2017 will quickly tell the American people whether the Republicans are at all serious about any significant fiscal changes in Washington DC.
I don’t expect any significant cuts in the federal budget. Maybe Trump will find some of the really excessive waste and go after that. But I’m afraid, even there, that it will be too little.
Trump has been pointing out some of the wasteful spending, but it is on relatively little things. I hear critics of Trump say that it will cost the American taxpayer extra money because the Secret Service will have to guard Melania and family in New York City because she plans to spend most of her time there with their son.
Of course, these same critics never spoke about when Obama would take a vacation that would cost 10 million dollars or more.
But the point is that this is all a drop in the bucket. Ten million dollars, or even a billion dollars, is basically nothing when compared to a four trillion dollar federal budget. It is mostly symbolic.
The military budget, Medicare, Medicaid, Social Security, and interest on the debt comprise about 80% of the federal budget. As much as I would like to abolish the Department of Education and the Department of Labor, it would not make a big dent in the overall budget even with complete elimination. The main benefits would come from the reduction in regulations and bribery.
So I don’t expect federal spending to be reduced. That is the best thing the government could do to improve the economy. It would mean that fewer resources would be misallocated.
With that said, regulations are a significant drain on the economy. Health insurance and medical care has been a huge burden on the American people, particularly on the middle class. That is part of the reason that Trump won the election.
Health insurance premiums have been rising at a far greater pace than overall price inflation for several decades now. This you cannot blame on Obamacare. The Affordable Care Act (Obamacare) was the opposite of its name though. It made everything that much more unaffordable. It made the already bad trend even worse.
In terms of Trump’s presidency, I think foreign policy is where he can have the greatest impact and make the most changes for the better.
On the domestic front, I don’t expect much from Trump. In fact, I think he is mostly a disaster when it comes to economics. He does not understand the benefits of free trade, or he at least does not let us know that he does. I agree with him on opposing TPP and these other managed trade agreements, but he gets things wrong when it comes to free trade and outsourcing jobs.
In terms of the economy, the one thing Trump needs to get right, and I hope he gets right, is repealing Obamacare. Of course, for several years now, we have heard Republicans talk about “repeal and replace”. Why can’t they just repeal, and not replace?
This is as much of a test for the Republicans in Congress as it is for Trump. Obamacare was somewhat unique in that is was a major piece of legislation that was opposed with near unanimity by one party. Yet, the Republicans will still find it difficult to repeal.
Most Republicans, including Trump, say that they like certain aspects of Obamacare. They agree with the provision that insurance companies should not discriminate based on pre-existing conditions.
But as I wrote quite a while ago, this is why the mandate is necessary. If you can just wait to get sick and then buy insurance, premiums would go through the roof more than they already have. Insurance companies would be covering mostly sick people.
Why would you buy really expensive insurance if you are not forced to, and if you can just buy it after you become seriously ill?
The mandate to buy insurance was put in place in order to have relatively healthy people buying insurance. They need this to subsidize the sick people.
Obamacare really is a package deal. While the Republicans were correct to oppose it in the first place, the Democrats are actually a little more consistent. If you mandate that insurance companies admit people with pre-existing conditions at a somewhat comparable rate to everyone else, then you have to have a mandate to buy insurance so that it won’t just be sick people buying it.
If the Republicans repeal the individual mandate without repealing the provision of pre-existing conditions, then it will just drive up health insurance premiums that much higher. It is a ticket straight to fully nationalized healthcare.
The Republicans should completely repeal Obamacare. Trump should enact his plan that would allow people to buy health insurance across state lines, just as you can do with other insurance. There are a lot more free market policies that need to be put in place, but at least this would be a start.
If the Republicans can’t even repeal Obamacare, they really are mostly useless. The only positive thing you could say about them at that point is that they are not Democrats.
Middle class America is hurting in a big way. Health insurance premiums are a big chunk of this. I think even many Democrats would say that Obamacare hasn’t worked out too well. Trump and the Republican Congress could easily repeal this without much backlash. Of course, the establishment media would be up in arms, but that doesn’t mean anything. Trump already defeated them.
On the domestic front, Obamacare is the big test. I am afraid the Republicans are going to fail miserably.