Trump Admin Asks Supreme Court to End Obamacare
The Trump administration urged the Supreme Court to strike down the Affordable Care Act in a legal brief filed by the Justice Department late Thursday.
The 82-page brief reiterates the administration’s support for a suit filed by Republican officials in Texas and 17 other states that claims that the ACA became invalid in its entirety when the individual mandate — the tax penalty for not purchasing health insurance — was zeroed out by Congress in 2017.
“The entire ACA thus must fall with the individual mandate,” Solicitor General Noel Francisco wrote in the brief, which was filed shortly before a midnight deadline. “The individual mandate is no longer a valid exercise of Congress’s legislative authority in light of Congress’s elimination of the penalty for noncompliance.”
A political gamble. Although the Trump administration’s decision to stick to its guns on Obamacare repeal may please conservatives who have vehemently opposed the health law since its passage in 2010, success could be costly. If the court agrees with the suit and invalidates the ACA, it could cost more than 20 million Americans their health care coverage and eliminate broadly popular protections for those with pre-existing conditions, while sowing chaos in parts of the health care market that have been affected by the law. All that would occur in the middle of a pandemic that has already killed more than 120,000 people and caused a severe recession that has stripped millions of their employer-based health insurance.
The White House said that the coronavirus played no role in its stance on the issue. “A global pandemic does not change what Americans know — Obamacare has been an unlawful failure,” spokesperson Judd Deere said Friday.
Critics pounce. Democrats were quick to highlight the tension between the growing health crisis and the administration’s effort to eliminate health care for millions of people. “President Trump and the Republicans’ campaign to rip away the protections and benefits of the Affordable Care Act in the middle of the coronavirus crisis is an act of unfathomable cruelty,” House Speaker Nancy Pelosi said in a statement.
Even some Republicans think the plan is politically misguided, given the context. GOP strategist Joel White told The New York Times that it’s “pretty dumb to be talking about how we need to repeal Obamacare in the middle of a pandemic.”
More reliance on the ACA markets. A report Thursday from the Centers for Medicare and Medicaid Services shows that hundreds of thousands of newly unemployed Americans have already turned to Obamacare for health coverage. About 487,000 people signed up for coverage during a special enrollment period after losing their jobs in 2020, an increase of 46% compared to 2019. April was the biggest month for new signups, which were 139% higher in 2020 than the year before.
What’s next. The court hasn’t said when it will hear the case, but oral arguments could take place in the fall, ahead of the election.
The $600 Unemployment Boost Is Working — for Now
New data released by the Commerce Department on Friday highlight how the $600 a week in enhanced unemployment benefits provided as part of the government’s coronavirus response have helped offset lost wages and stabilize personal incomes during the pandemic.
Bloomberg News’s Matthew Boesler reports:
“Compensation of employees, a measure which includes wage and salary disbursements as well as employer benefits, fell 8.3% in the three months through May, according to monthly Commerce Department figures on personal income and spending. But compensation of employees, plus government unemployment-insurance benefits, rose 2.3% over the same period, thanks to a surge in payouts last month.”
Personal income fell by 4.2% in May, the most since 2013, after soaring 10.8% the month before as the government sent out millions of $1,200 coronavirus relief payments and unemployment benefits helped cushion the damage from pandemic shutdowns. But while overall income fell, personal income from unemployment insurance rose to nearly $1.3 trillion in May, up $825.3 billion from April, and the $600 federal boost to benefits made up $691.9 billion of the increase, according to Bloomberg. A federal expansion of unemployment benefits to gig workers and other not typically eligible for benefits accounted for $101.5 billion.
Those benefits likely helped fuel a record rebound in consumer spending last month, though Americans also dipped into their savings, which decreased by $1.9 trillion. Spending rose by 8.2% in May after record drops of 6.6% in March and 12.6% in April. It remains 11% below pre-pandemic levels.
The fiscal cliff ahead: The question is whether the rebound in consumer spending will be sustainable, given the surge in coronavirus cases and expectations that incomes will fall if the $600 in weekly benefits expires as scheduled next month and millions of people see their unemployment checks cut sharply. Economists worry that consumer spending and the economic recovery could take a hit if government support efforts are removed and millions of people lose their unemployment checks or see them sharply reduced.
“Economists estimate that some 26 million people, two-thirds of whom do not qualify for the regular 26-week state unemployment insurance benefits, would be left without income,” Reuters Lucia Mutikani reports.
Lawmakers are debating whether and how to provide additional support to workers who have lost their jobs. Many economists say the government will need to do more to avoid more widespread economic pain in August. "It is clear that the major force in keeping things from falling apart is the enhanced unemployment compensation," Joel Naroff, chief economist at Naroff Economics in Holland, Pennsylvania, told Reuters. "Without action, income could crater in August and spending will follow."
Poll of the Day: Widening Partisan Split on Coronavirus Threat and Response
The stark and widening partisan split in perceptions of the coronavirus pandemic is both astonishing and sadly predictable at this point.
A new national survey released Thursday by the Pew Research Center finds that 61% of Republicans say that “the worst is behind us” when it comes to the virus, while 38% believe “the worst is still to come.” Just 23% of Democrats say we’re past the worst of the pandemic, while 76% say the worst is still ahead.
The Republican optimism likely reflects the messaging of President Trump and his administration, who continue to try to put a positive spin on progress against the virus, even as case counts surge in the South and West, state health departments report record numbers of new infections and several states pause their reopening plans. “We did slow the spread. We did flatten the curve. We’re in a much better place,” Vice President Mike Pence said Friday a White House coronavirus task force briefing, the first in nearly two months.
The partisan divide extends to views about how to respond to the virus, Pew finds: “Republicans are now much less likely to say an additional stimulus package is necessary than they were in early April, while Democrats continue to overwhelmingly say more economic assistance is needed.”
Overall, 71% of Americans say another coronavirus relief package is needed, down from 77% in April. “Notably,” Pew says, “the decrease has come entirely among Republicans, who are now divided over the need for more economic stimulus (51% say it will be necessary, 47% say it will not be needed). In April, two-thirds of Republicans (66%) said an additional stimulus would be needed. Democrats continue to be overwhelmingly supportive of additional economic stimulus (87% say it will be needed, unchanged from April).”
The survey also finds that, while just 25% of Americans say the economy is in excellent or good shape, Republicans are about five times more likely than Democrats to say it is doing well (46% vs. 9%).
As for specific aid measures:
- 88% of Americans support helping homeowners, renters and businesses weather the financial fallout of the virus;
- 76% favor sending more financial aid to state and local governments, though there’s a partisan split on this issue, with 91% of Democrats supporting the idea compared to 58% of Republicans;
- 60% favor extending the $600 in additional federal unemployment benefits beyond the end of July 31, with Democrats (775) far more likely to support the idea than Republicans (39%);
- 53% supports a temporary cut in payroll taxes.
The Pew survey was conducted June 16-22 among 4,708 adults. It has an overall margin of sampling error of 1.8 percentage points.
Deficits Could Average $2 Trillion a Year Over the Next Decade: Report
The massive fiscal response to the coronavirus crisis will play a big role in driving federal deficits to an average of $2 trillion a year for the next 10 years, according to new projections from the non-partisan Committee for a Responsible Federal Budget.
“Both the economic crisis itself and the federal government’s aggressive response have massively expanded deficits,” CRFB said this week. “This borrowing is largely appropriate as deficit spending can help offset the negative economic effects of a recession and spread the costs of emergencies over time.”
But the huge increase in spending in response to the pandemic will drive up long-term deficits, CRFB said, and accelerate the growth of the national debt.
Some highlights from the report:
- The response to the coronavirus crisis will increase the deficit by $5.7 trillion over 10 years, bringing the total deficit to $20 trillion over that time period.
- The deficit will come to 17.9% of GDP this year, and average 6.3% of GDP each year from 2021 to 2030.
- The deficit will exceed the size of the economy this year, and equal 118% of GDP by 2030 and 220% of GDP by 2050.
Under an alternative scenario in which various temporary tax cuts are extended and Congress passes another $1 trillion stimulus package — both of which appear likely — the deficit would hit 131% of GDP by 2030 and 269% of GDP by 2050.
Trump Says Politics Played a Role in Defense Contract Award
Visiting the Fincantieri Marinette Marine shipyard in Wisconsin Thursday, Trump said that the defense company’s procurement of a $5.5 billion contract to build new frigates was based in part on political considerations.
Describing the frigates as the “fastest, most advanced, and most maneuverable combat ships anywhere on the ocean,” Trump added, “I hear the maneuverability is one of the big factors that you were chosen for the contract. The other is your location in Wisconsin, if you want to know the truth.”
Robert Mackey of The Intercept said that Trump’s comments could give competing firms that lost out on the contract grounds to file a complaint with the Government Accountability Office’s Procurement Law Division, charging that the contract was awarded on political grounds.
In a freewheeling, politically charged speech, Trump also took credit for the appearance of new navy ships. “I’ve changed designs,” he said. “I looked at it. I said, ‘That’s a terrible-looking ship. Let’s make it beautiful. It’ll cost you the same and maybe less.' I said, ‘This is not a good-looking ship. Let’s change the design of it.’ And I got people in and we looked at different designs.”
Some defense experts expressed doubts about Trump’s claim to have intervened in the design of the new warship, and Marcus Weisgerber of Defense One said that it wasn’t clear what the president was referring to. The new frigate is reportedly based on the design of an existing warship used by the Italian Navy.
More concretely and on a smaller scale, Trump told his audience that the defense contractor had given him a “beautiful model” of a ship, which he said is “like a yacht with missiles on it.”
- Trump’s Unhinged Crusade to Destroy Obamacare Boomerangs Back on GOP – Paul Waldman and Greg Sargent, Washington Post
- A Horrifying U.S. Covid Curve Has a Simple Explanation – Max Nisen, Bloomberg
- America Didn’t Give Up on Covid-19. Republicans Did – Paul Krugman, New York Times
- Charting the Global Economy: That’s Not a V-Shaped Recovery – Jana Randow, Bloomberg
- Why Does Trump Want a Second Term? – Jonathan Bernstein, Bloomberg
- Anticipating the Greatest Public Health Effort of Our Generation – Claire Hannan, Mike Fraser and Brent Ewig, The Hill
- Governors Must Protect the Health Workers Who Protect Us – Michele Heisler and Ranit Mishori, Bloomberg
- The Ins and Outs of Your City Budget – Ariel Aberg-Riger, Bloomberg CityLab
- The Black-White Wage Gap Is as Big as It Was in 1950 – David Leonhardt, New York Times
- Medical Cost Trend: Behind the Numbers 2021 – PwC Health Research Institute