Posted by on January 8, 2017

It is clear that we can add Senator Chuck Schumer to the list of secret readers of The Economic Man Blog.[1]  Talking about the Republicans and their pledge to repeal Obamacare, he referred to them as “the dog who (sic) caught the bus.”  He tried to hide the provenance by changing “car” to “bus,” but it is clear that Schumer got this line from the Nature Abhors a Vacuum section of this blog.

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.

Obamacare is a Rube Goldberg machine.  But once you accept its overall logic, each element of the device is necessary.  Despite his repeated assurances that he is a “really smart guy,” Trump clearly does not understand this.  His musing about repealing the bad parts of Obamacare (such as the individual mandate) but keeping the good parts (such as the regulations on pre-existing conditions) is magical thinking at its worst.

As I have pointed out before (see Between Two Generations here), the essence of Obamacare is a wealth transfer from the young and healthy to the old and sick.  Since the young are not actually dumber than barnyard animals[2], they will not do this without some healthy shocks from a cattle prod.  These prods are the “bad parts” of Obamacare.[3]  Since the Obamacare exchanges are already in a “death spiral” where there are insufficient healthy premium payers to cover the costs of the sick, forcing the insurers to jack up rates and thereby driving out even more of the healthy, taking away the prod is the worst possible prescription.  In accordance with the logic of Obamacare, an increase in the voltage is required.

Unlike their glorious leader, the Republicans in Congress understand this.  This is the source of all the hemming and hawing.  There are two main schools of thought.  The first is “repeal and delay,” where the Republicans will deliver the political red meat by repealing Obamacare immediately, but delay the implementation until a later date – such as after, coincidentally, the 2018 elections.

Here the GOP is doing some very high stakes political gambling.  They are betting that (a) the Obamacare exchanges will not fall apart in the interim[4] or at least they will be able to blame the Democrats for the collapse and (b) before the expiration date, they will be able to agree on a replacement that meets Trump’s promise for “something terrific” and they will have the votes necessary to enact the program.  I mean, what could possibly go wrong?

The other school of thought is “repeal and replace…now!”  There are two problems with this.  The first is that the Republicans have not been able to agree on anything except their hatred of Obamacare.  Health insurance reform is tricky stuff and certainly Trump is not going to contribute any brilliant or original thinking on the subject.

The second problem is that the Republicans only have 52 votes in the Senate, which means that in order to avoid a filibuster, any repeal or replacement of Obamacare will have to be done by a “reconciliation” bill.  Under the rules applying to these types of bills, only matters touching the budget be changed.  But some of the most problematic parts of Obamacare, notably the treatment of pre-existing conditions, are regulatory and not budgetary.  These can only be changed with the approval of at least eight senators from across the aisle.  And that ain’t going to happen.

So, the Republicans are in a bad place.  This is not entirely of their own doing.  It strikes me that healthcare and health insurance reform in America is a giant exercise in what economists call “the theory of the second best.”  One of the insights of this theory is that, once you deviate from optimal conditions (usually being a completely free market), it is difficult to improve things with mere tinkering.  Radical reform is required but I doubt American politics would allow this.

This situation in America is not unique.  As this week’s typically clever cover of The Economist observes (“Theresa Maybe, Britain’s indecisive premier”), the Tory dogs in the UK also don’t know what to do with the Brexit car they have caught.  Prime Minister Theresa May has announced that she will trigger Article 50 and start the process of exit from the EU by March 30th.  However, she still has not announced what her objectives will be, saying that she does not want to tip her negotiating hand.

Noticing a pattern?  Like Trump’s top-secret plans for defeating ISIS, or his “something terrific” promise on health insurance, or his dozens of other promises to do something “huge” or “great,” there is much less here than meets the eye.  As the magazine[5] puts it:

The growing suspicion is that the Sphinx-like prime minister is guarded about her plans chiefly because she is still struggling to draw them up….the secrecy over Brexit and the silence on the government’s broader plans for Britain all point to the same problem: Theresa May does not really know what she wants.

Trump has recently tweeted about meeting May in the spring.  At least both will know that neither one has anything up his or her sleeve.

Voting ID Laws Redux

I have been having an exchange with one of my readers (see comments here) which has touched again on voter ID laws.  This has prompted me to look into the rules used by other advanced democracies, without realizing that this has been an argument the Republicans have already deployed.  It turns out, not surprisingly, that voter ID laws exist in many advanced democracies, including such hotbeds of racism and fraud as Canada, Switzerland and Sweden.  In fact, when I mention that there is a dispute in America over voter ID laws to my girlfriend, who hails from the recently democratized country of Slovakia, she looks at me, as is so often the case, with pity and mild disdain.

It should also be mentioned that most European democracies have populations that are less mobile than ours.  They also mostly have systems of national ID cards with photos and addresses.  Both of these factors make election fraud less likely.  Yet, they still make voters prove their identities.  They must be really racist.

Meanwhile, The Heritage Foundation’s “Does Your Vote Count?” project has just added three more cases to its count of voter fraud convictions, bringing the total to 742.  This is despite the fact that detecting voter fraud, given the current rules, is actually very difficult.

The Heritage Foundation also cites a study by the Pew Research Center that finds that 24 million voter registrations are inaccurate, out-of-date or duplicates, that 2.8 million voters are registered in more than one state, and that 1.8 million registered voters are dead.  Not just brain dead.  Actually dead.

Roger Barris

Weybridge, United Kingdom


[1] Chuck, if you are reading this, please tell your niece Amy to stop the jokes about the pains of being a fat chick in a patriarchal world.  They are tiresome and ceased being funny, if they ever were, a long time ago.  Plus, no one wants to listen to a multi-millionaire niece of a US Senator, who grew up on the Upper East Side and avoided jail time over some recreational shoplifting due to her uncle, whining about how tough her life is.

[2] At least not when it comes to their own money, although they are happy to indulge their stupid biases when it comes to their political choices.  This is the central insight of Bryan Caplan’s The Myth of the Rational Voter.

[3] The “risk corridor” payments to insurers are another “bad thing” about Obamacare that are probably necessary for its functioning.

[4] In fact, this is likely to accelerate since insurers will be even less committed to the exchanges if they know they are about to be closed.

[5] The Economist actually refers to itself a newspaper, even though it obviously has the form of a magazine.  I refuse to indulge them in this archaic silliness.

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3 Comments on "When Dogs Catch Cars"

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Disco Dave
IDs are a joke in the US, and for a fair amount of this , we can blame the Republicans. When going through airport security, a $12 / hour person has 5 seconds to scan a driver’s liscence or a state identification card from 50 states and countless territories to determine that your image matches, the card is authentic and the data is correct. Now, try to explain to a “real” republican, not a hedge fund manager, the need for a national identification card including biometric data. I would be shocked if they don’t immediately pull out their tin foil… Read more »
Good job

Good post, keep