Virgin Mobile Galaxy S3

Some background…I have been a Virgin Mobile customer for almost 2 years…. I picked up two Motorola Triumph’s (one for my wife and one for me) when they came out and signed them up for the $25/month plan, which gave me 300 minutes of voice, unlimited text, and theoretically unlimited data.

I crunched the numbers, figuring I would get 2 years out of the phone, making my monthly cost a little less that $35 each for a bone fide smart phone with a decent size screen (for 2 years ago) Not too bad for what I consider to mostly just be a toy, and significantly less than what the other providers had at the time. I’ve been fairly satisfied that I am getting what I am paying for (not a lot) so I really can’t complain that the voice quality is bad…especially in my house, and that the connection speed is pretty slow…sometimes painfully slow. The phone itself gets the job done, but compared to some other phones I have had a chance to play with, it is kind of primitive. My primary complaint is the keyboard. After 2 years….I still can barely type out a text without misspelling half of the words, and it’s not like I have fat fingers or anything….just dainty/clean accountant fingers. Also, battery life is abysmal, even after getting a new battery, and half the time, a fully charged phone will be completely dead by morning (but sometimes completely full). Finally, on my phone, it thinks that it has headphones hooked up to it 24/7….thus disabling the speakers…for, calls ect…

So, I decided it was time to get new phones…..just one problem. VM had a price increase on my plan from $25 to $35 and upgrading new phone cancels the grandfathered plan and bumps you up to the higher rate. So I was looking at $120 per year x 2 phones extra, not even counting the cost of a new phone. Doh!! So I put it off as long as I could, but with my phone near death, and the recent release of the Galaxy S3 on VM, I decided to stick my toe in the water. I purchased one S3 about a week ago for my wife, and switched her Triumph to my number.

Here are my first thoughts….the $400 S3, compared to the Triumph is an amazing device. The camera takes good pictures, on demand…no 5-10 second wait between. Also…it automatically uploads pics to my amazon cloud drive, so no worries about backups or sharing. The keyboard is a 10X improvement over the triumph….I played with it for a little bit and felt like I could write an essay on the thing….it was extremely precise. Other than that, it was fast, battery life is great, no issues on the device.

That said….I expected a huge increase in my connection performance, but I actually think it has declined. The Triumph runs off of the 3G network, my understanding is that the S3 would have the ability to run on either the 4G Wimax or the 4GLTE network. According to the VM coverage map, my home should have good coverage for both. WRONG!! In my home, the phone occasionally has no connection at all. Now, it’s on wifi, so it is primarily being used for text at the house….but it is extremely annoying when texts are not received or sent out timely because this is one of our primary communication channels during the day when I am at work and my wife is at home. An OMW isn’t that helpful if it is received after I actually get home, and it doesn’t help to get an item added to my grocery list when I am already  loading up the car.

But it’s not just inside the house….nowhere in my neighborhood have I observed the phone connecting to 4G. It will connect to 4G a few miles away, but the coverage map clearly shows 4GLTE for about a 10 mile radius around my house. A few nights ago, late at night after watching The Lone Ranger, I did a speed test on my two phones. The S3 on 4G clocked 250kb download speeds compared to the Triumph’s 200kb. Both are good enough to download a website in a few seconds, but nothing fast about either one. I’m not going to cry about it, but have decided to just hold onto my crappy 3G triumph until it dies.

Bottom line…the S3 is a huge improvement over the Triumph, but at least in my Houston suburb, the VM/Sprint network pretty much (still) sucks. Honestly, I had hoped to post a good review, because even at $35/month, VM is a great deal, and I  think the whole subsidized phone programs run by the big guys are just a huge scam. I honestly think just about everyone who can add and subtract should go prepaid, but at this time, depending on your needs, I can’t say that VM is the provider you should go with.

7/03/2013 Daily US Cash Deficit

07-03-2013 USDD

The US Daily Cash Deficit for 7/3/2013 was $21.7B on the first round of Social Security payments going out. The holiday timing is a bit off, so it will really be next week before we have a good comparison. Enjoy the Holiday Weekend!!

ObamaCare Delay And The 2014 Deficit

The delay in the Obamacare Employer Mandate has been in the news for a few days now, but one thing hasn’t been answered…how much will it cost? Surely the CBO will come out with an estimate sooner or later, but I thought I would take a wild ass guess now…then see how it turns out.

First…some background. The employer mandate is a $3000 penalty that businesses with over 50 employees must pay if they don’t provide health insurance for their employees. This was an important part of the initial financial case for Obamacare…these penalties were supposed to help offset the cost of the program, making it appear cheaper than it was.

So now…Obamacare will be implemented next year with all of the cost…but without some of the revenues (the individual mandate apparently will stand….bet you wish you had a lobbyist like big business huh 🙂 ) This article at gives us some numbers to play with. Supposedly, only 70,000 businesses exist with over 50 employees that do not currently provide insurance. So…we know these companies have over 50 employees…let’s assume the average is 150, so 10.5M employees, at $3000 each, so $31.5B in lost revenues. Obviously…this is a wild guess with the key being the average # of employees. Maybe it’s 51, maybe it’s 1000. Guess we’ll have to wait for the CBO…hopefully they have a little bit better data to work with than I do.

Now…there are two big uncertainties in my mind about the 2014 deficit. The first is revenues. Will we see 10%+ growth again, low single digits, or even see a decrease? I really don’t know. If I had to guess, I’d probably say 5% growth, but there is enough uncertainty to blow up my forecast if I miss it.

The second is Obamacare. I’ve seen a few estimates ranging from $60B to over $100B per year.  Before this delay, I was pondering about the timing of the cash flows. For example, I would expect that the outflows would probably occur steadily throughout 2014 as incurred. The inflows….the penalties paid by employers and individuals….I would expect these to be paid in early 2015…as part of their 2014 tax return. This timing mismatch…if material, could in theory cause a spike in 2014 outlays, followed by a mini spike in 2015 revenues. I’m not really sure how to model it all at this point…I am really hoping that Treasury adds a  revenue and outlay line to the Daily Treasury Statement giving us a wealth of data to analyze…fingers crossed 🙂


2013 Social Security Tax Hikes-Fun With Math

I’ve been wanting to dig into the details on this for a while…so here goes.

The most noticeable tax hike for most of is was the 2% increase in the social security tax from 4.2% to 6.2%…which all 134M of us with day jobs noticed around January 15th. Now…2% sounds like a pittance, but the base is so broad, it’s actually not.

So…some background. FICA taxes are really just an income tax…supposedly earmarked to pay for Social Security and Medicare. Cash, however, is fungible, and at the end of the day, all the cash goes into the same pot, and shortfalls are settled with IOU’s rumored to be kept on post it notes. All income up to ~$110k is subject to a 15.3% tax….half paid by the employee, and half paid by the employer…but don’t kid yourself here…you pay all of it. 6.2% is earmarked for Social Security, and the other 1.45% is for Medicare (I think)

So…an employee earning $50k per year would have $3825 deducted each year from his paycheck…and his employer would kick in another $3825….and send it all to good ol Uncle Sam…$7650 per year (That’s not exactly chump change!!) A few years ago, as part of the stimulus…they decided to lower the employee portion by 2%….This ended in 2012…thus we all ended up with a 2% tax hike…$1000 per year for our employee making $50k per year. Looking at the math…the rate went from 13.3% to 15.3%…a 15% increase.

From there…I found this document from the SSA..the total 2012 tax receipts related to FICA was $796B…good for 37% of taxes withheld in 2012…so a pretty good chunk. So…one would expect with a 15% tax increase, FICA taxes would increase from $796B to $915B, all else equal, so about $120B for the year, $10B per month. Very important to note..this is a one time bump from 2012 to 2013. Assuming we end 2013 with around 12% revenue growth, a full 5% of that will have come from this tax hike, and thus we won’t see another spike in 2014…we’ll just continue along at a higher base.

So…let’s think about 2014. Current employment is about 135M people and we seem to be adding jobs at about 2M per year. So in 2014, there will be 2M more people working…if their average wage is $50k, that alone would add $15B per year to the coffers…a 1.6% increase. That’s 1/4 of our recent payday loan from Fannie Mae. In relation to the $3.8T federal budget…it’s a rounding error.

I guess the point of all of this is to point out that yes…2013 tax revenues are showing very healthy increases. These increases are large, and they are material to the deficit. In fact…if we could string another 3 or 4 years of this together like the CBO thinks we will…the deficit situation would be vastly improved by 2016. However….given the math behind the increases, the data does not support this optimistic view….instead, the admittedly impressive 2013 revenues seem very likely to be a one time event caused by tax hikes and tax avoidance transactions that pulled income into 2012(with taxes paid in early 2013). If this is all true…then 2014 revenue could see low single digit growth, or even shrink…having huge implications for the 10 year picture.

And that’s why I haven’t got that excited yet about the surge in 2013 revenues. If…at the end of 2015, revenues are close to posting their third consecutive year of double digit growth…this pessimist will absolutely be forced to start re-examining my fundamental assumptions. Our $17T of debt took decades to accumulate and it’s going to take more than one year of double digit growth to even stop digging this hole, much less actually start paying it down.

7/01/2013 Daily US Cash Deficit

The US Daily Cash Deficit for 7/1/2013 was $31.9B…burning through half of June’s payday loan from Fannie Mae in a single day!! Why doesn’t treasury tweet that?

07-01-2013 USDD

It’s way too early to look for trends, but we see revenue up 4%. Cost appear to be up huge…but if you recall from the June discussion, in 2012, July had about $35B shifted into June….take that out and we’re pretty even.

Looking back, July 2012 posted an $82B deficit…despite the cost shift. I’m going to guess we end up in the same ballpark…say $80B. That assumes that we’ll see about 10% revenue growth and modest decreases in outlays….more or less making up the $35B hole we are starting in. So let’s sit back and let the facts start rolling in!!