Hyperbole, truthfulness, half-truths, lying, Donald Trump, Joe Biden

Let’s consider hyperbole, truthfulness, half-truths, and lying regarding President Donald Trump and Joe Biden.

Trump stretches the truth or uses hyperbole very often. Doing so supports his bombastic narcissism. When he does, the mainstream media folk call it a “lie,” which is itself either hyperbole or an outright lie. For example, if Trump overstates GDP growth as 3% when its actually 2%, CNN and other media outlets don’t say he stretched the truth, but that he lied.

Joe Biden isn’t untruthful as often as Trump stretches the truth, uses hyperbole  or lies. But when Biden lies, it is usually a whopper and/or relies on nitpicking. If Trump says something about Biden that isn’t purely truthful, Biden will jump on the untruthful bit and claim “That is NOT true,” insinuating that everything Trump said is a lie. Similarly, suppose Trump were to say, “The Bidens have received millions of dollars in corrupt payoffs.” It’s clear that Trump did not mean only Joe. Yet Joe would likely respond with “I did not receive a penny,” insinuating that Trump’s claim is 100% false. Biden used this tactic multiple times during their second debate.

Whenever Biden talks about what he would do as president, it’s near impossible for him not to lie, because he flip-flops and contradicts himself so much from one day to the next. Whenever Biden talks about what Trump did or wants to do, it is typically a whopper. 

A prime example is pre-existing conditions regarding health insurance coverage. Trump has said numerous times that he would not allow insurers to reject applicants with pre-existing conditions, without contradicting that at other times. As far as I know, Trump has never even hinted he approves allowing insurers to terminate existing health insurance coverage because the insured has a pre-existing condition. Yet Biden said in the Oct 22 debate about Trump:

“Lastly, we're going to make sure we're in a situation that we've actually protect pre existing -- there's no way he can protect pre existing conditions. None, zero, you can't do it in the ether. … [H]e’s already cost the American people because of his terrible handling of the COVID virus and economic spillover. 10 million people have lost their private insurance, and he wants to take away 22 million more people who have been under Obamacare, and over 110 million people with pre-existing conditions.“

Kamala Harris in her debate with Pence said Trump was out to take away insurance from people with pre-existing conditions.

It would be hard to find bigger lies than these. Firstly, pre-existing conditions pertain to less than 10% of the population with insurance, plus the uninsured. The insured part is applying for individual policies for people under age 65 directly purchasable from insurers and outside the Obamacare exchanges. Nobody can be denied coverage for pre-existing conditions when applying for health coverage via Medicare, Medicaid, Medicare Advantage policies, Medicare supplement policies when first eligible (usually age 65), an Obamacare exchange, CHIP, or an employer plan. All told, that’s most of the population for whom pre-existing conditions is not an issue. However, Biden and Harris exaggerate it to the entire population. 

Biden has said many times he would ban fracking, and as about as often not ban fracking, that it is impossible from him to not contradict himself, i.e lie. He is all for renewable energy (wind, solar) and anti-fossil fuels. He says he wants to end or transition from using fossil fuels. So where will people get gasoline for their cars, and gas or most electricity for their homes? How will that affect airplanes flying? Blank-out. Ceasing or transitioning from using fossil fuels entails fewer jobs that rely on fossil fuels. Biden loves to “advertise” millions of new jobs in renewable energy while blanking out the simultaneous loss of jobs that depend on fossil fuels. He wants to end subsidies of oil and gas, yet says nil about ending subsidies for wind and solar, which are many, many times greater. Ditto for Harris. They can’t have their cake and eat it, too.

Biden says out of one side of his mouth that he will reverse the Trump tax cuts, but says out of the other side of his mouth that he will not raise taxes on people with incomes less than $400,000. These claims are mutually contradictory. Reversing the Trump tax cuts necessarily raises taxes on many with incomes less than $400,000. So together or saying only the latter, Biden's claim is a big fat lie. 

Of course, CNN, Lesley Stahl, the Washington Compost, New York Times, and numerous other media people or outlets don’t challenge the lies and half-truths of Joe Biden or Kamala Harris. They let it pass without comment, maybe due to poor understanding of the two's gibberish.

House Reveals Proposed Health Care Revision #4

The Republicans led by Speaker Paul Ryan planned to bring the proposed American Health Care Act to a vote in the House of Representatives yesterday. Before the day was over, it was obvious that there would not be enough yes votes to pass it, so Ryan withdrew it from consideration.

President Trump had endorsed it, and threatened repercussions to Republicans who would vote against it. Every Democrat was expected to vote no. There were several reasons for the expected no votes. A big one was less federal money to the states for Medicaid (block grants rather a percent of Medicaid spending to the states*). Health care providers do not like their revenues reduced, nor do many people want to see less money available to give health care to poorer folk.

This was a big setback for both the Congress and Trump. The President's alleged deal-making skills failed.

* The federal government paid for 62.8% of Medicaid spending in 2015. Obamacare enabled a higher percent (100% initially) of spending for newly-enrolled people to states that expanded Medicaid. Here is a short quiz about Medicaid from the Kaiser Foundation.

House Reveals Proposed Health Care Revision #3

Trump OKs changes in GOP healthcare bill to win conservative support

Agreeing to add more Medicaid curbs to the House Republican healthcare bill to bolster support from some conservative lawmakers, President Trump spoke in favor of the Republican proposed healthcare bill. "I just want to let the world know I am 100 percent in favor" of the measure, Trump said at the White House after meeting around a dozen House lawmakers and shaking hands on revisions. "We're going to have a health care plan that's going to be second to none."

President Trump again shows his chronic habit of hyperbole and a boasting facade of having a Midas touch. The prospects of success in the House (and the Senate later) remain iffy.

In January Trump vowed, "We're going to have insurance for everybody" (link). The proposed bill doesn't do that. He also vowed to not touch Medicare. Promises, promises, not often kept.

Yet some Trump supporters have faith in his health-care plan. How deluded some people can be continues to amaze me.

Negotiating Drug Prices

Donald Trump has said drug companies are “getting away with murder. We’re the largest buyer of drugs in the world, and yet we don’t bid properly, and we’re going to save billions of dollars” (link).

It seems by “we” he meant Medicare and Medicaid, and he was more specific on other occasions.

This was before Trump met with drug company executives. I know little about what happened at this meeting, and this article is very vague about it. Anyway, apparently after the meeting Trump abandoned the above ideas. Joe Nocera at Bloomberg wrote Trump Had One Good Idea. Then He Ditched It. His article also appeared in at least the Chicago Tribune and Cleveland Plain-Dealer.

Apparently what Trump did believe, and Joe Nocera still does, is that Medicare and Medicaid buy and dispense drugs and have the power to negotiate drug prices. They surely don't buy and dispense drugs. They are not set up – have the supply channel and direct contact with the patient/”dispensee” -- to do so. Hospitals, pharmacies, medical clinics, doctors, and some other entities buy and dispense drugs and can negotiate prices. That includes Veterans Administration hospitals. Medicare and Medicaid only (partly) reimburse those who do the buying and dispensing. Medicaid "negotiates", but  Medicare can’t by law. When Congress added the Medicare Part D prescription drug benefit in 2003, it prohibited the government from "negotiating" drug prices on behalf of Medicare beneficiaries and stipulated that outpatient drug coverage should be provided entirely through private insurers like UnitedHealth and Humana, under contract with Medicare.

Insurers have aggressively negotiated with pharmaceutical companies, so Medicare’s prescription drug program has cost the government less than originally predicted. But the private insurers have not obtained discounts or rebates as large as those secured by Medicaid. (Insurers also steer policyholders to particular pharmacies, e.g. Walmart, and particular drugs when there are substitutes).

Medicaid “negotiates” lower prices via rebates. Medicaid receives rebates from the drug companies related to the reimbursements the insurers receive. The rebate scheme is complicated with differences based on the particular drug (link). It is much closer to price and product controls than negotiation. The word "negotiate" is not in the linked page. In other countries a government is usually the main insurer. So, they really can  and do dictate prices to pharmaceutical companies. Medicare doesn't strictly dictate prices; it dictates how much it reimburses and for what. Yes, it pays attention to what private insurers pay, but “dictatorial” is the best fitting adjective.

The main counteracting force to the drug companies is pharmacy benefit managers. In order to get included in an insurance plan's formulary, the drug company needs to usually offer concessions to the pharmacy benefit manager in the form of rebates. That's really how they hold down pricing.  Express Scripts, CVS Health, and UnitedHealth are the three dominant companies. Drug companies oppose the type of discounts required by Medicaid, seeing them as government price controls. Of course, they are correct. Drug makers say they prefer Medicare’s market-oriented approach, in which discounts are negotiated between drug plans and manufacturers.

Are my points about buy-and-dispense versus reimburse and what “negotiate” means when the government is one party some of what changed Trump’s ideas after meeting with the drug company executives? If so, I’ll give him credit.

In China, Trump-Style Infrastructure Partnerships Are Used to Hide Debt

The title is the title of this Wall Street Journal article dated Dec. 6. The link may allow the reader to see only a little of the article online, but some excerpts follow.

"The 400-foot JinQing Harbor Bridge under construction in this small seaside city [Wenling, China] is being financed not by bank loans or bonds but by a Chinese twist on the public-private partnerships that the president-elect has proposed to fund infrastructure projects in the U.S.

The city, like many in China, faces budget constraints after years of expansion amid warnings from central authorities that debt is already too high. So to pay for the $1.2 billion highway project that includes the new bridge, Wenling’s government teamed up with Bank of China Ltd. to create an “industrial fund” that pulls in money from ordinary investors.

Ultimately, the city is on the hook to pay back the money with a preset return. Critics of the structure say it is merely a way of disguising debt to pile more obligations on already straining government entities."
..............

“We’re seeing continued proliferation of off-balance-sheet channels to help banks extend and mask credit,” said Jack Yuan, a Shanghai-based analyst at Fitch Ratings. “Much of this is going to infrastructure and other local government projects, sometimes in the guise of funding for public-private partnerships.”

End excerpts.

This doesn't exactly parallel what I wrote in Pied Piper Finance? on Dec. 1, but it is very close. I note two minor differences. The Bank of China is government-owned, whereas the banks in my scenario are privately owned. The source of money is "industrial funds" rather than loans. A major likeness is that a big part of the money is not recognized as official government debt. In other words, it's "off-balance-sheet" like the WSJ article says.

Trump’s Impulsive Tariffs

I applaud President-elect Donald Trump’s proposals to cut the corporate tax rate and reduce regulation on business, especially smaller businesses, on whom they are most burdensome. His impulsive statements about tariffs are a different matter.

Donald Trump Warns of 35% Tariff For Companies That Move Abroad

"Despite the Carrier deal, the company still plans to close a plant in Huntington, Indiana, moving about 700 jobs to Mexico."

This plant makes microprocessor-based controls for the heating, air conditioning and refrigeration industries, i.e. parts that are probably used in the plant that Carrier is going to keep in Indiana. So what does Trump believe the tariff should be imposed on? And wouldn’t it be a cost for the plant that Trump claims to have helped save?

Further, suppose a foreign company, e.g. Honda or Toyota, has plants in the USA. The company with good economic reasons decides to replace a plant or part of it with one in another country. So legislation signed by Trump imposes a 35% tariff on the company's goods coming into the USA. The parts issue is pertinent again. Also, foreign businesses might wonder, "If I build a factory in the USA, what happens to me in the future if I want to relocate or merely shift part of production elsewhere? I don't want to take that chance. So I think I'll pass on building that new U. S. plant [and creating more American jobs]." (Hat tip to Gralee for this point.) Does that sound great for Americans in general?

Trump has threatened to impose tariffs on imports from China because he feels that the Chinese have stolen American jobs. He has ranted against the USA’s trade deficit with China. But imports from China aren’t solely made in China.

“On trade, although the headline data shows China accounted for 50% of the U.S. trade deficit last year, that number gives a highly distorted view since around 37% of those exports consist of imported parts, mainly from Japan, South Korea and Taiwan, according to Deutsche Bank Chief Economist Zhiwei Zhang. In value-added terms, he calculates, China accounted for just 16% of the U.S. deficit, slightly ahead of Japan and Germany.

        A trade war with China, Mr. Zhang notes in a report, “would be a war against all participants of the global supply chain, including U.S. companies.” Link.

Indeed, Almost Everything Trump Says About Trade With China Is Wrong.

Consider tariffs on a smaller geographic scale. Suppose a USA company wants to shut down a plant in state X and move production to far-away state Y. So the government of state X imposes a 35% tariff on goods shipped from a new plant in state Y back to customers in state X. Would Trump as President approve that tariff? (It's probably illegal, but I'm only questioning a principle.)

And why not a similar principle -- a 35% tariff on all imports? Oh, I get it. Trump companies import a lot of stuff.

Of course, imposing tariffs creates a host of other problems, e.g. higher consumer prices, enforcement, and retaliatory tariffs. Effects outnumber intentions here.

The Carrier Deal

President-elect Trump’s claiming to save 1,100 jobs at Carrier in Indiana was all over the news. A closer look says that it isn’t that many. Of course, Trump tried not to say anything about Carrier’s tax break.

A Wall Street Journal article says the number of jobs saved was 700. “The Indiana governor was offering $7 million over 10 years to encourage the company to keep in the state roughly one-third of the 2,100 jobs it planned to ship to Mexico” (link). 

A Chicago Tribune article says the number of jobs saved was 800. “Carrier, he said, had agreed to preserve 800 production jobs in Indiana. (Carrier confirmed that number.)” Link. 

Does this tax break make sense for Indiana? I will use the Chicago Tribune’s number of 800 jobs.

Assume $50,000 income per worker. That's very close to the that of the Carrier workers. State income tax =$1,617 = 3.23% for single, $1,584 = 3.17% for married. I’ll round the midpoint. 800*$1,600*10 = $12,800,000.

So at first glance Indiana gains about $5.8 (=12.8 - 7) million in tax revenue. (700 jobs implies a $4.2 million gain.) However, this assumes the 800 workers would otherwise vanish from Indiana's workforce such as being unemployed or moving out-of-state. Therefore, it is clearly an unrealistic assumption. If that were true of only 200 jobs, Indiana has a net loss of $3.8 million (= 200*1,600*10*10^(-6) – 7.0). Indeed, if that were true up to 437.5 (=(7*10^6)/(1600*10) jobs, Indiana has a net loss.

One thing that could justify the state government's decision -- one I didn't think of when I first posted this -- is unemployment benefits that Indiana could pay if these 800 workers were laid off. $7,000,000/800 =  $8,750 per worker. A few months unemployment benefits could cost the state  government that much. Beyond that I can only guess. Also, how much such benefits might be (hypothetically) could be diminished by severance benefits from Carrier.

Regarding Carrier’s decision its parent, United Technologies (symbol UTX) is relevant. UTX is a huge defense contractor. Perhaps the high-level executives at UTX considered saving those jobs in Indiana – rather than saving costs by having the work done in Mexico, estimated at $65 million – creates good will that will pay off when UTX deals with people in the Trump administration regarding defense contracts in the future. $65 million is not a lot for UTX; 2015 revenues were $56 billion and net income was $7.6 billion. Of course, it's a good deal to those who keep their jobs. Nevertheless, prima facie, it doesn’t look like a good deal for the Indiana state government and hence for the people of Indiana in general.

Pied Piper Finance?

Assume a government wants to do a big infrastructure project – resurfacing a major highway and repairing bridges along the route. This is not a toll road and that will not change. The government finds a contractor who will do the work. However, the government does not want to pay all the cost upfront. Therefore the government’s overseer of the project – call him “pied piper” -- finds a private investor (PI), who will borrow a large part, say 85%, of the money to cover the construction cost. PI will put up the remaining 15%. The pied piper promises to pay PI enough over several years so that PI can pay back the loan, plus some more. How much more might depend on meeting deadlines and how much actual construction costs turn out to be compared to the amount budgeted. If construction is done in less time and/or costs come under budget, PI will receive more from the government. If construction is done in more time than expected and/or there are cost overruns, PI will receive less from the government. In other words, incentives are attached to PI’s 15% equity stake.

Since the government doesn’t borrow – PI does that – the project will not increase the government’s debt or any deficit it has initially, under current cash-based public accounting practice. However, it probably will over time when the payments to PI come due, whenever the government does not have enough cash on hand at the time to make said payments.

This is off-budget treatment by the government. It is what the federal government does already regarding Social Security and Medicare. It is obligated to make payments to beneficiaries of these programs well into the future in excess of incoming revenue. But there is no corresponding debt for the excess of future outgo over future FICA tax revenues on a federal government balance sheet. The federal government doesn’t even publish a balance sheet. The only item that the government prominently presents that is a balance sheet component is the national debt. Cash deficits for the programs become debt as they materialize.

Is the scenario described above what Mr. Trump has in mind when this webpage says his infrastructure plan will be deficit-neutral? (This document by two Trump advisers had more detail.) Of course, it will be deficit-neutral early on when PI puts up the money, borrowing 85% of it. But when the government payments to PI commence, I will bet that it won’t remain deficit-neutral. The government will likely issue more Treasury debt to offset shortfalls, and that debt will be added to the national debt, which is now about $20 trillion. Depending on how the pied piper’s deal with PI is structured, those payments may not start coming due, and some may not be due anyway, until after Trump no longer occupies the oval office. Then they won’t be “his debts”; they will be the next president’s … and ours.

Or maybe much of the $1 trillion infrastructure plan would be pushed onto state and local governments. They already pay for a lot of infrastructure and get earmarked revenues to do so, e.g. fuel taxes for roads and bridges. Whatever is so pushed would be off-budget for the federal government. It might even be done selectively with strings attached. The state or local government is told it must contribute some of the money, e.g. raising it by issuing bonds. If they don’t, then they get no federal money.

Pied Piper Donald Trump

Since Donald Trump won the November 8 election, some of his proposals have gotten more attention. One such proposal is about the country's infrastructure -- highways, bridges, airports, water and sewer systems, etc. One can find several articles/comments about this proposal by searching Google News. Even though Democrats believe there is a need for improving infrastructure, they don't like Trump's proposal. 

One such article is in the Wall Street Journal here. Online subscribers can read the whole article at the link. Others who want to do so will need to find another way, e.g. a library. The ones I have seen have very little detail about his plan. An exception is this document written by two Trump advisers about a month ago. 

Trump’s infrastructure plan strikes me as another half-baked idea from the pied piper Donald Trump. In my view it has a big enough hole to drive an Abrams tank through it. Whence the revenues for the hypothetical private investor (PI)?

Said document says, “For infrastructure construction to be financeable privately, it needs a revenue stream from which to pay operating costs, the interest and principal on the debt, and the dividends on the equity.” Again, whence the revenues for the hypothetical PI? The article offers no answer I can see. 

The article assumes that for every $1,000 of an infrastructure project the PI will make an equity investment of $167 and it will borrow $833. If borrowed at 4.5% for 20 years like the article says, the debt service will be $37.5 each year for interest plus $833 in 20 years.  In addition there are all the construction costs for labor and materials, which I will assume is $1,000 to keep it simple. So aggregate cost, simply speaking, is $1,000 + 20*$37.5 + $833 = $2,583. 

The only “revenue” in the proposal for PI is the 82% tax credit, which amounts to a mere $137 (=0.82*$167).  But this could be realized only if PI has taxes due as the result of other operations. Regarded as an isolated business, the revenue would be $0! That’s unless Trump plans for more handouts to crony capitalists.

I leave it to those under the spell of the pied piper, or anybody else, to tell me whence the revenues in excess of $2,583 to cover the $2,583 of costs identified above plus whatever the target profit is. (A 9% dividend on the $167 equity implies a target profit of $300, i.e, 0.09*$167*20.) How much of that revenue comes from the US Treasury in the pied piper's plan? Does he plan to siphon off gasoline and diesel tax revenues, toll revenues, heavy vehicle use fees that truckers pay, etc. that the federal and state governments receive now and have for decades? Are there going to be lots of new tolls on many roads and bridges that have none now and those go to PI?

The idiom "PI in the sky" seems fitting. 😊

Why Did Trump Win?

Trump Won Because Voters Are Ignorant, Literally  (When a solicitation hid the article, I refreshed the page and that removed the solicitation.)

"But, to be fair, Clinton’s victory would also have been."

"Voting is more like doing the wave at a sports game than it is like choosing policy."

Election 2016

Gomer Pyle used to say, “Surprise, surprise, surprise!” Many people, including me, were surprised by Donald Trump’s winning the election for President over Hillary Clinton.

Ding-dong, the witch is dead! Politically, that is. What a Trump presidency will bring is a huge unknown. I hope it will be better than if Hillary had won. Hillary’s way is near always anti-freedom, more government controls, more government spending, and more foreign meddling and giveaways. While avoiding saying so, she advocates a walk toward socialism or totalitarianism, rather than a sprint as desired by Bernie Sanders. This is on top of her personal character -- corrupt, power-lusting, two-faced, chronic liar -- and conflicts of interest via the Clinton Foundation.

Proposition 61 on the California ballot failed, deservedly so in my opinion. It would have put price controls on prescription medicines, and only for the privileged benefit of state agencies and employees, about 12% of residents. The stock prices of pharma companies jumped about 10% yesterday in response, which still did not offset the price drop over several weeks prior to the vote. Of course, Bernie Sanders was all for it.