So does President Trump support a two-state solution in the Middle East, which has been US policy for decades? Or has he given up on that and now endorses a one-state solution? Here's his answer:

So I'm looking at two-state and one-state, and I like the one that both parties like. [Netanyahu laughs.] I'm very happy with the one that both parties like. I can live with either one. I thought for a while the two-state looked like it may be the easier of the two, but honestly, if Bibi and the Palestinians — if Israel and the Palestinians are happy, I'm happy with the one they like the best.

Translation: I couldn't care less. I'm not even sure what all this one-state and two-state stuff is about. I just want to make a deal.

I wouldn't blame Trump if he ignored Israel entirely. It's pretty obvious that no peace deal is anywhere on the horizon, and there's nothing much the United States can do about it. But if he is going to talk about it, is it asking too much that he demonstrate even a minimal understanding of what the two sides disagree about?

Victor Davis Hanson is a native Californian who hates California because it's become too brown and too liberal. Today he takes to the LA Times to use the Oroville Dam disaster as a way of riding all his usual hobbyhorses:

The poor condition of the dam is almost too good a metaphor for the condition of the state as a whole; its possible failure is a reflection of California’s civic decline.

....The dam was part of the larger work of a brilliant earlier generation of California planners and lawmakers....The water projects created cheap and clean hydroelectric power...ensured that empty desert acreage on California’s dry west side of the Central Valley could be irrigated...spectacular growth in the San Francisco Bay Area and Los Angeles Basin.

....Yet the California Water Project and federal Central Valley Project have been comatose for a half-century....Necessary improvements to Oroville Dam, like reinforced concrete spillways, were never finished....A new generation of Californians — without much memory of floods or what unirrigated California was like before its aqueducts — had the luxury to envision the state’s existing water projects in a radically new light: as environmental errors....Indeed, pressures mounted to tear down rather than build dams. The state — whose basket of income, sales and gas taxes is among the highest in the country — gradually shifted its priorities from the building and expansion of dams, reservoirs, aqueducts, bridges and highways to redistributionist social welfare programs, state employee pensions and an enormous penal archipelago.

LOL. The reason the Oroville Dam wasn't upgraded ten years ago is because all those salt-of-the-earth farmers that Davis admires didn't want to pay for the upgrades via higher water rates. Here's the San Jose Mercury News:

Environmentalists noted Friday that they had tried in 2005 to persuade the federal government to require the state to cover the emergency spillway with concrete. But the agency that was relicensing the dam, the Federal Energy Regulatory Commission, declined after opposition from the state Department of Water Resources and the State Water Contractors, a group of 27 water agencies who were concerned about the cost.

Hanson should have listened to his initial instincts: the Oroville Dam is too good a metaphor for the condition of the state as a whole:

President Trump would like to destroy Obamacare. Reason suggests that he's made his first concrete achievement toward that goal:

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 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....For most filers, filling out line 61 would be mandatory. The IRS would not accept 1040s unless the coverage box was checked....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.

Basically, this means that if you skip coverage, you can elect to not tell the IRS about it and not pay the penalty. The implication is that the individual mandate is now dead—and probably Obamacare along with it.

This is getting a lot of coverage, but you have to read it very carefully to see that nothing has really changed. The IRS has never rejected "silent returns." However, last year—before Trump took office—they announced a plan to begin rejecting silent returns in 2017:

The IRS plans to reject electronically filed “silent returns” beginning in FS 2017....Silent returns filed by paper will go to the Error Resolution/Rejected Returns unit as the IRS issues Letter 12C, informing the taxpayer of the issue. If the taxpayer does not respond to the Letter 12C, the IRS will issue a notice to inform the taxpayer that the IRS estimated an ISRP and made an adjustment accordingly. If the taxpayer’s original return claimed a refund, the IRS will offset the refund with the ISRP balance.

A couple of weeks ago the IRS decided not to implement this change. Is this because of Trump's executive order? Or because they had second thoughts about how much extra work it would cause? There's no telling. Either way, though, all they're doing is maintaining the same policy they've had ever since Obamacare was passed. There's really not much going on here.

UPDATE: It turns out we do know why the IRS decided not to implement this change: "The Jan. 20, 2017, executive order directed federal agencies to exercise authority and discretion available to them to reduce potential burden.‎ 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." So it was the executive order after all. The Reason article noted this, but I missed it.

National Review opposes the confirmation of Andrew Puzder as Secretary of Labor:

Puzder is not without his virtues, of course. He is a staunch opponent of knee-jerk demands to raise the federal minimum wage to $15, which he has rightly identified as a surefire way to send minimum-wage workers to the local unemployment office. He’s also unsympathetic to the bullying of organized labor, and it’s to his credit that the AFL-CIO, SEIU, and United Steelworkers have lined up to oppose him.

Gee. A Secretary of Labor who hates labor. What's not to like?

Well, it turns out he's soft on immigration: he supports comprehensive immigration reform rather than walls and high-profile raids. Can't have that. And just by coincidence, NR's opposition comes shortly after we learned that Puzder "employed an undocumented housekeeper for several years and failed to pay related taxes." I don't think NR actually cares about that, though. They only care that it gives Democrats a hook to fire up the opposition. Why give them a victory that will just make them even smugger than usual? Might as well pull the plug now and pretend that it was all because conservatives have such high moral standards.

The Wall Street Journal says that Wall Street is booming again:

Shares in America’s banks are booming again....Investor expectations of higher interest rates, lower taxes, lighter regulation and faster economic growth under the Trump administration have added $280 billion in combined market value to the nation’s six largest banks since Nov. 8.

....Bank stocks overall have outperformed broader stock markets since the election. The roughly 27% gain since Nov. 8 for the KBW Nasdaq Bank Index is around three times that of the S&P 500.

Yes...but. You can make almost any case you want for Wall Street depending on how you choose your starting and ending points. For example, here are five big bank stocks in the first month after the election:

Bank stocks kicked ass in the first month after the election. The S&P 500 is the thick dotted purple line, and big banks outperformed it by 15-30 percent. Now here are the same stocks in the two months since then:

Bank of America and JP Morgan have gone up an anemic 5 percent, about even with the market. The others haven't even done that well. But if you decide just to focus on the past two weeks, here's what bank stocks look like:

Once again, the big banks are all outperforming the market. So how is Wall Street doing? It all depends on how you look.


Phone records and intercepted calls show that members of Donald J. Trump’s 2016 presidential campaign and other Trump associates had repeated contacts with senior Russian intelligence officials in the year before the election, according to four current and former American officials.

American law enforcement and intelligence agencies intercepted the communications around the same time that they were discovering evidence that Russia was trying to disrupt the presidential election by hacking into the Democratic National Committee....The intercepts alarmed American intelligence and law enforcement agencies, in part because of the amount of contact that was occurring while Mr. Trump was speaking glowingly about the Russian president, Vladimir V. Putin....The officials said the intercepted communications were not limited to Trump campaign officials, and included other associates of Mr. Trump.

....Officials would not disclose many details, including what was discussed on the calls, which Russian intelligence officials were on the calls, and how many of Mr. Trump’s advisers were talking to the Russians.

This is from Michael Schmidt, Mark Mazzetti, and Matt Apuzzo at the New York Times. If Trump thought that firing Michael Flynn was going to stop the recent bloodletting, he thought wrong.

Just to make this clear: At the same time that Russian intelligence was hacking various email accounts in order to sabotage Hillary Clinton, multiple members of the Trump team had repeated phone calls with senior Russian intelligence officials. And during this entire time, Trump himself was endorsing a foreign policy that appeared almost as if it had been dictated to him by Vladimir Putin.

As a number of people have pointed out, the American intelligence community has all but declared war on Trump since his inauguration with leak after leak after leak. I hardly need to spell out why this is dangerous. At the same time, it's sure becoming a lot clearer why they're so alarmed by the guy.

And by the way, I shouldn't miss this chance to flog my favorite hobbyhorse again: FBI Director James Comey, who knew all about this, pushed hard not to make it public during the campaign. Instead he considered it more important to inform Congress that he had discovered additional copies of Hillary Clinton's emails on Anthony Weiner's laptop. Priorities.

The latest CDC numbers on the uninsured population are out, and as of September 2016 the number of uninsured in the US had dropped from about 17 percent before Obamacare to 10.3 percent. That continues to be below the original CBO estimate of 11 percent for the full year.

For all of Obamacare's faults, this is a tremendous achievement at a surprisingly modest cost. It's beyond belief that Republicans want to destroy it instead of making it better.

NOTE: As always, I'm using the CDC's figures for the nonelderly population. That's because (a) this is what CBO used for its estimates, so I need to use comparable numbers, and (b) it's the number we actually care about. The overall figure for all ages is currently 8.8 percent.

Last week, ICE coordinated a set of raids in several cities that ended with the arrest of nearly 700 undocumented immigrants. ICE claims this was business as usual. President Trump says it was all part of keeping his campaign promise to get tough on criminals who are in the country illegally. "Gang members, drug dealers & others are being removed!" he tweeted. Who's right?

One set of raids isn't enough to tell. In terms of raw numbers, there doesn't seem to be anything unusual going on. However, ICE doesn't generally conduct raids in multiple cities over the course of just a few days. That suggests that maybe there was something unusual going on.

My guess: the arrests themselves were fairly routine. However, they were deliberately conducted in a way to maximize publicity. This would certainly gibe with Trump's usual way of doing business.

We won't get a real answer about this until the end of the year, when ICE releases total removal numbers for FY2017, which ends September 30. That will tell us whether ICE is deporting more people, and in particular, whether they're targeting criminals more vigorously than in the past. For comparison, here are total removal numbers for criminal aliens since 2000:

From the White House briefing room:

The answer turns out to be January 26. That's three weeks ago.

Spicer is insisting that Trump fired Flynn due to an "erosion" of trust. "It was a matter of trust, pure and simple," he's said over and over. And yet, oddly enough, Trump's trust in Flynn didn't crater when he was told about Flynn's lies. It apparently cratered only after the Washington Post made Flynn's lies public. Funny that.

Now Spicer is trying to blame the Obama Justice Department for withholding its information about Flynn for 13 days. Nice try, Sean.

Oh, and Spicer says the real story here is all the leaks. Sure, Flynn is a story, but the press should consider the source. They should investigate that. Oddly, back when all those hacked Russian emails were gnawing away at Hillary Clinton's campaign, nobody on the right thought that was an issue. All that mattered was that this information was becoming public. I guess that's no longer operative.

Carolyn Johnson reports that another cycle in the pharmaceutical outrage machine is building up:

Politicians are, once again, concerned that a drug company that plans to sell an old medicine for a very high price is taking advantage of the system. On Monday, Sen. Bernie Sanders (I-Vt.) and Rep. Elijah E. Cummings (D-Md.) sent a letter to the chief executive of Marathon Pharmaceuticals, arguing that the Illinois company is"abusing” government policies that encourage the development of treatments for extremely rare diseases, called orphan diseases.

“We urge you to significantly lower your price for this drug before it goes on the market next month,” they wrote. “Marathon’s apparent abuse of government-granted exclusivity periods and incentives to sell what should be a widely available drug for $89,000 a year is unconscionable.”

Unlike some of the other recent huge price increases that have been in the news, this one is for a so-called "orphan" drug that treats a rare disease. In this case, the rare disease is Duchenne muscular dystrophy, which afflicts about 15,000 people. That's too few for a pharmaceutical company to spend time on, so in 1983 Congress passed the Orphan Drug Act, which provides subsidies and patent incentives for developing orphan drugs and bringing them to market. It's worked fairly well:

The orphan drug at issue here is deflazacort, which has been available outside the US for a long time. However, nobody had bothered to conduct the clinical trials necessary for FDA approval in the US until Marathon did so. Having done that, Marathon now plans to charge $89,000 per year for a drug that formerly cost about $1,000 per year.

Is this outrageous? Sure. Is it also an effective way to bribe companies to bring otherwise unprofitable treatments to market? Sure. Did Marathon abuse the system, as Sanders and Cummings claim? Probably. The clinical trial of deflazacort was small and probably fairly cheap. Marathon could still make money with a lower price.

But here's the thing: the Orphan Drug Act was passed by Congress, and so was the TREAT Act, which speeds up FDA approvals of orphan drugs. The policy goal is to provide pharmaceutical companies with enough incentive to bring orphan drugs to market, but not so much that they're fleecing the public. If that balance is wrong, then Congress can change it. Just keep in mind that no system will ever be perfect. If we subsidize orphan drugs enough to make them profitable, there are always going to be cases where someone finds an unusually lucrative opportunity. If we lower the subsidies enough to eliminate these opportunities, we may kill off the orphan drug market altogether.

In other words: be careful. Maybe the Orphan Drug Act needs some updates, but don't kill the goose that laid the golden egg.

UPDATE: So how much did it cost Marathon to conduct the studies needed for FDA approval? Derek Lowe points us to John Carroll, who asked a couple of experts for an estimate based on a Marathon slide that outlines their research program. One figured the total costs at $65-75 million, while the other came in at $10-15 million. That's a pretty big difference, but probably not enough to change the math much:

If half of all US patients are put on Marathon’s steroid, that’s at least $405 million gross a year — $33.7 million a month — based on their lower $54,000 annual net price....Because the FDA gave them orphan status, Marathon has a 7-year exclusivity deal for deflazacort. Based on the company’s wholesale price of $89,000, that market is theoretically worth up to $12.6 billion in total through the full stretch.

That's gross revenue, which is considerably higher than net profit. Still, it suggests that $10 million vs. $65 million isn't a very big deal. Even a tenth of Carroll's lifetime estimate would make deflazacort a huge moneymaker for Marathon.

But if this is anything close to accurate, I have a question: if deflazacort is such a slam-dunk winner, why didn't some big drug company do this years ago?