The Dark Days to Come

As we approach the end of a tumultuous 2017, let me offer my wish that each of you have a joyous holiday season and that 2018 brings you all the best.  Happy Hanukkah, Merry Christmas and a fine Festivus!

While I sincerely hope that all of us have a wonderful 2018 in our own ways, I am concerned that as a country we will hit turbulent waters at best or worse, experience a Constitutional crisis.  I gave up prognosticating some years ago.  However, since it is the end of the year, I will offer up my scenario as to how the coming year will unfold as the investigation led by Special Counsel Robert Mueller plays out.  There are certainly other very important events to come in 2018 that the administration will face, such as dealing with a bellicose North Korea, implementing a tax cut by expanding the deficit, undermining the Affordable Care Act, retooling immigration and someday passing a budget.  All of these will be overshadowed by the unfolding drama surrounding Mr. Mueller’s investigation and its final results.  It will not be pretty.

Lest we forget, as I see it there are four distinct areas of investigation for the Special Counsel.  Three have been his focus from the beginning and the fourth I surmise got added as the investigation looked into the activities of Mr. Paul Manafort and others and the resulting relationship to the original three areas of interest.  The four are concerns over Russian interference in the election, possible collusion between the campaign and the Russians, whether or not the FBI investigation into these matters was obstructed by the president or his advisers, and my fourth, money laundering and/or tax evasion by the president and/or family.  Let’s look at them one by one.

Many of us forget that the original intent of the investigation, starting with the FBI and CIA in 2016, was to determine the extent, methods, and impact of Russian interference in that year’s election.  The combined intelligence community in the United States and elsewhere concluded some time ago that the Russians did interfere.  End of discussion.  The questions of how, why, whether it mattered or not and what to do stop it in the future remain unanswered.  Reportedly, the president refuses to discuss it with his top advisers, has yet to hold any cabinet level discussions as to how to protect future elections and continues to deny that it ever happened.  This is unconscionable.  Regardless of one’s political views, all of us should be upset that there is overwhelming evidence that it occurred and there is no evidence that anyone is doing anything substantive to prevent it in the future.  There is still no federal coordinated action to stop it from happening again.  As Americans we should be appalled.  Michael V. Hayden had a lifetime of experience in the intelligence community and was CIA director under President George W. Bush.  His view of the Russian meddling?  That it is the political equivalent of the attack on September 11.  He further said,

“What the president has to say is, ‘We know the Russians did it, they know they did it, I know they did it, and we will not rest until we learn everything there is to know about how and do everything possible to prevent it from happening again. He has never said anything close to that and will never say anything close to that.”

Perhaps some in Congress will wake up to the fact that action is needed, and soon.  I won’t hold my breath for the president to initiate any action.  When Mr. Mueller’s findings come forward, we may have an impetus for action by the rest of the government.

The second area of investigation, and the one most focus on including the president, is whether or not the president’s campaign colluded with the Russians to interfere in the election and impede Secretary Hillary Clinton’s chances of victory.  This one is more complicated and takes more than a sound bite or Twitter statement to unfold.  In short, the theory is that in exchange for “dirt” on Mrs. Clinton and other “aids” during the election, the new administration, if they won, would lift sanctions on Russia imposed for a variety of reasons generated by Russian bad actors, and not just during the election.  This one is less clear as to the extent that the campaign organization knew what they were doing.  Their best defense, if one can call it that, is that they were incompetent.  That line of  reasoning is becoming less tenable as more and more instances of meetings between campaign representatives and Russian representatives become known.  In addition, both campaigns were briefed in August 2016, following the official nominations, that the Russians were trying to interfere in the election, that other bad actors might also try, and the two campaigns need to notify the FBI if they detect any Russian overtures or other activity.  The Trump campaign made no such reports to the FBI.  It is hard to claim ignorance under those circumstances.

The third area of investigation involves possible obstruction of justice.  This stems in one way from the aforementioned meetings with Russian operatives during the campaign.  Various campaign officials initially denied any such meetings.  It grew bigger after the president fired then FBI Director Jim Comey and bragged in a Lester Holt interview on NBC and later in a private conversation with the Russian (!) Foreign Minister and Ambassador that it was over the “Russia thing.”  Director Comey testified under oath that the president asked him to drop the investigation into former NSC Director Michael Flynn’s interactions with the Russians.  (The same Michael Flynn that pleaded guilty to lying to the FBI about those very interactions.)  As if that is not enough, the investigation also includes the president himself pushing prevarications on Air Force One concerning his son Donald Trump Jr. and his interactions with the Russians.  They made a very weak attempt to cover it up, allegedly at the president’s direct involvement in the cover up story.

You can’t tell the players without a program.

Not on the “official” list but the area that will cause the biggest consternation, and at the same time pull everything together, is my notion that the Special Counsel and his office are looking into the Trump Organization’s and family’s financial dealings.  I think that they will find instances of money laundering and tax evasion.  Very much like what they come up with concerning Mr. Manafort and Mr. Gates — only with Russians rather than corrupt Ukrainians.

Many focus on Mr. Trump’s visit to Moscow for the Miss Universe Pageant and his subsequent attempts at creating new business opportunities in Russia.  Lost to some is the knowledge that he started visiting Russia in 1987 and has made trips off and on since then.  If his son is to be believed, lots of their investment money came from Russian sources.  U.S. banks would not underwrite his endeavors after four bankruptcies and he was desperate.  Think of it as a “Godfather” scenario.  “Donnie, don’t worry.  We’ll take care of the problem.  Relax.  But at some time in the future we may come and ask you for a favor.”  Or as Don Corleone says it much better in the original, “Someday, and that day may never come, I will call upon you to do a service for me. But until that day, accept this justice as a gift on my daughter’s wedding day.”

My opinion as to the results?

  • The Russians interfered in many, many ways in the election but the number of votes that changed because of those actions (none of which were by actual vote tampering) is unknown.
  • Aides to Mr. Trump did collude with the Russians but the president will benefit from plausible deniability as there will be no way to tie it directly to him.
  • The investigation will conclude that Mr. Trump and some of his aides did try to obstruct justice by interfering in the attempt to investigate his family and campaign ties to the Russians.
  • The Special Counsel will conclude that prior to becoming president, Mr. Trump knowingly engaged in unethical and illegal financial transactions.  These transactions helped Russian oligarchs launder money in Trump investments and real estate purchases.  His hundreds of LLCs and shell corporations were used to hide these transactions and to limit the taxes he was by law responsible for paying.

That’s when the “fun” starts.

First, prior to the Special Counsel’s findings, the House committees investigating these matters will rush out findings — possibly in early January — that will find that there is no evidence of collusion, they did not look at obstruction of justice because it is a criminal matter, and did not investigate his finances.  They will say that the Russians interfered in the election but it is unclear to what extent and in any case, the interference did not change the election.

The president will seize on this report, claim that it proves his innocence and that there was “no collusion!”

The president will try to fire Special Counsel Mueller because, he will reason, the House committees already proved that there was “no collusion!” and so there is no need for the investigation to continue.  To do so would make it a “witch hunt” based on the Democrats efforts to push a “hoax” and an attempt to disenfranchise millions of Trump voters because of a deep hatred of Mr. Trump.  Fox News and some House Republicans will cry long and loud that this is an attempted FBI “coup” to overthrow the duly elected President of the United States.  (By the way, this has already happened in the last 48 hours.  The attacks on the FBI and Department of Justice from certain Republican Members of Congress are despicable.  Please note that they are not attacking the facts, the results so far or any other substantive issue.  They only attack the people and the institution with the goal to sow doubt in advance of just this scenario.)

The Senate will try to protect the Special Counsel but at the same time expand their investigation to include the other nominees — Jill Stein and Hillary Clinton — to show that it wasn’t just Mr. Trump.  When the Special Counsel’s findings start to leak out, the Senate, caught in a bind as to how to act as the president continues to undermine, ignore and invalidate the non-partisan results, delays action.

The Special Counsel will name Mr. Trump as an un-indicted co-conspirator.

Mr. Trump will not step down  from the presidency and tries to pardon those indicted as well as himself.  This will lead to a Constitutional crisis.

The “#metoo” movement continues to build pressure against Mr. Trump as more allegations of harassment by multiple women come out and he calls them all “liars.”

To make sure that justice prevails, state prosecutors step in to bring state charges — especially on money and tax issues. Mr. Trump cannot pardon violations of state law, only federal.

The issue of pardons for whom and for what gets challenged in court and follows an expedited path to the Supreme Court.

Pressure will build for the Congress to act.  However, the House and Senate will not act to impeach the president and will cite the upcoming 2018 elections as the reason.  “Let the American people decide.”

Democrats win big in the elections.  While campaigning they will not use the word “impeach” but will insist that Mr. Trump needs to be held accountable for his actions with Congressional oversight.

Mr. Trump, Fox News, and some House Republicans continue to cry that the system was rigged and that an attempted “coup” is underway.  Mr. Trump embarks on a series of campaign rallies to build support among the minority of voters that still support him. Angry demonstrations ensue.

Most Americans are appalled at the complete story and the fact that Mr. Trump will not step down plus the fact that he is trying to pardon the wrong doers — especially close family members.  The Democratic landslide is a result of voters being fed up because Congress will not act.

Very bitter disputes break out in violence on both sides of the issue as Mr. Trump continues purposely to stir up animosity and anger.

There is very little energy left to try to tackle the big issues facing our nation.  American influence in the world continues to wane and other nations take advantage of our inward rage and lack of attention to international affairs.  The Russians continue to meddle in western European elections and to support Syria and Iran.  China consolidates its economic power and pulls other Asian nations closer to its orbit as they become the de facto leader of the region under the Trans-Pacific Partnership (TPP).

2018 ends without resolution of the Constitutional issues surrounding Mr. Trump and his associates’ actions.  Trials begin for Mr. Manafort, Mr. Gates, and Mr. Kushner and others close to the president.

Merry Christmas to all and to all a good night!

 

 

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While You Were Tweeting

I trust that you all had an enjoyable Thanksgiving weekend.  In many ways we have so much to be thankful for so it is always nice to take time out and to reflect on our good fortune — whatever form that may take.

In our nationally induced tryptophan haze, one may have noticed, or more hopefully ignored, a bevy of tweets and other distractions that obscure the many important legislative challenges coming up in the next four weeks.  Or more accurately, in the few days that the House and Senate are actually in session before Christmas.  Nearly all of the following impact Americans in some form or another and are important to the smooth functioning of our nation.  These are important issues that deserve serious consideration and discussion.  I will let you decide whether or not that will happen.

To name a few:

  • Tax cuts.  The president promised a “great big beautiful Christmas present” with completion of the Republican tax cut.  Both the House — which passed its version before Thanksgiving — and the Senate — which hopes to pass its version this week — have significantly different bills designed to permanently cut corporate taxes and to cut some lower and middle class taxes for a while.  The Republican leadership is touting both bills as a boon to the middle class.  Sorry, but I don’t see it.  Besides adding at least 1.5 trillion dollars to the national debt over the next ten years, it makes some puzzling changes.  For example, nearly all deductions (mortgage, student loan, state and local taxes, medical expenses, moving expenses and about 40 some more) are removed from the individual taxpayers’ ability to use them but keeps them in place for corporations.  The argument is that the individual standard deduction will greatly increase (roughly doubled) and therefore there will be no need to itemize.  At the same time, corporate taxes drop roughly 40 percent (from 35% to 20%) but they still keep all itemized deductions, including those listed above that go away for the rest of us.  The real kicker is that corporate tax rates and rules are permanent and the rules for the rest of us are temporary.  The non-partisan Tax Policy Center (TPC) estimates that for many of us, our taxes will actually go up over the next ten years as compared to current law.  This happens primarily because of the “sunset” provisions impacting everyday Americans.  Many Republicans are arguing that some time “in the future” Congress will make them permanent and so in the end, we all benefit.  Except.  Except.  There is no guarantee that they will become permanent.  If they don’t, we are victims of a big lie.  And if they do, then it all has been a sham and a trick.  In order to meet the rules of the Senate, they cannot exceed the 1.5 trillion dollar addition to the national debt.  (To do so, they need 60 votes in the Senate, which means getting Democrats onboard, who, so far, have been shut out of any input to the bill.)  Thus, the permanent cuts for corporations are paid for by the average tax payer.   But not to worry, according to the Director of the Office of Management and Budget (OMB) Dick Mulvaney, it is all a trick.  A “gimmick.”  As he said on Meet the Press, in order to meet the Senate rules, “certain proposals can only have certain economic impact.  One of the ways to game the system is to make things expire.”  Or as he went on to say, “a lot of this is a gimmick… to get through these rules in the Senate.”  This from the president’s point man on the cuts and in charge of explaining them to the public.  There is a whole lot more to this issue, but it deserves a separate piece as the issues are complex with wide impacts on each of our futures.  Keep an eye on this.

(Please note that there is no need to place a time limit on getting this legislation right. It is an arbitrary political goal to “deliver” a tax cut by Christmas.  Remember that as it crowds out the following issues, many of which do have — or have already reached — a drop dead date to accomplish.)

  • Government Shutdown.  Funding to operate the federal government expires on 8 December.  Here we go again.  Both Republicans and Democrats are using the imminent expiration of the spending authorization to promote their political agendas.  As in the past, it is unlikely that the Republicans can pass a spending bill without at least some Democrats voting for it as well (there is always a hard-core Republican group opposed to the amount of spending and the impact on the deficit — although they mysteriously voted for the increased deficit from the tax cuts).  There is a “summit” planned tomorrow involving the leaders of both parties from both houses and the president to try to come to accommodation on this and other issues.  Probably there will be a short-term extension to keep the government operating — a continuing resolution or CR.  CRs wreak havoc on all government agencies from defense to agriculture as they limit immediate spending and give no clear guidance for the future, thus severely inhibiting planning for the future.  Predictions are not optimistic as to a quick resolution because the Republican leadership remains laser focused on getting the tax cuts finished first.
  • Defense Spending.  As part of the overall objective of setting spending levels for 2018 many want to see defense spending increased from about $549 billion to about $600 billion.  In order to do that, Congress must rescind a bipartisan 2011 budget deal that set spending caps on all areas of government.  Democrats are insisting that any increases in defense spending must be matched by increases in non-defense spending or they will not vote to lift the 2011 caps.  Under Senate rules, 60 votes are required to change the bipartisan agreement providing the limits so Democrats have a say in how this is resolved.  Very little progress in resolving the issue is apparent and this impacts the funding for the government as a whole (see above).
  • Health Care. Politicians on both sides of the aisle want to see the market stabilized for health care.  Not surprisingly, there are differences on how to do it.  The Alexander-Murray health care bill is a bipartisan effort to bring some continuity and stabilization to health care under the Affordable Care Act (ACA).  The administration opposes this bill and the Senate version of the tax cut plan eliminates the penalty for not having insurance — thus creating the possibility of increased premiums for those with insurance and eventually driving a predicted 13 million from the roles.  (See my previous posts about the “three-legged stool” needed to keep the system stable.)  Democrats say the Alexander-Murray bill is off the table if the repeal of a key provision of the ACA is enacted.  Republicans are still making noise about “repeal and replace in 2018.”  Compromise seems unlikely and the public suffers.
  • The Children’s Health Insurance Program.  The generally popular CHIP provides health coverage for about 9 million poor children and others.  The current legislation expired on 30 September and it is unknown when this usually bipartisan issue will be addressed.  To date, the states have picked up the slack to keep the program going in the short-term but many say that funds will run out at the end of the year.  This is also caught up in the “need” to address tax cuts before other legislation.
  • Immigration.  The president announced the expiration of the Deferred Action for Childhood Arrivals (DACA) (the Dreamers) program last September and gave Congress until March to come up with a system for dealing with the children brought here illegally by their parents.  Many Democrats say that they will not vote for any spending bills unless this issue is addressed by the end of the year.  Some Republicans say that they will not address immigration unless “The Wall” is part of the bill.  There are also Republicans that agree that the Dreamers issue needs to be addressed and that may actually favor their remaining in the country.  But, again, they argue this cannot be part of any spending bill and can only be addressed after the tax cuts pass.
  • Intelligence Gathering.  On 31 December of this year Section 702 of the Foreign Intelligence Surveillance Act will expire.  This section of the law, approved by Congress in 2008 as a part of the response to the terrorist attacks on 11 September 2001, is intended as a tool to track and thus foil foreign terrorists.  It is meant for use in conjunction with foreign citizens outside of the United States and has specific provisions to protect American citizens.  Unfortunately, critics of the provision claim that vast amounts of information is collected on U.S. citizens as they communicate with foreigners — any foreign national, not just those suspected of being terrorists.  Known as “incidental surveillance” it raises many questions of privacy and government intrusion into the lives of innocent, ordinary U.S. citizens.  The NSA considers this provision to be among their most important collection capabilities and fear that if they lose the ability to continue the surveillance that it will severely inhibit their counter-terrorism capability.  There is general bipartisan support to extend the statute, but with some restrictions to further try to protect Americans’ privacy.  Currently, there are no plans to address the expiring statute by the end of the year.
  • Disaster Relief.  The Administration asked Congress for $44 billion in disaster relief for help in mitigating the impact of the hurricanes and wildfires that affected many areas of the country this year.  To pay for it, they have asked for reductions in other expenditures, such as benefit programs.  By all accounts, 44 billion — a lot — is inadequate to meet the need.  Puerto Rico alone estimates that it will cost $99 billion to get the island back on its feet.  Congress has promised to provide the aid, but does not plan to address the issue with concrete action (money duly appropriated) until the tax cut plan is finished.
  • Iran Sanctions.  By declaring in October that Iran was not in compliance with the international deal to limit Iran’s ability to develop nuclear weapons, the president activated a 60 day period which expires in December for Congress to act to impose new sanctions or not.  The general sense is that there is mostly bipartisan agreement not to extend new sanctions on Iran and thus to keep the deal in place.  However, at the end of the 60 day period the ball is back in the president’s court and it may be that inaction on the part of Congress will lead to action by the president and thus put the deal in jeopardy.

And there’s more!  But you get the idea.  Not much of anything will get done until the tax cuts are passed, which is not a sure thing in the Senate.  Even if it does get through the Senate this week, or soon after, they still need to reconcile the two versions of the bill — no easy task as they are significantly different in several important areas.  All deadlines discussed for the tax cuts are purely political and self-imposed, unlike many other items in need of Congressional attention.

It is sure to be a busy political December.  Enjoy!  And don’t let the tweeting distract you from the real action going on.


Not Just “Something”

The Republican Congress is moving ahead with passage of a bill to enact tax “reform.”  Actually, if one takes a close look, it really is not tax reform, but rather a tax cut.  Some of us may be for it, some of us may be critical of it, some of us may think that there is no need for a tax cut at this point.  Whichever approach you favor, there are elements to the proposal that all of us need to understand as we will all hear different spins on the bill as more and more of it becomes clear.

The one thing we do not need or want — whether or not one favors the current tax cut proposal — is what I increasingly hear from Republican members of Congress.  That refrain is something along the lines of what’s important isn’t so much the details of the legislation but that this Congress must pass something.  Anything.  They could not deliver on Repeal and Replace and have so far not enacted any significant legislative at all.  Something has to pass or voters will think that they are ineffective and unable to govern.  As a result, the argument goes, they will be decisively punished at the polls in 2018 and therefore something is better than nothing.

Wrong.  I could not think of a worse reason to pass a bill, especially one that will impact every single American tax payer and business.  The last major attempt at tax reform took place under President Reagan in the early 1980’s.  Thus we hear that this is a once in a generation legislative achievement.  True or not, it is clearly significant and will have a lasting impact on our economy.

So, whether or not one supports the current bill, there are some things of which we all need to be aware as we decide if this is a good idea or not.  As usual, a few caveats apply.

The final version of the bill is unknown.  Even as I write, negotiations are taking place that will cause certain provisions to change or get modified as the wheeling and dealing takes place.  This deal making can substantively change the bill and not necessarily for the better.  Even as the version in the House is getting all of the attention, the Senate is working on its own bill, the provisions of which are being kept under wraps.  We can assume that it will probably be similar to the House version, but there is no guarantee.  The competing bills then go to conference where negotiators hash out the differences.  The question will be whether or not the “deals” see the light of day before voting takes place.  Finally, recall that the Republican leadership in the House and the Senate have decided to lock out the Democrats and pass the bills on a straight party-line vote.  Regardless of whether or not this is a good idea, certain Senate rules kick in as a result which means the House and Senate may not be able to do all that they want.  If they break certain rules — outlined in the just passed budget bill which got little attention because of other events — then the Senate will require 60 votes to pass the legislation, which is unlikely if the Democrats are locked out of any input to the bill.

I know, a lot of inside baseball type maneuvering, but it matters because the rest of us have to live with the results.

There are two major economic reasons for fooling around with taxes (either raising or lowering them).  One is to stimulate the economy to get it growing again.  The other is to bring about a balanced budget to stop or bring down the growth of our national debt.  The two are not necessarily mutually exclusive, but they tend to act in competition in a modern economy.

Some argue that the economy cannot be stimulated further because current unemployment rates are very low.  According to the Labor Department, unemployment in October was 4.1% and there were 6.2 million open jobs on the market.  Demand for workers is exceeding those available.  During the presidential campaign, the Republican candidate claimed that the government’s statistics were “false” and that the unemployment rate was really much higher.  He now argues that the numbers are correct.  Regardless, an argument can be made that although the unemployment rate is the lowest in decades, there are many people that have stopped looking for jobs even though there are 6.2 million available.  Why the disparity?  Probably because the skill levels needed for the empty jobs is greater than, or a poor match with, the skills of those that stopped looking for jobs.  Couple this information with the fact that worker productivity is the highest ever — thanks to automation and other technology advances — and one can rightly ask how this tax cut is going to further stimulate growth in the economy.

The usual reply is that corporations will create more jobs by using dollars that would have gone to taxes to instead expand production.  This assumes that there is more demand for their products, an assumption that may or may not be true but is an unknown and should not be assumed.

The use of “dynamic scoring” helps the case for the tax cuts.  This is the theory that more money not spent on taxes will enter the economy as people have more cash to spend and this in turn causes the economy to grow and will actually bring in more tax dollars in the long run than are lost with the cuts.  Historically, this has rarely if ever happened.

The proposed tax cuts now before Congress will not balance the budget and will in fact increase the national debt by at least 1.5 trillion dollars over ten years.  (By the way, this is one of those intricate rules that the Senate must follow under the just passed budget.  They cannot go over that number or 60 votes will be required for passage.)  One might ask what happened to the Republican “deficit hawks” that argued for the past decade that the debt was growing too fast and even argued for a balanced budget amendment to the Constitution.  Beware of the need to pass something.  One can also argue that it is not good governance or good policy to finance a tax cut through increasing the deficit.  It narrows the options going forward when it may be necessary to finance a major catastrophe or war through deficit spending.

In fact, the current proposal cuts government revenue by roughly 4 trillion dollars.  For those that argue for smaller government and less spending, that may be attractive.  Remember that many in Congress are also arguing for increased defense spending, major infrastructure spending, no cuts to Medicare or Social Security in an aging population, and other measures that will increase spending.  The money has to come from somewhere.

To get the 4 trillion in cuts down to 1.5 trillion in actual lost revenue, the bill makes up the difference by eliminating many current deductions.  This is where it starts to get interesting to you and me.

There are always winners and losers in these types of bills.  Depending on where you sit, you may or may not like what you see.  To me, we need to understand who wins and loses and decide for ourselves whether or not our elected representatives should vote for or against the bill.  There are philosophical reasons to support or oppose it and there are also practical reasons to do so or not.  Sometimes those line up, sometimes they do not.

As an aside, it is impossible to know if the president makes out well or not through the provisions of this bill because we do not have his tax returns.  Every analyst that I have seen opines that if his stated worth and holdings are true, the man and his family makes out “bigly” if the bill passes.  Call it a tycoon real estate developers dream.

Those that authored the tax cuts tout it as a huge win for the middle class and not so much for the wealthy.  Please investigate it for your self and do not take as gospel the talking points of anyone in the House or Senate, Republican or Democrat.

Here are some of the more eye-opening provisions.  These are only a sample.  Read the 429 page proposal for yourselves and see if it meets your needs.

According to the talking points, the attempt at tax reform is to simplify the tax code.  If you dig through the details, it really does not do that.  There will be no “post card” sized tax form unless you already use the “1040 EZ” form and use photo shop to make it fit on a post card.

According to the talking points the cuts will put about $1,182 into the “typical family of four.”  First, I’m not sure what a “typical” family might be (more on that in a minute), but more broadly, of the $1.5 trillion cut about $1 trillion goes primarily to corporations, about $300 billion to tax payers, and about $200 billion to the most wealthy Americans via the elimination of the estate tax.

Back to the typical family.  Some will receive a tax cut, although how much is in dispute by some economists, but they generally agree that some will get a cut and that some middle class folks will actually have their taxes go up.  The main argument from the bill’s authors is that increasing the standard deduction ($12,000 for individuals and $24,000 for married couples) will eliminate the need to itemize deductions as most people will be better off not doing so.  Perhaps.  Individual circumstances vary so widely that it is hard to generalize.  But middle class tax payers should know that among other deductions that are to be eliminated include:

  • Federal deductions for state and local taxes (known as SALT) are eliminated.  Property taxes will be deductible up to $10,000.  The argument against “double taxation” — used in eliminating the estate tax — doesn’t seem to matter here.  For states with state and local taxes (including sales taxes) one will pay twice on the same income.  Arguments that high state taxes that are deductible means those with no or low state taxes subsidize them do not hold up.  There are many ways to analyze the return on investment, but in general, states with low or no state taxes get back more from the federal government than they send to Washington in taxes and just the opposite for the supposed free loaders.  For example, New York (high state tax) gets back about 75 cents for every dollar it pays in federal taxes and Florida (no state income tax) gets back about $4.50 for every tax dollar.
  • The Alternative Minimum Tax (AMT) is repealed.  This is the methodology that hits many middle class tax payers (although it was originally designed to keep wealthy people from paying no taxes through shelters and other tax dodges) requiring that when certain marks are reached, the owed tax is calculated in two different ways and the higher rate prevails.  Estimates are that the president will save tens of millions of dollars every year with the elimination of the AMT.
  • Elimination of the deduction for medical expenses.  Currently, one can deduct all expenses over 10% of adjusted gross income.  No deductions will be allowed under the new proposal.  This obviously impacts people with major medical bills, often the elderly, as it includes long-term care and other services needed for the aged or infirm.
  • Deductions for student loan interest is eliminated.
  • Estate Tax limits rise from the current $5.9 million to $11 million and then is eliminated in 2024.  This is a hot button issue.  Most of us will never be impacted by it, but Republicans claim it is “double taxation” (see above) and harms small businesses.  Its elimination adds about $200 billion to the deficit over ten years.  Estimates are that about 80 businesses were impacted by it last year.  The president’s family is expected to increase their inheritance by approximately $500 million through its elimination.  Keep an eye on this.  One proposal to pay for this change would provide for estates passed to heirs to be valued at their original prices (such as stock you bought 20 years ago and want to pass on) rather than the current rule where the origination value is that that it held at the time of passing.  This would impact far more people than currently affected by the estate tax.
  • A lower rate for “pass through” business income also sometimes called the “Trump loophole.”  This applies to businesses such as partnerships, “S” corporations, sole proprietorships, and the like.  It allows the owners to “pass through” profits from their businesses to be taxed as their personal income.  Thus pass through income is taxed at no more than 25 percent — far below the 39.6 percent top individual income tax rate that now applies to pass-through income, or the 35 percent top rate that would apply to individual income under the Republican plan.  Many very wealthy people such as the president use these types of arrangements for their businesses.  It is expected that many will restructure their business arrangements to take advantage of this new loophole.
  • There are proposals over the weekend to include repeal of the Affordable Care Act, or portions there of in the tax bill.  Mixed signals from law makers make it unclear whether or not they will try to sneak that into the bill after failing to pass it into law over the last seven years.
  • And a whole lot more, but you get the idea.

Clearly a “typical family” with a mortgage (deductions are limited under the bill) who are suddenly hit with catastrophic medical bills while paying off the student loans they took out to meet the needs of the new work place will fare totally differently than those families used in the talking points.  Very little is “typical” of any family.

Primarily we all need to keep an eye on the negotiations that will keep specifics of the bill in flux until the day it is voted up or down.  Whether for or against these provisions, we should insist on a fair and transparent process where our representatives know what they are voting on and what the implications for the new laws will be.  All of us will be impacted in some way.

Tax reform is a good thing.  There are many complicated elements to the current law and other elements that are unfair to some or too generous to others.  It’s complicated.  It’s messy.  Not everyone will be happy.  What we don’t need is a closed door, rushed job, unclear bill that gets passed only because they had to do something.

 


It Just Will Not Stop

Just when one thinks that just about everything that could happen under the Trump Administration has already occurred — it can’t possibly get any crazier, but it does.  Last week was chock full of newsworthy items, any one of which would have been worthy of discussion but they just kept coming and coming. Over the last week or so, we’ve seen proof that President Trump still does not understand the dignity and impact of the presidency.

To quickly cover a few of the highlights before getting to the main event — health care bills — let’s do a tour d’ horizon.  Two venerable institutions, the Boy Scouts of America and Police Departments across the country, had to issue apologies and “clarifications” following President Trump’s speeches to the annual Boy Scout Jamboree in West Virginia and to a Long Island New York police department.

In the former he gave a political speech that was short on inspiration to America’s youth and long on past grievances, politics, and a reminder of how personally great everything Trump is and will be. Some parents threatened to pull their kids from the Scouts.  President Trump supporters opined that the “kids loved it” forgetting that they are boys and teens and that when you get 40,000 kids together in one place, especially mostly boys, they will laugh and cheer at just about anything, especially if flatulence is involved. On Long Island the president seemed to say that police brutality when arresting suspects was okay.  As usual, whenever called out on similar pronouncements, it was proposed that it was a “joke.” Police departments around the country could only cringe and issue statements that such statements were no joking matter and that their (fill in the city) police department does not condone such action.

Within days of President Trump announcing the new White House Communications Director Anthony Scaramucci, aka “The Mooch”, aka “Mini-me” Mr. Scaramucci went on a rant to a New Yorker Magazine reporter that disparaged key senior members of the White House staff and included numerous references, in full graphic detail, to acts of biology that to my knowledge are impossible.  No comment from the president at the time.  Others in the Administration opined that he’s just a “New Yorker” and apparently that’s how New Yorkers talk about co-workers.  Having lived for a number of years in New York state I don’t recall anyone talking that way and certainly not in the name of the President of the United States.

In Tweets (Tweets!) the president continues to disparage his own Attorney General and his first and for a very long time, only official supporter for president.  According to some accounts this is a prelude to cleaning out the senior levels of the Department of Justice including the Attorney General, his deputy, the Acting FBI Director, and Special Counsel Robert Mueller.  No problem there.  In another Tweet the president arbitrarily told all active duty transgender military personnel that their services were no longer required “in any capacity” because they are a burden and “disruptive.”  Suddenly somewhere around 7,000 soldiers, Marines, Sailors and airmen are in limbo and told that somehow their patriotism and willingness to defend the nation does not count.

In yet another Tweet, the president fired his chief of staff Reince Priebus.  The Tweet announced that retired Marine general and serving Secretary of Homeland Security John Kelly would be the new chief.

Whew!  A full week.

On the upside for those of us rooting for a successful and appropriate presidency there were several positive developments.  As I write this, reports are that Anthony Scaramucci was removed from his job of ten days as the Communications Director.  I have no inside information but I suspect that the new chief of staff had something to do with that as Mr. Scaramucci bragged last week that he only reported directly to the president and did not have to answer to anyone else on the staff.  My knowledge of General Kelly, although limited, would indicate that he would absolutely not tolerate antics such as those of Mr. Scaramucci.  Perhaps the General can bring order to the White House staff.  We’ll see, but a good first step.

Also positive, the Chairman of the Joint Chiefs of Staff General Joseph Dunford, USMC let it be known that the military does not act on Tweets or any other form of informal communications when a policy decision is to be made, even a Tweet by the president concerning transgender policy.  Hurrah. It remains to be seen what actual policy evolves, but it is good to know that spontaneous utterances by the president will not precipitate military action.

Further good news came out of the Congress that overwhelmingly passed a bipartisan bill strengthening sanctions primarily against Russia, but with some additional provisions against Iran and North Korea. The Congress felt it necessary after listening to, and observing the actions of, President Trump with regards to Russian President Putin and our president’s apparent fascination with him.  The White House staff had worked hard behind the scenes to stop the passage of the bill but both houses of the Congress got up on their hind legs and said “no” to the president on this issue. A positive sign that they may increasingly exercise their role in governing as an equal branch of the government.

Many Republican Senators and Representatives also went on the record along with their Democrat colleagues to oppose President Trump’s Tweet policy on transgender individuals in the military and the treatment of Attorney General Sessions.  Clear signs that the president will not get blanket support from them.  As an aside, the president now taunts Republicans as well as Democrats via Twitter seeming to make it clear that he does not consider himself a Republican.  But to most of us, that is no surprise.

And of course let’s not forget that North Korea tested new Intercontinental Ballistic Missiles (ICBMs) that experts think can reach targets on the U.S. mainland as far as Chicago.

Arguably the biggest news of the week was the failure to repeal or repeal and replace or otherwise get rid of the Affordable Care Act (ACA) lovingly known as Obamacare.  Most of us followed the news and at least heard of the ins and outs of the entire suspense filled week of “will they or won’t they?”  They did not.  One could ask why after seven years of clamoring for (and voting over 50 times for) the repeal of Obamacare the Republicans were not ready to put forward their own coherent health plan. One could also ask why the only argument put forward by most Republicans, and especially by the president, had nothing to do with the merits of the proposed replacement plan(s) but rather the only argument was that Obamacare was “bad” — nothing about why the new plan would be better.  SAD!

But be careful.

I do not think the health care battle is finished, only in a strategic pause.  There will be further efforts to repeal or repeal and replace.  For supporters of Obamacare, or supporters of a bipartisan effort to repair Obamacare and to make it better, do not relax.  The fat lady has yet to sing.

Over the weekend President Trump tweeted out (how else?) that Obamacare was going to implode and implicitly that he would make it happen.  On Sunday the Director of the Office of Management and Budget (OMB) Mick Mulvaney went on television to be explicit about the president’s threats/promises. As I have written in this space before, the president can do grave harm to the current Obamacare system, primarily through non-enforcement of the mandate and by withholding funds to subsidize premiums. He also made news by threatening the Congress and Congressional staffers with actions to increase their premiums.  I am no expert in this area, but this is what I understand is the issue.

Is it possible for the president to make Obamacare “implode” as he promises?  As with most things, the answer is “it depends” on what part of Obamacare one refers to during the discussion.  Since Obamacare remains the law of the land, the president cannot make it go away at once.  He can, however, create enough chaos in the system that it can degrade over time.  Remember that most Americans get their health insurance through their employers or through the government (military, VA, military retirees, Medicare, etc.).  For middle to low-income working adults and for children that do not have employer or government health insurance they mostly get their insurance through Medicaid or in a market place created by the ACA.  Although a major factor in the latest debates, Medicaid is provided by law and cannot be legally changed without a change to the law. What is really under discussion are the ACA market places.  Since the ACA was fully implemented, about 10 million Americans get their coverage via the government market place.  These are the people you most hear about on the news and in political rallies, be it how bad the system is or how wonderful the system is.

The administration has a number of ways to degrade the ACA.  In a slow motion effort, they could stop advertising and marketing the exchanges so that people either don’t know that the markets still exist (a lot of Americans are unsure as to what is available after all the latest hubbub) or miss deadlines to sign up because there was no public advertising as to how or when to get on board.  Additionally, if the administration follows through by not enforcing the mandate (either get insurance or pay a fine) healthy people will get out of the market which causes costs to rise for the insurers which is then passed on to those still in the market — their premiums rise — or the insurer gets out of the market because it isn’t profitable for them if they have to eat the added costs.  (Remember the three legs from my 23 June post. To work, if we want to cover pre-existing conditions, the system needs a mandate to keep the pool costs low by balancing healthy folks with those that we already know have problems, but then to be fair, we subsidize those that have to have insurance but cannot afford it.  Get anything out of whack, and the system starts to wobble — the promised “death spiral.”)

President Trump is threatening/promising to speed up the process by withholding cost sharing payments. As I write, they are only released through the end of July — today. (The next deadline is in late August.)  The ACA requires insurance companies to hold down the deductibles, co-pays and premiums for those in the individual market place. However, the insurance companies are not charitable organizations and they are in business to make money.  To make up the loss of revenue to those companies every month the government makes up the difference on the costs — currently about $600 million a month.  Should the Trump administration stop paying those subsidies, premiums for those on the market place would sky-rocket or the insurers would just pull out of the market.  This is a lot of what you hear about when those that oppose the ACA say it is “collapsing.”  Health care and health insurance is not “collapsing” for most Americans, but it could for those middle to low-income Americans that are on the individual markets should the president follow through and try to cause the ACA to “implode”.

He claims the Democrats will “own it” and he will take no blame.  I think he is fooling himself if he takes deliberate action to make it tough on the citizens he swore to protect.

There is one more esoteric wrinkle in the president’s threats that you may hear more about this week. Mr. Mulvaney explained the issue and says that the president is serious about implementing it.  This involves the health insurance for members of Congress and their staffs.  Despite rumors to the contrary, by law the entire Congress and their staffs are on the ACA — they get their insurance from Obamacare. But with a wrinkle.  President Obama’s administration put out a policy that allowed them to treat each individual office of each Senator and Representative each as a small business.  This means that they are eligible for the subsidies just talked about above, saving them lots of money out of their own pockets. Before setting our hair on fire, take a minute to think about it.  Certainly the individual Senators and Representatives could afford to pay full price in an employer plan, but most staffers, interns, administrative personnel, etc. working in their offices are young folks not making much money.  It would have a huge impact on them should President Trump change the policy to exclude them from the subsidy program.

Today is the start of a new week.  Let’s hope it is a dull one.  We need to take a collective deep breath and take a few minutes to enjoy the summer.  And summers in official Washington D.C. are supposed to be dull.  Nothing going on.  If so, hold on to your hats come September.


That Was The Week That Was

Some of us of a certain age can remember the 60’s political satire show “That Was The Week That Was”, or TWTWTW, or simply TW3.  The show launched the American career of the British television host David Frost who went on to do many serious interviews including the definitive series of interviews with former president Richard Nixon.  But in the beginning, think of TW3 as an early, ensemble cast version of the “Daily Show.”  I can only imagine what fun they would have had with this week’s news out of Washington D.C.  Actually, it is hard to keep up with the news from the last 72 hours, but I will try to hit some of the highlights.

First, on the Russian front.  No, not that news, but rather the news that President Trump decided to withdraw the U.S. from a CIA program to provide training and equipment to Anti-Assad forces in Syria. One could argue whether that secret program — different from the American involvement in Syria fighting ISIS — was effective or not, but it was relatively low-cost and showed U.S. support for freedom fighters in Syria.  By pulling the rug out from under them, it seriously undermines confidence in U.S. commitments in the Middle East. Oh, by the way, the Russians’ number one request from the U.S. was to withdraw support from those forces.  They have been demanding it for years.  And now the U.S. has given in to the demand in exchange for, for, well apparently for nothing.  A significant bargaining chip for the U.S. in its relations with Russia (and a symbol of our desire for Bashar al-Assad to go away) is now off the table.  Not sure how or why because the Trump administration doesn’t want to talk about it.

In an extraordinary (in every sense of the word) interview with the New York Times President Trump talked about everything from the healthcare bill, to the French Bastille Day celebration, to Napoleon, to Hitler to NATO and many more topics (you can’t make this stuff up).  In total, a bit disconcerting when it is all put together.  Reading the transcript is actually frightening as it shows that the president thinks that the entire federal government is his personal staff — that they owe allegiance to him first, foremost and only, rather than to the American people and the Constitution.  It cements in my mind that he has no real understanding of what it actually means to be president of the entire United States. It is particularly disconcerting when he speaks about the Department of Justice (DOJ), the Federal Bureau of Investigation (FBI) and the senior leaders in both.  By name and with apparent malice of forethought he disparaged Attorney General Jeff Sessions, Deputy Attorney General Rod Rosenstein, Acting FBI Director Andrew McCabe, and Special Prosecutor Robert Mueller.  For one example, how would you interpret what he said about Attorney General Sessions?

TRUMP: Well, Sessions should have never recused himself, and if he was going to recuse himself, he should have told me before he took the job, and I would have picked somebody else.

HABERMAN {NY Times}: He gave you no heads up at all, in any sense?

TRUMP: Zero. So Jeff Sessions takes the job, gets into the job, recuses himself. I then have — which, frankly, I think is very unfair to the president. How do you take a job and then recuse yourself? If he would have recused himself before the job, I would have said, “Thanks, Jeff, but I can’t, you know, I’m not going to take you.” It’s extremely unfair, and that’s a mild word, to the president. So he recuses himself. I then end up with a second man, who’s a deputy.

To me two things jump out.  First, in the best case scenario, the president does not understand the role of the DOJ and that those attorneys do not work for him as Mr. Trump.  They work for the American people and need to have a loyalty to the Constitution rather than to an individual in the White House. Mr. Trump always insisted on loyalty from employees and so it appears President Trump insists on loyalty to him from his “employees.”  A second more sinister interpretation would be that President Trump would not have nominated Mr. Sessions if he knew that the Attorney General was not going to keep any investigation into the Russian interference in the election and possible Trump campaign involvement in it from gaining any traction.  Apparently, he expected the Attorney General to keep things under control and away from the president and his family.  Otherwise, why appoint him?  Read it for yourself, but if you look closely, you will see that he is castigating Mr. Sessions for doing the right and honorable thing.  There are now reports from multiple sources revealing that President Trump is reviewing his options on pardoning friends, family, and himself.  Very Nixonian.  Take a look at these three quotes and guess which are which from President Trump and President Nixon.

“When the president does it, that means it is not illegal.”

“When you’re a star, they let you do it.  You can do anything.”

“The law’s totally on my side.  The president can’t have a conflict of interest.”

The first one is from President Nixon, the other two from President Trump.

The biggest issue of the last few days is healthcare.  What the House and the Senate decide, or don’t, in the coming days and weeks will have an impact on millions of people and on billions of dollars in our economy.  It should not be something that is just pushed through for the sake of “getting something done” alone.  I agree that the Congress should get something done — so far not much of substance has gained escape velocity from Capital Hill — but something this big should be carefully considered. Kudos to Senator Susan Collins (R-Maine), Senator Lisa Murkowski (R-Alaska) and other Republican Senators that examined the proposed bill and found it woefully wanting.

Claims that Trumpcare is dead are, however, exceedingly premature.  Likewise reports of the death of Obamacare are premature.  But the president can murder Obamacare if he wants to, and there is some indication that he wants to do so.  By withholding subsidies for insurance premiums, which he says he may do, and by not enforcing the mandate, which is already the case, the president can make portions of Obamacare collapse — not the whole thing, but parts.  Claims that he “doesn’t own it” will not hold.  If he actively undermines the law, people that lose it will notice.  Bad policy.  Hopefully some of his advisers and others in Congress will convince him not to take that path.

The Senate will vote on something next week, but even the Senators themselves do not know what that will be.  Not good news. Currently there are at least two basic versions of “repeal and replace” legislation, with the possibility that those two bills will change before voting occurs, and one version of “repeal and replace later” with the possibility that one will also change.  It is surprising and disconcerting that a vote will be held early next week, with wide-ranging consequences on real people’s lives, not just in theory, and no one yet knows what will be up for a vote.

Dare I hope?

Here is what I hope for.  There are definite signs that moderate Republicans and Democrats are making the early moves to work for a bipartisan bill to “repair” the flaws in the Affordable Care Act (ACA), aka Obamacare.  Flaws do exist.  But there is no reason to get rid of the entire program — assuming one believes that health care should be affordable and available to all as I wrote about in my 23 June post. To be realistic, no Democrat will budge until the word “repeal” gets buried.  They also won’t support anything called Trumpcare.  Conservative Republicans such as Senator Rand Paul (R-Ky) won’t support anything that does not completely repeal the ACA “root and limb.”  But I hope that enough good folks, willing to put country above party, still exist in the Senate in both parties and that cooler heads will prevail.  If that happens, it could be the beginning of a wonderful relationship.  Getting something as tough as health care tackled on a bi-partisan basis would go a long way in having Republicans and Democrats getting back together to tackle other long-standing problems.  What a concept. I am always told how naive I am, but I hope that we have a break through on this issue and that it leads to accomplishments in many more areas.

Finally, and I leave it here despite many more developments of the last 72 hours, speaking of putting country above party I have always had the deepest respect for Senator John McCain (R-Ariz).  That doesn’t mean I always agreed with him but I always thought he was trying to do what he thought best for the nation and its people.  As you know, he is battling a particularly nasty form of brain cancer. I hope that he is back on his feet and back to the Senate before too long.  There are not many like him left in today’s Senate chamber.


Whither Healthcare?

“Now, I have to tell you, it’s an unbelievably complex subject. Nobody knew health care could be so complicated.”  — President Donald Trump 27 February 2017

And you know what?  He is correct.

As the Senate debates and votes on Trumpcare to repeal and replace Obamacare over the coming days, much will be written and talked about regarding its impact and efficacy.  Some will think it is great and others will think it a travesty.  It all depends on what the goal for the program might be and how one thinks that goal should be attained.  Is Trumpcare, or the American Health Care Act (AHCA) (as it is called in the House of Representatives while the Senate Bill is called the Better Care Reconciliation Act of 2017) designed to help Americans and keep them healthy or is it an attempt to do the bare minimum while saving the government, and ultimately tax payers, money?  One’s view of Trumpcare also depends on whether or not Obamacare, or the Affordable Care Act (ACA), is working for you.

Put more succinctly, is healthcare in the greatest country on earth a right or a privilege?  Should it be open to a free market — those that can afford to pay do, those that can’t need to earn more money — or something that every citizen deserves?  If you happen to think that healthcare is a privilege, you get what you pay for, then you may as well stop reading here because you basically think that the government should have nothing to do with healthcare.  If you think that access to healthcare should be a right, then read on. Be forewarned however, that this is, as the president says, complex. Politicians of every stripe also parse and obfuscate elements of healthcare to their own advantage. It can be difficult to determine where the truth lies — especially since many times two people can both be technically correct while interpreting the meaning in totally different ways.  As I like to say, it is the difference between what things are and what things mean.

Here is the crux of the problem.  The United States does not suffer from poor medical care.  People come from all over the world to have their health problems resolved here in the U.S. — if they can afford it. That is the problem.  It is not the quality of care, but rather having access to good care and being able to afford it. Access and affordability are the reason we need insurance plans which is what both Trumpcare and Obamacare are really about.

The U.S. does not really have a health system.  It has a series of health systems depending on whether the individual is on Medicaid or Medicare (the dreaded by conservatives single payer system), or on the VA or Tricare (military) system (basically socialized medicine), or gets insurance through an employer (where most people get their insurance), or buys it on the open market (usually very expensive).

A pervasive goal in the U.S. should be that no one goes bankrupt due to an unexpected illness or injury. Likewise no one should have to forgo medical treatment because they cannot afford it.  Both happen in the U.S., although by most accounts, Obamacare went a long way in reducing the numbers of people in either situation.

So let’s design a system that helps people get care without using their every last dollar.  Let’s assume we want a system where no one can be turned down — or charged unattainable amounts of money — for a pre-existing condition.  This seems to be one area that most politicians can agree upon and one of the most popular aspects of Obamacare.  How to do that?  It does not take a genius to see that maybe I won’t buy any insurance until I get sick or injured and I will save a lot of money in the meantime.  That leaves only those with pre-existing conditions on the insurance rolls — a situation which will either leave the premiums so high as to be unaffordable, or leave the insurance companies holding the bag and going bankrupt.  To even out the costs and make them more affordable to all, we would then require everyone to have insurance — the dreaded mandate. However, it may not be fair or even affordable for everyone to buy insurance, especially for people that do not receive insurance through their employer, so if we are going to require it, then we should come up with a system to help people pay for it — the other debated aspect, subsidies. Those three elements are the basis for every proposed health care plan concocted by politicians.  If you play around with one of the three, it impacts the other two.  It becomes a very complicated game.  How one plays the game depends on my opening statement — what is the goal for the plan?

On top of that throw in hot button issues such as who can do what (Planned Parenthood anyone?), whether in our proposed system we “punish” young healthy citizens by making them subsidize the old “sick” citizens, should the government have the power to tell people that they “have” to have insurance, and who pays for all this, the wealthy or the poor who are most likely to benefit from a plan like this.  It does indeed get complicated in a hurry, and also very emotional for a lot of people.

In evaluating a planned system, lots of politicians focus on premiums and deductibles — and not always together.  It is possible to devise a plan with very low premiums, lower than Obamacare, but does it cover everything?  Does it have a high deductible?  Does it have annual or lifetime caps? What pre-existing conditions are covered?  Those and other details mute any discussion about premiums.  To coin a phrase, we cannot compare apples with oranges.  Premiums are certainly relevant when discussing the cost of a particular plan, but it is not sufficient to get a true picture of the impact or value of that plan.

To muddy the issue, the president makes unfounded claims about Obamacare.  He says “it is dead.” Except it isn’t.  But the president and the Republican leadership are trying hard to kill it, partly to force through Trumpcare.  Insurance exchanges are drying up and companies are pulling out because of the biggest fear they have — uncertainty.  The Congress has yet to decide if they will provide the money for the aforementioned subsidies to help people afford the mandated insurance.  And they have announced that they will not enforce the mandate.  Two of the legs of our three-legged plan are being distorted, that means the third leg is terribly out of balance which makes it appear the system is not working.  If insurance companies don’t think they are going to get paid — or that they will be left holding the bag for high cost pre-existing conditions which they are required to cover — then there are two choices.  They can raise premiums or leave the market.  Most experts assert that without the uncertainty coming from the White House and Capital Hill, the health insurance system in the U.S. would be stable and hold down costs for most (most — not all) Americans seeking health care.  Many people now have insurance that would not otherwise have it.  The result is “wellness checks” and other preventive health measures now sought out by people that did not seek it before.  Therefore they are healthier and the over all expenditures for larger, more catastrophic care comes down because they are less necessary.  Like it or not, the states that expanded Medicaid under Obamacare generally have more small hospitals and clinics serving the poor or rural areas of their states because those hospitals have a known source of income for the care they provide.  Many of those small hospitals and clinics closed in states that did not expand Medicaid and there is significant concern over the reduction of those Medicaid funds under Trumpcare. In mostly rural states such as Alaska and Maine, even their Republican Senators are concerned and may vote against the proposed Senate bill.  Senators Murkowski and Collins both realize what the proposed reductions in Medicaid mean to their states and are worried, as are others.

Whatever your own views on healthcare in the U.S. take a good hard look at any plan floated to solve the problem.  I am no expert on this subject.  Not at all.  I recognize that we do not have a bottomless purse to pay increasing costs for social programs.  I get it.  Personally, I think we leave a lot of possible solutions (such as a single payer system which prevails in many modern nations, such as Canada) on the table because of emotional political arguments rather than a factual airing of the pros and cons to different solutions.

It boils down to one’s personal views.  Do you get what you pay for and if you can’t pay you don’t get it? Or should the greatest nation on earth also provide the best healthcare available to its citizens?  If so, how is it paid for?  There are no easy answers, but I think we are making it harder on ourselves than needed.  Democrats and Republicans state that they both have the same goal — to make healthcare available to our citizens and at a cost that is sustainable.  If that is the case, then everything else is politics.

To me, we have a system for providing affordable care through an insurance program called the ACA — Obamacare.  No one thinks that system is perfect.  Democrats affirm that they are willing to work with Republicans to fix what needs to be fixed.  Republicans shout that Democrats are obstructionists while jamming through a bill that even most Republicans did not get a chance to look at.

You can look it up, you don’t have to take my word for it, but in putting together Obamacare the Democrats took nearly a year, held countless hearings, folded Republican amendments into the final bill, and tried to put together a bipartisan bill.  Politics interfered at the end of that process and one could argue that Democrats jammed it through at the end.  But contrary to what you now hear, it was not a secret process and it wasn’t a slap dash final product.  I am not sure what the rush is in the Republican held Congress at this point.  This is major legislation that will impact many Americans and a large chunk of our economy. There is no need to play hurry up ball at this point.  Every piece of legislation has some perverse and unintended consequences.  Obamacare has some.  Trumpcare certainly will if it has not been properly vetted and reviewed.  It is too important to just slam through, whether or not you support the fundamental political and social theories behind it.

This process is not in the best interests of our country.  I hope that cooler heads prevail and that everyone takes a step back.  Take a deep breath.  Let’s regroup and come forward with a bipartisan approach to helping every citizen find effective and affordable healthcare.

I’m not holding my breath.


Deal or No Deal? No Deal…. This Time. But More Will Come

“Obamacare is the law of the land. … We’re going to be living with Obamacare for the foreseeable future.”  — Speaker of the House Paul Ryan (R-WI) on 24 March 2017

The last ten days of the Donald Trump Administration has had more drama and newsworthy events than any recent presidency in memory.  Most of it was not good news.  Not good for the country and not good for the Trump Administration.  Ranging from the revelation that the FBI is conducting a long-term investigation into ties between the Trump campaign and foreign entities, to the failure of the House of Representatives to vote on a replacement for the Affordable Care Act (ACA). The American Health Care Act (AHCA) was pulled by Speaker Ryan because of its sure defeat in the House.  A defeat I may add, that came despite the fact that the Republicans had a majority in the House of Representatives, the Senate, and the White House.

There are many reasons why the bill failed, and I am sure that pundits will dissect those reasons at length as time goes by.  Among the most prominent in my view, is that as the final push began to go from theory to an actual bill, the Republicans lost sight of policy and focused primarily on politics. In so doing they ended up changing the bill in ways that left only 17% of Americans in favor of it replacing the ACA.

Despite President Trump’s promise on 17 January 2017 that his health care bill was nearly finished and would be revealed shortly, he apparently did not have one of his own and went with the proposal crafted by Speaker Ryan.  In that January interview, President Trump also insisted that his health care bill would provide “insurance for everybody” and that people “can expect to have great health care. It will be in a much simplified form. Much less expensive and much better.”  Which, surprisingly from this administration, turned out not to be true.

One could also ask why after seven years of campaigning on “repeal and replace” the Republicans did not have a viable plan, worked on by all factions of their party, with the contentious issues litigated before hand, ready to go?  It became a lesson for the new majority that opposition is much easier than leadership.

Speaking of leading, President Trump learned that leading the nation and a divided government is much different, and I would add more difficult, than running Trump, Inc.  The “closer” couldn’t close and he found that threats to an equal branch of government do not carry much water when the president’s approval rating is only in the 30’s and his disapproval rating is in the high 50’s.

There are other significant issues at play and we will see how things work out in the coming months as the president moves on to more “fun” (his word) endeavors such as tax reform and infrastructure renewal.  However, I think that all concerned are naive to believe that health care is resolved for the future.  In many ways, this is just round one of a longer, continuing saga.  As always, the devil is in the details and there are many details yet to be resolved before the battle of the ACA vs. AHCA is over.

Recall that President Trump and others continually repeat that the ACA is a “disaster” and in his usual method of communicating complicated issues, tweeted that “ObamaCare will explode and we will all get together and piece together a great healthcare plan for THE PEOPLE. Do not worry!”  One of many such tweets where he constantly reiterates that ObamaCare (the ACA) will “explode” or “implode” depending on his mood of the day, and blaming everyone — Republicans, Democrats, bureaucrats, a long list — for the failure of the bill to pass the House.  He blames everyone but himself or his dogmatic but very inexperienced staff, even as insiders say that he never really understood the policy behind the bill, nor really had much interest in it other than as a tag line during the campaign.

“Nobody knew that health care could be so complicated.” — President Trump on 27 February 2017

Here is the real point.  In fact, President Trump and his administration can turn his prediction into a self-fulfilling prophecy.  By regulatory action, or inaction, and by refusing to defend or promote the current system, they can indeed cause it to fail.  Not tomorrow, not the next day, but over time they can ensure that it fails without the proper attention to implementing its provisions.

Nearly all impartial adjudicators, including the Congressional Budget Office, state that under current provisions, the ACA will not explode, implode, or otherwise become a disaster.  It is working. However, it is not working perfectly and could use improvement.  In particular the number of insurance companies participating are decreasing, and deductibles in some areas are increasing. There is some debate as to whether this is happening because of the uncertainty that surrounded the ACA leading into the introduction of the AHCA or other factors.  Generally, the experts say that this trend can be reversed and in any case, does not impact all Americans.

The ACA — ObamaCare if you will — can be improved and should be improved.  Just like Social Security and other programs, the original plans are rarely perfect and it is entirely reasonable to see changes that improve the process and benefits.  Hopefully, now that the histrionics from both parties are over, the real leaders of the House and Senate can sit down in a bipartisan way and work on fixing the things that need to be fixed in the ACA.  I am not optimistic that it will happen. It will be difficult because from a policy viewpoint it is expensive and from a political viewpoint the Republican majority cannot pass such legislation without significant numbers of Democrats on board.  Thus far they have shown themselves to be unbelievably reluctant to pass anything that needs Democrats to carry the day. Conversely, at this point in time, Democrats are unwilling to show support for much of anything that President Trump is pushing.  That said, I am more confident that President Trump will be willing to work with Democrats and they may in turn be willing to work with him, on the right issues.

Unfortunately, the Secretary of Human Health and Services Tom Price made a career in the House of Representatives by opposing the ACA.  Now that he is the Secretary he can make regulatory changes that lessens the coverage provided by the ACA.  He can refuse to defend in it court when challenged and he can refuse to advertise re-enrollment dates and other factors that makes it harder for people to access and benefit from the Act.  Whether this will happen or not,  time will tell, but as the president and others continue to insist that the ACA will collapse, it is entirely possible that Secretary Price will help to make matters worse.

President Trump now has the opportunity to demonstrate whether or not he is the great negotiator that he claims to be.  He can choose to show real leadership and bring the parties together and do something positive for all Americans or he can show us that his “repeal and replace” sloganeering was only that — an applause line without substance.  So far his stated intention is to “move on.”

What he cannot do is claim that he no longer has any responsibility for the future of health care in the United States, which is what he tried to do last Friday.

“I think the losers are Nancy Pelosi and Chuck Schumer because now they own Obamacare. They own it – a hundred percent own it. And this is not a Republican health care. This is not anything but a Democrat health care. And they have Obamacare for a little while longer, until it ceases to exist, which it will at some point in the near future.  And just remember. This is not our bill. This is their bill.”  — President Trump on 24 March 2017

Sorry, Mr. President.  I regret to inform you that you are the president of the entire nation and that you are responsible for the well-being of all its citizens.  And oh, by the way, it was the Republicans that could not get themselves organized to pass their own bill.

Let us all work for a better deal in the future.