Mar. 07



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Dem pickups: (None)
GOP pickups: FL IA MI OH PA WI

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Muslim Ban v2.0 Is Announced

Yesterday, President Donald Trump signed a new executive order banning citizens of six majority-Muslim countries from entering the U.S. This ban has been crafted more carefully than the sloppily drawn-up original Muslim ban in the hopes the courts will not strike it down. It differs from the original ban in a number of ways:

• Iraq is not on the list any more
• The order takes effect on March 16, giving travelers and immigration officials time to prepare
• Green card holders are not affected
• People with existing visas will be allowed to enter
• The State and Homeland Security Depts. can issue waivers on a case-by-case basis
• Refugees who claim religious persecution in their home country will not get special treatment

Clearly, this ban is legally much stronger than the first version, but in reality it is entirely for show and accomplishes almost nothing. What it actually does it prevent citizens of the six targeted countries from entering the U.S. unless they have a visa. But the order wasn't necessary to achieve that. No one who is not a citizen of the U.S., a green card holder, or a citizen of a country exempt from the visa requirements (most of Europe, for example) can enter the U.S. without a visa. That has always been the case. De facto, what the order does is instruct the embassies of the six targeted countries to stop issuing visas. If Trump had simply issued orders to the six embassies and told them to stop issuing visas, that probably would have been accepted by the courts, since no citizen of a foreign country has a legal right to get a U.S. visa. But the PR value of that approach would have been far less, and presidential adviser Steve Bannon greatly prefers dramatic actions. (V)

Is Trump Confusing the Alfa Bank Investigation with a Wiretap?

Last year, we noted that computer scientists had discovered a digital hotline between one of Donald Trump's servers and the Alfa Bank in Moscow. The connection was used only during business hours in New York or Moscow, suggesting it was used for human communication, not serving Web pages. Also, the amount of traffic on the connection seemed to correlate with the amount of political news: more news, more traffic; less news, less traffic. When the New York Times reported this news, the server was shut down, only to reopen four days later under a different DNS name. The Alfa Bank is owned by people close to Vladimir Putin.

The FBI certainly knew all about this after the Times published the story, and most likely long before it. If so, it is entirely possible that the FBI—on its own authority and without telling the White House—presented evidence of something fishy here to the FISA court and received a warrant to snoop. It is possible that Trump's claim that Barack Obama wiretapped him is due to his confusion between a White House-ordered wiretap of Trump or his campaign and an FBI investigation of a possible crime (e.g., bribery, money laundering, foreign intervention in a U.S. election). It is also possible that Trump simply got the idea from some alt-right Website and then tweeted about it, without even remembering that one of his servers had a hotline to the Alfa Bank.

The BBC had a detailed story on this matter in January, claiming that in April 2016 the CIA had a tape recording of a conversation about money from the Kremlin going into the U.S. presidential campaign, which would be a crime. According to the BBC, the CIA and five other agencies went to the FISA court for a warrant in June and it was rejected. A second request was rejected in July. A third one was granted on Oct. 15. This one could have led to the FBI spying on the Trump-Alfa Bank connection in the context of investigating a crime. As a general rule, FBI investigations are not reported to the White House, so if the BBC story is true, most likely President Obama didn't even know about it. In any event, an FBI investigation of secret communication between a Trump server and a Russian Bank is completely different from an Obama order to tap Trump's phone, as discussed by Snopes. In addition, FactCheck.org has a detailed discussion of the Alfa Bank story and the FISA court.

Yesterday, several Trump aides, including Kellyanne Conway and Sarah Huckabee Sanders, said that Trump continues to believe that Obama tapped his phones during the campaign. They presented no evidence of any kind, and didn't mention the FISA court or the Alfa Bank, but simply said that a president has information no one else has. They supported his request for a congressional investigation into Obama's alleged wiretapping of his phones. Rep. Jason Chaffetz (R-UT) said the House Intelligence Committee he chairs would look into it, but admitted, "thus far I have not seen anything directly that would support what the president has said." (V)

GOP Releases ACA Replacement

Late yesterday afternoon, House Republicans finally released their bill to replace the Affordable Care Act. The 66-page bill is similar to what we have been reporting the past week. It repeals the income-based subsidies in the ACA, the expansion of Medicaid, and the individual mandate for people to buy health insurance (an idea originally thought up by the conservative Heritage Foundation in response to HillaryCare in the 1990s). The core idea of the new proposal is a refundable tax credit of $2,000 to $4,000 for buying insurance. The credit increases with age but does not depend on income, except the credits are phased out for couples making more than $150,000 per year. Here is the text of the bill.

Now, it should be noted that this is really just a framework, and any portion of the American Health Care Act or TrumpCare/RyanCare (depending on which party you're a member of) could change. The refundability of the tax credit will be hugely contentious when the bill hits the House floor. For people who pay little or no tax, a refundable credit means the government sends them a check for the difference between their credit and the tax they paid. Freedom Caucus members see this as welfare and strongly oppose it. If the credit is not refundable, people who earn so little that they pay no federal tax (Mitt Romney's famous 47%) get nothing.

And "refundability" is just one word that could blow the whole thing up. Nonetheless, the bill gives a sense of the choices the GOP appears ready to make, which means we can assess who would likely come out ahead, and who behind, if some version of the bill becomes law:

Winners:

• Wealthy People: It's hardly a surprise that a GOP-sponsored plan benefits the well-to-do. The taxes that Obamacare imposed on the wealthy to pay for the program would be canceled. The Top 1% of income-earners (average salary: $774,000) would get $33,000 back annually. The Top 0.1% (average salary: $4 million) would get $197,000 back. On top of that, the wealthy would also be able to put more money in tax-free health savings accounts.
  
  
• Young People: Their policies would be cheaper by about $700, on average, and it would be easier for them to forgo insurance entirely if that is what they want to do.
  
  
• Healthy People Who Like to Gamble: The new plan would allow insurers to offer, and citizens to buy, so-called "skinny plans" that cover only limited services or conditions. This would allow healthy people to get their insurance more cheaply, a deal that will work out very well for them as long as they remain healthy. And, ideally, young.
  
  
• Insurance Companies: Executives' salaries would be completely tax deductible; under the ACA only the first $500,000 in compensation was deductible. Presumably, this nice little pork sandwich was tossed in to persuade insurers to go along with the plan, although they may be skittish, given how many customers they would lose, not to mention the risk of an insurance market crash (see below).
  
  

Losers:

• Poor People: Medicaid would be cut massively, as would be insurance subsidies (which will be replaced, as noted above, by less-generous tax credits). Even a preliminary examination of the numbers makes clear that millions of people who were insured under the ACA would be uninsured under the GOP plan. In fact, depending on how things play out, the number of people who could lose all or some of their coverage could easily reach tens of millions.
  
  
• Planned Parenthood: Under the plan, people would not be allowed to give Medicaid funds (what's left of them) or tax credits to any healthcare provider that does abortions. Ergo, poor people would not only be compelled to pay out of pocket to terminate a pregnancy, they would also be compelled to pony up for any other services Planned Parenthood provides, such as the 2.5 million breast cancer screenings the organization does each year. Reportedly, Donald Trump offered to protect Planned Parenthood's funding if they agreed to stop providing abortions, but inasmuch as that is one of their core services, and inasmuch as they are the only option available to women in many parts of the country, they promptly said, "Thanks, but no thanks."
  
  
• Lottery Winners: Yes, you read that right. For whatever reason, nearly 10% of the verbiage in the Republican plan is devoted to making certain that lottery winners cannot claim Medicaid benefits.
  
  
• Older People: Obamacare declared that insurance companies could charge older people no more than three times what they were charging younger people. The Republican plan changes the multiplier to five times. A person in their sixties can expect to pay approximately $3,200 a year more, while getting $2,750 less in government subsidies. Needless to say, there are plenty of people in their sixties that don't happen to have nearly $6,000 in extra room in their budgets.
  
  
• Sick People: Insurance companies would be compelled to cover pre-existing conditions under the Republican plan, but instead of being responsible for a certain percentage of costs, the insurers would instead be compelled to cover a government-mandated list of services. So, for example, they might be required to cover prescription drugs, but not, say, kidney dialysis. The upshot is that comprehensive plans would become unavailable to those who are ill, and in turn they would be left paying out of pocket or foregoing certain treatments.
  
  
• People Who Have Mental Illness and/or Substance Abuse Problems: Medicaid covers a large portion of the costs of treating the mentally ill and the drug-addicted; rolling the program back would mean less treatment for people in both groups.
  
  
• The Insurance Market: Even by culling millions of sick people from the rolls of the insured, and reducing insurance companies' responsibilities for the rest, the GOP plan still makes probable a scenario where millions of healthy people decide to go without insurance, leaving the insurers responsible for a disproportionate number of sick people. This is the much-feared "death spiral" that could collapse the insurance market. In theory, the books are to be balanced by charging a 30% penalty to anyone who buys insurance after going without, but few economists think this surcharge will actually bridge the gap. In fact, the likeliest impact of the 30% penalty will be to convince people to wait until they are really sick to sign up, thus aggravating the death spiral, as opposed to alleviating it.
  
  

It should be evident that this proposal is going to leave a lot of people unhappy. The Democrats were surely going to oppose any Obamacare replacement, but one that so obviously sticks it to women and the poor is just going to sharpen their already intense ire. Senate Minority Leader Chuck Schumer (D-NY) has already promised to do everything he can to derail the plan, and he's among the shrewdest parliamentarians on the Hill.

Many moderate Republicans, particularly from states that expanded Medicaid, are also unhappy. They realize, of course, that their states would either be stuck with massive budget shortfalls or with legions of uninsured and/or underinsured sick people, primarily so wealthy residents of other states can get a nice tax refund. Already, four moderate Republican Senators—Rob Portman (OH), Shelley Moore Capito (WV), Cory Gardner (CO), and Lisa Murkowski (AK)—have sent a letter to Senate Majority Leader Mitch McConnell (R-KY) advising him that they will not support any bill that cuts Medicaid. Presumably, McConnell won't even have to get out his calculator to know that 46 Democrats + 2 Independents + 4 Republicans equals a majority.

And while McConnell and Speaker Paul Ryan (R-WI) might huddle and find way to make at least two of those four Republicans happy, they're also getting hammered on their right flank, by Freedom Caucus members and others (like Rand Paul) who say that the new plan is just Obamacare Lite, and doesn't go far enough. They've made very clear that they don't care who supports the bill, even if it's President Trump. "It doesn't matter who comes to us and asks us to go along with this devastating program," said leading Freedom Caucuser Rep. Dave Brat (R-VA). "The answer will be no."

In short, then, the ink isn't even dry on the Obamacare replacement, and already Republican leadership is under enormous pressure to make the plan both more moderate and less so. Congressional Democrats are at the ready with pitchforks and torches. And this is all before the general public learns more about the plan; presumably women, elderly people, sick people, and others will have some choice thoughts to share with their representatives and senators in the next few weeks. So while the GOP has certainly taken a step towards getting rid of Obamacare, it's only a very tiny step, and the road ahead remains long and difficult, and quite possibly strewn with very large boulders. (Z & V)

Senate Judiciary Committee to Hold Hearings on Deputy Attorney General Today

Normally, Senate confirmation hearings for a deputy attorney general would not be a major event, but when the Senate Judiciary Committee questions Maryland U.S. Attorney Rod Rosenstein under oath today for the job, there could be fireworks. Under different circumstances, the experienced prosecutor would sail through the confirmation process with flying colors. Rosenstein has a bachelors degree summa cum laude in economics from Donald Trump's alma mater, the Wharton School at the University of Pennsylvania, and a J.D. from Harvard. He was appointed as a U.S. attorney by George W. Bush in 2005 and kept on the job by Barack Obama. He has a reputation as an skillful and independent prosecutor who has handled high-profile cases before. Under normal conditions, this is the best the Democrats could hope for in a deputy AG.

But these times aren't normal. Attorney General Jeff Sessions has recused himself from investigating whether he committed perjury before the Senate and whether Donald Trump has ties to Russia. This means that if Rosenstein is confirmed, investigating Sessions and Trump will fall to him. Rosenstein is probably aware that Sessions has the power to fire him and Trump has the power to fire Sessions if he is ordered to do so and refuses. Sen. Richard Blumenthal (D-CT) has said he would try to block Rosenstein's appointment unless he promises to hire an independent special prosecutor to examine the Sessions and Trump cases. Rosenstein is very unlikely to agree to this under oath. He is more likely to say "I haven't studied the case yet." Whether this will satisfy the Democrats on the committee remains to be seen since they know he will be under enormous pressure from Sessions and Trump not to hire a special prosecutor. (V)

Trump University Case May Not Be Closed Yet

Two weeks after his election, Donald Trump agreed to settle the lawsuits against Trump University by paying $25 million to the students who claimed the university was a fraud. In the settlement, the students would get back at least half their money. Now one woman, Sherri Simpson, has made a court filing saying that the terms are not acceptable to her and she is not willing to waive her right to a jury trial. She wants her full $35,000 tuition back plus punitive damages.

The judge in the case, Gonzalo Curiel, was attacked by Trump last year as biased due to his Mexican heritage, even though he was born and raised in Indiana. If Curiel allows Simpson to drop out of the case and sue Trump on her own, Trump would still have the option of buying her off, although if she asked for millions in punitive damages, he might not want to do that. In the worst case scenario, the case could go forward and a sitting president could be subpoenaed to testify in a fraud trial. Trump would no doubt try to argue that the president can't be sued, but a 9-0 ruling by the Supreme Court in the case where Paula Jones sued Bill Clinton declared that no one is above the law, not even the president. Paula Jones' attorney in that case was George Conway, the husband of Kellyanne Conway. (V)

Ben Carson is Back at it Again

It's been a while since HUD Secretary Ben Carson's serious case of foot-in-mouth disease has flared up. His confirmation hearings were fairly smooth, in large part because Senate Democrats had bigger fish to fry, and many of them figured that the good doctor would eventually ruin himself with self-inflicted wounds.

For those who were thinking that way, Monday was a very good day. Speaking to his new staff for the first time, Carson declared:

There were other immigrants who came in the bottom of slave ships, who worked even longer, even harder, for less, but they too had a dream that one day their sons, daughters, grandsons, granddaughters, great grandsons, great granddaughters might pursue prosperity and happiness in this land.

Carson, in other words, was attempting to compare the experience of immigrants who voluntarily came to America in search of opportunity with that of slaves whose arrival in American was not voluntary, and whose end game was not opportunity. The HUD staff gasped, HUD spokesman Brian Sullivan quickly tried to clean the remarks up, and Carson's Facebook page was promptly updated to explain what he really meant.

This is hardly the first time that Carson has made a careless comparison involving slavery. He once said that Obamacare was "the worst thing that has happened in this nation since slavery," and he also compared unborn fetuses to slaves during an anti-abortion diatribe. If one didn't know better, it would almost seem like he's auditioning to be the first black member of the alt-right. Well, maybe the second one, after David Clarke. (Z)

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