Medicaid 2.

Posted on June 23, 2017 by jsh54

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.

Posted on June 21, 2017 by jsh54

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.

Posted on June 20, 2017 by jsh54

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.

Memoirs of the Addams Administration 23.

Posted on June 10, 2017 by jsh54

In 2015, President Barack Obama negotiated American participation in an international agreement to reduce carbon emissions. The agreement committed the United States to cut its greenhouse gas emissions by 26-28 percent of the 2005 level by 2025.[1] This is known as the Paris climate agreement.[2] Then President Donald Trump announced that the United States would withdraw from the agreement. The president’s decision inspired much criticism from home and abroad.[3] Critics appear to be out of step with ordinary Americans. Few Americans—of either party apparently—think that the environment is a pressing issue. Most assign a higher importance to health care, the economy, terrorism, immigration, education, and crime.[4]

Opinion varied on this decision. On the one hand, if the Paris agreement had been sustained by President Trump, it seems unlikely to have achieved its stated goals. That goal is to limit global temperature rise to 2 degrees above pre-industrial levels. One percent of that rise has already occurred. The Paris agreement would limit further increases by 0.2 degrees. Worse still, by one report world temperatures will rise by 3.1 degrees above pre-industrial levels by 3.1 degrees by 2100. On the other hand, the admittedly flawed agreement set the ball rolling toward greater commitments in the future. One reality appears to be that developing nations pursuing industrialization as the road to prosperity (China and India for example) will need to burn carbon to reach their goals. The only way to prevent this would be to develop non-carbon alternatives.

Many people saw the decision to withdraw as an American abdication of leadership.[5] President Trump, the critics said, has tossed aside the American leadership built up over decades. Now, however, other leaders—especially Germany or China–would step forward.[6] Right.

Then the “Trump-loves-dictators” theme reappeared. The logic here failed. Saudi Arabia has been a loyal American ally for decades; Israel has ruled over a captive Palestinian population since 1967; a series of American presidents have struck agreements on nuclear arms with the Russkies, Communist and post-Communist, while the Obama administrations sought a “re-set” with Vladimir Putin, and negotiated with Iran; and China has been an American “partner” ever since the chain-smoking dwarf Deng Xiaoping took power. No American president who negotiated with those countries got called a dictator-lover. Nor should they have been.

Elsewhere, the “Russia scandal” spun its wheels while awaiting the testimony of fired FBI Director James Comey[7] before the Senate Intelligence Committee.[8] Then various brown dwarves of American popular culture (Kathy Griffin, Ted Nugent) attracted attention for their tasteless comments on public figures.[9]

Still, if you want to worry about something real, terrorists attacked the Iranian parliament and the tomb of Ayatollah Khomeini. ISIS claimed responsibility; Iran blamed the Americans and the Saudis; and the terrorists were Kurds. Big storm coming.

[1] The agreement took the form of an executive agreement because President Obama recognized that a treaty would not be ratified by the Senate.

[2] “Trump pulls U.S. out of Paris accord,” The Week, 16 June 2017, p. 4.

[3] One poll found that a mere 28 percent of Americans supported withdrawing from the Paris agreement, while 59 percent opposed it.

[4] “Poll Watch,” The Week, 16 June 2017, p. 17. Only 4 percent rank climate in first place on the list of problems.

[5] “Paris: Does Trump’s America still lead the world?” The Week, 16 June 2017, p. 6.

[6] “How they see us: Defying the world on climate change,” The Week, 16 June 2017, p. 15.

[7] Like Michael Flynn, another “good guy” according to all media reports.

[8] “Russiagate: The plot thickens—again,” The Week, 16 June 2017, p. 16.

[9] “Griffin’s Trump stunt: Has the Left lost it?” The Week, 16 June 2017, p. 17.

My Weekly Reader 3 June 2017.

Posted on June 3, 2017 by jsh54

It is characteristic of the long-running funk into which many Western societies have fallen that there have been many “decline of the West” books published in recent decades. They offer varying analyses shaded by varying clouds of pessimism. Some focus on economic issues, some on misguided international policies, and some on cultural factors (with rotten schools in the forefront). Many are inspired by China’s challenge to societies that otherwise could remain complacent. Some are compelling, many are not. One recent example come from the former editor of the Economist, Bill Emmot.[1]

Thirty years ago Mancur Olson investigated the rapid revival of the devastated German and Japanese economies after the Second World War and the slower growth of the Western victors in that war.[2] He found the answer in the role of intermediate groups–political as well as economic–in the different societies. By intermediate groups he meant both labor unions and businessmen’s association, but also intrusive government regulators. These groups entrenched established organizations at the expense of newcomers. They entrenched established procedures at the expense of innovation. Dictatorship, war, defeat, and foreign occupation had destroyed these intermediate groups in Germany and Japan. This left individual entrepreneurs free to do what they wanted in a dynamic fashion. (“And all that implies.”—“The Iron Giant.”) Elsewhere, the intermediate groups survived the war and sometimes even tightened their grip.

It’s possible to find many examples of dysfunction in Western societies. Take both the Republican and Democratic parties in the United States for example. Or the low labor participation rate in the United States as men have fled to disability programs as an alternative to lost familiar work. Or Japan’s descent from Olsonian prime example of success into a barnacle-encrusted sampan. Or the domination of the American—and perhaps “Western”–political economies by the banks. In Japan that has meant a “lack of entrepreneurship or corporate investment” needed for growth. In the United States, it has meant exploiting a public safety-net to cover imprudent risk. This has resulted in “rising inequality, distortion of public policy, and [the] generation of collective economic pain and anger.” And now the dreaded “populism.”

Much later on, several different countries sought to scrape these “barnacles” off the hull. Sweden “reduc[ed] taxation and deregulat[ed] all manner of industries” in pursuit of “more freedom of choice and creativity.” Switzerland adopted an openness to immigration and also deregulated its labor market to get the right mix of workers to the right industries. Britain’s embrace of the “Thatcher Revolution,” joined with membership in the European Union allowed Britain to reap both a “brain gain” and a “brawn gain.”[3]

What does Emmott offer by way of possible solutions? Refreshingly, he does not glom every unpleasant surprise into one whole. Thus, Putin’s Russia and Islamist terrorism pose no existential threats to Western civilization. They can be mastered with a coherent effort. Similarly, “Brexit” is a bad idea but not a rejection of Western values or most Western institutions. In contrast, he over-states the real danger posed by the Donald Trump administration. Trump speaks neither for mainstream Republicans nor for Democrats, and his administration will not last beyond his first term. Then it will be back to business as usual.

Emmott has less to say about solving the real danger: Olson’s intermediate groups. Appeals for “openness” in discussion isn’t likely to suffice. It may take a real crisis, alas.

[1] Bill Emmott, The Fate of the West: The Battle to Save the World’s Most Successful Political Idea (2017).

[2] See: https://waroftheworldblog.com/2016/06/18/the-rise-and-decline-of-nations/

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

The Buckle on the Rust Belt.

Posted on May 19, 2017 by jsh54

From the 1890s to the 1970, you could travel from Rochester to Buffalo to Pittsburgh to Cleveland to Dayton to Gary to Chicago to Milwaukee to Detroit, and see the beating heart of American industrial power. It helped win two World Wars and helped keep the Cold War cold. It provided lots of jobs at increasingly good wages to millions of workers. American manufactured goods dominated world markets.

Then things went sour.[1] Between 1979 and 1994, the U.S. lost half of its manufacturing jobs. Improved technology and automation are part of the explanation. The growth of international competition as foreign industry revived or started fresh after the Second World War offers another part of the explanation. The domestic competition from new “mini-mills” in steel and other disruptive industries that targeted the low end of the market offers another part of the explanation. JMO, and I come in peace, but the arthritic nature of much heavy industry offered another part of the explanation. Bloated industrial bureaucracies and rigid work rules imposed by unions alike made American manufacturing slow to respond to challenges.

Then, in 1994, came the North American Free Trade Agreement (NAFTA); in 2001 China gained admission to the World Trade Organization (WTO). Between 2000 and 2010, 5 million more manufacturing jobs disappeared.[2]

The human costs of successful business adaptation to changing conditions have been very high. Old industrial cities and regions have lost jobs and incomes, and many of the businesses once supported by consumers. Local and state governments have lost the tax revenues from these businesses, so they struggle to provide services to people in crisis. Lots of people have lost hope. Many younger people have moved away in search of a future that works. Many of the displaced shifted into the ballooning service industries of health and education. Not healing or teaching so much as filling out forms. In some cases, however, the older people left behind with no future that works have turned to substance abuse.[3] Much to the distress of the Democrats, the 2016 election demonstrated that these once-reliable voters could not be taken for granted.[4]

For reasons not immediately apparent to me, free trade, an open world economy, and “globalization” became the goat. Free trade helps many American producers: 40 percent of corporate profits and 30 percent of agricultural revenue comes from foreign sales. Also, the Gummint projects that 3.5 million jobs will be created in specialized manufacturing by 2025. This means workers (presumably named Dave) who can run the robots.

There probably is no way of “saving” or “reviving” the “Rust Belt.” Guys now in their 40s and 50s who walked off the high school graduation stage into a job at the plant aren’t likely to want to/be able to “retrain” as medical coders or McDonald’s imagineers.[5] They’re close to the end of their working lives. Soon enough, they’ll be on Social Security and Medicare. Give them basic medical coverage and beer money.

That doesn’t mean that there isn’t room for improvement in the trade deals around the margins. After an ugly early spat with Mexico, the NAFTA renegotiation has begun. China is next, although there is the whole North Korea issue to tilt the scales.

[1] “Rescuing the Rust Belt,” The Week, 24 March 2017, p. 11.

[2] Economists estimate that 85 percent of these jobs were lost to automation of production. It cuts labor costs: welders in the auto industry earn $25 an hour; spot-welding robots cost $8 an hour. Take that coolies!

[3] Obviously, this latter issue is a much more complex story than is presented here.

[4] The recent passing of Norman Lear led to much revealing commentary in the media.

[5] As in “imagine this is real food.” Except, you know, those sausage biscuits (without egg) with a coffee and hash browns you get early on Sunday morning when you’re headed home? Whole world feels fresh and new and clean.

Memoirs of the Addams Administration 19.

Posted on May 14, 2017 by jsh54

In late March 2017, House Republicans had to pull the American Health Care Act (AHCA) because they couldn’t cobble together a majority from the disparate Freedom Caucus and moderate factions of the party. In early May they took another stab at it. This time the bill passed the House of Representatives by a razor-thin (as the cliché goes) margin. The new and improved AHCA ended the mandate[1], but allowed insurance companies to charge extra for people who let coverage lapse and then applied in a hurry once they got sick; granted the states the right apply for waivers if they wanted to allow insurance companies to offer plans with fewer “essential services” than mandated by the Affordable Care Act (ACA)[2]; “rolled-back” the expansion of Medicaid (which observers predicted would cut 25 percent/$880 billion in health-care spending over a decade); replaced the income-based subsidies of the ACA with age-based tax credits[3]; allowed insurance companies to charge old people much more than young people[4]; and encouraged states—through a promised $138 billion in federal subsidies–to create high-risk pools for those with pre-existing conditions that insurance companies wouldn’t touch with a ten-foot pole.[5] The right-to-life-but-not-to-medical-care-once-born crowd insisted on defunding Planned Parenthood.[6]

Republican Senators, who live in a radically different political environment than do Republican Congressmen, didn’t like the handiwork. Senate majority leader Mitch McConnell set up a baker’s-dozen of Republican Senators to save the party from an electoral disaster in 2018. They are expected to sketch a fig-leaf with regard to things like Medicaid spending, and coverage of the Emma Lazarus people: “Give me your tired, your poor, Your huddled masses yearning to breathe free, Your people with pre-existing conditions.”

Is there any way to make a Republican plan work? Yes, if you aren’t a 100 percent Democrat. The ACA expanded entitlement programs to provide health care to the poorest Americans. It had little effect for most Americans. It did not create health-care insurance for most Americans, nor did it seek to rein-in the rising costs of health-care. Most people receive their health care through their employers or through Medicare. The Republican plan poses no serious threat to these people. Republicans are betting that health care lite for the poor will be politically acceptable to most voters. Are they correct?

One contested issue lies in the effect on taxes. Democrats jeer that the AHCA will lead to a $1 trillion cut for the richest Americans over a decade. However, the ACA imposed a $1 trillion additional tax on those same richest Americans. This casts into doubt the claim that the mandate is necessary so that poorer young people will subsidize richer older people.[7]

[1] This is an acknowledgement that many young people don’t want or need insurance, or—if they do—resent being ordered around by the government as if they’re the hired help. There probably are about 14 million of these timid fugitives currently on the rolls of Obamacare. Millions more have not signed up because the Internal Revenue Service does not require that taxpayers actually submit proof of coverage.

[2] This is a concession to the people who were promised by President Obama that “if you like your insurance, you can keep it” and then had the rug pulled out from under them. Sad to say, attention to detail proved not to be Obama’s strongest quality. See: “Healthcare.gov roll-out.” Lots of times “big picture” people aren’t good at this.

[3] So people in their 20s would get up to a $2,000 credits, while people in their 60s would get up to a $4,000 credit.

[4] Up to five times as much, compared to the ACA’s limit of three times as much. However, old people consume far more health care than do young people, so the ACA appears to be a taxing of low income people to support higher income people.

[5] “Health-care reform heads to the Senate,” The Week, 19 May 2017, p. 5.

[6] Still, last time I checked, condoms were a dollar each at CVS.

[7] “American Health Care Act: The winners and the losers,” The Week, 19 May 2017, p. 6.

Memoirs of the Addams Administration 18.

Posted on May 9, 2017 by jsh54

There is no longer a filibuster on judicial appointments, but there can be one on spending bills. Since Republicans hold 52 Senate seats (rather than the 60 needed to stop a filibuster), they had to deal with the Democrats to pass a bill that covered government spending through September 2017. What did the Republicans get out of the deal? They got a big jump in defense spending ($12.5 billion) and in “securing the border” by non-wall means ($1.5 billion). What did the Democrats get out of the deal? Several of the federal agencies that President Trump wanted to put on short-rations came through relatively unscathed for the moment: the Environmental Protection Agency and the National Institutes of Health. Federal aid to Planned Parenthood is preserved. There is no money for “the wall.” American generally benefitted from not having a “government shutdown,” although President Trump raised the possibility of a more serious confrontation in September.[1]

The flip side of spending is taxation. The Trump administration released a bare outline of proposed tax change legislation. The plan proposed to create three tax brackets (10, 25, and 35 percent); cut the corporate tax rate from the nominal 35 percent (with a ton of loop-holes) to a standard 15 percent (pretty much the international norm); and get rid of the Alternative Minimum Tax and the Estate Tax.[2] The intellectual concept behind this plan is that lower taxation will lead to a surge in economic growth that will generate more revenue over time than it costs. Many people on both the left and the right are deeply skeptical–to put it mildly–of this belief. The Trump administration pointed to the slow growth of the first quarter of 2017 as proof to the harmful effects of heavy regulation and high taxation.[3]

In foreign affairs, the shock waves from the North Korea nuclear problem continued to rumble through America’s relationships in Asia. China has supported and protected North Korea as a way of advancing its own agenda. President Barack Obama’s policy of strategic patience put off action in hopes that “something will turn up.” While a wise policy at the time (like the pursuit of a nuclear deal with Iran), North Korea’s gains in nuclear weapons and missiles have now made that policy obsolete. There are tens of thousands of American troops stationed in both South Korea and Japan. The United States has defensive alliance with both countries. A North Korean attack on either one is likely to kill a lot of Americans and would require an American response. Hillary Clinton would have faced the same difficult choices as does Donald Trump. It will be necessary to give China something if it reins-in (or overthrows) the North Korean lunatic-in-office. To off-set any concessions to an expansive China, the Trump administration has sought to rally America’s allies in Asia. To this end, Trump invited the homicidal Philippine president Rodrigo Duterte to visit the White House, and ordered the Pentagon to move an anti-missile system to South Korea.[4]

A minor furor arose over President Trump’s question to an interviewer “Why was there a Civil War? Why could that one not have been worked out?” It’s a fair question that has pre-occupied academic historians for generations. While heaping abuse on the historically-ignorant president, his critics seem to have missed reading Abraham Lincoln’s Second Inaugural Address.

[1] “Congress agrees on spending deal,” The Week, 12 May 2017, p. 6. Will President Trump be willing to force a shut-down in September as a way to shoulder his way back into a bargaining process in which mainstream Republicans are willing to ignore his priorities?

[2] “Trump’s tax plan: Who would benefit,” The Week, 12 May 2017, p. 8.

[3] “Issue of the week: Looking for a ‘Trump bump’,” The Week, 12 May 2017, p. 38.

[4] “Trump’s hand of friendship to Philippine strongman,” The Week, 12 May 2017, p. 7; “How they see us: Trump diplomacy rattles South Korea,” The Week, 12 May 2017, p. 17.

Looking Back on the Obama Administration.

Posted on May 2, 2017 by jsh54

“America is a better, stronger place than when we started,” President Barack Obama declared in mid-January 2017. He pointed in particular to the Affordable Care Act (ACA), the triumph of marriage equality through the action of state governments and the federal courts, and the Paris climate agreement.[1] Moreover, the president had sponsored a bail-out of the car industry and passed an $800 billion stimulus bill.[2] Over the course of Obama’s two terms, unemployment fell from 10 percent to 4.7 percent as the economy created 11.3 million jobs. (That’s 1.4 million jobs a year.) He left office with an approval rating of 55 percent, while eorge W. Bush had a 33 percent approval rating.[3]

In foreign policy, President Obama won the Nobel Peace Prize, pulled out American troops from Iraq, resisted pressure for full-on U.S. intervention in the Syrian civil war (even when Bashar al-Assad was accused of having used chemical weapons).

Not everyone agreed, even when they liked the man and his accomplishments. President Obama’s decision to slight recovery from the “Great Recession” in favor of creating a costly new entitlement for the poor doomed the country to prolonged economic stagnation. His reliance upon executive orders, instead of legislation that could not be passed through a Republican Senate, means that many of his achievements can be rolled-back.

Race relations deteriorated during the Obama administration, for reasons that had little or nothing to do with President Obama. Many controversial incidents of police violence (Trayvon Martin, Michael Brown, etc.) cast a harsh light on race relations. This led some critics to complain that Obama had adopted too moderate a stance. Infelicitously, the out-going president claimed that people who voted for Donald Trump rejected “people who [don’t] look like them.” Some took this as a veiled charge of racism.[4]

The popular referendum on the Obama Administration seems harshly negative. In the 2016 election, the Republicans won the Presidency (through the Electoral College, rather than through the popular vote.) They also won 63 seats in the House of Representatives, 10 seats in the Senate, and a dozen state governorships. This continued a three-election trend.

In explaining the Democratic defeat in the 2016 election, liberal observers lamented the rising tide of authoritarian populism that had brought Donald Trump to the White House.[5] They also lauded the economic situation which existed at the end of the Obama administration as a gift to the Trump administration. None of this did Hillary Clinton any good.

Other observers seemed to feel relief at the end of eight years of what they regarded as self-righteousness on the part of President Obama. “If you didn’t agree [with him], you were on the wrong side of history,” wrote one conservative critic[6] A liberal author agreed that the president’s “tendency toward high-minded superiority” put off many people.

There’s a difference between the “Bully Pulpit” and the “Bully’s Pulpit.”

[1] “Obama’s farewell: ‘Yes, we did’,” The Week, 20 January 2017, p. 5; “Obama’s legacy: Hope, change, and disappointment,” The Week, 20 January 2017, p. 16.

[2] Having bailed-out the car industry, President Obama went on to campaign against greenhouse gases. Paul Krugman, currently a scourge of Republican “serious people,” then criticized the Obama stimulus pl n as half as large as was needed and spread over two years instead of front-loaded into one.

[3] The invasion of Iraq and all that followed; Hurricane Katrina’s destruction of New Orleans; the “Deepwater Horizon” oil drilling blow-out.

[4] “Obama’s farewell: ‘Yes, we did’,” The Week, 20 January 2017, p. 5.

[5] “Obama’s farewell: ‘Yes, we did’,” The Week, 20 January 2017, p. 5.

[6] “Obama’s farewell: ‘Yes, we did’,” The Week, 20 January 2017, p. 5.

Memoirs of the Addams Administration 17.

Posted on April 29, 2017 by jsh54

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 20^th 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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