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House Republicans Aim to Gut Spending and Cut Taxes (Mainly for the Rich) by $4.5 Trillion

12 February 2025 at 23:26

The budget resolution released Wednesday by the House Republican caucus contains no concrete details, but it codifies a GOP strategy that should surprise absolutely no one.

In parallel with the mayhem playing out in the Executive Branch, the House lawmakers aim to gut agencies Donald Trump disfavors, boost spending for those that align with his agenda, renew and extend the 2017 tax cuts that enriched America’s most affluent—his latest proposals all told, by one estimate, would raise taxes on all but the top 5 percent. They also pay lip service to the deficit even as their proposals will increase it significantly, perhaps as a way to build political consensus for cuts to programs like Social Security and Medicare.

Specifically, the new resolution directs each House committee to submit recommendations, by March 25, to either cut or increase federal spending under its jurisdiction. The figures below cover the 10-year period from 2025 to 2034.

Cuts (“not less than…”)
Agriculture: $230 billion
Education and Workforce: $330 billion
Energy and Commerce: $880 billion
Financial Services: $1 billion
Natural Resources: $1 billion
Oversight and Government Reform: $50 billion
Transportation and Infrastructure: $10 billion

Total cuts: $1.5 trillion

Increases (“not more than…”)
Armed Services: $100 billion
Homeland Security: $90 billion
Judiciary: $110 billion

And the doozy: Ways and Means, the committee responsible for tax policy, “shall submit changes in laws within its jurisdiction that increase the deficit by not more than $4,500,000,000,000.”

That’s an invitation for a net $4.5 trillion in tax cuts.

Total increases: $4.8 trillion

If the total cuts from the group above don’t reach $2 trillion, the document states, the difference will come out of Ways and Means’ $4.5 trillion allowance. That would leave us with almost $3 trillion in deficit spending. But at least the rich will get their tax breaks, right?

The resolution also asks Ways and Means to request a $4 trillion increase in the debt limit.

In the past, House Republicans have talked a good game on balanced budgets. This would be anything but. Tellingly, their resolution makes a show of lamenting the growing federal debt, which “poses a significant risk to the country’s long-term fiscal sustainability, with implications for future generations.” The document points to the mandatory spending that accounts for more than 70 percent of the budget, noting that it has increased by 59 percent since 2019.

And yes, the growing debt is a problem, especially when interest rates are higher, which makes servicing payments expensive, but there are ways to narrow the deficit that the Republicans, along with Elon Musk and his DOGE bros, have largely ignored.

Indeed, the gripes about mandatory federal spending, especially in this context, sound like a pre-justification for cutting from the three biggest areas of mandatory spending: Social Security, Medicare, and Medicaid.

Republicans have already targeted Medicaid, the national health insurance program for the poor, by proposing work requirements—which evidence shows are little more than a cruel tactic to purge people from the rolls. Going after Social Security and Medicare would be messing with America’s seniors, who are relatively wealthy and politically engaged, driving up their health care costs.

Historically, the latter two have been political third rails, “but with this group, I kind of never know anymore,” says a Democratic aide who works with the House Ways and Means Commitee. “They’re already talking about doing things on Social Security and Medicare in a way that I never would have thought they would be talking about, but it’s definitely in the ether.”


House Republicans Aim to Gut Spending and Cut Taxes (Mainly for the Rich) by $4.5 Trillion

12 February 2025 at 23:26

The budget resolution released Wednesday by the House Republican caucus contains no concrete details, but it codifies a GOP strategy that should surprise absolutely no one.

In parallel with the mayhem playing out in the Executive Branch, the House lawmakers aim to gut agencies Donald Trump disfavors, boost spending for those that align with his agenda, renew and extend the 2017 tax cuts that enriched America’s most affluent—his latest proposals all told, by one estimate, would raise taxes on all but the top 5 percent. They also pay lip service to the deficit even as their proposals will increase it significantly, perhaps as a way to build political consensus for cuts to programs like Social Security and Medicare.

Specifically, the new resolution directs each House committee to submit recommendations, by March 25, to either cut or increase federal spending under its jurisdiction. The figures below cover the 10-year period from 2025 to 2034.

Cuts (“not less than…”)
Agriculture: $230 billion
Education and Workforce: $330 billion
Energy and Commerce: $880 billion
Financial Services: $1 billion
Natural Resources: $1 billion
Oversight and Government Reform: $50 billion
Transportation and Infrastructure: $10 billion

Total cuts: $1.5 trillion

Increases (“not more than…”)
Armed Services: $100 billion
Homeland Security: $90 billion
Judiciary: $110 billion

And the doozy: Ways and Means, the committee responsible for tax policy, “shall submit changes in laws within its jurisdiction that increase the deficit by not more than $4,500,000,000,000.”

That’s an invitation for a net $4.5 trillion in tax cuts.

Total increases: $4.8 trillion

If the total cuts from the group above don’t reach $2 trillion, the document states, the difference will come out of Ways and Means’ $4.5 trillion allowance. That would leave us with almost $3 trillion in deficit spending. But at least the rich will get their tax breaks, right?

The resolution also asks Ways and Means to request a $4 trillion increase in the debt limit.

In the past, House Republicans have talked a good game on balanced budgets. This would be anything but. Tellingly, their resolution makes a show of lamenting the growing federal debt, which “poses a significant risk to the country’s long-term fiscal sustainability, with implications for future generations.” The document points to the mandatory spending that accounts for more than 70 percent of the budget, noting that it has increased by 59 percent since 2019.

And yes, the growing debt is a problem, especially when interest rates are higher, which makes servicing payments expensive, but there are ways to narrow the deficit that the Republicans, along with Elon Musk and his DOGE bros, have largely ignored.

Indeed, the gripes about mandatory federal spending, especially in this context, sound like a pre-justification for cutting from the three biggest areas of mandatory spending: Social Security, Medicare, and Medicaid.

Republicans have already targeted Medicaid, the national health insurance program for the poor, by proposing work requirements—which evidence shows are little more than a cruel tactic to purge people from the rolls. Going after Social Security and Medicare would be messing with America’s seniors, who are relatively wealthy and politically engaged, driving up their health care costs.

Historically, the latter two have been political third rails, “but with this group, I kind of never know anymore,” says a Democratic aide who works with the House Ways and Means Commitee. “They’re already talking about doing things on Social Security and Medicare in a way that I never would have thought they would be talking about, but it’s definitely in the ether.”


A Federal Judge Just Gave the Trump Administration a Sound Spanking

4 February 2025 at 02:18

Last week, after the Office of Management and Budget released a memo ordering a vague “temporary pause” on grant and loan spending by federal agencies, pending review to ensure the spending aligned with Donald Trump’s priorities, it didn’t take long for a coalition of nonprofits and health care providers to file a lawsuit claiming the move was illegal and would cause irreparable harm.

OMB had provided less than 24 hours advance notice, creating widespread chaos and confusion. Federal district judge Loren AliKhan quickly put a temporary pause on OMB’s temporary pause to give the parties—and the court—time to respond.

In the meantime, OMB rescinded its memo, and Trump’s Justice Department declared the case moot, only to have White House Press Secretary Karoline Leavitt muddy the waters by tweeting that, well, actually, the freeze wasn’t rescinded—only the memo.

On January 31, John McConnell, Jr., a federal judge in the Rhode Island district, imposed his own temporary restraining order (TRO) in response to a related lawsuit filed by 22 states (including some red ones) and DC. The states claimed Trump’s appointees were violating the Administrative Procedures Act and the Impoundment Control Act—longstanding laws that govern federal budgeting—not to mention the Constitution.

The evidence, McConnell agreed, showed that this was likely—he even quoted from a relevant ruling by Brett Kavanaugh from when he was a judge in the DC circuit. The withdrawal of the OMB memo would not make his ruling moot, McConnell wrote: “The evidence shows that the alleged rescission of the OMB Directive was in name-only and may have been issued simply to defeat the jurisdiction of the courts.”

Judge AliKhan returned late Monday with a strongly worded 30-page ruling, extending her TRO on behalf of the nonprofit coalition. The whole document is worth a read, but I’ve pulled out a few highlights here. This is verbatim, except for the headings—and I removed the legal source citations for readability.

The administration’s motion to dismiss

Defendants [representing the Trump administration] raise two threshold jurisdictional arguments. First, they argue that Plaintiffs [the nonprofits, etc] lack standing because they have not adequately alleged injury in fact, causation, or redressability. Second, they claim that the case is now moot because OMB rescinded memorandum M-25-13 after Plaintiffs filed suit. The court is unpersuaded on both counts.

Injury in fact

Plaintiffs allege that even a temporary pause in funding to their members, such as the American Public Health Association and Main Street Alliance, would destroy their ability to provide medical and low-income childcare services. On top of these economic injuries, Plaintiffs’ members face First Amendment harms because the memorandum targets funds that relate to “DEI [and] woke gender ideology.”

Defendants reply that Plaintiffs “must present more than allegations of a subjective chill” and need to allege “present objective harm or a threat of specific future harm.” At this early stage, Plaintiffs have done exactly that: they claim that Defendants have singled out their funding programs (in other words, their economic lifelines) based on their exercise of speech and association…

Plaintiffs have provided numerous declarations showing that many organizations need weekly injections of federal funds in order to continue operating. One health center pays its employees “biweekly, on Thursdays,” requiring it to “draw down grant funds on the preceding Tuesday” so that they reach the health center’s bank account by Wednesday. Some of those employees “live paycheck to paycheck,” meaning that a single missed payment could prevent them from buying groceries or paying rent.


Separately, a member of a tribal organization was forced to lay off two employees on January 28 because it could not access its grant funds that day. And another nonprofit dedicated to ending homelessness was forced to suspend a birth certificate and identification card program just so that it could keep its employees on payroll…For many, the harms caused by the freeze are non-speculative, impending, and potentially catastrophic.

Redressibility

Prior to the issuance of memorandum M-25-13, Plaintiffs’ members reportedly never had problems drawing down funds or receiving financial assistance. That all changed beginning January 28, immediately after OMB issued memorandum M-25-13. Streams of funds that had steadily flowed for years without issue suddenly ran dry. If the court were to grant Plaintiffs’ requested relief, Defendants would be barred from instructing all federal agencies across the board to temporarily pause (or continue pausing) financial assistance on the basis of the memorandum or its substance.

In other words, agencies would need to behave as if the memorandum were never issued. Defendants act as if any continued freeze is merely a random coincidence that could not possibly have anything to do with their memorandum. In the court’s view, that explanation ignores both logic and fact. Plaintiffs have adequately shown that a ruling in their favor will alleviate their alleged injuries.

Mootness

There is nothing stopping OMB from rewording, repackaging, or reissuing the substance of memorandum M-25-13 if the court were to dismiss this lawsuit…

By rescinding the memorandum that announced the freeze, but “NOT…the federal funding freeze” itself, it appears that OMB sought to overcome a judicially imposed obstacle without actually ceasing the challenged conduct. The court can think of few things more disingenuous…

The rescission, if it can be called that, appears to be nothing more than a thinly veiled attempt to prevent this court from granting relief. …

Plaintiffs allege that OMB’s funding freeze lacked any reasonable basis and failed to consider the disastrous effects it would have. Defendants, meanwhile, insist that “there is nothing irrational about a temporary pause in funding” when it is done “to ensure compliance with the President’s priorities.” But furthering the President’s wishes cannot be a blank check for OMB to do as it pleases…

If Defendants intend to conduct an exhaustive review of what programs
should or should not be funded, such a review could be conducted without depriving millions of Americans access to vital resources. As Defendants themselves admit, the memorandum implicated as much as $3 trillion in financial assistance. That is a breathtakingly large sum of money to suspend practically overnight.

Rather than taking a measured approach to identify purportedly wasteful spending, Defendants cut the fuel supply to a vast, complicated, nationwide machine—seemingly without any consideration for the consequences of that decision. To say that OMB “failed to consider an important aspect of the problem” would be putting it mildly.

In summary, Judge Alikhan granted the extended temporary restraining order and denied the Justice Department’s motion to dismiss. She gave the administration’s lawyers until Friday to file a status report “apprising the court of the status of its compliance with this Order”—which you can read in its entirety here.

Trump’s Tariffs: Another Disaster for the Families Who’ve Lost Everything

1 February 2025 at 11:00

President Donald Trump announced punitive tariffs Saturday on American allies and rivals—25 percent on imported goods from Canada and Mexico and 10 percent on Chinese imports in addition to any preexisting tariffs—a move the Wall Street Journal‘s conservative editorial board deemed “the dumbest trade war in history.” Energy products from Canada were assigned a lower duty of 10 percent. We don’t yet know exactly how the targeted countries will respond, but the expert consensus is that the tariffs will drive up prices for American companies and, in turn, consumers.

That’s particularly unwelcome news for the Floridians and North Carolinians whose homes and businesses were damaged or destroyed by Hurricanes Milton and Helena, the thousands of Los Angelenos who lost everything in the recent fires, and any American community, now or in the near future, that is compelled to rebuild in the face of ever more frequent and destructive climate-change-driven disasters.

Trump’s tariffs will “fan the flames of the already challenging environment that Californians face in recovering from the LA fires,” says Ann Harrison, an economist at UC Berkeley’s Haas School of Business who specializes in international trade. “A tariff of 25 percent levied on foreign imports would likely be paid by domestic California businesses and residents consuming lumber, food, cement, plastics, and other necessities. If the tariffs are passed through to importers of these goods, then rebuilding homes could be much more expensive.”

Consider the vulnerabilities: In 2022, according to visual data compiled by the Observatory of Economic Complexity (OEC), Canada was the source of almost half of the roughly $35 billion worth of wood products imported into the United States, with China second.

OEC

The US imported nearly $3 billion worth of plastic building materials in 2022. Here’s where they came from:

OEC

What about the $2.3 billion worth of cement America imports? Turkey is the biggest source, but the runners up are Canada and Mexico.

OEC

It goes on like this. The majority of imported gravel and crushed stone is from Canada and Mexico. Nearly a quarter of imported bricks are supplied by China and Canada. The United States took in $43.2 billion worth of steel in 2022, and about 37 percent came from the three countries Trump is targeting.

OEC

As the Guardian‘s Nina Lakhani reported a few days ago, Trump’s deportation orders are already posing problems for communities stricken by fires and floods. Clearing toxic debris in a disaster’s wake is difficult and dangerous work, and with unemployment hovering around 4 percent, it’s hard to find people willing to do it. For better or worse, America depends on immigrants, often undocumented, for work that is low-paid and unpleasant, albeit essential.

At the best of times, the construction industry depends heavily on immigrants, from grunt laborers to contractors and skilled tradespeople, including carpenters electricians, landscapers, masons, plumbers, roofers, tilers, and welders. In some states, including California and Florida, an estimated 40 percent of construction industry workers are immigrants. Some have green cards, legal work permits, or, until last week, temporary deportation protections—which President Biden granted but Trump has since rejected. Others are in the United States illegally and are therefore at the mercy of Immigration and Customs Enforcement (ICE).

As the administration pursues its deportation agenda, which experts predict will be economically destructive, even legal immigrants will be reticent to make themselves vulnerable to getting swept up in ICE raids. Any worker fearful of la migra may well choose to avoid disaster recovery zones, lest those areas prove too tempting a target for immigration enforcement.

Any labor shortages that result from deportations, or the fear of deportation, will inevitably slow the pace of recovery and drive up the costs. The double-whammy of deportations and tariffs could prove devastating for recovery efforts. “Trump’s tariffs are insane, not to put it into too-technical language. And the timing couldn’t be worse,” says Joseph Stiglitz, a prominent economist at Columbia University who was awarded the 2001 Nobel Memorial Prize for economics.

“Combined with labor shortages that may arise from his immigration policies, they are even worse. And with the climate-related disasters, such as the wildfires in LA, there will be an even greater need both for construction workers and materials. Like it or not, we are heavily dependent on both from outside our borders, and changing that can’t occur overnight.” 

This article was updated with details of Saturday’s White House announcement.

Nailing Trump for Taking Illegal Foreign Cash Shouldn’t Be This Difficult

24 January 2025 at 11:00

The Founding Fathers, having recently helped throw off the yoke of British colonial rule, were understandably concerned about foreign governments meddling in domestic affairs, which is why they wrote guardrails into the Constitution to stave off corruption and place limits on any future leader, including President Donald Trump, who might lack an intrinsic ethical compass.

The Constitution expressly forbids a president from accepting compensation other than his designated salary from the federal government or any state government. And without the consent of Congress, no federal officeholder can accept “any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.”

You see the problem here. Trump’s financial conflicts of interest constitute a long list, and he has deep and longstanding financial ties to myriad foreign governments, which now have more ways than ever to try to curry favor and influence his administration’s decisions.

“We have a lot of laws that are difficult to enforce when you have a powerful person intent on getting away with everything.”

I broke down five areas of particular concern in a companion piece. And below, edited for length and clarity, is the interview it was based on. Noah Bookbinder became president and CEO of Citizens for Responsibility and Ethics in Washington (CREW) in 2015, shortly before Trump announced his first presidential bid. He previously served in various government positions, including as a trial attorney with the Justice Department’s public integrity section, and he oversaw CREW’s 2017 lawsuits against Trump, accusing the president of taking illegal emoluments via foreign government patronage of his hotel in Washington, DC.

CREW’s legal actions, one of them a collaboration with the attorneys general of DC and Maryland, were upheld by appeals courts and on track for success—until Trump ran out the clock, a development Bookbinder deems “deeply frustrating.” His nonprofit is now busy triaging the most urgent priorities, including a lawsuit that challenges the activities of DOGE, Trump’s so-called Department of Government Efficiency, led by the world’s richest man, Elon Musk.

If domestic billionaires channel cash into Trump’s business interests to curry favor, that’s not emoluments, but something more like corruption, right?

That’s right. It can be a conflict of interest. It can be corruption. And there’s a separate emoluments clause in the Constitution, which says, essentially, that the president can’t take income from the federal or state governments beyond his salary. So if there are state pension funds contributing to the stock value of Trump Media or states making beneficial decisions for properties, things like that can be emoluments violations.

What’s your big-picture take on Trump’s conflicts of interest now versus then?

During Trump’s first presidency, he received significant payments and benefits. On the foreign side, the research we’ve done, combined with what the House did, suggests that more than $13 million—potentially much, much more—came to his businesses from foreign governments.

We should expect similar things [in Trump’s second term]: money coming into his properties and developments. But [now], there are factors that create the risk of emoluments at a much higher level. This really matters, because it is the potential for foreign governments and other powerful interests to impact decisions that could affect the safety of security and wellbeing of Americans.

One is Trump Media, the parent company for Truth Social. That’s a publicly traded company, and so anyone, whether it’s a wealthy individual or a foreign country, that buys a large number of shares is likely to push the stock value up, which immediately drives up Donald Trump’s net worth—and it could go much further than renting hotel rooms or planning an event at a Trump property. There’s also the threat that those interests could quickly sell off the stock, which would drive prices down and potentially tank Trump’s net worth, which gives them further leverage. So that’s a real risk.

Another one that he was talking about on Inauguration Day is a new crypto entity that he controls a lot of the value of. This “cryptocurrency” is not really a currency. There’s not anything behind it. It’s just a thing people can buy because they think at some point someone else will want to buy it for that much money or more—really sort of a hollow vessel for anyone, including foreign governments, to put money into, which puts money in Trump’s pocket.

I believe Trump has a financial interest in other cryptocurrencies, too, and now he gets to dictate how the Treasury Department regulates them.

That’s another major risk with him. He and his administration could be making major decisions that could really affect his businesses and his income. There’s likely a tremendous need for federal regulation, and if Trump has a lot of value in cryptocurrency, that could certainly affect whether it’s regulated, [such as] by looking out for regular people who are investing and whom we don’t want to get scammed. The same is true with social media companies [and rules] potentially looking out for the wellbeing of kids.

Have there been any legal tests for this stuff? Because there’s a lot of nuance with blockchain transactions that might not be enriching Trump directly.

That is a concern. We had litigation with Trump about emoluments violations during his first presidency, and there were some complicated questions there, and litigation delay is something at which he’s a master. So even though we won at various stages in federal appeals courts, those cases were still going after four years and ended up getting dismissed as moot by the Supreme Court.

There are certainly some new issues, particularly in the crypto and social media areas, that I don’t think have been litigated in the emoluments context. But ultimately, the core issues are pretty simple: He owns these business ventures, and foreign governments may be putting money into them, which violates those constitutional provisions.

Are there any aspects of your 2017 cases that could be revived—or would you have to start over?

As a legal matter, it is as though they never existed. And so even those favorable appeals decisions don’t have any precedential value.

That must be terribly frustrating.

Yes. This was a clear violation of provisions intended to protect the public from corruption and from decisions being made in ways that might not be in the people’s interest, and it’s very, very hard, it turns out, to get courts to enforce them—or get anybody to enforce them. That’s deeply frustrating, and one more example of Trump finding ways to be lawless and to take advantage of the fact that we have a lot of laws that are difficult to enforce when you have a powerful person intent on getting away with everything.

As far as CREW’s plans, we are still examining the facts and the current legal situation. When you had [Trump’s] DC hotel, which was a magnet for people trying to influence the president, it was pretty easy to establish who the competitors were and who might have standing [to sue, claiming they were harmed by the unfair competition]. It can be a lot more complicated when you have a social media stock. Some of the legal and jurisdictional issues—it was not easy in 2017, but it’s trickier now. So it’s a question of, in a time of potentially greater need and limited resources, what are the most strategic and compelling actions to bring? That’s the calculus now.

And I guess the judicial landscape has changed a fair bit since 2017.

We did pretty well in the appeals courts the last time around. There’s no particular reason to think they would be less open to these kinds of cases. But we’ve seen an alarming trend of the US Supreme Court bending over backward to accommodate Trump and to avoid holding him accountable for lawless behavior. And that is troubling for any decision about litigation to try to hold him to the laws and to the Constitution. That doesn’t mean you don’t do it.

You also have the 5th Circuit to contend with.

That is true. There are certainly pockets that are really problematic and questions about where a case like this could be brought.

If you go after Trump, wouldn’t he just run the clock again? It’s much easier for a president to delay than it is for a regular citizen to do so.

I think that’s right, and that’s a tactic that he used long before he was president. I certainly expect that with any kind of litigation. I hope that, to some extent, courts are maybe getting wise to that and will be a little bit less inclined to go along.

Another newer area of concern is the LIV Golf league. Say more about that.

Yeah. LIV Golf didn’t exist when Donald Trump was president the first time. It’s a league backed, indirectly at least, by the Saudi government that has held several events at Trump’s properties and is already scheduled to hold one at one of his golf resorts in 2025. That seems like another clear emoluments violation. You’d have to show that the connection to the Saudi government is direct enough and how the money is going to his companies. But when you take a step back, it’s clear what’s happening: This is a Saudi-backed enterprise bringing business to the president.

We saw in the first Trump term lots of cases where Saudi Arabia appeared to bring business to Trump. There was a time when one of the leading Saudi officials came to New York City, and the government had reserved essentially a floor at one of Trump’s hotels. There were a number of such instances, and this seems to be more of the same, potentially on a larger scale. We also saw Trump making decisions that seemed surprisingly positive toward Saudi Arabia, including essentially looking the other way when Saudi Arabia killed a US-based journalist.

Is CREW concerned about all the goods Trump is hawking—sneakers and watches and fragrances and Bibles and guitars? I mean, it’s probably small potatoes for foreign emoluments—though certainly untoward for a president.

It is untoward. And it is problematic to have a president who appears to be, in a very direct way, using the presidency to make extra money. Sometimes the amounts don’t really matter. We saw that during the first Trump presidency, where people and companies who wanted to influence the president would show up at the Trump hotel in DC and take a picture of themselves having a drink at the bar and put it on Twitter.

There were officials from T-Mobile during its merger with Sprint, which the administration was going to have to clear, that stayed at the Trump hotel and put that very prominently on social media.

John Legere, the CEO of T-Mobile, used to mock Trump hotels. Now he spends lots of money there as he tries to convince the Trump admin to approve his merger with Sprint. https://t.co/p3lbLoGcdk

— Steven Ginsberg (@stevenjay) January 16, 2019

These aren’t [necessarily] big-money purchases, but it’s still a way of signaling that they’re paying respect and they’re hoping that he’ll return the favor. Do we think that the Saudi government is going to buy a Trump Bible? I mean, that doesn’t seem like the most direct way to influence him when you could put millions of dollars into Trump Media stock. But small symbolic steps can also work to gain influence. It’s all part of the same playbook.

Another issue is the business dealings of Trump’s family members. Eric Trump claims the Trump Organization is playing by the rules and that they hired an ethics lawyer to review new contracts over $10 million—which actually seems like a high threshold.

Yes, and to some extent, it really doesn’t matter much. As far as we know, Trump is again putting his ownership of the Trump Organization into a trust. But it’s not a blind trust; it’s controlled by his son and the ownership will revert back to him when he’s done as president. He knows what his interests are. He knows that he benefits if Trump Media benefits. He knows he benefits if business comes to his resorts and his properties. And none of these steps do anything to address that.

His first presidency had stronger controls, because there were supposed to be no new foreign ventures. Yet there were constant conflicts of interest with foreign governments and wealthy individuals and companies—we documented over 3,700. So, there’s absolutely no reason to think the same kinds of measures, a little bit watered down, are going to do the trick.

It’s almost impossible to keep track. And then you have other transactional things, like CEOs donating millions for the inauguration or news executives settling defamation suits out of fear, or to protect their business interests. It feels like extortion. How does CREW view these developments?

You are seeing a lot of corporate America deciding, without being specifically prompted, that they have to get on Donald Trump’s good side to avoid bad things happening to them, which is why you see a lot of these million-dollar gifts. And that is corporate influence on politics, which is an old story, but also somewhat coerced corporate influence, where all of these folks seem to be afraid they’ll lose out in a major way if they don’t do this.

It’s a similar feeling with people reaching settlements on defamation cases that don’t seem merited or required by the law. And you have things that seem potentially related, like the pardons of all these January 6 defendants, which sends the message that committing crimes on behalf of Trump is something you can get away with. I think that rightly intimidates people who worry about getting on Trump’s bad side.

Maybe it also sends a message to officials who get orders from Trump that they might view as unethical or illegal.

I think it does, yeah.

Do you have any hope this administration can be reined in? 

There’s a lot to be distressed about—a lot of conduct that appears to be either lawless or aimed at getting away with whatever the law or its enforcement will allow, or intimidating people. And we’ve seen the collapse of efforts over the years to hold Trump accountable. All of that is deeply troubling.

Where I am a little more hopeful, particularly with regard to corruption and self-enrichment, is that I think the American people don’t have much appetite for government officials getting rich off government positions, for millionaires and billionaires making all the decisions, and for money being thrown around to influence decision-making. If it really is reported on, there will be pushback, and that may make it possible to start putting the brakes on some of that conduct. It’s going to be a long process.

But we all knew who Trump was, and he got almost half of the votes! 

That’s right. But I think those parts of Trump’s presidency had faded from people’s minds, and I don’t think that was what they had in mind when they voted for him. My suspicion, based on the first time around, is that when people start to see this kind of influence and potential corruption, they’re not going to like it.

Trump Is Perfectly Poised to Cash in on His Presidency, Constitution Be Damned

24 January 2025 at 11:00

Congress put rules in place ages ago to ensure that federal appointees and employees (including judges) don’t use their jobs to enrich themselves. The Office of Government Oversight vets those officials for conflicts of interest and can compel them and their spouses and minor children to dispense with assets deemed likely to create a conflict. For our purposes, all you need to know is that those rules don’t apply to the president, vice-president, or federal lawmakers—which is stupid, but whatever.

The Constitution, however, does place limits on elected federal officials. The president is entitled to a predetemined salary and that’s all. He is forbidden from taking anything further of value from the federal governments or any state government. Furthermore, without the consent of Congress, no federal officeholder may accept “any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.”

This is not ambiguous. It means no foreign money, period.

Yet President Donald Trump’s affairs are awash in foreign money. (Domestic, too.) Among other problems, foreign governments have rented units at Trump Tower, booked rooms and events at his hotels and resorts, and approved his company’s overseas deals and developments—not to mention those of son-in-law Jared Kushner, whose private equity fund got a $2 billion investment from a Saudi sovereign wealth fund shortly after he left the White House, and whose new partnership with the Trump Organization opens a very problematic new can of worms.

Trump “received significant payments and benefits from foreign governments” during his first term, says Noah Bookbinder, the executive director since 2015 of Citizens for Ethics and Responsibility in Washington (CREW), which two years later sued Trump in an emoluments case that focused on Trump’s DC hotel, and served as outside counsel in a similar lawsuit filed by the attorneys general of Maryland and the District of Columbia. The hotel, operating out of a federal building, became a mecca for both foreign governments and American companies and CEOs who hoped to curry favor with the administration. “The research we’ve done, combined with what the House did, suggest that more than $13 million—potentially much, much more—came to his businesses from foreign governments,” Bookbinder told me.

These legal actions were upheld by federal appeals courts, but they dragged on and the Supreme Court declared them moot on January 25, 2021, as Trump was no longer in office. “As a legal matter, it is as though [our cases] never existed. And so even those favorable appeals decisions don’t have any precedential value,” Bookbinder says.

That was tough to stomach, and now Trump is back at the trough without any further guardrails—or consequences paid. He was in “clear violation of provisions intended to protect the public from corruption,” Bookbinder says, “and it’s very, very hard, it turns out, to get courts to enforce them—or get anybody to enforce them. That’s deeply frustrating, and one more example of Trump finding ways to be lawless.”

CREW is now in a triage process to determine its priorities, and which legal actions might stand a chance of success—such as the lawsuit it and other groups filed earlier this week to challenge the actions of Trump’s so-called Department of Government Efficiency. In any case, Bookbinder says, the public can expect more influence-peddling during Trump’s second term, only now “there are factors that create the risk of emoluments at a much higher level.”

Prior to the election, CREW cited four primary areas of concern, not merely for conflicts of interest—that would be a very long list—but where Trump is likely in violation of the Constitution’s emoluments clauses. And now there are five areas, because only days before he was sworn in, a Trump-controlled entity called World Liberty Financial launched a pair of “meme” cryptocurrencies: $TRUMP and $MELANIA.

Let’s consider those problem areas one at time. (Click here for my full interview with Bookbinder.)

Trump Media and Technology Group
Trump has a controlling interest in this publicly traded company—the parent of Truth Social—which didn’t exist during his first administration. It’s unprecedented for a president to hold such a position. The company is the product of a merger between Trump Media and a so-called Special Purpose Acquisition Company. According to Investopedia, SPACs, also called “blank check” companies, have “gained a reputation for being dubious operations, often likened to ‘scams,'” because their sponsors get special financial arrangements and small investors are often left holding the bag when things go south.

But the constitutional problem, Bookbinder says, is that “anyone, whether it’s a wealthy individual or a foreign country, that buys a large number of shares is likely to push the stock value up, which immediately drives up Donald Trump’s net worth—and it could go much further than renting hotel rooms or planning an event at a Trump property. There’s also the threat that those interests could quickly sell off the stock, which would drive prices down and potentially tank Trump’s net worth, which gives them further leverage. So that’s a real risk.”

Trump World Tower (New York City)
In 2019, Reuters reported that at least six foreign governments (Iraq, Kuwait, Malaysia, Saudi Arabia, Slovakia, and Thailand—the EU makes seven) had been cleared by the State Department, without the congressional consent mandated by the Constitution, to rent luxury condos at Trump’s Manhattan tower, which was then his primary residence outside the White House. During Trump’s second term, according to CREW, public records indicate that “five foreign governments are expected to pay Trump’s business a total of nearly $2 million in monthly fees.”

LIV Golf
This, too, didn’t exist during Trump’s first term. A pro golf league backed by a Saudi investment fund, LIV Golf “has held several events at Trump’s properties and is already scheduled to hold one at one of his golf resorts in 2025,” Bookbinder notes. “That seems like another clear emoluments violation. You’d have to show that the connection to the Saudi government is direct enough, and how the money is going to his companies. But when you take a step back, it’s clear what’s happening: This is a Saudi-backed enterprise bringing business to the president.” During Trump’s first term, there were instances of the Saudis spending lavishly on Trump properties, Bookbinder points out, and “we also saw Trump making decisions that seemed surprisingly positive toward Saudi Arabia, including essentially looking the other way when Saudi Arabia killed a US-based journalist.”

Foreign Real Estate Developments
CREW writes: “Since 2021, the Trump Organization has signed three new agreements with an international developer for Trump-branded developments in Oman, Saudi Arabia and the United Arab Emirates. These projects may receive significant benefits from these governments during a potential second Trump presidential term.” At a hotel in Oman, a New York Times reporter witnessed “a team of sales agents…invoking Mr. Trump’s name to help sell luxury villas at prices of up to $13 million, mostly targeting superrich buyers from around the world, including from Russia, Iran, and India.”

$TRUMP Meme Coin
On Monday, my colleague Russ Choma reported that the value of the $Trump meme coin launched a few days earlier by World Liberty Financial—an entity controlled by the Trump family and in whose coins Trump and his male children reportedly hold a 20 percent stake—soared to just under $75, only to plummet to about half of that by the time Trump was sworn in.

World Liberty Financial also launched the $MELANIA coin, which peaked at $13.38 last Sunday and was trading for less than $3 late Thursday—was it the hat? In any case, the meme coin valuess are ethereal, and mercurial. “This ‘cryptocurrency’ is not really a currency. There’s not anything behind it,” Bookbinder says. “It’s just a thing people can buy because they think at some point someone else will want to buy it for that much money or more—really sort of a hollow vessel for anyone, including foreign governments, to put money into, which puts money in Trump’s pocket.”

World Liberty Financial also reportedly owns significant stakes in established cryptocurrencies, including Ethereum’s Ether coin—a potentially serious conflict given that Trump is now in a position to determine whether and how the crypto industry is regulated. “He and his administration could be making major decisions that could really affect his businesses and his income,” Bookbinder says.

New Hampshire’s Governor Thinks Elon Musk Is Too Rich for Conflicts of Interest

29 December 2024 at 23:11

A news clip making the rounds Sunday morning had CNN’s Dana Bash talking with Chris Sununu, New Hampshire’s Republican governor, about Elon Musk’s potential conflicts of interest. Here, after all, we have a hecto-billionaire with massive federal contracts via SpaceX—and whose carmaker, Tesla, likely wouldn’t have survived without generous state and federal subsidies—serving as an advisor to an incoming president on how the government should be spending its money, or not.

Sununu told Bash he liked that Musk is an “outsider”—an interesting choice of words—who is “not looking for anything.” When she challenged that notion, he responded, “The guy is worth $450 billion” and therefore is “so rich he’s removed from the potential financial influence.”

“I don’t think he’s doing it for the money,” Sununu said. “He’s doing it for the bigger project and the bigger vision of America.” The exchange is worth a listen:

BASH: One of the concerns is that Elon Musk has billions tied up in govt contracts. You don't see a conflict of interest?CHRIS SUNUNU: Everyone has a conflict of interestBASH: But that's a pretty big oneSUNUNU: He's so rich he's removed from the potential financial influence

Aaron Rupar (@atrupar.com) 2024-12-29T14:47:39.372Z

What this tells me is that Sununu doesn’t understand the mentality of excessive wealth and he probably shouldn’t be on the air talking about it. He’s correct, in one sense, that Musk is not doing it for the money. I mean, the guy could probably afford to buy Greenland. But “the greater project and the bigger vision”? That’s the sort of nonsense Col. Potter from the old TV series M.A.S.H. would have called “horse hockey”—among other things.

Musk is doing this for the power—the opportunity to dominate his peers. Let’s not forget that joining forces with Trump put Musk’s wealth, at least on paper, on a very steep upward trajectory. I haven’t done the math, but I’m pretty sure he’s now the richest person who has ever lived on our planet. He doesn’t need money to buy stuff. He needs it to nourish his narcissism.

I interviewed quite a few super-rich folks, and people in their close orbits, while researching my 2021 book, Jackpot, and we talked a lot about these kinds of matters. It became clear that, once a person attains a certain level of wealth, any further accumulation of assets is like a game. It’s all about score-keeping and social comparisons—and also maintaining one’s dynastic position by creating trusts to circumvent gift and estate taxes and pushing to maintain stupid loopholes like the discounted tax rate on carried interest, which even one private equity guy admitted to me was “bullshit,” though he was part of a group that made an annual pilgrimage to DC to lobby for it.

Here’s a abridged snippet from one of my interviews with Richard Watts, an attorney in Southern California who serves as a consigliere for some of America’s wealthiest families. Here he was talking about a conference he’d just spoken at—an annual shindig hosted by Mitt Romney and attended by loads of Fortune 500 CEOs and billionaires with names you’d know, in addition to former presidents and senators and other power players.

“I’m very well off, so I certainly don’t need to be working and doing all that stuff, and I’ve got a beautiful home down by the ocean. But when I spend the weekend with people that probably have a minimum net worth of $500 million, at some point I just have to leave, because you can feel in the discussion the measure is how big you are…

In those situations it’s always about what spectacular thing have you done, invented, created: What do you do? “Well, I own 35 mobile home parks free and clear, and we built them, and we’re going green with all of them. And it’s really been a great, wonderful thing.” And the guy’s 40 years old, and that’s a true story…


Now, if you’re Jamie Dimon, everybody kind of wants to see what you’re thinking and you know, “Hey, that’s a good guy. I want to be around him.” And then if it’s the governor of Maine, or let’s say it’s Mitt or it’s Paul Ryan, these are really interesting people. And the interesting thing is they kind of don’t want to have that discussion, but everyone has it with them. So, it’s like, “Hey Paul, since you’ve been out of the Speaker of the House, what is it you’re doing this year?” “Oh my god, I’m on the board of Fox News.” (And of course Murdoch was there lecturing as well.)

And it’s just this feeling that the only measure in the room—I don’t mean that they always stay this way, I’m just saying when they group together—it’s about who’s got the biggest boat, and I can say that in a lot of different ways that are nasty, but the biggest boat is pretty quickly identified.

One month prior to the election, Elon Musk’s estimated net worth was about $263 billion. Now, at year’s end, it is $437 billion. The “biggest boat” has been identified. It’s Elon and it ain’t even close. Musk would like to keep it that way. and his relationship with Trump helps him do that. So Sununu can spare us the “greater project” nonsense.

This is a dick-measuring contest, no more, no less.

New Hampshire’s Governor Thinks Elon Musk Is Too Rich for Conflicts of Interest

29 December 2024 at 23:11

A news clip making the rounds Sunday morning had CNN’s Dana Bash talking with Chris Sununu, New Hampshire’s Republican governor, about Elon Musk’s potential conflicts of interest. Here, after all, we have a hecto-billionaire with massive federal contracts via SpaceX—and whose carmaker, Tesla, likely wouldn’t have survived without generous state and federal subsidies—serving as an advisor to an incoming president on how the government should be spending its money, or not.

Sununu told Bash he liked that Musk is an “outsider”—an interesting choice of words—who is “not looking for anything.” When she challenged that notion, he responded, “The guy is worth $450 billion” and therefore is “so rich he’s removed from the potential financial influence.”

“I don’t think he’s doing it for the money,” Sununu said. “He’s doing it for the bigger project and the bigger vision of America.” The exchange is worth a listen:

BASH: One of the concerns is that Elon Musk has billions tied up in govt contracts. You don't see a conflict of interest?CHRIS SUNUNU: Everyone has a conflict of interestBASH: But that's a pretty big oneSUNUNU: He's so rich he's removed from the potential financial influence

Aaron Rupar (@atrupar.com) 2024-12-29T14:47:39.372Z

What this tells me is that Sununu doesn’t understand the mentality of excessive wealth and he probably shouldn’t be on the air talking about it. He’s correct, in one sense, that Musk is not doing it for the money. I mean, the guy could probably afford to buy Greenland. But “the greater project and the bigger vision”? That’s the sort of nonsense Col. Potter from the old TV series M.A.S.H. would have called “horse hockey”—among other things.

Musk is doing this for the power—the opportunity to dominate his peers. Let’s not forget that joining forces with Trump put Musk’s wealth, at least on paper, on a very steep upward trajectory. I haven’t done the math, but I’m pretty sure he’s now the richest person who has ever lived on our planet. He doesn’t need money to buy stuff. He needs it to nourish his narcissism.

I interviewed quite a few super-rich folks, and people in their close orbits, while researching my 2021 book, Jackpot, and we talked a lot about these kinds of matters. It became clear that, once a person attains a certain level of wealth, any further accumulation of assets is like a game. It’s all about score-keeping and social comparisons—and also maintaining one’s dynastic position by creating trusts to circumvent gift and estate taxes and pushing to maintain stupid loopholes like the discounted tax rate on carried interest, which even one private equity guy admitted to me was “bullshit,” though he was part of a group that made an annual pilgrimage to DC to lobby for it.

Here’s a abridged snippet from one of my interviews with Richard Watts, an attorney in Southern California who serves as a consigliere for some of America’s wealthiest families. Here he was talking about a conference he’d just spoken at—an annual shindig hosted by Mitt Romney and attended by loads of Fortune 500 CEOs and billionaires with names you’d know, in addition to former presidents and senators and other power players.

“I’m very well off, so I certainly don’t need to be working and doing all that stuff, and I’ve got a beautiful home down by the ocean. But when I spend the weekend with people that probably have a minimum net worth of $500 million, at some point I just have to leave, because you can feel in the discussion the measure is how big you are…

In those situations it’s always about what spectacular thing have you done, invented, created: What do you do? “Well, I own 35 mobile home parks free and clear, and we built them, and we’re going green with all of them. And it’s really been a great, wonderful thing.” And the guy’s 40 years old, and that’s a true story…


Now, if you’re Jamie Dimon, everybody kind of wants to see what you’re thinking and you know, “Hey, that’s a good guy. I want to be around him.” And then if it’s the governor of Maine, or let’s say it’s Mitt or it’s Paul Ryan, these are really interesting people. And the interesting thing is they kind of don’t want to have that discussion, but everyone has it with them. So, it’s like, “Hey Paul, since you’ve been out of the Speaker of the House, what is it you’re doing this year?” “Oh my god, I’m on the board of Fox News.” (And of course Murdoch was there lecturing as well.)

And it’s just this feeling that the only measure in the room—I don’t mean that they always stay this way, I’m just saying when they group together—it’s about who’s got the biggest boat, and I can say that in a lot of different ways that are nasty, but the biggest boat is pretty quickly identified.

One month prior to the election, Elon Musk’s estimated net worth was about $263 billion. Now, at year’s end, it is $437 billion. The “biggest boat” has been identified. It’s Elon and it ain’t even close. Musk would like to keep it that way. and his relationship with Trump helps him do that. So Sununu can spare us the “greater project” nonsense.

This is a dick-measuring contest, no more, no less.

America’s Health Insurance Crisis in Six Charts

20 December 2024 at 11:00

About a month ago, the Commonwealth Fund published the results of its biannual survey on the state of health insurance coverage in the United States. Good timing, given the recent uproar over the business conglomerates that dominate the sector and seem to be more concerned with maximizing investment returns than ensuring the health and wellbeing of their customers.

Despite the Commonwealth Fund’s mission—to “promote a high-performing, equitable health care system that achieves better access, improved quality, and greater efficiency, particularly for society’s most vulnerable”—its agenda is decidedly nonpartisan. I recently talked to a doc from Physicians for a National Health Program who made a good case for abolishing for-profit insurers entirely.

Commonwealth doesn’t quite go there. Although the survey report says public options should be made available, the primary policy recommendations involve bolstering Medicaid, the federally funded public insurance program for low-income Americans (the incoming administration appears likely to do the opposite)—and protecting consumers from medical debt. (Ditto.) But “the survey findings show pretty clearly that commercial insurance is not enabling timely and  affordable access to health care without fear of medical debt for millions of people,” one of the authors, Sara Collins, told me in an email.  

Indeed, it’s hard to look at these six charts—five of which are derived from the Commonwealth report—and not conclude that something is rotten in Washington and on Wall Street. The Affordable Care Act, which Republican lawmakers very nearly repealed during the first Trump administration, has cut the number of uninsured Americans in half, to 26 million last year, or roughly 1 in 12 people. (This number will certainly rise if Congress fails to renew enhanced ACA premium subsidies put in place during the Biden administration, which are set to expire in 2025.)

But when you factor in the number of underinsured Americans and the number of people carrying medical debt, even the current state of health coverage is far from ideal. The Commonwealth surveys were conducted this spring with 6,480 people, ages 19 to 64, who for the most part rely largely on commercial plans obtained through their work or via the ACA exchanges.

It also turns out that even being insured (and not underinsured) doesn't leave you in the clear. ("We don’t use the term 'fully insured,'" explains Collins.) The term "underinsured" is for people whose annual out-of-pocket costs (not including premiums) add up to more than 10 percent of their household income—or half that for a family of four that makes less than $60,000. You are also underinsured if your deductible, the amount you have to pay before coverage kicks in, is at least 5 percent of your household income. Growth in the number of underinsured people, Collins notes, "has been driven by growth in the proliferation and size of deductibles, especially in employer plans."

According to the Kaiser Family Foundation, average annual out-of-pocket medical costs, adjusted for inflation, have more than doubled since 1970, to $1,425 per person in 2022. And remember that healthy people don't pay nearly so much. It's the sicker folks who face the high out-of-pocket costs. In fact, roughly a quarter of insured people with certain chronic health conditions said they were skipping doses of medications their doctors prescribed, or hadn't gotten prescriptions filled, because of the cost.

Given the above, it shouldn't be surprising that lots of people who thought they were adequately insured have found themselves in debt to hospitals, medical and dental care providers, financial institutions, and bill collectors. The numbers are, of course, higher for uninsured and underinsured people.

The sums are not paltry, as the Commonwealth survey found. More than one-fifth of the people with medical debts owed at least $5,000. 

And as anyone who has been in such a situation knows, the albatross of debt puts a serious crimp on a body's well-being. 


But hey, at least somebody is doing well: executives and shareholders.*


*I selected three of the Top 4 firms serving the commercial markets without first viewing their numbers. I skipped CVS (Aetna)—#3—because the CVS-Aetna merger made the timeline hard to track. This chart is illustrative, not exhaustive.

“I Can’t Afford My Oxygen”: The Human Toll of For-Profit Insurance

16 December 2024 at 11:00

Amid the frenzied coverage of UnitedHealthcare CEO Brian Thompson‘s assassination and the public’s troubling reaction to it were references to various polls, including one conducted in 2016 by the Kaiser Family Foundation, whose results suggested that Americans were content with their private health plans.

Similar stats had crept into the debate over Medicare for All—a proposed national health insurance program to cover all Americans, and with which private insurers would have to compete. A few weeks before Thompson was murdered, AHIP, the primary trade group for commercial health insurers, published a new survey it had commissioned. About three-quarters of respondents, a “strong majority,” the group said, were satisfied with their employer-provided plans and preferred getting their coverage this way, as opposed to through any government program.

“We’re living in a country where we have people who literally can’t afford to breathe.”

I found these numbers hard to square with the nonchalant—even celebratory—response to Thompson’s death. Until, that is, I spoke with Ed Weisbart. A veteran medical doctor, now retired, Weisbart serves as national board secretary for Physicians for a National Health Program (PNHP), a nonpartisan organization of some 25,000 doctors founded in 1987 to advocate for a public health insurance program. (Disclosure: My late mother was a member.)

So long as you’re healthy, he told me, it is in your insurer’s best interest to keep you happy by delivering on small claims. It’s only when it looks as though you’re going to cost them lots of money that the denials start coming—and maybe by then you’re too sick to fight. This interview was edited for length and clarity.

What compelled you to join PNHP?

I was a practicing physician for decades and got fed up with seeing patients unable to afford health care—not in the broad, abstract way, but in the very real, nitty-gritty way. The Type 1 diabetic who has uncontrolled disease, and I prescribe insulin for him, and it would make a huge difference in his life expectancy, but he comes back a month later and his blood sugars are no better. And I ask him why, and he would say, “Well, because I’m taking my insulin every other day. It’s all I can afford.” I know he’s barreling toward dialysis.

A patient with end-stage emphysema came into the office without her oxygen, huffing and puffing, unable to breathe. She’s had portable oxygen at home and we know this because she had it previous visits. And I said, “Where’s your oxygen? Why are you so short of breath?” She says, “Oh, I can’t afford my oxygen anymore.”

We’re living in a country where we have people who literally can’t afford to breathe. I’ve got hundreds if not thousands of stories like that. It just drives me crazy, realizing you have to advocate for patients outside of the exam room as well, and then understanding that the reason it’s like this is because of the profiteers just leeching the blood and soul of everyday human beings so they can have the best returns on Wall Street.

What did you make of the reaction to the Brian Thompson killing?

It’s obviously a tragedy and a very wrongheaded move. I was aghast. And yet it was also not hard to understand the dynamics, when there are tens of thousands of people dying because of the profiteering—people constantly running into having some bureaucrat say they can’t get the lifesaving care they need. So, I was not surprised, but I was surprised.

What do you consider the biggest flaws of our health system?

As a medical director at various places, I'd say the biggest problem is that the system is designed to return profits rather than to improve health. And the programs that you would want to design to improve health are contrary to the business model of the people that could put those programs in place.

Related to that is the fragmentation of the system. That's a consequence of the first problem. It means comprehensive solutions can't be put in place. It means people are thrust into gaps in between care. So it creates its own set of expenses and driving up the cost.

The third piece is our inability to negotiate prices on behalf of Americans, which other countries do. Those costs are borne all across the system in ways that are obvious, like the overhead of the insurance industry—13 percent to 18 percent depending on where you look. But then they hide more than that by transferring some of the overhead onto hospitals, hospital infrastructure, and medical practices. Milliman estimated the average physician pays $100,000 for office staff to deal with the insurance industry, and where does that money come from? It comes from jacking up prices. All the fee schedules have to be adjusted so physicians can afford to pay this overhead.

This is unique to America. In Canada, the overhead of running a practice to deal with the national health insurance they have there is more like $20,000 or $25,000 per doctor.

In any other industry, auto repair for instance, you get an estimate in advance of what it'll cost you. Why isn’t that the case with health care?

Well, I would argue that's not the correct solution, anyway. Because in the auto repair industry, you can shop around and make an intelligent choice, and you know whether the car is going to work right afterward. In health care, it's the exact opposite.

“We spend roughly a third of the health care dollar propping up the bloated, Byzantine insurance industry.”

You can shop for prices for [commodity services like LASIK], but that kind of thing is a tiny fraction. In health care, a very large percentage [of the total cost of care] is spent in the last six months of life by people who are desperately sick, and they are not in a position to start shopping around. And even if you had the prices, how do compare that to quality? If an insurance company with six floors full of actuaries can't do the price-versus-quality equation so that you they can direct you to the best quality care for the price, how is the person who works at the gas station on the corner supposed to make that determination?

I'm also curious about situations in which a patient gets a crazy bill, just totally unrealistic, and they kick up a fuss and the insurer suddenly reduces the cost or even wipes it out entirely. Is the whole system premised on people giving up and not fighting claim denials?

Yes. There's data about this for Medicare. If Medicare denies a claim, it's usually because the claim is for something that's legally not a covered benefit. It's extraordinary for it to be any reason other than that, and so when Medicare denies claims—which they almost never do—and someone appeals, there's about a 1 percent chance that appeal will get reversed.

Now, with Medicare Advantage, which is the for-profit, typically proprietary, insurance industry version of Medicare, its the exact opposite. If somebody appeals a denial, I think around 80 to 85 percent of those denials get reversed, because when Medicare Advantage does a denial it's because it wasn't in the company's business interest to pay for it. But nobody appeals it because they don't know that they can—or that it would work.

Fascinating. So it's actually easy—well, not easy, because it's a total headache—but you can get these things reversed if you persist.

I wouldn’t call it easy by any means. The patient has to spend significant time collecting things and going through the process. And you need a physician who's willing to help, and who's going to pay the physician for that? That's a chunk of the physician’s time that is not reimbursed. Plus, most people in a situation where they need to do that are sick. They're not at their best to begin with. It's really hard, really time-consuming. And there's a long delay from when you do the appeal to when you get a favorable decision.

Tell me more about the for-profit model, and how delaying and denying claims plays into it.

The commercial insurance industry collects a premium. So that's a prepayment. The Medicare Advantage industry is prepaid by the government. That's money in their pocket, and every time they pay a claim, that's money that they're spending.

They have this term, “medical loss ratio,” which is a carryover from the fire loss ratio and property loss ratio, but they call it a loss when they pay. So, they don't want to pay, and it manifests in a couple of ways. First, if they don't pay the claim, that's money they can retain. Secondly, even if they just delay the care, they have sophisticated systems managing how they invest the money they're not paying.

I once worked in a part of the insurance world where they did exactly that. They had contracts that required them to pay their bills within a certain timeframe, and if they paid long after they were contractually obliged to, there was a penalty, and they had sophisticated systems to analyze the return on their investments in the market vs. how big the penalties are for delaying the payment for care. And they would delay until they hit the right point on the curve where it was more sensible financially to pay the claim than to keep investing it in the market.

So basically you collect a big pile of money and invest it and then avoid paying claims so you can keep that money invested as long as possible to maximize your returns in the market?

That's exactly right.

What are the kinds of procedures insurers are most likely to deny or delay, and the most common reasons people fall into medical debt?

I can't give you a quantitative answer, but the more expensive a procedure is, the more likely they are to want to put in a barrier to payment. Insurers typically don't want to put barriers to things that low-expense patients get, like a blood pressure medication that's very inexpensive and that healthier populations use. It's to their advantage to get you to use the insurance a little bit because the people that are the most likely to disenroll from a specific company are the people who never use it. They want you to maybe get your eyeglasses or something.

But if you're sick and you need home oxygen, or you need a CT scan or an MRI, or something that's both expensive and predictive that you're probably a higher risk person—that you're going to be a more expensive patient to take care of—they don't want to spend that money. So if you call them and say, “I'm so mad at you. You got in the way of my CT scan. I'm thinking of going to different insurance company,” the company has a win! They don’t want you in their plan.

You mention CT scans. I know imaging is among the things medical practices tend to overprescribe because it’s a cash cow, and you get a fair bit excessive testing and overtreatment. Can certain denials then be to a patient's benefit?

There is obviously a significant percentage of what we do in medicine that is not evidence-based and could probably be avoided. But if you compare the United States to other modern nations, our utilization of those kinds of services is roughly average. The problem with the high cost of care in the US is not overutilization. Is there overutilization? Absolutely. Is that the driver of health care costs? No, it's not.

The driver of health care costs is two things: It's the overhead, the managing, the cost of the complexity of administering this. Most estimates are that we spend roughly a third of the health care dollar propping up the bloated, Byzantine insurance industry. The second piece is the failure to negotiate prices effectively because we're so fragmented. That's where the money is.

How big a cost is the failure to negotiate prices?

I can’t tell you overall, but the average prescription drug in the United States is about twice as expensive as it is in the rest of the modern world.

How does the cost of a public insurance bureaucracy compare with the cost of a private one?

The commercial insurance industry has a roughly 15 percent overhead. Traditional Medicare, parts A and B, operates with a roughly 2 percent overhead.

Wendell Potter, a former Cigna PR guy, just wrote a Bloomberg piece on the role of Wall Street, and how executives at giants like UnitedHealthcare and Cigna go to these investor conferences where there’s no mention at all of patient care. It's all about the returns, and that's what's driving a lot of the misery we're seeing.

Oh, that's exactly right. I mean, the root issue is greed.

But don't public systems also have their drawbacks? The Veterans Administration has weathered scandals. And I saw a CTV News piece from last fall about how Canadians fed up with long wait times for surgeries in their public system were turning to private providers.

If you go down the street in Canada and ask people, they all have a story like that. But then they'll say, “But there's no way I would change to the United States system where I have to have a bake sale to have my knee replaced.” They don't want this system.

More importantly, US life expectancies were the same as Canadian life expectancies within a few months up until the early 1970s. That's when we passed the HMO Act, creating managed care, and Canada finally finished implementing their national health insurance plan, and then there was a fork in the road. Our costs continued to go up along the same curve. Their costs started to really flatten out, and our life expectancy did not begin to keep pace with the improvements in life expectancy in Canada. Fifty-some years later, they live three to five years longer than we do and spend half as much.

Have you seen any notable pivot points for the United States in terms of the cost of care and deterioration of quality?

They've been on a steady, relentless curve. There's a whole list of things that we have tried, and none have really bent the curve. There's one obvious solution.

You mean single-payer?

Correct. But I'm not stupid enough to say that sometime in the next four years or six years that's going to magically pass. One of the things PNHP has been really good about the last three or four years is thinking about a strategy of how do we pave the road to that? What has to happen? Our strategy to get the bills passed is far more robust than just pass the bill. The single-payer community five years ago, 10 years ago, would literally say you can only cross a chasm in a single leap. You know, I've looked at the bottom of chasms and there's dead people who couldn't make the jump. You cross the chasm by building a bridge slowly.

Do you think for-profit insurers play any positive role in our system, or would you like to see them go away entirely?

I would like to see them go away entirely.

I mean, it's probably never going to happen here.

Everything looks impossible until it's already happened.

My skepticism comes from watching Obama try to implement single-payer and having it demonized as socialism—and "death panels" and so forth.

I don't think people care whether it's single payer or quadruple payer. Those words mean nothing to people. You know, Medicare for All. That's not what they care about. People want health care. They don't care about health insurance. They're angry at the profiteering, the outrageous prices. They're angry they can't afford their care. They're much more focused on solve this problem than they are on which exact tool or mechanism you go to.

That's what I think, too. What I care about is that everybody in the country has unfettered access to high-quality health care that they control the decisions for. I think single-payer is the smartest way to do it. But if we went to an "all payer" or some other model that accomplished that, I'm fine. I just don't want people dying like they are today.

“I Can’t Afford My Oxygen”: The Human Toll of For-Profit Insurance

16 December 2024 at 11:00

Amid the frenzied coverage of UnitedHealthcare CEO Brian Thompson‘s assassination and the public’s troubling reaction to it were references to various polls, including one conducted in 2016 by the Kaiser Family Foundation, whose results suggested that Americans were content with their private health plans.

Similar stats had crept into the debate over Medicare for All—a proposed national health insurance program to cover all Americans, and with which private insurers would have to compete. A few weeks before Thompson was murdered, AHIP, the primary trade group for commercial health insurers, published a new survey it had commissioned. About three-quarters of respondents, a “strong majority,” the group said, were satisfied with their employer-provided plans and preferred getting their coverage this way, as opposed to through any government program.

“We’re living in a country where we have people who literally can’t afford to breathe.”

I found these numbers hard to square with the nonchalant—even celebratory—response to Thompson’s death. Until, that is, I spoke with Ed Weisbart. A veteran medical doctor, now retired, Weisbart serves as national board secretary for Physicians for a National Health Program (PNHP), a nonpartisan organization of some 25,000 doctors founded in 1987 to advocate for a public health insurance program. (Disclosure: My late mother was a member.)

So long as you’re healthy, he told me, it is in your insurer’s best interest to keep you happy by delivering on small claims. It’s only when it looks as though you’re going to cost them lots of money that the denials start coming—and maybe by then you’re too sick to fight. This interview was edited for length and clarity.

What compelled you to join PNHP?

I was a practicing physician for decades and got fed up with seeing patients unable to afford health care—not in the broad, abstract way, but in the very real, nitty-gritty way. The Type 1 diabetic who has uncontrolled disease, and I prescribe insulin for him, and it would make a huge difference in his life expectancy, but he comes back a month later and his blood sugars are no better. And I ask him why, and he would say, “Well, because I’m taking my insulin every other day. It’s all I can afford.” I know he’s barreling toward dialysis.

A patient with end-stage emphysema came into the office without her oxygen, huffing and puffing, unable to breathe. She’s had portable oxygen at home and we know this because she had it previous visits. And I said, “Where’s your oxygen? Why are you so short of breath?” She says, “Oh, I can’t afford my oxygen anymore.”

We’re living in a country where we have people who literally can’t afford to breathe. I’ve got hundreds if not thousands of stories like that. It just drives me crazy, realizing you have to advocate for patients outside of the exam room as well, and then understanding that the reason it’s like this is because of the profiteers just leeching the blood and soul of everyday human beings so they can have the best returns on Wall Street.

What did you make of the reaction to the Brian Thompson killing?

It’s obviously a tragedy and a very wrongheaded move. I was aghast. And yet it was also not hard to understand the dynamics, when there are tens of thousands of people dying because of the profiteering—people constantly running into having some bureaucrat say they can’t get the lifesaving care they need. So, I was not surprised, but I was surprised.

What do you consider the biggest flaws of our health system?

As a medical director at various places, I'd say the biggest problem is that the system is designed to return profits rather than to improve health. And the programs that you would want to design to improve health are contrary to the business model of the people that could put those programs in place.

Related to that is the fragmentation of the system. That's a consequence of the first problem. It means comprehensive solutions can't be put in place. It means people are thrust into gaps in between care. So it creates its own set of expenses and driving up the cost.

The third piece is our inability to negotiate prices on behalf of Americans, which other countries do. Those costs are borne all across the system in ways that are obvious, like the overhead of the insurance industry—13 percent to 18 percent depending on where you look. But then they hide more than that by transferring some of the overhead onto hospitals, hospital infrastructure, and medical practices. Milliman estimated the average physician pays $100,000 for office staff to deal with the insurance industry, and where does that money come from? It comes from jacking up prices. All the fee schedules have to be adjusted so physicians can afford to pay this overhead.

This is unique to America. In Canada, the overhead of running a practice to deal with the national health insurance they have there is more like $20,000 or $25,000 per doctor.

In any other industry, auto repair for instance, you get an estimate in advance of what it'll cost you. Why isn’t that the case with health care?

Well, I would argue that's not the correct solution, anyway. Because in the auto repair industry, you can shop around and make an intelligent choice, and you know whether the car is going to work right afterward. In health care, it's the exact opposite.

“We spend roughly a third of the health care dollar propping up the bloated, Byzantine insurance industry.”

You can shop for prices for [commodity services like LASIK], but that kind of thing is a tiny fraction. In health care, a very large percentage [of the total cost of care] is spent in the last six months of life by people who are desperately sick, and they are not in a position to start shopping around. And even if you had the prices, how do compare that to quality? If an insurance company with six floors full of actuaries can't do the price-versus-quality equation so that you they can direct you to the best quality care for the price, how is the person who works at the gas station on the corner supposed to make that determination?

I'm also curious about situations in which a patient gets a crazy bill, just totally unrealistic, and they kick up a fuss and the insurer suddenly reduces the cost or even wipes it out entirely. Is the whole system premised on people giving up and not fighting claim denials?

Yes. There's data about this for Medicare. If Medicare denies a claim, it's usually because the claim is for something that's legally not a covered benefit. It's extraordinary for it to be any reason other than that, and so when Medicare denies claims—which they almost never do—and someone appeals, there's about a 1 percent chance that appeal will get reversed.

Now, with Medicare Advantage, which is the for-profit, typically proprietary, insurance industry version of Medicare, its the exact opposite. If somebody appeals a denial, I think around 80 to 85 percent of those denials get reversed, because when Medicare Advantage does a denial it's because it wasn't in the company's business interest to pay for it. But nobody appeals it because they don't know that they can—or that it would work.

Fascinating. So it's actually easy—well, not easy, because it's a total headache—but you can get these things reversed if you persist.

I wouldn’t call it easy by any means. The patient has to spend significant time collecting things and going through the process. And you need a physician who's willing to help, and who's going to pay the physician for that? That's a chunk of the physician’s time that is not reimbursed. Plus, most people in a situation where they need to do that are sick. They're not at their best to begin with. It's really hard, really time-consuming. And there's a long delay from when you do the appeal to when you get a favorable decision.

Tell me more about the for-profit model, and how delaying and denying claims plays into it.

The commercial insurance industry collects a premium. So that's a prepayment. The Medicare Advantage industry is prepaid by the government. That's money in their pocket, and every time they pay a claim, that's money that they're spending.

They have this term, “medical loss ratio,” which is a carryover from the fire loss ratio and property loss ratio, but they call it a loss when they pay. So, they don't want to pay, and it manifests in a couple of ways. First, if they don't pay the claim, that's money they can retain. Secondly, even if they just delay the care, they have sophisticated systems managing how they invest the money they're not paying.

I once worked in a part of the insurance world where they did exactly that. They had contracts that required them to pay their bills within a certain timeframe, and if they paid long after they were contractually obliged to, there was a penalty, and they had sophisticated systems to analyze the return on their investments in the market vs. how big the penalties are for delaying the payment for care. And they would delay until they hit the right point on the curve where it was more sensible financially to pay the claim than to keep investing it in the market.

So basically you collect a big pile of money and invest it and then avoid paying claims so you can keep that money invested as long as possible to maximize your returns in the market?

That's exactly right.

What are the kinds of procedures insurers are most likely to deny or delay, and the most common reasons people fall into medical debt?

I can't give you a quantitative answer, but the more expensive a procedure is, the more likely they are to want to put in a barrier to payment. Insurers typically don't want to put barriers to things that low-expense patients get, like a blood pressure medication that's very inexpensive and that healthier populations use. It's to their advantage to get you to use the insurance a little bit because the people that are the most likely to disenroll from a specific company are the people who never use it. They want you to maybe get your eyeglasses or something.

But if you're sick and you need home oxygen, or you need a CT scan or an MRI, or something that's both expensive and predictive that you're probably a higher risk person—that you're going to be a more expensive patient to take care of—they don't want to spend that money. So if you call them and say, “I'm so mad at you. You got in the way of my CT scan. I'm thinking of going to different insurance company,” the company has a win! They don’t want you in their plan.

You mention CT scans. I know imaging is among the things medical practices tend to overprescribe because it’s a cash cow, and you get a fair bit excessive testing and overtreatment. Can certain denials then be to a patient's benefit?

There is obviously a significant percentage of what we do in medicine that is not evidence-based and could probably be avoided. But if you compare the United States to other modern nations, our utilization of those kinds of services is roughly average. The problem with the high cost of care in the US is not overutilization. Is there overutilization? Absolutely. Is that the driver of health care costs? No, it's not.

The driver of health care costs is two things: It's the overhead, the managing, the cost of the complexity of administering this. Most estimates are that we spend roughly a third of the health care dollar propping up the bloated, Byzantine insurance industry. The second piece is the failure to negotiate prices effectively because we're so fragmented. That's where the money is.

How big a cost is the failure to negotiate prices?

I can’t tell you overall, but the average prescription drug in the United States is about twice as expensive as it is in the rest of the modern world.

How does the cost of a public insurance bureaucracy compare with the cost of a private one?

The commercial insurance industry has a roughly 15 percent overhead. Traditional Medicare, parts A and B, operates with a roughly 2 percent overhead.

Wendell Potter, a former Cigna PR guy, just wrote a Bloomberg piece on the role of Wall Street, and how executives at giants like UnitedHealthcare and Cigna go to these investor conferences where there’s no mention at all of patient care. It's all about the returns, and that's what's driving a lot of the misery we're seeing.

Oh, that's exactly right. I mean, the root issue is greed.

But don't public systems also have their drawbacks? The Veterans Administration has weathered scandals. And I saw a CTV News piece from last fall about how Canadians fed up with long wait times for surgeries in their public system were turning to private providers.

If you go down the street in Canada and ask people, they all have a story like that. But then they'll say, “But there's no way I would change to the United States system where I have to have a bake sale to have my knee replaced.” They don't want this system.

More importantly, US life expectancies were the same as Canadian life expectancies within a few months up until the early 1970s. That's when we passed the HMO Act, creating managed care, and Canada finally finished implementing their national health insurance plan, and then there was a fork in the road. Our costs continued to go up along the same curve. Their costs started to really flatten out, and our life expectancy did not begin to keep pace with the improvements in life expectancy in Canada. Fifty-some years later, they live three to five years longer than we do and spend half as much.

Have you seen any notable pivot points for the United States in terms of the cost of care and deterioration of quality?

They've been on a steady, relentless curve. There's a whole list of things that we have tried, and none have really bent the curve. There's one obvious solution.

You mean single-payer?

Correct. But I'm not stupid enough to say that sometime in the next four years or six years that's going to magically pass. One of the things PNHP has been really good about the last three or four years is thinking about a strategy of how do we pave the road to that? What has to happen? Our strategy to get the bills passed is far more robust than just pass the bill. The single-payer community five years ago, 10 years ago, would literally say you can only cross a chasm in a single leap. You know, I've looked at the bottom of chasms and there's dead people who couldn't make the jump. You cross the chasm by building a bridge slowly.

Do you think for-profit insurers play any positive role in our system, or would you like to see them go away entirely?

I would like to see them go away entirely.

I mean, it's probably never going to happen here.

Everything looks impossible until it's already happened.

My skepticism comes from watching Obama try to implement single-payer and having it demonized as socialism—and "death panels" and so forth.

I don't think people care whether it's single payer or quadruple payer. Those words mean nothing to people. You know, Medicare for All. That's not what they care about. People want health care. They don't care about health insurance. They're angry at the profiteering, the outrageous prices. They're angry they can't afford their care. They're much more focused on solve this problem than they are on which exact tool or mechanism you go to.

That's what I think, too. What I care about is that everybody in the country has unfettered access to high-quality health care that they control the decisions for. I think single-payer is the smartest way to do it. But if we went to an "all payer" or some other model that accomplished that, I'm fine. I just don't want people dying like they are today.

Here’s Trillions in Federal Waste the DOGE Bros Could Actually Target

10 December 2024 at 11:00

As you may know, our felonious president-elect put mega-billionaire Elon Musk and mere billionaire Vivek Ramaswamy in charge of a commission—though not an actual government department, because only Congress can create those—named for the same silly dog meme as Musk’s favorite “shitcoin.” But even in an advisory role, the so-called Department of Government Efficiency could cause significant upheaval if Congress and agency chiefs follow its lead, or if Donald Trump launches a flurry of executive orders—and then lawsuits are filed and everything is messy and chaotic and journalists are all in a tizzy, just as Trump likes it.

DOGE’s supposed goal is to identify $2 trillion in savings and reduce the size of government—and the deficit—by slashing federal waste and redundancy. (It’s been tried before, with limited success.) Based on their activities and statements, Musk and Ramaswamy would accomplish this by gutting the federal workforce, eliminating certain agencies, slashing regulations, ending selected entitlements, and, as a corollary, privatizing as much as possible as quickly as possible.

For starters, the DOGE bros have proposed killing veteran’s health benefits, Pell grants, Head Start, and the Bureau of Prisons—which simply means the government would spend its “savings” on contracts with private prison companies, and what could go wrong? They also seek to eliminate the National Institutes of Health, which would be a disaster for US leadership and innovation in science, because the NIH funds most basic biomedical research—work that brings about lifesaving drugs and procedures and vaccines, which, whatever you may think of them, have saved millions of Americans from gruesome deaths.

But suppose, for a moment, that DOGE’s mission is earnest. If they really want to target waste and inefficiency, as Judd Legum pointed out recently, they might start with the Pentagon, which has been failing audits for ages and is notorious for things like $14,000 toilet seats. Defense will eat up nearly half of the $1.8 trillion discretionary budget for fiscal 2025, and Social Security and Medicare will account for most of the $4 trillion mandatory budget—both sacred cows that lawmakers mess with at their peril.

But there’s a far richer target that nobody, certainly not the DOGE boys, has been talking about: wasteful tax breaks. These wouldn’t be spending cuts, technically speaking, but they amount to the same thing, as evidenced by the fact that the government calls them “tax expenditures.” And what is more wasteful, honestly, than giving huge breaks to people who don’t need them?

There are myriad examples, but we’ll just highlight seven big-ticket items that are costing the Treasury hundreds of billions or trillions of dollars. To be clear, some of these are not all bad, and with the right guardrails can be quite good. The devil is in the details of who gets to take advantage of them, and to what extent.

Musk and Ramaswamy may be even less likely to push for these reforms as they would to target the Pentagon budget. But let’s game it out anyway. The cost figures below are five-year estimates, mostly from the congressional Joint Committee on Taxation (JCT) for 2023 through 2027.

Tax breaks for private retirement plans: $2.5 trillion
Some Republican lawmakers are eyeing Social Security reductions to cover the cost of extending the tax cuts for the wealthy that Trump signed into law in December 2017. But if the goal is to eliminate waste, they’re barking up the wrong tree. The Social Security Administration estimates it will disburse about $110 billion more in benefits this year than it receives from the taxes that are deducted from our paychecks to fund the program. And that’s a fair sum, but the government spends nearly four times as much subsidizing private retirement savings, whose benefits flow disproportionately to the affluent.

The US government, and by extension the states, offer tax breaks for contributions to these investment accounts and on the stock profits that accrue in those accounts over the years, benefits that add up to just under $2.5 trillion over five years. But unlike Social Security, private retirement plans are far from universal. Participation varies widely by income. According to the Federal Reserve Board’s latest (2022) Survey of Consumer Finances, only 41 percent of families in the lower half of the income spectrum had a private retirement account, whereas 96 percent of families in the top-earning 10 percent have one (or more). And among the participating families, average savings for the lower-income half was $54,700 vs. $913,000 for the top 10 percent.

Encouraging people to save is laudable. The wasteful part is that there’s no ceiling. In 2021, the JCT reported that more than 28,000 Americans had IRA (individual retirement account) balances exceeding $5 million, and nearly 500 had holdings of more than $25 million—Peter Thiel, using dubious tactics, even managed to accumulate more than $5 billion in a Roth IRA, a type of account intended for middle-class savers. And that’s just IRAs, which a person can own alongside other pensions and 401(k)-type accounts. See my piece “How Congress Made Sure the Rich Retire in Luxury—at Our Expense.”

The fix: Once a person amasses a total of $2 million in their combined retirement accounts, remove them from the federal teat. If they need more, they can save without the government’s help. (For a preemptive fix, Musk and Ramaswamy might also urge Congress to reject this potentially disastrous Project 2025 proposal, should it ever arise.)

Exclusion of capital gains at death: $309 billion
This aberration, known as the “step-up in basis” rule, resets the value of long-held investment assets as they pass from parent to child or grandchild. Suppose I bought $10,000 worth of Amazon stock way back when and now it’s worth $10 million more than I paid. That’s a huge capital gain. If I sold the stock, I would owe roughly $2.4 million in federal tax. But if I die and leave it to my kids, the cost basis for taxation “steps up” to the new fair market value of $10,010,000, and neither my kids nor my estate owes the IRS a dime.

The rationale for this giveaway? Well, for estates subject to gift and estate tax (which are now only imposed on inheritances exceeding $13.6 million, or $27.2 million for a couple), the notion is that resetting the value of inherited stock avoids double taxation. But in the real world, most super-wealthy people already deploy strategies to sidestep gift and estate taxes. A second rationale is that it is difficult for heirs (and the IRS) to determine the cost basis of older investments—but that’s become far less of an excuse in the digital era.

The fix: Kill the step-up rule. And speaking of tax avoidance…

Grantor Retained Annuity Trusts (GRATs): hundreds of billions*
In the late 1990s, while trying to rein in a type of trust rich people were using for tax avoidance, Congress accidentally opened the door to something far worse: GRATs. Ever since, America’s dynasties have widely embraced a variation known as the “Walton GRAT” as a way to channel mind-boggling sums to their offspring without paying any inheritance tax. We’re talking hundreds of millions of dollars, or billions in the cases of guys like the late casino magnate Sheldon Adelson and Nvidia head honcho Jensen Huang—who employs additional legal tricks that are now popular among billionaires, and also need to be addressed. “I think the ease with which the ultra-rich can just make their taxes disappear is becoming more visceral to people,” an aide to Senate Finance Committee chair Ron Wyden (D-Ore.), told me earlier this year.

*This five-year figure is based on an estimate given to the New York Times by Daniel Hemel, a tax expert at New York University.

The fix: Enact limits on GRATs that render them useless for tax avoidance. Sen. Wyden introduced a bill in March to accomplish exactly that. Will it pass? Not on Trump’s watch.

Tax deductions for charitable gifts: $379 billion
Okay, now you probably think I’m some sort of Grinch. What’s wrong with a deduction for charitable giving? A lot, it turns out.

The Tax Cuts and Jobs Act of 2017 (TCJA) doubled the standard deduction, which about 70 percent of taxpayers had been claiming on their federal returns. As a result of the change, nearly 90 percent of families now claim it. But that means the remaining 10 percent, mostly affluent taxpayers who itemize their deductions, are the only ones who get to subtract the value of charitable gifts from their taxable income. In short, we are all paying to subsidize the charitable inclinations of America’s richest. If you are a middle-class taxpayer who donates $500 to a food bank, that’s $500 out of your pocket. If billionaire Scrooge McDuck makes the same donation and takes the tax break, it only costs him $315.

Philanthropy has its place. Private giving can support bold initiatives that the government won’t, which sometimes brings about positive outcomes—though also bad ones and silly ones. But expending billions of public dollars to subsidize unelected philanthropists is profoundly undemocratic, in part because the rich differ so notably from the masses in terms of the things they support. In 2010, a team of political scientists led by Benjamin Page at Northwestern recruited a sample of 1 percenters for interviews—not an easy task—and compared their policy views to the preferences of the broader public, as gleaned from surveys. Fifty-eight percent of his subjects were Republicans. From my book, Jackpot:

Most Americans wanted environmental protections strengthened; the 1 percenters wanted them slashed. Nearly nine in ten public respondents said the government should spend whatever is necessary to ensure high-quality K–12 public schools, versus just 35 percent of Page’s subjects—who, after all, could afford private schools and tutors and coaches. Only about half of the wealthy group felt it was the government’s responsibility to make sure minorities and whites had educational parity. They also favored less spending on Social Security, health care, food stamps, and jobs programs. The affluent group “tilted toward cutting all the income-redistributive or social insurance programs we asked about,” wrote Page et al.

Scrooge McDuck, like Elon Musk, also has a private foundation that he funds (like Musk) with shares of his company stock, which means he not only avoids paying a tax on their gain in value over the years, he also gets to deduct their current value from his taxable income! The McDuck Foundation, like any private foundation, is only required to spend 5 percent of its assets each year on charitable activities, even though its investments are growing by 15 percent annually. And its donations go to nonprofits that are working to eliminate the federal regulations that prevent McDuck Enterprises from polluting rivers and streams. For more, see my piece “Philanthropy in America is Broken.” (No more ducks, I promise.)

The fix: Kill the charitable deduction. Replace it with a tax credit available to all, and cap it at $5,000 a head.

Reduced rates on dividends and long-term capital gains: $1.2 trillion
Consider two married couples, each with a combined taxable income of $200,000. (For simplicity, we’ll assume they claim the standard deduction.) The first couple’s income is entirely from their salaries. The second couple gets all its money from dividends and sales proceeds from one partner’s significant stock holdings, inherited from a parent—neither partner is employed. The working couple’s effective federal tax rate is a tad over 16 percent. The nonworking couple has an effective rate of 8 percent. Besides being an insult to people who work for a living, this large disparity—for very high earners, the top capital gains tax rate is about 24 percent vs. 37 percent for wage income—encourages lots of tax avoidance schemes. (Carried interest is another notable one.)

The rationales for rewarding passive investment over work don’t pass the smell test. Investors will invest regardless, and differing capital gains rates don’t appear to have a large effect on economic growth. When the rates are reduced, meanwhile, the windfall goes largely into the hands of people with incomes north of $1 million. Now, you’ll hear speculation, and see some research, concluding that higher capital gains taxes discourage entrepreneurial risk-taking. But since when is risk-taking an unvarnished good? There are lots of “innovations” that haven’t turned out so great for our society. Think Meta. And Purdue Pharma, maker of OxyContin. Are we really better off for the wasteful innovations of meal kit companies like Blue Apron? Heck, Juul was an innovator—one that got a generation of kids hooked on nicotine. When excess wealth is sloshing around in search of lucrative investments, the consequences can be grim. Consider how an explosion of private equity has hollowed out many industries, as fund managers leverage debt to suck the life out of once-healthy sectors and channel profits to investors and partners at the expense of consumers, tenants, and workers. (See our recent packages “How Private Equity Looted America” and “American Oligarchy.”)

The fix: Treat investment income the same as work income. Boom.

Home mortgage interest deduction: $258 billion
Prior to 2018, a couple could deduct interest on up to $1 million in loans for first and second homes. The Trump tax legislation lowered the limit to $750,000, but because the TCJA also doubled the standard deduction, the mortgage interest deduction shifted further in favor of the rich. In 2023, according to the Congressional Research Service, nearly half of the deduction’s value went to the 14 percent of families with taxable income exceeding $200,000. And the deduction has done little to bolster homeownership: “The economic literature,” the CRS notes, “has generally found that the deduction’s structure…does not address the largest barriers to homeownership—the down payment required by banks, and closing costs.”

The fix: Kill the deduction and replace it with a program to help lower-income homebuyers with down payments and closing costs, limited to first homes only.

Qualified business income deduction: $199 billion
This may sound like a snoozer, but this generous provision of the 2017 Trump tax cuts, enacted at the urging of Republican Sens. Steven Daines of Montana and Ron Johnson of Wisconsin (who stood to gain personally), was a blatant giveaway to the owners of “pass-through” businesses, a category dominated by S corporations and limited liability partnerships, nearly 70 percent of whose profits flow to the wealthiest 1 percent of the population, according to a 2016 Treasury report, while “virtually no” pass-through income goes to people in the lower 80 percent.

As I wrote in my book, pass-throughs include hedge funds and real estate partnerships, private equity and venture capital groups, landlords and professional firms: accounting, consulting, law, medical, dental. Their owners spent hundreds of millions of dollars on political contributions to get their way on the tax bill. Hedge funds more than quadrupled their contributions to federal candidates, lawmakers, and PACs during the 2016 and 2018 election cycles relative to earlier cycles. Private equity contributions more than doubled, and venture capital and real estate contributions nearly doubled. Those investments paid off in spades. 

The fix: Repeal it.

There’s more, but maybe we’ll just end it here. Your bumper-sticker takeaway: Stop the Plunder, Close the Deficit.

Correction (12/10/2024): My initial estimate for GRATs—$1 trillion over five years—was not the cost to the US Treasury but rather the amount of wealth moving through these and related vehicles the wealthy use for tax avoidance.

Linda McMahon, Secretary of Plunder

21 November 2024 at 20:54

Educators are flipping out over Donald Trump’s choice of pro wrestling exec and longtime donor Linda McMahon for secretary of education. Predictably so, since experts in just about every field are flipping out when Trump chooses some poorly qualified (yet very loyal) hack to oversee their specialty—or selects another fox to guard the henhouse.

America’s biggest union, the National Education Association, for instance, slammed McMahon as unqualified and bent on a privatization agenda:

Her chief goal for education is to promote vouchers, which drain resources from public schools and send taxpayer money to unaccountable private schools that are permitted to discriminate against students and educators. The policies she promotes are aligned with Trump’s Project 2025 plan

McMahon, who served as head of the Small Business Administration during Trump’s initial term, has scant education experience. She earned a teaching certificate in college and was a student teacher for a semester, but resigned from the Connecticut Board of Education in 2010, according to the Washington Post, after the Hartford Courant found that she’d claimed an education degree she never obtained. More recently, a lawsuit accused McMahon and her estranged husband, Vince, of tolerating the sexual abuse of children by an employee of their company, World Wrestling Entertainment. (A lawyer for McMahon told CNN the allegations are “baseless.”)

But hey, she likes vouchers.

Voucher-esque programs, speaking of discrimination, were first deployed across the South during desegregation so authorities could shutter public schools—the white parents didn’t want their kids mixing with Black kids—and instead provide grants to fund the private education of exclusively white children at hundreds of new private schools that popped up to serve them. This was a sordid and horribly racist enterprise, as you will glean from this history compiled by the Center for American Progress.

When states expand voucher programs, shoddy and established school operators both cash in, and public schools and their students are the losers.

And it’s still happening, de facto. ProPublica reported the other day that tens of millions of dollars in public funds are still flowing to these “segregation academies”—of the 39 schools the reporters found in North Carolina alone, more than half had reported to the federal government that their student bodies were at least 85 percent white.

Republicans have been drooling over vouchers for as long as I can remember. They were talking about them when I was in grade school, and I’m a geezer. But now the messaging revolves around school “choice,” with proponents claiming that vouchers, which a number of states have revived in the form of education savings accounts (ESAs), allow low-income parents to escape failing public schools. And this is certainly true to some extent.

But the voucher/ESA cheerleaders neglect to mention that those public schools are failing in significant part because affluent families have fled en masse, and that their budgets have been gutted by, well, the same voucher-loving politicians and/or charter school systems championed by billionaire philanthropists like Bill Gates and the Waltons, and affluent members of both parties. All this drainage leaves many public schools underfunded to the point that teachers literally have to beg for basic classroom supplies—as some did during parents’ night at the public high school my kids attended in Oakland, California.

McMahon or no McMahon, vouchers have come back into vogue recently, likely in reaction to the educational upheaval of the Covid pandemic. “In 2023 alone, seven states passed new school voucher programs and nine expanded existing plans—highlighting a push that is largely coming from red states,” notes a Brookings Institution report published last year.

And sure, some low-income families will benefit from the programs, which channel money that would have gone to the local public school into private accounts (the ESAs) that can be used for private K–12 tuition and related expenses. But there can be a lot of collateral damage, notes the Brookings report.

First, whenever you expand government payouts—and this is something the Republicans complain about in other contexts—fraudsters and opportunists will come out of the woodwork. The report cites research showing that when traditional voucher programs were enacted, a host of “pop-up” private schools would follow, of which many fail quickly. “That’s exactly what is happening with the ESA-style expansions in Arizona now,” the report notes. (Arizona, which in 2011 became the first state to offer ESAs for selected students, expanded its program in 2022 to all students—including those already enrolled in private schools—according to a subsequent Brookings paper that deems the program “a handout to the wealthy.”)

Voucher programs also lead to tuition hikes by existing private schools, according to the Brookings report, “and that is exactly what recent reports are showing with ESA passage.” So, basically, shoddy and established operators alike cash in, and public schools and their students are the big losers.

There are other consequences, too. From the report:

The last decade of research on traditional vouchers strongly suggests they actually lower academic achievement. In Louisiana, for example, two separate research teams found negative academic impacts as high as -0.4 standard deviations—extremely large by education policy standards—with declines that persisted for years. Those results were published across top journals for empirical public and education policy. Similar results in Indiana found impacts closer to -0.15 standard deviations. To put these negative impacts in perspective: Current estimates of COVID-19’s impact on academic trajectories hover around -0.25 standard deviations.

Vouchers, more broadly, are of a piece with what I’ve been calling the Plunder—the steady rigging of our economic system over the past four and a half decades to benefit people who need no government support at the expense of those who really do. This, as I argued in a recent piece, was a primary reason why Trump won a second term, as ironic as that may sound.

I wrote about the rigging of our educational system in my 2021 book about excessive wealth in America. (Chapter title: “Getting In.”) Take the tax-advantaged 529 college savings plans our government offers. Like private retirement plans—401(k)s, IRAs, etc.—these plans provide far more help to rich families than to poor ones. The example I used in my book involved two (fictitious) students living in Ohio, one rich, the other middle-class.

The middle-class family could only afford to put $6,000 a year into their daughter’s 529—an investment fund that grows tax-free over the years and can be used to pay college tuition and qualified expenses when the child comes of age.

And that’s good. They needed that assistance. But for some reason the rules also allow the rich couple in my example to frontload their son’s 529 with up to five years’ worth of the maximum contribution all at once. So, they put $150,000 into a 529 that they set up for him as a newborn, do this again during his fifth year, and then, when he’s 10, bring the balance up to maximum the state allows, beyond which they can contribute no more. With so much cash in their fund from the start, you can imagine how quickly the interest accumulates.

Rich families gained yet another lucrative perk in late 2017, when Donald Trump signed his most notable first-term achievement, the Tax Cuts and Jobs Act. Beyond cutting taxes for wealthy folks and corporations, the TCJA stipulated that parents could now take up to $10,000 a year from their child’s 529 fund for private K–12 tuition. It’s worth noting that elite private high schools—where tuition typically runs between $40,000 to $60,000 a year—offer extensive college admissions mentoring, whereas a middle-class kid at an underfunded public school cannot use their 529 fund to cover expenses like SAT prep, college advising, or essay coaching that their school doesn’t offer in any meaningful way.

When I crunched the numbers, here’s what I found: Even assuming a conservative annual investment return of 5 percent for the students’ 529 funds, the rich family got some $117,000 in tax breaks, nearly seven times what the middle-class family received, not to mention that young Nigel (XTC fans will get the reference) had two and a half years of his private high school tuition covered by the taxpayers. He also ended up with a staggering $688,660 in his fund—likely enough to also cover the cost of law school or med school or business school should he choose any of those paths.

Small wonder that, at the time I reported these numbers, the “Ivy Plus” colleges were enrolling more students from the top-earning 1 percent families than from the bottom 50 percent. And that, compared with kids with families in the bottom 20 percent of the wealth spectrum, the children of 1 percenters were 77 times more likely to attend an Ivy Plus college. 

Vouchers only add insult to this injury. They can be marketed to sound like a good and equitable thing—a perk for all Americans—when in reality, without serious means-testing, they end up delivering the most benefit to families who need it the least. They are but one of the levers (here’s another) the Project 2025 people and Trump’s new administration may use to accelerate a plunder that has been in progress for decades, under the watch of both major parties.

One can almost hear it now: the “giant sucking sound” that the late Ross Perot used to talk about, except in this case it won’t be the sounds of US jobs going to Mexico. It will be the sound of the remaining wealth of the middle class getting sucked ever upward and into the coffers of our most privileged.

Trump’s Choice of Fracking CEO Chris Wright as Energy Secretary Heralds a Swamp Revival

17 November 2024 at 20:47

Americans of a certain age tend to throw around the term “Orwellian” willy-nilly. But the expression really suits in describing the behavior of our felonious, twice-impeached president-elect.

In George Orwell’s classic novel 1984, a dictatorship represented by the all-powerful “Big Brother” dictates the reality its citizens must adhere to, however topsy-turvy. Official slogans include “ignorance is strength,” “freedom is slavery,” and “war is peace.”

In this context, another slogan comes to mind: “Drain the swamp.”

Trump didn’t invent this populist expression, but he made it a centerpiece of his first campaign—a vow to rid DC of the toxic influence of special interest money, lobbyists, etc. Of course, politicians of both parties have long railed, often without much credibility, against special interests in Washington, and the US Supreme Court’s trashing of campaign finance safeguards has indeed created a cesspool of oligarchic influence in DC that crosses party lines.

It’s not the slogan itself that’s Orwellian. The Orwellian part is Trump’s evocation of the Swamp as he appoints foxes to guard the federal henhouse yet again. It’s a trolling of the libs, but a trolling with potentially dire consequences—and a signal that our government is for sale, more openly now than ever.

Exhibit A: Trump’s selection of Chris Wright, the CEO of a Denver fracking services company called Liberty Energy, for the position of energy secretary. Wright has no government experience and certainly no experience related to the nuclear weapons whose oversight is a critical part of DOE’s role.

Meanwhile, as typical of Trump’s cabinet picks to date, Wright’s other qualifications for the job are—to use Orwellian “Newspeak”—doubleplusungood.

It has escaped nobody’s notice that Trump’s top consideration in doling out key positions is loyalty to the boss. For attorney general, he chose Matt Gaetz, an inexperienced lawyer (but fierce loyalist) who has been accused of sexual impropriety—no charges were ever filed—and is notorious for allegedly foisting upon House colleagues videos of women he’s bedded. For his director of national intelligence, Trump picked Tulsi Gabbard, a former congresswoman my colleague Dan Friedman describes as a “uniquely bad choice.” Namely, she lacks intelligence experience and is so in sync with Vladimir Putin’s propaganda machine that her nomination was even celebrated on Russian television. To oversee White House communications, he picked a bomb-thrower who cut his teeth at UFC. For Health, he chose Robert Kennedy Jr., a man with no academic expertise in the areas he would oversee, and whose views and priorities are far from the mainstream, as my colleague David Corn has reported. (In this administration, apparently, ignorance is indeed strength.)

Wright, too, is a loyalist, but this pick feels distinctly transactional—Swamplike. Trump, after all, met multiple times during his campaign with top fossil-fuel CEOs, promising that, if they gave him money and helped him get elected, they would be richly rewarded. Wright, who denies the climate crisis and completely dismisses the US clean energy transition—which is weird, because it is well under way, despite the fossil fuel industry’s attempts to thwart it—is the industry’s reward. As was Trump’s choice for Interior, North Dakota Gov. Doug Burgham, who is apparently champing at the bit to expand drilling on federal land.

The New York Times reports that Wright’s wife, Liz, co-hosted a Trump fund-raiser in Montana, and that the couple donated a total of $350,000 to a Trump campaign committee. Most notably, Wright was the preferred choice of oil billionaire Harold Hamm, a major Trump donor and co-host of gatherings where candidate Trump wooed oil executives with what sounded suspiciously like a pay-to-play pitch.

Hamm has been playing the political money game for ages. As former Mother Jones reporter Josh Harkinson wrote in an early profile of the oilman, Hamm began supporting political causes in earnest starting in 2007, founding a group called the Domestic Energy Producers Alliance (slogan: “Good things flow from American oil”) and giving millions of dollars to candidates and right-wing causes supported by the billionaire industrialists Charles and David Koch—including nearly $1 million to support Mitt Romney’s unsuccessful 2012 bid for the White House.

In his rush to exploit North Dakota’s Bakken Shale, Harkinson wrote in 2012, Hamm’s company, Continental Resources, “has ridden roughshod over environmental laws….

Documents acquired by ProPublica show that it has spilled at least 200,000 gallons of oil in North Dakota since 2009, far more than any other company. That year, in one of its few formal citations against oil companies, the state’s health department fined Continental $428,500 for poisoning two creeks with thousands of gallons of brine and crude, but later reduced the amount to $35,000. Around the same time, during a thaw, four Continental waste pits overflowed, spilling a toxic soup onto the surrounding land. The Industrial Commission said it would fine the company $125,000, but it ultimately reduced the sum to less than $14,000, since “the wet conditions created circumstances that were unforeseen by Continental.”

Hamm stepped up for Trump in 2016, securing a VIP seat at the 2017 inauguration and exerting his influence during Trump’s first term. From the Washington Post:

In early 2020, he lobbied Trump to help persuade Saudi Arabia and Russia to end a price war that had driven down the price of oil below $0 a barrel, causing Hamm to lose $3 billion in just a few days.

The effort appeared to pay off. In April 2020, under pressure from Trump, members of OPEC, Russia and other oil-producing nations agreed to the largest production cuts ever negotiated—nearly 10 million barrels a day—as oil demand collapsed during the pandemic. 

This time around, Hamm, now Continental’s executive chairman, and his fellow oil and gas executives, would love to see some of those pesky environmental regulations go bye-bye, including the fines imposed under President Joe Biden’s Inflation Reduction Act on drillers who spew waste methane—a particularly potent greenhouse gas and primary component of so-called natural gas—into the atmosphere.

The purpose of regulating the fossil fuel industry is to ensure Americans clean air and water and at least some hope of escaping the worst ravages of a warming planet. Killing such regulations, and preventing new ones that cost his donors money, is a big part of what this second Trump administration—not to mention the US Supreme Court, with its decisions crippling the automony of federal agencies—is poised to deliver.

Call it Swamp 2.0.

Trump’s Choice of Fracking CEO Chris Wright as Energy Secretary Heralds a Swamp Revival

17 November 2024 at 20:47

Americans of a certain age tend to throw around the term “Orwellian” willy-nilly. But the expression really suits in describing the behavior of our felonious, twice-impeached president-elect.

In George Orwell’s classic novel 1984, a dictatorship represented by the all-powerful “Big Brother” dictates the reality its citizens must adhere to, however topsy-turvy. Official slogans include “ignorance is strength,” “freedom is slavery,” and “war is peace.”

In this context, another slogan comes to mind: “Drain the swamp.”

Trump didn’t invent this populist expression, but he made it a centerpiece of his first campaign—a vow to rid DC of the toxic influence of special interest money, lobbyists, etc. Of course, politicians of both parties have long railed, often without much credibility, against special interests in Washington, and the US Supreme Court’s trashing of campaign finance safeguards has indeed created a cesspool of oligarchic influence in DC that crosses party lines.

It’s not the slogan itself that’s Orwellian. The Orwellian part is Trump’s evocation of the Swamp as he appoints foxes to guard the federal henhouse yet again. It’s a trolling of the libs, but a trolling with potentially dire consequences—and a signal that our government is for sale, more openly now than ever.

Exhibit A: Trump’s selection of Chris Wright, the CEO of a Denver fracking services company called Liberty Energy, for the position of energy secretary. Wright has no government experience and certainly no experience related to the nuclear weapons whose oversight is a critical part of DOE’s role.

Meanwhile, as typical of Trump’s cabinet picks to date, Wright’s other qualifications for the job are—to use Orwellian “Newspeak”—doubleplusungood.

It has escaped nobody’s notice that Trump’s top consideration in doling out key positions is loyalty to the boss. For attorney general, he chose Matt Gaetz, an inexperienced lawyer (but fierce loyalist) who has been accused of sexual impropriety—no charges were ever filed—and is notorious for allegedly foisting upon House colleagues videos of women he’s bedded. For his director of national intelligence, Trump picked Tulsi Gabbard, a former congresswoman my colleague Dan Friedman describes as a “uniquely bad choice.” Namely, she lacks intelligence experience and is so in sync with Vladimir Putin’s propaganda machine that her nomination was even celebrated on Russian television. To oversee White House communications, he picked a bomb-thrower who cut his teeth at UFC. For Health, he chose Robert Kennedy Jr., a man with no academic expertise in the areas he would oversee, and whose views and priorities are far from the mainstream, as my colleague David Corn has reported. (In this administration, apparently, ignorance is indeed strength.)

Wright, too, is a loyalist, but this pick feels distinctly transactional—Swamplike. Trump, after all, met multiple times during his campaign with top fossil-fuel CEOs, promising that, if they gave him money and helped him get elected, they would be richly rewarded. Wright, who denies the climate crisis and completely dismisses the US clean energy transition—which is weird, because it is well under way, despite the fossil fuel industry’s attempts to thwart it—is the industry’s reward. As was Trump’s choice for Interior, North Dakota Gov. Doug Burgham, who is apparently champing at the bit to expand drilling on federal land.

The New York Times reports that Wright’s wife, Liz, co-hosted a Trump fund-raiser in Montana, and that the couple donated a total of $350,000 to a Trump campaign committee. Most notably, Wright was the preferred choice of oil billionaire Harold Hamm, a major Trump donor and co-host of gatherings where candidate Trump wooed oil executives with what sounded suspiciously like a pay-to-play pitch.

Hamm has been playing the political money game for ages. As former Mother Jones reporter Josh Harkinson wrote in an early profile of the oilman, Hamm began supporting political causes in earnest starting in 2007, founding a group called the Domestic Energy Producers Alliance (slogan: “Good things flow from American oil”) and giving millions of dollars to candidates and right-wing causes supported by the billionaire industrialists Charles and David Koch—including nearly $1 million to support Mitt Romney’s unsuccessful 2012 bid for the White House.

In his rush to exploit North Dakota’s Bakken Shale, Harkinson wrote in 2012, Hamm’s company, Continental Resources, “has ridden roughshod over environmental laws….

Documents acquired by ProPublica show that it has spilled at least 200,000 gallons of oil in North Dakota since 2009, far more than any other company. That year, in one of its few formal citations against oil companies, the state’s health department fined Continental $428,500 for poisoning two creeks with thousands of gallons of brine and crude, but later reduced the amount to $35,000. Around the same time, during a thaw, four Continental waste pits overflowed, spilling a toxic soup onto the surrounding land. The Industrial Commission said it would fine the company $125,000, but it ultimately reduced the sum to less than $14,000, since “the wet conditions created circumstances that were unforeseen by Continental.”

Hamm stepped up for Trump in 2016, securing a VIP seat at the 2017 inauguration and exerting his influence during Trump’s first term. From the Washington Post:

In early 2020, he lobbied Trump to help persuade Saudi Arabia and Russia to end a price war that had driven down the price of oil below $0 a barrel, causing Hamm to lose $3 billion in just a few days.

The effort appeared to pay off. In April 2020, under pressure from Trump, members of OPEC, Russia and other oil-producing nations agreed to the largest production cuts ever negotiated—nearly 10 million barrels a day—as oil demand collapsed during the pandemic. 

This time around, Hamm, now Continental’s executive chairman, and his fellow oil and gas executives, would love to see some of those pesky environmental regulations go bye-bye, including the fines imposed under President Joe Biden’s Inflation Reduction Act on drillers who spew waste methane—a particularly potent greenhouse gas and primary component of so-called natural gas—into the atmosphere.

The purpose of regulating the fossil fuel industry is to ensure Americans clean air and water and at least some hope of escaping the worst ravages of a warming planet. Killing such regulations, and preventing new ones that cost his donors money, is a big part of what this second Trump administration—not to mention the US Supreme Court, with its decisions crippling the automony of federal agencies—is poised to deliver.

Call it Swamp 2.0.

Why Did Trump Really Win? It’s Simple, Actually.

7 November 2024 at 18:05

In the coming days, you will hear every imaginable take on why Americans voted to put Donald Trump back in office.

Pundits will say toxic masculinity was to blame—and men feeling usurped by women. They’ll say it was the Christian nationalism movement. A surprising shift in Latino voting patterns. Sexism. Racism. Transphobia. Elon Musk. Crypto bros. “Theo bros.” Housing prices. Gaza! Propaganda from Fox News and Newsmax. Misinformation on X.

Perhaps it was the cowardice of powerful men like Jeff Bezos and Jamie Dimon. The anti-immigrant frenzy—Trump’s incessant false claims about vicious murderers and rapists and mental patients swarming across the border like locusts. Property crime. Inflation. Interest rates. Lingering malaise from the pandemic. The Democrats’ failure to sell their economic wins. Kamala Harris’ inability to distance herself from an unpopular president.

Or maybe a combination of all these things. Gender and Gaza clearly made a difference. Inflation is a notorious regime killer—it was high inflation that underpinned the rise of fascism in Europe in the last century—and rising wages haven’t kept pace. When the Dems say, “Look, inflation is back to normal,” well, the price of groceries sure ain’t.

But I’m talking here about something even more basic, something that undergirds so much of America’s discontent. The best explanation, after all, is often the simplest:

Wealth inequality.

There is little that leaves people as pissed off and frustrated as the feeling that no matter how hard they work, they can’t ever seem to get ahead. And this feeling has been slowly festering since the 1980s, when Ronald Reagan and his cadre of supply-side economists launched the first salvos in what would become the great fucking-over of the American middle and working classes.

Half of the families in the richest nation on the planet have no wealth at all. Is it any wonder some of them are willing to see the system burn?

The frustration was evident in something two very different women in two very different states told me on the very same day in 2022 for a story on how America spends hundreds of billions of dollars a year subsidizing retirement plans mostly for rich people: “I’m going to have to work until I die.”

The great fucking-over commenced with President Reagan’s gutting of unions and the wealth-friendly tax cuts he signed into law in 1981 and 1986. The trend continued with George W. Bush’s tax cuts in 2001 and 2003, and culminated with the Trump tax cuts of 2017—which, like all of those other Republican initiatives, failed to generate the degreee of growth and prosperity the supply-siders promised. They did, however, make the rich richer as wages stagnated and the middle class shriveled.

We talk a lot about income inequality, but wealth and income are different beasts. Income is what pays your bills. Wealth is your security—and in that regard, most American families are just not feeling sufficiently secure.

In January 1981, when Reagan took office, the households of the Middle 40—that’s the 50th to 90th wealth percentiles—held a collective 31.5 percent of the nation’s wealth. Fast-forward to January 2022: Their share of the pie had dwindled to 25.7 percent, even as the combined wealth of the richest 0.01 percent of households soared from less than 3 percent of the total to 11 percent.

Put another way, 18,300 US households—a tiny fraction—now control more than a tenth of the nation’s wealth.

And what of the bottom 50 percent? How have they fared over the past four decades or so? When Reagan came in, their average household wealth was a paltry $944. (All figures are in 2023 dollars.) Today they have even less—just $659 on average, according to projections from Real Time Inequality, a site based on data from the Berkeley economists Emmanuel Saez and Gabriel Zucman. All told, those 92.2 million households now hold less than 0.05 percent of the nation’s wealth—which rounds down to zero. In short, half of the people living in the richest nation on the planet have no wealth at all.

They’re not doing so hot income-wise, either. In September, the Congressional Budget Office reported that average income of the highest-earning 1 percent of taxpayers in 2021 was more than $3.1 million, or 42 times the average income of households in the bottom 90 percent, according to the nonprofit Americans for Tax Fairness. That’s the most skewed income distribution since CBO began reporting this data in 1979, the group noted. Back then, the disparity was only 12 to 1.

And the billionaires? I’m glad you asked. Based on Forbes data, from January 1, 2018, when the Trump cuts took effect, to April 1 of this year, the nation’s 806 billionaires saw a 57 percent gain in their collective wealth—after adjusting for the inflation that has plagued working families.

Team Biden has actually done a good bit for the middle class, and tried to do more, but nuance is a hard sell when you’re pitching to families worried about whether they can make it to the end of the month.

“It’s a class and inequality story for sure,” Richard Reeves, the author of 2017’s Dream Hoarders, concurred when I ran my premise by him. “But it’s also a gendered class story.” (His latest book, Of Boys and Men, examines how “the social and economic world of men has been turned upside down.”) And he’s right.

But are you starting to see why the broader electorate, race and gender notwithstanding, might be just a little fed up?

I suppose, having also written a book about wealth in America, that I know enough to assert that wealth insecurity is fundamental.

But why, you might ask, would someone living on the edge vote for Republicans, whose wage-suppressing, union-busting, benefit-denying policies have only tended to make the poor and the middle class more miserable?

And why in the name of Heaven would they vote for Trump, a billionaire born with a silver spoon in his mouth who has lied and cheated his way through life? A man whose latest tax-cut plans—though some, like eliminating taxes on tips and Social Security income, can sound progressive—will be deeply regressive, giving ever more to the rich and rationalizing cuts that will hurt the poor and middle class and accelerate global climate chaos.

The reason, my friends, may well be that those on the losing end of our thriving economy don’t see it as thriving. Historically, every election cycle, when reporters fan out to ask low-income voters in swing states what they are thinking, the message has been roughly the same: Presidential candidates, Democrats and Republicans, come around here every four years and talk their talk, and then they leave and forget about us when it comes to policy.

Now that’s not entirely fair, because the Biden administration actually has done a good bit for working people and families of color, and has proposed all sorts of measures to make the tax code fairer and reduce the wealth gap (both the racial one and the general one)—including increasing taxes and IRS enforcement for the super-rich. But one can only get so far with a split Senate, Joe Manchin and Kyrsten Sinema on your team, and a rival party that would just as soon throw you into a lake of fire as support your initiatives.

And nuance is a hard sell when you’re pitching yourself to families worried about whether they can make it to the end of the month. Roughly half of the population barely gets by, has no stocks, no wealth, no retirement savings, and can’t imagine how they’ll ever afford a house—certainly not at current interest rates. Meanwhile, the billionaire techno-dicks are strutting around, publicly flexing their wealth and power with Democrats and Republicans alike.

In courting Americans who, fairly or not, feel like the system has never done them a bit of good, Team Trump has the rhetorical advantage, because he says he’ll destroy that system—even if that really just means he’ll subvert it to further enrich his buddies. “Populist Revolt Against Elite’s Vision of the U.S.” was one of the New York Times’ headlines after the race was called on Wednesday morning. And that’s absolutely right.

Because when the Republicans say, “The economy is a nightmare under Biden and Harris, and illegal immigrants are committing heinous crimes and taking your jobs and we’re gonna cut your taxes,” and the Dems counter, “Hey, none of that is really true and we actually did a lot and we feel your pain and the economy is going gangbusters and Trump’s tariffs will destroy it,” well, whom do you think a person struggling from paycheck to paycheck might be more inclined to believe?

Sure, the economy is doing great—if you own stock. If you have a well-paying job and a retirement plan. If you are in the top fifth of the wealth and income spectrums.

If not, even if you rightly suspect that the Republicans won’t do a damn thing to improve your lot, you might just be tempted to say, “Fuck it.”

And watch the system burn.

Questionable Signature Matching Could Disqualify Thousands of Nevada Voters

6 November 2024 at 01:02

Nevada’s secretary of state, the New York Times’ Danny Hakim reports, is concerned about the large numbers of absentee ballots getting rejected in the state’s most populous counties because of signature mismatches—potentially enough ballots to change election results. From the Times:

More than 11,300 ballots were reported by the state Monday night as still needing signature curing in Clark County, home of Las Vegas, and more than 1,800 in Washoe County. In particularly close elections, a large number of ballots that need curing could determine the outcome.

States that make such comparisons typically match the voter’s signature on the absentee ballot envelope against signatures in the registrar’s voter database and DMV records. If a mismatch is declared, voters are given the opportunity to “cure” a rejected ballot—in Nevada this year, they have through November 12.

The numbers above were much higher than the ones reported in 2020 and 2022, and they are expected to grow as more ballots arrive and are processed, Hakim wrote. “It’s mostly the fact that young people don’t have signatures these days,” Secretary of State Francisco Aguilar told the Times. “And when they did register to vote through the automatic voter registration process, they signed a digital pad at DMV, and that became their license signature.”

This is a problem his office might have seen coming, and it’s just one reason that having minimally trained people matching ballot signatures is not a great practice. Or so people who do it for a living told me when I was reporting on the subject during a past election.

There’s a lot of natural variation in people’s script related to health issues, aging, injuries, changes in mental state, and the circumstances in which a signature is created—that DMV touch pad yields a very different signature than a ballpoint pen at a desk will, for example.

“A person could write their signature 100 different times and none of those will be exactly alike.” 

Sample size is also an issue. “You have to have a series of signatures,” Patricia Fisher, a professional documents examiner from Northern California, told me. “They need to be closer in time, and on similar types of documents, because one signature is not going to represent the full range of variations in someone’s handwriting.”

Fisher, who at the time had spent more than four decades verifying disputed signatures, said her No. 1 rule was as follows: You never compare just two signatures to determine a mismatch. And you certainly don’t call a mismatch by comparing a recent signature with one collected years earlier—as might be the case with older voters who originally registered to vote—or drive—some time ago. 

Six signatures is about the minimum for a solid comparison, Fisher told me. A trained examiner looks for “the commonalities, the permanent characteristics, the fleeting characteristics, the other characteristics like the fluency, the speed, the rhythm. There are dozens of variables,” she said.

I spoke, too, with Mark Songer, a former forensic documents examiner for the FBI. “To do any kind of meaningful examination, I like to get anywhere from 6 to 10 representative samples that are pretty contemporaneous with the signature itself,” he told me. “A person could write their signature 100 different times and none of those will be exactly alike, because we all have a range—the only way to establish that range is to have a sufficient number of samples.”

Signature disputes are becoming increasingly common as more people, starting during the pandemic, began voting absentee. And thanks to the ubiquity of touch-pad signatures and the fact that cursive is no longer taught in many schools, signatures have become ever less reliable as a quick verification of a person’s identity.

“If they use a driver’s license signature and you’re signing an electronic pad, that changes many of the characteristics, because it’s not natural,” Fisher told me. “So you’re comparing apples and oranges for such an important thing—to say, ‘No, your vote doesn’t count because your signature doesn’t look right.’”

For a lot of those Nevada voters, that may be the only thing on file: “We’re seeing high engagement and turnout amongst our youth,” Aguilar told CNN.

I reached out to Nevada officials to ask whether it was true, per a rumor on X, that elections workers were attempting to call those voters, as opposed to, say, texting them. Because, I have a couple of first-time voters in my own household, and those people do not pick up the phone—unless it’s dad, and sometimes not even then.

A Clark County elections spokesperson assured me that elections staffers do, in fact, text voters—and call and email and even send them notices in the mail, and then continue to do so right up to the deadline. Yet despite these efforts, she said, only about half of the rejected ballots got cured in previous elections. That could yet be significant, since Clark County still had 9,600 uncured ballots as of 4 p.m. PT. And Washoe County’s website listed 1,375 still in need of curing.

In any case, “the whole signature thing needs to be totally reevaluated,” Fisher told me. “There should not be all these untrained people—and you probably won’t get trained people there, because trained persons know you don’t compare one signature to another signature.”

Elon Musk Made More Money Yesterday Than He Gave Away in an Entire Year

26 October 2024 at 10:00

Elon Musk, far and away the richest man on the planet, is pouring tens of millions of dollars into efforts to get Donald Trump elected. In addition to his massively valuable promotion of Trump’s messaging on X—an in-kind donation if ever there was one—he reportedly gave $50 million to a group linked to immigrant-hater Stephen Miller, the architect of Trump’s morally abominable family separation policy. And then there’s the legally problematic $100 payments and $1 million lottery-style giveaways he’s been offering registered swing-state voters who sign a petition stating the following:

The First and Second Amendments guarantee freedom of speech and the right to bear arms. By signing below, I am pledging my support for the First and Second Amendments.

Weird, right? But Musk’s return on investment could be huge if Trump prevails and gives him even more power over the very government at whose teat Musk’s companies were nurtured to profitability—and on which they continue to depend. Also, let’s remember, tens of millions for this dude is the equivalent of pocket change for the rest of us. Here’s how much of Musk’s net worth $50 million represents:

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But what of his philanthropy, you ask? Didn’t Musk sign Bill Gates’ “Giving Pledge,” vowing to give at least half of his wealth to charity?

Yes, he signed up in 2012, for what it’s worth. But he’s running way behind on his giving. Consider that, in all of 2022, according to his foundation’s latest tax filing, he gave $160.5 million to charitable causes. Musk made more than that just yesterday—a great deal more.

Forbes Real Time Billionaires

That’s right, Musk’s net worth increased by $2.7 billion on Friday, according to Forbes’ Real-Time Billionaires, a database that serves as a reminder of just how far our supposedly egalitarian American experiment has devolved into plutocracy—or oligarchy, if you prefer—a situation that founder John Adams had hoped we would avoid (though he wasn’t terribly confident that we would).

Put another way, the amount Musk gave to charity in one year is this much of what he gained in a day:

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Six percent! Musk, by the way, is now roughly 100 times as rich as he was when he signed the pledge—a scenario Andrew Carnegie would consider grotesque. He’d best start acting more like MacKenzie Scott. Because, as a trusted advisor to industrialist John D. Rockefeller once warned his boss:

You must distribute it faster than it grows! If you do not, it will crush you, and your children, and your children’s children!

Now, Musk did contribute almost $2.3 billion in Tesla stock to his foundation in 2022, earning a fat tax break and locking in a huge, tax-free capital gain at the expense of America’s taxpayers. But our rules governing philanthropy are so toothless that he need only disburse a small fraction of these “charitable” assets. His foundation’s nest egg—roughly $7.2 billion at the end of 2022—generated $309 million in investment income that year, and the value of its unsold assets gained at least $373 million. Yet the amount it gave to charity was about the same as the previous year.

Federal law requires private foundations to spend down 5 percent of their assets annually (which includes overhead). Musk’s 2022 obligation was about $358 million—he didn’t give even half that. The government lets foundations average their disbursements over five years, but he’ll have to pick up his pace considerably.

Lest you were hoping the Musk Foundation’s tax documents would reveal sinister causes to which he may have donated, sorry to disappoint. His public giving is unobjectionable. What you have to watch out for, though, is the transfers to donor-advised funds. His foundation has, since 2018, moved more than $75 million over to a fund at Fidelity Charitable. For some unfathomable reason, the government lets such transfers count toward a foundation’s mandatory charitable payout.

Donor-advised funds are even more problematic than private foundations—although both cost taxpayers a fortune and are, as I explained in our must-read American Oligarchy issue, profoundly undemocratic. Not only are the creators not obligated to dole out a minimum of their assets each year, they are not obliged to reveal whom they are giving to. It’s dark money, in other words— convenient for anyone who wants to give secretly to odious nonprofits, including groups willing to subvert the democratic process if it will help put a certain candidate back in the White House.

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