The GOP Tax Bill Will Hurt You

November 30, 2017

How can I say that the GOP Tax Bill Will Hurt You? Because I will be correct if you are in a fairly large group of Americans, (99.8%) and this so-called “tax reform” passes. Economically, this is not a difficult bill to understand. President Trump, the confirmed and serial liar that he is, is claiming he will not benefit. Its a lie.

Taxes: This is a welfare bill for the already wealthy. It reduces taxes for the uber-wealthy, only 0.2% of Americans. For them there is an average $250,000.00 per year reduction in federal income tax. For EVERYONE ELSE, it is a mixed bag. At best, it reduces income taxes for about 38% of middle class Americans for a short period, maybe 7 years. For the other roughly 61%, it is tax neutral, or raises your taxes, sooner or later.

The elimination of the Federal Estate Tax is a handout to the wealthy class, and a socially disastrous and cynical move by the GOP. This welfare for the wealthy will permanently embed an aristocracy with the likes of Ivanka and Donnie Jr. Trump, Jared Kushner, and other spoiled trust fund children who do not even know how to work as the decision makers in a government purchased by  the wealthy. Concentration of wealth in a few families, along with our currently undemocratic system of presidential elections is taking us ever closer to becoming like the corrupt oligarchy of Vladimir Putin’s Russia, which Donald Trump admires and want us to model and imitate.

Healthcare: The reversal of the ACA individual mandate will cost everyone more for health care premiums. This is a little more complicated, but my opinion is based upon the major changes to the health care industry after implementing the ACA. One effect will be that some Americans will once again go bare, and show up for only late stage emergency care. Those costs will be subsidized by higher premiums for everyone else. Another effect is the instability this re-introduces to the already corrupt medical insurance markets. Big Insurance will continue to profiteer by raising premiums due to their professed inability to predict costs. See “Winners and Losers Under Trumpcare” from March 15, 2017 –  below on this website.

The Deficit: The 1,500,000,000.00 addition to the budget deficit will create economic changes that the former GOP Budget Hawks are ignoring with accounting tricks. This deficit will not be paid by economic growth.   Trump blames the amount of foreign aid as the reason for the deficit, which is a lie.

The huge additional deficit will make it impossible to reduce the trade deficit, which is another type of deficit. The trade deficit is a problem Trump says he’s going to fix. Again, he is not smart enough for the complex analytical thinking these proposed actions require. The question is, how does the additional budget deficit effect trade? The answer is, it effects trade negatively and reduces the number of American jobs.

Here’s the economics of it: A budget deficit creates a need for additional government borrowing. The added borrowing creates upward pressure on interests rates as the government offers U.S. bonds that must be attractively priced to sell. These higher bond rates attract foreign investment, much of it from China’s,  India’s, and Russia’s newly minted billionaires. They also drive up domestic interest rates as banks are forced to complete with these bond rates for deposits. These bond purchases then effect the value of the dollar which becomes even stronger. As the dollar becomes stronger, it reduces our ability to produce goods that are competitive on the world markets. Companies that cannot compete globally then reduce their output, and fire American workers, or reduce their hours of employment. We produce and ship fewer goods because the expensive dollar makes our goods uncompetitive.

Even if the “tax break” goes deeper than I think it will, the effects of a tax break without federal spending reductions will be inflationary, and cause the Fed to raise the interest rate.   Adding capital to the spending economy of the uber-wealthy, and any average Americans who translate a tax break into spending and not savings, add further fuel inflationary pressures. This will cause the Federal Reserve Bank to raise its benchmark rate.

So, you lose. No matter what happens, this tax bill can ONLY add to the grossly unbalanced distribution of wealth in the USA, and reduce the meager fortunes and employment of most Americans.







Winners and Losers Under Trumpcare

March 15, 2017

It was interesting to read such a wonky OpEd by Doug Badger in the 3/14/17 edition of Twin Cities Pioneer Press,, later reprinted in The Record  He raises interesting questions about the accuracy of the mostly politically sourced data about the Affordable Care Act, or ACA, and the new Trump-Ryan-Bannon-Price Withdrawel of Care program humorously called the American Health Care Act or AHCA. He challenges the numbers tossed around about estimates of who gained coverage under the ACA. Doug’s assessment that the number of individuals who benefited from the ACA may be overstated is one piece of the puzzle that warrants further discussion. While an understanding of the number of people that gained coverage under the ACA, and how many more will lose it under any Republican idea proposed so far, including the AHCA, is essential to planning and to the metrics of success or failure, Doug kind of misses the forest for the trees.

Health care is complicated, and not something that lends itself to simplified political positions and silly slogans. It needs thoughtful analysis from many angles. There are so many moving parts including building, operating, and maintaining health care facilities, the location of such facilities, duplication of really expensive equipment for the sake of “being competitive,” the complicated business and clinical systems that deliver care, the training and licensing of the people who are “providers” of care, the health, mental and physical condition of the clients, their method of payment, and so much more. All of this so far has been paid for under the system of “Fee for Service” through the channels of private payments and insurance benefit remuneration. While Fee for Service is not a perfect system, and leads to a great deal of inefficiency, unnecessary duplication of equipment and facilities, and potentially massive overtreatment and profiteering, it secures a predictable flow of cash for providers and health care systems.

Deconstructing the “health care system” by looking at any one factor really doesn’t paint an accurate picture unless one understands the system as a whole. “Insurance coverage” is one such factor, and though very important, it has little to say directly about the “effects” of coverage. Whether the number of people who gained some level of coverage increased by 20 million, or something less, is really not the issue. The real issue is what happened in the last seven years when those folks gained coverage. A transfer of wealth in the form of taxes from the top 1% provided insurance subsidies and directly funded Medicaid eligibility for millions of the poorest Americans. To determine what effects that investment had on the system overall requires the analysis of huge amounts of data about each of the moving parts mentioned above, and many more. That analysis is important because it speaks directly to what will collapse when those now receiving coverage lose it, and the taxes flow back into the wallets of the extremely wealthy, which is really all Trump-Ryan Care promises.

Let’s look at just two effects, and the benefits derived on a system-wide level from these effects. Many of those who received new coverage under the ACA were unemployed poor or working class poor with marginal employment. Many qualified for either good quality employer based plans under the employer mandates, or an affordable individual plan, maybe with subsidies, from an exchange, or became eligible or aware of eligibility for Medicaid under the exchanges. Suddenly, the whole picture of health care delivery shifted dramatically in participating states. There was new and predictable remuneration infusing into a system that previously was required to provide services for “free.” One effect was emergency departments suddenly had far fewer patients needing to be treated for free, and those formerly lost fees no longer had to be subsidized by private paying patients and insurance covered patients. So hospital and community clinics could actually plan, based upon expected (and discounted) fee revenue, and shift operations by creating more appropriate facilities and systems. Some of them expanded or bifurcated their emergency departments to create spaces designed more like outpatient clinics. Others added new drop-in outpatient services.

A second effect was fewer really sick people. Suddenly, people who had never before seen a physician, began seeking care instead of remaining undiagnosed. Some specialty clinics that formerly treated mainly uninsured people in publically owned, university, or not-for-profit facilities, such as cancer treatment centers, are now seeing patients who have a new source of payment for services. This predictability of payment has allowed the expansion of cancer centers and other surgical facilities in participating centers. While the “Fee for Service” model is not necessarily the most efficient or appropriate, it is at least predictable when you can identify the source of payment for every patient and every procedure.

The other side of this coin is the sudden loss of coverage looming under all of the Republican proposals so far. Trump/Ryan Care-AHCA is not about delivering more health care at all. It is first a repeal of the ACA, and secondly, a “replacement” piece that is not replacement at all. It appears to be a tragic loss of coverage for some of the most vulnerable people in the land. The loss of funding for coverage is a transfer of wealth from insurance benefits, back to the most privileged Americans, the top 1% of wage earners and asset holders. Whether 5 million or twenty-four million lose their coverage isn’t the issue. The issue is the possible wholesale collapse of the health care systems that expanded under the ACA.