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.

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