exciting." It continues:

CasSelle: We produce tons of great content every single day. We're really focused on how we we deliver it to people in a way they want to consume it more and more.
Vasquez: One of the key ways we're going to harness the power of our journalism is to have an optimization group. This Tronc team, will work with all of the local markets, to harness the power of our local journalism, feed it into a funnel, and then optimize it so we reach the biggest global audience possible.

Yes, Tronc shall take the corn feed of journalism and funnel it into the optimization-group goose, to make delicious foie gras that will be consumed by the digital natives.

It arguably gets worse from there. What's genuinely sad is that people who talk like this typically don't understand how the internet works—that's why they lean on buzzwords—or have any notion of how to communicate with journalists, who tend to bristle at this stuff. Vasquez easily could have said: "We're creating a team of people who are going to create snappy web headlines for the stories you work hard on and figure out how to promote them to a really big audience on social media,” but no, she went for the funnel schtick.

Twitter, of course, is having great sport with the clip.

Welcome to the age of Tronc.

*Partial credit to Felix Salmon for the factory farming joke.

June 19 2016 4:45 PM

Free Ticketmaster Tickets Are Here! But Will You Get to See Anything Good?

Discounts and free tickets arrived in the accounts of some 50 million Ticketmaster customers this weekend (myself included), the fruits of a $386 million class-action settlement the ticketing behemoth agreed to last year. The company was accused of falsely labeling various service charges.

Check the "Vouchers" section of your account, and you might find one of the following:

June 17 2016 6:13 PM

This New Obama Administration Rule Could Make American Cities Less Segregated

The Department of Housing and Urban Development proposed new rules this week that would allow tens of thousands of families to use federal housing assistance to rent more expensive apartments in nicer neighborhoods. It has the potential to change the makeup of the American city, facilitating mobility for poor residents and decreasing residential segregation.

In 31 of the nation’s largest cities, the rule would revise the concept of Fair Market Rent, or FMR, a regional value that determines the subsidy available to the 2.2 million households that receive federal housing (or Section 8) vouchers. Here’s how it works now: A voucher-holder finds an apartment, pays 30 percent of his or her income toward rent, and Washington pays the rest—up to the FMR.

Having just one FMR (varied by apartment size) for a whole region means that expensive neighborhoods wind up with virtually no Section 8 tenants, while poor neighborhoods tend to be full of them. The Housing Choice Voucher Program, aka Section 8, was supposed to be an antidote to the concentrated misery of public housing projects, spreading low-income residents across whole cities; in reality, it hasn’t done much to distribute the geography of poverty. (Rampant discrimination against voucher-holders doesn’t help.)

Under the new rules, FMR will instead be set by ZIP code, so Section 8 will spend more money putting poor families in expensive neighborhoods. That reflects a growing consensus that getting poor families into good neighborhoods may be among the best anti-poverty tools we have.

“It is all part of a grand scheme to forcibly desegregate inner cities and integrate the outer suburbs,” the New York Post wrote last month about the changes. Sounds about right, except for the "forcibly" part. The plan's success depends on poor families finding new apartments in new and unfamiliar neighborhoods.

A version of this policy has been underway in a handful of American cities, including Chicago, which has enabled hundreds of Section 8 households to move into wealthy neighborhoods—even a handful on Lake Shore Drive. Those account for less than 2 percent of the Chicago Housing Authority’s voucher recipients. But the idea of subsidizing the poor's move into wealthy neighborhoods using “supervouchers,” as they’re known in Chicago, has unsurprisingly drawn “Welfare Queen” comments and some unscrupulous “watchdog” journalism.

Obviously, localized rent standards will mean the feds are paying more on behalf of some poor households. But the payoff should be well worth it: According to a 2015 Harvard study of HUD’s Moving to Opportunity program, young children whose families used vouchers to move to low-poverty areas were making 31 percent more, by their mid-20s, than their peers whose families had stayed behind.

And there’s a second component of the new HUD rule, too. In 2000, HUD raised its standards for Fair Market Rent from the 40th percentile of metropolitan rents to the 50th. It was hoped this would open up new neighborhoods to voucher recipients. Instead, HUD reports, most of the money went to landlords in the same neighborhoods, with the change “artificially inflating rents in some higher-poverty neighborhoods” where Section 8 tenants were concentrated.

This has low-income tenant advocates worried, especially since the old-style regional calculations tended to bump up FMR in the inner city by including wealthy suburbs (where Section 8 is a dirty word). The Wall Street Journal reports Friday that New York City “found that roughly half of the current Section 8 voucher holders in New York, or some 60,000 households, would see their subsidy levels go down, meaning they will either be forced to pay more rent or move.”

If HUD is right, there’s a third possibility: Rents in those neighborhoods, which had been jacked up by all that free federal subsidy, would fall.

Housing authorities in Dallas switched from a regional FMR to localized rent caps in 2011, and according to a 2014 Harvard-NYU study, which influenced HUD’s decision on the rule change, the results were excellent. “Because price increases in expensive ZIP codes were offset by larger decreases in low-cost ZIP codes, absent any behavioral response, this policy would have been cost-saving for the government,” the authors wrote. “Incorporating tenants’ improved neighborhood choices, the Dallas intervention had zero net cost to the government.”

In short, poor families got to live in safer neighborhoods with better schools. And it didn’t cost a cent.

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