Saturday, June 24, 2017

Donald Trump's Role As A Republcan President Is Very Constrained

The battle over the repeal of Obamacare has produced a bill from the House and bill from the Senate that is diametrically opposed to promises made by Donald Trump in populist campaign for the presidency.  Trump's promises of no cuts to Medicaid and Medicare have been ignored by the Republican Congress.  In doing so, the Republican Congress has clearly defined Trump's role as a Republican president.  Trump is like a "barker" who plays a critical role in a carnival.  The barker convinces the crowd to engage in a particular activity.  During the activity the experts at running the "games of chance" separate the suckers from their money.  He also plays another critical role as the president.  Trump will not veto the replacement for Obamacare as Obama did when he was in the White House.  In fact, Trump is now praising the healthcare bill that cuts Medicaid and Medicare.

Now that we have a "barker" as our president the Republican Party may achieve several of it's most precious goals.  Medicaid was created 52 years ago under a Democratic president.  Republicans hated Medicaid just as they despise most entitlements.  The Senate healthcare bill goes well beyond repealing Obamacare.  It systematically destroys Medicaid.  It does so by putting the states in charge of Medicaid and by reducing federal funding systematically over time.  It was important to make the cuts in Medicaid over time so that they would not impact the midterm elections in 2018.

Republican policies also have a fundamental goal of cutting taxes for individuals and organizations that fund their election campaigns.  As political campaigns become more expensive to run both parties are constrained by the need to raise larger sums for each subsequent campaign.  The Republicans enjoy doing this.  Democrats try to go in the other direction more gently.  For example,  Obamacare expanded the role of Medicaid in the ACA.  It paid for Medicaid expansion by taxing ordinary income over $200,000 by 0.9%.  It also taxed certain forms of investment income with a 3.8% surcharge (which compensates for the low tax rate on investment income compared to wage income).  Warren Buffet, who receives most of his income as investment income said that the healthcare bill, which eliminates the taxes in ACA, will cut his taxes by over $600,000.  Buffet opposes the huge cut in his tax bill because he believes that citizens who are served by Medicaid need the money more than he does.  Buffet, of course, is not typical of billionaires who fund Republican campaigns.  Many of them, like Donald Trump, worry more about their position in Forbes annual listing of the wealthiest Americans.  Trump argued that Forbes understates his wealth just like he argued the crowd at his inauguration was understated by the media.

The bottom line from this analysis is that we have a carnival barker in the White House who will help the Republican Party achieve several of its most important goals.  Cutting entitlements, cutting taxes for the super rich, and reducing the role of the federal government in favor of state rights, are within sight with Trump in the White House.  Populism is just another name for Republicanism under Trump.

It is also important to understand importance of Donald Trump's role as the populist barker.  Many who voted for Trump will be disappointed when they are hit with the reality of the GOP healthcare bill.  They will continue to fall for fake populism, however, because of the clever ways in which Republicans have divided Americans with low incomes.  Instead of being united against politicians who fleece them, Republicans have successfully turned groups of low income Americans against each other.  Divided they will fall and Republicanism will prevail.

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