3/27/17

The events of last week culminating in the pulling of the proposed bill to repeal and replace Obamacare are, simply put, a disaster for the US, for Republicans and for President Trump.

Is it an unmitigated disaster? No, but a pretty big one.

So what now?

Speaker Ryan
Ryan proved again that he is a great details person, a technocrat without one iota of political instinct or charisma. Going for the replace-repeal first was the right thing to do technically. It was the worst possible thing politically. Chalking up a major loss for the new Republican controlled administration is very damaging. Going for the much more popular and less (emphasize on less as opposed to not) controversial tax reform would have been a much more astute thing to do, politically. Ryan is so far into the weeds/trees that he missed the forest. Should he resign or be deposed? Not really. If he can be calibrated and directed by Trump to do what he is good at and not allowed to impose his wonkiness onto leadership style decision, he could be very useful at what he is good at.

President Trump
What made the person who ignored and broke—no, decimated—EVERY rule in the book on his way to the presidency, proving that his political instincts are second to none, to suddenly follow the technocrats is beyond me. Trump suffered a major defeat, too, and his “aura” of being a winner is damaged. Contrary to the self-image Trump has been cultivating, he suffered major defeats in the past too. And that is a GOOD thing. His “near-death” experience (financially) in the early 1990s, when he was practically PERSONALLY bankrupt and avoided it only with the grace of the banks that owned him, is a good corollary to where he is now. The fact that he managed to overcome the dire situation then and build an impressive empire afterward shows that he has the ability to learn from mistakes and recover. It takes determination and perseverance. If he can demonstrate those characteristics again, he can recover. He needs to move on and deal with other items of his agenda and two new ones as follows:

  • Tax Reform: Go for it. Fast and furious. Drop the Border Adjustment Tax. It is too complicated and unpopular and you do not have the political capital, having just lost a lot of it, to pull this one through. Ryan will tell you that if you drop it you will not be able to cut rates enough due to the technical “wonky” “reconciliation” rules. Ignore those and push the tax cut through the Senate without the “reconciliation” rules (see more below).
  • International Trade: This is probably not the time to start major trade negotiations with US trading partners. Leave this one aside for now. Engage in intensive bilateral talks and get some new trade deals signed quickly. Deal with improving the existing ones after you regained some political capital.
  • Infrastructure: Introduce a major infrastructure bill based on Private/Public initiatives. NO direct government spending. You can give significant tax concessions for designated, approved infrastructure projects but let the free markets dictate. Remove 90% of the regulatory hurdles that mean any such projects require years to get going; environmental, planning etc., etc. Leave a thin, quick layer of regulatory hurdles to make sure that no really damaging projects go through, but otherwise make it a national priority to approve qualified infrastructure projects fast. All of these projects will involve the public paying for their use, along the well-tested lines of public-private infrastructure type projects. If it cannot attract private equity, it is not worth doing!
  • Deregulation: Intensify the deregulation efforts. We need to see much more activity and action there and that includes major changes to Dodd-Franks and the wretched Sarbanes-Oxley Act, which has dropped below the radar but is one of the WORST pieces of legislation to EVER become law in the US, and totally unnecessary at that.
  • Immigration: You are building a barrier; that is good. Drop the Mexico-pay-for-it, at least for now.
  • Health Care: Do absolutely NOTHING. Do not make it easier by regulation. NOTHING. Let it crumble under its own weight. Prepare major legislation to allow future cross-state selling of insurance and pass legislation to amend the tort laws, generally, and in medical malpractice, in particular, so as to stop the abuse of the system by the trial lawyers’ bar—better described as gang.
  • REPEAL the filibuster. I wrote about that before in my post “2016 Elections (9) – The Republican Challenge.” This is a cancer and it is gone anyway. The only question is whether the Republicans will repeal it now or stick to it due to a false sense of respect for tradition, allowing their agenda to be materially—possibly terminally—wounded, only to watch Democrats repeal it when it suits them. The spirit of dignity and bipartisanship in which the filibuster was created is gone. It is the Democrats who demolished it and it is they who already put a major hole in the filibuster dam. It is now only a matter of time before it collapses anyway. So, take advantage of it. To be clear, one of the main reasons the heath care act failed is due to Ryan’s obsession (being the “wonk” that he is) to make sure that it fits into the reconciliation rules. Reconciliation is the only way, limited though it is, to pass something through the Senate—which is NOT subject to the filibuster. So, if the filibuster was gone there would be no need to fit into the straitjacket of reconciliation rules. Another example is the Border Adjustment Tax. The rationale behind it is the need to raise revenue so that the tax reform will be “revenue neutral” and can pass muster of the reconciliation rules in the Senate. Forget reconciliation. Forget the filibuster. REPEAL IT NOW!!!!!!!!! If not, it will destroy the Republican Party. Admittedly, they are already doing a pretty god job of it without the help of the filibuster/reconciliation duo.
  • REPEAL the Freedom Caucus! The Freedom Caucus (TFC) and its allies in the think-tank industry, such as Heritage Foundation, together with some radio talk show hosts like Limbaugh and Ingram are simply … well, I guess I will not use profanity here, but at the very least they are simply stupid. They do not understand the difference between ideological purity, which has its advantages in the theory of things, and real governing, which requires compromises. The US is a divided nation. It is not a conservative majority nation. 50% of the people—maybe even more—do not believe in the pure conservative, libertarian economic philosophy. By the way, I do. I applaud this philosophy and would follow it happily. But I am practical enough to know that you cannot govern by following it 100% as there is no consensus on it. The only way to move toward more and more free market, libertarian economic regime in this country is slowly, in small steps, which must involve compromises to get things done, and then move on to the next thing. The damage created by this alliance of the “pures” is huge. It is time to dismantle it and, indeed, repeal it. So, what can Trump do? He cannot and should not attack think-tanks and/or radio talk show hosts. He MUST do everything possible to make sure that TFC will suffer major losses in the 2018 congressional elections. There has got to be a major effort by the President and his team to launch a primary challenge to many of the members of TFC.
    
Choose all of those whom you think you have a good chance of defeating in primaries. Most of them come from safe Republican seats, which is why a primary challenge would not risk handing the seat over to the Democrats. The goal must be to defeat enough of them so as to weaken TFC, if not demolish it entirely. It needs to be done cleverly; so, no talking about it now. There is another 12-15 months before it is relevant and no need to alienate them now. But no matter what happens from now until the primary season for the 2018 elections, TFC members must be challenged and TFC, itself, hopefully materially weakened. Otherwise, Trump will not be able to do much. If he is successful in replacing even only a few of them that will be a major signal to other Republican Congressmen of all ilk that they need to be more collegial and work as a team to pass the agenda that won Trump, and with him the Republican party the majority, the right to govern.

It is time for deft footwork, some wily political maneuvering, a lot of perseverance and determination; and there will be a need for Trump to scale down his ambitious agenda until 2019.

What a stupid bunch.