Obama Finally Figured Out Where Congress Is, But It Was too Late to Save his Trade Bill

Belatedly realizing that he was facing defeat in what he considered a trophy trade bill, President Barack Obama went to Capitol Hill in person this morning to plead for his own Democratic Party's support. But, Democrats ignored him, leaving in tatters the prospects for the Trans-Pacific Partnership, the biggest free trade deal in history. In a dramatic vote, Obama's own Democrats, as well as Republicans, failed to produce enough support to approve a bill that would have given aid to workers who lose their jobs as a result of US trade deals with other countries. The measure was soundly rejected in a 302-126 vote. Its chances for adoption now look grim, unless Republicans can quickly revive the set of bills and save Obama's biggest second-term legislative priority. The House decisively rejected the first in a series of trade bills today, with Democrats voting against a program that would have helped workers displaced because of the free trade bills. Because of House procedural rules, the defeat meant the vote on the so-called "fast track" bill that followed was only symbolic. ~~~~~ Obama’s unscheduled lobbying visit to Congress was his first in two years and put his reputation on the line in a very personal way. He met privately with the entire House Democratic caucus, making what one pro-trade Democratic representative called a “powerful presentation.” Less favorable members pushed back, and Obama left the meeting unsure whether his party would support him : “I don’t think you ever nail anything down around here. It’s always moving.” House Democrats, unhappy at being asked to take a series of “yes” votes on issues they usually don't support, decided against supporting their President. They voted overwhelmingly against a measure needed to pass the overall package. ~~~~~ Perhaps the most surprising aspect of the defeat was that it took Obama's White House so long to realize what everyone else had known for a long time -- it was not going to be easy to get the free trade bills through Congress. After the defeat, White House spokesman Josh Earnest described the defeat as a tactical loss, noting that the Senate last month rejected the package before voting to adopt it. “It’s déjà vu all over again,” Earnest said. “To the surprise of very few, another procedural snafu has emerged. These kinds of entanglements are endemic to the House of Representatives.’’ Earnest normally would have blamed a "dysfunctional" GOP House caucus -- but today he had to indirectly admit that it was the Democrat caucus that abandoned their own President. Earnest said he was optimistic that the House would find a way to pass the bills. ~~~~~ However, the New York Times disagrees with the White House, saying it is unlikely that Obama will get his legacy-defining trade accord covering America's Pacific partners : "In a remarkable rejection of a President they have resolutely backed, House Democrats voted to kill assistance to workers displaced by global trade, a program their party created and has stood by for four decades. By doing so, they brought down legislation granting the President trade promotion authority -- the power to negotiate trade deals that cannot be amended or filibustered by Congress -- before it could even come to a final vote." ~~~~~ The Democratic congressional leadership also seems to disagree with the White House. Representative Nancy Pelosi, the House minority leader, said : “We want a better deal for America’s workers.” Pelosi has guided President Obama’s agenda for two terms and was personally lobbied by Obama until the last minute, to no avail. ~~~~~ Republican leaders tried to find enough support from their own party for trade adjustment assistance, a program they derided in the past as an ineffective waste of money and a sop to organized labor. Not enough Republicans were willing to save the program. So, Republican leaders then passed a stand-alone trade promotion bill, 219 to 211. But, that measure cannot go to the President for his signature because the Senate bill combined both trade adjustment and trade promotion. Republican leaders now have the difficult task of finding in two legislative days, beginning Monday night, enough votes to save the trade adjustment legislation. Representative Kevin McCarthy, the GOP majority leader, said : “We are not done with this.” Republicans now hope that House Democrats will panic at the prospect of trade promotion authority passing the Senate alone, without worker assistance. But the large number of lawmakers who would have to change their votes makes passage a second time unlikely. ~~~~~ Dear readers, today's vote was an extraordinary blow to President Obama. His lameduck status is now confirmed. But, his loss today is the result of his hands-off indifference to his Democratic congressional delegations and to the Republican congressional leadership. It started with his election in 2008 and has continued until today. A President who has long kept Congress at arm’s length paid the price in today's trade defeat. Representative Henry Cuellar, a Texas Democrat, put it in clear terms. Cuellar said today that Obama mustered rousing applause this morning as he went through the battles he had fought with fellow Democrats -- on labor organizing, health care access and environmental protection. But Cuellar said Obama could not change minds, : “I wish there had been much better outreach.”

Obamacare - Available but not Affordable, Despite the Obama Spin

The Affordable Care Act, President Obama told a large audience of Catholic healthcare professionals, "is no longer just a piece of legislation or an abstract theory, but a reality that people on the ground, day to day, are experiencing. Their lives are better,...Americans support this new reality,” Obama said. Republicans were quick to counter the President’s speech, saying the President was divorced from reality and denying the negative effects of a health care overhaul they said had raised costs and caused some people to lose health coverage they liked. ~~~~~ Last week, Brianna Ehley of the Fiscal Times provided some numbers for Obamacare’s final tally for this year’s open enrollment period in which some 10 million people purchased health coverage through Obamacare’s state and federal exchanges -- surpassing the administration’s goal of 9.5 million enrollees. While that part of the news is good for Mr. Obama, here’s a snapshot of Obamacare and health insurance in the US in 2015 which suggests that the law's opponents are right : ** 150 million Americans get their health insurance through an employer. ** 70 million people get health coverage through Medicaid or the Children’s Health Insurance Program (CHIP) after 30 states expanded their Medicaid programs under Obamacare. ** 16.4 million people have gained health coverage through Obamacare, whether through the law’s health exchanges or Medicaid expansion, according to March figures from the Obama administration. ** 10.2 million Obamacare 2015 enrollees paid for their premiums in the first month. ** 1.5 million Obamacare 2015 enrollees didn’t pay for their premiums in the first month. ** 2.3 million young adults gained coverage this year through an Obamacare provision that allows them to stay on their parent’s plan until they reach 26 years in age. ** 11.9% is the current uninsured rate, the lowest ever recorded by Gallup, who attributes the record-low uninsured rate to the health exchanges and Medicaid expansion set up under Obamacare. ** 31 million Americans with insurance say they still can’t afford medical treatment, and are considered “underinsured” because they are enrolled in high-deductible policies with high out of pocket costs. And a recent Gallup poll shows that about 38% of middle class people with a household income of $30,000 to $75,000 per year have delayed medical care because of costs, up from 33% last year. Meanwhile, about 28% of households earning above $75,000 said they delayed care this year, compared to just 17% in 2013. ~~~~~ The embarrassng truth never spoken by President Obama is that while the Affordable Care Act has reduced the uninsured rate to historic lows, it has not expanded actual access to healthcare. ~~~~~ First, there are the many working poor Americans who still can’t afford health coverage and so delay medical treatment. Many of the working poor rely heavily on community health centers -- exclusively designed for uninsured people and those with coverage through Medicaid. Obamacare provided more funding to these community health centers. And in May, the Obama administration announced $101 million to build 164 new health centers in 33 states and two US territories in order to increase access to services for about 650,000 patients, while existing centers also received federal funding to expand. The federal government funds the centers on a sliding scale for uninsured low income people, and provides Medicaid reimbursements for patients on Medicaid. Obamacare was touted as being able to reduce the number of patients using these community health centers, but the truth is that many of the centers are actually receiving more patients. A George Washington University study found that more than one million low-income, uninsured Americans depend on community health centers and that about 35% of these people live in Alabama, Florida, Georgia, Louisiana and Mississippi -- states that have not expanded their Medicaid programs. ~~~~~ Second, a 2012 Supreme Court ruling decided that states could opt out of Obamacare's Medicaid expansion, which expanded eligibility to every childless adult earning up to 138% of the federal poverty level, regardless of their ability to work. The ruling created a so-called “coverage gap” in the 21 states that decided not to expand their programs. The people in the gap earn too much to qualify for Medicaid, but not enough to qualify for subsidies on the state or federal health exchanges. Many of them turn to community health centers because their options for coverage are limited. ~~~~~ And, third, even in states that did expand Medicaid, there are still many people who can’t afford to buy coverage, or can only afford to buy coverage with high out-of-pocket costs -- for example, $5,181 for many Bronze plans. A recent study from the Commonwealth Fund found that 23%, that is 31 million, Americans with health coverage fall into this category. Community health centers also fill in these gaps where Obamacare doesn’t provide care for people. Many patients going to centers are uninsured for now, but there is a penalty for not having Obamacare coverage. Last year, the penalty was just $95 or 1% of annual income. In 2015, the penalty went up to $323 or 2% of annual income. The penalty will gradually increase. And those not having healthcare insurance because it's far less expensive than the actual costs of obtaining coverage for many low to middle-income families -- convincing some to opt out of Obamacare -- will find that as the penalty increases each year, it could become a huge financial burden. ~~~~~ So, dear readers, the problem with Obamacare is that it’s available but not affordable for the many Americans who use community care centers instead. There are millions of Americans who rely on community health centers even now that the uninsured rate has fallen to historic lows. That’s because high deductible policies and out-of-pocket costs still prevent people from actually being able to cover the cost of treatment. A Gallup poll late last year reported that about one in three Americans say they have put off treatment for themselves or a family member because of cost -- this is the highest rate recorded in Gallup’s history. Gallup attributed the increase to the shift to high-deductible policies being sold both on and off the Obamacare exchanges. Tom Scully, former CMS administrator under President George H.W. Bush noted during a Wall Street Journal breakfast last week : “It’s important to distinguish between coverage and access to care...there is still a problem with access. It’s sobering how many people don’t have the resources to cover $200 emergency costs and still don’t have access to care when they need it.” And if all this weren't enough, a recent Gallup poll found that the cost of healthcare is only expected to climb -- that's right. A new report from PricewaterhouseCooper’s Health Research Institute says health care costs are expected to jump 6.8% overall next year. Therefore, as costs rise it’s likely that more people will continue to put off needed care. Thank you, President Obama, for ruining the American healthcare system without doing anything to give healthcare to Americans who need it. America would have supported that goal. As it is, and despite the best spin you can put on the situation, 55% of Americans oppose your failure that is Obamacare.

After G7, Europe Welcomes Vladimir Putin

In sharp contrast to President Obama's frontal attack at the G7 meeting when he called Vladimir Putin out for ruining Russia in his search to recreate the Soviet empire, Italian Prime Minister Matteo Renzi warmly welcomed President Putin when he visited World Expo and the Russian Pavilion today at the start of a high-profile visit to Italy and the Vatican. Renzi's warm welcome came just two days after the G7 threatened tougher sanctions against Russia over Ukraine. The Russian president was greeted by 200 well-wishers waving Russian flags as he arrived for Russia Day at the Milan World Expo 2015 fair. A smiling Putin was welcomed by Italian Prime Minister Renzi, formerly Mayor of Milan, with whom he had bilateral talks followed by a joint press conference, at which President Putin emphasized the longstanding and large-volume trade relations between Russia and Italy, calling them the biggest in Europe today, and reminding Renzi of their 25% reduction because of the sanctions that make Russian-Italian cooperation difficult. Italy has long had an important economic relationship with Russia and political ties were close prior to the Ukraine eruption. Before the Ukraine crisis, Italy was Russia's third-biggest trading partner after China and Germany, with deals amounting to €30 biilion in 2013. Putin noted that there are 2 million Russians in Italy and 200,000 Italians in Russia. Prime Minister Renzi's welcome to Putin was positive, but the Italian leader referred often to the need to honor the Minsk Agreement that would end sanctions on Russia and expand Italian-Russian trade. ~~~~~ Renzi was one of the G7 leaders who signed the Monday warning that the major powers "stand ready to take further restrictive measures to increase cost on Russia should its actions so require." The G7 statement reflects concern about recent increased fighting in eastern Ukraine, where the West accuses Russia of providing military support that gives a great advantage to pro-Moscow rebels who control parts of the Russian-speaking region. Ukraine this week said Russian aid allowed separatist forces in the east to establish a 42,500-strong fighting force. Putin says any Russians fighting alongside the rebels are volunteers "answering a call of the heart." But, today Renzi seemed to be softening the G7 stance by calling for dialogue with Russia to end the Ukraine crisis, saying this is vital not only for Ukraine but also for the conflicts in North Africa and the Middle East, where Russia is a key player. ~~~~~ Putin then traveled on to Rome where an audience with Pope Francis focused on Ukraine amid fears that a fragile ceasefire agreed in February is falling apart. Ukrainian catholics want to hear the Pope say that Russia is behind the trouble in eastern Ukraine. A Ukraine prelate has said that the Pope's comments about Russia sound like "Russian propaganda." The Vatican today called for "a clear commitment and real effort for peace." Francis is undoubtedly focused on meeting Putin in an effort to be a peacemaker between Ukraine and Russia. This would further the goals of the Pope to protect the tiny, somewhat persecuted Russian Roman Catholic community and to bring the Russian Orthodox Catholic Church and its 230 million followers closer to Rome -- all part of Francis's global goal of uniting all Christians in the battle against their persecution and extermination in the Middle East and Asia. But, a Vladimir Putin-Pope Francis rapprochement could not only bring the pieces of the Catholic Church closer togethet. It could also provide Francis with the first visit of a Roman Pope to Orthodox Russia, and provide Putin with significant evidence that his isolation - emphasized by Barack Obama - does not in fact exist in much of the world, especially in areas such as Latin Ametica and Asia where Putin has his own political goal - to isolate America. ~~~~~ Dear readers, the strategic differences between Europe and the United States being highlighted today are not only cultural or religious. They are also economic and political. It is relatively easy for America to use sanctions to try to isolate and weaken Russia into giving up eastern Ukraine and possibly the Crimea. America needs very little from faraway Russia, which permits Barack Obama to play up what he sees as his macho warrior image by means of personal name-calling attacks on the Russian leader. In Europe, Russia is seen very differently -- as a major trading partner and next-door neighbor who could do significant damage to western Europe economically, but also militarily on a continent whose military is no match for Russia's, the US-led NATO excepted. And perhaps Europe is more aware than Obama of Russia's potential for reining in Syria's al-Assad regime and Iran in order to offer to Europe -- separated from the Middle East chaos only by an unpredictable Turkey -- a sense of security that President Obama has miserably failed to provide. The US President's lack of personal engagement and dilitante approach to the Middle East crisis has created many negative collateral results. But, the post-G7 welcome to Russian President Putin by Italy and Pope Francis may be the collateral result least foreseen by Obama and his White House advisors. It may well be that European leaders will quietly trade EU sanctions for a series of accommodations with Putin that not only seals off Ukraine in a no-mans-land between Russia and the European Union, but also seals off President Obama from having any meaningful input into the EU-Russia-Vatican equation. The damage done to American leadership by Barack Obama has not yet played itself out, unfortunately.

It's Time for the EU and Greece to Do the Deal

As the G7 summit in Germany wound down, world leaders showed increasing impatience in their warnings to the Greek government. German Chancellor Angela Merkel bluntly said that time is running out if Greece wishes to avoid defaulting on its debts : “I can only say: every day counts now to complete the necessary work. One must work with all intensity.” US President Barack Obama called on both Greece and European countries and institutions that are Greece's creditors to be flexible and willing to find a deal. “What it’s going to require is Greece being serious about making some important reforms, not only to satisfy creditors, but more importantly, to create a platform whereby the Greek economy can start growing again. Greece is going to have to make some tough political choices,” Obama said. European Commission president Jean-Claude Juncker, until now more accommodating than many of the EU’s leaders, blasted Greek Prime Minister Alexis Tsipras in an angry public speech. Juncker accused Tspiras of misrepresenting his government’s discussions with the EU when he addressed the Greek parliament last Friday. Further, he said Tspiras has not been a reliable negotiating partner, failing to deliver what he promises. Juncker is quoted as telling EU leaders that more meetings with Tsipras would be "a waste of time." His comments came as depositors continue to withdraw funds from Greek banks, fearing that capital controls may soon be put in place to prevent all but minimal withdrawals. ~~~~~ Greece is a small country, with a tiny population and economic output compared to the rest of the EU. However, a debt default could have consequences extending well beyond its borders. The European economy is already weak, and a Greek default, combined with the inevitable political crisis that would follow, would almost certainly make EU economic matters worse. And the fallout would cross the Atlantic. For example, Michael Hicks, an economics professor at Ball State University and economics and director of the Center for Business and Economic Research commented to the media just for the state of Indiana : “Even a mild European recession will have repercussions here. About 2.5% of Indiana’s GDP is exported to the rich nations in Europe. That means perhaps 75,000 direct jobs linked to the manufacture and transport of these goods and another 45,000 indirectly across the state. A meaningful downturn affecting northern Europe will cost tens of thousands of Indiana jobs. What happens in Greece will impact us, and so we ought to care about the economics of a debt restructuring.” And, the Massachusetts Institute of technology’s Observatory of Economic Complexity says that more than 20% of total US exports flow to Europe, meaning that a further slowdown there will have consequences in the US. ~~~~~ According to the New York Times, Greece’s big creditors -- mainly other Eurozone countries, the International Monetary Fund and the European Central Bank -- have done little to solve the Greek debt problem. Instead, they have forced deep pension cutbacks, as much as 48% in some cases, and further weakened Greek pension funds by forcing them to accept huge losses as part of the country’s debt write-down. In Italy, in an interview published today by the Italian newspaper Corriere della Sera, Tsipras suggested that a deal on Greece’s debt was within reach if the creditors scaled back their demands for cuts to pensions and other social services. Tsipras said : “There just needs to be a positive attitude on alternative proposals to cuts to pensions or the imposition of recessionary measures.” he said. ~~~~~ The battle over what to do with Greek pensions poses difficulties because Greece, like most of the EU, has an aging population, with relatively fewer young workers to help pay the bills for the growing numbers of retirees. The Greek age imbalance is even worse because of the chronic unemployment among young people since the financial crisis started in 2008, with estimates of up to 50% of young Greeks unable to find any job. Another big problem is that in 2012, the pension funds, which were obliged under Greek law to own government bonds, were hit by a huge debt write-down as those bonds plummeted in value. As a result they lost about €10 billion - 60% of their reserves. At the same time, Greece’s creditors, in an effort to make the Greek labor market more competitive, insisted that the government reduce the amount companies and workers had to contribute toward pensions, and that Greece reduce its minimum wage so that those who contributed would have smaller outlays. ~~~~~ At the same time, the pension system was becoming a key and growing component of the social safety net, absorbing thousands of people who retired early -- either because of the sale of state-owned companies, because they feared their salaries would be cut and their pensions become smaller, or simply because their businesses failed. Few Greek retirees are living comfortably, and many support unemployed children. For example, 45% of Greek pensioners live below the poverty line, wth 60% living on €700 per month. ~~~~~ So, with that reality to somehow manage, Tsipras has negotiated with Greece’s creditors, and the two sides have presented various proposals that have been far apart. The creditors want substantial early-retirements penalties for those who still choose that option, and they want to cut existing pensions even more -- including the smallest ones. The EU proposals also demand unifying the many Greek pension funds and establishing a closer link between contribution and benefits, which Greeks see as a move toward yet more cuts. But, something must be done because pensions are a big chunk of the government’s budget, equivalent to about 16% of Greece’s shrunken gross domestic product, up from 13% in 2009, making it proportionally the most expensive pension system in Europe. ~~~~~ The Greek To Vima news network reports today that the EU is examining a new Greek proposal. Reuters reports that the 3-page proposal may unlock new funding for cash-strapped Greece by bridging the differences on critical issues such as pensions and VAT reforms. Bloomberg spoke to two international officials with direct knowledge of the discussions regarding the document. The first official said it was a “rehash” of earlier proposals and only covered fiscal targets. But, a second 3-page document outlines how Greece will address its financial needs and includes a request to use funds from a special EU fund, the ESM, to pay off €6.7 billion worth of bonds due in July and August. The second official revealed that the EC, ECB and IMF are currently assessing the plan that they received this morning. Corroborated sources say the Greek government has raised the primary surplus target for 2015 from 0.6% GDP to 0.75% (when the institutions demanded a 1% target) and to 1.75% for 2016, with the institutions demanding a 2% target. Regarding the VAT reform, Greece accepts measures aimed at making it more efficient (such as increasing the 11% VAT rate to 12%), but rules out the introduction of 23% VAT on energy. As for the pension system, Greece only considers the ending of early pensions and has ruled out the abolition of the non-pension low-income EKAS solidarity grant. In the new proposal, Greece has also asked for EU coverage of €10.9 billion intended for the refinancing of Greek banks that had been returned to the EU, and for coverage of the €27 billion of bonds held by the ECB, including the €6.7 billion due in July and August. Tsipras will present the new proposal to German Chancellor Merkel and French President Hollande at a Wednesday meeting. Greece’s goal is to come to a comprehensive agreement and avoid further negotiations that would continue to hold the Greek government hostage. ~~~~~ Dear readers, Greece, its creditors and the EU will have to make some sort of deal, perhaps in time for the next Eurogroup meeting on 18 June. Tsipras will probably accept some pension reforms, because they are better than capital controls. Creditors will accept some flexibility around primary surplus targets, even though they indicate the possibility of debt sustainability. Both sides will compromise on VAT reform, excluding electricity, and privatisations of electricity utilities. This is the only way to keep Greece in the Eurozone and the other Eurozone countries quiet and in line. The time for indecisive EU politics as usual is over -- it is time to stop posturing and do the deal.