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.
Goldman Sachs Says Corporate Tax Rate Cuts May Get Phased In
Despite the challenges the Republican tax overhaul faces, Goldman Sachs still puts the chances of a plan becoming law by early next year at about 65 percent — but its analysts see some substantial changes coming before that happens. “The proposed tax cut is more front-loaded than we have expected; official estimates suggest a tax cut of 0.75% of GDP in 2018. However, we expect the final version to have a smaller near-term effect as competing priorities lead tax-writers to phase in some cuts—particularly corporate rate cuts—over time,” Goldman said in a note to clients Sunday.
The Hidden Tax Bracket in the GOP Plan
Politico’s Danny Vinik: “Thanks to a quirky proposed surcharge, Americans who earn more than $1 million in taxable income would trigger an extra 6 percent tax on the next $200,000 they earn—a complicated change that effectively creates a new, unannounced tax bracket of 45.6 percent. … The new rate stems from a provision in the bill intended to help the government recover, from the very wealthy, some of the benefits that lower-income taxpayers enjoy. … After the first $1 million in taxable income, the government would impose a 6 percent surcharge on every dollar earned, until it made up for the tax benefits that the rich receive from the low tax rate on that first $45,000. That surcharge remains until the government has clawed back the full $12,420, which would occur at about $1.2 million in taxable income. At that point, the surcharge disappears and the top tax rate drops back to 39.6 percent.”
Vinik writes that the surcharge would have affected more than 400,000 tax filers in 2015, according to IRS data, and that it could raise more than $50 billion in revenue over a decade. At a Politico event Friday, House Ways and Means Chairman Kevin Brady said the surcharge, sometimes called a bubble rate, was included to try to drive more middle-class tax relief.
Read the Republican Tax Bill, Plus the Talking Points to Sell the Plan
House Republicans on Thursday released a 429-page draft of their "Tax Cuts and Jobs Act." Read the bill below, or scroll down for the House summary or a more digestible GOP list of highlights.
Another Analysis Finds GOP Tax Plan Would Balloon Deficits
A study by the University of Pennsylvania’s Wharton School, using the Penn Wharton Budget Model (PWBM), finds that three modeled versions of the plan would raise deficits by up to $3.5 trillion over 10 years and as much as $12.2 trillion by 2040. The lowest-cost plan modeled in the study — a version that would tax corporate income at 25 percent instead of the GOP’s proposed 20 percent and pass-through income at 28 percent instead of 25 percent, among a host of other assumptions and tweaks — would lose $1.5 trillion over 10 years, or $1 trillion after accounting for economic feedback effects. (The budget adopted by Republicans last week allows for up to $1.5 trillion to the added to the deficit.) The study also found that workers’ wages would increase by about 1.4 percent over a decade, far shy of the estimated benefits being claimed by the White House.
The Budget Vote May Depend on a SALT Deal
House GOP members concerned about the proposal to repeal the deduction for state and local taxes are supposed to meet with party leaders Wednesday evening. They’re reportedly looking to reach a compromise deal to keep the tax break in some form — and the budget vote might be at stake, Bloomberg reports: “House Republicans hold 239 seats and need 217 votes to adopt the budget — a critical step to passing tax changes without Democratic support. That means 23 defections could sink the budget resolution — assuming no absences or Democratic support.”