Obama leaves office, hope increases

Randall Forsyth of Barron’s describes the “ironic triumph of hope” as Mr. Hope and Change prepares to leave office within the next week.

The enduring image of Barack Obama’s 2008 presidential campaign is the iconic red, beige, and blue pastel poster of him emblazoned with the word “hope” in big, bold capital letters. It is then no small measure of irony that measures of optimism—among financial markets, small businesses, and consumers—are at or near their highest, just as he is about to depart the White House.

The National Federation of Independent Business last week reported that its optimism index saw the biggest one-month increase since July 1980, rising some 7.4 points after November’s 3.5-point gain. That took the small-business confidence gauge to 105.8, the highest reading since 2004. “The December results confirm the sharp increase that we reported immediately after the election,” commented NFIB chief economist Bill Dunkelberg. “This is the second consecutive month in which small-business owners reported a much brighter outlook for the economy and higher expectations for their businesses.”

Consumers similarly are upbeat, with the University of Michigan last Friday reporting January’s preliminary sentiment index hovering near the 12-year high reached in December. “Both this measure and the Conference Board consumer confidence index are now back to levels last seen before the Great Recession, with recent moves by both showing that the election result is being viewed on balance in a very positive light,” writes Joshua Shapiro, chief U.S. economist at MFR. He also took note of the “unsurprisingly highly polarized” attitudes reflected in the University of Michigan’s commentary, which observed that “gains were accompanied by an unprecedented degree of both positive and negative concerns about the incoming administration.”

Barron’s editorial page editor ponders the ‘fight for $15’

Thomas Donlan devotes a Barron’s editorial commentary to the latest nationwide push for a higher government-mandated minimum wage.

New Year’s Day brought higher minimum wages to 19 states, some of which were only the start of a succession of programmed annual hikes. The first day of the year also brought many assurances that such laws benefit everyone and harm nobody.

Well, almost nobody: The employer who pays a higher wage has less business income to spend as he sees fit. But what do legislators and city councilmen care about that?

Everyone should care about profits, since the first thing that any employer considers is how and whether to use profits to reinvest in his business.

One form of investment is to pay employees more, hoping that greater reward will stimulate more work effort. Another form of investment is to buy new machinery to do the same work for no weekly pay.

Employers have a third choice: Pay themselves and their investors more and let the business stagnate. This may be the least bad option if the business faces a fading market or high taxes or oppressive regulation.

The editorial page of a widely respected newspaper recently celebrated an economic milestone: “Victories have been steady and significant in the Fight for $15, a nationwide movement for higher pay that began just over four years ago with walkouts by fast-food workers in New York City. In 2017, nearly 12 million workers will get raises.”

The editorialist and similar cheerleaders ignore the probability that the higher wage won’t be paid to all the workers who were working at minimum wages last year. Some will lose their jobs, as marginal businesses close their doors, or lay off their least productive workers, or automate some jobs, or move to more congenial jurisdictions.

The beneficiaries of minimum-wage laws can be seen working, and their income is taxed and tallied in the gross domestic product. But minimum-wage laws are not good for would-be workers, though such people are visible only on street corners and in government statistics about “discouraged” workers. When they do work, they are off the books. As economist Milton Friedman said, “The minimum-wage law is a monument to the power of superficial thinking.”

New Carolina Journal Online features

Dan Way reports for Carolina Journal Online on a federal court order blocking Gov. Roy Cooper’s controversial Medicaid expansion plan.

John Hood’s Daily Journal explains why it’s important for the state government to prevent local governments from abusing their residents’ rights.

Cooper doubles down with DHHS nominee

In your face cabinet pick by Gov. Roy Cooper for DHHS secretary— Dr. Mandy Cohen, whose previous job was—hold on —as an Obamacare administrator— and arguably not a very good one.

First up for Dr. Cohen and Gov. Cooper—state audit finds problems in Mecklenburg, Wake and Guilford counties—in both accuracy and timeliness problems when processing Medicaid applications. This is not news:

For example, a July 2014 report determined that current inefficiencies are costing the state at least $9.6 million in annual federal funding.

In April 2016, a legislative staff report determined that most counties were struggling to meet deadlines for timely processing of Medicaid eligibility applications, particularly food stamps.

In August 2016, a state audit determined that the DHHS’ practice of leaning significantly on no-bid contracts for services did not protect state interests in many instances.

Indeed the NC FAST and NC Tracks programs put in place by Dr. Aldona Vos are cited as the reason for counties’ problems processing Medicaid applications. But the bottom line is they’re barely meeting the demand as it is, so does really make sense to expand Medicaid, as Cooper announced he would unilaterally do?

Great information on teacher supply and demand

I am a fan of Teachersoftomorrow.org.  The group recently published the graphic below.

How The Teacher Shortage Impacts Classrooms In America

 

Trump’s tone

Matthew Continetti of the Washington Free Beacon assesses President-elect Donald Trump’s approach to the job he’ll take officially in one week.

The tone of Donald Trump’s presidency has been set one week before he takes office: raucous, brawling, improvised, unpredictable, frenzied, entertaining, and more than a little weird. It’s hard to keep track of all that is happening in Washington and New York: Russian hacks, salacious gossip, fake news, government ethics, the fate of Obamacare, cabinet and White House appointments, personal feuds, and confirmation hearings for Jeff Sessions, John Kelly, Rex Tillerson, Elaine Chao, Mike Pompeo, Jim Mattis, and Ben Carson. Each day brings crazy revelations, rebuttals by the president elect and his team, congressional maneuvering, proclamations from Trump Tower, and media sniping. And Trump wouldn’t have it any other way.

“I don’t carry a briefcase,” the president elect wrote 30 years ago in The Art of the Deal. “I try not to schedule too many meetings. I leave my door open. You can’t be imaginative or entrepreneurial if you’ve got too much structure. I prefer to come to work each day and just see what develops.” This improvisational style hasn’t changed. The Trump campaign was an aggressive, freewheeling, bare-bones operation that maximized its candidate’s political instincts and dramatic talent. There was no canned “message of the day,” no rigorous coordination between candidate and surrogates, no deference to focus groups or outside consultants or Beltway convention or powerful donors. It was Trump who decided the message—you’ve heard it before—and established the style: media saturation, relentless activity, and fierce response to attack. “When people treat me badly or unfairly or try to take advantage of me,” he wrote long ago, “my general attitude, all my life, has been to fight back very hard.”

That’s not often the case with politicians, whose tendency is to defer, pivot, accommodate, and ignore. No recent occupant of the Oval Office, and no other candidate for president in 2016, would have behaved like Trump did at his press conference this week. That’s the point. The Trump constituency is devoted to their man not despite his dismissive attitude toward established practice in the nation’s capital but because of it. The Trump vote is a rejection of Washington, of its practices, policies, and people. So divorced had the rich and smug capital city become from the realities of everyday life elsewhere in the country that only someone from outside the political system could change it. It’s not a defeat but a victory for Trump when the New York Times, Politico, CNN, and other “nonpartisan” and “objective” institutions fly off the handle at his latest move.

Sessions hearings offer clues about Dems’ tactics

Kevin Daley of the Daily Caller explores the larger significance of Democratic protests linked to attorney general nominee Jeff Sessions.

This week’s confirmation hearings for Sen. Jeff Sessions portend trouble for Democrats promising to mount an effective resistance to the Trump administration.

Senate Democrats have adopted a fairly hostile posture to the full range of President-elect Donald Trump’s cabinet nominees. They promised to subject each candidate to the “Garland treatment,” hoping to turn the appointments process into a slog engulfing the early months of Trump’s presidency. If any nomination was to be stymied, even scuttled, Sessions’ was the most vulnerable.

A failed confirmation had once before left Sessions a diminished figure, producing dubious if potent allegations of racism that hang around his nomination like an albatross. His positions on sentencing reform and civil asset forfeiture make him an outlier even among his Republican colleagues. A unified Democratic caucus and an aggressive message supplemented by a concerted effort to pickoff the handful of Republican senators with strong libertarian streaks could easily have beaten him back.

Instead, Sessions will almost certainly become attorney general. …

… Though the Trump presidency seems, and probably will be, a powerful banner around which Democrats will rally, the Sessions hearing placed in sharp relief the extent to which the party and its allies are scattered and directionless. The cleavages between interest groups, Senate Democrats, and the White House were wide and easily avoided. Their performance gives the appearance of flat-footedness.

A practical approach to replacing Obamacare

James Capretta offers National Review Online readers some guidelines for the process of replacing the Affordable Care Act.

Republicans have their best opportunity in a generation to enact a reform plan for health care that moves decisively toward a market-based approach, with far less reliance on federal regulation and control. A reform plan of this kind would represent a dramatic break from decades of policymaking and would be a major component of an effort to rein in the sprawling federal welfare state.

To succeed in this effort, however, House and Senate Republicans, as well as the incoming Trump administration, must dispense with wishful thinking. There is no plan for replacing the Affordable Care Act (ACA) that is without political controversy. Whatever they do will involve trade-offs, and in some cases they will be attacked by their political opponents for doing what is necessary but perhaps unpopular.

Further, there is no silver bullet for reforming health care that will solve all the existing problems. Health-care policy is complicated and does not lend itself to simple solutions. What’s needed most of all is the discipline of a well-functioning marketplace. Getting there will require many changes, in public insurance, employer plans, Health Savings Accounts (HSAs), and the individual insurance market. While Medicare changes can be addressed separately from other reforms, it will not be possible to replace the main provisions of the ACA in incremental, piecemeal bills, as has been suggested by some in Congress. An effective ACA replacement plan will need to ensure that changes in Medicaid, the individual insurance market, and employer-sponsored plans work well together to provide insurance options for the entire non-elderly population. That will happen only if these changes are made in one coherent reform plan so that interactions among various provisions can be understood and anticipated.

Republicans must also drop their ambivalence about embracing the goal of providing a ready and reliable pathway to insurance for all Americans. It should be self-evident, and not at all controversial to acknowledge, that health insurance is a necessity of modern life. Only the very affluent can afford to pay the cost of treating many forms of cancer without health insurance, and no one is immune from cancer, or a costly accident for that matter. Moreover, households with low incomes will never be able to pay the premiums for health insurance without governmental assistance.

The GOP must accept these realities and address them head-on in a replacement plan.