Capo di Tutti Capi

Here’s another part of the Trump interview that Joy Ann Reid highlights. Betty has covered part of this, but I think Trump’s attitude on this is important for Democratic strategy.

Let’s see his words.

SCHMIDT: Do you think Holder was more loyal to. …

TRUMP: I don’t want to get into loyalty, but I will tell you that, I will say this: Holder protected President Obama. Totally protected him. When you look at the I.R.S. scandal, when you look at the guns for whatever, when you look at all of the tremendous, ah, real problems they had, not made-up problems like Russian collusion, these were real problems. When you look at the things that they did, and Holder protected the president. And I have great respect for that, I’ll be honest, I have great respect for that.

He rambles about Joe Manchin, Luther Strange, and Roy Moore for a while, and then

O.K., let’s get onto your final question, your other question. Had the Democrats come through. …

SCHMIDT: Tell me about that, yeah.

TRUMP: Had they asked, “Let’s do a bipartisan,” Michael, I would have done bipartisan. I would absolutely have done bipartisan.

SCHMIDT: But they didn’t. … They didn’t …

TRUMP: And if I did bipartisan, I would have done something with SALT [the state and local tax deduction]. With that being said, you look back, Ronald Reagan wanted to take deductibility away from states. Ronald Reagan, years ago, and he couldn’t do it. Because New York had a very powerful group of people. Which they don’t have today. Today, they don’t have the same representatives. You know, in those days they had Lew Rudin and me. … I fought like hell for that. They had a lot of very good guys. Lew Rudin was very effective. He worked hard for New York. And we had some very good senators. … You know, we had a lot of people who fought very hard against, let’s call it SALT. Had they come to me and said, look, we’ll do this, this, this, we’ll do [inaudible]. I could have done something with SALT. Or made it less severe. But they were very ineffective. They were very, very ineffective. You understand what I mean. Had they come to me for a bipartisan tax bill, I would have gone to Mitch, and I would have gone to the other Republicans, and we could have worked something out bipartisan. And that could’ve been either a change to SALT or knockout of SALT.

But, just so you understand, Ronald Reagan wanted to take deductibility away and he was unable to do it. Ronald Reagan wanted to have ANWR approved 40 years ago and he was unable to do it. Think of that. And the individual mandate is the most unpopular thing in Obamacare, and I got rid of it. You know, we gained with the individual. … You know the individual mandate, Michael, means you take money and you give it to the government for the privilege of not having to pay more money to have health insurance you don’t want. There are people who had very good health insurance that now are paying not to have health insurance. That’s what the individual mandate. … They’re not going to have to pay anymore. So when people think that will be unpopular. … It’s going to be very popular. It’s going to be very popular.

Now, in my opinion, they should come to me on infrastructure. They should come to me, which they have come to me, on DACA. We are working. … We’re trying to something about it. And they should definitely come to me on health care. Because we can do bipartisan health care. We can do bipartisan infrastructure. And we can do bipartisan DACA.

I’ve bolded the parts that are out of “The Godfather.” Trump evidently believes that “bipartisan” means that the Democrats come to him and kiss his ring. It’s not clear whether he would then, out of the generosity of his heart, grant anything that the Democrats might want or if he simply expects them to sign on to his and the Republicans’ agenda.

A fair bit of commentary observed that aspects of the tax bill, including the removal of state and local tax deduction, seemed punitive to blue states. Trump just confirmed that.

Had they come to me and said, look, we’ll do this, this, this, we’ll do [inaudible]. I could have done something with SALT. Or made it less severe.

All Democratic negotiations with Congress and the Administration have to take this into account. I don’t see a good answer. It appears that he’s willing to punish the country until the Democrats kiss the ring.



Remember The Maine (Senator)!

Following up on Betty’s post below…

Pursuing the Maine chance, Susan Collins is all over a small part of the map on the Senate tax-theft/heath-care-wrecking/federal-overreach/America-gutting  bill.

She voted in favor of the motion to proceed, but she’s now signaling that she isn’t yet a solid “yes” on final passage:

Republican U.S. Senator Susan Collins said on Thursday she was not committed to voting for the Senate tax bill, citing concerns over healthcare and a deduction for state and local taxes.

Collins told reporters at a Christian Science Monitor breakfast it would be “very difficult for me to support the bill if I do not prevail on those two issues” but she was encouraged by her discussions with leadership.

Hedge, dodge, waver and waffle:  the net is that she’s still susceptible to pressure.  I think she’s beginning to feel the heat on at least two talking points:  that the bill raises taxes on many, probably most of her constituents, which is a bad place for a New England Republican to be; and that the health care measures she’s been pursuing are fig leaves that will gut her loudly proclaimed commitment to preserving access for all those who have it now.

I called her DC office and left a message and then spoke to a weary staffer in one of her state offices.  I encourage you all to do the same — especially when you can leave a recording that doesn’t necessarily mark you as a non-Mainer.

Contact info for all her offices here.

Image: Alexander Coosemans, Still life with fruit and lobster before 1689.



Apropos Of Not Much

So I read the latest over at Talking Points Memo on the slow-rolling Republican “moderate” cave on the tax bill to Trump and the GOP’s I Got Mine/Tongue-Bath-A-Billionaire Caucus.  That led me to a Twitter rant born of despair and rage.

The TL:DR is that dominant-power decline has happened before, will happen to whoever comes next, and is well underway now.  None of this is new; none original.  It just bubbled up, and as misery loves company, I give you a slightly edited version of the rant below.

As the GOP prepares to transfer wealth up and gut national finances in the process, it’s worth reflecting a little on national power. US predominance is no law of nature. It emerged in specific historical circumstances, & it will erode (is eroding) within its historical moment.

Trump and GOP actions are powering that decline, from gutting US diplomacy to abandoning soft power/trade alliances to an over reliance on the trappings of military power on the international security side to an attack on the US’s domestic capacity to solve problems, propel economic growth, and secure good lives for the great mass of its people.

The attack on universities that is both part of GOP rhetoric and built into the tax bill, for example is an attack both on civic life (in the form of engaged and critical-thinking citizens) and on the dollars and sense of economic life. Universities are where research happens, ideas turn into companies and all that. Whack them and we become not just dumber, but poorer too.

More decline follows as the basic sequence of life gets made harder for more people. CHIP follies are making pregnancy and childhood more wretched and even deadly. Ongoing assaults on the ACA, Medicaid and Medicare do the same for all of us and if/when the GOP passes its tax bill, most Americans will see taxes and deficits go up, threatening Social Security and everyone’s old age.

This kneecapping of American well-being and power extends across the policy spectrum.  Crapping on the environment isn’t just a matter of not hugging trees.  Just ask the citizens of Flint, MI if bad water is just an aesthetic loss. Recall the LA of my childhood and consider whether air pollution is just a matter of obscured views and great sunsets, etc.

All of these (and many more) domestic policy choices actually make us poorer, as individuals and as a nation. One more example: we already have crappier infrastructure than many of our national competitors. Among much else, that means it can take us longer to get to work — which is both an individual cost and and a net weakening of the US economy as a whole.

These are hidden taxes, charges we pay not in cash, but in our ability to choose how to spend our lives. That cuts US productivity as a matter of GDP, and our contentment as a matter of GHQ (Gross Happiness Quotient) (I made that up. I think.)

None of this means American will (necessarily) collapse entirely. It just means we will be less well off and, in the context of national power, less able to act in the world as a whole. We won’t be able to afford as much (see Britain, post 1918), and…we will — we already — find ourselves with less moral capital, less ability to persuade and encourage fidelity and emulation abroad. (Again, see Britain, post 1918).

There’s real danger ins such decline.  See Putin’s post Soviet Russia for one approach to the loss of economic, military and ideological/moral power.

In that context, it wouldn’t surprise me in the least to see Trump, backed by the GOP, launch into a second war of choice in an as many decades, with similarly awful consequences.

But, that said, even though nations find it hard enough just to muddle through a relative decline in international stature, the world goes on, in somewhat different order. That’s happening now. We can’t really stop it.

We do have a choice though — we can accept a relative decline that still has the US eagerly pursuing a rich and just future…

Or we can dive further the implications of the current GOP program, and watch as our politics become yet more of a zero sum game in which those with the most grab all the crumbs they can, leaving the rest of us to our own devices, while US power dwindles.

And that, by way of the long road home, leads me here: Trump’s GOP* is a fundamentally anti-American party. It is working as hard as it can to deliver wealth and power to a small constituency to the detriment of our national interest. That’s how an organized crime ring acts, not a party of government.

And with that….this thread.  It is open.

*And it is his party, or, if you prefer, he’s the predictable face of what that party has long been becoming.

Images: J. W. M. Turner, The Fighting Temeraire tugged to her last Berth to be broken up1839.

after Hieronymous Bosch, The Hay Wain (central panel of a tryptich), between 1510-1520.



Set Your DVRs: News Is Supposedly Going To Be Broken

May want to pop some popcorn too!

And we leave the last word to the drunk at the end of the bar er, um, noted, local crazy person er, um, official mouthpiece for state propaganda outlet er, um pundit and talk show host:

Open thread!



Governing is hard

The Republican Party has an ACA problem.  The ACA is deficit reducing.  Most of that was because it raised taxes on upper income families and cut back Medicare reimbursement rates for Medicare Advantage.  The Republicans are ideologically indifferent to cutting back Medicare Advantage reimbursement rates especially as Medicare Advantage has continued to grow in popularity so it has not harmed core Republican votes or donors.  But the Republican Party is ideologically committed to lower taxes on high income families.

The Republican Party has a policy problem.  It needs to offer something that is close enough to coverage to minimize blowback of sympathetic figures crying on camera that the Republican health policy bill will kill them.  So that means some type of coverage.  And that means spending some money.  That money has to be found from somewhere.  It can either be found from raising a different set of taxes after the taxes that hit high income individuals are cut or borrowing.

So here is what the Republican Party’s wonks are proposing:

Republicans are considering capping the U.S.’s tax break on job-provided health insurance, a major change to the tax system that could be used to finance their efforts to repeal and replace Obamacare.

This is a big pool of money.  The CBO believes the ESI tax exclusion is worth a quarter trillion dollars a year.  It is regressive tax benefit where the benefits mostly accrue to upper income individuals.  There is a good economic argument that the tax incentive favors one form of compensation (health insurance) over another (cash) when the efficient incentive structure is to be indifferent where both forms are treated the same by the tax code.  Most liberal wonks (myself included) will agree that building a system from scratch, ESI tax exclusion would never be part of an ideal package.

BUT HERE IS THE PROBLEM.  It pisses off voters who receive coverage through work.  And we already sort of tried this route before:

A similar idea was proposed by Senator Ron Wyden, a Democrat, during debate over the Affordable Care Act, and went nowhere. Obamacare already includes a levy on high-cost health insurance plans, known as the Cadillac tax, that begins in 2020. Republicans didn’t say where they would set the cap.

The Cadilliac tax set a fairly high rate (40%) excise tax on a fairly high exclusion limit.  It was supposed to have gone into play for 2018 but a large, bi-partisan coalition (including union friendly Democrats) pushed to force it back another two years.  There is still a large blocking coalition in place to continue to push the Cadillac tax back.  It will become the health care tax equivalent to the AMT re-indexing.

If the Republicans need to raise serious money from this exclusion being rolled back ($50 to $100 billion a year is serious), it means the tax hits most employer sponsored health plans to some degree.  If they don’t raise serious money because they fear blowback, it is a high income earner only tax and it still leaves their plan with a massive hole.

The easiest solution for Republicans looking for money to paper over their plan is to do what they did for Medicare Part D.  Just borrow it as that means no hard choices are needed.

But I can’t see how this proposal would get 150 votes in the House or 40 in the Senate.



HSAs, tax deductions and help for those who don’t need it

Health Savings Accounts (HSA) are going to be a big component of whatever passes as Republican health policy over the next couple of years. An HSA is a tax advantaged savings account that can be used to pay for out of pocket expenses and premiums. They are initiated and contribution eligible when the owner is covered under a high deductible health plan (HDHP). One of the primary tax advantages for an HSA is that contributions are tax free. Growth (as long as it is used for qualified medical expenses) is also tax free. I want to focus on the first part though.

My wife was notified of her bonus yesterday. Her firm also gave her a cost of living and merit based pay bump. She’ll see her bonus in the first check in January. I was sitting in a meeting where I barely needed to pay attention so I started sketching out my family’s 2017 budget. 2017 is looking good for us. I figure that I’ll still do some soccer but the four year plan to trade quantity for quality will continue as I value my family time more than soccer time as I no longer need it to pay the mortgage. My son will be out of daycare this summer so we are seeing a major expense drop and our incomes are going up. As my son leaves daycare, we’ll lose the value of the tax free benefit of the flexible spending account and that thought made me angry. Not angry at losing a tax benefit but angry at getting a lot of help when my family really does not need a lot of help.

We are able to contribute tax free a significant chunk of his day care costs. In 2016, we are doing well for ourselves so our marginal income is taxed at a fairly high marginal rate. I’m okay with paying a high marginal rate as I like civilization and the public sphere. I thought back to 2009 and 2010. Those years were lean. I was either out of work or consulting and my wife was working but unable to find full time work. We were tight and paying the mortgage was an adventure some months. If we were able to afford to put money away, we would have seen a tax benefit that is significantly less than what we are getting now. And those were the years when we really needed help as we had an infant daughter and a fraction of total income in 2016 or projected for 2017.

I’m angry about this because the tax deduction racket shovels most of the benefits towards people who don’t need the additional help. Someone who is in the top bracket this year will see the federal government subsidize their $1,000 contribution with a $400 tax break. Someone who is making $10,000 a year will not be able to afford to make a $1,000 contribution and in the odd case that they could, the federal subsidy administered through the tax code is only worth $100. That is wrong on a moral basis. More help goes to people who really don’t need it as the marginal value of their last dollar is fairly low.

One of the policies I want to see advanced is a flipping of tax deductiblity towards an open ended credit so it is more of a sliding scale based on either income or contribution. Here is how I think it could work:

The first $200 of a contribution to an HSA or an FSA would have credit equal to the size of the contribution times the top income tax marginal rate.
The next $500 contributed would have a credit equal to the size of the contribution times the second highest income tax marginal rate
The next $500 would have a credit equal to the increment times the third highest marginal rate

This would continue until a threshold is reached where any contributions to a tax advantaged account receive a federal subsidy equal to the lowest marginal rate. It still encourages savings but it gives more help to people who need it and less help the the people who are in pretty good to really good shape.



Repeal and Delay with the Norquist problem

Right now, the current Republican plan is Repeal and Delay as the NY Times reports:

Republicans in Congress plan to move almost immediately next month to repeal the Affordable Care Act, as President-elect Donald J. Trump promised. But they also are likely to delay the effective date so that they have several years to phase out President Obama’s signature achievement.

This emerging “repeal and delay” strategy, which Speaker Paul D. Ryan discussed this week with Vice President-elect Mike Pence, underscores a growing recognition that replacing the health care law will be technically complicated and could be politically explosive.

The mechanics of the repeal bill are fairly straightforward. A reconciliation bill would be written to sunset subsidies and Medicaid Expansion money after two (or three) years while a Replace bill is cobbled together. The individual mandate tax would be dropped to zero even if it was not technically repealed and all of the taxes that fund the ACA would be dropped immediately. This blows up the insurance market fast. There are discussions and rumblings that some Republican wonks are trying to make this point to Republican leaders. Someway of shoveling a massive amount of cash to insurers would be needed that would perform the same function as risk corridors and reinsurance but called something else is the most likely response.

And then there would be some type of Replace bill that would offer skimpier subsidies and much higher cost sharing than current law.

That Replace bill will cost money. It won’t cost as much money as the ACA but it will cost money.

That is a major problem as the major funding streams from the ACA (Cadillac Tax and high income tax surcharges) are gone. Nicholas Bagley at the Incidental Economist flagged this very early on:

You’ve got to bear in mind that passing the reconciliation bill would represent an immediate $346 billion tax cut over ten years to the wealthy—$123 billion from the Medicare tax surcharge and $223 billion from the tax on investment income. All of that money—every dime—will go to people making more than $200,000 a year.

The other major source of funding for the ACA is the Cadillac tax in the out years and Medicare Advantage payment equalization. The Cadillac tax is popular with health economists who, when they concentrate for an annual convention, might have sufficient political power to elect a county commissioner in an NFL market and no one else. The Republican Replace plans use modified Cadillac plans that usually apply regular income tax rates to health insurance benefits at far lower thresholds than the Cadillac tax. But I digress.

The Replace plan will cost money. And here is where we run into the Norquist problem. It is Republican orthodoxy that once a tax cut is passed it can never be re-enacted. The Replace Bill would not be signed for at least six months (absurdly optimistic case scenario) after the Repeal bill that wiped out the high income taxes that fund the ACA. The Congressional Budget Office (CBO) would score Replace based on current law which means no high income surcharges as offsets. Republicans can’t vote for higher taxes per Norquist even if those are taxes that just got cut.

Assuming Norquist is still a major political enforcer of Republican orthodoxy, my best bet is that any Replace Bill will be like the 2003 Medicare Modernization Act (MMA) in that it is almost completely deficit financed.