US President Donald Trump promised to cut through the disarray in the two parties of capitalism in the US by forcing on them a new strongman – himself – who knows how to get things done and make deals.
But the Republican health insurance debacle, with Trump’s replacement to Obamacare being withdrawn due to lack of support in Congress, not only cut him down to size, but represented the triumph of that very disarray over the new president. The strongman proved to be not so strong and the dealmaker could not close the deal.
The immediate cause of the collapse was not opposition from Democrats, but the re-emergence of the deep divisions in the Republicans evident earlier in last year’s primary election campaign. The humiliations Trump heaped on all his opponents in the primary race were paid back in kind by the Republicans in Congress.
The party’s united front to elect Trump and secure Republican control of both houses of Congress, the executive power and soon the Supreme Court, has blown apart — revealing itself to be superficial.
Nevertheless, there are many dangerous and reactionary policies they do agree on — and are already implementing. These include the huge rise in attacks on undocumented migrants, eliminating regulations on fossil fuels and gutting environmental protections generally.
Politicians of both parties agree on continuing the “War on Terror” in the Middle East and Africa.
Obamacare
The immediate issue in dispute was the Republican promise, reiterated by Trump, to “repeal and replace” the Affordable Care Act (Obamacare), which was enacted in 2010.
The ACA’s basic idea was first proposed by the ultra-conservative Heritage Foundation in 1989 as a bulwark against any proposal for government national health insurance for all. It relied on the insurance companies for voluntary compliance, with some provisions to aid those who could not afford to buy insurance on their own.
A recent op-ed in the New York Times pointed out that Obamacare is “the most conservative health care system that Americans are willing to accept”. It succeeded in enrolling about 20 million more people in some kind of health insurance program, and made some positive proposals such as requiring the insurance companies to not turn down applicants because they were sick (“prior conditions”).
However, it left 26 million people uninsured. Since it relied on the insurance companies, premiums began to go up. Extra charges to patients, called “co-payments”, also rose.
Many insurance companies pulled out of the program. This trend eventually priced many out of the program — not exactly “affordable care.”
Republican politicians in their overwhelming majority have opposed any government program for health insurance. Since Obamacare’s enactment, Republicans in the House of Representatives have voted about 50 times to repeal the ACA, knowing it would not survive an Obama veto. They never had any plans to replace it, just to eliminate it.
But then it became evident in the course of the Democratic Party primaries that the proposal by Bernie Sanders to replace Obamacare by a single-payer health insurance system had wide support. Polls show it is supported by a majority of 60%. Trump and other Republicans began to talk of “repeal and replacement” of Obamacare.
Trump ran on the promise to repeal and replace Obamacare, but provide coverage “for everyone.” He also promised to keep Medicaid, a deeply flawed program of subsidies to those too poor to buy health insurance, enacted in 1965.
Obamacare increased Medicaid, but still left its implementation in the hands of the states. This meant a patchwork of insufficient coverage in the different states.
After his inauguration, Trump reneged. He turned over plans to replace Obamacare to Speaker of the House Paul Ryan and the new Health Secretary Tom Price. Both are against government having any role in health insurance, but they had to come up with a “replacement” bill.
What they proposed was to repeal the ACA, eliminate taxes on the wealthy that helped fund Obamacare and make severe cuts to Medicaid, among other retrograde proposals.
The Congressional Office of Budget Management looked it over and came to the conclusion that the proposed law would strike 14 million people from the rolls of the insured in 2018, the first year of its implementation. It would lead to 24 million uninsured people in 10 years, largely due to its gutting of Medicaid.
So much for the promise that “everyone” would be covered. Republican “moderates,” especially in the Senate, were alarmed — this could put their seats at risk.
On the other side was the Freedom Caucus, ultra-conservatives who wanted to repeal Obamacare without any replacement. It claimed the replacement bill was “Obamacare-light”.
Trump then went on a public campaign, of the bombastic type we have become used to, in support of the bill. He tried to arm-twist both sectors of Republicans opposing the bill.
When the Freedom Caucus by-and-large remained opposed, Trump and Ryan switched to begging. They proposed more amendments further attacking Medicaid and eliminating coverage requirements for insurance companies, such as maternal and mental health care.
But this display of weakness on Trump’s part only emboldened the Freedom Caucus. Without its support, the bill could not pass the House. It also faced defeat in the Senate as “moderate” Republicans continued expressing their misgivings. In the face of such opposition, the bill was withdrawn.
The failure of Trump’s strong-arm tactics, followed by the failure of his abject pleading, underscores the collapse of his boasts about taking charge to set things right.
Tax reform
Trump now proposes Congress take on another of his promises — tax reform. Most Republicans are on board with plans to slash taxes on corporations and the wealthy. They back the discredited notion that this will spur investment on the grounds that capitalists just do not have enough money to invest due to taxation.
But there is no agreement on how to do this. “Balanced budget” fetishists want to cut major social programs like social security and Medicare, the government health insurance program for older Americans. This is politically untenable and would be opposed by a big majority — including many who voted for Trump.
Some propose to replace the tax cuts on the wealthy with other taxes, such as regressive taxes on consumption. But experts say this cannot balance out the cuts. Another idea in line with Trump’s economic nationalism is placing high duties on imports, which is also not enough to fill the gap and is opposed by import companies.
Trump also proposes to streamline the tax code and eliminate its many loopholes. These are tax breaks for many different industries put in place by powerful lobbies — each of which will vigorously defend its own tax breaks.
Will this mess be resolved, or will tax reform go the way of the health insurance bill?
Trump has also proposed vast infrastructure investment. These plans will run into the same problems as tax reform, since there is strong opposition among Republicans for spending on any government programs. Given Trump’s weakened ability to control his own party, this proposal is also in doubt.
The disarray among Republicans displayed by the health insurance debacle increases the overall political disarray in US politics. It was this disarray that propelled Trump’s emergence as the strongman who could set things right in the first place. Now he is part of that disarray.
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