Political Animal Blog

The Glaring Omissions in Trump’s Climate Rule

In an effort to get his administration back on track after a miserable week, today Trump will sign a new executive order that initiates his efforts to roll back Obama’s climate change policies.

President Trump will take the most significant step yet in obliterating his predecessor’s environmental record Tuesday, instructing federal regulators to rewrite key rules curbing U.S. carbon emissions.

The sweeping executive order also seeks to lift a moratorium on federal coal leasing and remove the requirement that federal officials consider the impact of climate change when making decisions.

The language there is important. Trump will instruct federal regulators “to rewrite key rules curbing U.S. carbon emissions.” In other words, this is a directive to begin the process. Here is the catch:

The centerpiece of the new presidential directive, telling the Environmental Protection Agency to begin rewriting the 2015 regulation that limits greenhouse-gas emissions from existing power plants, will trigger a laborious rulemaking process and a possible legal fight.

The agency must first get permission from the U.S. Court of Appeals for the D.C. Circuit, where the rule is tied up in litigation, to revisit the matter. Then, agency officials will have to justify reaching the opposite conclusion of the Obama EPA, which argued it was technically feasible and legally warranted to reduce carbon pollution by about one-third by 2030, compared with 2005 levels.

“So, for the president, even if he would like to revoke the Clean Power Plan, he doesn’t have legal authority to do that,” said Jeffrey Holmstead, a partner at the Bracewell law firm who opposes the Obama-era rule. Holmstead, who headed the EPA’s air and radiation office under President George W. Bush, said he thinks the agency can justify reversing the regulation. But “they have to justify why they have changed,” he added.

The key phrase there is that “they have to justify why they changed.” Way back in 2009, Obama laid the groundwork for the Clean Power Plan with something called the “Endangerment Finding.”

The Environmental Protection Agency formally declared on Monday that carbon dioxide and other greenhouse gases constitute a threat to human health and welfare. The move empowers the agency to regulate these emissions and gives President Obama an important tool if Congress fails to pass legislation to reduce global warming emissions.

One of the most significant things about the order Trump will sign today is that revocation of the Endangerment Finding is not included. In other words, as federal regulators begin the process of re-writing these key rules—which will certainly face court challenges—the underlying policy that supports the Clean Power Plan will remain in place.

Why would the Trump administration do that? Because overturning the Endangerment Finding would trigger massive legal battles that would require them to prove that greenhouse gases do not constitute a threat to human health and welfare. Regardless of all the climate change denials from people like EPA Administrator Scott Pruitt, it is very possible that they know the science doesn’t support them. Meanwhile, they are left with the challenge of winning legal challenges to any new rules they write with the Endangerment Finding in place.

I have to admit that it is a bit amusing to see Pruitt attacked as just another swamp-dweller by the right-wing media for this exclusion. But take a look at what Breitbart writes about the kind of person Trump has made his Director of OMB:

Of a piece with this was [Pruitt’s] recent spat with Mick Mulvaney, director of the White House’s Office of Management and Budget, over the EPA’s budget allowance.

Pruitt — supposed to be a hawk — protested that he couldn’t accept the proposed 24 percent cut in the EPA’s $8.2 billion budget. A furious Mulvaney responded by increasing the cut to 31 percent.

Those cuts, as well as the fact that Trump has failed to nominate people to key positions within the EPA, will make Pruitt’s job of re-writing rules and defending court challenges even more difficult.

The other item that is not included in the order Trump will sign today is a statement about pulling the U.S. out of the Paris Climate Accord. It looks like the president will go with the idea of leaving that one up to Senate Majority Leader Mitch McConnell. It was earlier reported that Trump was getting advice from some people to frame that as a treaty requiring Senate approval. It will be interesting to see if McConnell wants to go there.

But let’s be clear, while what Trump will do today isn’t a complete roll-back of Obama’s climate policies, it will have an affect on the biggest challenge we face as a globe.

“Meeting the U.S. terms of the Paris Agreement would require full enforcement of the current regulations, plus additional regulations,” said Michael Oppenheimer, a climate scientist at Princeton University. “It takes a comprehensive effort involving every country doing what they committed to and more.”

He said Mr. Trump’s order “sends a signal to other countries that they might not have to meet their commitments — which would mean that the world would fail to stay out of the climate danger zone.”

All I can add to that is, when it comes to staying out of the climate danger zone, elections matter.

How the Failure to Repeal Obamacare Is Affecting Wall Street

Most people who work in corporate America don’t have to worry about health insurance. So the failure of Republicans to repeal Obamacare was not likely to affect them directly. But Matthew Zeitlin says that it has Wall Street investors nervous.

As Republican attempts to kill Obamacare flamed out spectacularly, investors began rethinking an assumption that caused markets to rally for months: perhaps the Trump administration and its allies in Congress, they suddenly realized, won’t pull off the sweeping tax cuts that many have been expecting.

Since the election, investors have been betting that unified Republican control of Washington will make it rain for big businesses and the wealthy. The “Trump Trade” helped push the S&P 500 up by 12% between election day and March 1, and executives and major investors have spoken glowingly of a new optimism in the US economy.

But that thinking — and the market rally that came with it — has begun to recede.

Along the same lines, Mike Allen reports on what he heard from an executive at a money-center bank:

Holy crap! We may not get tax reform, or a repatriation bill, or infrastructure spend, or substantial changes to regulations.”

This is what I meant earlier when I talked about the smell of failure hanging in the air. Corporate America, Wall Street investors and their lobbyists are smart enough to have figured out the uphill battle Trump and Republicans now face on tax reform.

I was immediately reminded of what Alan Murray wrote about what Trump promised in order to secure the Carrier deal.

A source close to the company said President-elect Trump called Greg Hayes, CEO of Carrier’s parent company United Technologies, two weeks ago and asked him to rethink the decision to close the Carrier plant in Indiana.

Hayes explained that the jobs were lower-wage and had high turnover, and the move was necessary to keep the plant competitive, according to the source. He said the plan would save the company $65 million a year.

President-elect Trump replied that those savings would be dwarfed by the savings UTC would enjoy from corporate tax-rate reductions he planned to put in place.

Apparently Hayes bought the idea that Trump would deliver on tax cuts that would save the company more than $65 million a year. Betting on Trump and this Congress was clearly not a great business decision.

But since that Carrier deal, several other corporations have lined up to announce new investments and jobs that have actually been in the works for months and/or years prior to Trump’s election. In a sense, they’ve all been willing to kiss the emperor’s ring in the hopes of getting in his good graces and walking away with their tax cuts.

As the smart ones start to figure out that’s not necessarily a slam dunk, it will be interesting to see if the parade to Trump’s door continues.

Quick Takes: Will Trump Face a Government Shutdown On His 100th Day?

* While we’ve all been focused on the disaster of the Republican failure to repeal Obamacare and what that means for tax reform, a deadline is fast approaching. Last December, Congress passed a continuing resolution to keep the government funded. The trouble is, it runs out on April 28th. That means that Congress has exactly one month to figure out a budget, pass another continuing resolution, or face a government shutdown. The timing is interesting. Trump’s 100th day in office hits the very next day – April 29th.

* On Friday I suggested that we might have just witnessed the worst week ever for a first-term president. Walter Shapiro was thinking along the same lines:

From James Comey’s artfully cloaked shiv in last Monday’s congressional testimony to the head-for-the-lifeboats abandonment of Trumpcare on Friday, it is hard to recall a president who has had a worse week without someone being indicted.

* Similarly, as we head towards Trump’s 100th day in office and a possible government shutdown, here’s how a Republican strategist summed things up.

“No administration has ever been off to a worse 100-day start,” said Steve Schmidt, a longtime Republican strategist who served as a counselor to Vice President Dick Cheney.

* For an exclamation point on all that, here’s Gallup today:

* Today AG Sessions attended the WH Press Briefing to threaten so-called “sanctuary cities.” David Kurtz nailed it with his commentary.

Perhaps the White House had planned all along for Attorney General Jeff Sessions to make an appearance at today’s press briefing to rail against sanctuary cities. But the timing is consistent with what I’ve long feared will be the impulse for the Trump administration: When the going gets rough (failed Obamacare repeal, low poll numbers, etc), it will fall back on appeals to racism and xenophobia to regain political footing.

With so much incompetence taking root, it’s not difficult to envision a scenario where those base appeals must become more amped up, extreme, and scurrilous to be “effective.” It threatens to turn into a vicious cycle the likes of which we’ve never seen in this country.

* The story about Devin Nunes’ revelation last Wednesday got even more bizarre today.

The day before he announced to reporters that Donald Trump may have been incidentally monitored by U.S. intelligence agencies during the transition, House Intelligence Committee Chairman Devin Nunes met with the source of that information at the White House, a Nunes spokesman told NBC News.

* Let’s hope this is one of several to come.

* Finally, earlier today I suggested that the flip side of Trump’s failures will be the persistence of Obama’s legacy. Back in January, Jonathan Chait published a book titled, “Audacity: How Barack Obama Defied His Critics and Created a Legacy That Will Prevail.” After the election Chait took some heat for this focus that went against conventional wisdom, which had solidified around the idea that Obama’s legacy was toast. But he defended himself by titling an excerpt: “Barack Obama’s Legacy Is More Secure Than You, or the GOP, Think.” Right now Chait is looking a bit more prescient.

Trump may very well destroy the underpinnings of a system of government put in place more than two and a quarter centuries ago, and if he does, it will be not only Obama’s legacy that is repealed but the legacies of every president from Washington onward. But the future is not predetermined. It depends upon our actions and choices. Protecting, fulfilling, and, in some cases, restoring Obama’s legacy will require mustering the political will to rally around it. If Obama’s supporters defend the pillars of his legacy, rather than fatalistically accept their destruction, they stand a good chance of warding off the most frontal attacks. And where they fail, and Obama’s achievements are repealed, then they can set out to repeal the repeal when the opportunity presents itself.

And it will. Previous generations of Americans knew times when it seemed impossible to imagine slavery might be abolished, women given the right to vote, business subject to any government regulation. Progress tends to come in great dramatic bursts of action and then recede. Barack Obama’s presidency represented one of those great bursts. His was a vision and incarnation of an American future. His enemies long to restore a past of rigid social hierarchy, with a threadbare state that yields to the economically powerful. He, not they, represents the values of the youngest Americans and the world they will one day inhabit.

Democratic Ideas on How to Improve Health Care Are Complicated Too

On the heels of the failure by Republicans to repeal Obamacare, a discussion has emerged about whether or not Democrats should advance their own plans to improve the system. The latest edition of the Washington Monthly featured three ideas Democrats could incorporateDavid Atkins noted that Bernie Sanders has revived his call for single payer, and Steven Waldman suggests a grand health care bargain.

One way to evaluate all the ideas that are being generated is to break them down into two broad categories. In most cases these proposals have to do with either (1) changing the way we get health insurance or (2) trying to reduce the costs of actual health care. The reason this is important is because the difference is often determined by where we see the biggest problem.

To be clear, most people that are advocating for a change in the way insurance is provided (i.e., single payer and public option) are doing so because they believe that it will not only increase access, but that it will reduce costs. That usually rests on the assumption that the main driver of why health care is so expensive in this country is because of private insurers. The corollary is that either a public option or single payer will make health insurance less expensive, along with more accessible.

Those who advocate ways to reduce the costs of actual care assume that the main driver of our health care costs is already baked into the system prior to a discussion about insurance. It is to be found in how/what we pay providers and how that care is delivered. Of course, that can overlap with the issue of insurers based on what it is they pay for.

So while there are big areas of overlap, a short way of saying all this is that your solutions are mostly driven by how it is you describe the problem and who is the identified villain. To oversimplify things, is it the insurers or the providers?

While Obamacare certainly wasn’t single payer and ultimately didn’t include a public option, most of it tackled the issue of how health insurance is provided. The expansion of Medicaid is a great example. And while many of the ideas being articulated now are important for Democrats to consider, it is also significant to remember that there are still 19 states that have refused to do so. Millions of Americans would have access to insurance and health care if that was tackled.

Beyond that, Obamacare attempted to solve the problem of how people access insurance in the individual market and it created reforms like ending denials for pre-existing conditions, the list of essential health benefits, and the requirement that preventative services be provided without any out-of-pocket expense for patients.

One huge change Obamacare implemented when it comes to insurance companies is the medical loss ratio (MLR) in which their overhead and profit are limited to 15% (20% in the individual market) of what they charge in premiums. But when it comes to the exchanges, that hasn’t even come into play because the insurance companies still aren’t making a profit there. So it’s hard to make them into the villains of this story.

I think David is right when he says that any movement on single payer is likely to come from the states in the near future. We know that Vermont tried and failed to make it work. It will be interesting to see whether or not a larger state like California can figure it out.

When it comes to the public option, it is important to remember that, among Democrats, there were three different factions on that issue when Obamacare was being negotiated. We heard mostly from conservative Senators who were completely against the idea of including one. I remember the day I knew that a public option was dead. It was when Blanche Lincoln took to the Senate floor to announce that she would not vote for a bill that included a public option. Of course there were others who joined her, but one vote was all it would take to fall short of the 60 needed for passage. A statement on the Senate floor was definitive. It wasn’t going to happen.

But that battle obscured the one that happened over the public option in the House. There the disagreement was over what kind of public option would be included. This is where the issues of insurance and cost of care overlapped. Progressive Democrats tended to support what came to be known as a “robust” public option. It would tie payment to providers to the Medicare payment system. Conservative Democrats favored a public option that allowed HHS to negotiate payments with providers. In the end, Conservative Democrats won and it was their plan which was included in the House bill and later removed via reconciliation with the Senate. Interestingly enough, CBO said that premiums for that public option would be slightly higher than the private plans offered in the exchange.

A later CBO report found that a “robust” public option would produce premiums that are 7-8% lower than private plans. Here is why that is important: Medicare doesn’t negotiate rates, it sets them. And overall, Medicare tends to pay 80% of what private insurers pay. That sounds like a good way to tackle the cost control problem, right?

But there is a potential problem with that. Providers tend to accept Medicare because the volume of treating elderly patients makes it worth doing so for fewer dollars per procedure. When it comes to younger more healthy people, will that hold? If Medicaid is any indicator, it might not. Since Medicaid is mostly administered by states, the comparison is difficult, but overall there are big problems in some states with finding providers who accept it. When we advocate for a public option, this is something to keep in mind.

On the cost control issue, Obamacare took a more experimental approach. The two most important inclusions were Comprehensive Primary Care (which reimburses providers for outcomes rather than the number of services provided) and the Medicare Payment Advisory Commission (which looks for innovation in cost controls with Medicare). Both of these initiatives are still in the early stages, but encapsulate some of the best thinking on how to rein in health care costs.

As Democrats consider proposals to continue improvement on health care access and costs, this information points to some key issues to pursue:

  • Keep pushing for Medicaid expansion
  • Let states experiment with single payer
  • Refine efforts to design a payment structure for a public option
  • Track the success of cost control mechanisms already underway via Obamacare and develop plans to take them up to scale

Obviously Donald Trump just learned that health care is complicated. Democrats should be well aware of that by now and avoid jumping on a bandwagon that simply sounds good.