Fall Out from the Health-Care Debacle May Hurt Republicans Next Year

The failure of the Republicans, who now control the entire government, to fulfill their 7-year-old promise to repeal the ACA may come back to bite them in next year's midterms. Tim Phillips, president of the Koch brothers' Americans for Prosperity, put it like this: "This is an epic failure by congressional Republicans." Republican strategists now agree that the pressure to pass tax reform in September will be immense. If that fails (see below), the feeling is that there will be hell to pay next year.

The Republicans' current woes are overlaid over the historical background of midterms almost always being a referendum on the president. Nearly all the time, the president's party gets whacked because his supporters are disappointed that the president didn't accomplish all the things he promised. If Donald Trump fails on repealing the ACA, fails on tax reform, doesn't build a wall on the Mexican border, and can't pass an infrastructure plan, it could be bloody. Here are the past 20 midterms, to give some historical background. The bars show how many seats the president's party lost in the House.

The president's party nearly always get hit hard in the Senate as well, but next year the Republicans have such a favorable map, with only eight Republicans up for reelection, six of whom are in deep red states like Wyoming and Mississippi, that they will probably escape without losing many seats, and they might even gain a few.

The problem facing the GOP is that party activists and professionals are fuming at having blown a golden opportunity to fulfill a long-standing promise, while ordinary voters are going to wonder if Republican promises mean anything at all. Some of the conservative activists are looking for ways to punish Republicans who dragged their feet all year on repeal, even if they voted for the final bill. One of their targets is Sen. Dean Heller (R-NV), who is the weakest Republican senator up in 2018. If he is primaried, that simply increases the chances that the Democrats pick up the seat. Sens. Lisa Murkowski (R-AK) and Susan Collins (R-ME) can't be primaried next year because they are not up until 2022 and 2020, respectively. However, Collins may run for governor of Maine in 2018, so conservatives could primary her just to punish her, even though that would increase the chances of getting a Democratic governor in the Pine Tree state.

Republican lawmakers who dutifully voted for repeal at every opportunity don't have to worry about being primaried, but do have to worry about explaining to their base why they were unable to deliver the goods, despite controlling the whole government. The danger for them is not having their base suddenly turn blue, but having them decide not to bother voting in 2018. (V)

Tax Breaks May Break Tax Reform

The federal tax code is a mess. There are special breaks for home owners, ministers, veterans, blind people, gamblers, sick people, shipwreck survivors, bike riders, K-12 teachers, job seekers, Native American whaling boat captains, astronauts' widows, breast pump owners, and a lot more. One list of the tax breaks for various special interests runs 1,100 pages. If the Republicans want to make permanent changes to the tax code using the budget reconciliation process, the changes have to revenue neutral over 10 years, so they are going to have to axe many of these, especially since the border adjustment tax is now officially dead.

The problem, of course, is that most people don't care about say, special deals for whaling ship captains, but they care very much about a few that affect them and will go to the mat to defend them. To make it worse, many of the tax breaks are regional in nature. One big one is the deduction for state taxes. This hits hard in high-tax blue states. Heaven help the 9 New York or 14 California Republican representatives if they vote to eliminate the deduction for state and local taxes. Tax breaks like this pit state against state, rather than Democrat against Republican.

Also, if the tax cuts go almost exclusively to the top earners, the Republicans will have an image problem. If they also cut taxes for middle-income people, the project gets more expensive. Furthermore, whether the lion's share of the cuts go to corporations or individuals is not going to be an easy battle. In short, getting tax reform done this year isn't going to be easy. And next year is an election year, when nothing ever gets done, so it is now or never, with grave consequences for November 2018. (V)

Police Unhappy With Trump

There are a lot of gangs in America, from the Crips and the Mexican Mafia to the Vagos Motorcycle Club and the Trinitarios. However, there is one gang that has become an obsession for Donald Trump: Mara Salvatrucha, aka MS-13. He talks about them constantly, and tweets about them regularly. In fact, he's tweeted more about MS-13 as president than he has about the AHCA, Michael Flynn, Medicare, Robert Mueller, or ISIS.

On Friday, Trump continued on the MS-13 theme, delivering a speech about the gang to supporters and to members of the law enforcement community in Long Island, New York. And as part of that address, he enthusiastically endorsed police brutality, and declared that, "When you see these thugs thrown into the back of a paddy wagon. You see them thrown in, rough. I said, 'Please don't be too nice.'"

The police in attendance appeared to find the remarks delightful. Those who were not in attendance, not so much. Across the nation, police departments responded to the President's remarks with disappointment and/or anger. For example, officials with the Suffolk County PD, responsible for law enforcement in the area where Trump was speaking, issued a statement that reads, "The Suffolk County Police Department has strict rules and procedures relating to the handling of prisoners, and violations of those rules and procedures are treated extremely seriously." The Boston, Los Angeles, New York, and Chicago police departments, among many others, issued similar statements.

A police officer who is deciding whom they should listen to would be wise to err on the side of listening to their departmental superiors and not the President. "Donald Trump told me to do it!" is no defense before a review board or a judge. Trump, for his part, has offered no indication that he cares about the negative response. It's remarkable that, six months in, he continues to find new ways to shock and outrage. And as Trump surrounds himself with sycophants and yes-men, while eliminating those who push back against him, there's every chance things are going to get even worse. (Z)

Trump Unleashed?

Speaking of Donald Trump's downward spiral, Saturday was his first full day free of interference from former RNC staffers (aka grownups). And the early returns suggest that he's delighted to be free of Reince Priebus's shackles, because Trump fired off a shotgun blast of a tweetstorm yesterday.

There was, first of all, a fair bit of bragging. For example:

U.S. Stock Market up almost 20% since Election!

— Donald J. Trump (@realDonaldTrump) July 29, 2017

I love reading about all of the "geniuses" who were so instrumental in my election success. Problem is, most don't exist. #Fake News! MAGA

— Donald J. Trump (@realDonaldTrump) July 29, 2017

Trump is also upset about the news that North Korea may have a missile capable of reaching the United States (and that the Russians are likely helping them). So, Trump weighed in on that situation:

I am very disappointed in China. Our foolish past leaders have allowed them to make hundreds of billions of dollars a year in trade, yet...

— Donald J. Trump (@realDonaldTrump) July 29, 2017

...they do NOTHING for us with North Korea, just talk. We will no longer allow this to continue. China could easily solve this problem!

— Donald J. Trump (@realDonaldTrump) July 29, 2017

There was a fair bit of complaining about the health care situation, including these:

Republicans in the Senate will NEVER win if they don't go to a 51 vote majority NOW. They look like fools and are just wasting time......

— Donald J. Trump (@realDonaldTrump) July 29, 2017

Unless the Republican Senators are total quitters, Repeal & Replace is not dead! Demand another vote before voting on any other bill!

— Donald J. Trump (@realDonaldTrump) July 29, 2017

Of course, whatever the subject, the pattern is clear. Positive developments are completely due to Trump, while failures are due to anyone and everyone besides Trump. In any event, it's pretty clear that the President is enjoying the absence of pushback as he leads (and tweets) solely by instinct. Whether China is enjoying it, by contrast, is another matter. (Z)

McMaster May Be a Short Timer, Too

Michael Flynn was forced to resign. Robert Harward didn't want the job. That makes current NSA Herbert McMaster the third person to be chosen for his job in just over six months. The tally may soon reach four (or more), as McMaster is now regretting that he ever accepted the appointment.

The sources of McMaster's frustration are numerous. He's isolated from most other White House staffers. He's tired of watching his back, particularly against Steve Bannon, who is working hard to undermine McMaster. As a grown-up, he finds himself at odds with Donald Trump on a regular basis. In particular, Trump's delay in signing off on a McMaster-designed troop surge in Afghanistan, despite saying he would defer to military leadership, has rankled. The upshot is that McMaster has taken a lead over Jeff Sessions in the race to be the next White House official to go. (Z)

Sandoval May Campaign against Heller

Gov. Brian Sandoval (R-NV) may be the downfall of Sen. Dean Heller (R-NV) next year. Not that he wants to be, but he may be anyway, against his will. Sandoval was strongly against all of the Republicans' health-care bills and there is plenty of footage in which he strongly expresses this. Heller voted for the final bill. The attack ads write themselves, with clips of Sandoval urging the Senate not to pass the bills because they would be bad for the people of Nevada, followed by clips of Heller saying he will vote for them (or clips of him actually doing so). In fact, the ads against Heller have already started. Making Heller's life even tougher is that the Democrats have already settled on a candidate, Rep. Jacky Rosen (D-NV), who represents the Las Vegas suburb of Henderson. After the final health-care vote, she said about Heller: "No politician from our state has ever been more dishonest about their intentions, more misleading about their position or more disingenuous to their constituents." And this is only the start. It's going to get much nastier. Rosen, as a House member, has the added advantage of having actually voted on one of the bills (the AHCA) and she voted "no," like all the other House Democrats. Expect: "I voted to save your health care and he voted to kill it" to be a big campaign theme for her.

Sen. Jeff Flake (R-AZ) has almost as much of a problem as Heller, save one thing. The Democrats don't have a candidate yet, and unless they pick one of the four Democratic representatives, won't have the advantage of their candidate being able to say: "I voted to keep your health care and Jeff Flake voted to take it away." It is also possible (even probable), that there will be two Senate races in Arizona in 2018, Flake's and a special election to fill the seat of Sen. John McCain (R), should he die or resign in the next year. If that happens, the appointed senator won't be burdened with a vote in the Senate, and might even be able to capitalize on McCain's "no" vote ("Like the brave Sen. McCain, my only priority will be what is best for the people of Arizona."). (V)

How Did Mooch Make His Money?

It is no secret that Donald Trump has no respect for anyone unless he is either rich or a high-ranking military officer. Much of his interest in his new communications director, Anthony "Mooch" Scaramucci, is due to the fact that he is rich. This raises the interesting question of how Mooch made his money. Treasury Secretary Steve Mnuchin made his fortune in investment banking, Hollywood films, and subprime mortgages. Commerce Secretary Wilbur Ross bought up distressed companies and squeezed them. Education Secretary Betsy DeVos got her billions the old fashioned way: She married a man who inherited a fortune from his father. What about Mooch?

Mooch made his money in an unusual way. Hedge funds invest in a wide variety of assets and use many financial techniques to try to make money when their assets go up but also when their assets go down (e.g., selling short)—that is, by hedging their bets. The problem with hedge funds from the point of view of an investor is that they won't take you as a customer unless you are very, very rich. So what's a person with only, say, $1 million to invest to do? That's the problem Mooch solved. He created a company that invested in hedge funds but he didn't reject clients who were merely garden-variety rich. By investing in his company, Skybridge, a merely rich investor could get some of the hedge fund action despite the fact that the actual hedge funds would look down their noses at him if they showed up. Skybridge was reasonably successful with this strategy, and Mooch reportedly sold his share in the company for $100 million.

One clever thing Mooch did in the way of PR was run an annual conference in Las Vegas where he paid top-flight speakers very well to give a talk there. He picked Democrats, Republicans, media personalities, and other famous people. These conferences gave him a veneer of respectability. After all, anyone who could get both Al Gore and Sarah Palin to show up must be pretty good. While $100 million is small potatoes in TrumpWorld, Mooch's brash personality and TV-ready looks sealed the deal. (V)

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---The Votemaster and Zenger