Tuesday, June 05, 2018

Trump Jobs, Obama Jobs

Everybody's gushing about the great new jobs report that was just released.  223,000 jobs created (preliminary) in May, a strong showing. President Trump actually tweeted about it in advance, which is a definite no-no. Another norm bites the dust.

The unemployment rate fell to 3.8%, the lowest level since the year 2000. Trump recently took credit for that, too.

Trump, apparently, has been a job-creating maven, just like he said he would be. With 16 complete months in office, we now have a solid chunk of jobs data with which to compare with his predecessor. And we should: During the campaign, Trump was highly critical of Obama's job creation record.

So I wanted to see how Trump's 16 full months—February 2017 through May 2018—stack up against a comparable interval under Obama. But which interval would yield a fair comparison? Then it hit me: compare all of them! So I calculated the total jobs created for every single interval of 16 consecutive months during Obama's final 60 months (5 years) in office. Yes I did!

There are 45 such intervals in Obama's final 60 months. I did not go back further because five years is plenty of data; because the period begins far before the presidential campaign in which Trump made his critiques and promises; and because doing so would dip too much into the aftermath of the Great Recession that began at the end of the Bush presidency. Recall that the economy was shedding 800,000 jobs per month when Obama was sworn in. Even so, note that there were 3 million jobs created between the final month of negative job creation and the period we're looking at. But those particular jobs are not part of this study, which, again, is Obama's final 60 months in office. For this analysis we are considering the period February 2012 through January 2017.

The comparison is stark. Obama has two intervals at or above 4 million jobs created (ok, one is 3.999 million). Obama has 19 intervals exceeding 3.5 million. Trump never even hits 3 million.  The total for Trump's first full 16 months is 2.966 million.

In all, there were 40 16-month intervals over Obama's final five years that exceeded 3 million jobs created. There were only five intervals where Obama under-performed Trump. I placed all the data in a table for you to peruse, but because it is so large I put it down at the bottom of this post. Scan it on your way out.

The data comes from the authoritative Bureau of Labor Statistics, from which the monthly jobs reports originate. Here's the source data I worked from; feel free to check my arithmetic. Click on the table for a larger view:

This particular table is an image from a screenshot from the linked BLS page, so you can't load the numbers directly into your spreadsheet from here. (Me? I used a calculator. Yes I did!) But you can follow the link in the caption directly to the BLS web site where this table lives, where a download link is provided. Note that you can always obtain the most recent 10 years of data at this BLS page, so it's worth bookmarking.

There's yet another way to compare Trump job creation with Obama job creation. Over Trump's first full 16 months in office, an average of 185,000 jobs were created per month. By contrast, an average of 207,000 jobs were created per month for the entire final 60 months of the Obama presidency.  And over Obama's final 16 months, which abuts Trump's 16 months, an average of 216,000 jobs were created. So the handoff from Obama to Trump saw an immediate large reduction in jobs created. Yes it did!

All the same caveats and disclaimers from my earlier two posts (here and here) on this subject still apply. But we are now playing by Trump's rules, so when Trump crows about how many jobs he's created, citizens need to know he is under-performing Obama. In particular, do not forget how critical Trump was of Obama's economy—including job creation—during the campaign. And don't forget how Trump promised he'd fix that situation as president. Now he wants you to know what a great job he's doing.

Finally, about that unemployment rate, which is at an 18-year low. Trump wants to take credit for that too. Here's a graph of the rate since 2008. Click on the graph for a larger view. As you can see, it has been declining quite steadily for many years since its Great Recession peak, and has continued to decline at about the same rate since Trump took office. See any Trump effect? Me neither.

Source: St. Louis Fed

Up to this moment there have been 92 months of continuous job creation, the vast majority of that under Obama, who also created jobs at a faster rate than Trump. Obama created over 12 million jobs over the 60-month period we've been examining. He created over 15 million jobs since the last monthly job loss, in 2010. Yes he did! So Trump is in effect the cherry on the icing on Obama's jobs cake, but Trump wants to claim he's the entire cake.

At best, Trump hasn't yet managed to screw up Obama's economy. But with his recently announced tariffs and brewing trade wars, he might be trying to do so. We will, as he might put it, have to wait and see.

 Trump jobs, 16 full months in office


Jobs Created

Avg. Jobs per month

Feb 2017 - May 2018



Obama jobs, final 60 months, 16-month intervals


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Avg. Jobs per month

Oct 2015 - Jan 2017



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Copyright (C) 2018 James Michael Brennan, All Rights Reserved

Sunday, February 04, 2018

Early Musings on the Nunes Memo

Note: This post originated as private correspondence which I subsequently decided to post here. Keep that in mind as you decide how to weigh my analysis. I've gone back and added a number of links that weren't in the original correspondence, but more could and should be done, and some claims I make here aren't currently substantiated by links to outside sources. I was writing from memory.

Donald Trump said the Nunes memo "totally vindicates" him, but even a reader who takes the memo completely at face value would have to ask: How? The memo fixates on the surveillance of Carter Page, but says almost nothing about other matters involving the larger investigation of Russian interference in the U.S. election, Trump's possible involvement, and any other potential criminal activity (such as obstruction of justice or money laundering) by Trump or his associates.

Despite the harm to national security, to law enforcement institutions, and to prospects for congressional oversight, there may at least be this silver lining in the memo's release. The memo badly damages the releaser too, in ways that are already coming out, and will continue to come out. Republicans come across as incompetent bunglers, and their story will continue to fall apart.

For example, the memo alleges that the FISA court judge was not aware of the partisan origins of the Steele dossier, but The Washington Post reported shortly after the memo's release that the judge was told of the dossier's beginnings as a political document commissioned by an entity hostile to Trump. That itself is completely unsurprising in light the rigor of the FISA warrant process, and the demanding relationship of judges to petitioners.

Because persons and institutions in a position to know have said the memo is incorrect, incomplete, and misleading, we can expect specific examples of how that is so to continue to come out. The release of the Democratic memo rebutting the Nunes memo could be a huge and necessary corrective. (I had originally written that release of the Democrats' memo had been approved by the House Intelligence Committee after having initially been voted down on Monday, but that now seems to not be the case. Some Republicans have recently said the Democrats' memo should be released, which is not the same thing.) You can expect that rebuttal to be specific and unambiguous in ways the Nunes memo isn't. Except for one big problem.

Even if approved for release by the House committee, the Democrats' memo has to clear the same procedural process as the Republicans' memo did. Which is to say the president would have five days to review it and ultimately approve or block its release. What are the odds that memo will come out unimpeded? I am looking for a mark an individual, to take the other side of a modest bet with me, in which I will wager that Trump will severely alter, interminably delay, or completely block the Democratic rebuttal. Because the Nunes memo is a baldly political document produced with the blessing and possibly cooperation of the White House, over the objection of the administration's own DOJ and FBI, to advance the president's personal interests, the Democrats' rebuttal will be viewed as a politically hostile response necessitating suppression. The argument that the Nunes memo was subject to review and check by the executive was always a laughable canard because the reviewer and originator were in cahoots, but the White House will certainly treat the Democratic rebuttal as a threat to be opposed. We will shortly see that this was never about transparency.

Complicating our discussion of dueling memos, Rep. Jerry Nadler, Democrat from New York, produced a six-page rebuttal addressed to fellow Democrats that was released by NBC News, but this is not the Democratic memo containing classified information refuting the Nunes memo.

Still, the Nunes memo has its uses. It now confirms, for example, that the FBI's counterintelligence investigation was opened in July 2016 upon revelations that Trump campaign adviser George Papadopoulos in May told an Australian diplomat in London that the Russians had dirt on Hillary Clinton. When Clinton's emails began leaking out two months later, the Australian government contacted the FBI. This was first reported by the New York Times; we now have confirmation that report is correct, specifically in regard to the genesis and timing of the FBI's investigation. Why the Republican bunglers included that useful nugget in the final paragraph of their memo is unclear, because it works at cross-purposes to their attempts to pile aspersions on the Steele dossier. The FBI's investigation, we now know with certainty, was not a result of the dossier.

Thanks to the Nunes memo we now also know—as do our country's enemies—the exact timing of the FISA warrant against Carter Page, and that it was renewed three times. By law warrants must be renewed every 90 days or they expire. This is highly significant information. As the Nunes memo states, "each renewal requires a separate finding of cause." (!) And not just. The prosecutors need to demonstrate that the warrant being renewed has been productive. So the three successful renewals are themselves an indication of the warrant's legitimacy and efficacy. And as this analysis points out, "public reports say that there were four separate judges who did the reviewing—suggesting that four independent reviews validated the FBI’s investigation." The same analysis notes the memo "meant to leave the impression that Steele was the central, critical basis for the probable cause submission to the FISA court. But that isn’t what the memo says."

The Nunes memo makes other factual errors, exactly as the FBI said it did. The memo states that "Steele was suspended and then terminated as an FBI source for what the FBI defines as the most serious of violations—an unauthorized disclosure to the media of his relationship with the FBI...." Claims of "unauthorized disclosure," and of "suspension" and "termination," completely misrepresent the relationship between Steele and the FBI. To begin with, Steele was in no sense working for the FBI. As seventeen hours of testimony by Fusion GPS's Glenn Simpson (who contracted Steele) before Senate and House committees makes clear, it was Steele who initially contacted the FBI over grave concerns about what his investigations had been turning up. Namely, Steele feared that Trump might in fact be an agent of, or at least compromised (and subject to blackmail) by the Russian government. The seriousness with which Steele and Simpson took this threat to the the United States is described in great and fascinating detail in the transcript of Simpson's testimony before the Senate Judiciary Committee.

Further, it was Steele who cut off contacts with the FBI after he deemed, with some frustration, that they didn't seem to be taking his findings seriously enough.

Update to the previous two paragraphsThe Washington Post reported about a year ago that the FBI had reached a deal to pay Steele for assistance in its investigation, but that the agreement fell apart before it began, because the dossier began to become the subject of news stories and Steele was publicly identified. See also this version of the Nunes memo with Washington Post annotations. The Atlantic's Natasha Bertrand wrote that "two sources familiar with Steele’s actions vigorously dispute the claim that the former British intelligence officer, who has worked with the FBI and State Department on numerous projects over the last several years, ever lied to the bureau about his media contacts." Bertrand added that "a source familiar with the episode, speaking on condition of anonymity because of the ongoing investigation, told me that Steele’s research belonged to his clients, Fusion GPS and the Democratic National Committee. Steele gave the information to the FBI out of a sense of duty, the source said, but a relationship with the FBI had not been formalized even though the possibility of a commercial contract had been discussed to continue the research into Trump’s Russia ties. Such a contract never materialized, which meant that Steele was under no obligation to avoid reporters. The FBI acknowledged that, the source said."

The committee transcript describing Steele's contacts with the FBI also greatly clarifies implications of strong bias by Steele against Trump in the Nunes memo. The memo said Steele "was desperate that Donald Trump not get elected and was passionate about him not being President," [emphasis in the original] as if Steele somehow had strong political hostility to Trump. (This phrase was the only boldface text in the entire memo.) In fact, as the committee transcripts make clear in extraordinary detail, Steele's desperation and passion derived not from political antipathy but by a strong fear that an agent of the Russian government had been elected president of the United States. As you can see, context—in such short supply in the Nunes memo—truly matters, and demonstrates how easy it is to mislead for political effect when context is omitted.

Steele's fears should not be taken lightly. He had been the top Russia expert in Britain's MI6—its foreign intelligence service—before going into private practice. He was well regarded and had previously worked with the U.S. government on past projects, which is why he personally felt empowered to contact the FBI and/or DOJ over what he was learning about Trump. The narrative that emerges is one of how the game dramatically changed as it became clear to him what he was uncovering: how basic "oppo" research was profoundly transcended by an existential concern for democracy in the United States.

Steele's previous relationships with U.S. intelligence and law enforcement also perhaps explains why his dossier might have been given some justifiable weight in the FISA warrant application process. In that process investigators attempt to persuade a judge that a high threshold of "probable cause" has been cleared. If Steele's past interactions with the the U.S. government demonstrated that he produced reliable, quality work, that would be a point in favor of the dossier. Many legal experts have pointed out that, as a matter of law, arguing that a source for a warrant is "biased" almost always fails in legal challenges. Judges routinely assume that sources are biased; what they're trying to ascertain is whether those sources are likely to be correct. A source can be both biased and correct. Anyway, had the dossier been a basis for the warrant, its relevant claims would have been cross-checked against other sources.

I say the dossier "might have been" important; we just don't know the weight the dossier carried in granting the warrant, and despite its innuendo, the Nunes memo doesn't shed useful light on that question. Some observers have argued that the dossier itself doesn't contain enough information on Carter Page—the target of the warrant—to make the brunt of the case. There must have been other important reasons to surveil Page, and some of those possible reasons are already in the public domain (including his publicly visible ongoing interactions with Russia), giving us at least a taste of the case against Page.

It must surely have been significant that Page had already been involved in FBI investigations going back to at least 2013—well before the election. Back then he'd been talked about by Russian agents in intelligence intercepts, apparently as a recruitment target. That investigation resulted in one of those agents being tried, convicted, and jailed. It's also been hinted that Page had been the subject of a previous FISA warrant: information that is supposed to be a closely kept secret but which is inevitably driven out by irresponsible treatments such as the Nunes memo, which unfortunately puts everything in play. All this is far too deep and detailed for a shoddy, brief tract such as the Nunes memo to properly address, and in any case trying sensitive intelligence in the forum of inflamed American public opinion is exactly the wrong way to deal with it.

I have barely scratched the surface in suggesting how the Nunes memo might be misleading and even just plain wrong across a wide range of its claims and implications. Trump's own DOJ and FBI certainly say that it is. House Democrats say it "cherry picks" some information and omits other to produce an inherently false picture for public political consumption. In that regard it is a travesty of congressional oversight, and a cause of enduring shame for House Republicans. Damage has been done. That this will all blow up in Republicans' faces is at least some consolation and will be the source of at least some useful remediation.

P.S. There are several annotated versions of the Nunes memo. The best I've seen is by The Washington Post.

Copyright (C) 2018 James Michael Brennan, All Rights Reserved

Friday, February 02, 2018

Apples to Apples

Did you notice that Donald Trump said, in his State of the Union Address, that "since the election, we have created 2.4 million new jobs"?

Since the election? So now he's taking credit for over half a million of Obama's jobs, too?

One might suppose Trump is arguing you need to start counting from the election, since that result immediately and decisively kicked job creation momentum into high gear, from the moment the economy knew it was in better (if smaller) hands. Except that job creation under Trump has slowed a bit compared to Obama. No wonder Trump needs to steal half a million jobs from his predecessor.

As of this morning we have a full year of Trump job numbers on the books, so I'm using this as an opportunity to update my previous post, "The Trump Jobs Miracle". You should read it too.

In order to compare Trump's performance with Obama's, I give totals here for the past five years, but for the period February through January. That's because Trump was inaugurated January 20, 2017. His first full month in office was February, from which I begin counting. It's the best way I know to do an "apples to apples" comparison. Trump's first full twelve months ended with January 2018. Not everybody compares this way, but Obama beats Trump regardless of where you start counting—assuming, of course, that we disallow stealing three of Obama's months to add to Trump's first twelve. That would be cheating.

So for the period February 2017 through January 2018—twelve full months under Trump—the economy created  2.1 million jobs.

For February 2016 through January 2017, under Obama, 2.5 million jobs were created.

The year before that it was 2.6 million. Before that it was 3.0 million. And for February 2013 through January 2014 the total was 2.3 million.

Going back five years, Obama significantly trumps Trump every single year. Howzabout that.

The monthly numbers for my totals come from the authoritative Bureau of Labor Statistics. Because the table changes monthly, and the most recent two months are always preliminary and subject to revision, I freeze a snapshot of today's BLS table here. Use the link above to get the latest.

Click on the table for a larger view.

Copyright (C) 2018 James Michael Brennan, All Rights Reserved

Sunday, January 21, 2018

Who's to blame?

The government is shut down, for the first time ever when a single party controls both houses of Congress plus the presidency. Who's to blame?

It would not be hard to come up with a long list of culprits, and a fair-minded observer might try to apportion the blame widely across the political landscape. Not me. Here are my culprits.

I present Mitch McConnell as Exhibit A. In a lot of ways McConnell is responsible for the long, dreary decline in Senate comity and cooperation, and for its resulting dysfunction. The budget negotiations are currently grounded on the rocks and reefs of Senate procedure.

McConnell, more than anybody, weaponized the Senate rules and used them ruthlessly for partisan combat. McConnell normalized the filibuster as a weapon of scorched-earth obstruction, relentlessly, over the entire Obama administration, to the point that it is now a given that nothing can get through the Senate without 60 votes. That didn't used to be the case. Those chickens are now roosting (and worse) all over McConnell's stated desire to keep the government open.

And McConnell, the master tactician, opted for a failed attempt at brinkmanship when he delayed the final Senate vote until two hours before the ultimate deadline, in a move calculated to force Democrats' hand in the face of impending crisis. Chuck Schumer had proposed holding the vote the night before, to get all the cards on the table with still enough time to possibly negotiate. But McConnell chose to push the vote to the final moments, with the clock running out.

More even than McConnell, we have to blame Donald Trump, who has been manifestly unable to articulate and stick with a consistent position throughout the process. McConnell lamented that it would be nice to know what the president actually wants. Indeed. Trump himself doesn't know the answer to that question (other than to him be the glory), and has vacillated wildly in the past couple of weeks, blown hither and yon by the political—not winds!—but breezes, gentle puffs from his various handlers. This is what happens when you have an ignorant leader with no core motivating principles, no understanding of how the system works, no functional policy apparatus, and no conception of how to move the political process forward.  Every time Trump seems to be on board with a plan, he abruptly and inexplicably reverses himself and the thing blows up. This gets really old.

The latest iteration involved Trump making a public show of magnanimity, on live TV, about how he would sign whatever immigration plan congressional negotiators came up with, without any concern at all for what he himself might want. Shortly thereafter Lindsey Graham and Dick Durbin came to him with a bipartisan plan containing compromises that seemed to cover all the bases being discussed, including the money for border security requested by the White House, at which Trump erupted furiously with his tirade against "shithole" countries. The centrist senators, whipsawed, were stunned. What happened? It seems that immigration hawk John Kelly, Trump's chief of staff, didn't like what he saw developing and talked Trump into a 180 degree turn, lickety-split. Just like that.

That's how things go in this White House, continuously. If Trump doesn't know what he wants, he should keep his yap shut until he figures it out. But figuring things out is far too much to ask of this supremely incompetent leader, and keeping his yap shut is even more impossible. Everything is ad hoc, and subject to to immediate reversal. Whatever was recently agreed is soon undermined by a tweet. There's no foundation upon which to build any kind of shared understanding, and no sense that any agreement will hold long enough to finalize the deal.

Democrats, who unlike the president are motivated by core principles, have understandably had enough. You can argue about whether they're reacting appropriately to the pervasive dysfunction that confronts them, but at least they can articulate what they want, and negotiate in good faith. And, what they want happens to have large bipartisan support, at least as distinct matters of policy (such as DACA) separate from the budget maneuverings.

It really is long past time for renewal of the Children's Health Insurance Program (CHIP). This renewal, which has strong bipartisan support, should have been disposed of in standalone legislation many months ago. Attaching it in any manner to the gummed up budget negotiations is nothing short of deplorable. And you can imagine that Democrats were already miffed at Orrin Hatch saying, around the time Republicans were finalizing their deficit-exploding tax bill, that "the reason Chip’s having trouble is because we don’t have money any more." Good God. Perhaps passing it alone as a simple, unencumbered demonstration of goodwill would have gone a long way toward moving everything else along. What an odd idea, that.

Same for DACA, the Deferred Action for Childhood Arrivals program, that's soon to expire. Everybody from the president on down claims to want to do something permanent and meaningful for the "Dreamers," who were brought here illegally as children. Last September, during budget and debt ceiling negotiations with Chuck Schumer and Nancy Pelosi, Trump said he really really wanted a legislative fix. But the "big-hearted" Trump threw his obscene tantrum in the recent meeting with Graham, Durbin, and some Senate hardliners brought in to explode the deal. Perhaps that was the final straw.

Democrats have apparently concluded that negotiations are not just pointless, but meaningless. Schumer said that negotiating with Trump is like negotiating with Jell-O, saying the president has "turned blowing up bipartisan agreements into an art form."

Amazingly, Schumer even offered funding for the wall. Speaking on the Senate floor, Schumer said that "on the thorniest issue of immigration, the president said many times he would take a deal that included DACA in exchange for the wall. I put that deal on the table in the Oval Office in a sincere effort at compromise. I put the wall on the table in exchange for strong DACA protections in the Graham/Durbin compromise."

"What’s even more frustrating than President Trump’s intransigence," Schumer said, "is the way he seems amenable to these compromises before completely switching positions and backing off."
This really is something new, something unprecedented. The art and practice of government is disintegrating before our eyes. Chaos rules. Indeterminacy dominates. Doubt and confusion run amok. Certainty diffuses instantly into the mists and vapors. Reality is an illusion. Welcome to the presidency of Donald Trump.

Copyright (C) 2018 James Michael Brennan, All Rights Reserved

Tuesday, December 26, 2017

The Trump Jobs Miracle

Note - See Updates below.

Everything is a superlative in the mind of Donald Trump. Everything he's done is unbelievably good—far better than anybody expected.That includes the economy.

Perhaps Trump's biggest and most important promise to voters was to create jobs. So how has he managed?

Well, he's been reasonably successful at continuing the long positive trend he inherited from Obama, although so far he lags his predecessor by a little.

For this silly little exercise I compare total net nonfarm jobs created from Trump's first full month in office through the most recent month for which we have data, with the same period in the previous year under Obama. That is, I compare February through November, 2017, with February through November, 2016. Total nonfarm jobs created (seasonally adjusted) is the headline data item (along with the unemployment rate, which is trickier to interpret) that you hear about in the monthly jobs reports issued by the federal government. The source is the authoritative Bureau of Labor Statistics.

The following table shows monthly data for the two years being compared, along with cumulative totals. Data for the most recent two months is preliminary and subject to revision. As you can see, 1.70 million jobs were created under Trump during his first 10 months in office. By contrast, 1.96 million jobs were created during the same period a year earlier under Obama. Oops, Donald, you're slipping a little.


2016 Monthly

2016 Cumulative

2017 Monthly

2017 Cumulative



















































I say this exercise is "silly" because presidents have less control over the economy than a lot of people think, and also because there hasn't been enough time for any Trump-specific policies to have had an effect. But we need to do the comparison anyway, because Trump exaggerates and claims credit for everything good, and his base is not sophisticated enough to critique his claims.

While we're at it, let's have a gander at the past few years. As before, we're only looking at job creation during the February through November interval, not for the full year. As you can see, Trump continues the trend of strong but slightly declining job creation that he inherited. If we wanted to irritate Donald Trump (and we should), we could say he hasn't yet managed to screw up Obama's economy.


Total Nonfarm Jobs, Feb–Nov (millions)









We can also view the jobs picture graphically, from the beginning of the Great Recession through the present. The following graph (click on the image for a larger view) comes from the St. Louis Fed, which is the economic research and data arm of the Federal Reserve. (Whenever you see a "FRED" graph, it was generated by the St. Louis Fed, which has an online interactive reporting and graphing service you can access.)

This graph shows total nonfarm jobs (not monthly jobs created) in the economy. Total employment plummeted in the final year of the Bush administration in the recession's raging fury, bottomed out at the end of Obama's first year, and has risen continuously and quite steadily ever since. We've had a remarkable and indeed historic 8-year run of steady job creation which, again, Trump hasn't yet managed to screw up (poke, poke). See any Trump effect? I don't.

While we're at it, we may as well have a look at the unemployment rate.

The rate has declined steadily since its peak near the end of the Great Recession. Again, no visible Trump effect, even if Trump wants to crow about the drop from 4.7 to 4.1 percent during his brief tenure. I suppose any politician would, except Trump's crowing is always cruder, more flagrant and self-serving, and less indulgent of reality than normal political spin. But the rate of decrease in the unemployment rate under Trump is essentially identical to that under Obama over the final 7 years of the Obama administration. Things have been chugging along at this pace for the better part of a decade.

As I said, the unemployment rate requires some interpretation, because it incorporates workforce participation, which is the number of persons who are either employed or actively seeking employment. The unemployment rate can actually fall for perverse reasons, such as unemployed workers getting discouraged and dropping out (declining participation) of the workforce, as often happens in recessions. As an aside, the participation and unemployment rates come from a survey of households, which is different from the employment data, which comes from payroll statistics.

The unemployment rate ostensibly looks quite strong at present, but the workforce participation rate hasn't completely recovered to its level from before the recessiona matter of some curiosity and perhaps even consternation to economists. Low participation could make the unemployment rate appear better than it really is. Thus economists argue about how close to full employment (an economic concept that refers to the maximum employment the economy can sustain without inflation) we actually are. Most think quite close, although the rate could continue falling toward the 3.5 percent range. Another related curiosity is that wages haven't risen as fast as one would expect for such an apparently tight job market, although they are ticking up.

Finally, and deviating a little from the core point of this post, one reason (among many) that economists warn that the recently passed tax overhaul won't stimulate economic growth nearly as much as its proponents believe is that we appear to be scraping the bottle of the labor barrel. A surge in economic growth will require a lot more workers, but it's an open question whether they're out there to be had. An increase in the participation rate could possibly provide additional workers, but will it happen?

Speaking of economic growth (and this really will be my final point), Trump's bragging that his two straight quarters of 3% (3.1% and 3.3%, annualized) growth are practically unprecedented in the post-recession era is false, as most Trump claims are. For example, Q3 of 2013 had 3.1% growth, followed by 4% in Q4. Growth was 4.6% in Q2 of 2014, followed by 5.2% in Q3. Trump's public comments imply, falsely, that he's already achieved 3% annual growth, but that is not the case. It's a worthy goal, though, and probably the upper limit of what is possible on a sustained basis. Until recently, most economists expected—for structural and demographic reasons—a good bit less, and they could still be correct. We will have to wait and see. (By the way, the Republican critique—used to justify their tax cuts—that average annual growth has been below 2% since 2008 is disingenuous, since that period includes a severely depressed economy and the long, slow recovery that always follows depressions.)

The bottom line is that, yes indeed, "Trump's" economy is looking pretty darned good. But that's just the continuation of a very long and steady trend with which Trump had nothing to do, and never even acknowledged during his electoral sniping and criticizing. Now he wants to take credit for what he was given.

Update: Jan 5, 2018 - The December employment report was just released, giving us another month of data. The trend of Trump slightly under-performing Obama continues. 148,000 jobs were added in December, compared to 155,000 in December 2016. This was the 87th continuous month of job creation. November was revised up, from 228,000 to 252,000, while October was revised down, from 244,000 to 211,000. The revisions shave another 9,000 jobs off Trump's total, and Obama beats him by 7,000 in December.

Update: Jan 27, 2018 - Fourth quarter GDP growth came in less than expected at 2.6%, breaking the string of two consecutive quarters of 3% growth. GDP growth for the year was 2.3%, not the 3% Trump has been loosely and falsely implying. All in all not a bad year, and better than last, but it was only the third best year of GDP growth in the past five. There are many reasons to be concerned that going forward the economy is possibly as likely to slow as to grow, not least being the tight job market as explained above. Paul Krugman also notes additional reasons for concern. It's interesting, too, that the world economy has after a decade finally shaken off all the residual drag from the financial crisis and is uniformly growing. Whatever good is happening in the U.S. is not unique, but is part of a broad picture of growth worldwide that we've not seen in a long time. In response to this growth notice, too, that oil prices have been rising smartly. All in all, it looks to me as if the economy presents more perils than opportunity for Trump, but it doesn't hurt that there's significantly more economic activity worldwide.

Copyright (C) 2018 James Michael Brennan, All Rights Reserved

Tuesday, June 06, 2017

90 days. 120 days. 131 days.

Donald Trump's original travel ban was an executive order signed 131 days ago, on January 27.

It, and a follow-on order, sought to suspend for 90 days entry into the U.S. of persons from  seven predominately Muslim countries: Iran, Iraq (later revised), Libya, Somalia, Sudan, Syria, and Yemen. It suspended entry of refugees for 120 days, and Syrian refugees indefinitely.

These suspensions were ostensibly to allow time to review the process by which the U.S. vets travelers and refugees entering the U.S.

It was always unclear why the suspensions were necessary. Experts say the U.S. already practices very extensive vettingmuch more extensive, for example, than other western countries. The process of getting approval to enter the U.S. can take two years. By the standards of the international community, the U.S. arguably already practices the "extreme vetting" Trump claims to want.

Further, it was never clear why there needed to be a suspension while the review was being conducted. Nobody had ever claimed there were obvious problems with the existing system, so there's no reason a review couldn't be conducted while existing policy remained in effect. A review, if conducted in good faith, was always reasonable, but the concurrent suspensions were gratuitous.

Trump's travel bans have been blocked by a variety of federal courts: district courts in Washington and Hawaii, for example, and most recently the 4th U.S. Circuit Court of Appeals in Virginia on May 25. We are still awaiting a decision from the 9th U.S. Circuit Court of Appeals. The Trump administration is asking the Supreme Court to intervene immediately.

But we have to assume, do we not, that as all of this has been playing out in the courts, the administration has been busy conducting its review of existing policy. If it hasn't, it has been committing egregious security malpractice according to its own standards of urgent necessity.

The 120-day clock began ticking on January 27, the date of the original order. 131 days have now passed 11 days more than the original travel ban requested for travel suspension. Thus the administration has had more time than it had allocated to complete its review, identify shortcomings, and propose remedies. By the administration's own timeline, the need for suspensions has expired.


Copyright (C) 2017 James Michael Brennan, All Rights Reserved

Thursday, May 11, 2017

The Burden Of So Many Brackets

Yesterday Paul Ryan participated in a "roundtable" in New Albany, Ohio, to discuss the need for tax reform. According to Ryan, one reason we need tax reform is that there are too many brackets, and consequently people "don't know what to pay."

Here is my transcription of the "brackets burden" part of Ryan's remarks:
On the individual ... Families are dealing with a tax code that is extremely complicated. There are seven different brackets. They don't know what to pay at any given time. And the compliance costs are just really taking a lot of time and money away from hard working families, and so we want to clean up the individual side of the tax code. We propose to consolidate down to three brackets...

An alternative title to this post might have been, "When smart people say stupid things." Not, mind you, that I generally acknowledge Ryan is smart. His supporters and much of the media think he is, however, and I will grant that point here, momentarily, for the sake of moving along.

So about those brackets. When is the last time you were befuddled by your tax bracket? Did you know there were so many? Do you know which one you are in? Does the proliferation of tax brackets keep you from "knowing what to pay at any given time?"

No. No. And, of course, no.

When I file my tax return (I use Form 1040), I compute my income, reduced by deductions and exemptions, look up the result in the provided tax table, and voila! I'm told what to pay. Your tax preparation service or software accomplishes the same thing. There is not a tax bracket to be found, anywhere, while you are figuring out "what to pay."

I highlight this silly and admittedly trivial example because it demonstrates Paul Ryan performing his usual shtick, in which he plays a smart person but talks nonsense, and nobody seems to notice. There is, alas, a dearth of critical thinking skills in these troubled times. The problem is that Ryan is often clueless regarding subjects in which he claims expertise, including the economy and healthcare. He receives far too much undeserved deference from the media and fellow legislators.

Paul Krugman, a longtime critic, says that Ryan "isn’t actually a serious, honest policy expert, but plays one on TV. He rolls up his sleeves! He uses PowerPoint!" And it's true. In the roundtable video linked above, Ryan delivers his condemnation of too many brackets with his sleeves rolled up. Way back in 2010, Krugman called Ryan The Flimflam Man.

(Aside: Do you ever wonder why writers like me say things like "in the video linked above," sending you off looking for the link when they could just reproduce it where you're at, like here? Sloppy editing. Time-strapped bloggers working solo might be excused, but publications like the New York Times and such, with teams of editors, can't.)

Tax reform, properly done, is a good idea. But do not expect a Republican Congress to do it properly, particularly when the effort is led by Paul Ryan.

As for all those brackets, who cares? A bunch more would do no harm, and might help. For the record, I advocate a highly progressive, bracketless system. In my vision, the brackets are replaced by a tax rate represented by a continuous increasing curve, with each extra marginal penny of income taxed at a minutely higher rate than the previous penny, topping out in the range of 50-70 percent for the gazillionaires. It might require some complicated math to figure out "what to pay," but no worries: There will always be someone, or software, or a tax table, to tell you what you owe.

Note that my shocking headline number represents a marginal rate: Because each subsequent small increment of income is taxed higher than the preceding increment along the tax rate curve, it is also true that each preceding increment is taxed at a lower rate. Thus at each point on the curve income ("at the margin") receives a higher tax rate than what preceded it.

For the very highest income taxpayers, the highest rate applies to all income above a certain very high threshold; below that they're taxed according to the "curve" like everybody else. The top rate is just the point where the tax rate curve stops increasing. Thus gazillionaires wouldn't pay an effective rate of 50-70 percent on all their income, so we're not soaking them as much as you might think. (Another way to think about this is the gazillionaire only pays the same amount of tax as you do on his first increment of income up your income.)  But we need to soak them plenty, and I've got nothing against gazillionaires.

Also note that our current bracketed system likewise operates with marginal ratessomething a lot of people fail to appreciate. It's just that in that system the "margin" is precisely specified as being the boundaries between brackets. Anyway, a bracketless system, unlike Ryan's proposal, means no bracket games would be played, which eliminates at least one possible financial distortion in the system. Because the gazillionaire (and everybody else) is taxed only the tiniest bit more on his next penny of income than he was on his last, there is no point where it makes sense for him to quit earning income.

Paul Ryan would find my approach appalling, but if he calls me that is what I'll tell him.

Copyright (C) 2017 James Michael Brennan, All Rights Reserved

Monday, April 03, 2017

What Trump Should Do About Health Insurance

The Republican health care legislation has failed spectacularly in the House of Representatives and has been withdrawn.

"We’re going to be living with Obamacare for the foreseeable future," said House speaker Paul Ryan.

Maybe that's for the good, opined President Trump, because Obamacare will implode (Trump actually said "explode") on its own, and Republicans (and especially Trump) can then say I told you so. Just give it a little more time.

Ryan's "living with" assessment notwithstanding, it is well within the capabilities and motivations of Trump and HHS secretary Tom Price to make Obamacare's failure a self-fulfilling prophecy, so any sensible cynic naturally expects that they will. The ACA requires benevolent supervision by the executive, along with certain inputs from the Congress, and they are all Republicans. A government that doesn't want the law to work has lots of ways to see to it that it won't. There are early signs we are headed in that direction.

Oh, how they hate Obamacare! That's the only explanation for the abysmal legislation that came out of the House. (Well, not the only explanation; we could talk about what Paul Ryan wants to do to Medicaid.) These past weeks it became increasingly and abundantly clear how downright horrible the Republican replacement was. The CBO projected the law would reduce the number of insured persons by 24 million over ten years, with 14 million losses occurring in the first year.

Horrible, yes, but Republicans countered that Obamacare is "failing," in a "death spiral," and anything is better than its inevitable collapse. So, really, they were doing us a favor by putting Obamacare out of its misery.

Except that's just not true. Not even kind of true.

Signups on the ACA exchanges declined slightly (by about 4%) this year, for the first time since the law took effect. The slowdown came after a very strong early start in the open enrollment period, and coincided with Trump taking office and cutting open enrollment advertising and outreach activitiesan example of the countless ways the executive can affect the trajectory of the law, as I alluded above. Open enrollment messaging is important to successful signups for any insurance system. You have to get the word out.

Even so, 12.2 million people bought insurance on the exchanges, despite all the current political upheaval. If the ACA really were in a "death spiral" consumers would be fleeing the markets in droves; they're not. Add to that the many millions who obtained coverage through Medicaid expansion and the uninsured rate remains at historic lows.

Premiums have been up recently but that alone doesn't say much. For the first years of the ACA premiums came in well below initial projections, which actually puzzled insurance experts. (Companies might have been selling below cost to establish market share.) Now they are at approximately the level they'd been expected to be at this point in time, so the premium performance over the law's complete existence is basically on track with early projections.

In other words, the only reason the current big hikes seem like an "explosion" in premiums is that they're being compared with their unexpectedly low levels in the early going.

Some analysts think the ACA markets have completed a "correction" and that insurance companies who remain are now positioned to make money, or at least stop losing it. It seems it took some time for insurance companies to figure out the lay of the land in this new environment, and now they have. That shouldn't be a surprise.

Some that exited arguably had ulterior motives. For example, Aetna threatened it would leave if its merger with Humana was blocked. It was. It did.

The premium hikes were never such a big deal from the standpoint most consumers, because most (but not all) of the persons buying insurance on the exchanges get subsidies from the government, and those subsidies adjust to at least partially offset higher premiums.

More problematic is the issue of high deductibles. It seems downright bizarre to hear Republicans complain about that, however, because high deductibles and narrow provider networks have always been central to Republican insurance philosophy. What's ironic is that Obamacare is in so many ways a Republican plan through and through; it's just that Republicans abandoned their own principles wholesale once the Democrats enacted them into law and attached Obama's name to it. Anyway, the now-withdrawn Republican legislation would have increased deductibles, not lowered them. A recently published analysis by the Kaiser Family Foundation projected deductibles going up an average of $1,550 under the Republican plan.

Which is essentially a critique in microcosm of what Republicans were offering, an offering that consistently failed to address even the acknowledged problems with the ACA that its critics complain about and its supporters agree exist. Not only would the Republican plan not have helped; it would have made things worse pretty much across the board. (There would admittedly have been some winners, such as healthy young people with good incomes. And the very rich, who would have seen tax breaks in the hundreds of billions of dollars.)

The overarching problem with the status quo is that ACA was birthed into the most extreme partisan political cauldron, one in which scorched-earth Republican opposition negated any possibility of bipartisan cooperation. So none of the fixes, tweaks, and improvements that any law as large and complicated as the ACA would obviously need were possible in the years following its enactment. That itself is an anomaly: traditionally there's been bipartisan agreement that an enacted law be adjusted as needed to make it better, but Republicans have done nothing but promise complete repeal. It's frankly amazing how well the ACA has performed while under constant hostile attack from the right.

So what to do now, as along with Paul Ryan we contemplate "living with" Obamacare, warts and all?

This is of course fantastical to imagine, but Donald Trump could, conceivably, change everything for the better. Doing so would require a level of personal understanding and engagement that he is almost certainly incapable of, and he'd have to abandon a lot of his campaign rhetoric denigrating the ACA. On the other hand, he could keep other rhetoric while burnishing his populist bona fides.

What kind of rhetoric might we want him to keep? As recently as this January, Trump submitted to an on-the-record interview with the Washington Post's Robert Costa and Amy Goldstein in which he promised that the pending Obamacare replacement would offer insurance that was better, cheaper, and would cover everybody. That was so spit-out-your-coffee absurd that you had to wonder if Trump had any idea what he was talking about. But darn it, he actually said it. And were he to actually attempt to make those things happen, we could all applaud. I would.

But as I said, his interview was absurd. The only conclusion that makes sense is Trump was completely, utterly clueless; that he never had the slightest understanding of the issues surrounding healthcare. Trump seemed to have really believed, during the election campaign and after, that Obamacare was so poorly conceived and incompetently constructed that all that was needed to set things right was to bring to power a government that knew what it was doing; he and the Republican Congress were just that government. How else to explain his grandiose promises that were as improbable as a perpetual motion machine? The fix in Trump's mind would be easy, cheap, and comprehensivejust wait and see! And every child would get a pony. Paul Ryan, who had other ideas, cringed in horror.

But maybe, just maybe, Trump's cluelessness betrays the scantest germ of a nascent genuine affinity for at least the idea of making health insurance more comprehensive, more affordable, and more universala notion clearly at odds with prevailing Republican ideology as exemplified by the legislation the House tried to pass. I am trying to edge up to this strange possibility cautiously. Maybe Trump, given a chance, would actually prefer to think about healthcare differently than the Republicans with whom he has so far made common cause. It's admittedly a long shot.

How could that conceivably happen? The first thing Trump would have to do is to actually learn some things. I am not being flippant or merely demeaning by pointing out that this is asking a lot, perhaps far too much given what we have to work with.

Trump is clearly not a detail person. He also has some genuine issues with discerning reality. Trump's conspiracy-theory mentality impedes not just his judging the place of Obama's birth and the role of Ted Cruz's father in the Kennedy assassination (among so many other things), but also his grasp a vast array of basic empirical understandings that are necessary to actually govern. His mind might be appropriately wired for self-promotion, doing real estate deals, and generally cashing in on a variety of sub-ethical hucksterish ventures (Trump University, for example), but it seems to not be a comprehensive general-purpose dot-connecting issue-understanding disciplined mind capable maintaining the requisite attention needed to work through big, complex problems—especially problems that don't involve a payoff to Trump at the far end.

But suppose Trump resolved to make the effort. Determined to learn. Aspired to understand. How should he proceed? He would clearly need to get out of the Republican echo chamber and imbibe a lot of information he's not heretofore been exposed to. The first thing would be to bring in healthcare experts from the other side; preferably, even, the architects of Obamacare, and allow them to teach him some things. They could explain why Obamacare is the way it is—why it must be the way it is, or something very similar. What are the strengths and weaknesses of its model, and of alternative models. Why the personal mandate was selected as the best way to provide for community rating—the requirement that insurance companies cover everybody for the same price, regardless of preexisting conditions. Trump might marvel that there are reasons, and that they make sense. It might also come as news to him that Obamacare has in many ways performed quite well.

Trump could learn what Obamacare costs the government. What it costs taxpayers. Who pays the taxes. Its effect on the deficit.

He could learn about the tradeoffs between coverage and premiums. Of what drives out-of-pocket costs.

He could learn about how Obamacare's web of agreements and relationships with providers and interests of all sorts specifically sought to ensure the solvency of hospitals, and to extend the solvency of Medicare by years.

Trump could learn about why and how Obamacare reduced the uninsured population in the U.S. by 20 million, while for the first time requiring a comprehensive suite of benefits (including prescription drug coverage, hospitalization, preventative care, mental health coverage, maternity care, and more) where previously the private market was dominated by bare-bones stripped-down plans that could be canceled as soon as the insured got sick. (Republicans often say these are the kinds of plans people "want." No. People don't want junk. It's just that before the ACA they were the only kinds of plans people could afford. People often didn't realize how useless they were until they needed them.)

Trump could learn what are the difficulties with selling insurance "across state lines," and why it is not a panacea. He'd have to understand the complexities of managing provider networks, and avoiding "race to the bottom" situations.

After learning all these things, Trump would need to judge whether or not Obamacare's goals are reasonable, and whether its approach (notwithstanding whatever problems it may or may not be having) is fundamentally sound. If they are and it is, then the obvious way forward is to keep the good and address the problems. To identify and fix what isn't working while not throwing out the baby with the bathwater. To build upon an already solid framework, if indeed that is what we have—not dismantle it and start over.

The big problem, of course, is that by now the well has largely been poisoned. So many have been told for so long (by—don't forget—the same people who brought you the abysmal just-failed Republican replacement) that Obamacare is a disaster. That revealed wisdom is now something that millions (including, apparently, Trump himself) just know. The universe of possibilities has shrunken accordingly by years of dishonest or ignorant rhetoric so that discussants have a hard time even agreeing on reality. Admittedly a little bit of un-shrinking has recently been done as many have suddenly come to realize what they were about to lose, and have belatedly protested (in congressional town halls, for example) its threatened removal. Nevertheless, the problem of agreeing on what is and isn't real is immense, perhaps insurmountable. And as we have seen, Trump just might be the last person you'd depend upon to gauge reality.

But if we wanted to try—if Trump wanted to try—how would we fix "what isn't working"? Consider an example. It's been widely reported that some areas of the country have only one health insurance carrier offering coverage on the exchanges, even as there are other parts of the country that have active, robust markets. (For example, the California insurance marketplaces are thriving.) Data show that premiums are higher in areas with less competition. Data also show that regions with few insurers tend to be sparsely populated. That suggests it is harder for insurance companies to make a profit in rural areas (Wyoming, for example), which seems utterly unsurprising. If that is so, the question becomes one of figuring out how to serve sparsely populated regions of the country—a goal that ought not to be controversial even if it is judged to be difficult or expensive. Some changes to the law might need to be made to address this.

So maybe we need to go back to the drawing board and figure out what to do about rural counties.  Doesn't it make sense to approach this from within the framework of the ACA? Alternatively, how would scrapping Obamacare make the rural problem more tractable? Don't forget: The private insurance market was broken prior to the ACA; just going back isn't a solution.

As an aside, one possible approach to addressing the rural problem would be to revisit the "public option"—an idea that received favorable CBO scoring in 2009, and came very close to being part of the original ACA law except for a threatened filibuster by one Joe Lieberman. Another would be to allow premiums to rise (while providing offsetting subsidies) until there are adequate carriers in underserved markets.

There is of course no free lunch. Ensuring that rural areas have access to affordable healthcare has a cost, and somebody must pay it. But we are a rich country; we are also the only advanced country in the world that doesn't guarantee healthcare to all its citizens. We need to decide what we want.

Back to Trump. Suppose he learns about Obmacare, understands its motivations, and agrees with its approach. Suppose he decides that the best way forward is fix what isn't optimal and to improve what we already have. At that point some very interesting possibilities open up.

The biggest interesting possibility is that Democrats become interested in working with the president instead of opposing him. Almost unthinkable, I know. But what if Trump could demonstrate he really gets it, and really wants to do something good? How could Democrats resist? They would have to at least explore the possibilities.

Suppose, further, that an engaged Trump exercising real leadership (oh, how improbable!) brings along a sufficient number of the least ideological Republican moderates who are willing to adopt his approach: improve, not replace. Real bipartisanship breaks out.

Can you imagine? I know, it's hard. But the thing might build its own momentum. Trump really learns and understands. Trump convinces Democrats of his sincerity. Trump explains to the country that he's got religion, that this time he means it. Republican obstruction starts to crack, not least because they'd be obstructing their own president. But also because some Republican legislators have seen for themselves (through the current wave of town hall meetings, for example) what a lot of their constituents want, and what they don't want to lose.

The forces arrayed against this possibility are immense. Paul Ryan would have none of it. Ryan's core motivation, his reason for being, is the dismantling of the welfare state. (Hence the gutting of Medicaid in the just-failed Republican legislation.)

Tom Price, Trump's HHS secretary, has been a devout, committed opponent of the ACA, which is why he was selected in the first place. There's no way he'll go along with Trump's conversion, so he will have to go.

The House "Freedom Caucus"—the most extreme right wing of a right wing party—will have to be cut loose. No big loss: their extremity makes them useless as a governing partner pretty much across the board. Ditch those few dozen in exchange for a true bipartisan relationship with Democrats.

Perhaps just as problematic, Trump himself almost certainly doesn't have the temperament and skills to pull this off—even if he were to be convinced of its rightness. Ryan's recalcitrance would provoke a Trump counter-attack, with all the name-calling and vitriol we've come to expect. Anyway, Trump needs Ryan for the rest of his agenda. And that remaining agenda is more important to Trump than healthcare, which means my entire exercise in fantasy has been misbegotten from the get-go.

Given the sheer improbability of what I've been suggesting, it's easy to imagine a more probable alternative (given the possibilities at hand) is the Bernie Sanders / Michael Moore vision of civil war and national bloodletting that eventually leads to single-payer. As the Chinese curse puts it, may you live in interesting times.

Copyright (C) 2017 James Michael Brennan, All Rights Reserved

Sunday, March 26, 2017

Sick People: Unite!

You've heard the ironic quip, "I lose money on every sale, but I make it up on volume."

That inanity came to mind when I heard Tom DeLay opine on how to skin the "preexisting condition" cat:

"I would take Rand Paul's idea that I heard last night: Come to the Senate floor next week, and pass a bill that allows people with pre-existing conditions to join pools, associations, co-ops, to buy insurance, and show that you're going to remove the government and the regulatory structure away from it, so that the insurance companies can sell to people the kinds of policies they want."

Because if you can just let all those sick people organize, to band together as a big pool of sick people, then, by golly, the insurance calculus will change, and those sick people will magically be able to buy "the kinds of policies they want."

No, really. Imagine the market power all those sick people would have if we'd just allow them to join forces without any government meddling. What insurance company wouldn't want to insure sick people if only there were enough of them?

As for "the kinds of policies they want," you might presume that means polices that cover their health conditions.

Except that is not what DeLay means. DeLay means not policies that cover their conditions, but policies they can afford. And because we are talking about people who are sick, these are mutually exclusive outcomes when the sick are segregated and delivered to the tender mercies of insurance companies.

Come to think of it, when DeLay says "insurance companies can sell to people the kinds of policies they want," the "they" perhaps refers to the companies, not the customers. Which is why you need to get government and its infernal regulating out of the way.

This is, truly, how many on the political right think, and they're not embarrassed to say it on national radio.

Reminds me, too, of how in the years leading up to the financial meltdown, reams of low quality subprime mortgages were bundled into tranched securities. The lower tranches of those securities, consisting entirely of crappy loans top to bottom, were then themselves rebundled and retranched, sometimes through multiple iterations, sometimes forking off into CDOs or other exotic instruments, until what came out the other end were triple-A-rated investment grade securities. All it took to get to the desired result was a sufficient number of iterations through the sausage mill. It probably all made perfect sense to Tom DeLay.

Can't we do something like this with health insurance? No.Whether with mortgages or with insurance, there is no alchemy that turns lead into gold. You can't do it with obfuscation, either.

Health insurance works by spreading the risk widely, among the sick and the healthy, and having everybody share in the cost of paying for benefits, preferably over a lifetime. The healthy pay for the sick. It's as simple as that. They do so willingly, on the assumption that they too will some day be sick. Everybody gets his turn. It's a good bet.

The larger the insured pool, the more uniform the cost sharing, and the greater the overall stability of the system. Except that if the pool consists only of sick people, the "distributed" costs will be uniformly high, and thus not affordable. This goes against the very reason for having insurance. It's like having an auto insurance group consisting only of policyholders who will total their vehicles this year. What good is that?

Risk pools made up exclusively of sick people don't make sense, except to insurance companies, which profit by collecting premiums but not paying benefits.

Or to governments, which want to pretend they are subsidizing premiums paid by members of "high risk pools," but with a way of limiting that subsidy to something less than necessary. High risk pools are a way of doing things on the cheap, and you get what you pay for.

High risk pools, whether government run or not, don't magically reduce risk or lower costthey just move it around. There is no alchemic benefit to such slicing and dicing. Because eventually everybody will be sick, segregating the sick into separate groupings guarantees that each of us will one day be unhealthy outcasts.

It ought to be clear that what's good for insurance companies isn't good for society, but you can be sure that a lot of ostensibly smart people don't get it.

Copyright (C) 2017 James Michael Brennan, All Rights Reserved