How Trump’s Executive Actions are Like Obama’s–And How They’re Not

by Benjamin Studebaker

President Trump is fed up with everyone and everything. For months now, congress has refused to implement his agenda. He’s mad as hell and he’s not going to take it anymore. Does that sound like someone you know? It should–late in his presidency, Barack Obama became exasperated with years of Republican obstruction. He turned to his lawyers. What could the administration do unilaterally that might be legal? They threw the kitchen sink at it, trying all sorts of things and leaving it to the courts to decide what would stick. Like Trump, Obama began taking more executive action late in the first year, though most of his biggest and boldest moves came in the second term:

The fact that Trump is frustrated and is looking for ways to weasel around institutional impediments shouldn’t surprise us. When the Supreme Court got in Franklin Roosevelt’s way, he tried to pack the court with sycophants:

What’s interesting is how transparently bad this executive action is.

There are two pieces of action I want to talk about today:

  1. Trump’s decision to “decertify” the Iran nuclear deal.
  2. Trump’s decision to terminate Obamacare’s CSRs (Cost Sharing Reductions).

Iran Decertification

The Iran nuclear deal isn’t a treaty. It’s not a treaty in large part because the US constitution requires the senate to sign-off on treaties, and Obama didn’t want to have to bother with that. The chief weakness of everything Obama did by executive action is that Trump can easily undo those things. But Trump doesn’t want to get the blame for straightforwardly undoing the Iran deal. At this point, enough people on the hill have gotten in his ear about it that he appears to lack confidence–either substantively or politically–that abandoning the deal is the right move. So instead Trump has “decertified,” it, leaving congress to decide whether to impose new sanctions on Iran (which would terminate the deal) or pass legislation which removes the requirement that the president certify it every 90 days. This means that if congress leaves the deal in place and Iran does violate the deal, Trump won’t be in the position of having repeatedly certified the deal and can instead try to blame congress for keeping the deal after he decertified it. It’s essentially an act of political buck-passing. It creates confusion for our allies and it undermines Iran’s ability to trust us as negotiating partners (which is so important if the Iranians are to continue to elect more conciliatory governments). But it might benefit Trump’s domestic political position, and that seems to be all he cares about these days.

Terminating the CSRs

Obamacare is a three legged stool. Obama wanted to make insurance companies cover people with pre-existing conditions, but this made it too difficult for the insurance companies to make a profit. So Obama created the individual mandate to force young and healthy people to buy insurance. But some of those people couldn’t afford to buy insurance, so Obama created subsidies to help people whose incomes were too high to qualify for Medicaid but too low to afford market rate insurance policies. If you get rid of the individual mandate or the subsidies, insurance companies will massively raise rates to accommodate people with pre-existing conditions, and the whole system will rip itself to shreds in a death spiral.

Trump wants to weaken the subsidy leg of the stool by terminating CSRs. To qualify for a CSR, you have to buy a silver plan, have an income between 100% and 250% of the federal poverty level, and be ineligible for Medicaid or employment-based coverage. The CBO projects that without CSRs, insurance companies will raise premiums on silver plans by 20% by 2018. Initially, the CBO expects that some insurance companies would pull out of the marketplace out of anxiety and uncertainty about the effects of the policy, leaving some areas without coverage. That would leave about 1 million additional Americans without coverage in 2018. By 2020, those insurers would re-enter the marketplace and the 1 million would be picked back up. Those in between 100% and 200% of the federal poverty level would take advantage of tax credits that Trump has not touched, but because of the increase in premiums for silver plans, they’d be pushed into buying the crummier bronze plans. Those with incomes between 200% and 400% of the federal poverty level would likely stay on silver plans, but the increase in premiums would mean we’d end up having to give them significantly larger tax credits than we presently do. There are a lot of people who qualify for tax credits but not CSRs. So ironically, in his effort to lower the cost of Obamacare’s CSRs, Trump ends up increasing the cost of the tax credits by an even larger amount, increasing the deficit by $194 billion over a ten year period ($19.4 billion per year).

So in the short-run, the policy creates anxiety for a million people, and in the long-run, the policy wastes money and forces more low income Americans onto worse plans. This doesn’t seem to benefit anyone. The insurance companies won’t like losing the CSR money, the 1 million+ Americans who will first lose coverage and then have to accept worse plans won’t like that, and the rest of us won’t like throwing away nearly $20 billion a year (more than enough to double NASA’s budget).

Who does like this? People who hate Obamacare and want to see Trump wreck it, even if doing so makes lots of people worse off and no one better off. It’s a chaos policy and it caters to the schadenfreude of a group of ignorant or uncaring people who take pleasure in seeing Trump upset and harm others or don’t understand the policy well enough to see that this is what it does. Unfortunately for us, sadists and ignoramuses are a crucial component of the Trump base, and because Trump won the election with only 63 million votes (about 26% of the voting age population), he doesn’t really have to please the rest of us. To appear successful to these people he just has to periodically slaughter liberal sacred cows and appear in public covered in their blood. Well, mission accomplished.

You can say what you want about Obama and Roosevelt’s executive reaches, but they were trying to circumvent institutional blocks for the good of the people as they understood it. Trump is doing it to win elections and spite his enemies, and damn the public good if it gets in his way.