Saturday, March 11, 2017

Trumpcare & the end of an era: RIP globalization

Well its seems that the GOP has finally put its big boy pants and created a bill to replace Obamacare -- it took more than 7 years to get a sense of what the GOP leadership is thinking, and its a huge disappointment.  In a sense, the good old boys of the GOP only want to do one thing its make the government smaller!  So the pieces are slowly coming together, its not going to work, but you understand where they are going.

First, they flip the benefits for healthcare from the most in need to those who don't need it.  Really, its a simple as that the tax credits are aimed squarely at the richer segment of the population, the block grant is a brilliant idea if you want to kill Medicaid.  BTW a fun fact, nearly 50% of all birth in the US are paid via medicaid...

It gets even worse, they so don't believe in their plans they've not even bothered to get diverse faction of the GOP commenting on their plans -- seriously, the bill went to committee and no changes were made.  Obviously, those to the right want no government involvement in healthcare at all -- they ran on that platform and nothing less will satisfy them.  Ryan may get the whole thing through the House of Representative, but the Senate -- forget about it! Obviously, Trump is pissed that everyone is using the term "Trumpcare" for such doomed to fail legislation.  The question, is what is Ryan's plan?

My suspicion is that the GOP knows that changing the ACA is not possible without losing a lot of votes.  Just hear what the Co-President of the Tea party said last week:  This is not what the GOP sold us -- true, the GOP sold fantasy Island -- reality as Trump discovered last week is more complicated.

So Ryan's plan is to lose this thing, he got no scoring in terms of costs -- a big no-no for the far right of the party, and no buy-in from the various wings of the party.  In fact, the whole thing was written in secret and nobody likes it (I'm almost sure that Ryan will vote against it in a few weeks...)  In the mean time, certain wings of the party are working hard at killing the ACA -- forget replacement, the trick here is to remove subsidies for the insurance providers and the whole thing fall apart, they can blame the Democrats...maybe.

Trump's next 8 years...

The way the GOP is playing along (being dragged) I am relatively confident that Trump will last beyond the first 2 years, the GOP is too scared of the man and will not do anything to jeopardize its possible wins -- they will try to pass legislation some of it will work others (like V2.0 of the anti-immigration law) will not survive the courts.  Also most seats up for grab in the Senate are "sure thing GOP wins"  thanks to gerrymandering.  In any case within the next 12 months:  Education, EPA and Agriculture will cease to exit.  HUD and HSS are certain to be gone too, because if the Federal government can get a buy-in from the states for block grants, the it opens the door to other federal programs that could be managed by individual states.  State department may become shadow of its former self...Trump has asked for a 40% cut in budget!  Medicaid is in the process of being dismantled -- you can bet that the one segment of Trumpcare that will survive will be the block grants to the states.

So America's got Trump for at least the next 3 years and possibly the next 7, why because the GOP will get some of what they want, they will get lower taxes for the rich (Trumpcare is a perfect example), they will reform the tax code -- or at the very least give bigger breaks to their rich donors, and will reduce the number of immigrants (by hook or by crook) in fact non-Americans are already rethinking their presence in the US.  At any rate events in Europe are more important than in America with regards to immigration policy -- things are getting difficult for Turkey, and elections in France. the Netherlands, Italy and Germany may well dramatically change the picture of immigration policy across the OECD.

RIP Globalization

On a more general note, there is no doubt that things were coming to a breaking point.  The average OECD resident has seen its income stagnate throughout the past 40 years -- the promise of open market making life for all easier/better has been broken, the world is ready for a different solution to the question -- immigration free trade are probably not part of the equation.  The implications for countries such as Canada/Mexico and China are serious -- for nearly 40 years China has been an export power house.  How will tariffs change things, will China have the time to adapt to the new reality of more closed world.

the geo-political landscape is about to change, and uncertainty will created new classes of winners and losers, only time will tell, but a 40 year experiment in open border and open markets is probably about to come to an end.  As an economist this is a sad time. because its one of the most important aspects of economic growth -- however, there is no doubt that changes are afoot -- and the changes will be swift.  protectionism, tat for tat trade sanction, closed border etc etc.


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