by | ARTICLES, ECONOMY, GOVERNMENT, OBAMA, OBAMACARE
From the LATimes:
A proposal to adopt a single-payer healthcare system for California took an initial step forward Thursday when the state Senate approved a bare-bones bill that lacks a method for paying the $400-billion cost of the plan.
The proposal was made by legislators led by Sen. Ricardo Lara (D-Bell Gardens) at the same time President Trump and Republican members of Congress are working to repeal and replace the federal Affordable Care Act.
The bill, which now goes to the state Assembly for consideration, will have to be further developed, Lara conceded, adding he hopes to reach a consensus on a way to pay for it.
Republican senators opposed the bill as a threat to the state’s finances.
“We don’t have the money to pay for it,” Sen. Tom Berryhill (R-Modesto) said. “If we cut every single program and expense from the state budget and redirected that money to this bill, SB 562, we wouldn’t even cover half of the $400-billion price tag.” (emphasis added)
Lara’s bill would provide a Medicare-for-all-type system that he believed would guarantee health coverage for all Californians without the out-of-pocket costs. Under a single-payer plan, the government replaces private insurance companies, paying doctors and hospitals for healthcare.
The California Nurses Assn., which sponsored the bill, released a fiscal analysis this week that proposed raising the state sales and business receipts taxes by 2.3% to raise $106 billion of the annual cost, with the rest proposed to come from state and federal funding already going to Medicare and Medicaid services.
Even if the bill is approved, it has to go to Gov. Jerry Brown, who has been skeptical, and then voters would have to exempt it from spending limits and budget formulas in the state Constitution. In addition, the state would have to get federal approval to repurpose existing funds for Medicare and Medicaid.”
The state of California is already facing severe financial difficulties. To try to actually implement something like this, at so staggering a cost, would be reckless for the taxpayers of California. Hopefully, commonsense will prevail.
by | ARTICLES, BLOG, ECONOMY, GOVERNMENT, OBAMACARE
With the narrow passage of the GOP Healthcare bill this week, Michael Cannon wrote his critique of the legislation (GOP Healthcare Bill Is Not Repeal — It Is ObamaCare-lite, or Worse, May 4, 2017). Cannon is considered one of the foremost experts on Obamacare over the last 7 years. His displeasure with the bill focuses on problem of “community rating” inherent in Obamacare — which remains in the ACHA. Here are his principle concerns:
“House Republicans went behind closed doors and emerged with a bill that does not repeal the core provisions of ObamaCare, and therefore cannot begin to repair the damage those provisions are causing.
ObamaCare’s core provisions are the “community rating” price controls and other regulations that (supposedly) end discrimination against patients with preexisting conditions.
How badly do these government price controls fail at that task?
Community rating is the reason former president Bill Clinton called ObamaCare “the craziest thing in the world” where Americans “wind up with their premiums doubled and their coverage cut in half.”
Community rating is why women age 55 to 64 have seen the highest premium increases under ObamaCare. It is the principal reason ObamaCare has caused overall premiums to double in just four years.
Community rating literally penalizes quality coverage for the sick, to the point where Harvard economists found patients with multiple sclerosis and other high-cost conditions “cannot be adequately insured” under ObamaCare. It is the driving force behind ObamaCare’s narrow networks and the exclusion of premier hospitals.
Worst of all, community rating is taking health care away from the sick. Community rating has driven every last insurer from the Exchange in east Tennessee, leaving 43,000 Americans – including many with expensive conditions – with no coverage after December. It may soon do the same in Iowa, and another 1,000 counties that have only one insurer remaining in the Exchange.
Why? Because community rating forces insurance companies to cover the sick below cost, which simply isn’t sustainable. The only solution ObamaCare supporters offer is to keep throwing more money at the problem – which also isn’t sustainable.
ObamaCare is community rating. The AHCA does not repeal community rating. Therefore, the AHCA does not repeal ObamaCare. In fact, Republicans are modifying ObamaCare’s community-rating price controls and other regulations in ways that will accelerate ObamaCare’s race to the bottom.”
There is much more to Cannon’s piece than this, and it’s worth it to read in its entirety. The original piece was published on The Hill (Online) and reprinted via the CATO Institute.
For a different perspective on the ACHA, see my piece noting the list of Obamacare taxes abolished with this legislation.
by | ARTICLES, BLOG, ECONOMY, GOVERNMENT, POLITICS, TAXES, TRUMP
From the WSJ: “With Wednesday’s proposals—which include a 15% tax rate for all businesses, lower individual rates, a bigger standard deduction to benefit middle-income households and the repeal of the estate and alternative minimum taxes—Mr. Trump hopes to speed up economic growth and make his mark as a historic tax cutter.
What the administration delivered Wednesday largely hews to tax-cut proposals Mr. Trump made during his campaign last year, but includes some crucial changes. Most notably, he is proposing to repeal a provision of the tax code that allows individuals to deduct the state and local taxes they pay from their reportable income. That will hurt residents of high-tax states such as Mr. Trump’s home state of New York, New Jersey and California, and is already spurring objections from Republican lawmakers in those largely Democratic states.
Such a repeal has the potential to raise more than $1 trillion over a decade, which would help fund the reduction in rates and get the tax plan through Congress, which is focused on deficits in part because of budget rules.”
“Unless Mr. Trump can attract votes from Democrats—which appears unlikely—the plan must comply with legislative procedures that allow for a party-line vote in the Senate, where Republicans have 52 seats out of 100.
The key to those procedures: Any tax plan can’t increase budget deficits beyond a 10-year period. The Committee for a Responsible Federal Budget said Wednesday that the plan would cost about $5.5 trillion in lost revenue over a decade. Those limitations could lead Republicans to make some or all of the tax cuts temporary to limit the long-run fiscal effect.
Mr. Trump’s team intends to argue that his tax cuts will spur economic growth and increase revenue, which would help avert increased deficits. Lawmakers and Congress’s nonpartisan tax policy scorekeepers—the Joint Committee on Taxation—need to agree for the plan to proceed. Independent experts cautioned that the administration’s growth assumptions appear optimistic.”
As more details of this plan emerge, we can assess its merits and pitfalls.
by | ARTICLES, BLOG, ECONOMY, GOVERNMENT, OBAMACARE, POLITICS, TAXES, TRUMP
I’m sick and tired of reading over and over again in places both liberal and conservative that Trump’s (as well as the Republican’s) proposed tax reforms are going to give the lion’s share of the cuts to the top 1%. The entire concept is totally distorted.
In fact, nobody has been talking about the series of tax changes that occurred when Obama and his Democrat cronies passed the Obamacare increases. These raised the Bush tax rates on only the wealthiest from 36% – 39.6 % and then again raised the tax rates on the wealthiest by adding a net investment income tax (NIIT), otherwise known as the “Obamacare tax,” which covered all investment income. The increase also raised capital gains on the wealthiest ones from 15% – 20%. When the 3.8% tax would get tacked on, capital gains rates effectively went from 15%- 23.8% — an increase of about 55%. That’s ridiculous!
Those ludicrous tax increases were principally responsible — along with the hemorrhage of regulations coming out of the Obama administration — for the horrific economic performance since Obama took office. The first step of any meaningful tax reform should be to reverse those Obamacare tax increases, which went 100% to the higher income individuals, and 0% to the middle class and lower income. The reversal of those insane tax increases should in no way be considered a tax cut. It is just restoring what was in fact an egregious toxin on our entire economy.
by | ARTICLES, ECONOMY, FREEDOM, GOVERNMENT, POLITICS, TAXES, TRUMP
The clearest example yet of Media abuse of Donald Trump has surfaced in connection with the recently released excerpts from Pres. Trump’s 2005 federal income tax return. The return shows clearly and unambiguously that he paid an effective federal tax rate of 78.2%. Yet the press twisted the truth- outright lied – in reporting a tax rate of 25%, or even less.
It is outrageous that the media is distorting the true tax rate that Donald Trump paid for the 2005 tax year. His 1040 that was released last week showed that he paid an effective tax rate of 78.2% — not the 25% that some outlets are reporting (or the 5.3% figure that even other uninformed pundits have tried to peddle).
Let’s break this down: Trump’s Adjusted Gross Income (AGI) was reported to be $48.6 million. The AGI is an important number for all taxpayers, because it is derived from a taxpayer’s gross income net of allowable, rational, and legal adjustments to it. Every taxpayer reports an AGI and is the base figure from which taxable income amounts are calculated. Trump’s tax was $38million. Trump’s tax rate was effectively 78.2%: 38 million in federal taxes/48.6 million AGI = 78.2% tax rate.
In a clear attempt to avoid admitting that Trump paid such a high rate of tax, the pundits began manipulating and distorting the data. AGI was raised from $48.6 million to $152 million by arbitrarily – and inappropriately – adding back what appeared to be a $103 million perfectly legal carryover loss. Carryover loss provisions are necessary in that prevent people from paying taxes on profits that just restore losses that were actually incurred in a prior year.
Because Trump is a high income earner, he must calculate his taxes both by the regular tax rate and the Alternative Minimum Tax (AMT). The AMT is a parallel tax rate used by the IRS that disallows some or all legal deductions and credits that other taxpayers enjoy to ensure that such taxpayers pay “at least their fair share.” The AMT has been used for decades to collect more taxes by denying or minimizing income-reducing tax benefits that lower income-earners use. In Trump’s case, most of his deductions, including the carryover loss, were disallowed or reduced, resulting in his federal tax liability ultimately rising to $38 million.
That means on Trump’s AGI of $48.6 million, he paid $38 million in federal taxes.
It is always standard procedure to calculate one’s tax rate using the AGI as the starting point — not the gross income amount. No other politician (Romney, Obama, Clinton, etc.) has had tax rates calculated and published with other than their adjusted gross income as the base. Applying the standard used by the media for all other important figures, Trump’s tax rate was effectively 78.2%: 38 million in federal taxes/48.6 million AGI = 78.2% tax rate.
Continuing to focus on the $153 million as the starting point serves the media two purposes: 1) it makes Trump sound like a greedy capitalist who earned gobs of money and is out-of-touch with the average American; and 2) they want to highlight his $103 carryover loss as something that is unethical or wrong or a “sneaky loophole” that Trump should not have been allowed to do — even though virtually every business and investor makes uses of such tax provisions. Carryover losses are a necessary tax tool that is used as a means to continue to encourage investors who put up capital for long-term investments in the economy and deal with the ebb and flow of the market.
The real story here is this glaring example of the AMT creating yet another unfair and irrational burden on a taxpayer by siphoning extra tax revenue through the elimination and reduction of basic tax law provisions that other taxpayers enjoy. A 78.2% tax rate is extremely outrageous — about as outrageous as the media who ignores basic tax calculations in an effort to sensationalize and demonize Trump.
by | ARTICLES, BLOG, FREEDOM, GOVERNMENT
Daniel Henninger was spot on in his assessment of the Middlebury College in his article, “McCarthyism at Middlebury” in the Wall Street Journal. Students shockingly felt justified to attack Charles Murray, a conservative pundit, because he had a viewpoint that differed from their own. Henninger puts this incident into perspective; this display of recklessness might actually be a turning point in the madness that has infected liberals and college campuses under the guise of “correct speech.
We’ve seen this for several years now; in 2015, two Yale professors had to resign after encouraging adult students to stand up for the right to wear whatever Halloween costume he or she chose, even if it might offend another person; it was a response to a Yale policy trying to police Halloween costumes on campus. As Henninger pointed out in his article, “Numerous professors, including those at Yale’s top-rated law school, contacted [them] personally to say that it was too risky to speak their minds.” When even the faculty in higher education are afraid to speak their minds, we have a problem.
Even before that, in Spring 2013, a group of Swarthmore students outrageously violated the rights of the campus community. After being allowed to attend a board of trustees meeting to express their views, they then disrupted the meeting, preventing the duly elected Board from responding to their points and continuing the meeting. In their words, it was an effort “to smash ‘hegemonic power structures’ and silence other students”. Yet no action was taken against any of the students or faculty who participated in the abusive, illegal actions.
It is outrageous that the Middlebury incident occurred, but at this point, not entirely surprising anymore. What’s more, faculty and students at Middlebury participated in agitating the community before Charles Murray even arrived; they circulated a petition saying that Murray shouldn’t even be allowed to speak because his voice didn’t represent all people. In one sense, you can somewhat excuse the students who signed it, because they don’t always know better. But faculty? How can faculty at an institute of higher education believe and advocate that a different point of view is wrong in a college/university setting? What have we come to?
Middlebury can indeed serve as a turning point — but only if action is taken. These reckless participants need to be called out and reprimanded, or else such incidents will continue to occur.
by | ARTICLES, FED, GOVERNMENT, HEALTHCARE, IRS, LAW, OBAMA, OBAMACARE, TAXES
In response to Donald Trump’s Executive Order last week, the IRS altered its rules about tax returns and Obamacare’s “shared responsibility” penalty. This is one of the methods of paying for Obamacare, and if collection of the penalty is not being strictly enforced, it will contribute further to the already unstable financial state Obamacare is in.
From Reason.com:
How much difference does a single line on a tax form make? For Obamacare’s individual mandate, the answer might be quite a lot.
Following President Donald Trump’s executive order instructing agencies to provide relief from the health law, the Internal Revenue Service appears to be taking a more lax approach to the coverage requirement.
The health law’s individual mandate requires everyone to either maintain qualifying health coverage or pay a tax penalty, known as a “shared responsibility payment.” The IRS was set to require filers to indicate whether they had maintained coverage in 2016 or paid the penalty by filling out line 61 on their form 1040s. Alternatively, they could claim exemption from the mandate by filing a form 8965.
For most filers, filling out line 61 would be mandatory. The IRS would not accept 1040s unless the coverage box was checked, or the shared responsibility payment noted, or the exemption form included. Otherwise they would be labeled “silent returns” and rejected.
Instead, however, filling out that line will be optional.
Earlier this month, the IRS quietly altered its rules to allow the submission of 1040s with nothing on line 61. The IRS says it still maintains the option to follow up with those who elect not to indicate their coverage status, although it’s not clear what circumstances might trigger a follow up.
But what would have been a mandatory disclosure will instead be voluntary. Silent returns will no longer be automatically rejected. The change is a direct result of the executive order President Donald Trump issued in January directing the government to provide relief from Obamacare to individuals and insurers, within the boundaries of the law.
“The recent executive order directed federal agencies to exercise authority and discretion available to them to reduce potential burden,” the IRS said in a statement to Reason. “Consistent with that, the IRS has decided to make changes that would continue to allow electronic and paper returns to be accepted for processing in instances where a taxpayer doesn’t indicate their coverage status.”
The tax agency says the change will reduce the health law’s strain on taxpayers. “Processing silent returns means that taxpayer returns are not systemically rejected, allowing them to be processed and minimizing burden on taxpayers, including those expecting a refund,” the IRS statement said.
The change may seem minor. But it makes it clear that following Trump’s executive order, the agency’s trajectory is towards a less strict enforcement process.
Although the new policy leaves Obamacare’s individual mandate on the books, it may make it easier for individuals to go without coverage while avoiding the penalty. Essentially, if not explicitly, it is a weakening of the mandate enforcement mechanism.
“It’s hard to enforce something without information,” says Ryan Ellis, a Senior Fellow at the Conservative Reform Network.
The move has already raised questions about its legality. Federal law gives the administration broad authority to provide exemptions from the mandate. But “it does not allow the administration not to enforce the mandate, which it appears they may be doing here,” says Michael Cannon, health policy director at the libertarian Cato Institute. “Unless the Trump administration maintains the mandate is unconstitutional, the Constitution requires them to enforce it.”
“The mandate can only be weakened by Congress,” says Ellis. “This is a change to how the IRS is choosing to enforce it. They will count on voluntary disclosure of non-coverage rather than asking themselves.”
The IRS notes that taxpayers are still required to pay the mandate penalty, if applicable. “Legislative provisions of the ACA law are still in force until changed by the Congress, and taxpayers remain required to follow the law and pay what they may owe,” the agency statement said.
Ellis says the new policy doesn’t fully rise to the level of declining to enforce the law. “If the IRS turns a blind eye to people’s status, that isn’t quite not enforcing it,” he says. “It’s more like the IRS wanting to maintain plausible deniability.”
Tax software companies are already making note of the change. Drake Software, which provides services to tax professionals, recently sent out a notice explaining the change in policy. As of February 3, the notice said, the IRS “will now accept an e-filed return that does not indicate either full-year coverage or an individual shared responsibility payment or does not include an exemption on Form 8965, as required by IRS instructions, Form 1040, line 61.”
The mandate is a key component of Obamacare’s coverage scheme, which is built on what experts sometimes describe as a “three-legged stool.” The law requires health insurers to sell to all comers regardless of health history, and offers subsidies to lower income individuals in order to offset the cost of coverage. In order to prevent people from signing up for coverage only after getting sick, it also requires most individuals to maintain qualifying coverage or face a tax penalty. While defending the health law in court, the Obama administration maintained that the mandate was essential to the structure of the law, designed to make sure that people did not take advantage of its protections.
In a 2012 case challenging the law’s insurance requirement, the Supreme Court ruled that the individual mandate was constitutional as a tax penalty. The IRS is in charge of collecting payments.
Some health policy experts have argued that the mandate was already too weak to be effective, as a result of the many exemptions that are included. A 2012 report by the consulting firm Milliman found that the mandate penalty offered only a modest financial incentives for families making 300-400 percent of the federal poverty line. More recently, health insurers have said that individuals signing up for coverage and then quickly dropping it after major health expenses is a key driver of losses, and rising health insurance premiums.
It’s too early to say whether the change will ultimately make any difference. But given the centrality of the mandate to the law’s coverage scheme and the unsteadiness of the law’s health insurance exchanges, with premiums rising and insurers scaling back participation, it is possible that even a marginal weakening of the mandate could cause further dysfunction. Health insurers have said the mandate is a priority, and asked for it to be strengthened. Weaker enforcement of the mandate could cause insurance carriers to further reduce participation in the exchanges. One major insurer, Humana, said today that it would completely exit Obamacare’s exchanges after this year.
It is also possible that congressional Republicans will make it moot by repealing much of the law, including its individual mandate, which, as a tax, can be taken down with just 51 Senate votes.
Regardless of its direct impact, however, the change may signal that the Trump administration intends to water down enforcement of the health law’s most controversial requirement, even if those steps are seemingly small. The Trump administration may not be tearing Obamacare down entirely, but it appears to be taking steps to weaken the law, however subtly, one line at a time.
by | ARTICLES, BLOG, FREEDOM, GOVERNMENT, HYPOCRISY, POLITICS, TAXES
When assets are seized during federal investigations, the proceeds can be shared with law enforcement agencies who participate with federal agencies during the process. This is called Equitable Sharing, and both the Justice Departments and Treasury Departments can do it. The funds received have rules that govern how they are spent.
Therefore it was surprising that a Power Point presentation created by the Justice Department in 2015 suggested a way to circumvent those rules; typically they don’t allow funds to be spent on salaries or raises but this presentation gave a clear way for an agency to get around that restriction. “The presentation advises that instead of using the seized funds money to fund raises, agencies can use it to cover routine costs — such as maintaining vehicle fleets — and then redirect money already budgeted for maintenance into salaries. The PowerPoint says redirecting money in that manner is acceptable “so long as your overall budget does not decrease.”
It appears the Virginia’s Attorney General, Mark Herring, took that suggestion to heart. The “AP raised questions about significant pay raises for several of Herring’s employees at a time when state workers’ pay was stagnant elsewhere. Some staff attorneys’ salaries rose as much as $15,000 in a year — one had a 30-percent increase.” This investigation revealed the existence of the Power Point presentation, and is the reason 64 attorney received a raise in their pay floor, with the median raise of $7,000.
“Virginia received more than $100 million in asset forfeiture money under a joint state-federal settlement with Abbott Laboratories for an anti-seizure drug’s off-label marketing. Herring spokesman Michael Kelly said raises were made possible in part by using some of the funds to pay allowable expenses involving the agency’s rent, vehicle maintenance and operational costs.
The Abbott settlement money was administered by the Treasury Department, but Kelly cited the PowerPoint as justification for using the funds to make raises possible. He said the PowerPoint was part of 2015 training for accountants in the state attorney general’s office.”
The AP noticed the pay raises in the Office of Attorney General and requested documents about the aberration; last year, the rest of the Commonwealth canceled pay raises that were scheduled for state employees when budget problems got difficult.
It is unfathomable that a state agency, under the guidance and direction of a federal agency, could move money around in a ploy to give themselves pay increases. If one state agency, as part of a training exercise for accountants, could conclude that this action was both just and allowable, how many other agency partners in the Equitable Sharing program have done this?
by | ARTICLES, BLOG, FREEDOM, GOVERNMENT, NEW YORK, POLITICS, TAXES
The hostile New York City business environment has claimed a new victim: the legendary China Fun restaurant, which has been in operation for 25 years. A letter on left on the door of the restaurant on January 3, 2017, outlined the reasons:
“The climate for small businesses like ours in New York have become such that it’s difficult to justify taking risks and running — nevermind starting — a legitimate mom-and-pop business,” read a letter posted by the owners in the restaurant’s front door.
“The state and municipal governments, with their punishing rules and regulations, seems to believe that we should be their cash machine to pay for all that ails us in society.”
For 25 years, China Fun was renowned for its peerless soup dumplings and piquant General Tso’s chicken.
According to the NY Daily News, “the endless paperwork and constant regulation that forced the shutdown accumulated over the years.” Other reasons included: the requirement to provide an on-site break room, minimum wage increases, health insurance, business insurance, and onerous Health Department rules and regulations.
The government essentially acknowledges the burdens it places on small businesses; “free compliance advisors are available for on-sight consultation aimed at helping small businesses comply with regulations” are a part of the Small Business First initiative.
So instead of making it easier for a business to start, operate, and grow a business, NYC makes it easier to comply with overbearing regulation, rules, and taxes. Businesses go into business to make a product or provide a service — not to respond to government red tape. The loss of China Fun is a microcosm of the entirely hostile, anti-business environment that plagues the NYC government.
by | ARTICLES, BLOG, ELECTIONS, GOVERNMENT, POLITICS, TRUMP
Newt Gingrich warned that Trump’s “Drain the Swamp” verbiage was really a lot of bluster. His presidential appointments seems to be reflecting that — but is it really Trump’s fault? Or are his hands tied? Or a mix of both? Jay Cost over at The Weekly Standard, gives some insight into the history of presidential appointments and how the system works. It’s definitely worth a read in its entirety:
As a candidate, Donald Trump promised sweeping change in the way Washington functions. He would tell voters that the system is rigged, it’s broken, it’s run by losers, and only he could fix it. And yet, for all this rhetoric, it is striking how typical his presidential appointments have been: Jeff Sessions, Mike Pompeo, John Kelly, Rick Perry, Elaine Chao, Steve Mnuchin, Wilbur Ross, Andrew Puzder, Nikki Haley, Seema Verma. Most of these appointees are conservative, of course, but they are conventionally conservative. It is striking, indeed, that the most controversial appointment so far is Rex Tillerson to the State Department. He is an outsider to the ways of Washington but he is still the CEO of a company with $380 billion in total assets and 75,000 employees. A populist barbarian storming the establishment gate, Tillerson is not!
Little wonder that Politico reported last week, “Donald Trump’s White House-in-waiting is already being roiled by divisions, with the conservative outsiders who helped power his historic victory colliding with a Republican Party establishment muscling its way in.”
Something similar happened eight years ago. Barack Obama promised a major break with the previous practices of both parties. Still, his appointments were conventionally liberal: Hillary Clinton, Tim Geithner, Robert Gates (who was actually a holdover from the George W. Bush administration), Eric Holder, Ken Salazar, Tom Vilsack, Gary Locke, Kathleen Sebelius, and so on. Obama largely sampled from the upper echelon of Democratic politicians and policymakers in forming his cabinet—certainly an ideological change from the Bush era but not a fundamental break from past practices.
The system, as it turns out, is much more resilient than presidential candidates on the trail want voters to believe. Electing a new president certainly changes the course of public policy in Washington, but presidents are nevertheless constrained actors. Presidential candidates want us to think they have free rein to make over the government, but the truth is that the occupant of the Oval Office is boxed in from all sides, including in the appointment process.
Trump faces several challenges in using the appointment power to reshape the government. The first is Congress. The Senate possesses the constitutional authority to review certain appointments and reject those nominees it thinks are unfit. This could be why Trump passed over Rudy Giuliani for a cabinet appointment; he may have judged that the confirmation process would be a difficult one for the former mayor of New York City. This might also explain Trump’s decision to make Michael Flynn his national security adviser: The Senate does not review or confirm West Wing appointments.
Congress imposes broader constraints as well. The cabinet departments are, after all, legislative creations, and Congress has the power to write legislation regulating which employees are and are not subject to the appointment process. Starting with the passage of the Pendleton Civil Service Reform Act in 1883, Congress sharply curtailed the presidential nominating power, setting the overwhelming majority of executive department employees outside the discretion of the commander in chief. By and large, the same civil servants who worked under George W. Bush and Barack Obama will continue to work under Donald Trump, without worry that the president can dismiss them.
John F. Kennedy summarized the limits the president faces better than anybody:
The fact is that I think the Congress looks more powerful sitting here than it did when I was there in the Congress. . . . When you are in Congress, you are one of a hundred in the Senate or one of 435 in the House . . . but from here I look at . . . the collective power of the Congress . . . and it is a substantial power.
Executive appointments are just the tip of the iceberg. When Trump enters office, he will find Congress to be a potentially implacable foe on any matter where his will runs contrary to its own.
And Trump—or for that matter any outsider president looking to effect sweeping change—must confront the problem of asymmetric information. The federal government is so complicated that one must possess a great deal of technical, specialized information to manage it properly. The president typically does not possess that information, at least not outside a few policy domains (for instance, as Dwight Eisenhower did with the military). He must appoint officials who possess such knowledge. But where do people acquire this? They usually gain it from participating in the affairs of state—the very same affairs that the president has promised to alter.
There are, of course, experts who are nonetheless looking for big changes—for instance, Rep. Tom Price, whom Trump nominated to head the Department of Health and Human Services, and who came to Congress after a successful career as an orthopedic surgeon, is intent on rolling back Obamacare—but the president still faces a substantial challenge. Oftentimes, those whom he taps to change the system have been longtime participants in sustaining it. This problem is compounded when one considers the large number of lower-level appointments the president is authorized to make, where he can only afford to spend a small amount of face time with his nominees. Quite often, he is forced to trust that the people he has delegated responsibility to will, in turn, make good appointments.
Expertise, in other words, can create a subtle bias for the status quo, which was on full display in the aftermath of the 2008 financial crisis. As Ron Suskind reports in Confidence Men, President Obama wanted to reorganize Citigroup in 2009 and instructed Treasury Secretary Geithner to put together a plan. But, per Suskind, Geithner never followed through. As one high-level banking executive explained to Suskind: “The president had us at a moment of real vulnerability. At that point, he could have ordered us to do just about anything and we would have rolled over. But he didn’t—he mostly wanted to help us out, to quell the mob. And the guy we figured we had to thank for that was Tim. He was our man in Washington.”
The irony is that the president, in many respects, is less able today to fulfill his constitutional duty to “take care that the laws be faithfully executed” than he was in George Washington’s time. The Senate constrains him, via its advisory role, as always. But now the vast bulk of the executive branch is outside his aegis, easily able to resist his political or ideological agenda. Moreover, the technical expertise required to manage the government means that the relative handful of appointments he does get to make is often from the “establishment” he ran against.
All of this runs contrary to the image of the presidency that candidates wish to cultivate on the campaign trail. They want voters to think of the president as a kind of superman—able to work his will on any policy issue that confronts him. But this is just not the case. The president, in truth, is a restricted government agent, just as all officials are in our system of checks and balances. In this nomination process, we are witnessing an early glimpse of how our system of government will constrain and frustrate Trump, just as it has his predecessors.
