Trump to take health insurance hostage – by sabotaging ‘Obamacare’ – unless he gets his way

When I posted about this the other day, Obamacare subsides to continue while House v. Price remains in limbo, Greg Sargent of the Washington Post was so hopeful that he wrote In the battle over Obamacare’s future, Trump just blinked. Bigly.

That was then, this is now.

Just two days later Greg Sargent now writes, Trump has a strange new plan to threaten Democrats. It’s a sick joke.

President Trump likes headlines that portray him as a man of action, so he’s probably pleased with the barrage of Thursday headlines about his latest move on health care. ABC News, CNN, the Wall Street Journal, and many others all inform us that Trump is “threatening” to sabotage the Affordable Care Act to force Democrats to make a deal with him on its future. “Threaten” is a verb that is laden with action, purpose, and intimations of concealed leverage and power. Awesome!

Americans whose health, and for some whose life, depends upon Obamacare health insurance are a mere afterthought, they are simply collateral damage in “the art of the deal.” People must die so “Dear Leader” can claim his “victory.”

[T]he basic logic of this threat is extremely shaky. Here’s the problem: Trump could do a great deal of damage to the ACA if he wanted to — but it’s unclear why this would help him realize his own stated goals.

Trump’s new threat is that he will cut off so-called cost-sharing reductions, which subsidize insurance that offers lower out-of-pocket costs to 7 million lower-income Americans. For all the details, see this piece by Jonathan Cohn; the short version is that, if Trump does this, premiums could skyrocket and insurers could flee the individual markets, causing them to melt down and ultimately pushing millions off coverage. As Cohn notes, Trump is basically “threatening to torpedo insurance for millions of Americans unless Democrats agree to negotiate with him.”

Trump told the Journal that “Obamacare is dead next month [The next status report to the Court in House v. Price is due on May 22] if it doesn’t get that money,” adding that “Democrats will start calling me and negotiating.” Politico quotes two senior officials further explaining Trump’s thinking:

“POTUS wants to use [the subsidies] as leverage,” the senior official told Politico. “When Obamacare fails on its own, the Dems will want to come to the table.”…

“I don’t think Trump really wants to cut the subsidies, because he’d get blamed for people losing insurance,” a White House official told Politico. “But right now, it might be his biggest way to force people to do something.”

“Dems will want to come to the table,” and this will “force people to do something.” Missing from this explanation is why this would force Democrats to the table, and to what end he hopes this will occur. The basic problem is that Trump is asking Democrats to cooperate with him to bring about an outcome that would be worse than the one he is threatening them with.

The health-care bill Trump is championing would result in 24 million fewer people with health coverage. Those people are getting insurance both on the individual markets and through the Medicaid expansion, which would be phased out, resulting in 14 million fewer people on that program. But if Trump makes good on his threat to tank the individual markets, that might bump at least 10 million people from coverage, while leaving the Medicaid expansion in place (though it would do plenty of other damage as well). Thus, Trump is basically telling Democrats: “If you don’t give me the money, I’ll shoot only one hostage, rather than both of them.”

Trump wants Democrats to willingly buy in to a worse outcome than the one he is currently dangling as a threat. But if Democrats don’t play along, he’ll likely take the blame for the fallout. A recent Kaiser poll found that 75 percent of Americans want the Trump administration to make the law work, and 61 percent say that Trump and Republicans will be responsible for any problems they cause with it. To extend the hostage analogy, Trump is threatening to kill one of the hostages in a scenario which would leave only his fingerprints all over the murder weapon.

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[T]his leads to the real problem with Trump’s threat and demand for a deal: There are no indications that Trump envisions any outcome which, from the point of view of Democrats, is less awful and regressive than the plan he’s currently pursuing.

Indeed, if anything, he and Republicans are moving in the other direction: the latest effort toward a deal would allow states to jettison ACA regulations in a way that would essentially hollow out protections for people with preexisting conditions, to win over conservatives. But this is already costing the bill more support from moderates. Politico reports that vulnerable GOP Rep. Mike Coffman, who is taking heavy fire from his Colorado constituents for supporting the GOP bill, is now saying it would be “tough” for him to support such a deal. Thus, it’s likely that the only route to a deal — as Trump himself has defined it — would require moving the bill to the left.

Getting Dems to deal with him is Trump’s own stated goal, but it’s unclear whether Trump has given a moment’s thought to what outcome such a deal would be designed to progress toward. The unnamed aide who said Trump’s threat will “force people to do something” inadvertently got this exactly right. Trump treats the word “deal” as some kind of magically irresistible end in itself. But under these circumstances, the only known endpoint — the supposed “deal” — is worse than the “threat.” Why should Dems feel any incentive to respond to such a threat?

Of course, it did garner Trump action-packed headlines. Which might be the only true goal here.

Steve Benen adds, Trump considers provocative new hostage strategy on health care:

In other words, when the president says he doesn’t “want people to get hurt,” he means he will start hurting people by sabotaging the American health care system unless Democrats take steps to satisfy his demands.

It’s a bit like a criminal who declares, “I don’t want to shoot the hostages, but I haven’t yet received my ransom.”

What Trump may not realize is how truly ridiculous his new posture is. For a guy who paid someone to write “Art of the Deal” for him, the president doesn’t seem to have any idea how to negotiate effectively.

According to Trump’s latest comments, he’ll take deliberate steps to undermine Americans’ health security unless Democrats agree to help him undermine Americans’ health security. What incentive would Democratic lawmakers have to participate in such an exercise? None.

Indeed, the president seems baffled by the very nature of how threats are supposed to work. What Trump is describing is a form of political suicide: he’s publicly describing a scenario in which he alone starts hurting Americans, on purpose, so that everyone will know exactly who to blame. It’s like the aforementioned hostage-taker filming his crimes, while texting his address to the police, to make the prosecution easier.

Trump’s original strategy involved allowing the Affordable Care Act to wither through neglect and then avoid responsibility, insisting he had nothing to do with the law’s creation. That, too, was badly flawed, but it was at least borderline coherent. This latest gambit is simply bonkers: the president is prepared to take it upon himself to create a crisis that doesn’t currently exist, guaranteeing that Americans blame him directly for the ensuing disaster.

As negotiating ploys go, announcing plans to hurt people on purpose doesn’t exactly scream “presidential leadership.”

If Trump sincerely wants to work out a deal with congressional Democrats on health care, that would be wise, and Democratic leaders have expressed a willingness to reach an agreement. But if the president is counting on a hostage strategy to work out well for him, Trump is going to be disappointed with the results.

UPDATE: Trump’s budget chief says Medicare Phaseout is still on the agenda.

The reason that Trump is again saying that “Obamacare” repeal needs to come first is that he needs to extinguish the taxes on the wealthy under “Obamacare” which pays for the health insurance subsidies first in order to move on to his true legislative agenda: a massive “trickle down” tax cut for the wealthy.

It will be part of a “tax reform” package that also will undermine social security — something Trump promised on the campaign trail that he would not do. Republicans are floating a tax reform plan that could threaten Social Security:

Some Republicans around Washington are floating an audacious idea: repealing the payroll taxes that fund Social Security as part of a forthcoming tax reform bill. It’s a proposal that, even if it doesn’t cut the program’s funding right now, could have long-lasting aftershocks for one of the pillars of America’s social compact.

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According to the Associated Press, a Republican lobbyist aligned with the Trump administration is urging the House, where Ways and Means Chair Kevin Brady is leading the tax effort, to repeal the Social Security payroll tax as part of its tax reform bill.

Here’s the original report:

One circulating this past week would change the House Republican plan to eliminate much of the payroll tax and cut corporate tax rates. This would require a new dedicated funding source for Social Security.

The change, proposed by a GOP lobbyist with close ties to the Trump administration, would transform Brady’s plan on imports into something closer to a value-added tax by also eliminating the deduction of labor expenses. This would bring it in line with WTO rules and generate an additional $12 trillion over 10 years, according to budget estimates. Those additional revenues could then enable the end of the 12.4 percent payroll tax, split evenly between employers and employees, that funds Social Security, while keeping the health insurance payroll tax in place.

There is a lot to untangle here. The easy part is the repeal of the payroll taxes. This might sound great, but there’s more to it. We’ll get back to that. The monumental change, though, is overhauling how Social Security is funded — from a payroll tax paid in part by workers to a tax paid, at least directly, entirely by businesses.

Why would they do this?

To understand the rest of the proposal, we have to look at another piece of the Republican plan — something called the border adjustment tax, which House leaders really want and are coming up with creative ways to push through.

The border adjustment tax is complicated, but the gist is this: Companies would not be taxed on goods they export out of the United States, but would be taxed on goods they import into the US. It would fundamentally change how American businesses are taxed, prioritizing domestic production. It’s been a big sticking point in the early talks on tax reform, for reasons we won’t get into.

The trouble is, other countries might object to the plan and appeal to the World Trade Organization, which oversees global trade policy. Republican leaders have argued their plan adheres to international rules, but that argument could be put to the test.

This new plan appears to be an attempt to solve that problem, several conservative wonks told me. It changes the border adjustment tax to bring it more in line with the WTO’s rules — we’re veering into extremely wonky territory here, but it would prevent companies from deducting their labor expenses from their taxable income.

That change would increase taxes, which would likely trickle down to workers one way or another. So the plan would simultaneously repeal the payroll taxes to avoid a big tax hike. Whether they would completely offset depends on the details, which we don’t have yet, but that is the general idea.

As the AP report points out, supporters would also probably go a step further and try to sell this as a big middle-class tax cut. But experts agree the effect would actually be minimal.

“If you cut the employees’ payroll tax, then you impose that tax on employers, and you do that in equal and opposite proportions, it has zero economic impact,” Doug Holtz-Eakin, a prominent conservative wonk who leads the American Action Forum, told me. “It doesn’t do anything.”

Social Security is usually considered untouchable — the “third rail” in American politics — so if Tea-Publicans actually take up this tax proposal, expect public opposition to quickly rise.

There already is strong opposition to Trump’s border adjustment tax. Conservative Split Over Import Tax Imperils Trump’s Overhaul: the opposition comes from the “Kochtopus” organizations.

One Response to Trump to take health insurance hostage – by sabotaging ‘Obamacare’ – unless he gets his way

  1. For Sure Not Tom

    My die hard Republican friends and family members won’t even discuss Social Security beyond just saying “don’t mess with my Social Security”.

    Good luck to the GOP, their base is old, and if they do away with Medicare and Social Security, I think the base will notice.