Memoirs of the Addams Administration 17.

The Republican Congress debated a new version of the American Health Care Act (AHCA) which had failed in March 2017.  The same dispute between the Freedom Caucus in the House and the moderates in the Senate that wrecked the AHCA remained unresolved.  The Freedom Caucus did deign to accept an amendment that dumped the Affordable Care Act (ACA) requirement that insurers cover pre-existing conditions.  Millions of voters will have their say on this matter in November 2018.  Tick, tick, tick.

With the Republican Congress inert, President Trump acted through executive orders on a number of fronts.  On trade, he imposed a tariff on some Canadian lumber and talked about withdrawing from NAFTA.  On natural resources he reversed some late-stage Obama administration designations of Western areas as national monuments and reversed some limits on off-shore oil drilling.  On taxes he sketched a plan for change: cut the corporate tax from 35 percent to 15 percent; reduce the number of tax brackets from seven to three (paying 10 percent, 25 percent, 35 percent); double the individual deduction (so that the first $24K of a couple’s income escapes taxation).  The worm in this enticing apple is a loss of $3 trillion in revenue over ten years for a country already mired in red ink as far as the eye can see.[1]  On immigration and labor, Trump issued an order requiring greater scrutiny[2] of H-1B visas for skilled workers.[3]   Faced with the prospect of a government shutdown over the appropriations bill in Congress, Trump dropped his demand for money for the wall along the Mexican border.[4]

The Trump orders surfaced a number of important issues.  On immigration, are we obsessed about Mexican illegals gobbling up the jobs that Americans don’t want to take?  Or are we worried about the unwillingness of Americans to embrace Science, Technology, Engineering, and Mathematics (STEM) when those are the keys to the future economy?  Or are we afraid of a handful of Muslim immigrants providing cover for a few radical Islamist terrorists?

On taxes, will tax cuts spur growth?  Or are they just a way to fend off federal seizures of private property?  We say “one man, one vote.”  Why not “one man, one tax rate”?  Are huge deficits a problem or not a problem?  If they are a problem, then who should sacrifice to reduce them?  Just the people who do not benefit from the spending or Americans more generally?

On natural resources, for better than a century (c. 1790-1890) the federal government sold off public lands in order to raise revenue and to promote both economic development and social mobility. Really only in the 20th Century did the government turn to a policy of “conservation.”  The government stopped selling public lands.  Since then, people have argued over “preservation” (leave God’s Creation in pristine condition so that people can commune with Nature to restore their souls) and “conservation” (treat water, grasslands, forests, minerals as a more or less renewable resource that can be harvested).  There’s a lot to be said for each argument.  Especially if you have ever seen a clear-cut or camped in a mountain pass with not another human to be seen, or if you have lived in a mill town and seen the modest lives of natural resource workers and talked with well-off Easterners about their week-long vacation in the West.

Nothing about the issues facing the Trump administration are trivial.

[1] Do tax cuts stimulate sufficient economic growth so that overall revenue equals or surpasses the pre-cut level?  It seems not to have been the case with the Reagan tax or the Reaganesque tax cuts of succeeding Republican administrations.  However, I—or someone—should read about the Mellon tax plan of the 1920s and the Kennedy-Johnson tax cut of the 1960s.

[2] That is delays and restrictions.

[3] “Issue of the week: “The trouble with ‘Buy American’,” The Week, 5 May 2017, p. 42.

[4] “Trump’s flurry of major proposals,” The Week, 5 May 2017, p. 6.

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My Weekly Reader 29 April 2017.

In the “Roaring Twenties” the automobile was the “new thing.”  Henry Ford pioneered the mass production of cars and trucks.  He applied Frederick W. Taylor’s simplification of production into single successive tasks.  He created assembly lines to move the parts to workers in a carefully-sequenced order.  Production soared while the price of cars to consumers dropped off the edge of a cliff.  Others rushed to copy the “flivver king.”  So, in 1923, General Motors opened a car plant in Janesville, Wisconsin.  It was a good bet: thanks to the previous establishment of Parker Pens and a tractor factory, the town had a pool of suitably-skilled workers.  For almost fifty years, GM employed a lot of workers at decent wages.

The trouble was that the work itself would bore the balls off a pool table.  By the time of the New Deal disgruntled workers welcomed unionization with open arms.[1]  In 1936-1937 the United Auto Workers (UAW) staged a strike campaign that often turned violent.  For the first time, the government backed the right of the workers to unionize.

However, all the UAW could get its members were better pay, better benefits, and some pass-blocking between the workers and their foremen.  They couldn’t make the work itself any less soul-killing.  What workers wanted was out as soon as possible.  In 1970 the UAW launched a national strike that ran on for better than two months.  What the union won for its members was a “thirty [years] and out” rule that allowed workers to collect a full pension after thirty years on the job, and full health coverage between retirement and Medicare.

The cost of pensions and health care for people who retired when they were about 50 years old heavily freighted the books of companies that already had a hard time adapting to unexpected change.  Many of those companies—and other industries—began shifting the production to Southern “right to work” states or abroad.[2]  Furthermore, workers still had to gut out 30 years at a job they hated from Day One.  On the other hand, places like Janesville were tight communities that had real emotional attractions for the successive generations that grew up in them.[3]  Moreover, for decades American culture—and the Democratic Party in particular—celebrated the industrial working class.  Like combat troops, people could feel a sense of pride in what they had to endure.  It would be hard to cut loose, move to Los Angeles, and become a Chippendale dancer.  (If, you know, that’s how you roll.)

By the dawn of the 21st Century, automobiles—at least union-made, American-company automobiles–no longer were the “new thing.”  The financial crisis of 2008 pushed the remaining “rust belt” car companies to the edge of bankruptcy.  They responded with a desperate effort to cut costs and streamline production.  In October 2008, General Motors announced that it would close its Janesville plant in December.[4]  Merry Christmas!

In America, the human costs of global trade agreements, foreign competition, management errors, and union stupidity have been enormous.  The Janesville unemployment rate hit 13 percent, before falling sharply as people pulled up stakes to search for better chances.  Displaced workers in Janesville didn’t have any better luck with the vaunted government tr-training schemes than have other people.  Women have adapted more easily than men, which can’t be good for the men’s sense of identity.  In a generation, no one will remember or care.

[1] It’s not a car plant, but see: https://www.youtube.com/watch?v=UGXW-PpVL7I

[2] See: https://waroftheworldblog.com/2015/03/02/american-union-stay-away-from-me-uh/

[3] Elements of this appear in “Gran Torino” (dir. Clint Eastwood, 2008): https://www.youtube.com/watch?v=JmqV-LGbqkw

[4] Amy Goldstein, Janesville: An American Story (2017).

Memoirs of the Addams Administration 16.

Evidence continued to pour in of President Donald Trump’s fast climb up the learning curve.  China provides critical aid to the failed state on its border and has used North Korea’s belligerence as a leashed pit-bull in its own efforts to expand its power.  Thus, Chinese action will be decisive in efforts to change North Korean behavior short of war.  Confronted with the danger of North Korea, President Trump consulted with Chinese President Xi Jinping.  Inevitably, there is a price for Chinese co-operation.  After his meeting with Xi, Trump changed course from denouncing China as a currency-manipulator that had been “raping” the United States to claiming that China did not manipulate its currency.  In Syria he took a middle course between the non-intervention policy of the Obama administration and the deeper engagement urged by Hillary Clinton by ordering a one-off cruise missile attack on the air-base from which a poison gas attack had been launched on rebels.[1]

Even before Trump became president, the Affordable Care Act (ACA) faced problems.[2]  Many younger people refused to enroll, and the health care markets are served by a shrinking number of providers in some states.  Trump began to revive the “repeal and replace” campaign after its earlier defeat.  It isn’t clear yet whether the Republicans’ Freedom Caucus and moderate factions can agree on a new plan.  If they cannot, then peeling-off some Democrats becomes vital.  Moreover, winning some Democratic support enhances the bargaining power of the moderates against the Freedom Caucus.

To this end, Trump tried to exert pressure on the Democrats.  Before the election, Republicans had sued the Obama administration to stop federal subsidies to low-income clients on the insurance exchanges.  A federal court had sided with the Republicans, so the Obama administration had appealed to a higher court.  The payments continued while the court pondered the issue.  Eager to pass a replacement health-care plan, Trump threatened to stop defending the government’s position in the law suit.  That might cause the court to reject the Obama administration’s appeal.  Without the subsidies, the ACA’s market places will collapse.  This threat, in turn, might cause many insurers to abandon the market place so that they don’t get blind-sided in the coming year.  Trump intended this prospect to force Democrats to bargain.

A similar kind of maneuvering may be appearing in economic adviser Gary Cohn’s flirting with the idea of restoring the Glass-Steagall Act.  Glass-Steagall formed part of Franklin D. Roosevelt’s first Hundred Days legislative push in 1933.  The Act separated investment banking from commercial banking.  Investment banks used their own capital to invest as they pleased, often running a higher risk of failure.  Commercial banks just took deposits and made ordinary loans.  Merging the two into one bank increased the risk of systemic failure if riskier investments failed on so great a scale as to imperil the savings of ordinary people.  Glass-Steagall made banking “dull” from the 1930s to the 1990s, when the Clinton administration pushed through repeal of the Act.  This repeal has entered liberal mythology as an important factor in the financial crisis of 2008.  Cohn’s suggestion that it could be restored may be part of an effort to make a larger de-regulation of the financial industry, including repeal of the hated Dodd-Frank legislation, palatable to a wide range of voters.[3]

Is Trump a flim-flam man, or an intuitive applause-seeker, or a creature of his competing factions of advisers, or just an unscrupulous in-the-closet conservative Democrat?

[1] “Trump: What do his flip-flops reveal?” The Week, 28 April 2017, p. 18.

[2] “Obamacare: Trump ponders sabotage,” The Week, 28 April 2017, p. 19.

[3] “Issue of the week: Will  Trump break up the banks?” The Week, 28 April 2017, p. 38.

Memoirs of the Addams Administration 15.

Critics of President Donald Trump elaborated on the well-established trope that Trump is too inexperienced and shallow to manage national security—or anything else.[1]  In some minds, his foreign policy decisions rely too much on the former military officers in key positions (Secretary of Defense James Mattis, National Security Adviser H.R. McMaster).  In other minds, the reported battle for influence over President Trump between chief strategist Steve Bannon and Trump’s son-in-law Jared Kushner obscures a real slide toward the center under the influence of McMaster and Gary Cohn.[2]  In this view, the failure of the “Muslim ban” and the failed effort to “repeal and replace” the Affordable Care Act undermined ideologically-driven advisers and awakened the President to the complexities of many issues.  Better late than never, and it isn’t even late yet.

One potentially powerful influence on the future course of the Trump administration may be the evident gap between the campaign positions of Donald Trump and the current opinions of the majority of Americans.[3]  In the case of immigration, only 13 percent of Americans want the deportation of illegal aliens to be the first order of business and only 26 percent think that stopping future illegal immigration is very important.  In contrast, 90 percent favor legalizing the situation of illegal immigrants who have jobs, speak English, and pay their back taxes; and 60 percent think that the legalization of such illegal immigrants should be at the top of the immigration policy list.[4]  It’s worth noting that the supporters of legalization of status don’t seem to have been asked about a path to citizenship.  Maybe green cards without any path to citizenship would do it.  In any event, the weight of public opinion provides a lot of ammunition for the “moderates” around President Trump.

A comparatively small incident in foreign policy provided the basis for a change of course.  The Syrian air force allegedly used sarin gas in an attack on a town in Idlib province.  President Trump then enforced President Obama’s “red line” warning from 2013 by ordering a rain of cruise missiles on the air base from which the attack was said to have originated.  It would be difficult to make Syrian-American relations worse, but the incident pushed russo-American relations down-hill.  Secretary of State Rex Tillerson had a tense visit to Moscow, while the Russian foreign minister Sergei Lavrov warned the Americans not to make another such “illegal” attack.[5]  The Americans havered a bit, with Tillerson renewing the Obama administration’s insistence that Syrian dictator Bashar al-Assad had to go, while Secretary of Defense James Mattis said that the U.S. would not be drawn deeper into the civil war.

A majority (57 percent) of Americans approved the strikes.  As was the case with President Obama’s failure to follow through on his red line warning in 2013, the great majority of Americans (70 percent) believe that President Trump should seek Congressional approval for any further attacks on Syria.[6]  So, apparently, Americans will back the president, but then wish Congress would follow its constitutional duty.  Critics in the New York Times and the Washington Post complained that Trump has yet to articulate a comprehensive strategy for asserting American predominance in Syria.  (In short, he’s all action and no talk.)

[1] “Syria: Is there a new ‘Trump Doctrine’?” The Week, 21 April 2017, p. 6.

[2] “Bannon vs. Kushner: The battle for Trump’s soul,” The Week, 21 April 2017, p. 17.

[3] See: https://waroftheworldblog.com/2017/04/12/public-opinion-in-the-addams-administration-1/

[4] “Poll Watch,” The Week, 31 March 2017, p. 17.

[5] “Syria attack widens U.S.-Russia rift,” The Week, 21 April 2017, p. 4.

[6] “Poll Watch,” The Week, 21 April 2017, p. 17.

Public Opinion in the Addams Administration 1.

It has become an age of bitter political polarization.  Everyone says so.  To take one small example, in January 2017, 16 percent of Democrats believed that Donald Trump was following ethics laws; 79 percent of Republican believed that Trump was complying with the laws.[1]  A month later, almost half (46 percent) of Americans wanted Donald Trump impeached.[2]

If the conventional wisdom is true, what is to be made of the areas of broad consensus in the American public?  Take four examples: allegations about the election of November 2016; climate change; health care, and abortion.

Almost three-quarters (70 percent) believe that President Barack Obama did not have Donald Trump’s communications tapped.  Fewer than one in five (19 percent) of Americans believe that President Obama had intelligence agencies wire-tap Trump.[3]  That leaves 11 percent “not sure.”  Almost two-thirds (63 percent) of Americans saw Russia’s intervention in the presidential election as a “serious” issue.  Well over half (58 percent) of Americans believed that the allegations should be investigated by an independent prosecutor, while more than a third (35 percent) opposed an independent investigation.[4]

In 2015, only 27 percent of Americans described themselves as “believers” in climate change.  By early 2017, 50 percent described themselves as “believers.”  Another 31 percent believe in climate change, but think that it has been exaggerated by environmentalists and the media.[5]  Almost two-thirds (65 percent) of Americans support the development of alternative energy sources, while just over a quarter (27 percent) support the development of fossil fuels.[6]

In 2016, 51 percent of Americans believed that the government should ensure that all Americans have health-care.  By early 2017, 60 percent believed this, while 38 percent believed that it is not the government’s job.[7]  As the Republican “repeal and replace” of Obamacare got moving, virtually all (96 percent) of Americans believed that it was either “somewhat” or “very” important that all Americans have access to affordable health insurance.  This included virtually all (91 percent) Republicans.  Almost as large numbers (84 percent) believed that the Affordable Care Act should not be repealed until a suitable replacement was ready.[8]

Finally, over half (54 percent) of Americans want the Supreme Court to uphold Roe v. Wade, while less than a third (30 percent) want it overturned.[9]

So, if you leave it to ordinary Americans, women would retain their right to choose whether to bring a child into the world.  If you leave it to the Supreme Court, that may not be the case.  Of course, the Court might take the position that it does respect for the law in general no good if the courts drive huge numbers of people into disobeying a particular law.

The ground has shifted under the feet of the Trump administration (and the Republican Party) on climate change and health-care.  Their best course may be to pursue market-based policies to address both issues.  That is, declare “victory” and get out.

Democrats and Independents, if not every Republican, can smell a rat.

[1] “Poll Watch,” The Week, 27 January 2017, p. 17.

[2] “Poll Watch,” The Week, 24 February 2017, p. 17.  They probably expected him to be replaced by Hillary Clinton.

[3] “Poll Watch,” The Week, 7 April 2017, p. 17.

[4] “Poll Watch,” The Week, 17 March 2017, p. 17.

[5] “Poll Watch,” The Week, 7 April 2017, p. 17.

[6] “Poll Watch,” The Week, 24 February 2017, p. 17.

[7] “Poll Watch,” The Week, 27 January 2017, p. 17.

[8] “Poll Watch,” The Week, 10 February 2017, p. 17.

[9] “Poll Watch,” The Week, 17 February 2017, p. 17.

Memoirs of the Addams Administration 14.

The historian Fernand Braudel distinguished between long term trends and the “mere history of events.”  It’s a useful concept to bear in mind when analyzing political developments.  However, Braudel would be the first to admit that events can illustrate trends.

As early as the 1950s, Democrats turned to seeking changes in the law through the courts when they could not obtain them through the legislature.  Two can play at this game.  Both parties have spent a great deal of effort getting “their” judges on the bench while blocking the other guys’ judges from getting on the bench.  Polarization has only made the problem more obvious.  In 2013, when last in the majority, Senate Democrats chose to get rid of the filibuster for all judicial appointments below the level of the Supreme Court.  When Justice Antonin Scalia died, President Obama nominated a highly qualified Democratic replacement; Senate Republicans refused to even hold hearings on the nominee.  Now in the minority, Senate Democrats chose to filibuster the nomination of Neil Gorsuch to replace the late Antonin Scalia on the Supreme Court and Republicans chose to do away with the filibuster.[1]  This unhappy event is merely the most recent phase in the politicization of the judiciary.  The mind reels at possible future developments.

Human-caused climate change is a reality.  So, too, is the halting effort by industrial countries to limit the further emission of pollutants that cause that climate change.  So, too, are the social and economic costs of fighting climate change in industrial societies.  When interest groups resist the threats to their immediate well-being, governments can either bend before the resistance, or seek to off-set those costs, or seek to circumvent the resistance by other means.  Thus, President Barack Obama insisted that the Paris climate agreement to which his administration adhered not be a treaty.[2]  He knew he could never get such a treaty through the Senate, as required by the Constitution.  Nor could he get the policies needed to implement the Paris agreement through Congress.  So, he resorted to a “Clean Power Plan” issued by the Environmental Protection Agency (EPA).  The Trump administration ordered a re-write of the Plan and “requested” that the EPA lighten up on other regulations.[3]  Most observers found this to be ridiculous pandering to his core voters.[4]  In this view, coal is a dying industry, climate change has to be resisted with energy,[5] and renewable energy is a key technology of the future economy.

American social values and the deficiencies of the American education system have challenged the growth of the high-tech industries for many years.[6]  In brief compass, America doesn’t produce enough techies to meet the needs of growing industries.  The solution appeared in the hiring of many (85,000 new people a year) from foreign countries.  The granting of H-1B visas plays a key role in this process.  Now the Trump administration has issued orders intended to hinder the issuing of such visas.[7]  The empty spots aren’t likely to be filled by displaced coal miners.

[1] “Senate showdown over Gorsuch nomination,” The Week, 14 April 2017, p. 5.

[2] “Climate change: Can Trump revive coal?” The Week, 14 April 2017, p. 17.

[3] Relax the rules on emissions by power plants to be constructed in the future; allow new coal mining on public lands; and ease restrictions on the emission of methane in the course of “fracking.”

[4] As an employer, the whole of the coal industry ranks behind some fast-food chains.  Coal mine employment has fallen by almost 50 percent since 1990, long before the Clean Power Plan was even a twinkle in Barack Obama’s eye.  “The bottom line,” The Week, 14 April 2017, p. 35.

[5] HA!  Is joke.

[6] See Bruce Cannon Gibney, A Generation of Sociopaths: How the Baby Boomers Betrayed America (2017).

[7] “Tech: More scrutiny for skilled-worker visas,” The Week, 14 April 2017, p. 35.

Memoirs of the Addams Administration 13.

Once upon a time, old people depended upon their savings and their families to cover the living costs of their few last years.  Then, people started to live longer and the individual safety net eroded.  We got Social Security.  Once upon a time, the business cycle visited prosperity and hardship on people in varied measure.  Then came the Great Depression.  We got Keynesian counter-cyclical spending.  Once upon a time, doctors couldn’t do much to cure illness.  Then, the combination of science and medicine opened an Aladdin’s Cave of health solutions.  These cost a lot of money, so we got Medicare and Medicaid.  Once upon a time, America was a meritocratic society and poor people had to take their lumps.  Then came the Sixties and Seventies, which altered assumptions.  The Forgotten suffered in misery, so we got the Affordable Care Act (ACA).

Lots of people didn’t like the ACA.  Moreover, the ACA has problems all its own.  Those problems appear not to be fatal or crippling.  The Congressional Budget Office (CBO) projects that, left to its own devices, the ACA will “naturally stabilize” in most of the country in a few years.[1]  President Trump, or the Republicans in Congress acting without President Trump, can shove the ACA downhill if they want it to fail.  They can do this most easily by just not enforcing the individual mandate.  That would allow about 14 million younger-and-healthier people to drop out of the system.  The loss of their premiums might fatally destabilize the ACA.

The first major step in the Trump Administration came in the effort to co-operate with the real Republicans in the legislature.  Republicans campaigned against the ACA for seven years, then got the chance to repeal-and-replace.[2]  In contrast to the Democrats’ year-long construction of the ACA and disciplined passage of the bill, the Republicans adopted a “Hey, we can put on a show, we can use my dad’s garage!” approach.  The Affordable Health Care Act (AHCA) repealed the unpopular and nonsensical individual mandate, substituted limited age-related subsidies for open-ended income-based subsidies, and cut down the Medicaid expansion.  Public opinion—especially among Trump’s core supporters—disliked the AHCA.

Well, that didn’t work.  In the House the “Freedom Caucus” didn’t like it; in the Senate moderate Republicans didn’t like it.  The two Republican factions could not agree, so the AHCA got pulled before a vote.  (See: Face, egg on.)  The ACA survived.  Bitter recriminations ensued.

The stock market’s Trump Rally turned into a slump once the AHCA went up in flames like the Hindenburg.  The botched handling of the bill’s passage revealed that the deep fissures inside the Republican Party during the Obama years have not been healed.  It also raised suspicions that neither Trump nor House Majority Leader Paul Ryan have much understanding about how to manage their business.  Those revelations, in turn, cast a pall over the prospects for the other elements of Trump’s agenda that have real relevance for business conditions.  Tax cuts, renegotiated trade deals, infrastructure spending, and sweeping deregulation now seem in peril.[3]

Is the new “realism”/”pessimism” justified?  It is if you ask Democrats, but less so if you ask Republicans.  Having messed-up one thing right off the bat, Republicans have a strong motive to do better with the next project: tax reform.[4]  They had the same motive to pass AHCA.

Democrats chortled that people like the ACA.  The like Medicare/Medicaid and Social Security too.  With defense, such entitlements are driving the growth of the deficit.

[1] “Obamacare: Will it collapse on its own?” The Week, 7 April 2017, p. 16.

[2] “The GOP’s failed Obamacare repeal,” The Week, 7 April 2017, p. 4.

[3] “Markets: Health-care failure rattles Wall Street,” The Week, 7 April 2017, p. 36.

[4] “The GOP: can ‘the party of no’ learn to govern, The Week, 7 April 2017, p. 6.