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TrumpBeat: A Budget With Math Errors And A Fraction Of A Wall

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Regulation: Rules are rules

President Trump has had a rough start to his term when it comes to passing laws or enacting new policies. (The latest setback: The 4th Circuit Court of Appeals on Thursday refused to reinstate Trump’s travel ban.) But as we noted a few weeks back, he’s had more success when it comes to rolling back actions by his predecessor, Barack Obama. Trump, with an assist from Republicans in Congress, has repealed, suspended or delayed dozens of Obama-era regulations on banking, climate change and other issues.

There are limits to Trump’s authority, however. Republicans were able to reverse several of Obama’s rules via the Congressional Review Act, a previously little-used law that lets Congress and the president undo rules imposed late in the previous administration. The clock for using the law ran out in early May, however, meaning that from here on out, Trump will have a much harder time erasing Obama’s legacy.

Take, for example, the “fiduciary rule,” a set of regulations issued by the Obama administration last year that require financial advisers to put their customers’ interests first when handling their retirement accounts. Conservatives criticized the rule as an unnecessary regulation that would end up making it harder for ordinary Americans to get investing advice. And shortly after taking office, Trump issued a memorandum ordering the Department of Labor to delay its implementation.

This week, however, Labor Secretary Alexander Acosta said the rule will take effect June 9 without further delays. In a Wall Street Journal op-ed announcing his decision, Acosta said the rule “may not align with President Trump’s deregulatory goals” but that a review by the administration “found no principled legal basis” for delaying it. In other words, the president can’t ditch regulations just because he doesn’t like them.

The president could still get rid of the fiduciary rule the old-fashioned way, by writing a new rule and going through the long series of hearings and comment periods to put it in place. But that process can take months or years. In the meantime, the rule — and dozens of others issued by Obama — will remain in force.

Taxes: The phantom $2 trillion

Trump’s budget this week was widely mocked (by Stephen Colbert, among many others) for containing a “$2 trillion math error.” In a nutshell, the budget assumes that faster economic growth will help pay for Trump’s huge tax cuts, then it turns around and assumes that same growth will help balance the budget. In other words, he’s counting the same $2 trillion twice.

The administration’s efforts to explain away the apparent error only ended up causing more confusion. Mick Mulvaney, the White House budget director, told the Senate Budget Committee that there was no double-counting at all: Trump’s tax plan would pay for itself without relying on economic growth, which would require raising some taxes to offset the cuts. That would mark a major shift for the administration, which has previously said the plan would only pay for itself after factoring in the faster economic growth it believes the tax cuts would spark. Speaking to a separate congressional committee, however, Treasury Secretary Steven Mnuchin implied that there had been no shift.

Somewhat lost in the back-and-forth, however, is the fact that the double-counted $2 trillion probably doesn’t exist in the first place. The administration argues that cutting taxes will spur faster economic growth, which will mean Americans will earn more money and therefore pay more in taxes. The problem is that pretty much no serious economist thinks Trump’s plan would raise enough money to pay for itself. Even conservative economists at the Tax Foundation last year estimated that the tax plan Trump proposed during the campaign would cost at least $2.6 trillion after factoring in economic growth. (Trump’s most recent plan, a one-page outline released last month, didn’t contain enough details for economists to calculate its cost.) The problem with Trump’s budget math, in other words, goes beyond simple arithmetic; the economics of the plan don’t work, either.

Immigration: Fewer bricks in the wall

Trump campaigned on a pledge to crack down on illegal immigration, and his 2018 budget requests hundreds of millions of dollars to do just that. The president is requesting over $300 million to hire and train 500 new border patrol agents and 1,000 Immigration and Customs Enforcement officers. The budget also proposes funding to expand efforts to remove undocumented immigrants who are already here and to expand detention space across the country to hold the soaring number of detainees apprehended by ICE agents so far this year.

But Trump may be backing away ever so slightly from his signature immigration-related promise: the wall on the U.S. border with Mexico. His budget calls for $1.6 billion in funding for a physical barrier, a fraction of the $21.6 billion that the Department of Homeland Security estimates the full wall would cost and enough to cover just 74 miles of the 1,900-mile U.S.-Mexico border. (Trump earlier dropped a demand that Congress provide funding for the wall as part of its 2017 budget.)

The apparent shift in focus comes as data suggests there has been a big drop in illegal border crossings since Trump took office, even without a wall. Meanwhile, research has found that in recent years, illegal immigration has been driven more by people overstaying their visas than by people crossing the border illegally. According to a new report released Monday by the Department of Homeland Security, an estimated 629,000 visitors — including students, tourists and workers — stayed in the country after their visas expired in fiscal year 2016. (Another 111,000 overstayed their visas but left the country before the end of the year.) That’s more than the 408,870 immigrants apprehended at the southwest border over the same period. And the DHS data only includes people who entered the country by boat or plane, so it doesn’t include anyone who entered the country legally by crossing the Mexican or Canadian border. The wall, in other words, wouldn’t have done anything to stop them.

Health care: Uncovered

On Wednesday, the Congressional Budget Office, Congress’s nonpartisan policy analyst, released a much anticipated report on the House bill to repeal and replace parts of the Affordable Care Act. It was by most accounts, including ours, not good for the prospects of the American Health Care Act, which passed the House earlier this month. While coverage of the report tended to focus on the 23 million people who would lose insurance under the law, or the slight reduction to the federal deficit that it would deliver over 10 years, beyond those headline numbers were some revealing descriptions of how the insurance market would change under the bill. The AHCA, as described by the report, would create a system in which many people with pre-existing conditions can’t afford insurance, the industry sells plans too skimpy even to be considered coverage by the CBO’s standards, and patients in some states struggle to get access to services such as treatment for substance abuse and maternity care.

Currently, plans offered through the ACA’s insurance marketplaces must cover what are known as Essential Health Benefits, 10 categories of services including ambulatory, maternal and mental health care. Under the GOP House bill, coverage requirements would become less stringent, and the CBO thinks that as a result, private insurance plans in some states would stop covering pediatric dental care, maternity care and treatment for substance abuse, among other things. Patients who needed those services could end up paying thousands of dollars out of pocket. Those assumptions likely stem from the fact that before the ACA, those services were routinely excluded in states that didn’t mandate them by law.

The CBO also predicts that the insurance market might start encouraging people to buy skimpy plans. A little-reported passage describes how the agency foresees the insurance industry offering bare-bones coverage priced to match closely the amount a person is eligible for in federal subsidies. In effect, this would allow people to buy government-subsidized health insurance for next-to-nothing, but the plans “would not provide enough financial protection in the event of a serious and costly illness to be considered insurance,” in the words of the CBO.

The AHCA is something of a dead letter, at least in its current form — the Senate is now working on its own bill, which may bear little resemblance to the House version. But the CBO report still carries an important reminder: Fewer regulations on the insurance industry can reduce the cost of premiums, but it can also leave Americans with plans that don’t cover services they need, or without coverage altogether.

Ben Casselman is a senior editor and the chief economics writer for FiveThirtyEight.

Kathryn Casteel writes about economics and policy issues for FiveThirtyEight.

Anna Maria Barry-Jester reports on public health, food and culture for FiveThirtyEight.

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