Author Archives: jsh54

My Weekly Reader 14 July 2017.

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As contemporary Americans ponder whether the federal government has grown too strong or is not yet strong enough, it is worth revisiting the first years of the Republic.  Then even the survival of the United States lay open to question.  Many Americans (Anti-Federalists) had opposed the Constitution.  Britain and Spain, which possessed important territories bordering on the new nation, were little inclined to believe that the United States would become a behemoth.  In military affairs, interested people debated whether the United States should even have a permanent and professional military (a “standing army” of the sort decried in the Declaration of Independence).  Opponents of an excessively strong central government argued for a reliance on the citizen-soldiers of a militia.  Men like George Washington and Alexander Hamilton argued for the utility of a professional army.  What professional historians call “contingency” (specific things happen to determine an outcome) played an important role in deciding how things worked out.[1]

Take the example of the struggle for the “Northwest Territory.”  In 1781 a Franco-American army defeated a British army at Yorktown.  In 1783, Britain and America made peace.  In what was then the “West,” Britain granted to the Americans sovereignty over the territory north of the Ohio and east of the Mississippi.  The problem for the Americans lay in making good that claim.  The Indians living there declined to surrender their lands to white settlers.  Local British officials encouraged this resistance.  So, Indian wars became one feature of the presidential administration of George Washington.

In October 1791, the Indians defeated a U.S. Army force led by Josiah Harmar.  A year later, the governor of the Northwest Territory, Arthur St. Clair, led a new army into the wilds of northwestern Ohio.  Near the Wabash River, a smaller Indian force destroyed St. Clair’s little army in less than three hours.  They inflicted well over 90 percent casualties (including two-thirds killed), while suffering only minor losses themselves.[2]

This “signal catastrophe,”[3] tipped the balance in favor of a stronger national army.  In 1792, Washington managed to ram through Congress an increased military budget, then appointed Anthony Wayne to replace St. Clair.  Wayne worked hard to revive the morale of the defeated troops, then marched deep into Indian territory.  This took a while: the decisive contest only came in August 1794.  Then, at a place called Fallen Timbers, Wayne inflicted a devastating defeat on the Indians.  Faced with a victorious, ill-disposed-toward-Britain American army, local British commanders abandoned their Indian pawns.[4]

Two years later, Wayne negotiated the Treaty of Greenville with the defeated Indians.  The treaty—as decisive a surrender as that of the Japanese in 1945—opened the Northwest to white settlement.  Later, writers would cite America’s “manifest destiny” to conquer the West.  In the 1790s, this destiny was far from manifest.  It began to become so with the work of Anthony Wayne and his army.

[1] William Hogeland, Autumn of the Black Snake: the Creation of the U.S. Army and the Invasion That Opened the West (2017).

[2] In comparison George Custer got 268 men killed at the Little Big Horn.  “St. Clair’s Defeat” defeat was commemorated in folk culture.  See: https://www.youtube.com/watch?v=nn2rEoRmh1M

[3] I stole the phrase from the title of Patrick MacCrory’s superb book on the retreat of a British army from Kabul, Afghanistan in 1842.  I read his book in my youth and it conditioned me to think that people should be cautious about vexing Pashtuns.

[4] The episode nicely illustrates the difficulties of coalition warfare.  The British and the Indians were often in disagreement and the Indians themselves were not a solid bloc.

Possible Futures.

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The stock market surged after the election of Donald Trump.  This seems to have reflected a belief that he would begin the laborious process of rolling-back Barack Obama’s massive extension of federal rules and regulations, and that President Trump would support the Republican default strategy of tax cuts.  The Trump administration projected rapid growth as a result of his election: a big, long-overdue infrastructure program; an additional 10 million jobs by the end of the first term; and significant tax cuts whose revenue effects would be off-set by the accelerating growth rate.  “Bliss it was in that dawn to be alive,….”

In reality, the American economy appears to be slowing in its growth under the Trump administration.  The average monthly pace of job creation in 2016 ran at 187K.[1]  According to the Labor Department, the American economy can be expected to add 162K jobs per month in 2017.  It added only 138K jobs in May 2017.  The labor participation rate has fallen from 83 percent a decade ago to 81.5 percent in May 2017.  The unemployment rate fell to 4.3 percent. That is the lowest level in 16 years.  In short, wages should be starting up.

But they aren’t.  Wages increases for the last year have averaged between 2.5 and 3.0 percent, scarcely ahead of the inflation rate.  Why?  Well, productivity growth—a perennial problem since the 1980s—continues to drag.  Price inflation is very low.  To the extent that nominal wages are frozen—as are mine—real wages have been falling in recent years.  This real deflation then drags on consumption.

Similarly, mergers and acquisitions (M&A)–often taken as a stand-in for corporate confidence in the economy—are at their lowest level since 2013.[2]  Because 80 months of increasing hiring has occurred, people have a reasonable concern that we are headed toward a new slump.  I think the smart thing to do would be to “buy in” to the slump.

On a totally different front, consumer demand for the Ford Focus is weak: American drivers prefer SUVs and pick-up trucks; gas prices are low, so those vehicles don’t cost as much to drive; and Focus sales have fallen by 20 percent.  In late June 2017, Ford announced that it would shift production of this dog of a car to China (rather than to Mexico).  The Chinese-made cars would then be re-exported to the United States.  The one-time Focus plants in the United States will be converted to produce even more SUVs and trucks.[3]

This announcement raises several questions.  First, why to China?  Ford already has Focus plants in China (where the car is seen as much better than a bicycle) and because labor costs are lower in China than in Mexico.  Second, why off-shore them at all, rather than just cutting back production to reflect the market?  Because, under Obama administration regulations, Ford gets to average the mileage of the Focus with the mileage of the F-150 and the Explorer when calculating how to meet the average miles-per-gallon (mpg) requirements set by the Environmental Protection Agency (EPA).  Ford has to make a lot of cars no one wants in order to be able to sell the vehicles that people do want.  What if no one buys the Focus?  I think that Ford still gets to average in the Focus mpg so long as it has made the cars and they are sitting in some vast parking lot near a sea-port.  So, Ford is trying to cut to the bone the production costs of a car that will not be bought.  That is, the Obama administration planned to force losses on an entire industry so that it could pretend that it was meeting its climate change goals.

[1] “Issue of the week: The jobs report’s red flags,” The Week, 16 June 2017, p. 34; Greg Ip, “Paychecks aren’t growing,” The Week, 30 June 2017, p. 14.  .

[2] “The bottom line,” The Week, 23 June 2017, p. 31.

[3] “Autos: Ford shifts its Focus to China,” The Week, 30 June 2017, p. 32.

Memoirs of the Addams Administration 26.

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In May 2017 the House of Representatives passed the American Health Care Act (AHCA) in an attempt to “repeal and replace” the Affordable Care Act (ACA).   Senate majority leader Mitch McConnell assigned a small group of senators to quickly re-write this legislation to deal with its flaws.  In late June 2017 they revealed their handiwork to the public.  The Senate bill sought to introduce market-based solutions to health care.  In place of the ACA’s supposed individual “mandate”[1] to buy health care insurance, the Senate bill created a “lockout”[2] intended to keep people from only buying insurance when they are sick, then dropping out when they get better.  In place of the current open-ended government spending on Medicaid, the Senate bill would cap the amount of money that the federal government would pay.  The Senate bill reduced the average premium by about 20 percent, raised the average deductible by 70 percent, allowed insurance companies to offer a wider variety of plans in place of the expansively defined set of benefits required by the ACA, and raised the permissible differential between premiums for sick people and healthy people.   It also replaced direct subsidies paid to insurance companies with smaller individual tax credits.  The ACA’s expansion of the Medicaid eligible population to include the “working poor” would be rolled back by 2024.  The Congressional Budget Office (CBO) reported that the Senate bill would cut $722 billion out of federal health-care spending over a decade and that 37 million fewer people would have health insurance by 2026.[3]

McConnell found that he could not muster enough Republicans to vote for the bill.  Some of the dissidents wanted an even more radical repeal of the ACA, while others opposed the size of the cuts to Medicaid.   McConnell “postponed” a vote on the bill until later in the summer—or maybe ‘till the cows come home.

Otherwise, little is going on in government.  Most of the real news sprang from the Supreme Court.  The Court allowed a limited version of the administration’s initial travel ban on possible terrorists to go into effect until the Court can hear full arguments in October.  It also found that a Missouri law barring public funds to a church school violated the free exercise of religion.  The Court agreed to hear cases on the constitutionality of partisan gerrymandering and religious-based refusal to serve gay people.[4]  The dismantling of the “legacy” of President Obama continued.  The Environmental Protection Agency proposed repeal of a 2015 rule that claimed for the federal government the right to regulate water quality in the tributaries and wetlands surrounding major bodies of water like the Chesapeake Bay.[5]

Even so, people filled up the early summer with nonsense.  President Trump admitted that he had no tapes of his conversations with James Comey.  CNN admitted that it had published an unsubstantiated story about President Trump’s alleged Russian contacts.    Some Democrats bit at House minority leader Nancy Pelosi after the series of disappointing losses in Congressional special elections.[6]  Others urged staying the course that has brought the Democrats so much success of late.

[1] Many younger people just ignore the mandate.  That’s why the insurance companies haven’t been able to get a sustainable mix of poor, but healthy younger people to subsidize the health costs of wealthier, but sick, older people.  Massive losses have led insurers to pull out of a rising number of state insurance market places.

[2] Anyone who went without insurance for 63 days would not be eligible to buy insurance for six months.

[3] “Republicans divided over Senate health-care bill,” The Week, 7/14 July 2017, p. 4.

[4] “Supreme Court revives Trump’s travel ban”; “The U.S. at a glance…”; “Gerrymandering: A GOP advantage?” The Week, 7/14 July 2017, pp. 5, 7, 16.

[5] “Boring but important,” The Week, 7/14 July 2017, p. 6.

[6] The Week, 7/14 July 2017, pp. 6, 7, 17.

My Weekly Reader 29 June 2017.

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A pessimist’s analysis of the American position in the world might run something like the following.  The United States is the world’s only global power.  (As such, it performs many of the vital military, political, and economic functions of a world government.)  It faces a host of regional powers bent on disrupting the global order created through American leadership after the Second World War.  Iraq, Afghanistan, Libya, and radical Islamist jihad all offer examples of the failure of military power as a solution to challenges.[1]  Moreover, the foundations of American power have been cracked by changes in America’s society and economy.  Liberal internationalist elites ignored the human costs of their policies until they inspired a backlash under the last three presidential administrations.  Domestic politics have come to center on divisive identity politics and the expansion of entitlements (including the entitlement to not be taxed) beyond what the traditional economy can support.  In light of these grim facts, America should shift from “hard” (lawyers, guns, and money) power to “soft” power (diplomacy, humanitarianism); America should seek to lead from behind by encouraging allies to assume their responsibilities; and America should do its nation building at home.

Eliot A. Cohen takes sharp issue with this point of view.[2]  “The chances are growing that the United States will find itself using military power chronically and at varying levels of intensity, throughout the early decades of the 21st century.”  Even over the short-run, the United States faces complex challenges: China’s rise as an economic and military power in a key region for American interests; an aggrieved Russia trying to punch above its weigh while it still can; and a transnational radical Islam that will continue to inspire local insurgencies.  These quarrels may have to be resolved in places as different as the high seas, the anarchic peripheries around or between failing states, and even outer space.  So far as he’s concerned, micro-lending isn’t going to cut it.  “Hard” power will have to be at least part of the response.

Cohen is equally persuasive, alarming, and rough-edged in the rest of the book.  Asking whether America possesses the means to use force where needed, Cohen answers with a qualified “Yes.”  His deepest concern lies in the nature and quality of thinking about the use of the instruments of power, rather than about the quality and quantity of those instruments.  One danger springs from what he sees as the capture of strategic thinking by process-oriented bureaucrats.  Plans, working papers, studies, and a deep dive into minutiae introduce rigidity and myopia into thinking about the long-term strategic environment.  In short, dopes have a large voice in the use of military power.  Another concern arises from our public discourse on these issues.  The United States, says Cohen, needs to do some serious thinking and debating on its relationship to the outside world and on how and when to use military force.  Not only must Americans recognize the need for force, they will have to accept that the country is in for a series of long wars with no easy resolution, let alone parades.  In the White House, in Congress, and in the Pentagon, decision-makers are too much concerned to define the “end state” of any military action.  Get in, wreck stuff, get out defined the 1991 and 2003 wars with Iraq.  Neither resolved the basic problem.  Here Cohen could profit from a review of the post-WWII experience.[3]

Left largely unaddressed is the problem of paying for all this power.  It seems presumptuous to believe that Americans will prefer national security to Social Security.

[1] Hence, the Obama administration recognized that the American people opposed any new war in the Middle East.  From this perspective, a deal to slow down Iran’s acquisition of nuclear weapons made a lot of sense.

[2] Eliot A. Cohen, The Big Stick: The Limits of Soft Power and the Necessity of Military Force (2016).

[3] See: https://waroftheworldblog.com/2017/06/29/soldiers-become-governors/

Soldiers Become Governors.

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Modern war is about destroying the enemy’s army and seizing control of his territory.  Even when it can be achieved, victory still brings problems.  If Army officers wanted to be civilian bureaucrats they wouldn’t have gone into the military.  Yet civilian bureaucrats lack the means to effectively govern conquered territory.  Both civilians and soldiers agree to ignore this reality in what one scholar labels the “denial syndrome.”  Unfortunately, scholars have a lot of evidence with which to work in sorting out good practice from bad.[1]  People can’t help but compare the successful occupations of Germany and Japan after the Second World War with the disastrous aftermath of the 2003 invasion of Iraq.  What went right with the earlier occupations?  What went wrong with the later occupation?

After victory in the Second World War, the American military occupied huge territories of the defeated enemies.  Those countries acknowledged that they were beaten and that the war was ended.  The military had created immense global logistical systems that enabled it to move supplies to the conquered areas.  It had very large military forces available to support and enforce American military government.  The desire to avoid any renewed military danger from Germany or Japan inclined Generals Lucius Clay (Germany) and Douglas MacArthur (Japan) to sort out the conquered people, not just to punish them.  The suddenly developing Cold War with the Soviet Union motivated Americans (and the Germans especially) to not want a break-down of civil affairs.

Very different conditions prevailed in Iraq.  The war plan assigned far too few soldiers to occupation duty, then American forces were further drawn down.  Very quickly, the George W. Bush administration transferred authority in Iraq to what proved to be an inadequate Civilian Provisional Authority.  Iraqis did not acknowledge that they were beaten and that war had ended.  Instead, Sunni-Shi’ite-Kurdish conflicts broke out into the open.  Shi’ites looked to neighboring Iran for support, while Iran sought to undermine the American and Sunni positions.  While Germans had feared the Soviet Union, many Sunni embraced the insurgency that quickly became associated with the radical Islamists of Al Qaeda.

One—depressing—“lesson of History” might be that people fail to learn from History.  The George W. Bush administration failed to study the “good occupations” of Germany and Japan.  The Obama administration continued the same chaotic occupation policies launched by the Bush administration.  One reason for this failure may lie in the clash between any “lessons” History teaches and what people want to believe.  Lost in the adulation of the occupations of Germany and Japan is the reality that Americans raised in an environment of inter-war isolationism were only constrained to embark on internationalism by harsh necessity.

Also lost in recent accounts is the reality that Rome wasn’t built in a day.  By focusing tightly on the brief periods of military administration, then jumping ahead to the long-term outcomes, it is easy to attribute change to military government.  This analysis falls short of a real explanation.  On the one hand, civilian governments by the defeated peoples took decades to create democratic political cultures.  They wanted to avoid repeating the errors of the past.  On the other hand, Germany became a democracy because the victors in the Second World War partitioned the country, then parked 20,000 tanks on top of the place for almost half a century.

[1] Susan L. Carruthers, The Good Occupation: American Soldiers and the Hazards of Peace (2016); Nadia Schadlow, War and the Art of Governance: Consolidating Combat Success into Political Victory (2017).  In a typically American solipsism, the authors ignore the contemporaneous British experience with the government of conquered territories.

Memoirs of the Addams Administration 25.

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There have been four special Congressional elections since the general election of November 2016 put Donald Trump into the White House.  Democrats have fought hard to win these newly-opened seats, casting the votes as a referendum on the reality show of a Trump presidency.  To the alarm of Democrats, Republicans have won all four.[1]  In Georgia’s Sixth District the Democrats appeared to have a reasonable shot.[2]  Although the district had long given the Republican candidate 20-plus percent majorities, Trump had beaten Hillary Clinton there by only 1.5 percent and the Democratic candidate, Jon Ossoff, had almost reached the 50 percent mark in an April 2017 election amidst a crowded Democratic field.  In the run-off election between Ossoff and Republican Karen Handel, the Democrat claimed to be a centrist, while Handel portrayed herself as a mainstream Republican (rather than as a Trumpite).  Immense amounts of money ($55 million) from both sides passed through the campaigns and into the hands of local television stations and Washington consultants.  In the end, Handel triumphed by 52 to 48 percent of the vote.  That is, she did better than had Donald Trump.  Conservatives have commented that Ossoff’s “centrism” was bogus: he supports all the standard Democratic orthodoxies that have sent Southern Democrats streaming into the Republican party for decades: gun control, secular sharia, abortion-on-demand, and extensive regulation of the economy.[3]

According to Democrats, Donald Trump is in deep trouble with the law.  They point to the retention of private lawyers by Mike Pence, Jeff Sessions, and Jared Kushner as proof that the allegations of collusion made by Democrats “could be a big deal.”  However, Trump “believes that he’s the victim of a Democratic conspiracy to oust him from the White House.[4]  OK, now it’s out in the open.  Thing is, he’s probably correct.  When Green Party candidate Jill Stein challenged the vote count in a number of critical states, alleging un-specified “irregularities” and “Russian interference” with the vote count, money from aggrieved Clinton supporters poured in.  Trump foolishly[5] challenged the reports of the intelligence services on Russian hacking.  They responded with sun-burned “amour propre” by leaking secret information to embarrass the president.[6]  So far, there exists no actual evidence of collusion between the Trump campaign and the Russians.  Not even “circumstantial evidence.”  If there was no collusion, then it will be a stretch for prosecutors to prove that Trump “obstructed justice” rather than just tried to get James Comey to act the way a decent human being outside the Beltway might do.  Most of the quoted criticism comes from the New York Times, the New Yorker, and New York Magazine.  Partly, this reflects the collapse of print journalism in the rest of the United States.  Fewer points of view are represented.  Partly, it reflects the bifurcation of the United States into bi-coastal Democratic islands and “heartland” Republicans.  All the same, for a long time lots of Republicans believed that President Richard Nixon could not have broken the law.[7]  We live in an ugly political season.

[1] This includes a Montana race where the Republican won despite (because of?) body-slamming a reporter.

[2] “GOP holds seat in high-stakes Georgia election,” The Week, 30 June 2017, p. 5.

[3] As many scholars have demonstrated, race wasn’t the issue that caused Democratic decline in the South.

[4] “Trump goes on attack against special counsel,” The Week, 30 June 2017, p. 4.

[5] Being a fool is no legal bar to running in or winning a presidential election.  Look at Ted Kennedy or Jimmy Carter or George W. Bush or Mitt Romney.

[6] Good luck with that.  Embarrassing the president I mean.  Still, it is difficult to understand the American intelligence community’s leaks of information about the Manchester, Britain, bombing while President Trump was en route to meet with Prime Minister Theresa May as anything other than a jab at the president.

[7] That is, I may yet have to eat this line of reasoning.

To Europe by land and sea.

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Lots of people in Sub-Saharan Africa want to go to Europe.  As of late June 2017, 72,000 immigrants have completed the journey this year.  For the most part, they are fleeing poverty above all else.  Population growth dramatically exceeds economic growth in these countries.[1]  The poverty is particularly serious in rural areas.  “We have no machinery to cultivate the land [and] no rain,” one person told a New York Times reporter.[2]  However, “fleeing poverty” has a larger meaning here.  In the absence of any social security system or local pathway to an adequate income, sons are expected to support their parents.  Often this means leaving home in search of work elsewhere.  Many are pulled to the capital city of Dakar, where there is more opportunity and lower poverty levels.  Other go to Gabon or Congo to work in mines.

Best of all is to reach Europe.  Sons who have made it to Europe and found work send home part of their earnings.  Even a share of the meager earnings of those working in Europe pay for “luxuries” in West Africa: concrete block houses instead of mud huts; iPhones and satellite dishes (and the electricity to power them); sometimes a car instead of a bicycle.[3]  Parents or spouses often encourage men with small future prospects to migrate in search of work.

For those living in West Africa, the route generally takes them east along Route 5 of the Trans-Africa Highway system.[4]  That route passes from Dakar (Senegal) through Bamako (Mali), Ouagadougou (Burkina Faso), Niamey (Niger), and Kano (Nigeria), to N’Djamene (Chad).  In its longest extent, this is a journey of about 2,700 miles.  That’s like driving from Philadelphia, Pennsylvania to Reno, Nevada.  Without the Rockies, but also without much in the way of paved roads.  From there they join Highway 3 as it runs north across the Sahara to Tripoli (Libya).  From Tripoli and other Libyan ports, they “take ship” for Italy.

Almost every leg of the journey is dangerous.  Human traffickers organize much of the migration in order to prey upon the migrants.  Travelers can find themselves extorted for further payments or abandoned en route.  Africa’s transportation infrastructure is in poor condition.  It’s one thing if you’re a rich Westerner (but I repeat myself).  Airlines connect European capitals with important cities endowed with comfortable hotels.  For ordinary people, travel is more difficult.  Some roads are unpaved dirt tracks.  Many paved roads haven’t been maintained for a long time.  The few railroads mostly haul freight, with infrequent or no passenger service.  There aren’t enough vehicles of any kind, so overloading is common-place.  So are vehicle break-downs.  The vast distances pose another challenge.

The sea passage is worst of all.  Most of the deaths come in the crossing from Libya to Italy.  Vessels starting the sea-crossing are over-loaded, under-powered, and badly crewed/captained.  In the first half of 2017, an estimated 2,100 migrants have drowned in ship-wrecks on the Mediterranean.  In April 2015, one terrible disaster killed more than 800 migrants.

Yet people—those who go and those who urge them to go—rarely understand the dangers involved.  “We only heard success stories” said the mother of two sons drowned at sea.  Death lists are sometimes published in Europe, then reported by those who made it to relatives at home.  Yet still the migrants come.

[1] According to the World Bank, almost half (47 percent) of Senegalese live in poverty.

[2] Dionne Searcy and Jaime Yaya Barry, “Leaving Home, One by One, Along “Deadliest Route” to Europe,” NYT, 23 June 2017.

[3] But not more farmland or tractors?  Well, perhaps.  Some of the emigrants sell their land to raise the money for the trip.  So, someone is buying.

[4] See: https://en.wikipedia.org/wiki/Trans-African_Highway_network

Medicaid 2.

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The Republicans are willing to try to address the “entitlement tidal wave” headed toward the economy.[1]  Naturally, their first effort targets the low-hanging fruit of the poorest Americans.  Who don’t usually vote Republican.

Their first target is Medicaid.  Medicaid works as a partnership between the federal government and state governments.  Medicaid pays whatever bills are presented by care-providers.  The Republican American Health Care Act (AHCA), the intended successor to the Affordable Care Act (ACA) intends to cut the federal contribution to Medicaid.  Non-partisan experts agree that the intent of the plan is to cut federal spending on Medicaid over the long term.  States would not, in all likelihood, make up most of the cuts to federal spending by increasing state spending and—to pay for it—state taxation.

Critics of the current operation of Medicaid point out that a willingness to pay any bill that is submitted just entrenches an inefficient current system.

The much admired Congressional Budget Office (CBO) estimates that the Republican plan would cut Medicaid spending by $80 billion a year for a decade.

To return to a previous post, those with disabilities, poor mothers, and about two-thirds of those in nursing homes have their costs paid by Medicaid.  This was Medicaid before the ACA expansion of coverage.  That expansion of coverage added many poorer Americans beyond these core categories.

Reportedly, the Republican bill (AHCA) will cap payments to each person covered by Medicaid, with a controlled rise in payments over time.  However, there is no guarantee that states will make up the difference if health care costs rise faster than the Republican projection.

Critics point out that necessary medical spending varies over the years, rather than sticking to the Republican projection.  If Zika reaches the United States (never mind Ebola), then spending could spike well above the projections.

At the center of the dispute is the question of who will pay if Medicaid spending is capped or reduced.  Will spending caps force doctors to cut their rates?[2]  That is the Republican bet, just as they blame rising college costs on the growth of financial aid.  Or will spending caps lead doctors and hospitals and insurance companies to dump their least profitable patients?  One factor missed in this crude debate is that the first to be cut will be the able-bodied workers added to the Medicaid rolls by the ACA.   If that happens it may never come to cutting nursing home funding.

Again, the press provides too little information to evaluate the program on its merits.  It seems absurd that the United States is the only advanced industrial country that allows the greed of doctors to dictate medical costs.  That seems to me a “social wrong.”  It seems absurd that ne’er-do-wells should send in their medical bills to the tax-payers.  Again, a “social wrong.”  On the other hand, it seems absurd that the United States is the only advanced industrial country without universal health care.  Such access seems to me a “social right.”

To think about these issues is to confront a basic question.  What role should the state play in providing medical care to the poorest Americans?  What role should be assigned to self-reliance?

[1] Margot Sanger-Katz, “How G.O.P. Health Plan Is Really a Rollback of Medicaid,” NYT, 22 June 2017.

[2] Apparently, American doctors make 50 percent more than their comparably-skilled Western European or Japanese confreres.  Did I ever tell you about my son’s urologist whose computer screen background was a picture of a 40 foot sailboat with the text “Sail the boat”?

Medicaid.

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In 1965, fresh off a Democratic thrashing of the Republicans in the 1964 elections, President Lyndon B. Johnson had the means to push through his effort to “complete” the New Deal.[1]  This included legislation to provide government-funded medical care to four groups of the “deserving poor”: children, pregnant mothers, the disabled, and geezers who needed long-term care.  So it went from 1965 to 2014, as the one-time “war on poverty” failed to end poverty in a growing population.  By 2014, 57 million Americans were covered.  Still, at that point, one in seven Americans (14.3 percent) had no health insurance.  Then the Affordable Care Act (ACA) of 2010 kicked in, “allowing” states to use Medicaid to pay for the expenses of all able-bodied adults who earned less than 138 percent of the government’s poverty level.  This added 17 million people (about 30 percent of the 2014 total) to the Medicaid rolls. By 2016 the share of Americans without medical insurance had fallen to one in twelve (8.6 percent).  However, the cost of those covered by Medicaid ran to $574 billion a year.[2]

As part of the “repeal and replace” ACA effort, House Republican proposed to reverse the ACA’s expansion of Medicaid by 2020.  That is, they sought to return Medicaid to its original mission.  This would involve dropping 14 million people—those able-bodied people added by the expanded Medicaid of the ACA.  There also is talk of imposing a work requirement on able-bodied recipients of Medicaid.

Another part of the plan is tax cuts.  The ACA imposed $875 billion in new taxes, mostly on high income earners.  The Republicans want to roll back those tax increases.

Another part of the Republican plan would reduce the future growth in Medicaid spending by $834 billion over ten years.  The federal government would provide states with fixed amounts of money, rather than just paying whatever bills come in.  This proposal tries to address an important demographic and financial problem.  Medicaid pays for home health aides and for nursing home care for those who have exhausted their own savings.  A recent report by the World Economic Forum pointed out that the United States has the biggest gap between actual retirement savings and projected needed savings.[3]  U.S. government projections suggest that 70 percent of people will need long-term care.  The vast majority of these will need a home health-care aide, while 18 percent will need nursing home care.  Given the retirement savings gap, a huge financial cost will fall on the Medicaid system.  The Republican plan tries to address that issue.  It may not do that well, but one is surprised to see it done at all.

It is possible to see two distinct moral perspectives in the struggle over Medicaid.  Medicaid is but one front in a fight that involves Medicare, Social Security, defense, education, and taxes.  Broadly, they all touch on different conceptions of social reform and the best society.

Democrats would argue that the national government has a moral duty to its citizens.  It must break down the barriers to individual success.  Where those barriers can’t or can’t yet be destroyed, then the winners from current systems need to compensate the losers.

Republican would argue that such government action corrodes individual responsibility and creates dependency.  It harms the very people it seeks to help.  Government has a moral duty to create the conditions for individual success by fostering a dynamic economy.

It’s wishy-washy to say so, but both could be true.

[1] Julian Zelizer, The Fierce Urgency of Now: Lyndon Johnson, Congress, and the Battle for the Great Society (2015).  Really good book.

[2] “The battle over Medicaid,” The Week, 23 June 2017, p. 11.

[3] See: https://waroftheworldblog.com/2017/06/20/memoirs-of-the-addams-administration-24/

Memoirs of the Addams Administration 24.

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Republicans struggled forward with the effort to make the Obama administration go away.  In 2010, the Democrats passed the so-called Dodd-Frank Act.  That legislation led to the imposition of about 28,000 new regulations on banks and credit unions, greatly increasing compliance costs.  As a result, many small institutions have been absorbed into larger institutions with deeper pockets.  The Dodd-Frank Bill created an Orderly Liquidation Authority for banks that do fail.  It created a Consumer Financial Protection Bureau.[1]  All of these were wildly unpopular with Republicans.  House Republicans passed the Financial Choice Act.   It exempts banks from many of the Dodd-Frank restriction in return for a requirement that they maintain large cash reserves.  The bill now goes to the Senate.  There it is likely to be subjected to a substantial re-write.[2]  Meanwhile, Republican senators have been trying to create a less-horrible version of the American Health Care Act (ACHA) previously passed by Republican representatives.[3]  The Senate plan postpones cuts to Medicaid for seven years[4] and maintains—at a lower level—the subsidies to low-income earners.[5]

Elsewhere, the World Economic Forum[6] (the folks who bring you Davos) reported that many Western countries—but the United States most of all—are suffering from a huge gap between the savings needed for retirement and actual savings for retirement.[7]  The American gap amounted to $28 trillion in 2015 and is projected to reach $137 trillion in 2050.  Cat food-salad sandwiches and living in an ElderCommune being unlikely to appeal as the “golden years,” one might anticipate a fight among Baby Boomers as the lower 80 percent seek to draw on the savings of the upper 20 percent.[8]

All of these were important developments for good or ill.  However, Americans seem to have focused more tightly on the controversies surrounding President Donald Trump.  To begin with, former FBI director James Comey told the Senate Intelligence Committee (which has been investigating possible collusion between the Russians and the Trump campaign) that the president made him uncomfortable in several private conversations, that he had made detailed notes of these conversations, and that he had arranged for these notes to be leaked to the press after his dismissal in hopes to triggering the appointment of a special prosecutor to investigate the man who had fired him.  Next came Attorney General Jeff Sessions and his porous memory.  Sessions told generally hostile former colleagues that he fired Comey for reasons unrelated to the FBI’s investigation of the “collusion” investigation.[9]   To round-out the week in suitable fashion, New York City’s “Shakespeare in the Park” series ran a version of “Julius Caesar” with a Trump look-alike in the title role.  Back in 2013 a square-state theater company used “Caesar” to imagine Barack Obama slain by right-wingers.  Now a right-winger is portrayed as meeting his death at the hands of women and minorities.[10]

[1] Just for fun, let’s imagine a Consumer Information Protection Bureau with its own “fiduciary  rule” requiring newspapers and other print media and television networks to “act in the best interests of their clients.”

[2] “Issue of the week: Dodd-Frank under fire,” The Week, 23 June 2017, p. 34.

[3] “Trumpcare: The GOPs secret plan,” The Week, 23 June 2017, p. 17.

[4] Actually, this is pretty clever.  Seven years from 2017 would be 2024.  Given the way that the parties alternate in the White House, a Democrat would be walking in the front door just as the Medicaid cuts took effect.

[5] One federal court has held that those subsidies are illegal because the original Affordable Care Act (ACA) made no provision for appropriating the money to pay for the subsidies.  The Obama administration appealed this decision.  The case has not yet reached the Supreme Court.  When/if it does, that will be the end of all subsidies and the whole system of “mandated” insurance for poor people who don’t have employer-supplied medical insurance will collapse in a heart-beat.   Republicans hope to use this as leverage.  Democrats have been blaming the “uncertainty” caused by the Republican repeal-and-replace effort among insurers for the collapse of the health-care market-places.

[6] See: https://en.wikipedia.org/wiki/World_Economic_Forum

[7] “Retirement: Will Boomers work forever?” The Week, 23 June 2017, p. 32.

[8] See Richard Reeves “America’s hidden class system,” The Week, 23 June 2017, p. 12.

[9] “Comey: did he damage Trump?” The Week, 23 June 2017, p. 6; “Sessions denies collusion as Trump eyes Mueller,” The Week, 23 June 2017, p. 4.

[10] “Julius Caesar: Assassinating Trump on stage,” The Week, 23 June 2017, p. 17.