Following Up: Why the Economy Shutdown vs Restart Debate is Still Idiotic

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CCP Virus, Centers for Disease Control and Prevention, coronavirus, COVID 19, drug abuse, Following Up, healthcare, Im-Politic, infant mortality, mortality, opioids, poverty, restart, suicide, Tim Mullaney, Trump, Wuhan virus

The heated debate over whether it’s more important to open the economy relatively quickly, or wait until the CCP Virus really is under control slogs on. And I mean slogs on, since once it became clear that the pandemic wasn’t going to be even close to a Black Death-like catastrophe, everyone with a working brain should have recognized that immense uncertainties are all around, and that both approaches therefore entail terrible risk.

One built-in complication, though, continues to muddy the waters. And even though decisive clarity can’t be gleaned from the available data, it’s worth pointing out: CCP Virus deaths are relatively easy to calculate – even if not perfectly identifiable, because single causes of death tend to be difficult and controversial to pinpoint for victims with important underlying health problems, and therefore different U.S. states have (not surprisingly) come up with different standards for counting them.

Deaths from a prolonged economic slump like the one into which America has been plunged are much harder to determine, and data are therefore more controversial. But no one should doubt that they’re noteworthy, and worth taking into account in any economy restart decisions.

As commonsensical as these observations sound, however, they continue being vigorously disputed, and one of the few such arguments I’ve seen that try to quantify relative rates of loss has come from economics journalist Tim Mullaney. Full disclosure: I’ve criticized Mullaney here before, finding him to be an extreme hater even by Never Trumper standards. But I hope you’ll trust me when I say I’m singling out his latest article simply because it makes the “restart later” argument in such data-dependent terms.

According to Mullaney, President Trump and other prominent conservatives are blowing the most deceitful smoke imaginable by insisting “You have to reopen the economy despite the ongoing Covid-19 pandemic, quickly, lest a wave of suicides, domestic battery and the like overwhelm even the death toll from coronavirus.”

His evidence? The CCP Virus daily U.S. death toll when he wrote his article (2,763) dwarfs the numbers of lives lost each day in the United States to economic-related causes (like many suicides), as well as the numbers lost daily during the nation’s wars. (As of yesterday, daily national CCP Virus deaths hit a much higher 4,591.) * SEE CORRECTION BELOW

The war comparisons are sobering – no doubt about it. But if you look at them realistically, so is what we know of the death toll from various forms of economic privation. For example, it’s true that “only” 132 Americans took their lives each day in 2018 (the last year for which statistics are available, as is the case with all the following numbers). And there’s no way to know how many were due to the victims’ economic circumstances. But it’s also true that, as of 2017, 1.4 million Americans tried and failed to commit suicide. There’s no way to know the reason for each one, but the daily figure comes to 3,865. Surely economics had something to do with many of them.

The clear implication: If not for circumstances unrelated to the economy, the numbers of  suicides and of economy-related suicides would be much higher. Therefore, economic-induced extreme despair is undoubtedly much more widespread than the actual suicide rates indicate. And they signal the presence of huge economy-related mental health problems. Further, given the stigma society still attaches to suicide, it’s fair to assume that the attempt numbers in particular are undercounted.

That same year, 192 Americans each day died of drug overdoses. Of these, 130 came from opioids – the category most likely influenced by worsening economic circumstances and prospects. And just as with suicides and attempted suicides, the numbers of overdose deaths are dwarfed by the attempted overdose numbers. The Centers for Disease Control and Prevention don’t provide absolute annual figures, but they do note that “For every drug overdose that results in death, there are many more nonfatal overdoses….” Chalk lots of them up to economic despair, too.

You can also learn a lot from estimates of annual lives lost to poverty as such. In 2011, a Columbia University study pegged them at 671 per day in 2000 – not a matter of thousands, but not bupkis, either. And here’s another poverty-related mortality statistic: In 2018, about 59 newborn American babies died each day. Were all due to poverty? Of course not. But they’re most heavily concentrated in racial and ethnic minority groups with the highest poverty rates, so that’s pretty revealing.

Infant mortality, moreover, points to another health and death rate reality that’s strongly affected by the state of a national economy: the state of its healthcare system.

Given America’s vast wealth and annual healthcare expenditures, and its continuing major healthcare problems, there’s no doubt that money is no panacea for better health and lower death rates. Structures of national healthcare systems matter critically. At the same time, does anyone seriously believe that the U.S. healthcare system is going to do a better job on mortality and other fronts the worse the economy fares and the longer the current downturn lasts?

Which brings up a related question: What’s likelier to happen first? Indeed, much likelier to happen first? The kinds of major economic and social policy reforms needed to alleviate American poverty significantly, or to cure what ails the healthcare system? Or finding anti-CCP Virus vaccine or cure? If you’re not sure, you just haven’t been paying attention.

Those wanting a substantial economy restart sooner rather than later can legitimately point out that the above economy-related mortality numbers overlap a great deal. And that’s true. Second and even third waves, as they warn, seem all too likely as well. But it’s also true that, when you add them all up, they’re significant, and at best can’t be too far away from the CCP Virus death figures in which much more confidence is justified.

How far away? Honestly, why should anyone care? They’re clearly close enough to warrant concern that, as Mullaney’s conservative targets contend, a prolonged mandated economic slump will exact terrible human health costs – and that the longer it lasts, the higher it will grow. It’s also crucial to remember that the CCPVirus death toll shows signs of trending down – however horrific it will ultimately be – and that absolutely no one who anyone’s listening to is urging a total national economy restart all at once. 

All of which reinforces conclusions I’ve been pushing since the CCP Virus became a genuine crisis: It confronts Americans will trade-offs as tragic as they are difficult to figure out, and that anyone arguing to the contrary is more interested in taking cheap, invariably partisan, shots than in finding solutions.

*CORRECTION.  The 4,591 U.S. deaths figure I reported here was not for April 17, but for April 16.  The April 17 figure was actually 3,856, and today’s figure is only 1,891.  Moreover, as explained here, “The spike in mid-April is due to New York City authorities adding probable cases to the city’s death tally.”  So this is the kind of correction that clearly works in favor of my argument, since these numbers indicate even more strongly that this still terrible daily figure is on the way down, and that any gap between it and comparable figures due to economically-induced mortality is even smaller than previously apparent.

(What’s Left of) Our Economy: When Washington Slept on America’s Dangerous Dependency on Foreign Healthcare Products

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active pharmaceutical ingredients, Bureau of Industry and Security, China, China virus, Commerce Department, coronavirus, COVID 19, globalization, health security, healthcare, India, medical devices, national security, Office of Technology Evaluation, offshoring, pharmaceuticals, supply chains, surgical equipment, Trade, {What's Left of) Our Economy

Last week I wrote that no one in American politics, in either party, deserves blame for failing to anticipate the China Virus outbreak (in the sense of being ready for a genuine pandemic), and especially the Trump administration’s flawed response to its spread within the United States (as opposed to its timely decision on January 31 to start curbing inbound travel from overseas – initially from China). 

But there’s one big aspect of coronavirus-related public policy where potentially calamitous and avoidable mistakes have been made, and where identifying responsibility is essential (largely to prevent repetition). That’s the growth of America’s dependence on pharmaceuticals, their active ingredients, and other healthcare-related goods from foreign sources, especially from China.

It should have been obvious long before the virus broke out in Wuhan (at least as far as we know) that health security is national security, and that the blithe approval of trade and related policies that encouraged the offshoring of production in this crucial sector was as dangerous as the offshoring of crucial defense and defense-related (because so many inputs to weapons and platforms aren’t weapons themselves) products. Even louder alarm bells should have sounded once it became clear that a leading offshoring destination was China – a dictatorship that has challenged U.S. national security interests long before the rise of current leader Xi Jinping, and whose role in medical supply chains inevitably created the threat of supply cutoffs (as has recently been threatened in the Chinese government-controlled press).

And indeed American policymakers had all the evidence they needed as early as 2011. That’s when a small office at the Commerce Department called the Bureau of Industry and Security (BIS) issued a report called – yup – “Reliance on Foreign Sourcing in the Healthcare and Pubic Health (HPH) Sector: Pharmaceuticals, Medical Devices, and Surgical Equipment.”

For many years, BIS’ Office of Technology Evaluation (OTE) has been issuing reports on sectors of the U.S. defense industry and other portions of the economy critical to the nation’s security and their use of foreign parts, components, materials, and other inputs whose availability shouldn’t be taken for granted. And fortunately, the Office and the various acts of Congress that have defined its mission have long understood that, as suggested above, national security-related industries are by no means restricted to those that turn out products that go bang and boom.

Notably, the study was requested by the Obama administration’s Department of Homeland Security (DHS), which shows commendable foresight. And the main results make jaw-dropping reading today:

>“There is a significant amount of U.S.-based manufacturing for critical healthcare-related commodities.” At the same time, “There is…a very high degree of foreign sourcing and dependency for components, materials, and finished products.”

>“Exposure to supply disruptions is widespread, but many respondents consider it a cost of doing business in the healthcare industry.”

>As a result, “Only 34 percent of respondents are taking steps to reduce their exposure to foreign sourcing and dependency issues.”

>When it comes to the chemical ingredients for drugs, where heavy China dependency has attracted so much attention today, in 2011, pharmaceutical companies reported “difficulty limiting their exposure to foreign dependencies primarily because most of the APIs [active pharmaceutical ingredients] are produced outside the United States.”

>Medical device producers stated that they were “vulnerable primarily due to their reliance on other countries for electronic parts.” Japan was the main concern, due at least in part to the earthquake that year that disrupted many industries’ supply chains. But China has become an even more important supplier since then.

Sadly, however, the record also demonstrates that once the findings came in, no serious follow-through was undertaken.

OTE surveyed 161 companies – 70 pharmaceutical producers, 75 manufacturers of medical devices and surgical equipment, and 16 companies that turned out both kinds of products. Roughly three fourths of these companies were headquartered in the United States and roughly one-fourth were foreign owned.

All told, these firms produced 868 individual pharmaceuticals and 833 kinds of medical devices or surgical equipment. Of these, in turn, 290 pharmaceuticals and 128 types of devices and equipment were deemed by OTE “critical to effective healthcare services in the United States,” meaning “needed in various emergency scenarios.” The bureau also looked into the chemical ingredients and parts and components comprising these products.

As for the specific information sought, here it is:

“Survey respondents were asked to identify the pharmaceuticals and medical devices/surgical equipment they manufactured, integrated/assembled, and/or sold for use in the United States. For each product area selected, companies were then asked to provide the top three company proprietary products they make and the location of manufacture. Finally, companies identified, to the best of their knowledge, whether they were the sole U.S.-based manufacturer, sole global manufacturer, or not the sole manufacturer of each product.”

Some of the above results in greater detail:

More than 73 percent of the total surveyed companies depended on suppliers located abroad for at least one critical component, manufacturing material, or actual finished good. And the average number of such foreign-sourced goods per company surveyed was 11.4. Seventy-nine percent of pharmaceutical firms surveyed reported themselves in this situation versus 63.7 percent of the device and equipment manufacturers, and the average number of foreign-sourced products was 11.4 for the drug companies versus 9.8 for their device and equipment manufacturers.

Interestingly, even at this point, China loomed pretty large large in the picture at that time – especially for medical devices and surgical equipment. Its entities represented 13.8 percent of the total number of foreign suppliers to U.S.-based producers. For pharmaceutical companies, they accounted for 9.1 percent – less than leader Italy (15.7 percent), India (12.8 percent), and Germany (10.6 percent). Not that this result should be especially comforting, as India – a major global producer of generic drugs – has recently announced to restrict exports because it’s experiencing difficulty getting chemicals from China and (surprise?) wants to make sure it can provide for its own population.

The OTE survey, in other words, found that, in 2011, healthcare products companies operating in the United States relied on a diverse global supply chain. But significant vulnerabilities were reported, too. Principally, for pharmaceuticals, “there was no U.S.-based source for at least 65.5 percent of [total goods] identified by survey respondents.” And for medical devices and surgical equipment, the figure was at least 60.5 percent. More troublingly, in the device and equipment sectors, the greatest dependencies tended to be in complex products.

Moreover, when thinking about the safety of imported healthcare goods, keep in mind BIS’ finding that only 60.3 percent of the companies in total could identify the suppliers of their suppliers.

Nor were significant supply disruptions unknown by healthcare products companies. Thirty percent of these businesses reported experiencing at least one of these events between 2007 and 2010, 40 percent of these came from foreign suppliers, and 17.5 percent came from China – the biggest share for any single country. Both domestic- and foreign-origin disruptions lasted an average of 155 days. Nonetheless, these figures are surely way too low, as only 18.3 percent of responding companies said they tracked foreign supply disruptions.

Even so, the study oddly found that “Only 16.6 percent of companies foresee a risk of supply disruptions from outside of the United States” but that 29 percent “believed their company was vulnerable to serious and/or prolonged supply chain disruptions from events or dependencies outside the United States.” For pharmaceuticals, the top concern again was lack of API availability domestically.”

OTE made several policy recommendations to strengthen America’s health security. For example, various major relevant federal agencies should “further examine [the] survey data to prioritize the foreign sourcing and dependencies that could have the greatest impact on the healthcare supply chain in an emergency situation.”

In addition, these agencies, “in coordination with DHS and the Department of Commerce, should assess whether the use of Defense Production Act authorities, such as the Defense Priorities and Allocations System (DPAS), could provide the ability to rapidly expand or surge capacity of U.S.-based pharmaceutical and medical device/surgical equipment facilities to meet demand in an emergency situation.” As made clear, however, by the continued sky-high levels of the healthcare industry’s China and other foreign dependencies, the problem was promptly ignored.  

Such measures, along with many others in the trade, tax, and regulatory fields will no doubt be crucial to rebuilding the kind of domestic healthcare industry so many Americans and even their leaders finally recognize is essential. But if the nation really is seriously behind the idea that health security is national security, it’s going to need updated detailed information on foreign dependencies. In other words, time to put the OTE to work again.

Following Up: Why Many of America’s Widest Divides Aren’t What You Think

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college-educated, Democrats, education, Following Up, Gallup, healthcare, inequality, minorities, non-college, opportunity, partisanship, polling, polls, race relations, Republicans, whites

“An anxious and divided nation cast its first votes,” the headline in the Washington Post moaned this morning.

As yesterday’s RealityChek post reported, though, some impressive evidence came out last week showing that the nation isn’t all that anxious, or fatally divided in the most general terms, after all. At the same time, diving into that evidence’s internals shows no shortage of divisions – only many of the dividing lines are pretty surprising.  (See the PDF linked at the bottom where it says “View complete question responses and trends.”)

For not only is the most important division by far the partisan split between Democrats and Republicans. It’s a gap that tends to be considerably wider than those between groups where divides in the last few years are supposed to have been especially and worrisomely gaping – between blacks and whites, between rich and poor, between the better educated and the less well educated.

For me, the big takeaway is that when Americans are in political moods, they get carried away by their emotions, with Republicans feeling awfully chipper about the state of the nation, and Democrats correspondingly gloomy. When they’re not preoccupied with politics, Americans seem more level-headed – and their outlooks are sunnier. But the unexpected findings scarcely stop there!

For example, let’s look at the internals of the headline satisfaction finding, which shows Americans’ feelings about the quality of their lives. A lofty 84 percent of all Americans told Gallup that they’re satisfied on this score, and 37 percent said they were “very satisfied.”

Republicans were the most satisfied Americans by a wide margin – an astonishing 96 percent called themselves satisfied, and 60 percent considered themselves “very satisfied.” The least satisfied group? Democrats. Their satisfaction levels were 77 percent satisfied and only 25 percent very satisfied.

But here’s what really grabbed my attention – and should grab yours. Keep in mind that the various groups of respondents overlap considerably (for example, both Democrats and Republicans include the wealthy and the poor, and the college-educated and the high school grads; and the both the wealthy and the poor include those identifying with both political parties).

The Democrats’ satisfaction levels were lower than those for non-whites (79 percent) and for Americans with a high school education or less (84 percent). That doesn’t sound very consistent with the notion that non-whites and those with relatively modest education levels are feeling especially downtrodden lately. But these readings definitely point to special degrees of unhappiness among Democrats. So does the fact that the “very satisfied” results for both these groups (31 percent and 34 percent, respectively) topped those for Democrats as well.

The partisan divide is even bigger, in both absolute and relative terms, for satisfaction levels regarding whether working hard can get a person ahead in America these days. In toto, 72 percent of respondents were satisfied and 43 percent were very satisfied with this situation. Non-whites’ overall satisfaction and very satisfied levels weren’t too far off those figures (71 percent and 37 percent, respectively). And the figures for those holding a high school degree at most were notably higher (77 percent and 51 percent, respectively).

But the Democrats’ results were completely in the dumps (only 47 percent and 19 percent, respectively).

Also interesting – non-whites, and Americans lacking college degrees are all more convinced than the college grads (68 percent) about the payoff of working hard, with respondents with a high school degree or less expressing the highest (77 percent) satisfaction level.

Satisfaction levels are much lower in absolute terms (43 percent overall) over the distribution of income and wealth in America – which should surprise no one. But again, those lacking a high school degree were more satisfied, and by a wide margin (49 percent), while the least satisfied (also by a wide margin) were the Democrats (21 percent).

The least educated were also more satisfied with the current rich-poor gap than college graduates (40 percent). But on this issue, non-white satisfaction levels were lower than the average (38 percent).

Gallup respondents were even less satisfied with the availability of healthcare in the United States, with only 37 percent expressing such views. Yet a familiar pattern emerges from the internals. The biggest gap was between Republicans (53 percent satisfied) and Democrats (27 percent). These also represented the highest and lowest levels of all the groups examined.

In addition, non-whites (41 percent) were more satisfied than whites the overall total (37 percent), and much more satisfied not only than the Democrats but than college grads (31 percent). The same held for Americans without high school diplomas (also 41 percent satisfied).

Finally, let’s look at a particularly explosive issue – race relations. Or at least it’s supposed to be particularly explosive. But according to the Gallup survey, there’s much more dissatisfaction than polarization – except among Democrats and Republicans.

Overall satisfaction levels are low – coming in at 36 percent. But the widest gap by far is between followers of the two parties, with 51 percent of Republican identifiers declaring themselves to be satisfied compared with only 24 percent of their Democratic counterparts. (Actually, Gallup also measured satisfaction levels according to political ideology – liberals, moderates, and conservatives. I’ve left these findings out due to the assumption because these results closely track the political parties’ results – which include independent voters. But according to this gauge, the conservative-liberal gap is somewhat wider, at 52 percent-17 percent.)

Most significantly, this partisan divide is far wider than the racial divide, with 35 percent of whites expressing satisfaction with the state of race relations and 39 percent of nonwhites so stating. Also doubtless significant: The next-least-satisfied group is college graduates, of whom only 28 percent expressed satisfaction. Further, their “very satisfied” levels (3 percent) were by far the lowest along with the Democrats’. And they were only one-third the nine percent “very satisfied” levels of non-whites.

Is the country indeed anxious?  To some extent, sure.  Is it divided?  That’s where the answer gets especially complicated.  And this complex picture indicates that, especially in this presidential campaign year, all Americans should beware of pundits and others bearing sweeping generalizations. 

(What’s Left of) Our Economy: Are Soaring Prescription Drug Prices Really a Thing?

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2020 elections, Bureau of Labor Statistics, core inflation, Democrats, healthcare, inflation, prescription drugs, Trump, {What's Left of) Our Economy

Prescription drug prices keep skyrocketing outrageously – at least, that’s what’s constantly reported.  And much of the evidence looks especially impressive:  Politicians who normally agree on nothing have vowed to rein them in – including President Trump and Democrats of all stripes, including many of the party’s presidential candidates.

So imagine my surprise when I checked into these claims by examining the consumer price data issued by the U.S. Bureau of Labor Statistics each month. They show that these prices have actually fallen on net since December, 2017 (by 0.43 percent).

Moreover, these figures also show that prescription drug prices have fallen during the past year (through May, by 0.99 percent), and that they’re dropping even though the rate of overall inflation and core inflation (which strips out volatile food and energy prices) has been rising (year-on-year by 1.80 percent and two percent, respectively).

Nor has there been a notable increase in prescription drug prices during this calendar year. From January through May, they’ve risen by 0.16 percent. But that’s still considerably less than the overall inflation rate (0.98 percent) and the core rate (0.51 percent).

That’s not to say that there hasn’t been a prescription drug price problem. For example, from May, 2017 to May, 2018, their prices rose by 3.71 percent – much faster than the overall inflation rate (2.74 percent) and the core (2.22 percent).

Moreover, during the last 27 months of the Obama administration, prescription drug prices increased by 11.14 percent, versus 2.67 percent for overall inflation, and 4.78 percent for core inflation. During the first 27 months of the Trump administration, however, these numbers are 2.07 percent, 4.59 percent, and 4.37 percent.

Americans still pay lofty prices for prescription drugs, and especially compared with consumers in other wealthy countries. It’s also important to point out that drug pricing is complicated. (Here are some of the reasons.) And I confess to having no idea why this pricing has been weak lately, and whether the decline will continue.

But when one of the country’s leading measures of inflation is saying that prescription drug prices have been going down, that should be pretty newsy. Even if “everyone knows” they’re soaring.

Im-Politic: Signs of Hopeless Division or Potential Unity?

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Affordable Care Act, Democrats, election 2020, Gallup, healthcare, Im-Politic, Immigration, independents, Obamacare, Republicans, Trump

Polls like today’s Gallup survey that try to assess what national issues and problems are foremost in American’s minds are terrifically valuable, especially as big elections like the 2020 presidential race approach. Trouble is, Democrats and Republicans and independents of all kinds will struggle to find clear trends marked out in this morning’s survey, much less derive strong comfort from it.

The difficulties start with Gallup’s overall findings about how high various major issues rank on the public’s priority scale. Competing fiercely for the top spot, and mentioned more than twice as often as the next concerns, are “The government/poor leadership” (cited by 23 percent of respondents – in this case, “US adults”) and “Immigration” (cited by 21 percent). And to be more specific, the government/leadership option offered by Gallup included “Congress” and “politicians,” not simply the President. “Immigration” wasn’t further elaborated on.

In principle, some more light might be shed on who could benefit most from this poor government finding by examining the trends over time. But as the chart below shows, although the importance of the overall government issue began rising notably right after the last presidential election (indicating that President Trump is causing most of the anxiety), the ranking became unusually volatile in the middle of last year, and has stayed that way – including through 2019. This year, of course, has seen an unpopular partial federal government shutdown most often blamed on Mr. Trump, rising levels of partisan rancor, and the climax (for now) of the Russia scandals investigation. On the whole, though, it seems reasonable to conclude that this issue is cutting somewhat against the President.

Some evidence to the contrary, however, comes from the current separate figures for Democrats, Republicans, and independents. Democrats express the most concern about the quality of government and leadership, with 32 percent pegging it as the country’s top problem. But although only 21 percent of Republicans chose this option, that result was much closer to that of independents (19 percent) than the Democrats figure. Both independents and especially Republicans are much likelier than the Democrats to blame government failings on the Democrats who now control the House of Representatives, and therefore wield much more power in Washington than during Mr. Trump’s first two years in office.

Using these criteria, the Gallup immigration findings look even more promising for Mr. Trump. It’s true that using that single noun to describe the issue masks the distinction between respondents who consider current U.S. policy too restrictive or not restrictive enough.

But assuming – not too controversially – that Republicans favor more immigration curbs, Democrats fewer, and independents as a group coming down somewhere in the middle, it seems apparent that immigration-motivated Americans are likelier to be Republican and Trump voters. Indeed, only five percent of Democrats view immigration as the country’s biggest problem today, versus 18 percent of independents and 41 percent of Republicans.

As for the rest of the issues mentioned in the Gallup survey, the responses seem to offer hope for both parties. Relatively little concern is expressed about matters such as the economy in general, unemployment and jobs, poverty, and inequality – which looks like good news for Republicans and for the President, since these results clearly signal satisfaction with the so-called pocketbook issues. Ditto for the measly three percent figure recorded for climate change and other environmental issues combined, and the failure of gun violence even to make it into the rankings.

At the same time, Democrats should feel pretty pleased that “Ethics/Moral/Religious/Family decline” alarmed only three percent of respondents, and “Crime/Violence” topped the list for only two percent.

The most puzzling message sent by the Gallup results concerns healthcare – which, it’s widely agreed, helped the Democrats greatly during last year’s midterm elections, and could be a winner for them again in 2020, especially if Mr. Trump continues his war on Obamacare.

The seven percent of the public naming healthcare as the country’s biggest problem resulted in the third highest such score (behind “The government/Poor leadership” and immigration). But especially given its enormous importance for so many families’ finances no matter how the Obamacare fight turns out – and potentially into the future if the White House and both houses of Congress are won by Democrats seeking to expand coverage dramatically – seven percent is hardly astronomical.

But how should this number be interpreted? If it signals overwhelming satisfaction with the status quo, however uncertain its durability is Republicans could benefit – but probably only if they make clear that they won’t go for major change, either. Since Obamacare (officially known as the Affordable Care Act) has shaped the status quo, Democrats in principle could take heart – particularly if their most ambitious ideas on this front fall by the wayside.

And here’s the partisan split (which I don’t think undermines the above analysis): Healthcare is seen as America’s leading problem by three percent of Republicans, seven percent of independents, and 14 percent of Democrats.

This Gallup poll’s findings that so many different and even clashing concerns are troubling Americans these days – and in so many possibly different ways – could understandably be seen as evidence that Americans are hopelessly far from agreeing on national priorities. I prefer a more optimistic take: There’s a new winning consensus and lasting political realignment in the making if only the nation’s political leaders could break out of their ideological straitjackets and build it.

Im-Politic: After Mueller/Barr, Can Trump Be Trump?

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America First, Attorney General, Betsy de, budgets, conservatism, conservatives, establishment Republicans, foreign policy, globalism, healthcare, Im-Politic, Immigration, impeachment, Kevin McCarthy, Obamacare, Populism, Republicans, Robert Mueller, Ross Douthat, seasonal workers, Special Counsel, Special Olympics, tax cuts, The New York Times, Trade, Trump, Trump-Russia, visas, William P. Barr

A week ago, I posted on the likely political impact of the end of Special Counsel Robert Mueller’s investigation of what have become known as the Trump-Russia scandals and of the release of Attorney General William P. Barr’s summary of its principal conclusions – which appear to put these charges and the threat of presidential impeachment they created behind Mr. Trump.

Now it’s time to think about a related and at least equally important subject: the policy effects. They could be profound enough to redefine the Trump presidency and the chief executive’s chances for reelection – even though the early indications seem to be saying exactly the opposite in ways that are sure to disappoint much of Mr. Trump’s political base. Here’s what I mean.

Ever since his administration’s opening months, I’ve believed that Mr. Trump’s policy choices have been strongly influenced by impeachment fears. Specifically, (and I have zero first-hand knowledge here) because President Trump feared that the Democrats and many mainstream Republicans were after his scalp, he concluded that he needed to appease his remaining allies in the latter’s ranks with policy initiatives they’ve long supported even though they broke with his own much less conventional and more populist campaign promises. 

In other words, it was the Russia and related scandal charges that were preventing “Trump from being Trump.”  

Moreover, this reasoning makes sense even if the President was certain that he faced no legal jeopardy. For impeachment ultimately is a political process, and although establishing criminal guilt is clearly helpful, it’s not essential.

The main evidence for my proposition has been the early Trump decision to prioritize Obamacare repeal over trade policy overhaul and infrastructure building; his almost libertarian-like initial budget proposal (at least when it comes to non-defense discretionary federal pending); his business-heavy tax cut; and numerous foreign policy moves that more closely resembled the globalist approaches he decried while running for the White House than the America First strategy his promised.

But although President Trump now seems certain to finish out his first term in office, he still seems to be currying favor with the Republican establishment. Just look at his latest budget proposal, and decision to go after Obamacare again – the healthcare move reportedly made despite the pleas of establishment Republicans like House GOP Leader Kevin McCarthy to move on from an issue now stamped as a major loser politically and threat to the party’s 2020 election prospects across the board.

It’s true that many of Mr. Trump’s trade and immigration policies still clash with the donor-driven agenda of the Republican establishment, and especially the party’s Congressional leaders. But even on these signature issues, the President arguably could be breaking even more sharply with the longstanding Republican and conservative traditions.

For example, Mr. Trump continues to keep suspended his threat of higher tariffs on many imports from China in apparent hopes of reaching a successful trade deal even though Beijing still seems determined to avoid significant concessions on “structural issues” (like intellectual property theft and technology extortion) and on enforcement.

On immigration, the President has just raised the 2019 cap on visas for unskilled largely seasonal foreign guest workers to levels never reached even during the Obama years. His administration also has permitted visas for farm workers to hit record levels and done little to stem the growth of work permits for foreign graduates of U.S. college and universities that critics charge suppress wages for high skill native-born workers.

One intriguing explanation for this continuing policy schizophrenia comes from New York Times columnist Ross Douthat. In a piece this past weekend, Douthat made the case that, although President Trump’s actual record has been largely heretical in mainstream conservative terms, when it comes to staffing (and especially key staff positions)

“there are effectively two Trump presidencies. One offers something like what the president promised on the campaign trail — a break with Paul Ryan’s green-eyeshade approach to entitlement reform, a more moderate tack on health care, an indifference to Obama-era conservative orthodoxies on fiscal and monetary policy.

“The other offers a continuation of the Tea Party’s insistence on spending cuts and Obamacare repeal, and appropriately its present leader is a former Tea Party congressman — Mick Mulvaney, the Zelig of the administration, whose zeal is apparently the main reason that the Obamacare lawsuit now has administration support.”

And the main reason for this confusing mix? The President has relied “on personnel who are associated with 2010-era G.O.P. orthodoxy, rather than elevating the kind of conservatives who have actively theorized for a more populist right.”

It’s so hard to argue with Douthat’s facts that I won’t. But they still leave the main puzzle unexplained – why so many of the President’s personnel picks have been so un-Trumpian. And much of the answer points to a problem that was clear to me ever since Mr. Trump’s presidential candidacy achieved critical mass and momentum, and that doesn’t seem solvable for the foreseeable future.

Specifically, as I’ve previously noted, conservative populists (I’m never been thrilled with this description of “Trumpism,” but for the time being it’s convenient) have never created the institutions and therefore cohorts of first-rate policy specialists remotely capable of staffing a conservative populist administration. Even if you want to identify immigration as an exception – where organizations like the Center for Immigration Studies put out top-flight studies – it’s clear that nothing of the kind has ever existed on the trade and foreign policy fronts.

And even worse, because of the long lead-times needed to achieve these goals, Mr. Trump appears doomed to dealing with shortages of competent true-believers as far as the eye can see. In fact, he’ll face a special challenge in the next few months, as the second halves of first presidential terms tend to see the departures of many early, often burned out appointees. And of course, the Trump presidency has already experienced much more than its share of turnover.

So I’m expecting an indefinite continuation of the eye-popping sequence of events of the previous week – in which Trump Education Secretary Betsy deVos announced an end to federal funding of the popular Special Olympics program, a public outcry ensued, and the President abruptly reversed her decision.

It’s hard to imagine that this kind of zigging and zagging can win President Trump reelection. But it’s also conceivable that the post-impeachment situation will “Let Trump be Trump” just enough – especially if the Democrats err in picking an overall strategy for opposing him.  After all, nothing has been more common in recent American political history than completely off-base predictions of Mr. Trump’s demise.

(What’s Left of) Our Economy: Private Sector U.S. Jobs Increasingly Really Deserve the Name

Tags

Barack Obama, Employment, healthcare, Jobs, private sector jobs, recession, recovery, subsidized private sector, Trump, {What's Left of) Our Economy

Although unemployment in America has hovered near multi-decade lows for most of the last year, concerns about job quality rightly persist – largely because wage gains have only recently showed signs of recovering to historically normal levels for a recovery. But the latest official data from the Labor Department demonstrate that the makeup of the country’s employment picture and how it’s changed make clear continued improvement in one key measure: Growing private sector employment increasingly reflects gains in what I’ve called the real private sector, as opposed to the subsidized private sector.

Also apparent from the employment figures: The resurgence of the real private sector in relative terms as well as in absolute terms has been a Trump era phenomenon.

As known by RealityChek regulars, this trend is encouraging because the subsidized private sector consists of parts of the economy that are often (and even officially) viewed as parts of the private sector, but whose health depends largely on government largesse. That is, its total employment and its employment gains would be much smaller without huge government payouts – i.e., politicians’ decisions. The healthcare services industry is the main example.

By contrast, the real private sector consists of parts of the economy whose health flows largely from free market forces. So without getting involved in the debate over whether the United States supports too many subsidized private sector jobs or not, it should be clear that they have little to do with the state and health of the economy as a whole – unlike real private sector jobs.

According to the Labor Department’s Bureau of Labor Statistics, from 2013 through 2016, the subsidized private sector’s share of total annual employment increases more than doubled: from 11.34 percent to 25.99 percent. And its share of annual total private sector jobs gains (that is, employment increases by the private sector as conventionally defined), soared from 11.02 percent to 28.59 percent.

During 2017 and 2018 (and the data for late 2018 is still preliminary), the subsidized private sector’s share of total annual U.S. jobs gains dropped to 21.04 percent and then to 19.90 percent. And its share of the growth of total private sector jobs fell to 21.91 percent and then to 20.74 percent.

Another way to look at the Obama-era growth of subsidized private sector employment is to examine its growth as a share of the growth of real private sector jobs. In 2013, this figure stood at 12.38 percent. In 2016? Just over 40 percent. In other words, in the last year of Barack Obama’s presidency, some four in ten of the net new jobs created in the private sector came in the subsidized private sector – meaning that they were heavily dependent on government largesse.

In 2017 and 2018, subsidized private sector jobs growth as a share of total private sector jobs growth sank all the way to 28.05 percent, and then to 26.16 percent.

Looking at the economy from a static standpoint – i.e., through snapshots taken at crucial dates – illustrates these trends, too, although less dramatically. After all, even major relative changes can take many years to show up as major absolute changes in a supertanker as big as the U.S. economy.

At the outset of the last recession the subsidized private sector represented 13.67 percent of all U.S. jobs and the real private sector’s share was 70.16 percent. And the subsidized private sector’s share of the total (conventionally defined) private sector was 19.49 percent.

By the time the recovery began, in mid-2009, these figures stood at 14.97 percent and 67.80 percent – showing that during an economic downturn that decimated the overall American jobs market, subsidized private sector employment rose not only in relative terms but in absolute terms (from 18.92 million to 19.61 million. Meanwhile, the subsidized private sector’s share of the total private sector employment had risen to 22.07 percent.

By January, 2017 – the final month of the Obama administration and eight and a half years into the recovery – the subsidized private sector comprised 15.75 percent of all American jobs, and the real private sector was back up to 68.94 percent. Subsidized private sector employment had grown to 22.84 percent of total private sector jobs.

By December, 2018 (results that are still preliminary) the subsidized private sector’s share of all American employment had kept increasing – to 15.91 percent. And the real private sector’s share grew modestly, too – to 69.11 percent, as did the subsidized private sector’s share of the total private sector (to 23.02 percent).

Nevertheless, this examination of the changing dimensions of subsidized private sector employment also reveals that the national jobs market still hasn’t returned to pre-recession normality. In particular, even though the current recovery is nearing it’s tenth anniversary, that real private sector share of total employment (69.11 percent) is still below where it stood at the downturn’s onset (70.16 percent).

Im-Politic: Want to Really Fuel Big Government? Ditch Trump’s Trade Policies

Tags

Affordable Care Act, big government, budget cuts, Congress, conservatives, discretionary spending, entitlement spending, healthcare, Im-Politic, industrial policy, Mick Mulvaney, Obamacare, Republicans, Trade, Trump, USAToday

USA Today‘s editorial yesterday on U.S. trade policy did an excellent job of stating a major objection to tariffs and other measures that interfere with international commerce – and one that understandably resonates strongly in a nation that prizes free market values, and especially among its conservatives: These trade curbs fuel Big Government, thereby preventing the economy from achieving its full potential, and harming the nation’s society and culture as well as the economy by sapping the attractiveness of individual initiative.

The essay also understandably focused on a development that looks like a poster child for trade-fostered Big Government – the process set up by the Trump administration to decide which companies will receive exemptions from recent metals tariffs, based on claims that adequate domestic substitute steel and aluminum products aren’t available.

In the words of the editorial writers:

“[T]he administration has imposed a new tax on imported metals and then put itself in a position to decide who has to pay it and who does not.

“This is Big Government at its worst — arbitrary and capricious, if not outright political, as it picks winners and losers in business. And all this is being done without any new law being passed and while a Republican Congress, which used to stand for free enterprise and limited government, remains supine.”

One obvious rejoinder is the observation that, however cumbersome the exemptions process may or may not be, Washington actually has an impressive historical record of “picking winners and losers in business.” Examples include the information technology hardware and software industries, which were practically launched with public (largely Pentagon sponsored) research and development funds, and critically nurtured by government (again, largely defense-supplied) markets; the world-class farming sector fostered by U.S. Department of Agriculture research findings; the equally world-class pharmaceutical industry aided by the National Institutes of Health; and an aviation and aerospace industry supported by the Defense Department, by the National Aeronautics and Space Administration, and by a NASA predecessor aeronautic agency. (For an excellent summary of this historical record, see this study from the National Academies of Science.) 

But there’s another vital point missed by USAToday and by conservatives who remain devoted to preserving or renewing the expansion of the existing free trade realm: If they succeed, they’re likely to see the kind of Big Government metastasis America has never experienced before. The reason? So many renumerative Americans jobs will be lost, and so much income destroyed, that political pressures for a much more generous welfare state will positively skyrocket.

Another favorite cause of newspaper editorialists like the USAToday writers and many Big Government-phobic conservatives – the return of mass immigration – will bring the same type of outcome, for many of the same reasons.

And if you think that the nation’s leaders will unite to uphold the causes of self-reliance and much smaller government, you weren’t paying attention to the recent fight over abolishing “Obamacare.” For better or worse, the national healthcare system created at the initiative of the former President remains largely in place even though its Republican opponents control the entire federal government and a huge majority of state governments because lots of these Republican politicians recognized that eliminating this latest entitlement would be political suicide.

At the same time, standard-issue conservatives aren’t the only Americans who may need to learn these lessons. Donald Trump belongs on this list, too. Interestingly, he won the presidency after running a campaign that both promised an Americans-First overhaul of trade policy and to protect the nation’s immense middle class entitlement programs – both of which clashed strongly with conservative dogma.

But his biggest first-year push as President involved going after Obamacare – well before he had achieved any of his trade policy goals, and before he even began pursuing them energetically. And he’s so far permitted his budget director, former Tea Party stalwart Mick Mulvaney, to propose numerous deep cuts in discretionary spending and even some entitlement spending that aren’t exactly middle class-friendly, either.

This set of priorities may have been unavoidable politically, reflecting Mr. Trump’s perceived need to establish some conservative bona fides with Congressional Republicans – who mainly still strongly support the party’s old orthodoxy, but whose staunch backing he would need in any impeachment proceedings.

At the same time, a fair number of those donors-friendly, offshoring-happy Congressional Republicans are retiring – largely because they recognize that Trump-ian trade and other unorthodox policies have won over the base. And although Democratic hardliners may indeed push successfully for impeachment proceedings if the party wins the House, it’s likely that, in the absence of a major smoking gun, this campaign could alienate independent voters – who are hardly gung ho to give Mr. Trump the heave-ho. Chances are they’d be even less receptive to an impeachment spectacle dominating Washington if the President distanced himself from meat-axe public spending cuts.

If this scenario unfolds, the loudest voices complaining that Trump-ian trade policies lead to Big Government could be mainstream media editorialists and pundits. But these voices would be less important than ever.

(What’s Left of) Our Economy: America Keeps Getting More Manufacturing-Lite

Tags

Commerce Department, finance, GDP, Great Recession, gross domestic product, healthcare, manufacturing, real value-added, recovery, subsidized private sector, value added, {What's Left of) Our Economy

The Commerce Department’s “GDP [Gross Domestic Product] by Industry” reports aren’t considered market movers by those in the know in economics, business, and finance. Still, I find them well worth following because they provide the most authoritative evidence available on whether numerous claims about the economy’s strengths and weaknesses meet the reality test.

The big takeaway here? For all the post-financial crisis talk from politicians across the political spectrum about the need to reindustrialize the U.S. economy, manufacturing remains a major growth laggard. Indeed, by two key measures, it still hasn’t recovered fully from the Great Recession.

Commerce’s latest report takes the story up to the second quarter of this year, and revises the previously published results back to 2014. For some reason, the new 2014 numbers won’t come out till next month, but we do have the 2015, 2016, and first quarter 2017 revisions. Here’s what they say.

From 2015 through the first quarter of this year, manufacturing’s inflation adjusted growth rate – according to a gauge called “real value added,” which aims at eliminating unintentional double-counting – has been a few ticks lower than originally judged. The 2015 performance was revised down by 0.6 percentage points, the 2016 growth was upgraded by a full percentage point, and the first quarter 2017 result was downgraded by 0.8 percentage points. As for the latest, second quarter 2017 number, it’s a healthy four percent at an annual rate.

Manufacturing real value added’s contributions to growth have been a little more modest, too – which means that it’s been growing more slowly than the rest of the economy. That trend comes through more clearly from the Commerce data showing industry’s actual share of GDP. The main numbers are presented in current dollar terms, meaning that they don’t factor in inflation. But they make clear that manufacturing value added has declined from representing 12.1 percent of total American economic output in 2015 to accounting for just 11.5 percent in the second quarter of 2017.

To make the point even more emphatically, when the Great Recession broke out, in the fourth quarter of 2007, manufacturing value added represented 12.4 percent of gross domestic product.

Of course, there’s a case to be made (not that I accept it) that as long as manufacturing is growing, it doesn’t matter whether it’s becoming a bigger or smaller share of American economic output. But even by these standards, U.S. manufacturing is faltering. The new Commerce numbers show that, since the recession began, manufacturing real value-added is down. It’s not down by much – 0.18 percent in toto. But we’re talking about absolute shrinkage over a period of nearly ten years.

As RealityChek regulars know, the Federal Reserve’s industrial production reports (which also adjust for inflation), peg manufacturing’s shrinkage since the end of 2007 at an even greater 4.26 percent. Only if you take price increases out of the picture does manufacturing show a real recovery. In current dollar value added terms, it’s grown by 18.26 percent during this period.

But even by these terms, manufacturing’s laggard status stands out. In fact, since the fourth quarter of 2007, it’s share of the economy’s value-added has fallen by 10.16 percent. That’s the greatest such drop in the whole economy after mining (26.09 percent) and construction (10.42 percent).

The leaders, by these criteria? The subsidized private sector (industries, notably healthcare services, whose size is determined largely by government largesse) is number one, increasing its share of value added by 16.22 percent. Next is a supersector comprising arts, recreation, accommodation, and food services (up 13.89 percent). And remember all the concern that the pre-recession, bubble-ized economy of the previous decade was too Wall Street heavy? Since it brought the entire world to the brink of economic disaster, the finance super-sector has boosted its share of value added by a healthy 5.05 percent.

(What’s Left of) Our Economy: The Dubious Labor Shortage Claims Keep Coming

Tags

BLS, Bureau of Labor Statistics, healthcare, Immigration, labor shortages, nurses, nursing, Reuters, wages, West Virginia, {What's Left of) Our Economy

Perhaps some day we’ll find out when it apparently became mandatory for journalists to write articles about supposed labor shortages in the American economy without once mentioning the word “wages.” For now, RealityChek will have to settle for citing yet another example of this phenomenon that contains an interesting twist: The reporter in question did look at some data from the Bureau of Labor Statistics (BLS), the U.S. Labor Department division that gathers and publishes employee compensation figures. But she still left out BLS numbers on wages and salaries.

According to Jilian Mincer of Reuters:

“Hospitals nationwide face tough choices when it comes to filling nursing jobs. They are paying billions of dollars collectively to recruit and retain nurses rather than risk patient safety or closing down departments, according to Reuters interviews with more than 20 hospitals, including some of the largest U.S. chains.

“In addition to higher salaries, retention and signing bonuses, they now offer perks such as student loan repayment, free housing and career mentoring, and rely more on foreign or temporary nurses to fill the gaps.”

And as indicated above, she is clearly familiar with the BLS as a reliable source of information on the American employment picture. Later in the article, she writes that “Nursing shortages have occurred in the past, but the current crisis is far worse. The Bureau of Labor Statistics estimates there will be more than a million registered nurse openings by 2024, twice the rate seen in previous shortages.”

But for some reason, she didn’t mention the BLS wage data – a crucial omission because everything we (think we) know about economics tells us that when anything, including labor, is scarce, its price (pay in this case) will rise until the greater rewards attract an adequate supply. Common sense supports this analysis, too. If employers are scrambling to fill jobs, it stands to reason they’ll offer better pay to make sure they and not their competition attract the needed workers.

And what the BLS data tell us is that no such scramble is taking place – or at least not enough of one to bid up wages. The last year for which detailed data for occupations (as opposed to sectors of the economy) is available is 2016. The numbers say that last year, the mean (average) national annual wage for registered nurses was $72,180 before inflation, and the mean hourly wage was $34.70.

Now let’s go back five years. The 2011 numbers? An annual mean wage of $69,110 and an hourly median wage of $33.23 per hour. So pay by these key measures wages rose by 4.44 percent over those five years and 4.42 percent, respectively. And again, that’s before adjusting for inflation. Does that sound like the hospitals and other healthcare providers that employ nurses are desperate for more?

Even stranger: Nursing pay has been rising more slowly than pay overall during this period. Between 2011 and 2016, mean annual wages for all occupations were up 9.73 percent, and mean hourly wages were up by 9.75 percent. That’s more than twice as fast! (See the same links that contain the national nursing figures.)

In fairness, Reuters’ Mincer looks at an additional nursing issue – the labor situation in rural areas, which she describes as especially dire. And it does seem to make some intuitive sense that small towns and farm communities would have special difficulties staffing medical facilities. But the numbers don’t seem to back up that story, either.

The author spent considerable space reporting on West Virginia. But the BLS numbers show that, between 2011 and 2016, both hourly and average nursing pay advanced by 4.50 percent. That’s only slightly more than the national rates of increase.

Yes, Mincer’s piece did talk a lot about healthcare providers offering “higher salaries, retention and signing bonuses [and] perks such as student loan repayment, free housing and career mentoring….” It’s entirely possible that she’s right. (The government doesn’t keep detailed occupational figures on these scores.) It’s also entirely possible that the data that is tracked by BLS is way off base. But when you’re claiming “labor shortage,” shouldn’t you at least mention that the most comprehensive facts available about base pay say nothing of the kind?

Moreover, buried in the article – indeed at the end of the quote immediately above – is a clue to the apparent paradox: Mincer’s observation that the healthcare industry is relying “more on foreign…nurses to fill the [employment] gaps.”

If true, that would make clear that lax immigration policies are still enabling nurses’ employers to suppress pay by easing any shortages in the domestic labor force by hiring immigrant nurses who will work for significantly lower pay than native-born workers. And it would suggest that the Cheap Labor lobby encompassing so many American businesses is still able to keep these wage-suppressing global labor pipelines open by peddling a steady stream of warnings about bogus labor shortages to gullible journalists.