Get Ready for Your 'Daily Glitch'—The NYSE, WSJ and United Were Just the Beginning

“Glitch” is clearly the word of the moment, after a series of pesky little technical problems forced United Airlines to ground flights, halted New York Stock Exchange trading and took down The Wall Street Journal website homepage all on the same day. If that wasn’t enough technical trouble, Seattle’s 911 system went down briefly. And a couple of NASA spacecraft also suffered “glitches” in recent days.
We deal routinely with glitches these days — a Wi-Fi connection goes down, an app freezes, a plug-in (usually Shockwave) stops responding, an email doesn’t load properly — which may help explain why, aside from lots of grumbling from delayed airline passengers, the reaction to Wednesday’s glitches was rather muted. The NYSE problems were reportedly caused by a “configuration issue” after a software update and United blamed its problem on “degraded network connectivity.” We see those issues every day, just not on as large a scale.
But that’s the problem.
At the risk of sounding like a high school term paper, let us note that the Merriam-Webster definition of glitch is “an unexpected and usually minor problem; especially: a minor problem with a machine or device (such as a computer).” The full definition describes it as a minor problem that causes a temporary setback.
Sure, Wednesday’s setbacks were all temporary. The Wall Street Journal site came back up quickly. Seattle’s 911 service was restored. Action on the NYSE itself was stopped for nearly four hours, but even then traders were still able to buy and sell NYSE-listed stocks on other exchanges. United grounded about 3,500 flights, which meant some people missed a wedding or a crucial business meeting. That will take time to sort out, but it will get sorted out.
In aggregate, though, the problems add up — and the word “glitch” only minimizes what can be much bigger, more serious issues..
Stock exchanges have suffered from a series of stoppage-causing glitches in recent years, pointing to the value of having trading spread across numerous exchanges. United’s tech breakdown “marked the latest in a series of airline delays and cancellations in the last few years that experts blame on massive, interconnected computer systems that lack sufficient staff and financial backing,” the Los Angeles Times reports. Just ask any of the roughly 400,000 United passengers whose travel plans were messed up if this was a little glitch. Or maybe check with the engineers who had to troubleshoot and rebuild the HealthCare.gov site after its glitch-laden launch.
It may be some relief that these latest outages weren’t the result of external attacks, but as sociologist Zeynep Tufecki, an assistant professor at the School of Information at the University of North Carolina, writes at The Message, “The big problem we face isn’t coordinated cyber-terrorism, it’s that software sucks. Software sucks for many reasons, all of which go deep, are entangled, and expensive to fix.”
These foul-ups are now mundane, and to some extent they may be inevitable as we rely more and more on complicated computer systems in every aspect of our lives. That’s the real issue, and it’s a lot bigger than a glitch.
Trump: Repeal the Obamacare Mandate to Cut the Top Tax Rate

President Trump repeated his call Monday to repeal the Affordable Care Act’s individual mandate as part of the tax bill. In a tweet — geotagged from Pennsylvania, not the Philippines , where Trump currently is — Trump added that the billions in savings from ending the mandate should be used to cut the top marginal rate to 35 percent and the rest on cuts for the middle class.
The Congressional Budget Office said last week that eliminating the mandate would save $338 billion over the next decade.
The current version of the House tax bill keeps the top individual income tax rate at 39.6 percent, while the Senate bill lowers it to 38.5 percent. However, mandate repeal is not currently part of either tax bill, and, as The New York Times notes, “repeal of the individual mandate was not on the list of 355 amendments that the [Senate Finance Committee] released on Sunday night.”
Tax Reform Is Hard, but the GOP Could Have Made This Easier
The Tax Policy Center’s William G. Gale writes that the GOP’s approach to the tax bill combines a $5.8 trillion tax cut with a $4.3 trillion tax increase to offset the costs. There may have been an easier way. “What if the House GOP simply tried to cut business and individual taxes by $1.5 trillion. No offsets needed. They could have distributed small tax cuts to middle-income individuals by, say, modestly expanding the earned income tax credit and raising the standard deduction. And they could have trimmed the top corporate tax rate by a few percentage points. It would not have been base-broadening tax reform, but neither is the current bill. ... Tax reform is never easy, but crafting the bill this way has vastly increased the challenge of passing it.”
Alan Greenspan: Deal with the National Debt Before Cutting Taxes

Former Federal Reserve Chairman Alan Greenspan is warning that sharply cutting taxes right now would be an economic “mistake.”
In an interview with Maria Bartiromo on the Fox Business Network Thursday, the 91-year-old Greenspan said it’s more important for President Trump and Congress to put the nation on a sustainable fiscal path by addressing rising entitlement spending driven by the aging of the U.S. population.
“Frankly, I think what we ought to be concerned about is the fact the federal debt is rising at a very rapid pace, and there’s nothing in this bill that will essentially stop that from happening," Greenspan said. "So my view is that we’re premature on fiscal stimulus, whether it’s tax cuts or expenditure increases. We’ve got to get the debt stabilized before we can even think in those terms.”
GOP’s Estate-Tax Repeal Details Would Save Super-Rich Tens of Billions Extra

It’s no surprise that the House Republicans’ tax bill includes the eventual repeal of the estate tax, a long-held GOP goal. But The Washington Post’s Glenn Kessler highlights an unexpectedly generous aspect of the current bill: It “allows the beneficiaries of estates to not pay capital gains taxes on the increase in value of assets held by the estates. That has not been a feature of most previous estate-tax bills.”
Currently, estates face a federal tax if they’re valued at more than $5.49 million for individuals or almost $11 million for couples. But, for tax purposes, the value of assets passed on to heirs gets “stepped-up” or reset to their value at the time of death. Kessler’s example: “Imagine a home that had been purchased for $250,000 but was now worth $1 million. The ‘stepped-up basis’ would be $1 million. If the heirs sold the house for $1.1 million, they would only owe capital-gains tax on the $100,000 difference, not the $850,000 difference from the original purchase price.”
The GOP bill repeals the estate tax, but also keeps the stepped-up basis — a seemingly small detail that creates a huge tax shelter. It means that heirs of large estates would save tens of billions of dollars a year when they sell assets that have appreciated in value over time — or, as Kessler puts it, that the bill will allow “tens of billions of untapped capital gains to remain beyond the reach of the U.S. government.”
Republicans Are Still Coming After Obamacare’s Individual Mandate

Speaker Paul Ryan said Sunday that House Republicans are still considering a repeal of the Obamacare individual mandate as part of their tax bill. "We have an active conversation with our members and a whole host of ideas on things to add to this bill. And that’s one of the things that’s being discussed," Ryan said on Fox News. President Trump touted the idea in a tweet last week, and Sens. Tom Cotton and Rand Paul have recently spoken in favor of using the tax bill to eliminate the mandate. The move would save the government $416 billion over 10 years as roughly 15 million people go without insurance due to lower spending on subsidies and health care services, according to the CBO. Those savings could be appealing as Republicans look for revenues in their revised tax bill. But if the controversial repeal of the mandate isn’t included in the tax bill, the White House is reportedly ready to roll out an executive order weakening the requirement that taxpayers provide proof of insurance to avoid paying a penalty.