Democrats Brawl Over Medicare for All

Plus, what the Fed's rate cut means

Democrats Brawl Over Medicare for All

Health care policy dominated the first half hour of the debate among 10 Democratic presidential hopefuls Tuesday night, with much of the discussion focused on the viability of Medicare for All.

Sens. Elizabeth Warren and Bernie Sanders defended their plan for universal health insurance against charges from moderates led by former Rep. John Delaney that their plan was too radical because it would eliminate the private insurance that roughly 150 million Americans currently rely on. “We don’t have to go around and be the party of subtraction, and telling half the country, who has private health insurance, that their health insurance is illegal,” Delaney said.

In response, Warren and Biden argued that private insurance was part of the problem, raising prices while siphoning billions of dollars from the health care system that could be used for patient care. Warren also cut Delaney down to size with a devastating retort: “I don’t understand why anybody goes to all the trouble of running for president of the United States just to talk about what we really can’t do and shouldn’t fight for.”

How will they pay for it? The fate of private insurance isn’t the only point of contention Democrats have when it comes to Medicare for All, says Jeff Stein of The Washington Post. During the debate the candidates also discussed the question of how to finance an ambitious new public program. Sanders has proposed a 4% tax on all households earning more than $29,000, but other candidates were vague about financing their own proposals for universal coverage. Warren ducked the issue by claiming that overall spending for middle class families would go down once premiums and prices were taken into account.

“Clearly the candidates did not want the talking point that middle-class taxes would go up,” said Larry Levitt of the Kaiser Family Foundation. “Tax increases are a potent line against Medicare-for-all, though it would likely lead to the middle-class paying less for health care overall.”

Biden ready to jump in: The health care debate is likely to continue on the second night of the debates. Frontrunner Joe Biden, an opponent of Medicare for All, took aim at his more liberal competitors even before the debate had started. “Medicare for All would cost American taxpayers $30-$40 trillion over 10 years … of course it'll raise middle class taxes,” a new Biden video says, according to The Hill. The former vice president has proposed to provide a public option that would enable Americans to purchase a government-run health insurance plan while leaving much of the current health care system, including Obamacare, in place.

Biden will share the stage Wednesday with Sen. Kamala Harris, who released a health care plan earlier this week that falls somewhere between Sanders’ Medicare for All and Biden’s more modest proposal. The Harris plan would allow Americans to buy into Medicare while maintaining a role for private insurers. The expanded health care system would be paid for by a 4% tax on households earning over $100,000 and new taxes on stock trades and offshore corporate earnings.

White House ‘Scrambling’ to Come Up with a Health Care Agenda for Trump: Report

The Washington Post’s Yasmeen Abutaleb and Josh Dawsey report:

“White House advisers, scrambling to create a health-care agenda for President Trump to promote on the campaign trail, are meeting at least daily with the aim of rolling out a measure every two to three weeks until the 2020 election.”

The administration has already announced an plan to allow prescription drugs to be imported from Canada and elsewhere. It is also reportedly considering a sweeping executive order to lower Medicare Part D drug prices by tying them to prices in other countries.

“The furious push reflects the administration’s sense of vulnerability on an issue that Democrats successfully used in 2018 to win control of the House of Representatives,” Abutaleb and Dawsey write. But it’s not clear whether the administration can push through ideas that will have an effect before the 2020 elections — and if it can enact some of its ideas without Congress, where some Republicans remain skeptical about the White House’s approach.

“While Republicans have largely fallen in line with Trump on free trade and immigration even when he has blown up GOP orthodoxy, many rely heavily on donations from the pharmaceutical industry and are reluctant to sour those relationships,” the Post notes.

Read the full story at The Washington Post.

What the Fed’s Rate Cut Means for the National Debt

The Federal Reserve cut its benchmark interest rate for the first time since 2008 on Wednesday, lowering the target for its overnight lending rate by a quarter point, to between 2% and 2.25%, in an effort to protect the U.S. economy against rising risks, including those from President Trump’s trade war.

The rate-setting Federal Open Markets Committee said in its statement that the job market remains strong and that economic growth is likely to continue, but uncertainties cloud the outlook. “Although growth of household spending has picked up from earlier in the year, growth of business fixed investment has been soft,” it said.

Fed Chair Jerome Powell added that the cut, a reversal of a December rate increase, wasn’t “the beginning of a lengthy cutting cycle" — a stance that sent stocks falling. Wall Street has been pricing in multiple rate cuts this year, and President Trump had repeatedly criticized the Fed and called for larger rate cuts.

What it means for the national debt: The cut is another signal that interest rates will remain lower than the Congressional Budget Office projects. But the Committee for a Responsible Federal Budget warned Wednesday that even with low rates, the debt is still projected to grow as a share of the economy:

“If interest rates stay at the low levels experienced in early 2019, primary deficits” — that is, before interest costs are factored in — “would still need to be cut from 1.7 percent of GDP to 1.0 percent, the equivalent of $1.8 trillion in spending cuts or tax increases over the next ten years. Putting debt on a clear downward path under this scenario would require reducing primary deficits to about 0.5 percent of GDP, the equivalent of $3.1 trillion of spending cuts or tax increases.” Those CRFB projections don’t account for the cost of extending Congress’ recent tax cuts and spending increases.

For some additional context, CBO has projected that the 2017 tax cuts will add $1.8 trillion to primary deficits through 2028, while CRFB says the recent budget agreement will add $1.7 trillion to projected spending over the next 10 years.

CRFB also says that the tax cuts and spending hikes enacted since 2015 will more than double the deficit in 2020 and 2021. The 2017 tax law accounts for the largest part of that increase, with an expected cost of $565 billion over the next two years, or more than a quarter of projected deficits. The two-year budget deal lawmakers and the White House just agreed to will cost about $235 billion over the next two years.

In all, recent legislation will add about $4.5 trillion to deficits over the next decade, or 35% of a projected total of $13.1 trillion.

Debt and Deficit Hardly Mentioned in Democratic Debate

The first night of the second Democratic presidential primary debate included only passing references to debt and deficit concerns.

Former Colorado Gov. John Hickenlooper, as part of a discussion on whether candidates would continue President Trump’s trade and tariff policies:

“Trade wars are for losers. And the bottom line is we've got to recognize, let's negotiate a better trade deal. But you're not going to win against China in a trade war when they've got 25 percent of our total debt.

“And step back and look it. Here's Trump gives a giant tax cut and at the same time -- so we're paying in tariffs about $800 to $1,200 per household and then we give this incredible tax cut to the rich. Essentially what's happening is now he's transferred that tax obligation onto the middle class. That's what's outrageous. But tariffs are not the solution.”

Sen. Amy Klobuchar, in response to a question about Sen. Bernie Sander’s proposals to cancel all student debt and make two- and four-year public colleges and universities tuition-free:

“I want to make it easier for kids to go to college. And I think we do it by focusing our resources on the people that need it most. And my problem with some of these plans is they literally would pay for wealthy kids, for Wall Street kids to go to college. There's no difference. … I don't think that makes sense. And I'm very concerned if we do things like that, the debt we're going to pass on to the next generation and the next generation. So what I would do about student loan debt is that I would allow people to refinance it at a better rate and I would make sure that we improve those student loan repayment programs for our teachers and expand them so that you literally -- over 5, 10 years -- can get it paid for if you go into occupations where we don't have enough workers.”

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A lot going on today, and in the middle of it all the Houston Astros landed another ace. Send your updated World Series predictions (Astros over Dodgers?), story tips and feedback to yrosenberg@thefiscaltimes.com. And please tell your friends they can sign up here to get their own copy of this newsletter.

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