Saturday, May 6, 2017

Always Dreaming, The Favorite, Wins The Kentucky Derby

Always Dreaming took the Kentucky Derby in what was almost a wire-to-wire win in a race that didn't see much movement among the leaders after the first quarter of a mile. Lookin at Lee placed and my Battle of Midway took third. Classic Empire came from back in the pack to close for fourth. Irish War Cry was contending for the lead at the top of the stretch but quickly faded away. And McCraken, the horse that was so supposedly in peak form, was never really a factor as was Gunnevera.

Always Dreaming went off at 9-2 odds, Looking at Lee was 30-1, and Battle of Midway was at 40-1, creating huge payouts for exacta and trifecta bets.

Kentucky Derby - Analysis And Predictions

It's the first Saturday in May which means it's time for the Kentucky Derby. For the first time in a number of years there is no real clear-cut favorite horse or two. Instead there is a group of five horses who have had varying degrees of success in the run-up to the Run for the Roses that the experts think have an almost equally good chance to win. Because of that, it is possible we will see the favorite go off with some of the highest odds in recent history and the chance for a huge exacta payout with a horse from the field is ripe for the picking.

Classic Empire, coming off a win in the Arkansas Derby, had been the favorite for most of the week, but he has recently been supplanted by Almost Dreaming, an impressive winner in the Florida Derby. In addition, there is the winner of the Wood Memorial, Irish War Cry, Gunnevera, who came from the back of the back to win the Fountain of Youth, a lead-up to the Florida Derby, and McCraken who was undefeated in four races before posting a slightly disappointing third in the Blue Grass Stakes.

Here is the morning line as of around 10am:

1. Lookin at Lee 27-1
2. Thunder Snow 18-1
3. Fast and Accurate 38-1
4. Untrapped 63-1
5. Always Dreaming 4-1
6. State of Honor 56-1
7. Girvin 21-1
8. Hence 14-1
9. Irap 40-1
10. Gunnevera 9-1
11. Battle of Midway 38-1
12. Sonneteer 35-1
13. J Boys Echo 44-1
14. Classic Empire 7-1
15. McCraken 7-1
16. Tapwrit 27-1
17. Irish War Cry 5-1
18. Gormley 21-1
19. Practical Joke 30-1
20. Patch 15-1

With the field this tight, your guess is as good as mine, but I'm going to go with Classic Empire at 7-1. And then, in honor of my father, I'll take a fling on an Always Dreaming/Battle of Midway exacta. Post time is at 5:34PM EDT.

Natural Weekends - Lilacs

It truly has been a gorgeous spring here on the creek and things are blossoming all over. And this year our lilacs have been especially fabulous. Here is a little montage of their progression to bloom. Too bad I can't include the sweet scent as well...

Friday, May 5, 2017

Is McConnell Playing The Long Game On Health Care?

Mitch McConnell, no matter how much you dislike him, is a dangerous man who is a master at political maneuvering. He has been remarkably silent throughout the whole AHCA debacle in the House and, maybe it's just my paranoia, but I can't help but feel that he has some devious plan to accomplish the major Republican goal of massive tax cuts for businesses and the top 1% while rolling back as many restrictions on corporate power as he possibly can. And, as we know, repealing the taxes on the rich that support the ACA is part and parcel of that process. All of which makes me think he just might be playing the long game on health care.

Anything the Senate wants to get done on health care will have to be done under the budget reconciliation process which only requires the 50 votes plus Mike Pence to pass. Anything outside of that process will require 60 votes and be filibustered by Democrats. There are three enormous problems with the bill that the House passed that make it highly unlikely the Senate parliamentarian will allow them to be included in budget reconciliation. The first is the ability for states to opt out of the essential benefits that the ACA currently requires. This covers things like pre-existing conditions and lifetime caps. The second is the 30% surcharge for not maintaining continuous coverage. And the third is allowing insurers to increase the cost ratio of older to younger insured from 3:1 to 5:1. Of course, the first and the third of those hurdles are what made the bill "work' in the House and allowed it to get passed at all.

Knowing this, it is not surprising that McConnell has already declared that the Senate will write its own bill from scratch. That bill will probably substantially decrease the amount of Medicare cuts that the House bill envisions. Other than that, it is hard to know what the Senate bill would look like, other than reducing those ACA taxes. But with the essential ACA benefits in place, doing so would run into the same problems that the House chose to ignore. Millions of Republican voters would no longer receive subsidies and the insurers themselves would also suffer. And in addition to taking care of the Medicaid issue for many more moderate GOP Senators, McConnell has to worry about the three bomb-throwers in his caucus, Ted Cruz, Mike Lee, and Rand Paul, of which the former two are adamantly determined to repeal Obamacare in its entirety.

But a worrying sign, to me at least, is that after having been silent about the House bill for the last two months, America's Health Insurance Plans (AHIP), the lobbying group that represents health insurers, absolutely the group most effected by any changes to the ACA, finally issued a statement that said, "Immediate challenges exist in the individual market today, and the bill includes key provisions to stabilize the market in 2018 and 2019. We need certainty now about funding for cost-sharing reductions that lower copayments for patients so they can better afford to get care from their doctor. The tax credit should be enhanced to reduce premiums and better meet the needs of people with low and modest incomes, are older, or live in areas with high health care costs. We want to work with the Senate to ensure the continued strength of the Medicaid program, which delivers real value to more than 70 million Americans.  States need adequate resources to administer an efficient, effective program that helps beneficiaries improve their health. If changes are made to criteria for who is covered by Medicaid, we need to give people more time to adjust – and more time for the individual market to stabilize." Pretty much everything in that statement runs counter to what's in the AHCA, but the fact that AHIP has only now broken its silence may indicate to someone as suspicious as I am that they have already worked out some sort of deal with McConnell already. What that may include, I have no idea.

Even if McConnell does manage to push through a bill under budget reconciliation, it would still have to go through the bill reconciliation process to "merge" it with the House version and then be voted on again by the House. Considering that the very items that finally got the Freedom Caucus to vote for the House bill will almost be definition not be included in the Senate bill, it is hard to see that it could pass again. And because of the limitations in the Senate, it is almost guaranteed that millions of Americans would still lose coverage under whatever bill came out of reconciliation. It is hard to see that reconciled bill getting through both the House and the Senate.

That leaves us with the scenario that the Senate either does nothing on health care at this point or crafts a bill that will either fail again in the House or be blocked by the Senate. And that process will take months. But that would leave the insurers who have to decide about participating in the ACA exchanges in 2018 to deal with uncertainty long past the decision date and it would no wonder that many of them would decide to drop out. Right now there are around 1,000 counties in the country that have only one insurer. There are a number of counties in Tennessee that have already lost their last insurer and a few days ago Medica announced its intention to pull out of Iowa, leaving most of that state without an insurer.

With the chaos that the Republicans have created around health insurance and the resulting decision for insurers to withdraw from certain less profitable markets, along with Trump's continued threat to withhold the insurer subsidies, it is possible that we will see significant parts of the country experience an ACA implosion in 2018. And Republicans will run hard in 2018 on blaming Democrats and the ACA for the collapse of the insurance market, just as they predicted. It could be a powerful argument, especially to those who live within the right wing echo chamber, and Democrats need to be prepared to fight it.

There are ten Democratic Senators up for re-election in 2018 who represent red states and the GOP will have a great campaign issue if those states have an ACA implosion to pound away at the Democrats. If Republicans hold their own and pick up eight of those seats, they will have a filibuster-proof majority in the Senate. Assuming that the extreme gerrymandering will allow the GOP to squeak by with a small majority in the House, then McConnell and the Republicans will have unfettered power and be able to do virtually anything they want with health care, taxes, the environment, the whole ball of wax. It's a big gamble but, if he pulls it off, it would frankly be Mitch McConnell's wet dream.

Solid Employment Report Offsets Worrying Signs For The Economy

A few weeks ago, I posted about the warning signs for the US economy, citing the anemic March employment numbers, the cratering of jobs in the retail sector, the downward trend in job growth, and the simple fact that the admittedly sluggish economic expansion has been running for almost eight full years.

Subsequent to that post, the first quarter GDP number came in at an also anemic 0.7% annual rate, well below consensus expectations of 1.1%. But first quarter GDP numbers have been horrendous for a few years now, probably due to measurement issues, so the headline numbers were not all that disturbing. However, personal consumption expenditures (PCE) also fell from a truly robust 3.5% increase in the fourth quarter of last year to just 0.3% in the first quarter this year, indicating that consumer spending might also be slowing. That thought was supported by disappointing auto sales in April, down nearly 5% compared with April of 2016. Those sluggish sales have resulted in a large increase in inventory, again suggesting a slowdown in actual car production. All in all, there were some clear reasons to worry about the direction of the economy.

On the other hand, Goldman Sachs put out a report stating their belief that the US had finally reached full employment, with discouraged workers seeking employment reaching levels not seen since before the recession. This would mean good news for workers as it would tend to drive wages higher as firms finally have compete to retain and hire employees. Of course, those gains might be offset by the fact that the Fed has clearly signaled its intent to continue to raise interest rates. In addition, home prices continue to rise, with the CoreLogic Home Price report showing prices 7.1% higher in March than the same month last year. But even that number was somewhat worrying as prices had reached a level less than 3% below their 2006 peak, just before the collapse of the housing market and the financial crash, causing some to worry again about a housing bubble.

With all that in mind, all eyes were on today's unemployment numbers and they were once again solid. April employment was up 211,000, exceeding the consensus of 185,000. However, the numbers for the prior two months of February and March were revised downwards by a combined total of 6,000. Hourly wages again rose by 7 cents and now show a healthy 2.5% increase in the last year. The number of people who are part-time for economic reasons has dropped to a level last seen in April, 2008, again suggesting that we are close to full employment, if not already there.

Reaching full employment will mean continued higher wages for workers, something that they haven't seen in at least a decade if not longer. But nothing frightens the Fed more than wage inflation (an irrational fear that still lingers from the stagflation of the 1970s), so that will certainly mean more interest rate hikes this year in an effort to slow down the economy. But the danger signs that were there before today's employment report have not gone away. And the real danger is that the Fed will be raising rates at a time when the economy is already beginning falter. That, combined with the chaotic nature of the Trump administration, should make for an interesting next few months.

Right Now, May Offers No Defense From EU Brexit Demands

Ever since Theresa May invoked Article 50 and began the Brexit negotiations, a united EU has opened up with a fusillade of demands that has left the UK on the defensive and exposed the weakness of May's negotiating position.

Jean Claude Junker's reported statement that May was in a "different galaxy" when she believes that the EU will negotiate a new trade deal while the Brexit negotiations are going on was firmly and publicly backed up by Angela Merkel. That has left some Conservatives talking up the possibility of not coming to a new trade agreement with the EU and letting trade with the Continent fall under normal WTO rules. While that may be a good sound bite, it is willfully ignoring estimates that have shown that moving to WTO rules would shrink UK GDP by 5% to 10% over just 15 years.

In addition, Junker made clear that their would also be a "severance" fee for Britain that is reported to be around $109 billion. This fee would cover the prior financial commitments that the UK has made while still a member of the EU. May's response to that is to say there is nothing in the EU treaty that details such a severance fee, which basically amounts to a threat to take the EU to court. That's not exactly optimal when there is a two-year time window for completing the negotiations.

After Junker's visit, a special EU leaders' summit laid out the European demands for Brexit and they present real difficulties for the UK. The EU wants to legally ensure the rights of its citizens who reside in the UK, ensuring that they maintain the rights granted by the EU. Acceptance of that principle would mean that EU citizens in Britain would continue to actually have more rights than UK citizens, particularly when dealing with bringing family members into Britain. In addition, the demands open up the issue of Gibraltar and Northern Ireland's status to remain in the EU.

But the real jewel in the negotiations for the Europeans is London's financial industry, even if it remains unstated. The European Commission is now proposing that Euro-denominated derivative transactions be cleared through a clearing house located inside the EU or, if not, be regulated by the EU. Right now, around three-quarters of all Euro-denominated derivative trades are cleared in London, primarily by the LCH. This issue is a significant part of the larger question of how much access banks and trading houses will have to the Euro market after Britain leaves the EU. This has already caused a pretty steady trickle of financial industry jobs leaving London and moving to the Continent and all the major banks already have made contingency plans to move significant portions of their business and staff within the EU should it be necessary. Since the financial industry accounts for around 7% of UK GDP, any major changes would be a serious blow to the British economy.

Theresa May's response to all this is remarkably cavalier as she claims this is just the EU trying to interfere in the UK elections. That really is pretty weak tea. But her attitude apparently extends down the Brexit negotiating team, one of whom said about the EU demands for Brexit, "To be honest no-one is paying too much attention to these ‘guidelines’ – I’ve had them in my inbox for two days and not bothered to read them." Comments like that make EU officials wonder if May's government understands the seriousness and difficulty of the task ahead. Said one Senior EU official, "What irritates the EU side is that the British are treating this as if it is a negotiation of equals, as if the interests of one departing state are equivalent to the interests of 27 – the reality is that Article 50 does not work like that."

May will most certainly increase her Conservative majority in Parliament in the upcoming election. But, from a distance, she sounds far too much like Donald Trump when it comes to the Brexit negotiations, that all the details will be so easy to work out. Just as Trump has discovered, they won't. May will have a stronger position in Parliament going forward but the weakness of the UK negotiating position when it comes to Brexit will remain.

For House GOP Members, The Morning After AHCA Vote Is Not So Pretty

When the House Republicans passed the AHCA yesterday that will cause millions of Americans to lose health care, they celebrated, bringing in beers to the Capitol and then going to the White House and having a love-in with Donald Trump. But, like any of us who have partied just a little too hard, sometimes you wake up the next day and think "what did I really do".

Republican Representative Chris Collins from upstate New York is one of those vulnerable GOP House members who was besieged by his constituents at town halls when Trumpcare 1.0 came out. But, despite those protests, Collins was always a lean yes on the more damaging Trumpcare 3.0 and voted for the bill yesterday. Like most of the people who voted yesterday, Collins had to admit he had not read the entire bill but claimed that his staff had and that he clearly understood the components of the bill. But when asked whether he realized that the bill would cut $3 billion from New York State's Essential Health Plan which helps subsidize insurance for around 19,000 people in Erie and Niagara counties, counties that Collins' district covers, he replied, "Explain that to me". With that comment, Collins himself wrote the attack ad to be used by his challenger in 2018.

Collins probably joins a couple of dozen other GOP members in worrying about what the Republicans actually did yesterday, whether they voted for the AHCA bill or not. There are 23 Republicans who live in districts that voted for Hillary Clinton and 14 of those actually voted for the bill. And today, the respected Cook Political Report changed their view on 20 current GOP seats, moving them into a more favorable position for Democrats. Many of these seats still lean Republican but Democrats chances in all of them have improved because of the vote taken yesterday.

There is still a long time until the 2018 election and, of course, anything can happen. In the short term, many Republicans will have the cruelty and irresponsibility of the bill explained to them, especially when the CBO score gets released in the next week or two. But it will be up to Democrats to explain it to the voters in 2018 if they are to have any chance of retaking the House.

Thursday, May 4, 2017

Net Neutrality Has Become A War Between Two Oligopolies; Consumers Are Collateral Damage

In a clear sign that the progressive message is finally moving the Overton window, Farhad Manjoo has written an article on the front page of the NY Times business section that says this, "This column is nominally about network neutrality... But really, this is a story about ballooning corporate power." It's been a long time since market concentration in the US was probably even mentioned in a NY Times business section story as a real problem, except when quoting a progressive economist, pundit, or politician in the context of another merger.

Ajit Pai, the new chairman of the FCC, is determined to gut the rules on net neutrality, allowing broadband providers to charge different prices to content providers. The original battle over net neutrality was about making sure that digital innovators would not be "locked out" by the telecom monopolies. This would protect consumers' ability, say, to connect a Netgear wifi router to the Comcast cable box rather than being forced to use a Comcast product or to have a product that directly competed with the telecom still get access.

But now, as Manjoo points out, net neutrality is largely a battle between the telecom oligopolies and the internet oligopolies, Comcast versus Google for instance. Actual consumers and other digital innovators are merely bystanders, or collateral damage, in this war between monopoly powers. Amazon, Apple, Facebook, Microsoft, and Alphabet control virtually all of our digital technology, the operating systems, the browsers, and the cloud storage. AT&T, Verizon, and Comcast control the digital pipes though which all that information flows. As Manjoo says, "People used to talk about the internet as a wonderland for innovative upstarts, but lately the upstarts keep getting clobbered. Today the internet is gigantic corporations, all the way down."

But even this view of telecoms versus tech is simplistic as these oligopolies are bleeding onto each others' space. Manjoo continues, "Telecom companies are becoming internet companies (Verizon now owns AOL and Yahoo), internet companies are dabbling in telecom (Alphabet has a fiber-optic internet service arm), and they’re all becoming film and TV studios".

In many ways, the battle for net neutrality has already been lost. These monopolies make more money even when their competitors succeed, from increased cloud services to app store income to increased advertising. As an example, 99% of the new ad revenue in the last year has gone to just two companies, Google and Facebook. And when a competitor gets just a little too popular, these giants simply copy the idea and market their own competitive product, sometimes successfully, sometimes not. And when worse comes to worse, they can simply buy the competitor out.

But removing the rules on net neutrality will mean these oligopolies won't even have to take those steps to quash their competitors. Again from Manjoo, "But Mr. Wu [the originator of the concept of net neutrality] points out that at least the giants now have to do something to respond to rivals. In the absence of neutrality rules, all they might have to do its buy up access to speedy lanes online, thus easily preventing rivals from ever working well on people’s phones."

Both sides, of course, claim that their position will increase competition. Tech companies claim that keeping the existing net neutrality rules will allow the marketplace of ideas to work. Telecom companies say that that removing the net neutrality rules would allow start-ups to more easily compete with the tech giants because they would need less infrastructure investment and instead could simply buy broadband speed.

The reality, of course, is that, whatever happens with net neutrality, both the telecom and tech oligopolies will still probably win. That's just the way it is with monopoly power.

House Passes AHCA; A Few Thoughts On The Future

So they've done it. Republicans in the House just passed the AHCA which will cause at least 24 million to lose insurance, premiums for older people and probably those with pre-existing conditions, even those who have employer-provided health care, to skyrocket, gut Medicaid, and threaten thousands of Americans with medical bankruptcy once again. And all in the name of hundreds of millions in tax cuts for the very rich.

This bill will move on to the Senate where it is theoretically dead on arrival. But, as we just found out in the House, what may look dead and buried can easily come back to life and get passed. Take nothing for granted except the fact the Republican moderates will almost always cave (see Susan Collins entire career).

The cruelty and horribleness of this bill are evident for all to see. They will be put into stark relief when the CBO score of the bill comes out next week or the week after. That score will, in all likelihood, be even worse than before, if that seems even possible.

Amidst my anger and depression, I can give you a couple of slivers of silver linings. First, the Senate will have to wait until the CBO score comes out and then a couple of weeks after that before it can even be able to take up the bill. This will take us into June and give Democrats plenty of time to continue the resistance. In addition, this will waste even more time from the legislative calendar, especially if Schumer can slow Senate business to a crawl, and keep Republicans from doing even more damage in other areas.

More importantly, this vote, even if nothing gets done in the Senate, gives Democrats a much better chance of retaking the House in 2018. In the wake of the passage of Obamacare, Democratic representatives saw a loss of support of between 10% and 15% which helped lead to the wipeout in 2010. If we see a similar move in 2018, there are nearly 100 Republican House seats that could be at risk. Obviously, a lot can happen between now and 2018 but there is no indication that the resistance is losing steam at this point.

On the other hand, I'm pretty sure this vote means the end of Obamacare, even if nothing happens in the Senate. What insurance company is going to decide to participate in 2018 amidst all this uncertainty. As I've been warning last fall, Republicans don't have to repeal Obamacare to kill it, just create enough uncertainty to drive the insurers out of the market. And the insurers are apparently only too happy with that result.

One of the more remarkable features of the debate in the last few months is the overwhelming opposition from almost every sector of the medical profession to what the Republicans were proposing to do and now have done. But there was one notable exception and that was the health insurers themselves. They were shockingly silent throughout the entire debate. The lesson, of course, is that the next run at health care must have some sort of public option and not rely on the private insurance market entirely, if at all.

And, on a personal note, I just want to thank all those Trump voters for raising my premiums and, perhaps based on my age and health, essentially denying me health care by making it unaffordable. It's not politics for me, it's personal.

Depth And Breadth Of Scandal At Wells Fargo Is Almost Beyond Belief

While we wait for the Republicans in the House to vote to throw tens of millions of Americans off of health insurance and bankrupt tens of thousands of others, including those with employer-sponsored health insurance, let's spend a little time with our one of our favorite corporate criminals, Wells Fargo.

As you might remember, high-pressure sales tactics at the bank let to the opening of thousands of bogus accounts and credit cards by the sales staff without the authorization of the actual account owners simply to rack up additional fees. Wells Fargo initially claimed that this criminal activity was simply a result of some unethical employees and only went on for about five years. It soon emerged, however, that management had received hundreds of complaints about the practice from both inside and outside the firm and were well aware of what was going on, frequently firing the whistleblowers who came forward. In addition, this scam had been running for over a decade, double the time Wells had originally claimed.

So far, of course, Wells Fargo has merely receive just another slap on the wrist for this criminal behavior, paying a $185 million fine for the abuses. But that didn't stop Wells from making it as hard as possible for customers to receive the restitution they were entitled to, trying to force each individual customer to go through arbitration to recover their stolen funds.

Now a shareholders' lawsuit against Wells is uncovering just how deeply the unethical mentality was entrenched at the firm. The first revelation is that it now appears this scam of bogus account openings had been going on for 15 years. In addition, there was something called "Hit The Streets Thursdays" where the Wells Fargo sales staff would go to Social Security offices and sites where undocumented immigrants would be working and try to get people to sign up for a Wells Fargo account, offering to waive the check cashing fee for doing so. Of course, those people were probably not informed that there were other fees on the account that would offset the check cashing fee. And once that one account was set up, it made it possible for the salesperson to set up multiple other bogus accounts and generate fees from those.

Management was well aware of these practices and even encouraged them, as the Washington Post illustrates with the story of one Wells Fargo salesman:

Ricky Hansen Jr., who worked for several years as a manager at Wells Fargo branches in Arizona, said in court documents he witnessed sales tactics “that started out okay but then evolved into massive fraud.” Hansen said he discovered that one employee was opening 40 to 50 bank accounts under fake names every week, and funding those accounts by transferring other customers’ money. The employee later moved the funds back, after he’d received credit for the sales, hoping the customers didn’t notice. Hansen added that customer signatures on bank records appear to have been written by the same person using the same pen. Still, the employee was praised by upper management, Hansen said. When he reported to the bank manager what he knew, he was told the employees’ sales were legitimate. "You have to decide if you want a job here. You can either run with us or not,” Hansen recalled his district manager telling him, according to court records. “Play ball or get out.” Hansen was later fired, while the employee he reported was promoted, he said.

It is incredible to think that during most of the 15 years that this unethical and criminal activity was going on Wells Fargo was considered one of the best run banks in the US. Their balance sheet was in such good shape that they tried to refuse to take TARP money at the height of the financial crisis. Since the financial crash, we have learned about the mortgage and foreclosure fraud, the price-fixing of interest and currency rates, massive anti-money laundering violations, and much more. But, looking at the breadth and depth of this scandal, you can only wonder what other criminal and unethical behavior was going in the banking industry that we still don't know about.

Wednesday, May 3, 2017

House Apparently Will Vote On Trumpcare 3.0 Tomorrow

Apparently, the House will actually vote on Trumpcare 3.0 tomorrow and they may actually have the votes to pass it. The whole exercise has had less to do with health care than with making whatever deals need to made to just get the bill to the floor for a vote and pass the buck over to the Senate.

There is nothing in this new bill that would reduce the estimated 24 million that would lose insurance based on the CBO estimate of the original bill. In fact it would probably increase that number. There will still be nearly $900 million in Medicaid cuts. While it theoretically maintains the requirement to cover pre-existing conditions, it allows insurers to charge higher premiums for those with pre-existing conditions. Estimates are that people with asthma would see their premiums rise by around $4,000; diabetes $5,500; pregnancy $17,000; arthritis $26,000; and cancer premiums could rise by an incredible $140,000.  In addition, states can opt-out of the minimum insurance standards and basically allow insurers to sell junk insurance. That change would not only effect people currently on Obamacare BUT ALSO ON EMPLOYER-PROVIDED PLANS AS WELL! Lastly, I have already written that citizens in states like California and New York that require insurance plans cover abortion would not be eligible for the tax credits that are essentially replacing the Obamacare subsidies.

Republicans are rushing this vote through without getting it scored by the CBO and the expectation is that the numbers will be even worse than the original. There has been no input from the any of the interested medical organizations and lobbies. But with the latest budget deal being seen as a total capitulation by the Republican base, the need for some kind of win for Trump, Ryan, and the House Freedom Caucus was enormous, with Ryan probably being the one with the most need. On the other hand, this vote will leave Republican moderates hung out to dry, even if they vote no but the bill still passes.

Everyone knows that this bill will never go anywhere in the Senate, if it even gets taken up at all. That would truly leave the Republicans in the House hung out to dry. If it is taken up by the Senate, it will come back to the House in a far different form that would once again be unlikely to pass the House. So this is strictly a CYA process for conservatives and Ryan.

Obviously, Democrats should hope the bill goes down to defeat in the House or, even better, never actually makes it to a vote. Legislation has the uncanny habit of getting completed in some form once it gets passed in one house of Congress or other. That would be a disaster for Democrats and for the country. But there is a feeling that there may be a silver lining if the bill simply comes up for a vote tomorrow. Some Democrats privately feel that it would increase their chances of retaking the House in 2018. For moderate Republicans, the Democratic attack ads simply write themselves. For the House Freedom Caucus, this is not repealing Obamacare but a bastardized replacement plan. As the head of the House Democratic Caucus Chairman said, "There’s a cadre of 35 to 40 Republicans who are staring death in the face if they give their vote."

Media Enforce Clinton Rules Even After The Election

Since we seem to be rehashing the 2016 election today with James Comey's testimony on his actions before the election and Hillary Clinton's comments yesterday, we get a chance to see one more classic example of the Clinton Rules when it comes to the media. Taken together, Comey and the Clinton Rules pretty much sum up the entire election campaign.

In an interview with Christiane Amanpour which covered a whole range of issues mostly concerned with empowering women, Clinton was unsurprisingly asked about the election and provided an honest mea culpa on the result, saying, "I take absolute personal responsibility. I was the candidate, I was the person who was on the ballot. I am very aware of the challenges, the problems, the shortfalls that we had." She later added, citing multiple analyses and specifically Nate Silver, that she felt James Comey's letter swung the election away from her. She added that with an election result that was as close as it was, any number of factors could be pointed to as decisive but that Comey's actions moved the electorate more than anything else that is remotely quantifiable. According to Clinton, "I was on the way to winning until the combination of Jim Comey’s letter on October 28 and Russian WikiLeaks raised doubts in the minds of people who were inclined to vote for me but got scared off — and the evidence for that intervening event is, I think, compelling [and] persuasive."

Later on in the interview, Hillary discussed her mistaken belief that the policies she had proposed would get more traction and specifically cited the importance of infrastructure, making the rather obvious point that it is hard to bring significant businesses into an area "if you don't have access to high-speed affordable broadband, which large parts of America do not. If you drive around in some of the places that beat the heck out of me, you cannot get cell coverage for miles. And so, even in towns — so, the president was in Harrisburg. I was in Harrisburg during the campaign, and I met with people afterward. One of the things they said to me is that there are places in central Pennsylvania where we don't have access to affordable high-speed Internet."

And with that we were off. Here is the tweet from the New York Times' Glenn Thrush: "Hillary takeaways 1) Loathes Trump 2) blames Comey/Putin 3) the 'real' Hillary-funny, hard-edged, unguarded 4) blames everyone but self". Of course, the very first thing Clinton said is that she is ultimately responsible for her loss, but no matter. Here is Phil Elliott of Time Magazine: "'You cannot get cell coverage for mile,' Clinton says of the places that voted against her", implying she was blaming that fact for her loss. Here is Zach Wolf from CNN: "Clinton NOW talking about Pennsylvania, rural cell service. Uhhh." Of course, providing high-speed broadband to every area of the country was an integral part of Clinton's infrastructure plan but that's not nearly as sexy or important as emails. And here is Philip Rucker in the Washington Post saying, "Yet the Democratic nominee declined to fault her strategy or message, nor did she acknowledge her own weak­nesses as a campaigner or the struggles by her and her advisers to at first comprehend and then respond to the angry mood of broad swaths of the electorate." In fact Clinton made it very clear in the interview that her campaign made their share of errors and mistakes.

What's clear about every one of these reporters is that they never bothered to listen to the whole interview with Clinton. They just took the few comments that got quoted and tweeted and reflexively painted Clinton in the worst light possible. And that is pretty much how most of the media treated her entire campaign.

Comey Acknowledges Investigation Into Whether FBI Was Also Colluding With Trump Campaign

As noted in my prior post, James Comey is testifying to the Senate Judiciary Committee today. He has already been pinned down by Diane Feinstein and Patrick Leahy about his decision to reveal the investigation into the Abedin emails just 11 days before the election and his answer to that critical question is simply not credible.

But he is also made news saying that the FBI is investigating whether the existence of the Abedin emails was leaked to the Trump campaign, and specifically Rudy Giuliani, before his ill-advised letter. Giuliani told reporters after the existence of the emails was revealed that he had known about them beforehand and some of his statements to the press before Comey's letter hinted that he knew that a bombshell about Clinton was about to drop. There were unsubstantiated reports that Giuliani had been fed the information by agents in the FBI's New York field office, where he has maintained a number of close contacts. In addition, other unsubstantiated reports claimed that Comey sent the letter to Congress specifically because he was essentially being blackmailed by those New York agents who threatened to go public with the information if he didn't. And it is believed that Fox's Brett Baier's report in the last week of the campaign saying that Clinton would likely be indicted in a "pay-to-play" scheme at the Clinton Foundation, that new emails with possible classified information have been found among the Abedin emails, and that Hillary's email had almost assuredly been hacked at least five foreign intelligence services had been based on Giuliani as a source who was passing on what he knew from those New York FBI agents. Baier had to almost immediately walk those accusations back, but that report certainly fed into the narrative about Clinton immediately before the election.

Patrick Leahy asked Comey if the FBI was investigating possible leaks to the Trump campaign and Comey replied, "Correct", adding "If I find out that people were leaking information about our investigations, whether to reporters or to private parties, there will be severe consequences". Comey assured that he would let the committee know the results of the investigation but did not promise to make the result public.

As with everything Comey, there are a number of problems here. First, should we really be relying on the FBI to investigate itself, especially in light of the partisan decisions that Comey made in the run-up to this election. More shockingly, Comey is admitting that there is an open investigation into whether the FBI was also colluding with the Trump campaign in the same way as the Russians. If this turns out to be true, not only would it show that the FBI has become a rogue agency under Comey's watch, it would be an unbelievable subversion of our democracy. It would almost literally be an American coup. And, again, Comey's prior actions give us no confidence he will lead a thorough investigation into this, especially when he will not agree to make the results public.

Comey's Answer On Abedin Emails Is Simply Not Credible

So James Comey is testifying at the Senate Judiciary Committee today and Diane Feinstein finally put him on the spot about his decision to reveal the FBI investigation into the Abedin emails just 11 days before the election, an act that virtually every independent analysis shows tilted the election in Donald Trump's favor. Comey's answer was less than satisfactory.

Comey insisted that he would make the same decision again, which is not surprising because he will never admit an error as enormous as this was. But his explanation was truly beyond belief. Comey said, "I stared at ‘speak’ and ‘conceal,’ and ‘speak’ would be really bad. There’s an election days away—Lordy, that would be really bad. Concealing in my view would be catastrophic, not just to the FBI but well beyond. And honestly, as between really bad and catastrophic, I said to my team we’ve got to walk into the world of really bad...Anybody who disagrees with me with me has to come back to Oct. 28 with me and stare at this and tell me what you would do. Would you speak or would you conceal? I could be wrong, but we honestly made the decision in those two choices and even in hindsight, and this has been one of the most painful decisions, I would make the same decision. I would not conceal that to Congress." Well, really bad it was. Of course the hypocrisy of this statement is that when he looked at "speak" and "conceal" when it came to the investigation of Russian hacking and the connections to the Trump campaign, "conceal" did not seem so "catastrophic".  But Comey incredibly claims that their was no hypocrisy in how treated the Trump investigation, saying, "I treated both investigations under the same principles … people forget we would not confirm the Hillary Clinton email investigation existed for the first three months." I am not aware of any DOJ “three month rule” on not commenting about ongoing investigations but apparently Comey thinks there is one.

In addition, Comey tried to weasel his way out of even taking responsibility for the investigation of the Abedin emails becoming public, claiming he merely sent a "private letter" to the heads of the House and Senate Oversight Committees.

Just look at the incredible lack of judgement here. On the one hand you have the potential of a presidential campaign conspiring with a foreign power, possibly committing treason, and a batch of emails that you have no idea are relevant or not to an investigation of the possible unintentional mishandling of confidential documents. Which one seems like the bigger threat to the country? Of the two, which one would you "conceal"? If you are James Comey, you "conceal" the Trump investigation and "speak" about emails whose contents you know nothing about and whose relevance turns out to be nil. Of course, he could have taken the proper course of action that follows DOJ procedures and applies in all FBI investigations, especially right before an election, and that is not to comment at all until there is a decision whether or not to prosecute. In addition, Comey apparently believed, if you take him at his word, that his "private letter" to Jason Chaffetz, who had been waging a partisan witch hunt against Hillary Clinton for years, would not become public. These answers are just not credible.

As Adam Schiff put it in a nutshell, for Comey, "Real choice was not conceal or speak. Comey spoke about Clinton & concealed Trump invest. Real choice was to abide by DOJ policy or violate." He chose violate.

Tuesday, May 2, 2017

How Corporate Greed Helped Create The Current Opioid Addiction Crisis

The opioid epidemic is probably one of the United State's biggest public health issues since the turn of the century. It has destroyed lives and ripped families and communities apart. The causes for the crisis are varied with some of the responsibility lying in the despair of once vibrant communities that have lost the economic vibrancy they once, or in some cases, never had. But one thing is clear and that is the epidemic was and is fueled every step of the way by corporations in a deadly drive for profits above all else.

Back in the late 1980s, a company called Purdue Pharma was scheduled to have the patent on its main source of revenue, a pain pill called MS Contin, expire. Facing a massive revenue loss due to the coming competition from generics after the patent expired, the company needed to find a new cash cow. The success of MS Contin was based on stretching the release of the drug's main ingredient, morphine, over a period of eight to twelve hours. The company decided to replicate that process using oxycodone, which was currently sold under names like Percocet, instead of morphine. Thus was born the painkiller OxyContin.

Traditional oxycodone like Percocet lost efficacy after about 6 hours. With their time-release technique, Purdue believed they could stretch OxyContin's effectiveness out to 12 hours. And when the drug was finally ready to be introduced in the mid-1990s, that is how the company planned to market it. The problem was that clinical trials actually showed that the drug wore off well before the 12 hour period. In one study on cancer patients, 95% needed additional pain medication before the twelve hours ended. But the crucial selling point of OxyContin for Purdue was that it lasted for 12 hours, twice as long as its competition and meaning that patients would not be disturbed at night because of the need to take another pain pill. The company did complete one study in Puerto Rico where only one-third of participants needed additional medication and that study was used to get OxyContin approved for use by the FDA.

It soon became apparent to doctors that OxyContin was not providing the full 12 hour relief to many patients. Of course, Purdue was well aware of this fact as their studies had shown that to be the case. Doctors started prescribing Oxy for patients to take at 8 hour intervals. But that was just marginally longer than traditional oxycodone and would therefore reduce OxyContin's marketability. In addition, insurance companies started to refuse to fill OxyContin prescriptions for less than the 12 hour period. Purdue's sales teams forcefully instructed doctors not to prescribe for eight hour intervals but instead to increase the dosage of Oxy for those patients not getting full relief instead.

Raising the dosage also increased returns for Purdue. The highest dosage pills cost over six times as much as the lowest dose. And part of that increase went into the pocket of the sales team and executives at Purdue. But increased dosages along with the withdrawal that comes when the painkiller wears off in just eight hours also massively increased the chances for addiction and overdose. In 2007, Purdue and three of its executives were sentenced for downplaying the risks of addiction and forced to pay $635 million as a result of a Justice Department lawsuit. A study in Canada of 32,000 OxyContin patients showed that 1 in every 32 had died of an OxyContin overdose. As one researcher noted, these patients were "more likely to die as a result of their medication than almost anything else." But none of that mattered to Purdue because, as part of their defense in another case in Connecticut stated, "The 12 hour dosing schedule represents a significant competitive advantage of OxyContin over other products."

Purdue was well aware of the difficulties with OxyContin from the very beginning. They knew that for many people it would not work for the full twelve hours, creating withdrawal symptoms and risking addiction. In response, the company recommended upping the dosage which increased the chances for overdosing. All in the name of profits.

But Purdue was not the only company interested in getting on the gravy train of OxyContin and other oxycodone drugs. The oligopoly of prescription drug wholesalers, McKesson Corporation, Cardinal Health, and AmerisourceBergen Drug Company have done nothing to stop the clearly abusive flow of prescriptions for these addictive drugs into communities across the country. These companies are obviously abetted by doctors and local pharmacies in every instance. And often they are assisted by lax oversight, if not willful blindness, by state regulators.

In West Virginia, pharmaceutical companies flooded the state with over 780 million hydrocodone and oxycodone pills over the span of six years. That comes to 130 million pills per year. The town of Kermit, West Virginia, has a population of 932 but a single pharmacy in that town received over 4.5 million pills per year over a two year period. In the town of Oceana, a pharmacy received 600 times more oxycodone pills as another pharmacy literally just down the street. The population of the entire state of West Virginia is about 1.83 million and the number of pills delivered to the state amount to over 430 for every single individual in the state. And, as we saw with what Purdue did with OxyContin, the dosages for these prescriptions increased as time went on. The state Board of Pharmacy was made aware of the potential problems with local pharmacies for years but refused to investigate and kept on giving those pharmacies positive inspection reviews.

A similar pattern is now a subject of a lawsuit in Oklahoma where the Cherokee Nation has sued the prescription drug wholesaler oligopoly of McKesson, Cardinal, and AmerisourceBergen as well as the three members of the prescription drug provider oligopoly, Walgreen's, CVS, and WalMart for having turned "a blind eye to the problem of opioid diversion and profited from the sale of prescription opioids to the citizens of the Cherokee Nation in quantities that far exceeded the number of prescriptions that could reasonably have been used for legitimate medical purposes."  As in West Virginia, the suit alleges that these firms flooded the 14 counties that comprise the Cherokee Nation with enough hydrocodone and oxycodone pills to supply every man, woman and child in the Nation with at least one pill each in 2015 alone.

The prescription drug wholesalers and the prescription drug providers are both required by law in many states to report potentially abusive or suspicious prescription orders to authorities. For the most part, these companies simply ignore that requirement. There is simply too much many too be made from these companies' sales forces up to the top executives from preying on people's addiction and oversight from the states is either lax or captured. In addition, doctors are equally complicit in feeding these addictions as virtually every one of the prescriptions for these millions of opioid pills was written by a medical professional.

In the last two decades, over 7 million Americans have abused OxyContin and more that 190,000 have died from opioid overdoses related to oxycodone abuse. In 2015, it is estimated that 2 million Americans had a substance abuse problem related to painkilling medication. In addition, there is no doubt that prescription drug abuse has also led to an increase in heroin addiction, with another half million Americans currently abusing that drug. These are just numbers and they don't tell the heart-wrenching stories of the individuals involved. But so many of these numbers and the tragic stories behind them are driven by a collection of oligopolies that elevated the primacy of corporate profits and greed over the actual health of the people these companies are actually intended to serve. Such is the state of unrestrained American capitalism.

I suggest you read the incredible reporting that provided the information for this post, the LA Times' incredible expose on OxyContin and the Charleston (West Virginia) Gazette two part series on the opioid crisis in West Virginia. The level of greed and corruption that both articles uncover will shock you, especially when you consider the incredible damage that has been done.

Why Is The House Still Trying To Pass The AHCA?

Can someone please explain to me what is the political calculation driving the House to try to ram through an unpopular health care bill that they know will go nowhere in the Senate. The revised bill will get the same horrendous CBO score as before and, for potentially vulnerable GOP members, the Democratic attack ads virtually write themselves. With the most recent special elections showing an over 10% swing toward Democrats, that would mean over 100 Republicans would be in danger in 2018 if that trend holds. So what is driving the GOP?

The original idea was that ACA repeal would create a $1 trillion tax cut that could then be used as the baseline for further tax reform and greater tax cuts in for the 2018 budget. But, if Republicans know this bill will never fly in the Senate, then that can't be the reason for continuing to try to pass the AHCA. Is it Paul Ryan who sees this as a way to show that his leadership is not a failure and save his job as Speaker? Is it the House Freedom Caucus who Trump blamed for the original AHCA defeat trying to avoid primary challenges in 2018? And what are some of the House moderates thinking?

As Chris Hayes pointed out last night, the tax credits that the AHCA will use to replace the Obamacare subsidies can not be used to purchase health insurance plans that cover abortion. That was in the original bill and, as far as I know and correct me if I'm wrong, that provision has not been changed with any of the recent amendments. State law in California requires that abortion be covered and it is part of the minimal plan in New York. In Massachusetts, abortion that is considered medically necessary must be covered.

Are Republican moderates in New York and California, who are almost by definition considered vulnerable, going to vote to pass the AHCA with this provision in it, even if it dies in the Senate. According to the latest Huffington Post whip count for this week's supposed vote on the AHCA, there are two GOP House members from California who lean no, Paul Cook and David Valadao. There are four members who are undecided, two from California and two for New York, Steve Knight, Ed Royce, John Faso, and Elise Stefanik. And there are two who lean yes, Darrell Issa and Peter King.
Three of those Republicans, Steve Knight, John Faso, and Darrell Issa, won by less than 10% in 2016. Two others had margins that were around 15%.

I still have no idea what the Republicans in the House are thinking. Is this simply an attempt at CYA for the conservatives? Are they caving in to pressure from Trump? Is Paul Ryan driving the issue? I don't have a clue. What I do know is that the longer the House and Donald Trump take talking about health care and still getting nothing done is another day for Democrats to rally their base, another day to display GOP failure, and another day wasted for the rest of their legislative agenda.

Juncker Makes Clear To May That Brexit Negotiations Will Not Be Easy

Theresa May might have just gotten her first real wake-up call on the real difficulties in separating from the European Union. Leaks of May's meeting with Jean-Claude Juncker, President of the European Commission, quoted Juncker as saying that May was not only in "a state of denial" and but also was in a "different galaxy" when it came to the Brexit negotiations.

May insists on trying to work out a new trade deal with Europe at the same time as the withdrawal terms are being negotiated. Juncker dismissed that idea out of hand and he was subsequently supported by Angela Merkel who said, "I must say this clearly here because I get the feeling that some people in Britain still have illusions — that would be wasted time...We can only do an agreement on the future relationship with Britain when all questions about its exit have been cleared up satisfactorily".

In addition, May also seems under the illusion that the UK will not have pay a "severance" fee to the EU for leaving simply because there is no mention of such a fee in the EU treaties. Juncker made it clear that there would be no subsequent trade deal without such a payment.

Admittedly, this is just the opening act in a long negotiation and positions on both sides will evolve over the next two years. But it should now be clear to May that the EU holds most of the cards and is not only united but in no mood to make things easy for Britain's exit. While she will not say so, May's best hope for an easier path for Brexit would be to have an anti-EU candidate win the election in Netherlands or France, perhaps breaking up the unity of the bloc. But Wilders was soundly defeated in the Dutch election and Le Pen is trailing badly in the current polls in the run up to this weekend's election.

The open question is whether May's "hard" Brexit stance is being influenced by other pro-Brexit ministers and members of the government who are pushing the idea that leaving the EU without a trade deal and falling back under WTO trading rules would be an acceptable outcome. Apparently there are number of ministers who are increasingly comfortable with this idea. But a Treasury report prepared before Brexit estimated that falling under WTO rules would cut UK GDP by between 5% and 10% over 15 years and blow a more than 40 billion pound hole in government finances.

In any case, Juncker has made it clear to May that it will be a difficult road ahead in order for the UK to leave the EU. This guarantees that there will be no quick solution and more years of uncertainty for the UK economy. In addition, the pressure from Scotland and Northern Ireland to leave the Union and become part of the EU will continue to build. May and the Conservatives are expected make gains in the upcoming election, mainly by making further inroads in formerly Labour areas. But while England may become more unified under Tory rule, in many ways it will also become more isolated. That does not actually make for a stronger negotiating position.

Monday, May 1, 2017

Apple's Cash Reserves Show Need For Real Antitrust Enforcement

Apple's current cash holdings have probably reached over $250 billion at the time of this writing which, with the exception of the top 40 or so economies, is greater than any country's GDP and is greater than the market capitalization of Wal-Mart.  As the Wall Street Journal reports, that is also larger than the current foreign currency reserves of the UK and Canada combined and it is more than the annual interest on our national debt. Note that we are not talking about Apple's market capitalization but their current cash reserves.

In the last quarter of 2016, Apple was socking away cash at a rate $3.6 million per HOUR. More than 90% of this cash is stashed offshore in an attempt to avoid US taxes on those profits. With the latest Trump tax proposal showing that the repatriation of offshore profits would only be taxed at a rate of 10%, it would provide an opportunity for Apple to successfully avoid billions of dollars in taxes. As the Journal states, "Apple Chief Executive Tim Cook early this year said he was eager to bring cash home if tax changes enabled it. Chief Financial Officer Luca Maestri said such a move would give Apple flexibility to do more capital returns." Of course, there is no reason that Apple could not "bring the cash home" right now. The only thing that the "tax changes" would "enable" is to massively lower Apple's tax bill. And when Maestri talks about capital returns, he is probably talking about a special or higher dividend or a stock buyback. In addition, acquisitions might also be considered but, unlike Google, Apple has been leery about purchases outside its specific space. Perhaps the most tempting business out there for Apple would be Netflix. But it is likely that whatever Apple buys will simply consolidate its place in the tech oligopoly.

While Apple continues to build its cash reserves, it apparently pays far less attention to the workers who actually build its products. For years, Apple's factories in China have abused workers and, despite Apple's insistence that it continually audits its suppliers and improves working conditions,  things hardly seem to change. And it is not just Chinese factory workers who face abusive conditions. Employees at Apple stores complain that "they are treated like criminals" and other have sued the company for wage theft.

Since the inception of this country, there has always been a concern about the deleterious effects of monopoly power. And that concern was not based on concern for consumers but on the fear of the concentration of political power by those monopolies. Thomas Jefferson wanted a "restriction against monopolies" included in the Bill of Rights. But any real restrictions on economic power did not come until the late 1800s and the passage of the Sherman Antitrust Act. While the specifics of that law were more designed to protect consumers, it was largely driven by "a popular revolt against the political corruption perpetrated by large corporations" according to professor Luigi Zingales. Ever since then, there has been a tension between those two directions to antitrust policy.

Largely driven by the work of Robert Bork, antitrust policy in the US has solely been focused on whether consumers would be hurt by mergers and industry concentration. This policy has led large sectors of the American economy to be dominated by oligopolies, with just a handful of companies dominating the airline, health insurance, drug store, chicken, beef, and pork production, tech, cable, and banking industries. And the political power of these oligopolies are enormous.

Now, at last, the political implications of monopoly power are beginning to make a come back in economics discourse, at least. According to Diana Moss, the head of the American Antitrust Institute, "Growth in income and wealth inequality is fundamentally an antitrust problem, because of the growth of dominant firms from what is a relatively lax period of enforcement". And Zephyr Teachout adds, "People do not believe that Apple, Amazon, and Google get the same treatment when it comes to tax policy or criminal law. They are not wrong in that belief. The too big to jail problem is as threatening, if not more, than the too big to fail problem that we have." I would certainly add Wall Street firms and executives avoiding prosecution in the wake of the financial crisis as a prime example of the political power of an oligopoly.

In addition to the obvious, at least to some of us, political ramifications of lax antitrust enforcement there is now increasing evidence that increased concentration has real negative economic implications. Recent studies have show that mergers in some sectors, rather than leading to greater efficiency and lower prices, actually lead to an opposite result with higher prices and lower productivity. Jonathan Baker adds that it has turned out to be a false assumption "that greater business freedom to pursue efficiencies would lead to long-term consumer welfare gains without facilitating substantial and durable market power. From today’s vantage point, market power appears to have been widening for decades, while economic dynamism and the rate of economic productivity growth have been declining."

And what could be a greater example of market inefficiencies than a company sitting on a quarter of a trillion dollars in cash. Surely, the principles of economics would dictate that the company invest in new or improved products, or increase the knowledge and wages of its workers, or, at worst, return much of that cash to its shareholders. Instead, the company holds the money offshore and pressures our government to give it an enormous tax break in order to put that money to use. All of which is as good a reason as any to have strong antitrust policies in place to ensure that a virtual monopoly like Apple never gets this kind of money and power in the first place.

Now we all know that the Trump administration is not going to increase antitrust enforcement. In fact, it will do exactly the opposite. But making the political and economic case for reducing the power of American oligopolies can be a powerful political message for Democrats in the next four years. Let's hope we can take advantage of it.

On International Workers' Day, US Works Harder For Less

For most of the rest of the world, today is the International Workers' Day, the equivalent of Labor Day here in the United States. The reason the US does not celebrate this day with most of the rest of the world is because of the fear of workers uprisings, socialism and communism. In an attempt to appease the working class after the deadly and brutal suppression of the Pullman strike, President Cleveland designated the Labor Day as we know it here in the US in 1894. There were already a number of states in the US where a day in September was designated to commemorate workers so it made some sense for Cleveland to designate that date. In addition, May 1st had been formally declared International Worker's Day by the Second International, an international organization of socialist parties, in Paris in 1891. That day was specifically chosen to commemorate the Haymarket Riot in Chicago in 1886. So the fact that the day commemorated a less than memorable day in US history and was supported by socialist, communists, and anarchists gave Cleveland further reason to choose a day in September.

But enough history, let's talk about US workers today, especially compared to our industrialized counterparts. According to the OECD, US workers put in far more hours that our industrialized counterparts.

Now I know that all those European countries where people work far less are hellholes where no one has jobs, living off the dole, with areas of the big cities where police won't go and are ruled by Sharia law. Of course, if you ever go there, you know that it's not true. The fact is that the recognized dynamo of Western economies right now is Germany and they work nearly one quarter fewer hours than their counterparts in the US. In addition, those German workers get a version of a state run health care system. According to the OECD, after tax income for the median household in Germany is 31,925 USD per year. That number is 41,071 USD for the median household in the United States. So median income is roughly 25% less for Germans who work 25% less hours. It kind of makes sense until you consider health care costs in Germany are included in that income number. For many workers in the US, especially part-time workers, health care was a personal cost to workers before Obamacare and for higher earning individuals it still is. In the end, Americans work significantly harder for potentially less than their industrialized counterparts.

Budget Agreement Shows Congress In Control, Trump Sidelined

Last week I wrote that the failure of the AHCA, the increasing awareness that Trump is constantly bluffing, then folding, and Trump's clear weakness would allow Congress to take control of the GOP agenda going forward. The latest deal on a continuing resolution that keeps the government funded through September shows that is exactly what has happened. Virtually all of Trump's "demands" have been ignored. This was partly driven by the need to get Democratic votes but also by Congressional Republicans' realizing they don't have much to fear in ignoring the President.

Trump's signature campaign promise, the border wall, was left unfunded entirely. There was no money for an increased deportation force. There are no cuts in funding to sanctuary cities. Planned Parenthood was not de-funded. There was even more money for the sciences and renewable energy. In addition, as part of the agreement, the Trump administration agreed to keep on paying the insurer subsidies that are a critical part of the ACA, payments Trump had threatened to cut off in order to get Democrats to negotiate. The only item that Trump can point to as a "win" is the increase in the defense budget, but that increase was actually far less than what Trump had originally sought.

While Congress may be taking control of the agenda, that does not mean that it will be any easier to get things done. As we have seen with the 2017 budget and the AHCA, the divisions within the GOP caucus are pretty deep. Republican moderates in the House are getting increasingly nervous about 2018. Getting anything through the Senate other than by budget reconciliation will require Democratic votes. Trump may be sidelined, but progress on the GOP agenda may be just as problematic.

Sunday, April 30, 2017

Trump's Ignorance, Ego, And Lack Of Discipline Keeps Wasting GOP's Legislative Time

Reflecting on Donald Trump's first 100 days of epic failure, what is shocking is to think just how much time was wasted, by his administration, by Congress, and by the American people on irrelevant or doomed issues simply to fuel Trump's enormous ego or deal with his enormous ignorance. Beyond the wasted legislative days that the Trump administration has not taken advantage of,  Republicans in Congress have had to spend hours and days defending the indefensible or reacting to Trump's latest outrage. All that has taken away from the time that the GOP can spend building popular momentum for their agenda, no matter how unpopular much of it may be. Admittedly, some of these irrelevant issues are designed to deflect attention from Trump's criminality or failure, but they nonetheless waste valuable legislative time for both Trump and Congress.

It began virtually on day one, with the ridiculous argument over crowd size and then the damaging attacks on the media and the intelligence communities, disgracing himself and his office in front of the Wall Of Heroes at the CIA.  It was followed by the illegal voting claims and the poorly crafted Muslim ban that would not stand constitutional scrutiny, followed by attacks on the judiciary. As the Russia investigation started to heat up, Trump then claimed Obama tapped Trump Tower, which precipitated the whole fiasco with Devin Nunes and the unfounded accusations against Susan Rice. And, because of Trump's ignorance and stubbornness, he tried to ram through the Muslim ban 2.0 which refused to address the problems with the original order.

But the best example of how Trump's ignorance and ego is hurting Republicans is the disaster of the AHCA. Trump's inability to focus on the details and instead simply demanding that the Republicans in the House pass the bill actually helped splinter the GOP in the House. When the AHCA did not even get to the floor for a vote, Trump lashed out House Freedom Caucus and suggested they were as much the enemy as Democrats. But rather than moving on to tax reform (aka tax cut), Trump has insisted that the House keep on pushing to repeal Obamacare no matter how unpopular the issue has become for the GOP in order for him to get a "win" before his first 100 days are up. That, again, resulted in another predictable failure but, even now, Trump is pushing forward to try to somehow get to a vote, wasting even more time on an issue that, at this point, is doomed to failure. Paul Ryan may want to pass something to save his own job and the Freedom Caucus may want to pass something so they won't be blamed, but, even if they actually accomplish passing some form of repeal and replace of the ACA, it will never pass the Senate. Right now, they are just wasting time in futile attempt to simply avoid blame.

Today, Trump provided even further evidence for how damaging he can be. In an interview this morning, he apparently backed off the key promise of allowing states to opt out of covering pre-existing conditions that had actually gotten the Freedom Caucus on board with another try to pass the AHCA. In addition, Reince Priebus refused to knock down the story that Trump is considering revising the First Amendment to allow news organizations to be more easily sued, presumably by Trump. Republicans in Congress will have to react to both of these issues at some point tomorrow.

In addition, Trump seems to provide no discipline or direction for the administration. Everyone knew that tax reform would be the next item on the agenda after dealing with the ACA. Yet, when Trump surprised the Treasury Department with his announcement that they would be presenting a tax plan last week, another item fueled by Trump's need to get a "win", the best they could come up with was a laughable one-page bullet point draft. It seemed that Treasury had done little or no preparation on tax reform at all.

Besides the first 100 days being the time when most Presidents get most of their legislative priorities passed or at least outlined and in Congressional committees, there are only around 150 legislative days for Congress in any calendar year.  Much of that time is often used up with required actions like putting together a budget. Because of the incompetence of the Trump administration driven by Trump's lack of leadership and discipline, around 40 or 50 legislative days of this year have already been used up. The AHCA is dead but still being debated. There are no other bills focused on the GOP agenda that are even being considered in Congress. In fact, Congress is still dealing with the 2017 budget. They still have the 2018 budget and the debt ceiling to worry about, and both those items will require Democratic votes.

As the year progresses and it becomes clearer that Trump may face an entire year of legislative futility, his ego will fuel even more distractions and outbursts. All this is good new for Democrats, But, eventually, Congress, especially Mitch McConnell, will take control of the legislative agenda, crafting legislation either on its own or with elements inside the Trump administration but away from Trump's interference. When that time comes, Democrats must be ready to relentlessly resist in the same ways that we were able to defeat the AHCA.

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