Archive for the ‘Healthcare’ Category

Same Poison Different Bottle

Saturday, September 23rd, 2017

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Every time Republicans regroup in an attempt to repeal and replace the Affordable Care Act, the proposed legislation gets worse.  That in itself should tell you something about the nature of the politics at play here.

The proposed Cassidy-Graham bill is the same poison in a different bottle.  It shifts health care costs including Medicaid to the states.  At the same time, it perversely cuts funding to support Medicaid and subsidize insurance premiums.  Worse yet, all federal funding disappears in 10 years.

It hard to fathom how Republicans could come up with a plan that would be worse than repealing Obamacare without a replacement, but they succeeded.

What is even harder to understand is that even though the bill is widely opposed by healthcare experts, industry groups, AND 85% of the population, it almost became law.  At this point it appears that the bill will fall a few votes short of passing in the Senate.  It would almost certainly have passed in the House, and President Trump would have signed it.

We can no longer afford to trust the Republican Party with healthcare.  It’s too important to be the subject of this sort of politics.  Healthcare accounts for 20% of our economy.  12.5% of Americans work in the healthcare industry.  More than 32M people would lose coverage under Cassidy-Graham.

Republicans were willing to vote on this without a CBO score, committee hearings, or testimony from experts and those affected.  They were willing to vote without any input from Democratic Senators even though Senate Democrats represent a majority of voters.

Instead they were willing to pass this bill, as bad as it was, because they thought they could.  They were more concerned about their base, their ideology, and the next election; than what was best for the rest of the country.

Please hold Republicans accountable in the upcoming elections for this cowardly act.

 

 

Kool aid

Sunday, July 2nd, 2017

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I must admit that I remain astonished at our current political landscape.

We have a Congress who are attempting to take healthcare away from at least 22M people in the name of what? Reducing premiums for the young and healthy? Providing the first of many big tax cuts to the wealthy? Further punishing the poor, sick, and old just because they can? Because we need something to replace Obamacare because we promised something better? How do you then explain a plan that costs more, covers less, threatens those with pre-existing conditions, does nothing to address the basic drivers increasing healthcare costs, and essentially eliminates Medicaid as we know it?

Then we have a President encouraging Congress to repeal Obamacare completely without any replacement as some sort of punishment to Democrats for not supporting him. If he can’t have what he wants, nobody can. Those 32M people who suddenly find themselves without healthcare can just go to the emergency room (Mitt Romney’s solution the problem of the uninsured).

It isn’t even enough to discover that the new healthcare bill will cause premature deaths to rise by approximately 29,000 a year as a result of lost insurance. Medical bankruptcies will again begin to rise after a decline during the ACA years.

We even have Republicans suggesting that the best way to deal with opioid addiction is to inform addicts that public safety officials can only afford to save their lives with Nar can three times. The fourth time they overdose, public safety officials are instructed to just let them die. Why? Because saving their lives is too expensive.

We’ve got reports that Russian hackers discussed gaining access to Clinton emails during the 2016 campaign and providing them through an intermediary to Michael Flynn.

We’ve got Mitch McConnell saying that he has $200B to play with and should be able to buy some votes. He has $200B to play with BECAUSE the Senate bill kicks so many people off of the healthcare insurance rolls so much faster than the House bill that instead of saving $119B over the next decade, the number is more than $300B.

We’ve got the war ratcheting up in Syria and Afghanistan with nary a peep from Trump supporters.

We watched a truly cringe-worth round robin of ring kissing from Trump’s staff and cabinet. Normally those things only happen in dictatorships and religions.

We’ve got Trump demonstrating on a daily basis that he has no idea what he is doing. His attempt to rally the senatorial troops to get a vote on his healthcare bill was embarrassing. It’s so bad, that McConnell had to chew out Priebus calling a Trump PAC’s attacks on Nev. Senator Heller for his opposition of the Senate healthcare bill “beyond stupid”.

There is all of this and more and what does everyone get upset about?

Trump picks another fight with a female news person.

Republicans can’t seem to muster the courage to call him and the Republican leadership out for their cynical attempts to pass a massive transfer of wealth from the poor to the wealthy. They secretly cringe when he obsessively thrusts himself back into the spotlight taking focus away from their attempts actually get something done. They continue to defend him as the evidence mounts regarding his campaign’s involvement with the Russians and his own attempts to obstruct the FBI investigation.

You’ve got Paul Ryan defending the large number of uninsured in the Republican bill by claiming that most people don’t want healthcare insurance. Exactly the opposite is true. The main reason people don’t have health insurance is because they can’t afford it.

But even he felt compelled to say something about how inappropriate Trump’s attacks are.

Some folks in the White House think that they are somehow “winning” when Trump demonstrates that he is a petulant narcissist. In their view, these events galvanize their base because it forces them to swallow yet another gulp of the Trump Kool-Aide which inoculates them against reality and demonizes the only source of unbiased information that could possibly save them.

But even some of these have decided that this recent tweet may have been a bridge too far.

So if this is what it takes to finally get us to a point where Trump can be held accountable for his failures to fulfill his responsibilities as President, I hope that the Morning Joe reality-TV battle is only the first of a long series of attacks, each more demeaning and mean spirited than the last.

Perhaps that will be the missing ingredient to break the Trump spell for enough of his current supporters that we can finally start a rational discussion about the consequences of incompetence.

In the meantime, we’ll have to continue to witness to Trump’s feeble attempts to govern with a weak 40% approval rating and an even weaker understanding of how to function in the most powerful elected office in the world.

As I already mentioned, last week Trump called GOP holdouts to the White House for some old fashioned arm twisting around the stalled Senate healthcare bill. What happened? Nothing. Nobody changed their vote. Why? Because when the House bill was in a similar situation, he threatened intransigent conservatives that he would actively campaign against them if they didn’t drop their demands. What happened? They called his bluff. He caved and gave into their demands. They passed a bill that now has no chance of passing the Senate.

He has strong support among Republicans. Where are his appeals to his base and Republicans in general to support the Senate efforts? Shouldn’t this be a natural instinct for a “master salesman”? Instead he has been criticizing the bill. When he calls the bill “mean” and implies that it is cheap, how many Senators are going to be willing to take a hard vote? He is already telling them that he is going to protect himself if this whole thing goes south.

He has even undercut his lead dog in this fight, majority leader McConnell. McConnell has been working every angle he can think of wrangle the handful of votes he needs to get this thing passed and Trump undercuts those efforts with a tweet suggesting that it may be time to throw in the towel and just repeal Obamacare without any replacement. That’s what Rand Paul wants to do, not Mitch McConnell.

What does all of this mean?

It is not going to get better. Trump isn’t going to change and the realities of how politics works are also not going to change.

What will change is the voter’s opinions of Trump and those who support him. We will discover that like many other things about this President, his unwavering kool-aid-loving support is small too. We’ll see how this plays out in the 2018 election.

The Great Erosion

Wednesday, May 31st, 2017

Nixon left office with a 24% job approval rating.  I’ve often wondered what sort of people would still support a President after his spectacular abuses of power were revealed.  Based on recent analysis by FiveThirtyEight, I now have a better understanding.

Nate Silver makes a good argument that Trump has already lost significant support among those who voted for him, and that may only be the beginning.

His analysis tracks the changes in the “strongly approve” portion of those supporting Trump’s job performance.

While Trump continues to enjoy strong approval among those who self-identify as Republicans, the nature of that support has changed.  Those who “strongly approve” has eroded from a high of 30% to current levels of 22%.  In addition, those who “strongly disapprove” outnumber those who “strongly approve” by a 2-1 margin.

The cause of this erosion in base is the first failure to pass healthcare reform followed by an even worse bill that added removing protections to those with pre-existing conditions to a bill that will reduce the rolls of the insured by 23M.

What’s important about this erosion is that it is entirely in line with what NBC polls predicted several months earlier.  They identified a “floor” of approval for Trump at 22%.  The rest of his support was conditional on accomplishments.

The erosion reflects approximately 8% of those who were previous strong supporters, now becoming “somewhat approve”.  But the “somewhat approve” and “somewhat disapprove” numbers have been fairly constant.  The “strongly disapprove” number spiked with the release of the travel ban and has stayed high.  So where did the 8% where were strong approvers ultimately go?

What appears to be happening is that the erosion is in the segment of Trump voters who were reluctant supporters to begin with.  It is those voters that are making the slow journey through the stages of grief from “somewhat approve” to “strongly disapprove”.

The result is that the 22% of voters who supported Trump during the primaries, continue to stick with him.  Everyone else is up for grabs.

That’s why the midterms are going to be an interesting test.

We’ll find out how many of these “reluctant supporters” are going to be willing to vote if their choice is between a candidate who represents a President who has disappointed them and a party that they don’t identify with.  What may make that vote easier for some are those House Republicans who will be defending their vote for a healthcare bill that most of these “reluctant supporters” did not support.

We’ll also find out if Democrats are going to be able going to turn out across the country in the numbers that we’ve seen in the couple of special elections.

If so, Trump may be in trouble because 23 of the seats won by Republicans in 2016 were in districts that Clinton won.  The Democrats only need 24 seats to reclaim a majority.  The special elections in Kansas, Montana, and (soon) Georgia are all much closer than anyone would have predicted.  The result is that ALL of those seats will be in play for the Democrats in 2016 too.

In any normal electoral cycle, gaining 24 seats would be a heavy lift but recent history (Republicans gained 63 seats in 2010) certainly indicates what’s possible when some parts of the electorate are unhappy.  And there are A LOT of people who are unhappy.

Here are some of the reasons why.

The House passed a healthcare reform bill, with Trump’s help, that only 17% of voters supported. His threats to undermine the existing ACA have caused BCBS of NC to request approval of a 22% rate increase.  His budget proposal eviscerates pretty much every discretionary dollar not spent on defense in order to fund a huge tax cut for the wealthy.  Trump’s executive immigration order has been struck down twice by the courts.  We’ll see how his court nominee affects that vote when it gets to the SCOTUS.  The investigations into obstruction of the Russian investigation will continue to produce bad news over the next 18 months.  Trump is considering pulling out of the Paris Accord which is supported by 70% of the public.  North Korea will continue to improve their missiles that could reach the west coast within a year.  Trump trusts China to help with North Korea, but China has their own agenda.  Russia and Syria will continue to deteriorate.  Nothing of substance is going to pass Congress because those who are up for reelection in 2018 won’t want to take any more hard votes.  And Trump will continue to be Trump.

He has no one to blame but himself.

Eaten by Alligators

Friday, March 24th, 2017

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There are points in history when, even though you see them coming, you can’t help but marvel when they actually happen.

Thus it is with the repeal of healthcare reform.

Obama and the Democrats figured when it was passed, that if Republicans ever gained control of all branches of government again, the political costs of taking healthcare away from millions of people would prevent the basic reforms from repeal.

They were right.

The Democrats paid a high price for healthcare reform.  It spawned the birth of the Tea Party and a particularly virulent strain of conservative know-nothing Republicanism that cost the Democrats their House majority in 2010 and essentially ground the government to a halt for the next six years.  That movement morphed in the Trumpinistas in 2016 and gave Republicans the cherished control over all branches of government.

What did they do with that legislative control – the very first thing?  They turned on each other like rabid dogs fighting over a bone.  Those same rebellious Tea Partiers whom the Republican establishment thought they could control, brought another House Speaker and another President to heal.

The reason they were able to do this, however, is posted every week.

Trump’s approval rating.

Self-preservation is important to every politician, even the members of the Freedom Caucus.  They are WAY more afraid of disappointing the folks in their safe gerrymandered deeply conservative districts than they are of the Speaker, the President, or the Republican Party.  BTW, who was responsible for those gerrymandered districts that made these Republicans untouchable by even their own party?  Why the Republican controlled legislatures that the Republican Party is so proud of.

If Trump had approval ratings in the 60% range (as Obama did when he started working on healthcare reform), this would have been a different story.  That would mean that a majority of the voters in many of the Freedom Caucus districts also approved of Trump.  He very well could have had enough leverage to get this deal done.

Instead, he and Ryan are now exposed.  The Freedom Caucus called Trump’s tough-guy bluff and Trump blinked.  Rather than dig in and do the gritty political horse trading that gets things done in Washington, Trump stepped out of the room and into a big-rig photo op where he was obviously more comfortable.

How bad of a beat was it?

The guy who constantly celebrates himself as a dynamic winner of incomparable abilities?  He was reduced to blaming Democrats for this loss because not one of them gave him a vote.  That was a surprise to him?  And now it’s the fault of the Democrats who have been defending Obamacare from Republican assaults for for seven years to the day that this assault also failed?  No this was just another in a long line of Democratic victories.  Trump’s humiliation is all his own making and his incompetence was on public display.

  1. He demonstrated that he has no understanding of the legislative process.
  2. He attempts to bully powerful people failed.  They weren’t afraid of him, ignored his threats, and knew he had a lot more to lose than they did.
  3. He doesn’t respect the political process. Those that do just demonstrated how dangerous the swamp can be for the inexperienced.

All that’s left is the sorry spectacle of a public figure being exposed as the buffoon he really is.  But as he said in Time magazine, it is certainly his right because he is the President.

The problem is that the alligators don’t care who is President and at least in this swamp, they bite back.

Big Lie – Everyone Will Be Covered

Wednesday, March 22nd, 2017

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President Trump rode a populist wave into the White House.  He was embraced by those who felt that both parties and were ignoring their pain.  He promised to pay attention to their problems and get government working again for them.  He promised healthcare insurance for everyone that would cover more and cost less.  He also promised to protect Medicare, Medicaid, and Social Security.

His actions don’t reflect his promises.

His healthcare proposal is a tax cut for the rich disguised as a healthcare reform bill.  It repeals a Medicare tax on those with high incomes.  The loss of $117B over ten years accelerates Medicare insolvency by four years.

The bill does lower costs for the young and healthy at the expense of the most vulnerable older population who really need affordable insurance.  In its first version, it reduces the deficit more than Obamacare, but does so by driving older sicker people out of the subsidized insurance market.  While the latest version hasn’t been scored by the CBO yet, the math suggests that additional tax supports for older sicker people may keep more of them in the insurance pool.  That could easily bring the total saving down below those projected for Obamacare.  If that’s the case, Republicans are offering a plan that is more expensive AND covers fewer people.

The plan also caps Medicaid funding.  More uninsured will turn to expensive emergency rooms for care.  That drives healthcare costs back up.  If passed along with additional proposed budget cuts, it would be the largest social welfare cut in our history.

Republicans tout increased competition across state lines as the missing ingredient to lower insurance costs.  But Obamacare also encouraged selling insurance across state lines.  Six states implemented it.  No insurance companies chose to participate.  That’s because the barrier to entry is not state regulation, it’s the cost for insurance companies to setup provider networks.  The reasons why sparsely populated areas have few insurance providers is simple math.  The same counties that Trump said are currently underserved, will continue to be underserved in this proposed plan.

If you are still unconvinced, Medicare Advantage programs are federally regulated effectively providing the national economies of scale that Republicans tout.  97% of the counties in this country have limited choices for Medicare Advantage plans because of sparse population, not state regulation. 

Insurance premiums are driven primarily by costs of care.  Utah and Colorado have young healthy populations and low insurance costs.  An identical plan sold in Michigan costs more because of an older sicker population.

Expanding coverage to more people improves health and drives down costs.  That’s because those with insurance are treated by primary care physicians rather than in the emergency room.  They receive preventative care to keep them healthy rather than remediation when they are ill.  This plan doesn’t to that.  It’s regressive – punishing the poor, sick, and elderly in order to reward the wealthy.  Please tell your representatives that they have to do better if they want your vote.

The Perils of Trump

Monday, February 13th, 2017

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Trump has become one of the most unpopular President’s in history in the shortest time on record.

Because he lost the popular vote by such a wide margin, he didn’t enter office with much support outside his party. That support is now gone.

Whether Trump’s approval rating will drop further depends largely on independents and Republicans — he has almost no support to lose among Democrats. If those voters do sour on him, that could pose a threat to Republicans in the midterm election in 2018. The incumbent president’s approval rating historically serves as a good predictor of how many seats his party will lose at midterm.

Based on recent studies, we can make some predictions of where future erosion could occur.

His core support represents about 22% of the population. These folks are going to support Trump no matter what.

The next group are going to support him based on what he delivers. These represent another 22% of the population. These first two groups, the “believers” and the “conditionals” make up the 44% of the population (more or less) that approve of Trump’s performance so far.

The “conditionals” are interested in an improved economy, cleaning up Washington corruption, defeating ISIS, and building the wall in that order. If he fails to do any of those things, he will lose their support.

Let’s look at the challenges that Trump has with this group of “conditionals”.

Trump’s economic plan has a big problem. There aren’t enough workers to support the growth that he has promised. Worse than that, Trump is also expected by this group to put a tough immigration plan in place. Immigration is the easiest place to find the workers that Trump’s economic plan REQUIRES.

Here’s the math. We currently employ 152M people. Trump wants to add 25M more jobs. He needs that job growth in order to deliver the 4% a year GDP growth that he has promised. He’ll get 8M from population growth. If we are able to return to historical highs in workforce participation, he’ll get another 8M. That still leaves him 9M short.

There are only two places he can find those extra jobs. Either immigrants are going to fill them or he’s going to have to figure out how to convince baby boomers to come out of retirement.

The problem is that he can’t fill them with immigrants because one of the other things that the conditionals are going to hold him accountable for is keeping immigrants out and deporting those who are here illegally. That leave seniors. 19% of those 65 and over, work today. In order to hit his numbers, that percentage has to increase to 32%. Even that won’t get the job done, because 7M jobs are filled today by undocumented workers. If you deport all of those workers in addition to keeping new workers out, Trump’s plan adds only 9M new jobs. That’s not nearly enough to hit his GDP numbers. It barely keeps up with the jobs that population growth will require.

Trump is left between a rock and a hard place. Investments to grow the economy without increases in both productivity and workforce are going to spike inflation as demand exceeds supply. That’s going to lose him the support of the conditionals who will have a harder time buying a house, paying their adjustable mortgage, buying a car, and paying their bills. If he reneges on his immigration plan, he will lose the support of the conditionals even if it does help him keep his economic promise.

Trump has already lost the last two groups (curious and resister). He won’t get them back because their views are diametrically opposed to his base and the conditionals. They don’t want a wall.  They want to keep Obamacare. etc.

The only logical result is a continued erosion of the “conditionals” as Trump fails to deliver on his promises.

Most presidents lose ground during their first two years. The average decline since World War II is just short of eight points, according to a compilation by Marquette University political scientist Charles Franklin. If Trump follows that pattern, he could end up with an approval rating in the high 30s — perilous territory for congressional candidates running in swing districts.

If he survives all of the other challenges that currently seem to surround his administration, the historic patterns leave him in very dangerous territory. Bush II lost control of both the house and the Senate in 2006 because the country was tired of the Iraq War. His approval ratings were in the 30’s.

House members are already dealing with tea-party-like disruptions at their local town halls. Republicans are already backing away rapidly from any immediate action on Obamacare replacement because of fears of the impact that might have on the 2018 elections. Trump hasn’t even started to try to get his agenda through Congress, and the news cycles are dominated by stories of disarray, conflict, and foreign intrigue.  By way of comparison, by the third week of the Obama administration stimulus legislation was already being debated.

The closer that we get to the 2018 elections, the less likely it will be that at least House Republicans are going to be willing to take controversial votes. If healthcare reform remains undone, some voters are going to hold him accountable for NOT making the healthcare changes he promised. Other voters are going to vote for Democrats to PREVENT him from making the changes that he promised.

There is no clear path for Trump to improve his situation.

There are only many opportunities for it to get worse.

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.

 

Conservative Myths – Free Market

Saturday, November 14th, 2015

One of the basic claims of conservatives and libertarians is that government intervention in capitalism distorts and ultimately inhibits the free market. More importantly, the implication is that the free market would somehow operate more efficiently if it were unfettered. Republicans have claimed among other things that an unfettered free market will cure poverty, solve global warming, reign in the growth of healthcare spending, and give everyone the opportunity to become wealthy.

So let’s dig into this myth as a precursor to a discussion about income inequality.

Markets, free or otherwise, are places where goods and services are bought and sold.

Markets require rules in order to operate. Sellers want to be assured that they are going to get paid. Buyers what to be assured that they get what they paid for.

eBay is a great example. They created their own market free from government regulation. It had anonymous buyers and sellers. Everything, at least in the beginning was priced based on competitive bidding. As long as there was more than one bidder, prices would always settle on what the real value of that product or service was at that particular point in time. Basic supply and demand. But even eBay had to have rules. They had to have a way to escrow payments to make sure that sellers got paid and buyers actually received what they paid for. They have to have a way to resolve disputes if products turned out to be misrepresented. They also had to protect sellers from unethical buyers who might want to blackmail sellers using bad reviews. eBay is as close to free market as you are going to get in this day and age, and they did it through consistent enforcement of a set of rules that were fair to both buyer and seller.

Government provides the rules that allow markets to operate in efficient and predictable ways. Those rules include contracts, bankruptcy, and fraud just to name a few. The notion that markets are somehow fettered by these rules is folly. In fact, it is very much the opposite as we will soon see.

This brings us to the next step in the myth of the free market. That is the notion that the marketplace is the fairest judge of the worth of both goods and labor. That might be the case if the markets were themselves fair, but if people cheat to gain an advantage it raises the real question of how fair that market is going to be.

Here are a few examples.

Insider Trading
Insider trading is taking unfair advantage of information that you may have that is not available to the rest of the market. The expectation of most people familiar with the term is that insider trading is illegal. The fact is, however, that CEO’s trading with their own stock are exempt from insider trading rules. Even worse, companies no longer have to disclose when they are trading in their own shares, whether that is buying back their own stock or when their senior executives exercise their options and then sell the stock. Rules put in place during the Clinton administration treat executive compensation that is performance-based (e.g. stock options) as tax exempt for the company. These rules have created a perfectly legal situation where a CEO can direct his company to buy back a sufficient number of their own shares to artificially drive up the price, and then sell off shares acquired through their executive compensation package before the stock has had a chance to fall back to the normal trading ranges. This is one of the ways that CEO’s of companies underperforming the stock market can still secure windfall profits for themselves. It is not illegal. But it is certainly cheating on the principle that compensation has anything to do with performance. What’s worse, it is not only cheating those who are investing in this company or its competitors. We tax payers are subsidizing these windfall profits that CEO’s enjoy because we make up the difference that their taxes would otherwise supply.

This is just one example of how large companies since roughly the 70’s have tilted their markets in their favor through manipulation of the rules governing the market. It is also an example of how tax rules put taxpayers in the position of redistributing pre-tax subsidies UPWARD in our economy.

Another example was the subject of a three part story in the NYT.

Contracts
That covers contracts. Companies large and small now include terms of use contracts in all of their online and many of their hard goods packaging. The same language is in many supply contracts as well. Those terms of use preclude the user from participating in a class action suit. Instead the consumer or trading partner agrees to arbitration. The problem is that the arbiters who hear these cases have a built in bias to find in favor of the company. That’s because those who find in favor of the customer quickly find that they fall off the list of arbiters acceptable to the corporations. The result has been that third party arbitrations end up being resolved in favor of the company most of the time. This gives companies wide leeway to behave in predatory ways without fear of consequences.

Here’s another.

Generic Drugs
It is perfectly legal in this country for large pharmaceutical companies to pay producers of low cost generic alternatives to delay producing those drugs. The result is that healthcare costs in this country are artificially inflated because only the higher priced proprietary drug is available. Worse yet, we are the only country in the world that allows this practice. So our drug prices are also the highest in the world. The annual additional cost that the insured and the government bear is estimated to be $3.5B/year. This is another direct subsidy to big pharma.

Cable Monopolies
We also pay more for Internet service that any other country in the world because we have given the cable companies, who dominate the market, a monopoly in most areas. 80% of cable subscribers in this country only have one choice. As a result cable costs 3x more in the US than Europe where consumers have up to 7 providers to choose from.

Big Banks
Too big to fail banks now control 44% of the loans in this country. They are able to offer lower interest rates on those loans than smaller competitors precisely BECAUSE the financial markets know our government will not allow these big banks to fail.

Bankruptcy Law
Similarly the rules for bankruptcy favor corporations and banks over individuals. Corporations can use bankruptcy to walk away from pension obligations or union contracts. Individuals cannot use bankruptcy to walk away from student loan debt.

Ivy League Schools
Because wealthy people get big tax breaks to contribute to private institutions of higher learning like the Ivy League Schools. They also secure the guarantee of enrollment at those institutions for their children through “legacy” preference. The problem is that those tax deductions constitute a government subsidy provided by the rest of us tax payers that is estimated at almost $60K a year per Ivy League student. The tax payer subsidies to state schools generated primarily through direct payments rather than tax deductions is about $6K per student. So we are not only contributing to the wealth of the 1% through the tax avoidance strategies of their companies, we are also paying to educate their kids who will learn how to expand this strategy for their benefit when they follow in their parents footsteps.

Summary
I could go on for quite a while, but I think that you are getting the point.

There is no such thing as a free market because those who control the market would prefer that it operate in ways that benefit big corporations and disadvantage competition and customers.

The result is a massive subsidy that consumers, small companies, and the government provide in the form of anti-competitive rules and regulations. This upward pre-tax distribution of money is why many corporations spend more money on lobbying than they do on R&D.

Our markets are rigged to benefit the powerful and wealthy. The powerful and wealthy are perfectly happy to perpetuate the myth that they earned their wealth because they were smarter and willing to work harder than everyone else. The data, however, suggest otherwise. It shows that corporations with highly paid executives generally underperformed the market and their competitors.

The real story is that a high percentage of the wealthy and powerful got there because they started out on the inside through the accident of birth, learned the game at the same schools their parents attended and supported, and figured out how to expand their unfair advantages when they had their turn at the wheel.

The reality is that if we were able to stem the tide of this massive upward redistribution of wealth, we wouldn’t need nearly the amount of post-tax redistribution to the working poor through transfer payments. We would be able to pay our bills because the existing tax system would be generating a lot more money. We would be able to fix our roads, educate our kids, and feed our hungry.

Instead we are supporting an oligarchy who claims that they deserve what they stole because the “free market” decided that they should have it. While they are promoting the myth of the free market, they are using their wealth to buy political influence. They use that political influence to warp market and tax rules in their favor.

They say publicly that “government is the problem”, but behind the scenes this government is working just fine for them. That’s because they are getting what they paid for.

Trump and the Crazy Train

Friday, August 14th, 2015

There is certainly one thing that you can say about Trump – he is entertaining.

What people aren’t talking about is the fact that ALL of the Republican presidential candidates are in one way or another just as crazy as Trump.

Trump represents an interesting populist anti-establishment uprising that has surprised the party establishment, the media, and Trump. He is also the natural evolution of the “money votes” economy. Rand Paul was on the right track when he said that Trump is “used to buying politicians”. He has simply taken the next step of by passing the middle man and representing his own interests. Whether he is able to translate this into a nomination is yet to be seen.

He gained momentum by demonizing undocumented workers. He fanned the flames of xenophobia by claiming that Mexico was deliberately sending their most dangerous citizens to us to deal with.

All of the rest of the candidates were dragged along to support Trump’s claim that there is a crisis at the border. Rubio tried to distance himself from his previous support of a path to citizenship. Walker also changed his tune. Christie called his previous support a “garbage idea”. Even Trump had flipped from his earlier support of path to citizenship. Only Kasich, Hackabee, Carson, and Paul have resisted the urge to jump on the “we’re being overwhelmed with criminals” bandwagon.

The problem is that fact checkers call this claim false. Illegal immigration peaked in 2007 and has actually declined since. Deportations hit an all time high in 2013 of 400K. Most of those were convicted of crimes in this country. More robust border enforcement has not only dramatically reduced illegal immigration, but it has also discouraged undocumented workers from leaving this country for fear that they won’t be able to get back in. The result is a fairly stable population of undocumented workers in this country of 11M. Their children, at least those born here, will automatically be citizens. If these trends continue, within thirty years the number of undocumented workers will drop by 50% without any other actions on our part.

So the only value in building a bigger wall is that it will likely provide some jobs for those that the wall is intended to keep out.

How about abortion?

Trump flipped from his previous support of abortion.

Rubio lied about never supporting exceptions to abortion.

Bush questioned whether, “we need half a billion dollars for women’s health issues.”

Huckabee said he would ignore the Supreme Court and declare that a “baby inside the mother’s womb is a person at the moment of conception.”

Santorum, who has built his political career on his opposition to abortion, took the opportunity to question Carson’s character because Carson used fetal tissue in his medical research. “When you start to see some of these cracks, I think it may show whether the person is really someone who’s going to take on an issue and be strong on it when they get into the very difficult position of being President of the United States.” An interesting attack from the guy who recently failed a significant test of character when he had to choose between politics and his religious faith on the topic of climate change.

How about healthcare?

Trump flip flopped in his previous support for single payor.

All promise to repeal Obamacare and replace it with something better. NONE have said what that something better would be other than some discussion that health savings accounts would be nice.

How about the use of our military in the Middle East?

Rand Paul is the only one who would not put “boots on the ground”.

Fiorina lied when she claimed that the US wasn’t arming the Kurds. We are doing it through the Iraqi government.

How about the economy?

Jeb promises that he can deliver 4% growth off into the future based on his experience in Florida and his belief in supply side economics. The reality is that he presided over a huge real estate bubble in Florida. When it burst, shortly after he left office, 900K of the 1.3M jobs he claimed to create vanished. Funny the same thing happened to his brother’s supply-side experiment.

Many economists think that 4% is just out of our reach because of the demographic headwinds of the baby boomer retirement. You really have to believe in the fairy dust of supply side economics to project that we would touch 3% as a result of government policies.

Christie claimed some big job numbers, but his state ranked 44 out of 50 in job growth.

Walker did not elaborate on his failure to deliver the 215K jobs he promised would appear as a result of the massive tax cuts he gave business. Instead he talked about job growth and job participation numbers. What he didn’t say is that these were the same numbers that existed prior to his election.

Huckabee solves everything with a consumption tax. One of the advantages of that tax is that even “illegals, prostitutes, pimps, and drug dealers” would be paying this tax. He claims that tax will generate 6% growth. I have to admit that 6 is better than 4 which is certainly better than 2, but just changing the tax policy won’t do it. You have to get more workers which just isn’t going to happen unless there is also a radical change in immigration policy which is not part of Huckabee’s plan. Even if you got more workers, you would also have to have a significant change in productivity because wages would have to track this growth in order to get more money into the economy. Huckabee hasn’t even thought of this because his consumption tax shifts most of the tax burden to the poor. All he has thought about is that 6 is better than 4.

Then there is Doc Carson, who suggest that we should all tithe 10% of income instead of pay taxes. When asked whether or not it would work, he said that if it worked for God, it will work for us.

Summary

In this context it isn’t surprising that Trump is having the success that he has been having. The reality is that the only half-way serious candidate in this train full of clowns is Kasich. Not surprisingly he is the most moderate of the bunch and as a result, the least likely to get the nomination.

This speaks volumes about what the Republican Party has become. This is no longer the party of George HW Bush or even Ronald Reagan. It has become the party of paranoia and extremism as the old white angry men, who have been the party’s backbone, struggle with the reality that they are no longer in control. They failed to defend marriage from the onslaught of gay rights. They failed to prevent the rollout of what they see as another big entitlement program in Obamacare. Black people are demanding justice. Hispanics have discovered the power of the ballot box. Even the Pope disagrees with their abortion obsession. And women are no longer content with staying home and raising children. They not only demand a career, but also equal pay for equal work.

These guys are growing tired of the effort required to hold back the flood of scientific evidence supporting human-caused climate change. Their dam has sprung so many leaks that they are running out of fingers to plug them. Coal-based electrical generation is not only polluting, it is expensive. The most economical and highest performance car is all electric, made in this country, and sold direct over the internet. The world is changing under their feet and there appears to be little they can do to prevent it except perhaps support someone who is willing to give voice to their fears and frustrations – Donald Trump.