Archive for the ‘federal debt’ category

A Week Of Eye Opening

March 26, 2017

This past week has been an eye opener for what a new Republican Congress stands for. How about “for everything” and “for nothing”? Or, maybe “for effective government” and “for ineffective” government? Or, maybe “for sincere government” and “for insincere government”? Hmmm.

This first revelation was striking. Republicans had passed legislation to repeal Obamacare about 80 times during the past 6 years and had campaigned in 2016 for the complete repeal and replacement of Obamacare. Yet when the opportunity was there, Republicans had no replacement plan.

The GOP had many plans, all disingenuous, but there was no one plan Republicans could agree upon. Hint: do you realize GOP candidates lied about their intentions?

The most popular refrain the GOP used was lowering the premium costs which “Americans” are experiencing. To some degree, in some places, this claim seems justified but Republicans were happy to leave this claim unclear. Americans receiving healthcare coverage from their employer, Medicare, or Medicaid, received no staggering premium price increases. These Americans were shielded from the increases some individuals in certain areas experienced.

So why would Republicans make such a claim? Could it be that most all Americans experience some form of uncontrolled healthcare cost increases (as they did yearly before Obamacare) and don’t understand why hospitals, doctors, and drugs cost so much?

Few, if any of our politicians called out for a universal, single payer system to replace Obamacare. Shamefully, Republicans instead called for changes to Obamacare which were designed to reduce cost increases pressure by insuring less people! How do those politicians sleep at night?

But simply reducing coverage was not good enough for some Republicans. The “Freedom Caucus” members sought to change Medicaid from an entitlement for the most needy to a capped block grant which would become the sole responsibility of States in a few years.

The “Freedom Caucus” wants to deconstruct the Federal Government and healthcare seemed an opportune way to begin the process. “Freedom Caucus” members represent a clear and present danger to modernity.

Most Americans have little skin directly in the healthcare game. Next up on Congress’ docket is likely to be “tax reform” where almost all Americans have an opinion.

While there is much good that can be achieved (like eliminating or vastly reducing the number of tax loopholes, exemptions, and deductions), changes which will lower the overall tax revenue or the progressive nature of the tax code, are sinisterly designed to reward the wealthy and to starve the Federal Government and its ability to function.

With tax reform, even more than with healthcare, it will be critical to study what any proposed changes might accomplish before voting upon any bills. The devil will almost certainly be in the details.

This past week revealed a White House and a Congress whose intentions are hidden.   On one hand, the Republicans seem unfit to govern and on the other hand, seem not a friend to the average American.

I wonder whether this GOP leadership will have learned anything that might restore faith in their intentions? I really wonder whether the White House or the Freedom Caucus care?

“Americans” Expect Us To Act

March 22, 2017

How many times have you heard GOP leaders repeat ad nauseam the mantra “the American people elected us to X or Y”, or “the American people want this or that”? The correct terminology  would be “Some American people…” with emphasis on “some”.

This type of honesty and absence of hyperbole would diminish the pomposity and self importance GOP elected officials want to present. (I fear this is a Republican disease today simply because Republicans are in the majority and in truth, Democrat leaders might fall under the same spell if roles were reversed.)

No better example of the misleading nature of “Americans expect” is the current healthcare debate. Republican Congressional leaders are moaning about those Republican Congress members who are threatening to vote against the American Health Care Act (the replace plan for Obamacare). “Americans expect us to pass this bill” leaders cry while all sorts of non-partisan studies point out that the replacement bill will maintain some popular Obamacare benefits but at the end of the day provide less coverage and insure fewer people.  No more appropriate subject does “some Americans” apply than here.  “Most Americans” are not impacted as a benefit recipient by Obamacare

For some Republican Congress members, the AHCA does go far enough in rolling back entitlements and for others, it goes too far. Hmmm, I wonder what Americans really want?

Senator Rand Paul elaborated today on his proposal which could gradually eliminate Medicare expansion and streamline the individual market. Paul has proposed creating a pool of all uninsured and the allowing the “free market” to drive down price through competition amongst insurers.  As lower policy prices emerged,  government supports would decrease until they disappeared. Hmmm.

Paul deserves credit for proposing a clever way out of the box Republicans have created for themselves. His proposal, of course, has it own set of pitfalls, the most obvious of which is whether “for profit” insurance companies will want to offer policies at prices the pool will demand and people can afford. None the less, Paul proposal deserves a careful review.

The irony of the current healthcare repeal and replace drama is that greedy Republicans are far more interested in diving into “tax reform”. We will hear again that “Americans expect us to lower taxes” when in fact “some Americans”, like the top 1 or 2% wealthiest Americans will alone reap huge benefits. Most American will see little impact and no benefit. More insidious will be the knock on effects of such a large tax cut. Where will the Government get revenues to pay its expenses?  Think there will be more cut in government services?

The Republican tax reform odyssey will make “searching for a free lunch” dinner time conversation.

Negotiating 101

March 18, 2017

In 1973, Robert J Ringer, wrote a book titled “Winning Through Intimidation”, a self help book describing ways to be more successful in the art of selling. For someone who approached business as a “tell it as it is, win-win” person, Ringer’s examples were eye opening. The picture Ringer painted of unsavory, but successful characters one would have to deal with in the business world was shocking. Why would anyone waste their time dealing with intimidators and not prefer honest brokers? Hmmm.

President Trump (and his senior advisors) are giving Americans a refresher “Winning Through Intimidation” course. For the Trump Administration, there appear to be no limits on veracity and no retreat from prima facia falsehoods. Yet, four of Trump’s favorite words are “believe me, it’s true”.

Trump’s budget proposal is a clear example of a 21st century negotiation using 1970’s tactics. (I have carefully avoided using the word “strategy” because at this point there are no indications of what the Trump Administration’s objectives and strategies might be.) Trump’s “Winning Through Intimidation” tactic opens with proposed draconian cuts in order to boost Defense and Homeland security spending.

For example, the President has proposed increasing the defense budget about 10%, and offsetting those costs by decreasing a host of Federal programs (including support for science, the arts, and poverty programs). Budget cuts are also to include 30% decreases to the State Department and EPA’s budgets. What is the President thinking?

The President must privately realize that the “mess” he inherited is not former President Obama’s mess. Congress, and more specifically the fundamental division among Republicans, has produced a deadlock and Congress is incapable of making budgetary decisions. The more conservative Republican elements seem ready to throw the baby out with the bath water if that would reduce the size of government.

Medicare and Medicaid make up the largest drivers in both size of government and the deficit components. Although, healthcare reforms similar to healthcare systems in two dozen other “best in class” foreign countries, where effort is put into cost control (doctors, hospitals, and drug companies), and where the waste associated with “for profit” insurance administrators is eliminated, could dramatically reduce healthcare costs, lower the size of government, and in the process secure the benefits of Medicare and Medicaid for years to come. Why no mention of these expenditures yet?

So, let’s speculate.

The President and his advisors want tax reform (read tax cuts for the wealthy) and want a second term. They connect both of these with more jobs and a growing economy. Unfortunately, more jobs (if ever possible) and growth will take time. What can the Trump White House do in the interim to keep his faithful supporters quiet? Hmmm.

Let’s make the EPA and other regulatory agencies the “bad guys”. Let’s debunk science and focus short term on job promises. Let’s emphasize “America First” in a world where an isolationist retreat will stall the economy (but most voters don’t understand that), and buy time.

Inconveniently for President Trump, Republicans have made a “do or die” issue out of repeal and replace Obamacare. President Trump and his advisors realize that a replacement is politically near impossible. They realize there is no way “replace” can happen (60 votes in Senate) with drastic cuts in healthcare benefits or increasing the national debt (which is politically toxic amongst most Republicans). Hmmm.

President Trump is cleverly drawing Republican leadership further out on the “replace” limb knowing that an option acceptable to moderates will be unacceptable to conservatives and vice versa. At some opportune time in the near future, President Trump will inform Republican Congressional leaders that he is about to cut them loose and walk away from their plan because it’s wrong for the people. Of course, Congress could support an Obama-Lite alternative, keep his support, and move onto tax reform which could garner enough support to pass (at the end of the day, all Congress members like to tell their constituents they voted for lower taxes).

President Trump will show Congress members how lower taxes will stimulate the economy and generate new tax revenue, even at lower marginal rates, thereby not increasing the debt. While factually this is extremely unlikely, too many voters will believe it to justify a Congress member taking the chance of going against the President. Hmmm.

“Winning Through Intimidation” will become a must read during the Trump Administration. The Republican Party is a misnomer and will eventually break apart. Unfortunately, during the next four years a lot of unwise actions could take place.

Keep your eyes open and double check what ever you hears. There is a new sheriff in town.

Ready, Set, Fire, Aim

January 16, 2017

With only a few days left before President-elect Trump becomes President Trump, the feeling is like the calm before the storm. On Friday, January 20th, 2017, the Republican Party gets a full house and a friendly President to boot. The GOP wish is to undo the last 8 years and make the future like the past, the distant past. The public has been advised “to fasten their seat belts” and watch our elected leaders make things happen beginning on the very first day.

Hmmm.

We can remove some mystery about any consequences from GOP actions. There will be massive reductions in taxes paid by the top 1%. Even the irresponsible repeal of Obamacare is at its core a tax cut for the wealthy.

Corporate tax rate reduction unless accompanied with elimination of business tax deductions, exemptions, and loopholes will accrue more money for the wealthy. And eliminating the myriad of regulations which we are told are hamstringing our economy, will put even more money in the wealthiest’s pockets.

So for at least some Americans, January 20th should be a red letter day.

Every action has a reaction too. Repeal of Obamacare will immediately beg the question what happens to those insured by the Affordable Care Act? The GOP will attempt to keep enough of current Obamacare recipients covered that they can look the camera in the eye and say, “see we replace Obamacare with patient centered, not Washington centered healthcare”.

But two facts will emerge. (1) The GOP will have to find money to cover whatever parts of the ACA it puts forward as “patient centered care” and will most likely hide their healthcare subsidies. With no new taxes, the healthcare costs will go straight to the national debt.  The GOP will adamantly deny this with a look of sincerity.

And, (2) The number of people covered will shrink as will the quality of their coverage.  The “free” market will offer reduced coverage to those unable to pay the going price for standard coverage. Those impacted the most will be the most vulnerable and, not surprisingly, those least able to garner public sympathy.

This is a pretty sad commentary on the Grand Old Party.

But there’s more.    IMO, Trump will support juicing the economy with tax cuts and government spending so that his prediction of greater economic growth can materialize. Trump, however, will run into opposition from fiscal conservatives who want to see the debt decreased, not increased. Trump, the deal maker, will step forward offering to trade his support for much of the GOP agenda, despite his own preferences, in return for support of new spending.  You scratch my back, I will scratch yours. Hmmm.

With “Ready, Set, Fire, Aim”, Republicans will run unnecessary risks. Unintended consequences and collateral damage are almost assured with current GOP plans. As the first 100 days domestic casualties begin to mount up, voters view of President Trump will become tarnished.  At that point, President Trump will make sure everyone knows he favored this or that, and instead those in Congress, much over rated, all talk and no action did not follow his advise and are to blame. Hmmm.

Most of the Republican game plan will hurt small groups… initially. For example, the 20 million ACA subscribers pale in comparison to the greater 340 million US population. Increasing the Federal Debt won’t impact anyone at first. The subsequent risk, however, is the building pressure to reduce other Government spending… like Medicare, Medicaid, Social Security, and a myriad of social safety network programs. And as these messy regulations are revoked, freeing up America’s great capitalist engine and creating jobs on every corner, conditions for another financial meltdown, run away inflation, and renewed disillusionment with Washington will gratuitously appear.

President Trump has an initial White House lease for 1461 days. It would be a shame for the Trump Administration to let hubris in the first 100 days help destroy the next 1361.

Looking Ahead

January 9, 2017

Donald Trump is still President-elect. In 11 more days he will become the 45th US President and the consequences of the 2016 election will begin to be revealed. Trump has woven insiteful advice with his own intellect and killer instincts and achieved a victory most thought impossible. The elephant in the room is will President Trump be as effective when he attempts to put his policies in place in the context of the Republican controlled Congress and the unpredictability of world events.

Looking ahead, here are some thoughts.

  • The President-elect has selected a cast of strong willed people to form his cabinet. The question of the day is, will the new cabinet members be allowed to run their own show, or will the “White House” run it for them? Of course Donald Trump will be the President and as such these cabinet heads report to him, not Congress, and not the voters. But strong willed people normally do not take kindly to anyone telling them how to do their jobs. Who will be the first casualty and will it happen in the first year?
  • The Republican controlled Congress is a quasi stable majority. Republican unity results only from their shared desire to control of Congress, and the perks that follow. As demonstrated with this 115th Congress’ first action, attempting to gut the Office of Congressional Ethics, Congress’ leadership is neither strategic or purposeful. Someone as canny as Donald Trump should be able to pick them apart and get their rubber stamp on any of his initiatives. But what might happen if some part of the Republican Congress gets its back up? What if Congressional members criticize the President?
  • Most financial prognosticators are predicting good things for Wall Street. Tax cuts and spending programs (like infrastructure investment) may stimulate economic growth, some positing as much as 7% GDP growth. But what if promised corporate tax cuts simply flow to the investors and owners pockets and not to creating new jobs? What if infrastructure spending turns into pork barrel projects for key Congressional Committee chairmen? And what if some of the “pork” falls from the pubic trough into the lap of a Trump family member?
  • Repeal and replace Obamacare represents the most obvious risk to this Republican honeymoon. While Republican messaging today (like patient centered healthcare, not Washington centered) is carrying the day, what if the “replace” plan bombs? What if the replace price tag unleashes fiscal conservatives’ wrath?  And, what if Republicans can not stop with Obamacare but feel the urge to rush on with Medicare, Medicaid, and Social Security?
  • What if Japan thinks through the President-elects threat towards Toyota building a plant in Mexico? Does anyone rationally believe that other countries will subjugate their own economies to prop up Trump’s Make America Great Again? Picking on small countries like Mexico may appear risk free but other countries are watching and can be expected to prepare defenses if not collaborate jointly to counter balance the new bully.
  • The urge to roll back much of the social progress that has been made in the last 8 years will be huge. Gay rights, women’s rights, and immigration reforms are obvious targets. But don’t over look the myriad of ways to suppress voting rights. This two edged sword may delight some Republican voters but could just as easily bring forward new charismatic Democrat leaders.

The picture just outlined is one of many fast moving parts. Any of these changes could create unforeseen consequences, which in turn could splinter the Republican majority bringing to an early halt many of the Trump agenda items. And should the Republican controlled Congress somehow get to think it was more powerful than the chief executive, they will be in for a fight they can only have nightmares about.

Over the past 8 years the 7/24 news media has grown a business model which feasts upon statements or events which titillate, arouse, madden, or otherwise encourage the reader or listener to jump to some unsupported conclusion or opinion. The media appears to bear no remorse over the dumbing down of news and instead values only its audience ratings and its bottom line. What if enough of the major information sources caught their collective breaths and revisited their journalistic standards? Remember the Watergate investigations?

And let’s not forget the unknowable. What calamities might be waiting around the corner. What if North Korea develops the capability to deliver nuclear weapons intercontinentally? What if Pakistan is overthrown and its nuclear weapons land in a Middle East country’s hands? What if China loses control of its economy and the Chinese Government needs to create an external enemy in order to maintain its domestic control? And, and, and…

Most of all, one must remember voters represent a fractured electorate. Donald Trump will become President with a minority of the popular vote, and his electoral college majority was wafer thin. It will not take much convince enough voters to make Trump a one term President.  And most elements of the Republican Congressional majority would prefer a one term Trump than for themselves to lose reelection.  I wonder who has got whose back?

Governing is much harder than running for office.

What’s Going On?

December 18, 2016

It seems every news venue, radio or TV talk news program, or in the pages of the top newspapers, the subject, in some way, is about Donald Trump. Further, the inference questions (1) his victory as not legitimate, (2) his opinion poll numbers as terrible and getting worse, or that (3) he is hopelessly ensnared in conflict of interest situations. These reports question the wisdom of those who elected Donald Trump.  Hmmm.

There are, IMO, two important observations to remember. First, these same media outlets failed to point out the threat that the rust belt (or fire wall) States posed, and second, there are far more important matters about to impact Americans thanks to the upcoming Trump Administration.

Russian hacking and the subsequent Wikileaks disclosures were hardly earth shattering and even FBI Director Jim Comey’s totally out of place report to Congress was to a thinking person not decisive events. What the media could have reported was that despite overwhelming information on Donald Trump’s character, preparation, and natural disposition, a large group of voters could not care less. These voters cared only about their personal situation and preferred someone who offered them a life preserver, even if imaginary, to someone else who would be an adult in the room.

So it is now. Those “margin of victory” voters who decided the election thinking Trump was a great business man and was the only person who could deal with the economy and provide (good) jobs for everyone (but especially them) are still of the same mind.

This group cares little whether Donald Trump’s companies do well, even if the Trump Administration trades favors with foreign countries to boost more favorable outcomes for Trump enterprises… as long as these voters do well.

Rather than question Trump’s legitimacy, his razor thin temperament, or his near corrupt business dealings, the media would do well to inform all voters what other Trump and GOP policies are about to bring them.

Healthcare. The emphasis, the GOP says, will be on repealing Obamacare. With that, coverage of those under 26, those with pre-existing conditions, and those really sick Americans who exhaust some predetermined amount of coverage will be without coverage. In addition, Medicaid roles will be reduced and consequently hospital emergency room lines will increase while hospital balance sheets turn red. And while they are at it, Medicare will be up for improvements, read less coverage for more money. Buying the Trump line gets all this at the same price.

Social Security which these “margin of victory” voters expect to receive may look a bit different. Rather than a government managed benefit private enterprise might be called upon to offer 401K-like policies where social security taxes are invested by investment firms and the future of many Americans with no other means will ride upon the stock market.

Income inequality will become an accepted way of life. Work hard, get rich, and why worry. But for these “margin of victory” voters, there is no pot of gold waiting for them. Higher taxes on the richest or hire minimum wage levels are not going to happen. Income inequality will be transformed into what makes America Great Again (for the wealthy).

Regrettably there are other changes coming for which the “margin of victory” voters will not immediately register concern. For example, ignoring global warming, diminishing the EPA’s reach, pushing charter schools, expanding the concept of religious freedom (read making legal discrimination on the basis of deeply held religious beliefs) and reversing all sorts recent progress on inclusion will be the just reward for the “margin of victory” voters.

But the cruelest hoax will come under the flag, “cutting government spending” for the purpose of reducing the national debt.  Consider that the budget is currently unbalanced by about $600 billion or roughly the size of the defense budget.  So, there is suppose to be a massive tax cut, a massive investment in the infrastructure, and a rebuild of the military (to make it great again).  Where is the money going to come from to balance the budget?  Hmmm.  Cut baby cut.

Fasten your seat belts, the race to “Make America Great Again” is about to begin.

Growth As In “America Great Again”

December 9, 2016

President-elect Donald Trump has told anyone who would listen he is a wildly successful business man and he will apply the principles which has propelled his wealth accumulation to problems and opportunities facing America. And, voila, America will be great again. Hmmm.

Trump the candidate often pointed to US “GDP” growth (around 2% per year) under President Obama as “pathetic”. Trump and his surrogates boasted that they would return growth to 4-6% range, if not higher. Is this a likely outcome one should reasonably expect?

Economic theory around growth gets complicated very quickly. One financial pundit recently boiled GDP growth down to two simple factors, population growth and productivity growth. This person predicted that the base case was likely to be 1% total GDP growth given a 1/2% population increase and a 1/2% productivity increase.

If this person was close to accurate, then for the US GDP growth to be higher, there would have to be a lot more workers added or some large stimulus to increase the output per existing worker, or both. At the present time no one is predicting new productivity tools similar to the impact computers and automation have had and no one is seeing the number of hours worked increase. So where would that 4-6% GDP growth come from?

The Trump economic brain trust claims that with less regulations and lower taxes, America businesses will invest more and as a result produce more goods and services. Hmmm.

And don’t forget the bi-partisan support for infrastructure repair and maintenance. This often characterized as a multi-trillion dollar, absolutely necessary, investment that only the government can finance. To be sure, infrastructure means more jobs and should be additive to GDP growth. But….

The combined lower taxes and the increased government infrastructure spending will drive federal deficits and increase the national debt dramatically. Sooner or later this increased debt will need to be paid back. And when paid back the reverse impact upon the economy (slowing productivity) should be expected.

Again the Trump team has the answer, the economy will be percolating so strongly with less regulations, lower taxes, and a stronger infrastructure that tax revenues will be sufficient to pay down the increased debt. Hmmm.

Looking around the world and judging the GDP growth of other countries puts President Obama’s 2% in a fairly good light. The Trump Administration’s 4-6% goal would put the US in a class by itself with a growth rate like China but growing without the predatory export segment. Hmmm.

Oh, and lastly, I wonder where the population growth rate comes out in Trump’s team’s mind? Making it harder for seasonal workers or undocumented workers living here now should run counter to GDP growth.

The most likely outcome will be a slight positive boost to GDP growth, say maybe to 2.5%.  Growth in excess of 3% will come with the prospect of a subsequent contraction back to 0.5% or so.  If GDP growth exceeds 4%, then a recession should be expected as the longer term reward.  (The silent hand won’t be so silent.)

With all this chatter about GDP growth, I wonder whether anyone will notice the “really big” tax reduction the wealthy received, the millions who will lose healthcare coverage, or that the new jobs “America Great Again” are mostly low pay and minimal or no benefits?