Posted by on April 3, 2017

I have just returned from a lengthy trip to Nevada, California (where I attended a conference organized by the libertarian Reason magazine – more below), and Hawaii.  After fighting back the fog of jet-lag[1], I will return to blogging in my usual way: short(ish) comments on a mixed bag of subjects.  I will break this into multiple posts to avoid a “TL;DR” censure from my Generation Z co-author.

The Trumpcare Fiasco

The GOP’s first major legislative initiative under President Trump, to repeal Obamacare and replace it with “something terrific,” was a total disaster for the reasons that my “When Dogs Catch Cars” post anticipated.  To remind my readers, this was my prediction back in January:

The Republicans are about to make their first big mistake of the Trump era.  In their haste to carry out one of Trump’s few clear policy promises, they will probably repeal Obamacare in a half-assed, incoherent way that can only rebound to their political misfortune.

I certainly got the “half-assed” right, but I didn’t count on the principled opposition of the Freedom Caucus, which saved the GOP leadership and Trump from their worst instincts.

The Republicans were in trouble from the start.  The fundamental problem is that they are united only in their justifiable opposition to Obamacare, with no consensus on its replacement.  Adding to this problem were the limitations of the “budget reconciliation” process whereby the GOP planned to avoid a Democratic filibuster in the Senate.  Although some lawyers take a more aggressive position, the GOP leadership believed that this severely limited their options for changing the architecture of Obamacare.[2]

Trump was also part of the problem.  As always, he massively overpromised, both in terms of the timing and the effect of the legislation.  His total policy ignorance was also an impediment.  It turns out that there are some issues that actually require knowledge and attention to detail; bullying and tweeting are not always sufficient.  I guess that Trump skipped that chapter in The Art of the Deal.

The problem with the American Health Care Act (“AHCA”) is that it did very little to repeal Obamacare or to cure its structural flaws.  None of this mattered to Trump.  His attitude was, for once, ably summed up by Paul Krugman, who tweeted out the bogus syllogism at the heart of the AHCA push:

We have to do something about Obamacare

The AHCA is something.

Therefore, we have to do the AHCA.

The fact that the legislation actually failed to match the promises made to GOP voters, or that it would do nothing to halt skyrocketing premiums and the “death spiral,” and that it did all of this while producing a headline of lost coverage for 24 million people[3] – none of this mattered to Trump.   He was only focused on a “win,” being able to claim that he fulfilled his campaign promise.  Fortunately for the GOP and the country, the Freedom Caucus did not share his nihilism.

The specific flaws of the ACHA were myriad.[4]  To start with, the act did virtually nothing to roll back the expansion of Medicaid.  In fact, it created incentives for the states to expand the program and lock it in for an extended period of time.  This is despite the fact that Medicaid is appalling coverage, with some studies even showing that access to Medicaid actually produces worse health outcomes than no insurance, and even worse value for money.  But the leadership, reportedly with the urging of Republican governors like John Kasich, decided to follow the lead of the Democrats and choose form over substance.  Got to get those numbers up!

The ACHA also engaged in some childish renaming of features of Obamacare.  The hated “individual mandate” was replaced with the right of insurance companies to add a 30% penalty to premiums in the case of interrupted coverage.  The Obamacare subsidies for buying health insurance were converted into a more Republican-sounding “tax credit,” but the fact that the tax credit was refundable (that is, paid even if no taxes are owed) and prepaid (directly to an insurer), made this a distinction without a difference.

The Freedom Caucus ultimately took one for the team and accepted all of this flimflammery.  But they drew the line at the Obamacare regulations, which were left untouched by the ACHA.[5]These are the rules mandating certain forms of coverage regardless of the needs of the individual, such as maternity care and chemical dependency rehabilitation.  Most importantly, this includes the regulation on “guaranteed issue/community rating” which requires insurance companies to ignore pre-existing conditions in setting premiums.  This is the “death spiral” regulation that causes rising premiums and, ultimately, the withdrawal of insurers from the marketplace.  The ACHA did nothing about this and, in fact, would have probably made the problems worse by increasing the incentives for gaming the system.[6]

In the eyes of the Freedom Caucus, with no change to the regulations, the ACHA did nothing except insure that, when the inevitable collapse of the insurance market came, the GOP would own it.  The group also thought that the fiscal and tax savings promised by the ACHA would never materialize since the pressure from the continuing collapse of the individual insurance market would force the government to bail out the system.

For his part, Trump refused to back down on his foolhardy promise to keep the “pre-existing” conditions part of Obamacare.  So, the bill crawled between this rock and hard place…and died.

Trump, in one last fatuous bluff, declared that if the ACHA were not passed, he would leave Obamacare in place and move onto other elements of his agenda.  He doesn’t have that choice.  The reality is that Obamacare is imploding and the uncertainty interjected by the recent legislative dance can only accelerate the process.  Already, 43,000 people in Tennessee who obtained their insurance through the Obamacare exchanges will have no offering when it comes time to renew.  An additional 3,000,000 people will be free to choose their coverage, so long as they take it from the one remaining company offering it.  Many of these people previously had insurance before Obamacare destroyed access.  This is not a problem that can be ignored.

The Freedom Caucus is also ready to deal.  Their attitude was nicely summed up by Representative Thomas Massie from Kentucky, who is not a member of the Caucus but a fellow traveller.  Massie, who has a degree in electrical engineering from MIT and is another libertarian RINO[7], was originally a “no” on the ACHA.  After Trump tried to close the deal with a mixture of flattery and threats, he changed this to a “hell no” and tweeted out something to the effect that, if the executive branch can tell the legislative branch how to vote, then there really isn’t much point to having a separation of powers.

Despite all of this, Massie professed in a great interview with Reason to still hold out some hope for making progress under Trump:

Let me be clear: I am still operating under the assumption that this president wants to accomplish those things he campaigned on. And I’m not saying that ironically or sarcastically. I think that he got bad advice from Paul Ryan; I am not laying the blame for this at Donald Trump’s feet. He’s a big-picture guy, and when he picks the right sub-contractor, good things happen. So he went to—here’s an example—he went to Heritage and he went to the Federalist [Society] and he asked them for a list of Supreme Court nominees, and they gave him a lot of good candidates, and he picked one of those, and he’s a hero for it right now; there are very few if any Republicans who are upset with that choice. Contrast that to the way he went shopping for a health care plan. He came to the swamp and asked the folks in the swamp to write him a health care plan, and then adopted this swamp creature, and I think that’s where he went wrong, frankly.

The instinct of the American public to vote for radical change in Washington was a good one.  However, this fiasco shows the limitations of choosing Trump as the conduit for this impulse.  I am reminded of the advertising line from the Audemars Piguet watch brand: “To break the rules, you must first master them.”  Trump doesn’t even know the rules exist.

Tax Reform

My former boss and current Secretary of the Treasury, Steven Mnuchin, just uttered his first complete idiocy in his new role.

Commenting on the huge swing and miss on Obamacare, and getting ready to step to the plate on tax reform, he said: “Health care is a very, very complicated issue.  In a way, [tax reform is] a lot simpler.  It really is.”

Um, no.

Mnuchin, who had a good but not spectacular career in the minors, in about to be introduced to the major league curveball.  As the Cato Institute recently put it, “[t]he tax code isn’t just part of the Washington swamp, it is the swamp.”  There is a very good chance that amateur night will not play any better in this area.

Judge Gorsuch

Unable to come up with any substantive reasons for their partisan objections to the nomination of Neil Gorsuch for SCOTUS, the Democrats seem to be defaulting to two arguments.  Both are bad.

The first is that he refused to answer questions about how he would rule on specific legal issues, forgetting that Bill Clinton’s nominee Ruth Bader Ginsburg set the gold standard for evasiveness by refusing to answer these types of questions more than 70 times while the Democrats in the Senate applauded.  Joe Biden led the cheering squad.

The second argument is even worse.  They are faulting Gorsuch for “a stunning lack of humanity” (Senator Clair McCaskill from Missouri) and because “[w]e do not want judges with ice water in their veins” (Senator Charles Schumer[8] from New York).  In other words, they are faulting Gorsuch for actually applying the laws as they are written, instead of usurping the legislative role and applying them as the liberal senators wish they had been written.  Gorsuch is rightfully saying that, if you don’t like the outcome, then write better laws.  But you shouldn’t expect an unelected judge to do this for you.

The Democrats are also insisting that there is a 60-vote standard that traditionally applies to Supreme Court justices.  When Schumer repeated this claim, it earned him a “Two Pinocchios” rating from the Washington Post:

Democrats are being slippery with their language. Sixty votes is not ‘a standard’ for Supreme Court confirmations, as two of the current justices on the court did not meet that supposed standard.

The nomination of Judge Gorsuch is by far the best thing that Trump has done so far.  Let’s hope that the Democrats don’t refuse this gift horse.

Reason Weekend

As I said in the intro, I have just come back from a weekend organized by Reason.  It was great.  Presenters included Reason analysts and journalists, libertarian media stars (including the awesome Larry Elder, whom I had never heard before), libertarian businessmen, legal scholars from academia and think tanks (including the very large brain of Eugene Volokh of The Volokh Conspiracy), and the former lead guitarist for Nivana (Krist Novoselic), who is a staunch libertarian, tall enough to give me a crick in my neck from talking to him, and a campaigner for electoral reforms like ranked preference voting.  And also is a really nice guy.

I came away from the weekend thinking that the libertarians are not only the smart kids, but also very often the cool ones.  Which leaves me with my usual question: Why don’t we win more?

Roger Barris

Weybridge, United Kingdom

 

WTF?

“Look, economic nationalism is predicated on a state-of-the-art infrastructure for the country, right? Broadband as good as Korea. Airports as good as China. Roads as good as Germany. A rail system as good as France.[9] If you’re going to be a world-class power, you’ve got to have a world-class infrastructure” by Steve Bannon, who passes for an intellectual in Trump’s circles because he actually reads books (which reminds me of this classic scene from A Fish Called Wanda)

 

I Wish That I Had Said That (and Sometimes Not)…

President Trump is so famously post-factual he cites riots that never happened as pretexts for executive orders, invents crime statistics out of thin air, and insisted for years that Barack Obama was born in Kenya. But it’s libertarians who are nuttier than a squirrel’s turd? Sure, why not” by Nick Gillespie of Reason, responding to some disparaging comments from Steve Bannon about libertarians and giving me my new go-to description of Trump

  • “Looks at cards
  • Doubles down
  • Triples down
  • Realizes he’s holding a stack of bar napkins instead of cards
  • Quadruples down
  • Releases statement that he will not bet any further
  • Quintuples down
  • Tries to put hotel on Reading Railroad
  • Yells “Yahtzee”
  • Demands new cards from Congress”

by Daniel Lin on Twitter, describing how Donald Trump plays blackjack

“GIVE DOGS JOBS—THEN TAX THE DOGS—CREATING MORE JOBS FOR DOGS—THEN TACKLE THE CAT PROBLEM” by the surreal Twitter account “Berniethoughts,” which has a good grip on the profundity of Bernie Sanders

 

[1] Hawaii, particularly the island of Kauai, was beautiful, but it is way too far from Europe to make sense.  It also seems to provides evidence for the theory of Herodotus: “In soft regions are born soft men.”  In this case, the softness appears to be in the head.  Maybe it was just bad luck but we certainly ran into a lot of very dopey people.  At least I now know where people too flakey for California go.

[2] In retrospect, they would have been better served politically by going for the whole enchilada and daring the Democrats in the Senate to block it.

[3] Do not mistake my quoting of this number for an endorsement of it.  For all the meaningless statistics bandied around in politic discourse and by the popular media, this one probably sets a new high-water mark.  I am talking about its optics, not its substantive worth.

[4] The ACHA was not all bad.  The expansion of Health Savings Accounts and the block granting of Medicaid funding to the states, for example, were good moves.  But there weren’t enough of them.

[5] This is the area where the use of the “budget reconciliation” process was most constraining.

[6] The GOP leadership and the Trump administration tried to fudge this concern by claiming that further modifications would be made through administrative action and subsequent legislation, but they were never able to present credible arguments for how the future would be any different from the present.

[7] Republican In Name Only

[8] Whom I usually refer to as Chuck “The Schmuck” Schumer.

[9] If you have ever driven in Germany, you know that the Hitler-era autobahn is actually pretty shitty  –  a case of first-mover disadvantage.  If you understand the implications of population density for modes of travel, you know that America should never have a rail system like France (which loses massive amounts of money, anyway).

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Posted in: Policy, Politics

Comments

  1. Montana Skeptic
    April 4, 2017

    Leave a Reply

    Great stuff as always, Roger.

    I wish I could find a point of difference and cross swords with you, but I can’t. I’m holding my breath about Gorsuch, hoping the Republicans don’t make some stupid deal to achieve 60 votes.

    Hawaii sounds a bit like Austin…

    • Roger
      April 4, 2017

      Leave a Reply

      Thanks, Montana. I think that we are all holding our breath on Gorsuch.

      I am admittedly extrapolating from a small sample, but I think that Hawaii is much worse than Austin. I have spent a fair amount of time in Austin over the years for business purposes. Sure, it’s dopey in a typical college town kind of way, perhaps made worse by the desire to pretend it really isn’t part of Texas and justify its city motto (“Keep Austin Weird”). But it has never struck me as dopey in the indolent and incompetent way that we routinely found in restaurants, hotels and other retail establishments in Hawaii. The kind of dopey that comes from having it too easy and therefore not having to give a f**k. Kind of reminded me of France.

      Be well. The Tesla price action has been even more divorced from reality than usual lately. I shorted some more yesterday.

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