Memoirs of the Addams Administration 31.

After the latest (but perhaps not last) attempt to “repeal and replace” the Affordable Care Act (ACA), some Republicans have fallen back.  Lamar Alexander suggested that a bipartisan effort to “stabilize and strengthen” the ACA.[1]  Will President Trump accommodate himself to this inconvenient truth?  The president could scuttle the ACA’s healthcare market places by refusing to authorize the payment of the subsidies that enable “Cost Sharing Reductions” in premiums.  Under the Obama administration a federal judge held that payment of the subsidies without a Congressional appropriation is illegal.  The case awaits final resolution in the Supreme Court, but the Trump administration has continued to make the payments in the meantime.  Halting the payments would lead to an estimated 19 percent jump in premiums nation-wide.  Does Donald Trump want to shove millions of Americans off medical insurance?

Six months into his administration, President Trump has begun to encounter resistance from fellow Republicans.[2]  They are eager to embrace a strong line against Russia, they can’t do anything to bring a resolution to the “collusion” story, and they’re angry about his verbal assault on Attorney General Jeff Sessions (so recently one of their own).  If Republicans break from the president, he will have little choice but to abandon a legislative agenda in far of issuing a blizzard of executive orders and vetoing Republican legislation out of spite.  Those will be contested in the courts.  On the other hand, if Republicans break from the president, they will have little chance of advancing their own legislative agenda unless they can unite with Democrats to over-ride a presidential veto.  Of course, cooler heads may prevail.

Playing to his base, the president announced that transgender troops would be barred from further service in the military, and the Justice Department launched an investigation of affirmative action admissions policies by universities.[3]  There may be legitimate reasons for limiting transgender troops in the military.  It isn’t clear that the president knows any of them.  Rather, he seems to have been over-responding to pressure from Christian conservative Republicans.  In any event, the Pentagon said that a tweet is not the same thing as a formal order, that there is a formal review of transgender service people under way; and that all troops will continue to be treated with respect.  In terms of affirmative action, there is a sense in some quarters that it has been turned into a system of “set asides” for African-Americans and, to some extent, for Hispanic-Americans.  Given the over-supply of colleges, it doesn’t have much effect.

Under these adverse conditions, a steadier hand in the White House became vital.  President Trump’s churning of his White House staff reached a new stage.[4]   Chief of Staff Reince Priebus and Press Secretary Sean Spicer left, while Anthony Scaramucci became director of communications.  Then Secretary of Homeland Security John Kelly took over as chief of staff.  Next thing you know, Scaramucci got booted out of the White House.  Kelly, a retired Marine Corps general often portrayed in the media as a Drill Instructor screaming orders up the noses of staffers, tried to impose some order.  (No such option appears available to the Congressional Republicans.)  One key task for Kelly will be dealing with leaks from the sieve-like White House.  It will fall to the Justice Department to stanch the leaks from the Trump Resistance within the federal bureaucracy.  Editorials and columnists generally agreed that a far more challenging task lay in the need to wrangle an undisciplined president.

[1] “Health care: What happens now?” The Week, 11 August 2017, p. 6.

[2] “The GOP: Rebelling against Trump,” The Week, 11 August 2017, p. 16.

[3] “Justice Department to target affirmative action,” The Week, 11 August 2017, p. 6.

[4] “Embattled Trump turns to Kelly,” The Week, 11 August 2017, p. 4.

Memoirs of the Addams Administration 30.

“The great thing about hitting yourself in the head with a hammer is that it feels so good when you stop.”  Recently, almost two-thirds (64 percent) of Americans desired the preservation of the Affordable Care Act (ACA) as it currently exists or with reforms of “problem areas.”[1]   Are there “problem areas”?  Yes.  Here are a couple of examples.  First, there are many people who are caught in a tight spot by earning too much to qualify for subsidies, but too little to be able to afford health insurance.  Second, only a few insurance companies had any experience at providing/pricing health insurance to poor people.  The Obama administration lured many other health insurers into participating in the healthcare market places by promising that all sorts of healthy rubes would pay premiums without needing much care.  Then, the Obama administration failed to enforce the “mandate.”  Many people did not even bother to get health insurance.[2]  The lack of young, healthy fools ready to be gouged for the benefit of older, wealthier people lies at the root of the instability in healthcare market places.  Third, the survival of the system depends upon continuing subsidies from appropriations passed by Congress.  The Republicans have declined to pass such appropriations and a federal court has held that spending without an appropriation is unconstitutional.  This case has not yet been heard by the Supreme Court.  When the Court does hear the case, it seems likely to support the initial decision.

Then, there are all the bad-press issues.  President Barack Obama said that “If you like your insurance, you can keep it” (or words to that effect).  Then the government cancelled a lot of insurance policies as “garbage policies” when the policy-holders really liked those policies.  The “roll-out” of the healthcare.gov web-site was a humiliating mess.  The Supreme Court held that the extension of Medicaid could not be forced on states that didn’t wish to participate by the threat to withhold other Medicaid funding.[3]  Naturally, these colossal screw-ups colored the perception of the ACA for a time.  Now, however, with the ACA an established—if imperfect—reality,[4] Republicans might do well to concentrate on remediation.

Such remediation might consist of getting rid of the ACA mandate on what must be covered; getting rid of the “mandate” that everyone must be covered; allowing/encouraging a few experienced companies to provide insurance for previously uninsured Americans[5]; expanding the range of those people eligible for subsidies; appropriating the moneys needed to make the system work; and not trying to coerce states that don’t want to expand Medicaid.

This will not be easy for Republican law-makers to do.  It abandons ideas of personal responsibility, to which many Republican voters are committed.  It expands spending, when we are already neck-deep in red-ink.  On the other hand, it will not be easy for Democrat law-makers to do.  It abandons the idea of “equal access” to health care and it abandons another federal suppression of state autonomy.

Then we can argue about how to close the budget deficit.  Anthoer difficult task.

[1] “Poll Watch,” The Week, 11 August 2017, p. 17.

[2] About 15 million people did get health insurance solely out of fear of the Internal Revenue Service (IRS).  These 15 million resent having to buy something they don’t need and constitute the core of those people who would “lose” this insurance under various Republican plans.

[3] This class-based program of medical insurance covers many Trump voters as well as the voters whom the Trump voters despise for other reasons.

[4] Like Social Security, Medicare, and the Espionage Act of 1918.

[5] Yes, I understand that this will create a two-tier medical care system.  “What are you, fresh offa da boat?  Expect that the streets are paved with gold?  ‘Merica is hard place to live.  Still, is better than the Old Country. “  NB: Imagined monologue, not a quote from the text.

Memoirs of the Addams Administration 29.

Unable to leave well enough alone, the Republican Senate leaders made yet another attempt to “repeal and replace” the Affordable Care Act.[1]  Without having any commonly-agreed plan, they managed to get a formal debate started.  First, the Senate voted down a broad plan to repeal and replace.  Then it voted down a plan to repeal and give Congress two year to replace it with something else.  Then it voted down a “skinny repeal” that just got rid of the mandate.[2]  Despite its flaws, the Affordable Care Act (ACA) helps—as well as vexes—many lower income Americans of both parties.  Opinion polls since the election have tended to show broad support for preservation of universal health insurance.  With a narrow 52-48 majority in the Senate, the Republican leadership cannot force through any legislation that would alienate more than two Republican senators.  Lisa Murkowski (Alaska) and Susan Collins (Maine) come from states that may have a substantial number of people who want to vote Republican, but who also live in marginal economic circumstances.  Their opposition alone isn’t enough to block “repeal and replace”: Vice President Pence can cast the tie breaker.  However, one more Republican dissident—like John McCain—and the measure loses.  In either case, Murkowski and Collins get covered for the next election for having done the right thing.  So, the question becomes: how to fix the problems with the ACA, rather than trying to roll it back?

Donald Trump campaigned against the North American Free Trade Agreement (NAFTA), calling it “the worst trade deal maybe ever signed anywhere.”  Once elected, he insisted on a renegotiation of the agreement.  This immediately became engulfed in the hysteria following Trump’s surprise election.  It also drew heat from Trump’s highly public spat with the president of Mexico.  Nevertheless, Mexico and Canada agreed to engage in a re-negotiation of NAFTA.  The negotiations are scheduled to begin on 16 August 2017.  Now the government has released a statement of its objectives for the negotiations.  Contrary to the worst fears of the immediate post-election Trump hysterics, the American objectives are solidly “mainstream ideas for furthering trade liberalization.”[3]  Generally speaking, NAFTA trade benefits the American economy even though it is often seen as the source of job-loss.  Reality proved more compelling than rhetoric.  Perhaps Trump and the Senate leadership should let Commerce Secretary Wilbur Ross (who oversees the NAFTA negotiations) run health-care reform?

Six months into his first term, President Trump began a major churning of his staff.  Sean Spicer had the reputation for being a decent guy.  Then he took the job as White House Press Secretary.  Six months of humiliating Hell followed.  Then, President Trump concluded that his image problems sprang from poor representation.  He hired Anthony Scaramucci as communications director.[4]  Spicer promptly resigned.[5]  Chief of Staff Reince Priebus, Trump’s direct connection to mainstream Republicans, then got the heave.

Donald Trump governing as a non-party mediator still has—theoretical—potential.

[1] “Senate Republicans grapple with Obamacare repeal,” The Week, 4 August 2017, p. 7.

[2] The Congressional Budget Office (CBO) estimated that ending the mandate would leave 15 million more people without insurance.  This can be taken as an official measure of the number of people who buy insurance under duress.  It can be added to whatever number just don’t buy it regardless of the mandate to get a total number of people who are opposed to the mandate.  On the other hand, it can be subtracted from the numbers of those estimated by the CBO to be left without insurance issued on other versions of “repeal and replace.”

[3] “Issue of the week: A softer U.S. line on NAFTA,” The Week, 4 August 2017, p. 42.

[4] Scaramucci deleted Twitter posts in favor of gun control, action on climate change,, legal abortions, and ending use of the death penalty.  “Noted,” The Week, 4 August 2017, p. 18.

[5] “White House: Spicer’s out, “The Mooch” is in,” The Week, 4 August 2017, p. 18.

Medicaid Essentials.

There is a good argument that the “welfare state” has been created out of changing social needs.  In 1965, as part of his “Great Society” effort to “complete” Franklin D. Roosevelt’s New Deal, President Lyndon B. Johnson signed the law creating Medicaid.  The law extended medical insurance to the “deserving poor”: children, pregnant women, the disabled, and geezers unable to afford long-term care.[1]  By 2013, 57 million people were covered by Medicaid.[2]

In 2014, the Affordable Care Act (ACA) allowed states to extend Medicaid coverage to all those who earned 138 percent of the federal poverty level or less.  Some 31 states expanded Medicaid.  This added 17 million people to the Medicaid rolls.  Even though 19 states did not expand Medicaid, the total cost of the program rose to $574 billion in 2016.

Did the expansion of Medicaid improve health outcomes?  One might suppose that it would take a while to tell.  All the same, Harvard rushed out a study that that found a 6 percent drop in mortality among poor populations in states that expanded Medicaid after 2014.[3]  A Kaiser Family Foundation study found that there isn’t much difference between private insurance and Medicaid—except that Medicaid recipients are just as likely to get care that they wouldn’t have received otherwise.

The aging of the American population poses a huge challenge to Medicaid.  The chief problem is “long-term care”: home health aides and nursing home care.  Medicaid provides for such “long-term care.”[4]  Anyone who exhausts their savings paying for home health-care or a nursing home qualifies for Medicaid.  Better than 60 percent of people—mostly women because women tend to outlive men—in nursing homes are covered by Medicaid.  This amounts to 21 percent of total Medicaid spending and the share is only likely to grow.  About 18 percent of “Baby Boomers” will need nursing home care.  Most of them don’t have the resources to pay for it, so they will become public charges as they/we have been public charges throughout life.

Republicans wanted (and still want) to scale back spending on Medicaid.[5]  In particular, they want to roll-back the Obama administration’s extension of Medicaid to the “working poor” while leaving in place health coverage for the “deserving poor.”  In contrast, the vast majority (70 percent) of Americans favor maintaining Medicaid spending at its current level.

In the near term, there isn’t any real prospect of cutting entitlement spending.  It is a different question to ask if America can afford such spending.  The ACA loaded $875 billion in new taxes on upper income earners.  This seems to be the real source of funding for the ACA, rather than the revenues derived from “mandatory” insurance participation.[6]  The Republican “repeal and replace” plan would roll-back these taxes.  The House version would have cut spending by $834 billion.  Grimy though it may be, this turns into a debate over spending on an “undeserving” past versus spending on an uncertain future.  Boomers should have saved more.

[1] On the distinction between the “deserving” and Undeserving” poor, see http://www.herinst.org/BusinessManagedDemocracy/culture/work/deserving.html  It doesn’t matter if this is a nonsensical distinction.  In contemporary Democratic party ideology, ALL poor people are the “deserving poor,” as re many members of the middle class.  However, Republicans hold the White House, both houses of Congress, and the Supreme Court.  For that matter, it is clear that many conservative Democrats hold to the same beliefs.

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

[3] Not to be callous, but over two years, the death rate declined by 6 percent and this is the result of extending Medicaid?  Is this reduced or merely postponed mortality or just a short-term deviation?

[4] Fat black ladies from the Caribbean, mon, sticking tubes in you and wiping your ass.

[5] People on Medicaid usually don’t vote Republican.  If the “reform” passes, they never will.

[6] My sons received forms for the last two years in which they were supposed to certify that they had health insurance.  However, they were not required to submit those forms with their tax returns.  That is the “mandate.”

Memoirs of the Addams Administration 27.

The third attempt to “repeal and replace” the Affordable Care Act (ACA) has already died.  Last week, however, it seemed like it might work.  Senate Majority leader Mitch McConnell tried adding inducements to win back “moderate” Republican senators.  Senator Ted Cruz added a proposal to require insurance companies to sell one full “Obamacare” policy in return for the freedom to offer more stripped-down policies as well.[1]  As is now known, McConnell’s effort to pull in votes from the two wings of the Republican party failed.

It is worth noticing several points that were not well articulated in the commentary.  First, critics claimed that the Cruz proposal would trigger a flight from the ACA standard policies on the part of younger, healthier (and often lower income) people.  That is, the ACA created not just an “entitlement” for some, but an irksome burden for many others.  Second, late in the Obama administration, a federal court held that the money for the insurance subsidies does not come from any Congressional appropriation.  Hence spending that money is illegal.  The Trump administration has not stopped paying the subsidies or hurried the case to the Supreme Court.  It seems likely that this Court would affirm the lower court.  In that case, the subsidies would stop and the market places would encounter some turbulence.  Third, the Republican party alone did not put Donald Trump into the White House.  Many traditionally Democratic voters switched side to vote for him.  Letting Mitch McConnell and other mainstream Republican decide the form of a new health-care law works against the interests of Trump’s own base.  He might do better to actually try to lead in conjunction with the Republican “moderates” and whatever Democrats he can pry loose.

The latter may not be so far-fetched as it sounds.[2]  First, Democrats have been debating whether the embrace of Bernie Sanders by many Democrats amounted to a sugar high.[3]  After the triumph of marriage equality,[4] transgender rights became an important liberal cause.  There are a great many gay people, but not a lot of transgender people.  Certainly their rights deserve as much protection as do those of anyone else.  However, was it politically wise to unleash the whole force of right-minded contempt on the many people who have not yet reached the point now occupied by urban liberal opinion?[5]  Then, you don’t see a lot of “We Oppose Our Local Police” yard-signs out there.  There are about 1,000 police shootings of civilians every year.  Focusing on a few high-profile cases, no matter how egregious they appear at first glance, may not be a winner.[6]  Democrats are divided over these and other issues.  The current chaos inside the Republican Party offers some of them a chance to actually accomplish something.  Much would depend upon Trump deciding to be president and Democrats shifting toward pragmatism.

[1] “Divided GOP haggles over health-care bill,” The Week, 21 July 2017, p. 5.

[2] “Democrats: Should they shift to the center?” The Week, 21 July 2017, p. 16.

[3] Meanwhile, in Venezuela,…

[4] Which I fully supported.  Why should gay people be the only ones with a socially-approved out?

[5] It is worth reflecting on how long it took for President Obama’s position on marriage equality to evolve.  An estimated 25 percent of people self-identify as liberals.  A recent survey of small town Americans reported that just over two-thirds of the respondents felt that they had different values from people in urban areas (probably why they’re still stuck in the boonies).  Almost as  many (56 percent) believe that the federal government does  more to help the cities than for people like them. “Poll Watch,” The Week, 30 June 2017, p. 17.  Hillary Clinton lost in the Electoral College, not in the popular vote.

[6] Of the 80 police officers arrested for fatal shootings since 2005, 28 have been convicted.  “Noted,” The Week, 30 June 2017, p. 16.  One can read this as a warning against a rush to judgement until all the facts come out.  Or you can read it as a sign that juries of ordinary citizens are reluctant to second-guess the police officers who protect their communities from other dangers.

Exclusive Covenants, Exclusively Arrived At.

Until the First World War, almost all African-Americans lived in the rural South.  By 1970, almost half of the African-American population lived in cities outside the South, while many others had migrated to Southern cities.[1]  That “Great Migration” fell in two parts.  From 1915 to 1930, about 1.5 million African-Americans moved out of the South.  From 1940 to 1970 another 5 million people moved North or West.

The migrants found no warm welcome from the white residents of cities.  Generally, white people did not want to live or work in proximity to black people.  Southern cities sometimes had ordinances that forebade people of one race to live in neighborhoods where the majority population belonged to another race.  However, in 1917, the Supreme Court held that such ordinances violated the 14th Amendment.[2]

As the “Great Migration” began during the First World War, it encountered violence from northern whites.  For example, in Chicago’s Washington Park between 1917 and 1921, bombings struck black-owned residences in traditionally white areas and the offices of realtors who sold houses to blacks between 1917 and 1921.  A bloody race riot shocked Chicago in Summer 1919.  Businessmen, and realtors in particular, saw violence as bad for business.  Integration led to violence.  So segregation had to be preserved.

A solution soon came to hand.  The “Great Migration” coincided with an effort at Republican “Progressive” reform launched by Herbert Hoover, the Secretary of Commerce in the Harding and Coolidge administrations.  In 1922, Hoover’s Commerce Department issued a model law for the states to pass called the “Standard State Zoning Enabling Act.”  The model law, subsequently revised, became the common basis for urban zoning.[3]

While the Commerce Department’s model law made no reference to racial segregation, it provided a framework within which city officials and real estate developers could use zoning and legal covenants attached to new subdivisions.  Immediately after a Supreme Court decision upholding covenants in 1926, the Chicago Real Estate Board promoted the use of covenants.

What was true in Chicago’s Washington Park section was true elsewhere.  Many real estate developers attached “exclusionary covenants” to each property in a sub-division.  They barred sale to or occupation by African-Americans.  For almost three decades, legally-enforceable residential segregation spread through much of urban America.

The National Association for the Advancement of Colored People (NAACP) mounted legal challenges to the covenants.  In 1926 the Supreme Court rejected NAACP arguments and affirmed the legality of the covenants as “private action” not covered by the 14th Amendment.  In 1940, the Supreme Court did reject one exclusionary covenant on technical grounds, but did not declare against covenants in general.[4]  In 1948, the Supreme Court essentially reversed the 1926 decision.  The Court held that private individuals could abide by the covenants, but that they could not use the courts to enforce their own views on others.[5]

In 1968, Congress passed the Civil Rights Act.  Title VII of that act is known as the Fair Housing Act.  It barred discrimination on the basis of race, creed, gender, or national origin.

[1] By 1970, 40 percent lived in the North, 7 percent in the West, and well over half of African-Americans living in the South lived in cities.  See: Nicholas Lemann, The Promised Land: The Great Black Migration and How It Changed America (1991), and Isabel Wilkerson, The Warmth of Other Suns: The Epic Story of America’s Great Migration (2010).

[2] See: https://en.wikipedia.org/wiki/Buchanan_v._Warley

[3] See: https://en.wikipedia.org/wiki/Standard_State_Zoning_Enabling_Act

[4] See: https://en.wikipedia.org/wiki/Hansberry_v._Lee

[5] See: https://en.wikipedia.org/wiki/Shelley_v._Kraemer

Possible Futures.

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.