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Furthermore …

Friend
Herndon
Reinhart
Rogoff

Full-time care concern

Fort Wayne Community Schools’ conundrum is one faced by schools and universities across the nation: What to do about part-time employees who would qualify for health insurance benefits under new federal health care requirements?

The goal of the Affordable Care Act is for more Americans to be covered by medical insurance, but when an employer is a tax-supported entity, the options are – as Kathy Friend, FWCS chief financial officer, noted – “a bad choice and an equally bad choice.”

Under provisions of the law set to go into effect next January, employees of large companies who work at least 30 hours a week must receive health benefits. Employers who fail to comply face fines.

At FWCS, the new requirements affect almost 850 employees who work 30 hours a week during the school year. To provide them with insurance coverage would cost the district $10 million a year, while the federal fine could cost $8 million.

Friend testified before an Internal Revenue Service hearing this week, urging changes in the formula to calculate work hours. Without the change, FWCS will likely have to reduce employee hours, as many colleges already have done.

Economic underpinning undercut

Washington’s debt warriors had a powerful tool in their push for austerity. Research from Harvard economists Carmen Reinhart and Kenneth Rogoff convincingly argued that debt becomes a barrier to growth once it reaches a certain point. They showed that in countries where the debt load was 90 percent or more of annual economic output, “median growth rates fall by 1 percent, and average growth falls considerably more.”

Their work took on near-legendary status among political leaders decrying the burgeoning national debt. Rep. Paul Ryan, R-Wis., used Reinhart-Rogoff to demand major budget cuts.

But there’s a problem: Reinhart-Rogoff is wrong.

When a University of Massachusetts-Amherst graduate student named Thomas Herndon, 28, studied the Harvard researchers’ data for a research paper, he realized they had omitted some data and miscalculated other figures.

“The average real G.D.P. growth rate for countries carrying a public debt-to-G.D.P. ratio of over 90 percent is actually 2.2 percent, not –0.1 percent,” Herndon and his co-authors write.

In other words, the painful budget cuts that federal lawmakers have pushed are based on a faulty premise that growth declines once a country reaches the 90 percent threshold for its debt.

The Harvard researchers have since conceded that Herndon’s findings are correct, even if they stand by their central premise.

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