Trump’s Plan to Kill Obamacare Rattles Republicans

Plus, Trump's promised $4 trillion bonanza is falling short

Trump’s Plan to Kill Obamacare Rattles the GOP

The Trump administration’s decision to back an effort to invalidate the entire Affordable Care Act stunned legal and health care experts, baffled political pundits, thrilled Democrats and rattled Republicans.

But the president on Wednesday doubled down on the idea of dismantling Obamacare.

A day after telling reporters that “the Republican Party will soon be known as the ‘party of health care,’” Trump defended his Justice Department’s decision and criticized the Obama health law, pledging that the GOP would deliver something better, despite the failure of the party’s previous “repeal and replace” efforts.

“If the Supreme Court rules that Obamacare is out, we'll have a plan that is far better than Obamacare,” Trump said at the White House.

‘A Clear Loser for Republicans’

For now, though, Republicans don’t have a plan — certainly not one that can pass a divided Congress — and they seem less than eager to be dragged into the fight again. “I believe that he's sort of got the cart before the horse, that you need to have a plan for what a replacement would be that would improve upon the ACA," Sen. Susan Collins (R-ME) said. Collins, who voted against a last-ditch GOP Obamacare repeal bill in 2017, said she was disappointed by the administration’s decision and “vehemently opposed” to it.

Axios reports that House Minority Leader Kevin McCarthy told Trump he disagrees with the administration’s attempt to get the entire ACA invalidated and that the Justice Department’s decision makes no sense.

“McCarthy is far from alone in his view,” Axios’ Jonathan Swan, Sam Baker and Alayna Treene report. “Multiple GOP sources — from the most conservative to the most moderate wing of the party — have told Axios that they can't fathom why the president would want to re-litigate an issue that has been a clear loser for Republicans.”

The administration’s decision immediately shifted the political focus away from the Mueller report's findings and back onto an issue that has been immensely beneficial to Democrats. As Bloomberg’s Sahil Kapur notes, CNN exit polls found that health care was the top issue for 2018 voters and the 41 percent who cited it preferred Democrats to Republicans by a huge 75 percent to 23 percent margin.

One unnamed senior GOP aide told The Washington Post that the new strategy “is the equivalent of punching yourself in the face repeatedly.” And Michael Steel, former press secretary for Republican House Speaker John Boehner, tweeted that without a consensus on a conservative alternative to Obamacare, a renewed effort to kill the law “makes as much political sense as diving headfirst into a wood chipper.”

The administration’s decision also met with resistance inside Trump’s cabinet, as Health and Human Services Secretary Alex Azar and Attorney General William Barr both opposed it, Politico's Eliana Johnson and Burgess Everett report. Trump, however, sided with Acting White House Chief of Staff Mick Mulvaney and others in the administration who favored the move.

Does Trump Have a Strategy?

The president may be looking to shore up a GOP weak spot ahead of the 2020 elections. At a closed-door lunch on Tuesday, he told Republicans “that he ‘owned’ the issues of the economy and border security, but the party is vulnerable on health care,” the Post’s Rachael Bade, Josh Dawsey and John Wagner report, adding that Trump said he wanted to come up with a health care plan during the election — and that the president touted his “Republicans are the party of health care” line as a new slogan he had just thought up on his ride to the Capitol.

“White House aides acknowledge that there is no specific plan and that when Trump has said the Republicans need to be the party of health care, it is more of a branding exercise,” the Post says.

So Trump’s strategy, as it were, is to go on the offensive, even without a plan for avoiding chaos if Obamacare is nullified. An administration official who supports the Justice Department’s new position told Axios: "Burying your head in the sand and wishing the issue of health care goes away didn’t work in the midterms and it won’t work this time. Obamacare’s failures are obvious to everyone, and if Republicans abandon the field there’s no obstacle to a fully socialized system."

The bottom line: Trump should know by now that health care is complicated — and that there are huge risks to pushing political messaging on the issue without policy substance to back it up. “Trump’s plan isn’t a plan at all,” writes Peter Suderman at The Washington Post. “It’s a political fantasy that doesn’t acknowledge the hard choices that are an inevitable part of any health-care system. And that refusal will likely put Trump and the GOP into a political and policy bind.”

Trump Said Companies Would Bring $4 Trillion Back to the US. Last Year’s Total: $665 Billion

President Trump made some big claims about the 2017 Republican tax overhaul, including a prediction that it would encourage companies to transfer trillions in profits held overseas back to the U.S.

“We expect to have in excess of $4 trillion brought back very shortly,” Trump said last August. “Over $4 [trillion], but close to $5 trillion, will be brought back into our country. This is money that would never, ever be seen again by the workers and the people of our country.”

Most economists said the Trump administration was overstating the amount of profits held overseas, and more sober estimates pegged the figure somewhere between $1.5 trillion and $2.5 trillion. U.S. multinationals kept those funds offshore to avoid paying tax on them, but the 2017 overhaul lowered the corporate tax rate while imposing a one-time levy at a reduced rate, freeing companies to bring the money back home.

Data released by the Bureau of Economic Analysis Wednesday shows that while the repatriation of profits increased substantially last year, the total fell well short of the figures Trump cited. Corporations brought $665 billion back to the U.S. in 2018, the BEA said. By comparison, U.S. firms repatriated $155 billion the year before. The data suggests that the repatriation effect is fading, with the quarterly numbers falling back toward their pre-tax cut levels after an initial jump in the first quarter of 2018.

Critics of the GOP tax law warned that the impact from repatriation was likely exaggerated. In addition to being significantly smaller than Trump indicated, about half of the assets held overseas by U.S. firms are illiquid and therefore hard to repatriate. And the profits that are eventually brought home are unlikely to boost investment and wages as Republicans promised; instead, the extra cash is likely to flow into dividend payouts and share buybacks. Not coincidentally, S&P recently announced that buybacks hit a record high last year.

Chart of the Day: Payroll Taxes Loom Large

The majority of taxpayers earning less than $200,000 a year will pay more in payroll taxes in 2019 than they will in federal income taxes, according to a new report from the Joint Committee on Taxation. The primary payroll taxes are Social Security and Medicare, and they hit low-income workers the hardest. “The payroll tax is regressive, with the highest average rate falling on Americans with the lowest incomes,” says the Tax Foundation’s Robert Bellafiore. “In contrast, the income tax is progressive, with the average rate rising with income.”

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