Archive for December, 2016

Trump’s Ticking Time Bomb

Thursday, December 22nd, 2016

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There are a lot of things that could blow up the young Trump presidency. Conflicts of interest abound. Russian hacking could easily become the dog that bit its owner. Foreign conflicts involving China, Russia, Israel, Turkey, or Iran all loom on the horizon. ISIS lone-wolf attacks will continue and may soon begin to focus on Trump properties here and abroad. Obamacare, however, may prove the first issue to seriously wound Trump.

Trump made a lot of promises during his campaign. He has already discounted many of them as “campaign talk”. But he isn’t going to be able to walk away from his Obamacare promise. That promise was to replace the current healthcare insurance system with “something terrific” that will provide better coverage at a lower price for more people.

His supporters are likely going to give him a pass on his conflicts of interest. They will also give him a pass if he doesn’t start building the wall right away. They won’t care if he takes a while to renegotiate NAFTA and the TPP. They also aren’t going to demand immediate action on immigration reform. He’s already told them that he isn’t going to “lock up” Clinton or Obama.

Obamacare, however, is immediate and personal.

Many of those who voted for Trump were upset about the fact that their insurance bills went up this past year.

Their expectation is that Trump is going to come up with a better plan which will provide them insurance which meets their needs at a price they can afford. They are unhappy with high deductible plans. They are unhappy with lack of choice. They are also unhappy with the perception that poor people are getting a better deal through Medicaid than they are.

Health care, for all its tediousness, is extremely emotional. Sickness brings out our most vulnerable selves. When the system built to keep you alive lets you down, the urge to start afresh can be irresistible.

“I hope that Mr. Trump is working with someone as we speak on this,” Starry said. “Figure it out, guys. That’s what we hired you to do.”

The problem is that Trump is not going to be able to immediately change the fundamental economics that are driving growth in healthcare costs. Obamacare was originally passed to address the fact that healthcare costs were growing much faster than the overall economy. Obamacare has been effective in slowing the growth of healthcare costs, but it has been a very delicate balance. Recent premium increases under Obamacare reflect a couple of important facts. The risk mix between low cost and higher cost people is still too high for insurance companies. Small business did not exit the insurance market, as many predicted. So a higher number of younger healthier working people are getting their insurance from their employers rather than through the Obamacare exchanges. Also the number of younger healthier people willing to just pay the penalties is higher than projected. As a result, insurance companies are raising their rates to offset the higher costs of care for their insured populations.

Trump’s second problem with Obamacare is just as large as his first one. Conservative Republicans have their own agenda that goes well beyond Obamacare. Repealing Obamacare is just the first step in the conservative Republican plan to unravel the social safety net that they feel leads to dependency. They are not particularly interested in replacing Obamacare with anything. If they are able to repeal Obamacare without offering a viable alternative, they will next take aim at privatizing Medicare and Social Security.

If Trump is unable to focus his majority on tax reform, immigration, and jobs — they will happily spend their time and his political capital on their ideological agenda.

That will spell doom for Trump and his Republican majority.

Those voters who were angry about increases in their premiums in 2016 will be outraged when their policies are canceled, there are no affordable options, and insurance companies resume denying care for those they perceive as high risk.

If the Trump Congress follows a “kick the can on replacement” Obamacare repeal with suggestions on how Medicare and Social Security can be “improved”, the furry will reverberate across the country. The backlash will be worse than the 2010 Tea Party revolt. Voters will punish Trump and Republicans in 2018. If Trump manages to survive until 2020, he will lose in a landslide to Elizabeth Warren or whomever else the Democrats end up nominating.

What Happened?

Tuesday, December 20th, 2016

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We elected Trump president.

He is by all objective accounts the least qualified person ever elected to this office.  Yes he is a businessman and by all appearances a very wealthy person.  We have elected business people to this office in the past, but never one with absolutely no government experience.  We have also elected wealthy people to this office in the past, but never one who claims to be as wealthy as this guy.  As a result, we have no idea how he will perform because we have no previous history to use as comparison.  The closest we can come is Herbert Hoover, and that didn’t work out so well.

In as a dispassionate way as possible, I’d like to figure out why and then perhaps lay out just a few of the challenges that he and we will face.

Change

Republicans began this race with a significant advantage.  US voters simply don’t like to give any particular party more than 8 years in the White House.

The Clinton campaign understood this challenge.  As it became clear that Trump would be the Republican nominee, they crafted a strategy to highlight the risks of electing someone with so little government experience.  They framed this election as a choice between change and risk.

Here’s an example of how Clinton discussed this choice.

Donald Trump’s ideas aren’t just different – they are dangerously incoherent. They’re not even really ideas – just a series of bizarre rants, personal feuds and outright lies.

He is not just unprepared – he is temperamentally unfit to hold an office that requires knowledge, stability and immense responsibility.

As proof of how effective her message was, Clinton won these points.

  • Just 38 percent of voters said that Trump was “qualified” to be president (52 percent said the same of Clinton).
  • Just 35 percent said Trump had the “temperament to serve effectively as president” (55 percent said Clinton had the right temperament to be president).
  • One in three voters said Trump was honest and trustworthy (36 percent said the same of Clinton).

But she still lost the popular vote in the key states of Wisconsin, Michigan, Pennsylvania, Ohio, and Florida.  That’s because the desire for change was stronger than the perceived risks associated with that change.  Four in 10 voters said the most important character trait in deciding their vote was a candidate who “can bring needed change” to Washington. Of that group, Trump won 83 percent to Clinton’s 14 percent.  In effect, all that Trump had to do is demonstrate that he was NOT part of the establishment in order to win this election.  For the change voters, particularly in the key battleground states that I listed, all of his objective weaknesses were strengths.

Demographics

I had thought that the Obama victories spelled the end of white angry male politics.

I was wrong.

Clinton still did well with emerging demographics.  The white male voter segment is getting smaller in every election including this one.  That vote increased 2% from 2012-2016.  In comparison the black vote increased 6%.  The Asian vote increased 16% and the Hispanic vote increased 17%.  The problem for Clinton was that most of those votes were in states like California rather than the battleground states where Trump was able to eke out narrow victories.

Clinton won 55% of the young vote, but they weren’t as large a percentage of the total vote in 2016 as they were in 2008 or 2012.  Clinton also improved as a percentage of 65+ voters over those who voted for Obama in 2012, though Trump won that demographic by roughly 10%.

Issues

The country continues to become more liberal as demographics change.

The vote on immigration this election was almost evenly split.  That is a dramatic improvement over the negative view of immigration a decade ago.  74% of Americans now believe that there should be a path to citizenship for undocumented workers.  61% oppose building a wall.

Large majorities of all voters support more aggressive actions on gun control including expanded background checks, keeps guns out of the hands of those with mental health issues, barring those on no-fly lists from purchasing guns, tracking gun purchases in a national database, banning the sale of high capacity ammunition clips, and even restricting the sale of assault-type weapons.

65% of voters are concerned about climate change and believe it is a real issue.

60% support same sex marriage and LGBT rights.  A majority also oppose “Freedom of Religion” laws.

Where We Go From Here

There are a number of issues that could easily derail a Trump presidency.  The basic challenges remain that he is deeply inexperienced AND that he has chosen to surround himself with others who can only be generously classified as outsiders.

He was certainly elected to “shake up” Washington.  But Washington isn’t going to welcome change.  The same is true with the rest of the world.

So here’s my list of the challenges that Trump is going to have to navigate to survive his first term and get re-elected in 2020.

China, Russia, Iran, Israel, and ISIS

The One China policy has allowed Taiwan and China to peacefully coexist for decades.  Trump upset that policy with one phone call.  China’s response was to grab some of our stuff.  Escalation is not a good formula here.  Trump is already talking about killing the TPP.  That agreement was crafted to provide the other Pacific Rim countries an alternative to accepting China’s trading rules.  If China controls the rules of trade in the Pacific, they will also have tremendous economic leverage over those countries.  That will make it more difficult for the US to oppose Chinese aggression in the region.  What will Trump do if China threatens Taiwan?

It would be great to have better relations with Russia.  But Russia has been aggressively expanding its sphere of influence in border countries by intervening in their elections and annexing territory.  What is Trump going to be willing to give (or take away from) Russia that will cause them to change their behavior?  Trump is in dangerous territory if it turns out that there were contacts between his campaign and Russian hacking during the election.  Trump is also in dangerous territory if ongoing Russian hacking expose the inner workings of the Trump administration in the same ways that it exposed the inner workings of the Clinton campaign.  What leverage does this give Russia?  Russian reactions to the assassination in Turkey could lead to a military escalation early in Trump’s administration.  Turkey is our NATO ally.  How will the Trump administration respond?  Trump also has real estate holdings in Turkey.  How will Trump respond to actions that threaten some of his properties?

Trump has said that he will move the US embassy to Jerusalem.  That move would signal the end of any two-state solution.  It will also give Israel free reign to continue their economic and military persecution of Palestinians.  How will the Trump administration respond to an Israeli crack down on a Palestinian uprising that resulted in a large number of Palestinians being killed?  How will a Trump administration respond to an increase in military actions by Israel’s neighbors in reaction to a brutal military crackdown of a Palestinian uprising?

That leads naturally to Iran.  Israel has every right to fear Iran, and Iran has every right to fear both Israel and the US.  Iraq used to be the balance to Iran, but our invasion of Iraq upset that balance and caused Iran to start their nuclear weapons program.  They’ve stopped that development because of their interest in joining the global economy.  But if Trump figures he can get a better deal and is also seen as a close ally of Israel, this whole deal could come apart.  What will Trump do to prevent Iran from getting a nuclear weapon?  What will Russia, Iran’s close ally, do if the US or Israel take some aggressive action against Iran because of their resumed nuclear program?

ISIS will continue to attack around the world.  He has been curiously silent, for example, after the Berlin attack.  After Trump’s inauguration, I predict that his named properties will become targets.  This isn’t planned, but random.  How is Trump going to respond?  The reality is that there is little he can do.  He can attempt to bomb them, but if anything that will only increase the domestic terrorism that is now the bulk of ISIS action.  He will fail to be effective and ultimately voters will hold him responsible.

Conflict of Interest, Deal Making, Obamacare, Infrastructure, Tax Reform, and Republicans

Trump has a serious conflict of interest problem.  There are no indications that he is going to take steps to effectively insulate his business and his family from the potential benefits that would accrue to those businesses from his office.  Even worse, he also needs to insulate himself from the APPEARANCE of conflict regarding foreign contributions.  Just one example is the fact that he owns hotels.  Every time someone employed by a foreign government stays in one of his hotels, he is in potential violation of the constitution.  Congress and the American people will let him slide for a while, but he is taking grave risks against some future event that will paint him as corrupt.  I’m not sure how many of those events he is going to be able to survive, since he was elected to clean up the corruption.

Deal making is also going to be very difficult for him because that’s not how government business is done.  Deals are done politically, not financially.  It is ok to trade influence.  It is not ok to trade money.  There are a large body of regulations which prohibit favoritism in government contracting.  Trump could easily run afoul of these laws in his attempts to personally negotiate the country’s business.  The difference here is that, rather than a political backlash, he will get sued by whatever corporations felt that they were disadvantaged by one of Trump’s deals.  How many of those suits will have to occur before Congress decides that they have had enough?

It is going to be very difficult to replace Obamacare.  Collin Powell famously said of Iraq, “if you break it, you own it.”  The same is true of Obamacare.  If Republicans repeal it without a plan to replace it, even if that repeal is delayed until after the 2018 elections, the exchange structure could easily collapse.  If that happens, millions of people will either lose their insurance, or see their premiums rise dramatically.  This could easily turn into a daily drip-drip-drip of bad news, much like the financial collapse of 2008.  That bad news and the inability of the Trump administration to do anything about it, will result in a big 2018 backlash and the beginning of the end for Trump.  He will say that he did what the voters elected him to do, but voters are going to blame him because he promised to make it better.

Trump hired a budget hawk for his OMB director.  This budget hawk is going to have to figure out how to fund the massive infrastructure bill that is the foundation for Trump’s jobs program.  It is going to be very interesting to see how this plays out.  The infrastructure bank idea is an invitation to crony capitalism and will only work in big urban areas where investors have an opportunity to monetize their projects.  It isn’t going to help those vast under served rural areas where many Trump voters live.  The cuts to other federal spending that would be required to pay for this, if it isn’t financed through debt, will result in MORE job loss and hardship for those rural voters rather than less.  Their life will get harder, unemployment will go up, and they will vote for a different change in 2018 and 2020.

Tax Reform will be another give away to the rich.  This may turn out to be the least controversial of the programs that Trump takes on.  But it is also fraught with danger for Trump.  If Trump voters weren’t already sensitive to a cabinet filled with billionaires all getting big tax cuts, they will be.  If Trump hasn’t divested himself from his businesses, you can bet that the benefits that his family gets from Tax reform will be front page news and Trump’s hypocrisies will dominate social media.

Republicans are the most interesting piece of this puzzle.  Just as they rallied around Trump as it became obvious that he was going to win, they will abandon him if he appears to falter.  They will determine if they can mold him in their image.  When that fails, they will see if they can maneuver him politically to carry out their agenda.  When that fails, they will see if they can trip him up and get him out of the way, so that they can replace his agenda with theirs.

Summary

I will be surprised to see Trump complete his term.  I think that foreign intrigue will reveal his fundamental weaknesses and terrify voters.  Hopefully, we will avoid a conflict.  If not, it will go badly.  If he avoids foreign conflict, he will fumble Obamacare and the repercussions will cost him at least his senate majority in 2018.  The house will eventually impeach him for conflicts of interest and the post 2018 senate will confirm that impeachment making him the third president to go through an impeachment trial, and only the second one to lose.

I would prefer that this not be the script for the next four years, but Trump is sowing the seeds of his own destruction as we speak.  He is not taking the steps to insulate himself from potential conflicts of interest.  He is secretive and combative rather than transparent.  He trusts in his own ability to communicate with the public directly, but the public will soon be able to see for themselves whether the results match his promises.  He is picking fights with his intelligence agencies which makes him even more vulnerable to bad information.  His cabinet of outsiders will likely agree with him rather than oppose him.

We will face a challenge as a country too.  That’s because Trump will try to blame his failures on others.  We have to be vigilant to prevent Trump and his followers from using domestic turmoil to distract us from his administration’s failures.  He should have every opportunity to prove me wrong, but if he fails, he alone should be held responsible for the consequences of his failures.