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Day 49: Backlash Comes from Both Sides with TrumpCare

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This week, Trump announced the dawn of TrumpCare, his term coined for the replacement Republicans have built for the Affordable Care Act (ACA), initiated by Obama. The reaction from the entire country was less than desired from the White House, as both sides of the aisle criticized the newly proposed healthcare reformation plan. On top of that, Trump’s self-attributed growing markets may soon be at risk of halting as a rate hike is all but certain at the upcoming FOMC meeting. It, along with slow-to-get-rolling infrastructure plans, could decelerate the President’s market rally.

TrumpCare: Almost the Same as Obamacare, but with Less Paper

  • Formally named the American Health Care Act, TrumpCare repeals the levies that the ACA initiated to pay for coverage.
  • The levies being loosened are namely a tax on the wealthy, as well as not requiring businesses to provide healthcare, according to the L.A. Times.
  • Key missing components: a full repeal of subsidized health care and competition opening across state lines.

TrumpCare was introduced, not to the sound of trumpets beckoning it into the world, but with much weeping and gnashing of teeth from the liberals in the house and Senate. Surprising to the President might have been the many Republicans grumbling at his healthcare initiative. This could be attributed to the fact that he laid out few details about what the plan actually improves as far as opening up the healthcare market to more competition.

It turns out that the Republicans don’t really want to repeal government-sponsored healthcare. Peter Schiff weighed in on this topic in a podcast earlier this week: “They [Republicans] don’t want to repeal it. They want big government; they just want their version of big government as opposed to Obama or the Democrats version, so they can take credit for it.”

If Trump wants to truly fix our costly and overblown healthcare in this country, he should give it the prescription it needs to get better: complete and utter removal.

Rate Hike is all but Confirmed, now Yellen Could be in Trump’s Crosshairs

  • The Fed is staying on track for their aggressive rate hike schedule, with March essentially a lock according to Politico.
  • Some say that it could spur a new recession that paints conservatives in a bad light for the 2018 mid-terms.
  • Yellen made clear that an aggressive fiscal stimulus would push the Fed to cap the economy with more hikes.
  • This direct head-butting between the FOMC Chair and the President could ignite economic warfare.

When your President and the most powerful banker in the world see the nation’s economy in terms of exact opposites, you know there will be trouble brewing. Trump sees a horrifically stagnant and bleak economy, in dire need of tax cuts, revolutionized deals for trade, and fiscal stimulus. Yellen and company see the economy running at maximum capacity, with low unemployment and high market prices.

Unfortunately for everyone, neither party is getting it right. Regardless of how quickly inflation balloons past where the Fed can match it with rate hikes, which is already happening, the markets are still standing on broken stilts. It’s a matter of time before the inevitable force of economic gravity pulls it back to reality. We need a vast recession so that the economy can reset itself to build back up on a stronger foundation. When that happens, maybe we’ll finally stop issuing IOUs in place of actual money.

$1 Trillion Trump-fastructure Plan Could be in for a Slow Start

  • Trump’s major fiscal plan has been fraught with understaffing, bureaucracy-related issues, and lack of understanding about how to pay for it, according to the Washington Post.
  • Few of the “new jobs” promised by the President will manifest this year.
  • Meetings are just now starting to identify projects and issues that could be addressed with the stimulus.
  • Trump wants there to be a combination of government and private funds to equate to $1 trillion.

Trump is planning to lure private businesses to join his fiscal plans by offering tax credits and other incentives. His ultimate goal is for the fiscal spending to be a net-neutral on revenue, meaning that the projects can’t cost the government any money at the end of the day. He is going to have a challenging time accomplishing that goal if private businesses won’t sign on to spend their own money, but why would they?

Peter said it best: “Why is the private sector going to suddenly spend all this money on infrastructure?” he asked on his podcast. “If there were some infrastructure project that the private sector could afford, that was also economically viable, it would have been made already!” Peter also weighed in on another recent podcast about the fallacy of improving the economy by having your government dump more money into the economy:

“You don’t improve the economy by the government getting bigger and spending more money on infrastructure. If it was that simple every time a country was in trouble, all they’d have to do is build some roads or build some bridges and they’d be out of trouble.”

 

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