Former President Donald Trump this afternoon pleaded not guilty in a Washington, D.C., court to four federal felony charges stemming from his efforts to overturn the result of the 2020 election. Trump is charged with conspiracy to defraud the U.S., conspiracy to obstruct an official proceeding, obstructing and attempting to obstruct an official proceeding, and conspiracy against rights. The next hearing in the case is scheduled for August 28, five days after the first GOP presidential debate (which Trump might skip).
Here's what else is happening.
Uninsured Rate Drops to Record Low – but Probably Not for Long
The share of the U.S. population without health insurance fell to an all-time low of 7.7% in the first quarter of 2023, according to new data from the National Center for Health Statistics. The record low — which translates to more than 25 million uninsured people — probably won’t last for long, though, as states continue to remove millions of beneficiaries from their Medicaid programs following the official end of the Covid-19 pandemic.
The drop in the uninsured rate, which had fallen from a peak of 18% in 2013 to a range near 10% following the enactment of the Affordable Care Act, was directly related to the pandemic. Starting in 2020, in an effort to protect more of the population from Covid-19, the federal government provided additional funding to the states to expand Medicaid coverage while forbidding them from removing beneficiaries regardless of eligibility. Before the pandemic, significant numbers of Medicaid beneficiaries were routinely removed from the program as their incomes increased or they failed to provide the required paperwork to maintain coverage, but that churn was suspended for more than three years.
As a result, Medicaid enrollment rose by more than 30%, with about 93 million people — or more than one in four Americans — covered by the program by the beginning of this year.
With the end of the pandemic, states have started to remove beneficiaries once again, with some states moving more aggressively than others, raising fresh concerns about people losing coverage for procedural reasons. According to KFF, a health policy group tracking disenrollment data, some 3.8 million people have been removed from state-level Medicaid programs since the process started in April, with the majority losing coverage for reasons such as failing to complete paperwork or return forms rather than being determined to be ineligible through a review process.
KFF estimates that as many as 24 million people could lose their Medicaid coverage once the review process at the state level is complete. Some will find coverage through employment or family members, but millions will likely go without coverage, pushing the uninsured rate back toward its pre-pandemic levels.
Quotes of the Day: More Notable Reactions to the Fitch Downgrade
“The downgrading of America’s credit rating by Fitch represents a historic failure of leadership by both political parties and the Executive branch. The credit agency specifically cited the decline in governance, erosion of cooperation in the federal government and ballooning national debt when making the determination to lower our credit rating. This is a stark warning that cannot be ignored. We must act now to fully fund the government and address our national debt before we wake up to a future where America’s superpower status is in jeopardy and we have lost the confidence of our allies around the world.”
— Sen. Joe Manchin, Democrat from West Virginia, reacting to Fitch Ratings’ downgrade of the U.S. credit rating from AAA to AA+. “September will be a crucial month as the deadline to fund the federal government grows closer,” Manchin added. “Now, more than ever, it is time for elected leaders from both parties to work together and send a clear message to the world that we will take the necessary fiscal and budgetary steps to restore our credit rating and keep America's economy strong for this generation and the next.”
“Berkshire bought $10 billion in U.S. Treasurys last Monday. We bought $10 billion in Treasurys this Monday. And the only question for next Monday is whether we will buy $10 billion in 3-month or 6-month [T-bills]. … There are some things people shouldn’t worry about. This is one.”
— Famed investor and Berkshire Hathaway CEO Warren Buffett speaking to CNBC following the Fitch downgrade. CNBC’s Becky Quick reports that Buffett made the comments in part to ease concerns that investors may have about the Fitch decision. Buffett emphasized that the U.S. still offers the safest markets. “The dollar is the reserve currency of the world, and everybody knows it,” he said.
Billionaire Investor Ackman Says He’s Betting Against 30-Year Treasuries
Hedge fund titan Bill Ackman on Wednesday night said he’s betting that the price of 30-year Treasury bonds will fall because inflation will stay closer to 3% than to the Federal Reserve’s target of 2%.
In a post on the social media platform formerly known as Twitter, Ackman, the CEO of hedge fund firm Pershing Square, laid out his case: “I have been surprised how low US long-term rates have remained in light of structural changes that are likely to lead to higher levels of long-term inflation including de-globalization, higher defense costs, the energy transition, growing entitlements, and the greater bargaining power of workers. As a result, I would be very surprised if we don’t find ourselves in a world with persistent ~3% inflation.”
Ackman also argued that, given the $32 trillion national debt and the expectation of large federal budget deficits in coming years combined with the Federal Reserve’s quantitative tightening — reducing its balance sheet by selling off some of its Treasury bond holdings — “it is hard to imagine how the market absorbs such a large increase in supply without materially higher rates.” He adds that he’s been “puzzled” as to why the Treasury Department hasn’t been financing the government through heavier use of longer-term bonds given their relatively lower interest rates.
Ackman argues that the yields on 30-year Treasury bonds could quickly jump to 5.5%, up from about 4.18% on Thursday morning. Bond yields rise as prices fall, and yields on 30-year Treasuries have been climbing. “There are many times in history where the bond market reprices the long end of the curve in a matter of weeks, and this seems like one of those times,” he wrote.
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Fiscal News Roundup
- White House, Protecting Biden’s Economic Message, Hits Back on Credit Downgrade – New York Times
- House GOP Worries That Hardliners Actually Want a Shutdown – Politico
- SALT Deduction Cap Vexes GOP After Vexing Democrats After Vexing GOP – Wall Street Journal
- Treasury’s Ramp Up in Bill Sales Triggers Supply Digestion Fears – Bloomberg
- Debt Downgrade, Driven by Partisanship, Is Unlikely to Deter Borrowing – New York Times
- Fitch Downgrade Won’t Break Washington’s Tax, Spending Habits – Wall Street Journal
- Manchin Warns Government to Step Up After Fitch Credit Rating Downgrade – CNBC
- Manchin: Downgrade of America’s Credit Rating a ‘Historic Failure’ of Political Leadership – The Hill
- Warren Buffett Says He’s Not Worried About Fitch’s U.S. Downgrade – CNBC
- Elon Musk Says Treasury Bills Are ‘No-Brainer’ – Bloomberg
- Billionaire Investor Ackman Says He Is Shorting 30-Year Treasuries – Reuters
- Shrinking Minority of Americans Able to Cover $400 Surprise Bill – Bloomberg
- Gas Prices Hit Their Highest Level This Year as Heat Hampers Refineries – Washington Post
Views and Analysis
- Three Takeaways on Fitch’s Weird Downgrade of the U.S. Credit Rating – Washington Post Editorial Board
- Fitch Downgrades America – Wall Street Journal Editorial Board
- America’s Fiscal Time Bomb Ticks Even Louder – Spencer Jakab, Wall Street Journal
- Republican Chaos Is to Blame for the Fitch Downgrade – Timonthy Noah, New Republic
- Republican Voters Are Pushing Their Party Toward a Shutdown – Jonathan Bernstein, Bloomberg
- How the Recession Doomers Got the U.S. Economy So Wrong – Derek Thompson, The Atlantic
- Manchin’s IRA Anxiety Sparks Tensions With Schumer – Leigh Ann Caldwell and Theodoric Meyer, Washington Post
- A Shining Example of U.S. Leadership Is Needlessly Endangered – Washington Post Editorial Board
- The Economy’s Odometer Is Broken – Justin Lahart, Wall Street Journal
- Is Good News Finally Good News Again? – Jeanna Smialek and Ben Casselman, New York Times
- Bill Ackman’s Treasury Short May Be Right for Wrong Reasons – Jonathan Levin, Bloomberg
- The Oliver Twist: How Orphan Drugs Became Big Business for Big Pharma – Maureen Tkacik, America Prospect
- Rising Debt Could Reduce Income Growth by One-Third – Committee for a Responsible Federal Budget
- Actually, Most Americans Can Come Up With $400 in an Emergency – Allison Schrager, Bloomberg