The Hill reports that Obamacare replacement has taken yet another hit:

The chairman of the influential Republican Study Committee said Monday he would vote against a draft ObamaCare replacement bill that leaked last week. Rep. Mark Walker (R-N.C.), head of the 172-member committee, said Monday his opposition stems from the draft bill's use of refundable tax credits.
 
"There are serious problems with what appears to be our current path to repeal and replace Obamacare. The draft legislation, which was leaked last week, risks continuing major Obamacare entitlement expansions and delays any reforms," Walker said in a statement Monday.

Refundable tax credits are the mechanism for funding the Republican replacement plan. So what Walker is saying is that he opposes any plan that spends money.

The only alternative, of course, is a plan that costs nothing, which would be suicidal for Republicans. Even Donald Trump couldn't bluster his way into convincing people that a zero-dollar plan would help them compared to what they have now.

Republicans are really truly in a pickle. Here are their options:

  • Leave Obamacare alone. This would obviously enrage their base.
  • Repeal Obamacare and propose a replacement acceptable to conservatives. This would be so obviously useless that everyone outside their base would be enraged.
  • Repeal Obamacare with no replacement. But since Republicans can only repeal parts of Obamacare while leaving other parts alone, this runs the risk of imploding the entire individual insurance market. That would be an electoral disaster.

It's no wonder that Paul Ryan feels so backed into a corner that his latest "strategy" is to bull through a repeal-and-delay bill—and then dare anyone in the GOP caucus to vote against it. It's a desperate ploy that's bound to both fail and to piss off a lot of his fellow Republicans in the process. But what choice does he have? He has to pretend to do something.

From the Wall Street Journal:

Former Utah Gov. and ambassador to China Jon Huntsman is in talks to be the No. 2 at the State Department, U.S. officials said Monday....The search for the deputy secretary of state has continued after President Donald Trump rejected Elliott Abrams, who had the backing of Secretary of State Rex Tillerson.

This is nuts. How do you go from Elliott Abrams to Jon Huntsman? This is like deciding to buy a Hummer and then changing your mind and deciding that a Prius is a better fit after all. Does Tillerson have any idea what he really wants? Or is this coming from Trump, who thinks that Huntsman has that central casting look he's so fond of in his cabinet?

Dave Weigel recaps all the currents that flowed around the Ellison-Perez contest for DNC chair, and covers most of the bases very nicely. One of those bases, of course, is that Ellison was the Bernie guy and Perez was the Hillary guy. Josh Marshall comments:

The Democratic party will have a hard time moving forward if every contest must be reduced and simplified into a replay of the 2016 primary battle.

That's true, but you know what? It's only been a few months since the election. These things take time. All things considered, Democrats are in surprisingly fine fettle considering just how thoroughly they've been tromped over the past few years and how little time has passed since Donald Trump won. A few high-profile lefties have been complaining about Keith Ellison's loss and how it proves the Democratic Party is a pawn of Wall Street etc. etc., but the emphasis here should be on "few." And those few are mostly people who had no patience for mainstream liberalism anyway. All things considered, there's been very little blowback from Tom Perez's win. Nearly everybody seems pretty anxious to move on and win some elections.

One other point while I'm on the subject. Marshall also says this:

I think most Democrats realize or believe that the politics of the Obama era will not be the politics that is necessary in the post-Obama era. But probing beneath that general agreement is where things get more contentious. For many on the left of the party — and broadly speaking, the Sanders wing of the party — this isn't some evolutionary development or a general insufficiency of the Obama era. Obama's incrementalist, cautious policy approach — deemed "neo-liberal" in its policy particulars — is what made Trumpism possible, they argue. So Obama-ism it is not just outdated or insufficient. It is the cause of the present crisis and must be specifically repudiated before the party can move forward.

For a long time, one of the favorite tropes of centrist columnists was that Republicans needed a candidate who was fiscally conservative but socially liberal. This was primarily because these columnists themselves were fiscally conservative but socially liberal. Someone,1 however, pointed out that exactly the opposite approach was more likely to succeed with actual voters: fiscally liberal but socially conservative. And roughly speaking, that's how Trump campaigned.2 By adding a wall and an immigration ban to the normal conservative stew, he was, in effect, more socially conservative than even a guy like Ted Cruz. Fiscally, however, he was relatively liberal for a Republican. Sure, he yakked about the national debt, but he also promised not to touch Social Security or Medicare; he wanted to tear down Obamacare but was vocal about replacing it with something even better; he wanted a surge in Pentagon spending; he touted a huge infrastructure spending plan; and he promised tax cuts for all.

Roughly speaking, the fiscally conservative/socially liberal quadrant describes libertarians, who have spent decades trying to gather a following but haven't succeeded anywhere in the world, as far as I know. It's literally the only quadrant of this matrix that's clearly a loser. Conversely, the basic Democrat and basic Republican quadrants have attracted plenty of followers. The only one that's never really been tried recently is the Donald Trump quadrant.

But if it weren't for the hammerlock of the two-party system, it's long been viewed as a very plausible winning combination—and Trump just proved it could be. But he pulled this off by taking advantage of his rare ability to work around the traditional parties, not because of a backlash to the "neoliberalism" of the Obama era. White working-class voters have been fleeing the Democratic Party for decades, but not because Democrats were too stingy. It was because they were too friendly to gays, too prone to spending welfare money on blacks, and wanted to take their guns away. Donald Trump fixed all that.

POSTSCRIPT: When I say that the DNC race ended amicably, I mean that it was relatively small beer compared to lots of intra-Democratic battles of the past. On a scale of 1 to 10, I'd maybe give it a 3. However, I'm willing to change my mind if someone who's been closer to these battles over the past few decades disagrees. How about Ed Kilgore? I'd trust his judgment on this.

1Sorry, I don't remember who. It probably came from more than one person.

2Whether he governs that way remains to be seen.

I have finally figured out who Donald Trump reminds me of. He's a dumb version of Robert Moses.

This is a relief. It's been burrowing around in the back of my mind for a long time, but I couldn't quite place who I was thinking of. This should free up some space in my brain for further incisive political comparisons.

We learned today that President Trump wants to increase defense spending by $54 billion. How much is that, anyway?

This is tricky. Normally, you'd just take a look at defense spending over the past decade or so and see how it compares to the trend. However, ever since 9/11, a big chunk of defense spending has been for "Overseas Contingency Operations," known to the rest of us as "wars." You don't want to count that as part of the baseline. On the other hand, the OCO account sometimes acts as a sort of slush fund for ordinary spending, which basically hides increases in baseline defense expenditures.

With that caveat in mind, here is baseline defense spending since 2001:1

There are two ways you can look at this:

  • All this is doing is getting defense spending back up to its Obama-era levels prior to the sequester.
  • Yikes! That's a 45 percent increase since 2001.

Do we really need to be spending 45 percent more than we did in 2001 for baseline defense? Remember, if we decide to invade Iraq and take their oil, that would get funded separately. The baseline budget is just to support basic military readiness.

I guess we can all make up our own minds about this, though I can't say that I've heard any persuasive arguments that the Pentagon is truly suffering too much with a $550 billion budget. The real question is whether Trump's $54 billion increase can get through Congress. Normally, Republicans would pass it via reconciliation, and they wouldn't need any Democratic votes. However, this increase would blow past the sequester limits put in place in 2013, and this can only be done via regular order.2 That means Republicans need at least eight Democratic votes in the Senate.

Normally, they could probably get that. But if they try to balance this $54 billion increase with a $54 billion cut to the EPA and safety net programs, there are very few Democrats who will play ball. So what's the plan here?


1Historical budget authority here. OCO levels here. I adjusted for inflation using the GDP deflator. This seemed more appropriate than consumer inflation measures like CPI and PCE, but it doesn't actually make much difference. They all show pretty similar inflation levels over a short period like this.

2Though I admit I can't find an authoritative confirmation of this. I think that any spending above the sequestration levels can be filibustered, but I'd appreciate confirmation from someone knowledgeable about this. The sequester applies only to discretionary spending, and it's possible that Republicans can add $54 billion to defense if they slash $54 billion from mandatory spending elsewhere.

UPDATE: OK, Stan Collender confirms that spending above the sequester caps can filibustered. If Stan says it's true, then it's true. He goes on to say that the only options for Republicans are (a) to put the increase in the OCO fund, or (b) to authorize the spending, trigger the sequester, and then for Trump to ignore the sequester. They're both illegal, but it's hard to tell if anyone cares these days.

President Trump long ago gave up on the fib he told repeatedly throughout the campaign about having a secret plan to defeat ISIS. There was never any plan, so now it's up to the Pentagon to come up with one. They should have it ready for Trump in a few days, and this morning the LA Times gives us a preview:

The month-long strategic review, which Trump requested Jan. 28, is expected to include proposals to send more U.S. troops to both countries, deploy more U.S. forces near the front lines, give greater authority to ground commanders, and possibly provide weapons to Kurdish YPG fighters in Syria.

....U.S. analysts said they don’t expect the new plan to differ dramatically from the Obama administration’s approach, at least in Iraq.

No, of course it won't differ much from Obama's approach. That's because Obama's approach is pretty much the only possible approach unless you're willing to send tens of thousands of front-line troops to Iraq to do the fighting. Nobody, including Trump, is willing to do that, so you're left with only tweaks here and there. A few more advisors, an uptick in bombing runs, small changes in the rules of engagement, etc. That's been true from the start.

Trump, of course, will sell his base on the fiction that this plan is a radical toughening up of Obama's feckless approach, and they'll believe him. Eventually it will work, whether or not they make changes to Obama's plan, and then Trump will crow endlessly that this is what happens when you put a man of action in the White House. Sigh.

OMG OMG OMG OMG OMG OMG OMG. We are all so screwed.

Our story so far: Republicans spent years vilifying Obamacare and promising to repeal and replace it at their first opportunity. Then that opportunity came, but they still couldn't agree on the "replace" part, so they suggested something called repeal-and-delay: repeal Obamacare now, and work on a replacement plan later. But that turned out to be pretty unpopular even among Republicans, who naturally wanted to know what they were going to get before Obamacare was dismantled. So Republican leaders went back to the drawing board and tried to draw up a replacement plan. So far this has been a dismal failure, for the obvious reason that even a mediocre replacement plan will cost a lot of money, and they don't want to spend a lot of money.

What to do? The Wall Street Journal reports that repeal-and-delay is back:

Republican leaders are betting that the only way for Congress to repeal the Affordable Care Act is to set a bill in motion and gamble that fellow GOP lawmakers won’t dare to block it.

Party leaders are poised to act on the strategy as early as this week, after it has become obvious they can’t craft a proposal that will carry an easy majority in either chamber. Lawmakers return to Washington Monday after a week of raucous town halls in their districts that amplified pressure on Republicans to forge ahead with their health-care plans.

Republican leaders pursuing the “now or never” approach see it as their best chance to break through irreconcilable demands by Republican centrists and conservatives over issues ranging from tax credits to the future of Medicaid.

There you have it. It "has become obvious" they can't craft a decent replacement plan now, so instead they're going to try to convince everyone that they can craft a replacement plan later. This is obvious nonsense, but they're just going to bull ahead and dare anyone to stop them.

This is extremely high-risk-high-reward. First of all, they might just lose. All it takes is three defections in the Senate. Second, they can't repeal everything, and a partial repeal will send the individual insurance market into chaos. Third, President Trump has already gone on record opposing this strategy, and he's not a guy who likes to publicly back down. And fourth, they're leaving themselves open for the mother of all Democratic attacks. I don't think Democrats are nearly as divided as the press would have us believe, but if Republicans go ahead with this plan it will unite the party instantly. Politically, it would be a godsend for Democrats.

The desperation Republicans are showing here is remarkable. They are all but admitting that they flatly can't pass a health care plan that's worth the paper it's printed on. This is not an auspicious start to their plan to show the country just how great things can be if they'd just put the GOP in charge once and for all.

The Wall Street Journal writes today about Japan's stagnant economy and persistent deflation:

During Japan’s go-go 1980s, Hiromi Shibata once blew a month’s salary on a cashmere coat, wore it a few times, then retired it. Today, her daughter’s idea of a shopping spree is scrounging through her mom’s closet in Shizuoka, a provincial capital.

....The U.S. appears to be leading other parts of the globe out of an extended era where central banks relied heavily on low and negative interest rates and stimulus to jump-start growth and keep prices from falling....Japan remains definitively stuck, despite a long and aggressive experiment with ultralow rates. A quarter-century after its property bubble burst, a penny-pinching generation has come of age knowing only economic malaise, stagnant wages and deflation—a condition where prices fall instead of rise.

....Since then, annual growth has averaged less than 1% amid periodic recessions. Prices began falling in the late 1990s....Many economists believed the Bank of Japan’s 2013 stimulus would be enough to jolt the nation out of its downward spiral of weak growth and falling prices....Some economists contend the government should try even more fiscal stimulus and monetary easing. Others argue the stimulus has already saddled Japan with so much debt—now 230% of gross domestic product—that it could end in an economic collapse.

It's true that Japan has suffered through two decades of low growth:

But there's way more to this story. Obviously, the bigger your population, the bigger your GDP. The fact that the Russia has a bigger GDP than Switzerland doesn't mean it has a better economy. It just means it's bigger. The key metric to judge whether an economy is in good shape is GDP per working-age adult, since that tells you how productive your workers are. So let's look at that:

Despite its persistently low inflation, Japan's economy is doing fine. Their GDP per working-age adult is actually higher than ours. So why are they growing so much more slowly than us? It's just simple demographics:

Japan is aging fast. Its working-age population peaked in 1997 and has been declining ever since. Fewer workers means a lower GDP even if those workers are as productive as anyone in the world. Now put all this together, and here's what you get:

This is GDP per capita. That is, the amount of stuff that Japan produces for each person in the country. Over the past two decades it's grown 20 percent. And aside from the Great Recession, that growth has been pretty steady. It's not declining. It's not stagnating.

Under the circumstances, Japan is doing fine. Each of their workers is as productive as ours, and their productivity has actually grown a little faster than ours. But there's only so much you can do when your population is declining. Given the demographic realities, Japan is probably doing about as well as they could.

There are two things I take away from this. First, there's not much the Bank of Japan can do to stimulate their economy. It's already running pretty well. Second, despite this, Japan is suffering from persistent deflation. Why? If their economy is productive and growing, deflation shouldn't be any more of a problem for them than it is for us. Somehow, though, the very fact of a declining working-age population—and, since 2011, a declining overall population—seems to be driving deflation. This is very mysterious, especially since Japan's deflation has persisted even in the face of massive BOJ efforts that, according to conventional economics, should have restored normal levels of inflation.

So why didn't it? Is it really a consequence of demographic decline? Or is it something else?

The New York Times tells us about President Trump's TV strategy:

One West Wing official, who requested anonymity to speak candidly about strategy, said the administration craved the split-screen television images of Mr. Trump at round-table discussions with business executives every few days on one side, and the vehement protesters of his administration on the other.

This sounds right. Trump seems to believe that sitting around a table with powerful business executives is "presidential." It's basically a child's idea of what a president looks like. So that's what he does. I don't think it's even cynical image manipulation on his part. He really does think this is what makes a president presidential.

Meanwhile, back in the real world, we have this:

A day before delivering a high-stakes address on Tuesday to a joint session of Congress, Mr. Trump will demand a budget with tens of billions of dollars in reductions to the Environmental Protection Agency and State Department, according to four senior administration officials with direct knowledge of the plan. Social safety net programs, aside from the big entitlement programs for retirees, would also be hit hard.

This is obviously the work of Mike Pence and OMB Director Mick Mulvaney more than it is of Trump himself, but Trump will nonetheless be the master showman selling this plan. It's also more symbolic than anything else, but it's symbolism that matters since it means Trump is signaling that he's willing to go along with Paul Ryan's feverish devotion to cutting spending on the poor. We already know that Trump is also eager to cut taxes on the rich, so it appears he and Ryan are entirely on the same page. The next few months promise to be bloody.