Two Very Big Stories This Week; Plus — the Health Reform Hype
Author: Greg Valliere
April 15, 2019
BACK TO REALITY THIS MORNING after the greatest comeback in U.S. sports history, and the frenzy over Game of Thrones, incomprehensible as usual but stunningly filmed.
FIRST OF ALL, IT’S MUELLER WEEK: The special counsel’s report may be heavily redacted, but no matter — Democrats are counting on it to revive talk of White House wrongdoing. The report, due for release this week, is highly likely to question President Trump’s boast that he was totally vindicated; many of his aides are bracing for embarrassing new revelations and renewed talk of obstruction of justice.
BUT TRUMP IS INCAPABLE OF EMBARRASSMENT, and the case “is closed,” press secretary Sarah Sanders said yesterday. Nevertheless, we suspect Trump will seek to divert attention from the report; he often stirs controversies when he faces political outrage. So we expect Trump to keep up the drumbeat against sanctuary cities, the Federal Reserve, and Democrats who do not forcefully condemn anti-Semitism.
AS THE MUELLER REPORT reverberates through Washington, we will focus on three take-aways: 1. Will it change anyone’s mind as the next election approaches? Highly unlikely — both sides are rigidly dug in. 2. Will it revive speculation about impeachment? That ship has sailed, although there will be enough new material to occupy prosecutors in the Southern District of New York and elsewhere for months to come. 3. Will this have any impact on the markets? Hardly a ripple; there’s a more important story looming.
WE THINK AN AGREEMENT IN PRINCIPLE WITH CHINA IS IMMINENT: Both sides apparently have resolved the biggest remaining issue — creation of an enforcement mechanism that would allow the U.S. to re-impose sanctions if there are signs that China is violating terms of the agreement.
THERE STILL ARE A HANDFUL OF ISSUES: The dominance of Chinese state-owned companies, and their subsidies, has to be addressed, and it’s highly unlikely that Trump will agree to drop all existing tariffs. But there’s enough in the deal for Trump to declare victory on the one issue that seems to matter most to him — reducing Beijing’s trade surplus with the U.S. as China buys more more U.S. products. It remains to be seen whether there will be enough structural reform for Trump’s hard-liners to be pleased with the final deal.
WHAT TO WATCH FOR: If there are leaks by the end of this week that Presidents Trump and Xi are preparing to meet, that will be a near-certain tip-off that the deal is done; Xi will not travel to a summit without first signing off on a final pact. We anticipate a signing ceremony in May.
THE ONGOING HEALTH CARE BOMBAST: The clamor for a single payer health system — from Bernie Sanders and many Democrats running for president — has begun to worry investors in health insurance companies. This is a grossly over-rated threat, in our opinion.
WE GIVE THE FINAL WORD this morning to health care gurus Paul Heldman and Sasha Simpson, who have a sterling reputation for analyzing the complex world of health policy. “A Bernie Sanders Presidency would be no more likely to ram a single payer system through Congress than Trump being able to legislatively repeal the Obama health care law,” they wrote this weekend, adding that “a Senate majority for a single payer plan would still be unlikely even via special Senate budget rules.” A more narrow public health insurance option and federal drug price controls are greater potential threats, they conclude.
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