Moneybox
A blog about business and economics.

Nov. 11 2016 4:29 PM

Donald Trump Just Said He Might Be Willing to Keep Parts of Obamacare

I don't want to give anybody a false sense of hope here, but Donald Trump just told the Wall Street Journal that after chatting with President Obama, he might not want to junk the entire Affordable Care Act after all. According to the paper, Trump says that he would now consider keeping the regulations that allow Americans 25 and under to stay on their parents' health insurance and prevent insurers from denying coverage to consumers with pre-existing conditions. “I like those very much,” Trump said.

I imagine many Republicans have to be flipping out right now. Pretty much everybody wants to continue letting adult children stay on their parents' plans. But it is almost impossible to eliminate the rest of Obamacare if you keep the rules forcing insurers to cover patients with pre-existing conditions. That requirement is why we have the individual mandate—so that carriers can sign up enough healthy, profitable patients to balance out the sick, unprofitable ones. And of course, if you have to have a mandate, you have to have subsidies for coverage, etc., etc. Conservative wonks have tried to think up alternatives to Obamacare's regs on this—one idea would ensure that patients with pre-existing conditions can keep their coverage so long as they continuously paid premiums—but they're far less strict and consumer friendly.

Why Trump's change of heart? Per the WSJ:

On health care, Mr. Trump said a big reason for his shift from his call for an all-out repeal was that Thursday meeting at the White House with the president, who, he said, suggested areas of the Affordable Care Act to preserve. “I told him I will look at his suggestions, and out of respect, I will do that,” Mr. Trump said in his Trump Tower office.

“Either Obamacare will be amended, or repealed and replaced,” Mr. Trump said.

So, Obama just told him about this stuff, and Trump thought it sounded worth looking into. It's not as if he's making any promises. And maybe our president-elect is just BSing here. But if not, it's a remarkable change in rhetoric. And I'm going to count this as evidence of my prior thesis that Trump does not actually know what Obamacare does. Also, it'd be a jaw-dropping demonstration of just how easily influenced he is.

Of course, Trump is also busy stocking his transition team with doctrinaire conservatives and cranks right now. I'm sure there'll soon be plenty of people around him urging the complete destruction of the Affordable Care Act. And there's no reason to think he won't listen to them when the time comes.

Nov. 10 2016 7:04 PM

Atlantic City, Where Trump Stiffed Workers and Swindled Investors, Loses Self-Governance

Donald Trump is going to Washington, New Jersey Gov. Chris Christie may be going with him, and Atlantic City—a place they both know intimately well—is losing its right to self-government.

The two events aren't directly related; Atlantic City's problems were greater than Trump, and Trump's swindles covered much more ground. But in a strange twist of fate, Atlantic City was approved for state takeover on the same day the city's most infamous mogul was elected pesident of the United States.

The troubled boardwalk town, locus of Trump’s dishonest payment practices and repeated business failures, hit a new low on Wednesday with the announcement that New Jersey would initiative a state takeover.  The head of New Jersey’s Local Finance Board, longtime Chris Christie official Timothy Cunningham, will have the power to sell municipal assets, fire city employees, and renegotiate union contracts, the New York Times reports.

Atlantic City has been subject to some form of state supervision since 2010, but the last four years have been particularly rough. Hurricane Sandy pummeled the boardwalk in 2012, causing millions in damage. Newer, fancier casinos have opened across other states in the Northeast, drawing away the clientele. Five boardwalk casinos in A.C. have closed since 2014, putting a huge dent in what had been an economic engine for the fading beach resort since the late 1970s.

The troubled boardwalk town, locus of Donald Trump’s dishonest payment practices and repeated business failures, hit a new low on Wednesday with the announcement that New Jersey would initiative a state takeover.  The head of New Jersey’s Local Finance Board, longtime Chris Christie official Timothy Cunningham, will have the power to sell municipal assets, fire city employees, and renegotiate union contracts, the New York Times reports. In a strange twist of fate, that was also the day the city's most infamous mogul was elected pesident of the United States.

Atlantic City has been subject to some form of state supervision since 2010, but the last four years have been particularly rough. Hurricane Sandy pummeled the boardwalk in 2012, causing millions in damage. Newer, fancier casinos have opened across other states in the Northeast, drawing away the clientele. Five boardwalk casinos in A.C. have closed since 2014, putting a huge dent in what had been an economic engine for the fading beach resort since the late 1970s.

Nov. 10 2016 4:00 PM

Why Trump’s Win Didn’t Crash the Markets

Heading into this week's election, it seemed fairly clear that investors were dead terrified by the idea of President Donald J. Trump. When his chances of winning rose, stock prices fell. When his chances of winning fell, stock prices rose. On Tuesday night, as it became clear that the man might actually pull off an unexpected victory, markets convulsed—Dow Jones futures fell hundreds of points. It looked like panic on Wall Street.

But then things settled down, and on Wednesday the markets began to rise. The S&P 500 is actually up more than a percentage point since the vote. So why are investors seemingly learning to love—or at least make peace with—our president-elect?

A standard disclaimer: Trying to derive meaning from price movements in markets is often useless guess work. With that said, I think the pattern we've watched unfold reflects two basic facts. First, investors generally hate uncertainty. When you're betting many millions or billions of dollars based on complicated projections about the future, it's frightening when your assumptions are suddenly upended. Most people presumed Clinton would win. Moreover, Trump is a temperamentally erratic question mark who many are worried might land us in trade war or worse. Fairly or not, analysts have suggested that the man's plans could land the U.S. (and maybe the world) in a deep recession.

I think that's why, until Tuesday, the markets seemed to be rooting for Clinton. But now, a second reality appears to have set in: Trump's policy agenda, insofar as he has one, is going to be a bacchanal for corporate America, particularly industries that fared poorly during the Obama administration. The president-elect wants to pass massive corporate tax cuts. That means more profits to shower on shareholders. He wants to nix Obamacare's surtax on capital gains. That means investors get to keep more of their returns. These are wonderful developments for Americans lucky enough to have significant equities portfolios, even if it's not for the poor and working class families who will likely see safety-net programs slashed to (partially) pay for these cuts.

Some industries will benefit more than others, of course. Trump wants to unleash fossil fuels and finance by rolling back Obama's clean power plan and Dodd-Frank, among other deregulatory moves. He will also in all likelihood end the Department of Education's quiet (and just) war on for-profit colleges. And as the Roosevelt Institute's Mike Konczal shows in this very helpful chart, companies in some of those sectors have been doing exceptionally well over the past couple days.* The biggest banks alone have added more than $53 billion to their market cap. Industries favored by liberals, like green energy, may not be doing so swimmingly. (Tesla's stock dropped sharply Wednesday, for instance.) But it seems the profit opportunities for corporate America outweigh the perils as far as the markets are concerned.

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Roosevelt Institute

So, if you want to be detailed about it, you could say markets have decided that we’re more likely to see soaring corporate earnings thanks to tax cuts and deregulation than we are an economically disastrous trade battle with China, especially given Trump’s tendency toward rhetorical bluster. The more simple version: It may be the end of the world as we know it, but investors have every reason to feel fine.

*Correction, Nov. 10, 2016: This post originally misspelled Mike Konczal’s last name.

Nov. 9 2016 3:52 PM

Don’t Mourn the Election. Find a Charity and Help It Now.

If you feel stuck in a state of mourning this pitch-black day-after-the-election, if the words “President-elect Donald Trump” fill you with anger and sadness and profound dread, I’d like to make a suggestion. Pick a charity, preferably after a little research. Then go volunteer or make a donation.

I realize that sounds sort of insignificant compared with the world-historic enormity of what transpired Tuesday night. But at a moment like this, when it feels like all hope has been extinguished from politics, adding a little bit of good to the world around us—doing a little bit tikkun olam, to get all Hebrew school about it—is one of the only ways we can all take back some measure of control. And in the age of Trump, small, individual acts of charity are going to be more necessary than ever.

There’s a strong chance that over the next four years, much of the American social safety net will be badly damaged if not outright shredded. Congressional Republicans have been waiting for the entire Obama era to realize a radical restructuring of American government. They want to slash taxes, particularly on the wealthy, and slash spending on the poor. House Speaker Paul Ryan has claimed that his proposed reforms to anti-poverty programs “is not a budget-cutting exercise.” But the Center on Budget and Policy Priorities notes that the latest House budget plan would eliminates $3.7 trillion from programs that benefit low- and moderate-income households over a decade. “In 2026,” the think tank notes, “it would cut such programs overall by 42 percent—causing tens of millions of people to lose health coverage and millions to lose basic food or other support.” Its not a given that President Trump would sign such a plan. But I wouldn’t bet against it.

Charity will not come even close to making up for that lost spending. We are talking about cuts to health insurance programs, food stamps, Pell grants for college kids, and more. Even if it could, we wouldn’t necessarily want it to; private philanthropy is a poor replacement for a functioning welfare state because it’s less equipped to deal with recessions. The government can always spend more to help people during a downturn, but when the economy sours, private donations tend to dry up.

But we’re not talking about a first-choice scenario. We’re talking about a near-future when lots of people could suddenly find themselves in need without the helping hand of Washington to steady them. Every little bit of help is going to count. And there’s something especially strong to be said for getting involved with charity in our local communities at a moment when it feels like American civil society is really, truly fraying. Our fractured country isn’t coming together anytime soon, but we can at least try to build institutions and community in our own backyards.

I’m not an expert on philanthropy, so I won’t try to tell you what the single, scientifically proven, most-effective use of your time or cash would be. I’m always a little skeptical of those kinds of analyses, anyway. But try to commit to something soon, while you’re still outraged and upset and motivated—before we get complacent under the new normal of the Trump administration, however detestable it might be. Personally, I’ll be increasing my monthly donation to the Food Bank for New York City, and calling my neighborhood food pantry to see if they need some volunteers. We all have to do what we can.

Nov. 9 2016 1:19 PM

A Few Ways America Got a Little Better Tuesday Night

It’s a dark morning for multiculturalism in America, but liberals can savor a few local gains.

At the state and metropolitan level, progressive initiatives like legal marijuana, the minimum wage, and better transit systems earned support nearly everywhere they appeared.

California, Massachussets, and Nevada legalized recreational marijuana, with Massachusetts becoming the first East Coast state to do so. Maine’s marijuana vote is deadlocked at 50-50 but pro has a slight edge. Arkansas, Florida, Montana, and North Dakota voted to allow medical marijuana. The only pot ballot measure that failed was in Arizona, where recreational marijuana fell 52-48. Arizona already allows doctors to prescribe the drug.

Arizona, though, joined Maine, Washington, and Colorado in raising the minimum wage. Arizona’s initiative, which also includes a paid sick leave guarantee,  gained steam statewide after the GOP-controlled legislature made it clear they would allow no progressive laws on wage or paid sick leave at the city or county level. It was a a populist rebuke to a conservative-dominated statehouse. A motion to lower the minimum wage for minors failed in South Dakota.

Gun control initiatives passed everywhere they appeared, in California, Maine, Nevada and Washington. Solar power survived a deceptively worded ballot amendment in Florida. Colorado became the sixth state to legalize assisted suicide. South Dakota and Missouri adopted campaign finance laws.

Maine becomes the first U.S. state to adopt ranked-choice voting in state and federal elections, which will make it easier to support third-party candidates by eliminating the third-party spoiler effect that was on display in Florida, Michigan, Wisconsin and Pennsylvania last night. I wrote more about that system here.

Nov. 9 2016 2:39 AM

Donald Trump Will Erase the Obama Era

I’m not sure anybody is ready to put into words what transpired Tuesday night. Donald Trump, a know-nothing demagogue who rallied working-class white voters to his campaign by scapegoating Hispanics and Muslims, who winked to white nationalists, who promised to shred America’s traditional foreign policy alliances, who shattered basic norms like releasing his tax returns, who spent several days of his candidacy insulting the parents of a fallen U.S. soldier, has won the presidency of the United States. He is a political figure unlike any in our history, and it is hard to fathom what his victory will mean for the future of our country and national character.

But speaking purely from a policy perspective, I do think it is clear what we are about to lose. It starts with the erasure of the Obama era, which gave America its first true steps toward a more progressive, compassionate government after some three decades of conservative policy dominance—all while helping the country gradually recover from the worst economic catastrophe since the Great Depression. Trump will happily undo every piece of the president’s legacy that he can, if only to satisfy his personal vendetta against the man. And he will have the aid of Republicans in the House and Senate, who have been biding their time since 2010 for the opportunity roll back Obama’s key achievements. Trump and House Speaker Paul Ryan may not see eye to eye on everything. But they do share a desire to blot out the past eight years.

Obamacare is, of course, in deep danger. For all its faults, the law has helped extend health insurance to some 20 million Americans who previously lacked coverage. It now stands to be repealed—and possibly replaced with some insubstantial, faux version of reform. It will only take 51 votes in the Senate to do it thanks to the chamber’s budget reconciliation rules. Furthermore, Trump has said he would turn Medicaid into a block grant program, which would likely leave millions more uninsured.

For technical reasons, some of Obama’s other achievements may be trickier to dismantle wholesale, but at the very least Trump will be able to erode them badly. (And if Republicans eliminate the filibuster, it won’t be tricky at all.) Trump has promised to junk the Environmental Protection Agency’s Clean Power Plan, the president’s legacy of fighting climate change, and Dodd-Frank’s Wall Street reforms. The planet will continue to heat. The markets will be free to run wild. We may very likely collapse into another recession.

In many ways, it will almost be as if the past eight years never happened. And what then? It’s possible the Trump era might become a truly radical experiment in conservative government: He has promised enormous corporate and personal income tax cuts that would favor the rich. Presumably, something will be cut to pay for it—and I think it’s safe to assume that something will be programs for aiding the poor. If so, America would be a hungrier, sicker, more unequal place in the future.

You can speculate more—about trade wars, about what on earth his immigration policy will actually be. None of this touches his terrifying authoritarian instincts, his frighteningly incoherent foreign policy pronouncements, or that he will be able to pick at least one Supreme Court justice. But in the shock of this moment, what I personally keep coming back to is the future America has chosen to turn its back on. The past eight years made halting progress toward a more fair government and economy. Right now, we can only mourn that progress’s imminent loss.

Nov. 9 2016 2:15 AM

The Stock Markets Are Reacting Badly to the Prospect of a President Trump

In Wednesday’s wee hours, as Donald Trump looked increasingly certain to emerge as the next president of the United States, stock markets began crashing.

Nov. 8 2016 8:58 PM

Donald Trump’s Election Night Party Is Charging $13 for Wine and $7 for Soda, but It’s Probably Not His Fault

Lots of tweeters made quick work Tuesday night bashing Donald Trump for the price of the booze at his election night party after seeing this tweet from the Washington Post’s Dana Milbank.

Yep, that’s $13 for a mixed drink or a glass of wine, $10 to $11 for a beer, and $7 for a soft drink. Ritzy!

But take a step back. Cash bars are a common sight at electoral victory parties. What’s a bit out of line are the prices at Trump’s soiree, which is at the New York Hilton. And apparently there is an open bar in the VIP section at Trump's bash, according to the New York Post. But this probably isn’t another example of Trump profiting at his supporters’ expense—shocking, I know. In the catering industry, it’s the venue that most likely sets the price for drinks if the host isn’t footing that particular tab. Trump’s mistake was picking an expensive midtown Manhattan hotel for his hoped-for victory party.

A state subsidiary owns the Jacob K. Javits Center, where Hillary Clinton is holding her celebration and, as a result, the prices are a bit more reasonable. A source on the ground at Javits tells me the concession there is charging $5 for a bottle of Vitamin Water. It’s unclear whether the booze is gratis tonight, but an online catering menu lists the most expensive wine at Javits at $9, while imported beers are $8.25 and mixed drinks range from $8.50 to $9.50. As for food, tonight the Javits concessions is offering up a chicken parmesan with a side of spaghetti for $11.30 and three meatballs for $7, among other options. From my source at the Javits:

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Anyway, it’s true that Trump is so cheap he once famously cashed a 13 cent check sent as a joke by Spy magazine. Tonight, though, the $7 soda is probably not his fault.

Nov. 8 2016 9:21 AM

Now Startups Have Figured Out How to Make Money on “Volunteer” Rides to the Polls

Perhaps you’ve seen tweets like these in recent days:

Ride-hailing services will colonize yet another corner of the American experience this Election Day, and for those snagging a free ride, that’s hardly be a bad thing. Volunteer efforts to drive voters to the polls can surely use all the help they can get. But this project is a bit more discomfiting than initially meets the eye—offering yet more evidence that there are few remaining spaces where tech startups haven’t figured out how to shave off a slice.

The campaign is the work of a recently formed super PAC, My Ride to Vote, formed by Silicon Valley investors Marc Porat and Adam Berke, plus Anna Soellner, the former vice president of communications for the Center for American Progress. Left-leaning and certainly well-intended, it’s concentrating its efforts in Philadelphia, as well as working with Vote Latino in the vital swing states of North Carolina and Florida.

Here’s how it works: My Ride to Vote is circulating a coupon code that offers voters in the targeted areas a credit of up to $15 for a ride to their local polling station, plus another for the return trip. And no, no one expects Uber or Lyft or their drivers to transport voters for free. They are not. Donations to My Ride to Vote are footing the bill.

My Ride to Vote’s goal for its voter-driving effort was initially quite modest, and as recently as last Friday, newspaper reports had it that the campaign had raised $33,000 toward a $100,000 goal. But over the weekend the campaign went viral and it raised the goal to $850,000. It’s currently raised more than $457,510, mostly from donations ranging from $25 to $250.

But My Ride to Vote isn’t processing the donations itself. Instead, the for-profit political crowdfunding platform Crowdpac is hosting the campaign. Crowdpac is a Kickstarter for political campaigns, founded a few years back by Steve Hilton, a former top adviser to David Cameron, proving, I suppose, that it’s not just American political factotums who are seeking their fortune in Silicon Valley. Crowdpac’s investors include LinkedIn founder Reid Hoffman and venture firm NEA, which also backs BuzzFeed and Green Chef.

While a report in the Financial Times from a few years back helpfully explains that Crowdpac’s long-term plan is to pay the bills by “an advertising revenue model in which companies or political groups pay to target users based on their views,” there are short-term considerations, too. So when you click to make that $25 donation, you’ll discover your initial bill, via an orange-red banner reads, “Donate $28.82.” That’s because you’re asked to also pay $2.50 to Crowdpac, and on top of that to pay a “processing fee” of $1.32 to Democracy Engine, yet another startup, this one a political payment processor.

When you use a credit card in a store, you’re also paying a fee to have your payment processed, but there it’s almost always wrapped into the sticker price of whatever you’re buying. Here it’s an add-on. Its virtue is that it allows everyone to claim the entire amount you are donating goes to the campaign of your choice. Onward.

As for Crowdpac’s fee, it turns out that’s discretionary. If you click a very small “edit” link next to the Crowdpac bill, you’ll discover it’s actually an “optional tip” that “helps us cover operating expenses so 100% of contributions go to candidates and organizations.”

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Screenshot via Crowdpac

How many people actually change the amount or eliminate it entirely? You got me. Crowdpac wouldn’t tell me. And why not allow people to pay My Ride to Vote directly rather than through Crowdpac, at least eliminating one middleman and potentially saving some donors a few bucks? I don’t know the answer to that, either. Soellner, who acts as the organization’s spokeswoman, said she would call me and did not.

I can, however, tell you that if you decide to stiff Crowdpac, figuring people like Reid Hoffman, estimated net worth $3.7 billion, don’t need your largesse, you’ll save 9 cents on your tab to Democracy Engine.

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Screenshot via Crowdpac

So you do some good, a smattering of Silicon Valley startups make a few bucks, but all is basically right in the world, right? Not if you care about the ongoing financialization of our private lives. In The Outsourced Self, Arlie Hochschild described how we had converted everything from child rearing to housekeeping into hourly jobs done by others, commercializing, for good and ill, the most intimate areas of our family lives. The sharing economy extends the practice with a twist.

When you, say, pay a local party venue to hold a child’s birthday party, you’re aware that someone is profiting from your laziness (guilty!) or time-challenged lifestyle. Here you’re paying a driver to volunteer on your behalf, which may be reasonable enough. Most of us don’t live in Philadelphia or have time to drive people around on a Tuesday afternoon.

And it’s true that commerce and Election Day are hardly strangers. Department stores have long-offered Election Day sales, and bars will make a mint Tuesday night by offering viewing parties. But we have a long-established tradition of volunteering to take people who lack transportation to the polls, typically organized by campaigns or people or groups who support them. These efforts are not, even in the age of the sharing economy, hard to discover. Warren Buffett is sponsoring Drive 2 Vote, which pairs voters in the greater Omaha area who need a ride with a volunteer driver. In the Phoenix area, the Bazta Arpaio campaign (which wants to unseat Republican Maricopa County Sheriff Joe Arpaio) is partnering with a local taxi union to get people to and from the polls. When I asked it if any money was exchanging hands, a spokesman quickly replied, “It is an entirely volunteer effort.”

Nov. 8 2016 5:00 AM

Who Wrote That Ballot Measure You’re Voting On?

At first glance, Florida’s Amendment 1 looks sunny for solar power. If it passes on Tuesday with 60 percent of the vote, the measure would give Floridians a constitutional right to a solar panel. The bill’s title, “Rights of Electricity Consumers Regarding Solar Energy Choice,” sounds positive enough.

But Floridians can already own solar panels. Buried in the second sentence, if you bother to read past the right to a solar panel, you’ll find the real purpose of the measure: a provision that could end "net metering," which allows solar panel owners to sell excess power back to their utility on hot summer days. This change would vastly reduce the incentive to own or lease solar panels. A similar initiative in Nevada this winter “brought rooftop solar to a dead stop” in the state.

Amendment 1 was written by a group funded by the state’s big utility companies. It’s a great example of the initiative-industrial complex, the smattering of corporations and consultants that have transformed the ballot initiative—engineered to bypass special interests in the statehouse—into a way for special interests to bypass the statehouse.

The amendment’s success will be determined not by how Floridians feel about net metering, which has been shown time and time again to provide substantial benefit to non-solar consumers, but on their reading comprehension skills.

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