Donald Trump humiliated on healthcare. He had better hope the US economy booms
“Nobody knew,” said President Trump recently in his typically breezy style, “that healthcare could be so complicated.” Sure, nobody knew, unless you are one of the tens of millions of people in the US who have, unlike the President it seems, thought about it for more than five seconds.
Today Donald Trump was introduced to just how difficult the politics of healthcare are when he experienced the humiliation of a major piece of legislation being withdrawn. The decision was made when it became clear that there were not the votes.
Healthcare across the developed world, where expectations often outstrip resources and management capacity, tends to be complicated. But the US is special with deep suspicion of socialised medicine widespread, but with many of those most suspicious wanting entitlements for themselves. The peculiarity of the American system appalls Europeans because even though it involves high-spending it traditionally provides poor coverage. Care in the US when it is good is among the best in the world and when it is bad, for those less able to pay, it is frequently dire.
Yet there is no consensus on how to fix it and arguments have raged for decades while Trump was watching something else (himself?) on television in Trump Tower. The system of entitlements and tax-breaks that developed across administrations controlled by both major parties created so many distortions and perverse incentives. Then the Obamacare programme piled more on top, with rising premiums to boot. But what it did do – hated as it is by conservatives – is extend coverage. What is given is usually, within a surprisingly short timespan, difficult to take away. Many of the voters in a punchy populist mood last November seem to want government that is simultaneously smaller, or more effective, and even more entitlements at much lower costs.
During the election campaign, Trump surfed that populist wave. In September of last year he said that voters would “have their doctors, they can have plans, they can have everything.”
They can have everything… how about the moon?
“Everybody’s got to be covered,” he said, with the air of a circus master waving his tophat in the air to attract a crowd of suckers. “This is an un-Republican thing for me to say, because a lot of times they say, ‘No, no, the lower 25 percent that can’t afford private.’ But I am going to take care of everybody. I don’t care if it costs me votes or not… The government’s gonna pay for it.”
After the election it expected him to lose, the Republican leadership ignored his blather and set about building its own plan under Paul Ryan, Speaker of the House, which it then persuaded Trump to endorse, after a fight among his advisors. The result has been the creation of a failed alternative to Obamacare that Trump did not want or design and he seems barely to understand.
The GOP-sponsored American Health Care Act is said to remove as many as 24 million people from coverage. It ups costs for older, rural voters, removes basic requirements and treatments, and cuts Medicaid by $880 billion.
Contemplating the bill, Washington this week got into one of its classic wrangles, as Trump tried to get someone else’s plan through Congress. A vote was delayed on Thursday evening, after meetings with the Freedom Caucus which will not be happy until all of Obamacare is gone. Others pushed for more specific concessions in the other direction, to limit premiums rising too high and to protect their voters. It became even more of a mess as a result, to the extent that hardly anyone could explain what the revised bill did. And on Friday the vote was pulled.
Trump the dealmaker and CEO has been exposed in the very area he was supposed to be good at – that is solving problems and fixing deals. To an endlessly complex dilemma, Trump aimed, as much as he thought about it, to bring the simplicity of the Art of the Deal to bear. That is his terrible book (written by a now regretful ghostwriter) in which he supposedly explains how to negotiate successfully. If there can be no deal, Obamacare stays in place and Trump can now blame Washington paralysis and party game-playing. Will that work?
Probably not. Congress can try again at some point, but in front of his own voters it has been revealed in round one that for all his swagger about doing terrific deals for them he was prepared to put his weight behind a programme that it seems would reduce cover for quite a few of those who voted for him.
The healthcare reform package constructed by Ryan and pushed by Trump was off the scale in terms of unpopularity with American voters. A nationwide poll conducted by Quinnipiac University this week suggested that Americans were opposed to the AHA bill by 56-17, a result somewhat outside the margin of error to put it mildly.
Trump endorsed Ryan’s plan and for all he’ll say “we had a great plan, such a great plan” it wasn’t great, voters hated it and it is more clear than ever that in going along with Ryan he showed he doesn’t do the work or the thinking.
As if that is not enough for one week, the strange business of the Trump campaign’s connections to the Russian government gets stranger by the day, with Trump spokesmen giving increasingly bizarre explanations. Talk of money-laundering swirls around associates of the President and the whole thing is about as unpresidential as it is possible to imagine.
None of this seems to penetrate the Trumpian carapace. And for an insight into what is going on inside that skull, it makes sense to read the interview Trump gave this week to Time. The content is standard Trump – I had a rally (good for you) and I won the election by miles (no you didn’t it was very close, down to fewer than 100,000 votes across three states) – but the passages on truth are appalling. He is clearly a post-modern TV addict who seems to think that if he saw it claimed on TV then it is true. He can’t respond in an adult fashion when the interviewers press him with the idea that presidents traditionally aim to say only what has been established as true and verifiable.
His troubling and worsening behaviour is presumably why the Wall Street Journal penned an editorial warning this week that he is becoming “a fake President.” If he warned of an attack, the paper asked, would voters believe him? A basic relationship with the truth matters, most of all in an emergency. For this Trump condemned the esteemed and respected WSJ saying it is “fake news.”
Only two months – and it feels like years – into the Trump presidency and it is already possible to see how this could end in impeachment, if voter anger on healthcare and lack of progress on other matters puts pressure on Republicans in Congress ahead of the mid-term elections and the Russia connection is further exposed. What protects him right now is that many Congressional Republicans are not prepared to take on a Republican president, and they prefer to concentrate on finding and pursuing leakers within the intelligence community. It is a holding strategy that may not work if more emerges.
Ultimately, he’ll be measured by voters on the economy. Short of a killer revelation about conduct, Trump’s future rests, as his election win did, on the economy and on the valid sense that many of his voters were getting a bad deal and voted for something better. So where is it?
The Trump stated aim is 4% growth, and as Diana Furchtgott-Roth reported this week in a piece for Marketwatch in the US even getting close to 3% – from last year’s 1.6% – would do wonders for investment and confidence.
But higher growth, Republicans acknowledge, requires corporate tax reform which must be delivered via Congress, which Trump is now at war with over healthcare. Trump wants the corporate tax rate lowered to a simple 15% and Congress offers 20% – the aim being to usher back in a flood of investment of US wealth held abroad. As Furchtgott-Roth says:
“It is difficult to overstate the importance of a sensible tax system to economic growth. Failure to take into account the deleterious effects of higher taxes is one of the major reasons actual GDP growth had consistently underperformed the Obama administration’s expectations.”
Those tax reforms now look stalled, which explained the falls on Wall Street earlier this week. Optimistic investors based their decisions after the election on the expectation of a boost to US growth and a Trump boom. This was always the seriously positive potential upside of Hillary Clinton and the Democrats losing, for countries such as the UK too who usually benefit when America booms. It doesn’t look promising so far.
After his thrashing on healthcare, Trump had better hope for a breakthrough on tax reform, a sprinkling of magic and a booming economy. For all the “You’re Fired” Apprentice jokes about him being ruthless, if he is in a few months primarily associated with failure on healthcare and tarred with foreign influence and then the economy doesn’t take off, he is doomed. Without a rapidly rising economy impeachment or electoral defeat looms for the man-child with his eyes glued to the TV in the Oval Office.