In recent months, Donald Trump’s administration has supplemented its globe-spanning tariffs with bespoke industrial policy deals with U.S. corporations. These include the federal government taking equity stakes in Intel, a “golden share” in U.S. Steel, and profit sharing on Nvidia and AMD’s chip sales in China. The deals have astonished and unnerved economic analysts across the political spectrum. Commentators from The Wall Street Journal editorial page to MSNBC have decried them as “unprecedented” and amounting to “socialism,” “corporatism,” or “state capitalism with American characteristics.”  

In truth, Trump’s actions are rooted in a long history of presidents from both parties taking temporary control or ownership of systemically important companies. However, until now, most of these interventions have been temporary and involved either wartime emergencies or too-big-to-fail corporate collapse. Under Woodrow Wilson, the federal government took temporary ownership of the railroad industry to support troops during World War I. During World War II, Franklin D. Roosevelt’s administration directed much of the corporate industrial sector. In 1980, Jimmy Carter’s administration extended loan guarantees to Chrysler in exchange for stock warrants. After the company recovered and repaid its loans, the government earned $311 million in capital gains. During the financial crisis, Barack Obama’s administration provided the auto industry with tens of billions of dollars in exchange for equity stakes and commitments for substantial restructuring. 

Trump’s moves also build on recent industrial policy interventions by his and Joe Biden’s administrations. Until now, those policies stopped short of the government seeking direct influence over corporate governance through golden shares or equity stakes. During his first term, Trump primarily conducted industrial policy through targeted tariffs and trade actions to promote American industry, and by jawboning corporations to boost domestic manufacturing. The Biden administration went further, providing computer chip and clean energy companies with hundreds of billions of dollars—and detailed requirements for how they could be spent—as part of a long-term post-neoliberal industrial strategy for national security. Those actions were consistent with, though a major step beyond, Trump’s first-term trade policies, just as Trump’s second-term corporate dealmaking is an advance on Biden’s (even if neither president would admit it).  

So, while Trump’s dealmaking spree is not unprecedented, it ventures into new territory reflecting his strongman tendencies: He has claimed for himself concentrated power to oversee and influence corporate decision-making, authority thus far ceded to him by Congress and the courts. He has operated outside the law through handshake deals that corporations often cannot afford to refuse, endowing the presidency with powerful—and dangerous—economic tools for routine use.  

This is unlikely to be a mere Trump-era aberration. Presidents typically don’t forego inherited powers. Today’s novelty policies may become tomorrow’s precedent, as the last decade has shown. Some elements of industrial policy with Trumpist characteristics may become long-term features of American governance. But Congress and the judiciary should assert democratic and constitutional control over American industrial policy now and in the future to prevent its abuse and, potentially, its collapse.  

Here’s a rundown of Trump’s corporate dealmaking thus far: 

U.S. Steel: In June, the White House greenlit Nippon Steel’s takeover bid for the American steelmaker U.S. Steel. Trump overturned Biden’s blocking of the deal—on the condition that the government receive a “golden share” of the company, allowing it to veto major corporate decisions, such as offshoring jobs and closing plants. 

MP Materials: In July, the Department of Defense announced an investment in MP Materials, the country’s only active producer of certain rare earth minerals used for military equipment. The deal provided government support for the company, guaranteeing a minimum price for its products and providing a guaranteed buyer—the federal government—for all its output for the next 10 years. The feds also extended a $150 million loan and purchased $400 million in company stock, making it MP’s largest shareholder. 

Japan: Also in July, the White House announced a trade deal with Japan that purportedly included Tokyo creating a $550 billion investment fund for the administration to use toward its industrial policy priorities, including energy infrastructure, semiconductor manufacturing, critical mineral supply chains, pharmaceutical production, and shipbuilding. Japan quickly contested the administration’s description of the deal, explaining that the investment fund would be nearly entirely composed of loans the U.S. would need to repay.

Nvidia and AMD: In August, the administration agreed to allow the semiconductor makers Nvidia and Advanced Micro Devices to sell certain modified chips in China, reversing national security restrictions. The companies also agreed to give 15 percent of all profits earned in China to the U.S. government. 

Intel: Later that month, the administration took a 10 percent equity stake in the chipmaker Intel. The deal converted billions of dollars in grants the company was due under the CHIPS and Science Act into equity stakes, making the federal government Intel’s largest shareholder. That conversion also, without any legal authority, dispensed with CHIPS Act taxpayer safeguards that required Intel to reach milestones toward completing new domestic manufacturing sites to receive federal funding. 

Trump’s economic interventions bear a number of distinctive qualities that expand on industrial policy precedent, but five stand out.

1. Unilateralism: Trump’s industrial policy has been personalist, flowing from and controlled by the president himself. Unlike the Biden administration, which shepherded industrial policy bills through Congress, Trump relies exclusively on executive action. His industrial policy has at times been colored by favoritism and personal relationships. The Nvidia export agreement, for instance, came after meetings between Trump and CEO Jensen Huang. The president himself asked Huang for a share of the company’s Chinese profits. In other cases, bargained-for benefits have been structured to accrue directly under Trump’s control. The Nippon Steel agreement gave control of the golden share not to the office of the president but to Trump himself; only after he leaves office does the share transfer to the secretaries of treasury and commerce. Finally, the (contested) $550 billion pot from Japan would be, according to Secretary of Commerce Howard Lutnick, a fund to be spent however Trump wished—part of “a national security and economic fund managed by Donald Trump.” 

2. Public ownership in the absence of a fiscal crisis or national security justification: While direct government ownership of industry is not unheard of in American history, the Trump administration has been uniquely eager to wield it as a routine industrial policy tool. The MP Materials and Intel deals both gave the government equity ownership of private companies, and the U.S. Steel approval netted the government special, powerful veto rights over that company’s decision-making. After announcing the (contested) terms of the Japan trade deal, administration officials even contemplated using the deal’s (disputed) investment fund to build government-owned factories that could then be leased to private companies. 

3. Bullying individual companies: Trump has a quid pro quo mentality of wanting a cut of any private gains he feels he has facilitated—he has openly compared his presidential dealmaking to waiving property rights on his real estate for the benefit of a third party, in exchange for a fee. When he agreed to grant Nvidia export licenses to sell modified chips in China, Trump told its chief executive, “If I’m going to do that, I want you to pay us something.” Or as Lutnick described the Intel equity stake, “If we’re going to give you the money, we want a piece of the action.” 

4. Leveraging government power: Beyond just flexing the rhetorical might of the presidential bully pulpit, Trump has used the levers of government to offer firms deals they can’t refuse. The administration has created or exploited bargaining power to induce targeted firms to relent to its demands. Under export control regulations, Nvidia and AMD needed the administration’s permission to sell chips in China, forcing them to acquiesce to Trump’s profit-sharing demand. Nippon Steel could not take over U.S. Steel without approval from the government’s foreign investment review committee. Shortly before Intel agreed to the equity deal, Trump ratcheted up the pressure by calling for its executive to be fired and withholding its CHIPS Act grants.  

Two other examples illustrate Trump’s leverage power plays. In May, he issued an executive order instructing pharmaceutical companies to agree to adhere to “most-favored-nation price targets … to bring prices for American patients in line with comparably developed nations.” The order threatened that the administration would put the squeeze on pharmaceutical companies that don’t comply, through newly authorized competition from drug imports, restrictions on their own exports, antitrust scrutiny, reconsideration of FDA approvals of their drugs, and loss of National Institutes of Health grants. And in August, the administration announced that it would impose high tariffs on semiconductor imports—but would exempt tech companies that made new domestic investment pledges. The administration thus imposed tariffs to create leverage and offered relief from those tariffs to advance its industrial policy goals.

5. Legally dubious boundary pushing: Much of Trump’s industrial policy has operated in legal gray zones. To bypass routine federal contracting and procurement laws that typically require competitive bidding, the administration’s investment in MP Materials relied on a little-used provision of the Defense Production Act authorizing transactions “without regard to the limitations of existing law.” Trump’s profit-sharing deal with Nvidia and AMD flouts prohibitions on export taxes and fees under both the Constitution and federal law. There is also no firm legal basis under the CHIPS Act to convert Intel’s grants into equity (nor was there to withhold its grants in the first place). 

Trump has avoided legal constraints by relying on “regulation by deal,” rather than legislation or agency rulemaking. (He’s also been firing the regulators who would otherwise shape such government interventions.) Companies have acquiesced to White House demands that may not otherwise withstand legal scrutiny to avoid lost business opportunities, the cost and time of litigating against the federal government, and the general ire of the Trump administration. This has insulated much of Trump’s industrial policy from administrative procedure, due process, and judicial review. 

Some elements of Trump’s approach are likely to endure. The wraparound support for MP Materials, for example, could well become a model for how the U.S. government cultivates strategically important domestic production. The type of golden share Trump obtained in U.S. Steel could be on the table for future mitigation agreements between the federal government and foreign companies seeking to invest in critical domestic sectors.  

As I have written for this magazine, there are also compelling reasons for the government to insist on a direct return on its industrial policy investments. Taking equity stakes in semiconductor companies funded by the CHIPS Act was originally a Bernie Sanders proposal. When used in the right context, equity stakes ensure that industrial policy returns upside revenue to the public, instead of merely socializing profits for corporations. 

External trends may also lend Trump’s industrial policy approach greater staying power. As policymakers seek new revenue sources beyond traditional taxation, they may increasingly look to levers like equity stakes, profit-sharing agreements, and royalties. Congress’s tendency toward gridlock and paralysis has long spurred administrations to seek creative executive workarounds, but the courts have increasingly limited the discretion given to the administrative state. That may steer administrations toward regulation-by-deal as a flexible means for the executive branch to regain power from the judiciary. 

It’s not hard to imagine where Trumpist industrial policy may be headed. White House advisers have said they will seek equity stakes in other companies receiving federal grants and loans to seed a sovereign wealth fund. Moreover, if Intel cannot right its ship, it may be forced to revisit previous discussions of spinning off its semiconductor factories to a foreign firm like the Taiwan Semiconductor Manufacturing Company. The Trump administration, which has opposed such a move, could, as Intel’s largest shareholder, dictate the terms of such a deal. (Indeed, the Intel agreement included a poison pill to stymie the sale of its foundries.) Plus, any such sale must win the administration’s approval through the Committee on Foreign Investment in the United States. One could imagine the administration negotiating on economic and national security grounds for government ownership of Intel’s factories, which could then be leased to another chipmaker.  

Trump’s industrial policy toolkit may empower future administrations with different priorities. For instance, federal policies—steep tariffs and national security exclusions—are sparing U.S. automakers from a flood of low-cost, cutting-edge Chinese electric vehicles. A future administration could condition that continued industry protection on American carmakers offering more affordable low-emissions vehicles and ramping up their research and development investments.  

A future administration could use the specter of the government’s statutory powers to limit or override patents on federally funded technologies to negotiate long-term profit-sharing agreements with artificial intelligence companies. It could also use similar authority to negotiate price reductions from pharmaceutical companies and leverage the Medicare Advantage market to acquire golden shares in health insurance companies, with veto power over major corporate decisions.  

A future Democratic administration could grant targeted tariff reductions to countries or companies that decarbonize their energy grids and production processes—and dangle extra reductions to those that use American-made clean energy technology. It could use the Defense Production Act’s preemption power to expedite clean energy and new housing development around other legal impediments. If the industrial policy arc from the first Trump administration to the Biden administration is any guide, the next Democratic president will make fulsome use of these kinds of Trump-inspired tools.

So sheer inertia may well propel Trumpist industrial policy forward. But there are several stark and urgent reasons Congress and the courts should pump the brakes and reconsider major elements of Trump’s approach. For one, this approach may simply yield worse industrial policy. Absent exceeding care and deliberation, go-it-alone executive branch industrial policy can overreach and implode without the safeguards and democratic legitimacy of operating through Congress. Even if Trump’s deals successfully evade the courts, a subsequent administration could deem some contrary to law and declare them null and void—regulation by deal has far less long-term durability than regulation by regulation, let alone legislation. Such whipsawing will make the U.S. government a less reliable, more tumultuous economic actor. 

For another, elements of Trump’s industrial policy are a recipe for abuse and corruption. Pay-to-play regimes for exporting sensitive technologies to foreign adversaries jeopardize fair competition and national security. Personalist policymaking is a recipe for cronyism, corruption, and favoritism for well-connected dominant firms. As The New York Times reported, Trump’s family was directly benefiting from billions of dollars of investment in its crypto company by the United Arab Emirates—at the same time it agreed to provide the UAE with highly sensitive and valuable advanced semiconductor chips.

It is all too easy to foresee more future gambits redounding to the private benefit of the Trump family (like the Paramount merger with Skydance, which routed $16 million into the Trump presidential library). Moreover, while leverage can be useful for achieving policy aims, marshaling the vast regulatory state as one big pressure cooker to coerce concessions from targeted companies risks undermining other vital policy interests. We’re already seeing that regarding antitrust. Companies seeking merger approvals have won favorable treatment from the Trump administration by making side promises for domestic manufacturing investments. The potential for Trumpist misuse of industrial policy risks poisoning the whole enterprise. 

That’s where Congress and the courts come in—or where they should. Congress was a true coequal branch during the Biden administration’s major industrial policy programs, shaping and passing the Bipartisan Infrastructure Law, CHIPS and Science Act, and Inflation Reduction Act through normal legislative processes. It could again instill democratic prerogatives and guardrails for industrial policy. Congress could determine when the government should take equity stakes in private companies. It could set ground rules around taking golden shares, like which corporate decisions may be subject to a government veto and which are off-limits. It could set standards around appropriate uses of revenue-sharing deals with the federal government. It could stipulate where the revenue generated from industry policy investments should go and how it should be spent. It could set rules preventing the government from unduly favoring companies where it has taken equity stakes in competitor firms. It could establish safeguards to ensure that industrial policy is not used to enrich public officials. Meanwhile, the courts may need to revisit legal doctrines like standing to ensure that some party can contest deals of questionable legality, like the Nvidia revenue-sharing agreement or the Intel equity swap.  

If Congress fails to act, it could be understood as blessing Trump’s mode of industrial policy by one-man dealmaking. That doesn’t just invite corruption, but is also a recipe for managerial disaster. The Obama administration’s masterful overhaul of Detroit is arguably less remembered today than the failure of Solyndra. After receiving an Energy Department loan, the solar panel firm’s bankruptcy led to a series of high-profile investigations that ultimately uncovered no criminal wrongdoing or corruption but soured the public on Obama’s nascent clean energy industrial strategy. 

With Trump’s state capitalism, the hands-off market fundamentalism era is over. The question is whether the government’s new terms of engagement with industry will be dominated by the president or deliberated on by Congress and the courts. Acquiescence by the other branches to Trump’s deals, warts and all, risks heralding the unchecked and unbalanced industrial policy of the unitary executive. Activation by them, however, could lead to a whole-of-government effort to sand away the roughest edges of Trump’s approach to craft an industrial policy that is both powerful and responsible to effectively guide the country forward.

The post Trump’s Industrial Policy: What’s Right and Wrong appeared first on Washington Monthly.

In recent weeks and months, Donald Trump’s administration has supplemented its globe-spanning tariffs with bespoke industrial policy deals with U.S. corporations. These include the federal government taking equity stakes in Intel, a “golden share” in U.S. Steel, and profit-sharing on Nvidia and AMD’s chip sales in China. The deals have astonished and unnerved economic analysts across the political spectrum. Commentators from The Wall Street Journal editorial page to MSNBC have decried them as “unprecedented” and amounting to “socialism,” “corporatism,” or “state capitalism with American characteristics.”  

In truth, Trump’s actions are rooted in a long history of presidents from both parties taking temporary control or ownership of systemically important companies. However, until now, most of these interventions have been temporary and involved either wartime emergencies or too-big-to-fail corporate collapse. Under Woodrow Wilson, the federal government took temporary ownership of the railroad industry to support troops during World War I. During World War II, Franklin D. Roosevelt’s administration directed much of the corporate industrial sector. In 1980, Jimmy Carter’s administration extended loan guarantees to Chrysler in exchange for stock warrants. After the company recovered and repaid its loans, the government earned $311 million in capital gains. During the Financial Crisis, Barack Obama’s administration provided the auto industry with tens of billions of dollars in exchange for equity stakes and commitments for substantial restructuring. 

Trump’s moves also build on recent industrial policy interventions by his and the Joe Biden administrations. Until now, those policies stopped short of the government seeking direct influence over corporate governance through golden shares or equity stakes. During his first term, Trump primarily conducted industrial policy through targeted tariffs and trade actions to promote American industry, and by jawboning corporations to boost domestic manufacturing. The Biden administration went further, providing computer chip and clean energy companies with hundreds of billions of dollars—and detailed requirements for how they could be spent—as part of a long-term post-neoliberal industrial strategy for national security. Those actions were consistent with, though a major step beyond, Trump’s first-term trade policies, just as Trump’s second-term corporate dealmaking is an advance on Biden’s (even if neither president would admit it).  

So, while Trump’s dealmaking spree is not unprecedented, it ventures into new territory reflecting Trump’s strongman tendencies: He has claimed for himself concentrated power to oversee and influence corporate decision-making, authority thus far ceded to him by Congress and the courts. He has operated outside the law through handshake deals that corporations often cannot afford to refuse, endowing the presidency with powerful—and dangerous—economic tools for routine use.  

This is unlikely to be a mere Trump-era aberration. Presidents typically don’t forego inherited powers. Today’s novelty policies may become tomorrow’s precedent, as the last decade has shown. Some elements of industrial policy with Trumpist characteristics may become long-term features of American governance. But Congress and the judiciary should assert democratic and constitutional control over American industrial policy now and in the future to prevent its abuse and, potentially, its collapse.  

Here’s a rundown of Trump’s corporate dealmaking thus far: 

U.S. Steel: In June, the White House greenlit Nippon Steel’s takeover bid for the American steelmaker U.S. Steel. Trump overturned Biden blocking the deal—on the condition that the government receive a “golden share” of the company, allowing it to veto major corporate decisions, such as offshoring jobs and closing plants. 

MP Materials: In July, the Department of Defense announced an investment in MP Materials, the country’s only active producer of certain rare earth minerals used for military equipment. The deal provided government support for the company, guaranteeing a minimum price for its products and providing a guaranteed buyer—the federal government—for all its output for the next ten years. The feds also extended a $150 million loan and purchased $400 million in company stock making it MP’s largest shareholder. 

Japan Trade Deal: Also in July, the White House announced a trade deal with Japan that purportedly included Tokyo creating a $550 billion investment fund for the administration to use toward its industrial policy priorities, including energy infrastructure, semiconductor manufacturing, critical mineral supply chains, pharmaceutical production, and shipbuilding. Japan quickly contested the administration’s description of the deal, explaining that the investment fund would be nearly entirely composed of loans the U.S. would need to repay.  

Nvidia and AMD: In August, the administration agreed to allow the semiconductor makers Nvidia and Advanced Micro Devices to sell certain modified chips in China, reversing national security restrictions. The companies also agreed to give 15 percent of all profits earned in China with the U.S. government. 

Intel: Later that month, the administration took a 10 percent equity stake in chipmaker Intel. The deal converted billions of dollars in grants the company was due under the CHIPS and Science Act into equity stakes, making the federal government Intel’s largest shareholder. That conversion also, without any legal authority, dispensed with CHIPS Act taxpayer safeguards that required Intel to reach milestones toward completing new domestic manufacturing sites to receive federal funding. 

Trump’s economic interventions bear a number of distinctive qualities that expand on industrial policy precedent, but five stand out: 

1. Unilateralism: Trump’s industrial policy has been personalist, flowing from and controlled by the president himself. Unlike the Biden administration, which shepherded a industrial policy bills through Congress, Trump relies exclusively on executive action. His industrial policy has at times been colored by favoritism and personal relationships. The Nvidia export agreement, for instance, came after meetings between Trump and CEO Jensen Huang. The president himself impromptu asked Huang for a share of the company’s Chinese profits. In other cases, bargained-for benefits have been structured to accrue directly under Trump’s control. The Nippon Steel agreement gave control of the golden share not to the office of the president, but to Trump himself; only after he leaves office does the share transfer to the secretaries of Treasury and Commerce. Finally, the (contested) $550 billion pot from Japan would be, according to Secretary of Commerce Howard Lutnick, a fund to be spent however Trump wished—part of “a national security and economic fund managed by Donald Trump.” 

2. Public Ownership in the Absence of a Fiscal Crisis or National Security Justification: While direct government ownership of industry is not unheard of in American history, the Trump administration has been uniquely eager to wield it as a routine industrial policy tool. The MP Materials and Intel deals both gave the government equity ownership of private companies, and the U.S. Steel approval netted the government special, powerful veto rights over that company’s decision-making. After announcing the (contested) terms of the Japan trade deal, administration officials even contemplated using the deal’s (disputed) investment fund to build government-owned factories that could then be leased to private companies. 

3. Bullying Individual Companies: Trump has a quid-pro-quo mentality of wanting a cut of any private gains he feels he has facilitated—he has openly compared his presidential dealmaking to waiving property rights on his real estate for the benefit of a third party, in exchange for a fee. When he agreed to grant Nvidia export licenses to sell modified chips in China, Trump told its chief executive, “If I’m going to do that, I want you to pay us something.” Or as Secretary Lutnick described the Intel equity stake, “If we’re going to give you the money, we want a piece of the action.” 

4. Leveraging Government Power: Beyond just flexing the rhetorical might of the presidential bully pulpit, Trump has used the levers of government to offer firms deals they can’t refuse. The administration has created or exploited bargaining power to induce targeted firms to relent to its demands. Under export control regulations, Nvidia and AMD needed the administration’s permission to sell chips in China, forcing them to acquiesce to Trump’s profit-sharing demand. Nippon Steel could not take over U.S. Steel without approval from the government’s foreign investment review committee. Shortly before Intel agreed to the equity deal, Trump ratcheted up the pressure by calling for its executive to be fired and withholding its CHIPS Act grants.  
    
   Two other examples illustrate Trump’s leverage power plays: In May, he issued an executive order instructing pharmaceutical companies to agree to adhere to “most-favored-nation price targets… to bring prices for American patients in line with comparably developed nations.” The order threatened that the administration would put the squeeze on pharma companies that don’t comply, through newly-authorized competition from drug imports, restrictions on their own exports, antitrust scrutiny, reconsideration of their drugs’ FDA approvals, and loss of National Institutes of Health grants. And in August, the administration announced it would impose high tariffs on semiconductor imports—but would exempt tech companies that made new domestic investment pledges. The administration thus imposed tariffs to create leverage and offered relief from those tariffs to advance its industrial policy goals

5. Legally-dubious boundary-pushing: Much of Trump’s industrial policy has operated in legal gray zones. To bypass routine federal contracting and procurement laws that typically require competitive bidding, the administration’s investment in MP Materials relied on a little-used provision of the Defense Production Act authorizing transactions “without regard to the limitations of existing law.” Trump’s profit-sharing deal with Nvidia and AMD flouts prohibitions on export taxes and fees under both the Constitution and federal law. There is also no firm legal basis under the CHIPS Act to convert Intel’s grants into equity (nor was there to withhold its grants in the first place). 
    
   Trump has also avoided legal constraints by relying on “regulation by deal,” rather than legislation or agency rulemaking. (He’s also been firing the regulators who would otherwise shape such government interventions.) Companies have acquiesced to White House demands that may not otherwise withstand legal scrutiny to avoid lost business opportunities, the cost and time of litigating against the federal government, and the general ire of the Trump administration. This has insulated much of Trump’s industrial policy from administrative procedure, due process, and judicial review. 

Industrial Policy Unleashed

Some elements of Trump’s approach are likely to endure. The wraparound support for MP Materials, for example, could well become a model for how the government cultivates strategically important domestic production. The type of golden share Trump obtained in U.S. Steel could be on the table for future mitigation agreements between the federal government and foreign companies seeking to invest in critical domestic sectors.  

As I wrote for the Monthly, there are also compelling reasons for the government to insist on a direct return on its industrial policy investments. Taking equity stakes in semiconductor companies funded by the CHIPS Act was originally a Bernie Sanders proposal. When used in the right context, equity stakes ensure that industrial policy returns upside revenue to the public, instead of merely socializing profits for corporations. 

External trends may also lend Trump’s industrial policy approach greater staying power. As policymakers seek new revenue sources beyond traditional taxation, they may increasingly look to levers like equity stakes, profit-sharing agreements, and royalties. Congress’s tendency toward gridlock and paralysis has long spurred administrations to seek creative executive workarounds, but the courts have increasingly limited the discretion given to the administrative state. That may steer administrations toward regulation-by-deal as a flexible means for the executive branch to regain power from the judiciary. 

It’s not hard to imagine where Trumpist industrial policy may be headed. White House advisers have said they will seek equity stakes in other companies receiving federal grants and loans to seed a sovereign wealth fund. Moreover, if Intel cannot right its ship, it may be forced to revisit previous discussions of spinning off its semiconductor factories to a foreign firm like the Taiwan Semiconductor Manufacturing Company (TSMC). The Trump administration, which has opposed such a move, could, as Intel’s largest shareholder, dictate the terms of such a deal. (Indeed, the Intel agreement included a poison pill to symie the sale of its foundries.) Plus, any such sale must win the administration’s approval through the Committee on Foreign Investment in the United States (CFIUS). One could imagine the administration negotiating on economic and national security grounds for government ownership of Intel’s factories, which could then be leased to another chipmaker.  

Trump’s industrial policy toolkit may empower future administrations with different priorities. For instance, federal policies—steep tariffs and national security exclusions—are sparing U.S. automakers from a flood of low-cost, cutting-edge Chinese electric vehicles. A future administration could condition that continued industry protection on American carmakers offering more affordable low-emissions vehicles and ramping up their research and development investments.  

A future administration could use the specter of the government’s statutory powers to limit or override patents on federally funded technologies to negotiate long-term profit-sharing agreements with artificial intelligence companies. It could also use similar authority to negotiate price reductions from pharmaceutical companies and leverage the Medicare Advantage market to acquire golden shares in health insurance companies, with veto power over major corporate decisions.  

A future Democratic administration could grant targeted tariff reductions to countries or companies that decarbonize their energy grids and production processes—and dangle extra reductions to those that use American-made clean energy technology. It could use the Defense Production Act’s preemption power to expedite clean energy and new housing development around other legal impediments. If the industrial policy arc from the first Trump administration to the Biden administration is any guide, the next Democratic president will make fulsome use of these kinds of Trump-inspired tools.

Industrial Policy Checked and Balanced

So sheer inertia may well propel Trumpist industrial policy forward. But there are several stark and urgent reasons Congress and the courts should pump the brakes and reconsider major elements of Trump’s approach. For one, Trump’s approach may simply yield worse industrial policy. Absent exceeding care and deliberation, go-it-alone executive branch industrial policy can overreach and implode without the safeguards and democratic legitimacy of operating through Congress. Even if Trump’s deals successfully evade the courts, a subsequent administration could deem some contrary to law and declare them null and void—regulation by deal has far less long-term durability than regulation by regulation, let alone legislation. Such whipsawing will make the U.S. government a less reliable, more tumultuous economic actor. 

For another, elements of Trump’s industrial policy are a recipe for abuse and corruption. Pay-to-play regimes for exporting sensitive technologies to foreign adversaries jeopardize fair competition and national security. Personalist policymaking is a recipe for cronyism, corruption, and favoritism for well-connected dominant firms. Trump’s industrial policy deals have so far been structured to secure public gains. Still, it is all too easy to foresee future gambits redounding to the private benefit of the Trump family (like the Paramount merger with Skydance, which routed $16 million into the Trump presidential library). Moreover, while leverage can be useful for achieving policy aims, marshaling the vast regulatory state as one big pressure-cooker to coerce concessions from targeted companies risks undermining other vital policy interests. We’re already seeing that regarding antitrust. Companies seeking merger approvals have won favorable treatment from the Trump administration by making side promises for domestic manufacturing investments. The potential for Trumpist misuse of industrial policy risks poisoning the whole enterprise. 

That’s where Congress and the courts come in—or at least, where they should. Congress was a true coequal branch during the Biden administration’s major industrial policy programs, shaping and passing the Bipartisan Infrastructure Law, CHIPS and Science Act, and Inflation Reduction Act through normal legislative processes. It could again instill democratic prerogatives and guardrails for industrial policy. Congress could determine when the government should take equity stakes in private companies. It could set ground rules around taking golden shares, like which corporate decisions may be subject to a government veto and which are off-limits. It could set standards around appropriate uses of revenue-sharing deals with the federal government. It could stipulate where the revenue generated from industry policy investments should go and how it should be spent. It could set rules preventing the government from unduly favoring companies where it has taken equity stakes in competitor firms. It could establish safeguards to ensure that industrial policy is not used to enrich public officials. Meanwhile, the courts may need to revisit legal doctrines like standing to ensure that some party can contest deals of questionable legality, like the Nvidia revenue-sharing agreement or the Intel equity swap.  

If Congress fails to act, it could be understood as blessing Trump’s mode of industrial policy by one-man dealmaking. That doesn’t just invite corruption, but is also a recipe for managerial disaster. The Obama administration’s masterful overhaul of Detroit is arguably less remembered today than the failure of Solyndra. After receiving an Energy Department loan, the solar panel firm’s bankruptcy led to a series of high-profile investigations that ultimately uncovered no criminal wrongdoing or corruption but soured the public on Obama’s nascent clean energy industrial strategy. 

With Trump’s state capitalism, the hands-off market fundamentalism era is over. The question is whether the government’s new terms of engagement with industry will be dominated by the president or deliberated upon by Congress and the courts. Acquiescence by the other branches to Trump’s deals, warts and all, risks heralding the unchecked and unbalanced industrial policy of the unitary executive. Activation by them, however, could lead to a whole-of-government effort to sand away the roughest edges of Trump’s approach to craft an industrial policy that is both powerful and responsible to effectively guide the country forward.  

The post Trump’s Industrial Policy: What’s Right and Wrong appeared first on Washington Monthly.

In a 2023 New York Times column, Ezra Klein coined the term “everything-bagel liberalism” to describe the phenomenon of projects that liberals favor getting weighed down by seemingly ancillary requirements liberals impose on them. He noted, for instance, that in California, strict labor and environmental standards embedded in various pieces of legislation passed by the Democratic legislature over the years have made it too costly and time-consuming to build subsidized housing for the homeless. 

This same problem, he warned, would imperil one of the centerpieces of the Biden administration’s economic policy: the CHIPS and Science Act. Klein praised the aims of this flagship legislation to reshore semiconductor manufacturing with a $39 billion fund to attract companies to the United States. But in the administration’s implementation of the bill, he discovered a plethora of conditions the government would have to use to evaluate prospective grantees that worried him—ranging from applicants’ commitments to workforce development for racial minorities and women, to environmentally friendly operations, to community investments in transit, housing, and child care, and more. Klein warned that this litany of priorities that were not directly related to the main task at hand—bringing semiconductor manufacturing to the U.S.—risked overwhelming the core enterprise. “The government is adding subsidies with one hand,” he wrote, “and layering on requirements with the other.” An industrial policy mission as complex as bringing back semiconductor manufacturing calls for “an intensity of focus that liberalism often lacks,” he concluded.

Klein resumed his critique of the Biden administration’s industrial policy approach in his book Abundance, coauthored with The Atlantic’s Derek Thompson and released in March—and the two were hardly alone. When the administration first issued the CHIPS Act funding guidelines, Catherine Rampell of The Washington Post wrote that the requirements were the latest example of how “virtually every ambitious program gets saddled with too many other unrelated objectives to do any of them well.” Matthew Yglesias wrote in his Slow Boring newsletter that if promoting semiconductor manufacturing is an important national goal, then the administration should “act like it’s important and say that other causes need to fall by the wayside.” The blogger Noah Smith likewise bemoaned liberals’ “laundry list” habit of “inserting every goal into every project.” Senator Ted Cruz and a dozen of his Republican colleagues got in on the action too, blasting the administration in a letter for including “application requirements that are ancillary to accomplishing Congress’s stated goals or otherwise squander taxpayer dollars on social policy objectives.”

The argument that liberals inadvertently produce scarcity by entangling their own projects in a web of competing priorities is a central tenet of what’s become known as “abundance liberalism”—an emerging policy movement, of which Klein and Thompson are among its most prominent proponents. And in certain contexts, they are right. For instance, I’ve argued in these pages in favor of permitting reform to accelerate the building of clean-energy infrastructure, and elsewhere have endorsed using the Defense Production Act to bypass procedural barriers for important green projects.

But just as too many conditions can doom a project in some contexts, so can too few conditions spell doom in others. Indeed, despite all of the op-ed page consternation, the CHIPS Act’s everything-bagel conditions turned out to be a nothingburger. When stacked up against high-profile economic development failures of the recent past, the CHIPS Act shows that a little bit of everything-bagel liberalism is actually quite useful to crafting effective and politically sustainable industrial policy. When government is handing out vast sums of taxpayer dollars to private industry, the best and only way to achieve public ends is to put the right conditions on the money.

It’ll be years, of course, before we can know for certain whether Joe Biden’s CHIPS Act achieves its goal of rebuilding an internationally competitive advanced microprocessor fabrication industry on U.S. soil—and whether it can withstand Donald Trump’s vendetta against the “horrible” law enacted by his predecessor. But by many measures, the CHIPS Act is already achieving its aim of creating a domestic alternative to the existing geopolitically fraught Taiwanese-dominated semiconductor supply chain. The act’s semiconductor grants program wound up “vastly oversubscribed,” according to Biden’s commerce secretary, Gina Raimondo. The Department of Commerce received some 600 statements of interest from companies seeking to build semiconductor fabrication facilities (known colloquially as “fabs”) in the United States, collectively requesting $70 billion in funding—nearly double the amount available under the law. To take one prominent example, the Taiwan Semiconductor Manufacturing Company (TSMC) received a grant to create a new plant in Phoenix, which is now up and running and achieving chip production yields that outpace the company’s Taiwan plants—a key mark of success. In March, the company announced plans to more than double its investment in Arizona.

The administration’s supposed gauntlet of conditions held back very few suitors. In fact, many of the “extraneous” conditions were directly tied to significant industry needs. 

In Abundance, Klein and Thompson singled out the Biden administration’s funding preference for CHIPs Act applicants who “create equitable work force pathways for economically disadvantaged individuals,” including “building new pipelines for workers.” However, workforce development is a critical concern for semiconductor reshoring: The meager existing domestic chip industry in the U.S. means that the country has few skilled workers available to staff new fabs, posing a stark bottleneck for new investment. Indeed, in 2023, TSMC’s new fab in Phoenix was forced to delay production in part because of the shortage of skilled workers. 

Nonetheless, Klein and Thompson (along with many other critics) expressed particular dismay over the administration’s consideration of whether a CHIPS Act applicant would arrange for either onsite or local child care for its workers. Yet the industry itself seemed entirely nonplussed by this requirement. In an interview with Oren Cass of American Compass, Scott Gatzemeier, an executive at the semiconductor manufacturer Micron Technologies, explained, “What keeps me up at night [is] getting the workforce for these fabs and building the workforce for the future,” noting that his firm was actively exploring “nontraditional pathways [to] reach out and get more people coming in … At Micron, we’re building a daycare right across the street from our [Idaho] headquarters.” He added, “We’ve already purchased the land [at our coming] New York site to do that [too].” Semiconductor firms are providing perks like child care because it’s a smart strategic choice to attract and retain the skilled workers they need to succeed.

Klein and Thompson’s list of apparently dispensable funding preferences also included the administration’s encouragement of a “climate and environmental responsibility plan.” However, environmental impacts are hardly an abstract concern for chipmaking: Semiconductor manufacturing is a famously water-intensive process, with the typical fab consuming volumes of water each day equivalent to roughly 30,000 households’ usage. When Micron was deciding where to open its next production site, it ultimately chose Clay, New York, over Austin, Texas, in part because of central New York’s superior access to a reliable water supply. Indeed, as Micron explained in a 2024 financial filing, its “manufacturing and other operations in locations subject to natural occurrences and possible climate changes” could “result in increased costs, or disruptions to our manufacturing operations.” If anything, legitimate environmental concerns weren’t emphasized enough in the CHIPS application process, with TSMC opting to locate in notoriously water-constrained Arizona.

Abundance also made at least one notable omission from its list of Biden administration conditions for semiconductor firms. According to a 2023 New York Times report, Raimondo informed governors that the administration would favor applications from firms that had received state and local assurances “to have permitting sped through” normal review processes to expedite the construction of new fabs. That abundance-friendly funding criterion was reported by none other than Ezra Klein.

All of which makes the CHIPS Act an awkward poster child for everything-bagel liberalism run amok. Indeed, in fretting about condition overload, Klein and Thompson might well have their worries backward. To understand the value of industrial and economic policy with conditions, consider what such a policy without conditions looks like: the brief saga of Amazon in New York City.

In 2017, Amazon announced a nationwide competition to determine where it would build its second headquarters (“HQ2”). The competition prompted a stampede of nearly 240 cities applying to host the e-commerce giant, jockeying in a race to the bottom to offer the company billions in tax breaks and other public incentives. New Jersey and Maryland each reportedly offered a record $7 billion in incentives to the company. Within a year, Amazon announced that it would split the new headquarters into two locations: New York City and Arlington, Virginia. In New York, Amazon was set to receive $3 billion in state and city incentives for up to 8 million square feet of office space on the East River waterfront in Long Island City, Queens, replete with a private helipad for CEO Jeff Bezos.

Amazon’s new headquarters would have displaced a planned mixed-use neighborhood—including new apartments with affordable units—and a school lunch distribution center. For its part, the company pledged a handful of community benefits, including office space for tech start-ups, internships and résumé workshops, a new community school, and green space.

After negotiating the deal in secret, New York’s political leaders—Governor Andrew Cuomo, and Mayor Bill de Blasio—and Amazon appeared to expect a celebratory reception. But the surprise deal quickly provoked public outrage. Residents objected to the eye-popping tax breaks offered to one of the world’s richest companies, and the lack of transparency surrounding the deal—something Amazon had insisted on by making public negotiators sign nondisclosure agreements. Elected officials condemned the deal as diverting taxpayer funds to corporate welfare while pressing city issues like affordable housing and deteriorating public transit went unaddressed (and could be worsened by Amazon’s arrival). Representative Alexandria Ocasio-Cortez tweeted, “Amazon is a billion-dollar company. The idea that it will receive hundreds of millions of dollars in tax breaks at a time when our subway is crumbling and our communities need MORE investment, not less, is extremely concerning to residents here.” State Senator Michael Gianaris added, “If Amazon wants to come here, they should be talking about subsidizing Long Island City, not squeezing subsidies out of New York state or New York City.” Others saw behavior like Amazon’s anti-union history and its successful effort to kill a Seattle tax that would have funded affordable housing for homeless people as troubling red flags for the city’s future with the company.

By February 2019, the deal was dead. Amazon announced that it was pulling out of New York, and Virginia would be the sole location for HQ2. (Amazon was reportedly “upset at even [the] moderate level of resistance” it faced in New York.) The company made its decision shortly after the New York State Senate selected Gianaris, a vocal Amazon opponent, to sit on a state public authority board with the power to veto the deal absent unanimous approval. 

Some abundance-oriented commentators have pointed to this breaking point as an example of how vetocracy can stifle economic development. In Why Nothing Works: Who Killed Progress—And How to Bring It Back, Marc Dunkelman concludes, “Whether or not Amazon’s proposal was worthwhile, no single state senator should have the authority to scuttle a deal of this magnitude on his own … In a nation desperate to build, progressivism’s imbalance had left the government unable to deliver.”

That may be so. But New York lawmakers took a different lesson from the HQ2 debacle. In 2021, state legislators set out to craft new economic development legislation to draw semiconductor manufacturers to New York—a state-level set of incentives separate from those being developed under the federal CHIPS Act around the same time. And lawmakers had the Amazon fracas front of mind: state Assemblyman Al Stirpe, one of the legislative sponsors of the New York bill, wanted to ensure that any financial incentives for chipmakers came with attached requirements to benefit the community at large. “There is a concern about the Amazon blowup from a year and a half ago in New York City,” Stirpe told reporters. “You want to make sure people who feel that way about incentives for corporations know that we’re very concerned about inclusivity and this project will benefit everybody.” 

In August 2022, New York enacted the Green CHIPS Act, which created a $10 billion fund to provide subsidies to chipmakers that moved to the state. To be eligible for funding, firms had to create at least 500 new jobs, reduce their greenhouse gas emissions, provide workforce development opportunities for low-income New Yorkers, and pay prevailing wages for plant construction. “We thought if we were going to give a business an incentive, which is what they want, let’s get something that we want in terms of a sustainable project,” Stirpe said.

The Green CHIPS Act took the anti-Amazon approach. Successful economic development projects required socially beneficial terms and conditions in exchange for public subsidies to corporations. And where HQ2 liberalism failed, everything-bagel liberalism succeeded. In October 2022, on the heels of both the federal and state CHIPS laws, Micron announced its new $100 billion investment in central New York, a project that promises to transform the region.

The juxtaposition of these two approaches—no strings attached for Amazon on the one hand, and some strings attached for semiconductors on the other—is telling. When the government undertakes industrial policy, attaching smart conditions is an important, even essential, predicate for success for several reasons.

First, conditions can help secure industrial policy’s democratic legitimacy. New York’s Amazon deal met resistance because of the top-secret negotiations and because the HQ2 search process smacked of unseemly corporate power: a mega-company dictating development terms to the public, instead of the other way around. Conditions that alter firm behavior and ensure that a project advances important social purposes signal that the public is driving industrial policy, rather than letting the state acquiesce to corporate capture. 

Second, the federal government can set high national standards by employing conditional industrial policy. The design of the HQ2 competition played states and cities off of each other to up the subsidy ante for Amazon’s benefit. Because states are in competition with one another for any company’s business, big corporations can drive a bidding war. That’s less true at the national level. While the federal government has to worry about firms moving abroad, it’s still much easier for companies to move across state lines than national ones. That gives the federal government more bargaining power to add conditions consistent with community and coalitional values on subsidies to corporations. While New York was able to put a small number of conditions on its CHIPS bill, the federal government was able to demand far more from firms benefiting from its largesse.

Third, conditions can protect the government’s investment. Many of the CHIPS Act conditions simply reflected the government doing due diligence on potential grantees, ensuring that they were properly prepared to plan for workforce development, environmental sustainability, and other foreseeable issues that could otherwise squander federal funding. Conditions can also include corporate guardrails to make sure that federal subsidies are not siphoned off by shareholders, as the economists Lenore Palladino and Isabel Estevez have explained. Those guardrails can take the form of restrictions on share buybacks and shareholder payments, protections for workers, and public equity stakes. Protective conditions increase the government’s confidence that the investment will achieve its aims, thereby decreasing the risk that the investment fails and becomes right-wing fodder as another liberal wasteful boondoggle.

Other investment protections can seek to maximize the benefit of public subsidies for the American economy. For example, the clean vehicle tax credit under the Inflation Reduction Act included domestic content conditions requiring eligible automakers to substantially source key EV components from the United States or its free trade partners. This leveraged an industrial policy subsidy to spur additional domestic economic activity—in this instance, EV battery production and critical mineral development. In doing so, it also advanced national security priorities by creating a firewall to limit federal funds from indirectly subsidizing foreign supply chains in China.

And fourth, conditions distinguish industrial policy from mere corporate welfare by securing a direct public return on investment. Echoing criticisms of HQ2, in 2022 Senator Bernie Sanders condemned the not-yet-passed CHIPS Act as “corporate welfare,” saying that “taxpayer handout[s]” would go to “five companies [that] made $70 billion in profits last year.” While he supported industrial policy, Sanders said, “industrial policy to me means cooperation between the government and the private sector. Cooperation. It does not mean the government providing massive amounts of corporate welfare to profitable corporations without getting anything in return.” He demanded that CHIPS Act subsidies be limited to only those companies that “agree to issue warrants or equity stakes to the Federal Government. If private companies are going to benefit from generous taxpayer subsidies, the financial gains made by these companies must be shared with the American people, not just wealthy shareholders.” While stopping short of taking an equity stake in semiconductor firms, the Biden administration did impose an “upside sharing” requirement such that companies receiving funding under the CHIPS Act must share any profits achieved above a certain threshold with the federal government. 

Industrial policy that benefits private companies for a public purpose ought to yield direct public returns. As the economists Mariana Mazzucato and Dani Rodrik put it, “conditions create a healthy tension between public and private so that subsidies are part of a ‘deal’ rather than a blanket handout.” For instance, when the Mexican government sought to curb grocery inflation, it granted industry concessions by waiving import tariffs, freezing transportation fees, and relieving regulatory burdens—but on the condition that firms agree to consumer-facing price caps on food and essentials. Likewise, when the United States sought to expand health coverage through the Affordable Care Act, it subsidized the insurance industry—but insisted that insurers cover a stronger set of essential health benefits, offer plans to everyone regardless of preexisting conditions, and spend a certain percentage of premium dollars on actual care, among other requirements. Indeed, industrial policy with conditions bears some resemblance to utility regulation: Private firms that benefit from government protection or investment must in turn comply with special rules and requirements for the benefit of the public.

Klein and Thompson have a point that liberals need to pay as much attention to supply as they do to demand. But their prescriptions often only get us part of the way to actual abundance. With housing, exclusionary zoning and NIMBYism do constrain supply (including for public housing) in many high-growth areas. But those obstacles don’t explain why home construction never fully recovered from the 2008 housing crash. With clean energy, old green laws are slowing new green projects. But so are financing challenges, input bottlenecks, fickle market-sensitive private developers, and oppositional investor-owned utilities. Or take semiconductors: Regulatory and permitting processes do slow the build-out of new domestic fabs. But as TSMC showed, so do workforce constraints.

Abundance can be hampered by more than just government red tape. And securing abundance will require a pragmatic blend of catalyzed private power (whether through subsidization or regulatory reform) and directive public power (to ensure that the private sector doesn’t subvert or bungle public aims, or siphon off public dollars). 

“Everything-bagel liberalism”—industrial policy with conditions—provides that blend. The government provides the direction, but the private sector generates the output.

Policy makers must find a sweet spot where a project pencils out financially for the firm while the attached conditions hold water democratically for the public. No-strings-attached public money to corporations is generally not democratically viable or desirable. Yet a tangle of attached strings risks strangling a project for a firm. 

The question is not whether to do conditional industrial policy, but how much to do. How many conditions should be attached? And which ones? Maybe there’s a role for a new industrial policy agency that can get a stronger grasp of industry dynamics in order to better understand which conditions are valuable and which might be detrimental. The most obvious conditions to include are those that simply adopt an industry’s own best practices—like in the semiconductor context, proactive workforce development and environmental sustainability. And there’s also a strong democratic case for protective conditions that get something back for the public—like a share of profits, or a commitment to R&D investment—even though they might raise hackles from a firm’s shareholders.

The aim, according to Mazzucato and Rodrik, is to “maximize the public value of public investments.” Positive-sum industrial policy enhances the collective good, alleviating scarcity and want. The road to abundance is lined with everything bagels.

The post In Defense of Everything-Bagel Liberalism appeared first on Washington Monthly.

After passing important climate legislation this summer, Congress is turning to permitting reform—the “side deal” that Senate Majority Leader Chuck Schumer struck with Senator Joe Manchin. Congressional liberals have been balking, fearing the accord will hurt the environment more than it helps. But instead of opposing reform, liberals should recognize that some fix is essential if only to prove that a Democratic House, Senate, and White House can tackle our most significant threats.

To secure Manchin’s vote for the Inflation Reduction Act, Schumer promised to take up a permitting reform package to streamline building new energy projects. It would modernize laws like the National Environmental Policy Act (NEPA), which imposes onerous procedural requirements on development projects to evaluate environmental impacts.

Manchin’s just-released legislation empowers the president to designate energy projects for fast-track energy permitting; limits environmental reviews of new projects to two years; caps the time litigants have to initiate lawsuits against new projects; centralizes permitting for interstate transmission lines; and completes his coveted natural gas pipeline in his home state of West Virginia.

This deal irks progressives. Representative Jared Huffman called it a “sleazy backroom deal.” More than 70 House Democrats sent a letter to leadership demanding that “attempts to short-circuit or undermine [NEPA] in the name of ‘reform’ must be opposed,” as should provisions that “significantly and disproportionately impact low-income communities, indigenous communities, and communities of color.” Some environmental groups oppose permitting reform, seeing it as a fossil fuel Trojan horse. 

No doubt, permitting reform could be a double-edged sword: Regulatory efforts to speed up energy production and transmission could benefit both clean energy and fossil fuels. But the urgency of climate change demands that progressives embrace some permitting reform. According to Princeton University’s REPEAT Project, the Inflation Reduction Act has the potential to secure two-thirds of the emissions reductions the United States needs to meet our climate goals. But the word potential is key. The same group warns that the IRA’s $370 billion in climate spending may punch well below its weight unless we fix our permitting processes. It found that 80 percent of the IRA’s potential emissions reductions will be lost if we cannot build electricity transmission faster. That’s because much of the law’s impact depends on reaping and distributing abundant clean energy from new infrastructure that must be permitted: wind farms, solar arrays, and other renewable energy sources, plus transmission lines. Unless we drastically streamline permitting, building clean energy infrastructure could take too long to meet our climate goals.

Hindering the IRA from reaching its potential would be a self-inflicted wound for clean energy advocates and a familiar failure for progressives. President Joe Biden’s short-lived child allowance under the American Rescue Plan, impressive though it was in reducing child poverty, missed 18 percent of eligible children. Obamacare’s health insurance marketplaces, thought initially to mark the beginning of the end of employment-based insurance, were projected to cover 25 million people; instead, they’ve leveled off at just about 15 million, an important backstop but not what it could have been. 

This implementation spillage leaves a delta between what a policy should achieve and what it actually achieves. This problem particularly bedevils large-scale infrastructure projects from subway lines to wind and solar farms, which contend with frequent cost overruns, construction delays, and lengthy environmental reviews. High-speed rail, meant to be President Barack Obama’s signature transportation project, is still nowhere to be found. Our failure to execute these laws is taking a bigger and bigger bite out of progressive achievements.

Progressives once knew how to build. Across the Democratic Party, President Franklin D. Roosevelt’s New Deal programs are held up as exemplars of liberal ambition and effectiveness. But it’s impossible to imagine FDR’s most celebrated infrastructure projects proceeding anywhere near the same pace in today’s permitting environment. In Franklin D. Roosevelt and the New Deal, the historian William Leuchtenburg recounts that FDR’s Tennessee Valley Authority—“the world’s largest earthen dam”—brought electricity to a region where, in 1932, “only one Mississippi farm out of a hundred had power.” As TVA Director David Lilienthal put it, “We are working toward no less a goal than the electrification of America.”

Roosevelt’s rural electrification program turned the lights on in rural America. In 1935, 90 percent of American farms lacked electricity. Because of the Rural Electrification Administration, by 1955, 90 percent of farms had it.

Today, we need to generate clean energy and distribute it through new transmission lines. But it takes a decade or longer to construct a single line, partly because of permitting delays. Yet the models forecasting the IRA’s emissions impact assumed that lines would proliferate in just seven years. As a report from the Belfer Center for Science and International Affairs puts it, under the current permitting environment, “construction of new transmission requires an extensive siting and permitting process that can stretch for over a decade and may put the goal of a carbon-free electric grid by 2035 out of reach.” Permitting reform would help accelerate building the new interstate lines we need to decarbonize. 

To do big liberal things—to make “FDR-size” strides against climate change—will require revisiting regulatory barriers. Of course, we shouldn’t fully return to the 1930s; FDR’s building spree was sped by a lack of environmental laws and lax worker protections. But we should honestly reassess where we’ve overcorrected with laws like NEPA that now ensnare bike lanes and offshore wind farms in drawn-out environmental reviews. 

There will be trade-offs between swift action and deliberative proceduralism, between broad national benefits and possible harms falling on discrete populations. For instance, congressional progressives worry that permitting reform will hurt historically disadvantaged communities by exposing them to new fossil fuel development. But those communities, long plagued by air pollution and environmental harm, would also benefit greatly from hastening a clean energy economy. Princeton’s REPEAT Project estimates that the IRA has the potential to save 35,000 lives from premature death over the next decade by reducing air pollution from power plants, cars, trucks, and buses. These health benefits risk erosion if we stick with the sedentary permitting status quo. 

If liberals can’t cut through permitting sclerosis, then voters will elect those who will (or, at least, who’ll purport to). Here’s the libertarian-leaning columnist Virginia Postrel describing then primary candidate Donald Trump in March 2016: 

“Who can build better than Trump? I build; it’s what I do,” he said, defending the practicality of his proposed border wall. For his supporters, the attraction is not just the possibility that the wall will be built but the belief that their candidate is a doer, someone whose abilities transcend the quotidian and inadequate skills of the political class currently in power.

Voters didn’t elect Trump out of disgust with the U.S. permitting process. But years’ worth of projects falling short of their promise bred cynicism and doubt that liberal government could be made to work.

Biden understands this. He recently tweeted, “When Americans start seeing big projects cropping up in their hometowns—cranes going up, shovels in the ground—I want them to feel the way I feel: Pride in what we can do when we do it together.” Recent research validates Biden’s sensibility, finding that the construction of wind turbines “generated large electoral benefits for (pro-renewables) Democratic candidates.” Most voters like tangible environmental progress in their communities, making a virtuous political cycle possible. Building clean energy infrastructure faster benefits climate-friendly lawmakers.

Rather than try to kill permitting reform, liberals should put their stamp on it. Boycotting negotiations guarantees that those who are ambivalent to or oppose a green transition will shape its terms. Liberals have the numbers in Congress to ensure that permitting reform disproportionately accelerates clean energy projects. 

One approach that could work for liberals is simply exempting green energy projects from environmental review. It makes little sense to let green laws delay green projects. But that may not fly with Manchin and his preference for an “all of the above” (meaning renewables and fossil fuels alike) energy portfolio. The coal state senator may be more amenable to proposals from the Institute for Progress, a nonpartisan think tank, which would put clean energy projects on an equal regulatory footing with fossil fuel projects (which receive numerous exemptions from environmental review law). Others have suggested creating specialized “NEPA courts” where technical experts adjudicate environmental review cases with greater speed and consistency than regular federal courts. 

Reform should also take on state and local permitting obstacles that delay or kill wind and solar farms that meet neighborhood opposition. The Telecommunications Act of 1996, which supported cell phone tower building over frequent local resistance, can be a good model. 

And while Manchin-led permitting reform may be an “all of the above” double-edged sword, the fossil fuel edge may prove dull. Renewable energy costs have plummeted, and the emerging direction of major industries and the IRA’s clean energy incentives point toward a green future. Car ads are now all about electric vehicles, and clean energy has the economic winds in its sails. 

Permitting reform can help propel American dynamism through liberal governance. Nearly a century after the New Deal, we must once again “work toward no less a goal than the electrification of America”—the clean electrification of America. That is what this moment calls for—to keep the rising seas and the illiberals at bay.

The post Why Liberals Should Embrace Permitting Reform appeared first on Washington Monthly.

The surprising momentum of Democratic presidential candidate Pete Buttigieg has given a boost to an important but overlooked liberal project: taking back the rhetoric of freedom from decades of conservative domination. In his official campaign launch two weeks ago, Buttigieg, the mayor of South Bend, Indiana, said: “Our conservative friends care about freedom, but only make it part of the journey. They only see ‘freedom from.’ Freedom from taxes, freedom from regulation … as though government were the only thing that can make you unfree.”

“But that’s not true,” he insisted. “Your neighbor can make you unfree. Your cable company can make you unfree. There’s a lot more to your freedom than the size of your government … Consumer protection is freedom, because you’re not free if you can’t sue your credit card company even after they get caught ripping you off.”

By staking out a liberal version of freedom that focuses on the economic barriers to individual liberty, Buttigieg is reclaiming important rhetorical ground for a left-leaning agenda. If he succeeds, it will be in part because it’s ground that Donald Trump has all but abandoned in favor of raw nativism. That gives all liberals, not just Buttigieg, a rare opportunity to articulate their own positive—and uncontested—vision of American freedom.

Freedom has never been far from the rhetorical center of gravity in American politics. But its political valence has shifted over time. In the aftermath of the Great Depression, Franklin Roosevelt wielded the rhetoric of freedom for liberal ends. He spoke about “freedom from want” and “freedom from fear,” demanding a new set of economic rights that called for affirmative government interventionism. “We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence,” Roosevelt told the nation. “Necessitous men are not free men.”

Since FDR’s era, however, and especially following the civil rights movement, conservatives have gradually taken over the mantle of freedom in political discourse. Beginning in earnest during the Cold War, the right successfully appropriated the concept as rhetorical draping for don’t-tread-on-me libertarianism and deregulatory free-market capitalism, casting liberal government programs as genetic cousins of totalitarian Soviet ideology. At the close of the 1964 presidential campaign, Ronald Reagan famously framed the race between Barry Goldwater and Lyndon Johnson as a choice between “man’s age-old dream, the ultimate in individual freedom consistent with law and order” and the “ant heap of totalitarianism . . . [by] those who would trade our freedom for security.” And so conservative standard-bearers from Goldwater through Reagan through Paul Ryan defined freedom as the absence of government intervention: the unencumbered consumer putting his dollars to work as he sees fit; the family left alone by government to peaceably live behind a white picket fence.

Yet for nearly three decades now, with the Cold War long behind us, that pitch has been running on fumes. By the Great Recession, it had truly outlived its usefulness. Conservatism was vulnerable to an insurgent who would come along and challenge its dusty rhetorical trappings.

That insurgent turned out to be Donald Trump. Trump rarely talks about freedom. Instead, he talks about “winning”—a politics of brute domination, supercharging the status of “his people” by attacking the status of everyone else. Yet, at the same time, Trump’s lack of interest in the actual work of governing has compelled him to outsource much of his administration’s policy agenda to the Republican old guard. That has produced the standard fare of wildly unpopular GOP policies: tax cuts for the wealthy, relentless attacks on health care, and Ryan-esque budgets that take from the poor to give to the rich.

That combination—the GOP’s ultra-stale plutocratic agenda aggravating economic inequality, and Trump not even bothering to dress up that agenda in a thin veneer of freedom—gives liberals an opening to go on offense by arguing that true and meaningful freedom requires some baseline of economic security.

Where the traditional conservative narrative around freedom focuses on preventing the tyranny of government, liberals worry about the tyranny of markets in everyday life. You’re not free if your employer is allowed to act as a mini-dictator controlling your personal choices. You’re not free if you can’t afford to have children because of the prohibitive cost of childcare. You’re not free if you don’t have access to quality education that expands your opportunities. You’re not free if you can’t switch jobs without losing access to health care—or if your employer prevents you from going to a competitor, or if one company controls all the employers in your field in your region. When people are serving the needs of the economy more than the economy is serving the needs of the people, freedom can feel like it’s in distressingly short supply.

The financial constraints and dependencies of modern American life have left many rethinking what real freedom means and seeking a reprieve from the grind of the unforgiving economy. It’s no coincidence that the institutions many Americans cherish most are those that we’ve shielded from the market, like schools, churches, parks, and libraries. Those are spaces of life where, to one degree or another, all comers are free to pursue enjoyment, enlightenment, and salvation, regardless of their wealth or income. The question that liberals now raise is which other spaces of life—like health care, family life, higher education, decent work, and a clean environment— ought to join those ranks and be wholly or partially freed from the market, too.

When government steps up to take care of those essentials, people are freer to live the lives they want. For instance, as Buttigieg put it, “Health care is freedom, because you’re not free if you can’t start a small business because leaving your job would mean losing your health care.”

With the deepened corrosion of conservative politics under Trump, the idea of freedom is now up for grabs. To truly control our own lives, and to have real liberty, government must tear down barriers that get in the way of our pursuit of happiness. Buttigieg has started reminding voters of that truth. Other liberals should, too.

The post What Democrats Can Learn From Pete Buttigieg appeared first on Washington Monthly.

Progressives have had it with the Supreme Court. Last week was a breaking point: a flurry of 5–4 decisions where the Court’s conservative wing systematically advanced the Republican Party’s agenda from the bench, from decimating public-sector unions to kowtowing to President Trump’s travel ban to sustaining Republican gerrymanders that water down the voting power of the Democratic base. Then, in a coup de grace, Justice Anthony Kennedy affectionately wrote to his “dear Mr. President” announcing his retirement, gift-wrapping Trump and Senate Republicans the chance to cement a conservative majority on the Court for decades.

It was a week where the Court dropped its nonpartisan veneer and showed its true colors through and through. And with the Court no longer bothering to hide its partisan stripes, many progressives are meeting it head-on, advocating for the next Democratic president to pack the court by adding at least two new Supreme Court seats. “Abolish the Roberts Court” is quickly becoming the new “Abolish ICE.”

Here’s how it would work: The Supreme Court has been comprised of nine justices for over a century. But that number is not enshrined in the Constitution. Instead, it is set by statute. A simple majority in Congress (probably with a change to the Senate’s filibuster rules) could pass a new law changing the number of seats on the Supreme Court. The president would then immediately get to fill those new vacant seats, with the Senate’s advice and consent.

So, to illustrate, if a Democratic president took office in January 2021 with Democratic majorities in Congress, he or she could sign a law passed by Congress adding two new seats to the Supreme Court, and then promptly fill those seats. That would give liberals a 6–5 advantage on the reconstituted Supreme Court.

It’s a bold act of political hardball. But there are good reasons for Democrats to keep court-packing on the table for 2020. Democrats may need to pack the Court to save it.

We live in a constitutional democracy. The presidency and Congress are popularly elected branches of government. The Supreme Court, on the other hand, is supposed to be more independent and insulated from the vagaries of popular will. But it’s not quite that simple. The Court is inherently a political animal because its justices are nominated and confirmed by the other two (political) branches. And legal scholars have long recognized the role that popular opinion and social movements have played in influencing some of the Court’s decisions. The Court’s legitimacy depends on it not growing too misaligned from mainstream views and consensus.

Yet today’s Court is dangerously out of sync with the rest of the country. If Trump’s nominee to replace Justice Kennedy is confirmed, four of the Court’s justices will have been appointed by presidents who lost the popular vote. (And that number could yet increase if Trump gets any more vacancies to fill.) One of those Republican-appointed justices was the product of an unprecedented heist from a twice popularly elected Democratic president. Even though more people have voted for Democrats than Republicans in six of the last seven presidential elections, conservatives have still retained an stranglehold over the Supreme Court.

Even worse, at least two of the Court’s nine justices will have been appointed by Trump while he’s caught up in the investigation into potential collusion with Russia to swing the presidential election. The specter of Trump’s illegitimacy taints our current Supreme Court.

Expanding the size of the Court under a Democratic administration would cure the growing imbalance between the Court and our democracy. The politics of such a maneuver might be messy and divisive in the short run. But in the long run, restoring an ideological balance to the Court that better reflects where the country stands is necessary to protect the Court’s legitimacy. Just like the Very Serious People who (baselessly) insist our leaders must swallow the political pain of austerity to protect the future of the country’s finances, a strong and far-sighted progressive leader must (actually) reform the Court for the country’s long-term good.

This is entirely in keeping with the Constitution’s system of checks and balances. The Constitution gives the president and Congress levers over the Court to provide direct democratic accountability. The president and Senate have a check over the Supreme Court by making appointments to fill vacancies. But Congress as a whole — including the House, the most democratic chamber — has a check on the Court by adjusting its size. This gives the popularly elected branches of government another way of holding the Court accountable. If Congress categorically refuses to use this power, then it has tied its own hands and atrophies its duties under the Constitution.

Early in the country’s history, the first Congresses were quite willing to wield this check over the Supreme Court. Congress originally set the size of the Supreme Court at six justices. After the Federalists lost the 1800 election, the lame duck Federalist Congress shrunk the size of the Court to five to deny Thomas Jefferson, the incoming Democratic president, an appointment. The new Democratic Congress then repealed the measure and wound up increasing the size of the Court to seven in 1807, giving Jefferson an extra appointment.

This Supreme Court yo-yoing continued throughout much of the nineteenth century. Congress later increased the size of the Court to nine in 1837 to give President Andrew Jackson two new appointments. And during the Civil War, the Republican Congress increased the Court again to ten justices to guarantee it had a pro-Union, anti-slavery majority. When Democrat Andrew Johnson assumed the presidency after Lincoln’s assassination, Congress reduced the size of the Court to seven to deny Johnson any appointments. And when Ulysses S. Grant succeeded Johnson in 1868, Congress increased the size of the Court to give him two new justices to appoint.

The most infamous court-packing attempt was President Franklin Roosevelt’s failed effort to add new justices in 1937. Facing a conservative Supreme Court that batted down his Depression-era relief measures, Roosevelt wanted to add as many as six new justices to the Court. Roosevelt’s ham-handed effort fell flat. It was too cute by half, adopting the pretext that new justices were needed to lighten the workload for an increasingly geriatric Court. Congress rebuffed FDR’s initiative, and the plan quickly died. But the president’s constitutional hardball proved to be an effective brushback pitch nonetheless: Justice Owen Roberts soon switched sides to preserve a nine-justice Court, and began siding with the liberal justices to uphold New Deal legislation.

FDR’s court-packing gambit was the last attempt at altering the size of the Court — until Senator Mitch McConnell successfully did it sub silentio in 2016. By refusing to consider President Obama’s nomination of Merrick Garland to replace Justice Antonin Scalia, McConnell effectively wielded the power of the Senate to shrink the size of the Court. In fact, McConnell—and Republican senators Ted Cruz and Richard Burr—openly planned to keep the Court at eight justices indefinitely if Hillary Clinton had won the 2016 presidential election, a bald-faced plan to unravel the Court by attrition — at least under Democratic presidents. McConnell only returned the size of the Court to nine justices after President Trump took office.

McConnell’s heist cannot go unanswered. It’s true, the judiciary wars have been escalating for years, and with both parties doing their part. But if Democrats blink now, they lose. Tit-for-tat is far from ideal, but unilateral disarmament is worse.

Restoring the Supreme Court to democratic legitimacy in 2020 will not be easy. For one, Democrats will need the presidency and strong majorities in each chamber of Congress. This speaks to the scale of resistance and change that will be needed to clean up after the Trump presidency. Undoubtedly, pundits will gnash their teeth over fears that the Court will be diminished by Democrats playing some hardball of their own. But the ongoing presence of Justice Neil Gorsuch on the Court — in a stolen seat, while hobnobbing with McConnell and giving speeches at Trump Hotels — is evidence enough that the institutional standing of the Court can withstand even the most shameless politicization.

When FDR announced his court-packing plan in 1937, he said, “We have…reached the point as a Nation where we must take action to save the Constitution from the Court and the Court from itself.” Come 2021, we may very well have reached such a point again. As progressives work to build a new and lasting majority, they cannot neglect institutional reforms. Expanding health care access, making the economy fairer, and curtailing climate change are all too important to the general welfare to be roadblocked by a reactionary Supreme Court.

If they win back power in 2020, Democrats cannot flinch from doing what needs to be done to correct the imbalances on the Court. Two seats for the people in 2021.

The post Two Seats for the People in 2021 appeared first on Washington Monthly.

It’s been 50 years since Robert F. Kennedy was murdered on the night of the California presidential primary. As Democrats seek to lead the country out of the darkness of Trumpism, they should borrow a central theme from Kennedy’s campaign: the promise of meaningful dignity for all Americans.

Kennedy is now regarded as a fallen liberal hero, yet during his presidential campaign, he ran as something of a dissident against President Lyndon B. Johnson and the liberal establishment. In May 1968, his campaign laid out his agenda for reforming the welfare system, believing it had “done much…to alienate us from one another,” and was unloved even by its beneficiaries. He thought that cash welfare on its own wouldn’t boost Americans, so he rejected guaranteed basic income proposals that circulated in the late 1960s.

What Americans needed and craved, Kennedy believed, was greater dignity and purpose. And that meant jobs. Good work is more than clock-punching drudgery. It means having a stake in a community to call one’s own—an exercise of citizenship to take pride in.

“We need jobs, dignified employment at decent pay,” he said. “The kind of employment that lets a man say to his community, to his family, to his country, and most important, to himself, ‘I helped build this country. I am a participant in its great public ventures. I am a man.’”

Fifty years later, the economy is chugging along, but the spoils are mostly going to the richest of the rich. The modern liberal economic agenda is focused on reversing this economic inequality. Inequality is a macroeconomic phenomenon, but what people actually experience at the individual level is a dwindling sense of personal dignity.

These indignities manifest themselves in different ways. For some people, it’s the anxiety of being squeezed by rising costs and stagnant pay, and being utterly dependent on an employer just to scrape by (not just for income, but also for healthcare and benefits). For others, it’s the mini-tyrannies that so many employers run, controlling nearly every aspect of workers’ lives. For minorities, and African-Americans in particular, it’s chronic unemployment that feeds into generational poverty and a limited shot at upward mobility. For white working-class voters, it’s the sense of lost honor from the shriveling up of the American Dream—an indignity that led many straight into the arms of Donald Trump.

These feelings of a lack of dignity are intrinsically bound up in rising inequality. Political leaders have long insisted that a rising tide lifts all boats. But for over 40 years, America’s rising tide has lifted mostly yachts. Everyone else has been treading water, with cynical political and cultural voices egging on working-class whites to direct their frustrations at immigrants and minorities. Income inequality may be the fact of what has happened, but the ensuing erosion of individual dignity and personal status is what many people have actually felt.

 Though not always stated, the progressive agenda implicitly aims to ease many of these indignities. In particular, one rising big idea brings the politics of dignity to the fore: the federal jobs guarantee. Prominent Democratic senators from Cory Booker to Bernie Sanders to Kirsten Gillibrand have, in rapid succession, unveiled job guarantee proposals. Booker’s plan, for example, would test a jobs guarantee in 15 localities, funding public jobs for every adult who wants one. “There is great dignity in work,” Booker said. “And in America, if you want to provide for your family, you should be able to find a full-time job that pays a fair wage.”

Of course, many people don’t find much dignity in their jobs. While the mechanics of a jobs guarantee (and the precise jobs) still need to be hashed out, most of the plans anticipate funding a WPA-style public workers corps with all Americans earning a living wage paired with generous benefits. Tedious jobs will undoubtedly endure, but those stuck in them would at least benefit from a rising standard of pay, better working conditions, and more job options.

More fundamentally, the right to a job carries the promise of ensuring that our broken economy actually serves human needs. Just as the long-held progressive declaration that healthcare is a right vows to liberate bodily integrity from ability to pay, a jobs guarantee raises the hope of untethering individual purpose from the whims of the market.

Not coincidentally, dignity has become the core dividing line in our politics in the age of Trump. The president has set about boosting solely the dignity of his own narrow political base, and stripping the dignity of everyone else. By relentlessly denigrating just about every marginalized group, Trump elevates the relative status of his followers by undermining the status of nearly everyone else.

At the same time, conservatives have latched on to rhetoric about the dignity of work to justify cutting off Medicaid and other welfare benefits from the unemployed. There’s a big difference between penalizing people for not working and facilitating work for all who want it. Progressives shouldn’t dismiss the gains to personal dignity from expanding employment just because conservatives pervert that idea to demean and marginalize the poor.

It’s good that Democrats are dabbling with a jobs guarantee, but they can’t stop there—the party should build upon it to craft a broader pro-dignity agenda, too. After all, the ultimate end-goal of liberalism is not government intervention for its own sake, but to secure meaningful dignity and self-determination for all Americans. “Even if we act to erase material poverty, there is another greater task,” Kennedy once said. “It is to confront the poverty of satisfaction—purpose and dignity—that afflicts us all.”

During his short-lived presidential campaign, Kennedy’s message united a working-class coalition that cut across race and ethnicity. By vowing to expand personal dignity for all in the wake of a president determined to obliterate it for many, perhaps progressives in 2018 can command this coalition once again.

The post What Democrats Can Learn from Robert Kennedy’s Politics of Dignity appeared first on Washington Monthly.

At last, progressives are beginning to grapple with what it would take to make single-payer healthcare a reality in the United States. And while the mechanics of Medicare-for-All may be daunting, there’s a logical place to start: Medicare-for-Kids.

Support for moving toward a single-payer, Medicare-for-All healthcare system is ascendant in the Democratic Party. More and more prominent Democrats have come out in favor of a Medicare-for-All system—a whopping 117 out of 194 House Democrats have signed on to Rep. John Conyers’s Medicare-for-All bill.

While single-payer sounds good to many progressives in the abstract, an abrupt transition to such a system could prove prohibitively disruptive. The vast majority of Americans get private insurance through their employers. They’d rightly fear the unknown impact of being thrust into a new system overnight. The tumultuous short-term politics of Medicare-for-All could fatally overwhelm the program’s long-term benefits.

This has left progressives searching for easier pathways to make inroads toward an eventual Medicare-for-All system. One place to start is by providing government-run health insurance to all American children. Children could be auto-enrolled in Medicare coverage at birth until some point in early adulthood, perhaps age 26—the current cutoff for children to stay on their parents’ insurance. Families would have the option of opting out of Medicare for their children in favor of employer-sponsored coverage or another suitable private plan.

Though over 4 million American children still lack health insurance today, Medicare-for-Kids would extend universal coverage to all children. And the transition would be much less disruptive than would be moving all Americans to Medicare. Over 40 percent of all American children are already insured by Medicaid, the Children’s Health Insurance Program (“CHIP”), and other public programs. Medicaid alone covers nearly half of all births in the United States. Extending automatic public health insurance to the other half of newborns would be a gradual first step toward Medicare-for-All.

Bringing children into Medicare’s fold also makes good financial sense. Children are typically cheap to insure because they generate few healthcare costs. By adding them to Medicare, children would improve the program’s overall financial profile by lowering average Medicare costs.

Children are also among the most vulnerable to what’s known as health insurance churn, meaning that they are often jerked in and out of different types of coverage. Slight changes in their parents’ income can disqualify families from receiving coverage through Medicaid or CHIP, graduating into private insurance instead. The healthcare disruptions caused by our fragmented system could be avoided at least during formative years by simplifying insurance for children by providing consistent, automatic Medicare coverage.

Medicare-for-Kids is not a new idea. When Lyndon Johnson enacted government-run insurance for all elderly Americans in 1965, his administration expected to follow Medicare with a similar program for all young Americans. Robert Ball, who served as LBJ’s social security commissioner, said that the administration “expected Medicare to be a first step toward universal national health insurance, perhaps with ‘Kiddicare’ as another step.” In his 1968 State of the Union address, President Johnson proposed to expand Medicare to cover prenatal and newborn care for low-income families. Johnson’s “Kiddicare” idea ultimately fell by the wayside when he opted not to run for re-election in 1968.

The Great Society was a missed opportunity to provide guaranteed healthcare to children, and the idea lay mostly dormant for the next three decades. In 1997, Congress created CHIP, extending coverage to nearly 9 million children through block grants to state insurance programs.

In 2001, Democratic Congressman Pete Stark and Senator Jay Rockefeller proposed a program to guarantee health insurance for children. Their plan included a mandate requiring parents to maintain coverage for their children. If parents could not provide coverage, their children would be automatically enrolled in a new government-run MediKids program. “MediKids simplifies the confusing array of health insurance assistance programs for children today and guarantees them coverage until adulthood,” Stark said.

And during his campaign for the 2004 Democratic presidential nomination, Senator Joe Lieberman ran on a plan to create a new federal program to cover all children from birth, which was also called MediKids. Lieberman promised that under his plan, “newborn babies won’t go home with just a name and a birth certificate. All American children, rich or poor, will have health insurance that stays with them from the moment they’re born, all the way to age 25.”

As progressives chart a path toward greater universal healthcare today, the Medicare-for-Kids idea has been quietly kicking around. A number of advocates, policy experts, and commentators have endorsed it. But for all the Democratic enthusiasm surrounding Medicare-for-All, no current candidates or officeholders have picked up the mantle of Medicare-for-Kids as a place to start. They should do so. It’s a simple pitch to bolster the health security of the youngest and most vulnerable Americans. Reviving the unfinished business of LBJ’s Great Society, Medicare-for-Kids would be a major attainable step toward a single-payer future.

And it could be a step with powerful reverberations. Medicare-for-Kids would create a generation of Americans accustomed to universal healthcare as an automatic right of birth. Starting with children may be the best path progressives have to an eventual system of guaranteed healthcare for everyone.

The post The Path to Medicare-for-All Starts with Medicare-for-Kids appeared first on Washington Monthly.

While the White House implodes from Russia scandals, congressional Republicans are plugging away at repealing the Affordable Care Act. And while few are watching, they are getting ready to gut one of the country’s most important health care programs: Medicaid.

Medicaid provides healthcare coverage to nearly one hundred million Americans, making it the country’s largest health insurance program. It is run jointly by the states and the federal government: Washington covers at least half the cost of each state’s Medicaid program, and as much as 73 percent in poorer states. The federal government also pays for nearly all of the cost of Obamacare’s Medicaid expansion in the nineteen states that have agreed to insure everyone up to 133 percent of the poverty line.

Of course, any repeal of the ACA will reverse that expansion. But Republicans aren’t simply trying to return to the status quo; they want to make Medicaid less generous than it was before Obamacare. Specifically, they aim to shrink Medicaid’s funding by capping the amount of money that the federal government pays to the states. Instead of paying a percentage of each state’s ultimate Medicaid costs, the federal government would prospectively give each state either a lump sum of funding or a set allotment that the feds will pay for each enrollee. Either way, these limits would deliberately reduce the amount that the federal government spends on Medicaid. This leaves states on the hook to make up the funding gap by either raising taxes or offering fewer benefits to fewer people.

To put this in numbers, the House health care bill imposes progressively deeper cuts over the next decade, slashing federal Medicaid spending by 26 percent by 2026. Even these cuts, which the White House has blessed, are not severe enough for some hardliners in the Senate, who want even greater reductions. They would achieve this by tying federal funding to a lower measure of inflation than the one currently used, which would cause the real value of the block grants to erode over time and cover less and less of the states’ expenses.

These reductions in federal Medicaid spending would affect a much wider swath of the American people than is commonly understood. For instance, Medicaid is the biggest neonatal care program in the country, covering nearly half of all births in the United States. That’s because Medicaid covers pregnancy services for all women with incomes up to 133 percent of the poverty line, and many states extend eligibility to pregnant women with significantly higher incomes. And at any given time, Medicaid insures nearly 40 percent of all American children. At the other end of life, Medicaid is also one of our biggest eldercare programs. More than 60 percent of all nursing home residents rely on it. The program also pays for 40 percent of all costs for long-term care.

Funding for these services is at risk under a Republican health care bill. Yet as states are forced to pare back optional coverage for home- and community-based services in the face of massive Medicaid cuts, more seniors and children with disabilities could be forced  into nursing homes anyway. The bill will also make more homeowners “too rich” to qualify for coverage by counting more of their housing value against Medicaid eligibility. This, too, could force people out of their homes in order to receive care.

Then there are Medicaid’s optional “medically needy” programs, which allow states to extend Medicaid eligibility to middle-class families with high medical expenses from debilitating disabilities like autism or Down syndrome. Because these programs are optional, they are “[a]mong the Medicaid programs at greatest risk” for getting cut, observed former Obama economic advisor Gene Sperling in a New York Times op-ed. To triage their budgets, states would be forced to prioritize Medicaid’s mandatory coverage requirements while whittling away optional coverage for middle-income families with high-cost disabilities. This has been borne out in the past. Multiple states have already eliminated their medically needy programs in order to cover budget shortfalls. When Oklahoma ended its program in 2003, 800 children, 6,500 parents, and 1,000 seniors lost coverage.

So Medicaid provides vital healthcare services relied on by poor and middle-class people at all stages of life. Indeed, nearly two-thirds of all Americans report either benefiting from Medicaid themselves or having close friends or family who have. That’s what’s at stake right now. The federal cuts contemplated by Republicans are simply too daunting for states to realistically make up the difference. To cover the gap in federal funding under the Republicans’ bill, states would need to increase their annual share of Medicaid spending—already one of their biggest expenditures—by an average of 37 percent by 2026. As one healthcare expert has noted, the proposed cuts are simply “so large, no amount of new flexibility could allow a response that wouldn’t include large state tax increases or severe reductions in coverage that would affect the medical services needed by the children, pregnant women, persons with disabilities, the elderly, and other adults now served by Medicaid.”

Yet Republican officials are pretending there won’t be any pain at all. Health secretary Tom Price outright lied on CNN, insisting that “[t]here are no cuts to the Medicaid program” under the House’s bill. To the contrary, the bill’s cuts are so substantial that the non-partisan Congressional Budget Office projects that upwards of 14 million people will lose their Medicaid coverage. Indeed, Speaker Paul Ryan has openly boasted that the GOP’s attack on Medicaid constitutes the biggest entitlement reform in generations, fulfilling the wildest dreams of his college kegger days. “We’re talking about trillions in the end here in this program,” he nearly salivated to conservative radio host Hugh Hewitt.

So don’t lose sight of what Republicans are doing to Medicaid. While Donald Trump does violence to our constitutional democracy at one end of Pennsylvania Avenue, congressional Republicans are plotting violence against Americans’ health at the other.

The post The GOP Is Quietly Scheming to Gut Medicaid While You Weren’t Looking appeared first on Washington Monthly.

Cast out of government, the Democratic Party is up for grabs. And single-payer healthcare has become one of the key fronts in the battle to define the party’s future.

Take the special election in Georgia’s sixth congressional district, where Democratic candidate Jon Ossoff recently found himself in hot water with progressives for his failure to endorse single-payer. “I think we should be focused on incremental progress based upon the body of law on the books,” Ossoff explained, “rather than going back to square one and proceeding from a starting point of ideological purity.”

This sparked a wave of skepticism of Ossoff among a segment of the left. When asked whether Ossoff is a progressive, Sen. Bernie Sanders flatly answered, “I don’t know.” Sanders’s aides pointed to Ossoff’s silence on single-payer as one reason for progressives to be lukewarm toward his candidacy.

Ossoff’s campaign has been analyzed through the prism of the Democratic Party’s internal fight. His incremental theory of healthcare progress eschews Sanders’s social democratic revolution for the pragmatism of Barack Obama and Hillary Clinton. And while some urge Democrats to adopt a more distinctly working-class politics, Ossoff’s high-profile candidacy in a suburban district has kept a middle-class appeal at the party’s forefront. “Ossoff is showing us the path to retaking the House,” tweeted former Clinton aide Brian Fallon. “It runs through the Panera Breads of America.” To which Jacobin magazine contributor Matt Karp quipped: “Two paths forward for the Democratic Party: Medicare For All, or the Fuji Apple Salad with Chicken.”

Meanwhile, progressive enthusiasm for single-payer healthcare is ascendant. Buoyed by the fiery collapse of the GOP’s Obamacare repeal effort, progressives have been quick to promote single-payer as the next horizon in health reform. Rep. John Conyers’s perennial single-payer bill quickly racked up more House co-sponsors than ever before.

There’s a lot to like about single-payer healthcare, but making support for single-payer a litmus test for true progressivism dismisses the learned wisdom of recent generations of health reformers. There might be a better way to make progress toward the vision of single-payer—one grounded in the center-left tradition of pragmatism and incremental reform.

On the surface, single-payer tends to be a popular idea. Polls often find a majority of Americans supporting government-provided health insurance. Sarah Kliff of Vox recently ran a focus group of Trump voters, and half of them backed single-payer as a fair solution to the woes of our healthcare system.

But when you bore into the details of single-payer, this support collapses. While 50 percent of those polled by the Kaiser Family Foundation supported guaranteed health insurance through a single government plan, more than a third of single-payer backers changed their minds after hearing the arguments from opponents that it would require many Americans to pay higher taxes and would hand government too much control over healthcare.

Results like this suggest that many Americans are single-payer supporters in theory, but skeptics in practice; while they like the abstract notion of a streamlined, government-run health insurance system, they are put off by the practical disruption and sacrifices that it could cause in the real world.

Democrats learned this lesson the hard way. Bill Clinton’s failed attempt to overhaul healthcare was resisted by industry stakeholders and consumers alike as overly disruptive to the status quo. Sixteen years later, Democrats keenly sensitive to charges of government overreach set out to maximize coverage for the uninsured while minimizing the threat of disruption to those who already had good insurance.

As Paul Starr explains in Remedy and Reaction, when Democrats tried to avoid repeating Clinton’s healthcare defeat, there was little appetite for anything resembling single-payer outside of progressive circles. In 2007, political scientist Jacob Hacker proposed a healthcare plan that paired a mandate on employers to provide insurance with a Medicare-like public plan to cover the uninsured. But Hacker’s proposal never gained steam because of its potentially deep impact on the healthcare industry. Estimates projected that his public plan could eventually attract 50 percent of the non-elderly population. Medicare pays hospitals about 20 percent less than private insurers did, so a shift of over 100 million Americans from private insurance to Medicare rates would mean financial upheaval for doctors and hospitals. “The proposal was not consistent with Democrats’ interest in minimal disruption,” Starr concluded.

That hard reality steered the Democratic reform effort: just enough people benefited from a flawed system to make root-and-branch reform nearly impossible. As Hacker himself reflected on the passage of Obamacare, “It was this basic political reality—that most Americans had coverage, however costly and insecure, and could be easily frightened into believing that reform would impose losses on them—to which the Democratic policy approach…responded.”

There’s little reason to think that the headwinds against single-payer have faded over the ensuing years. Thanks to Obamacare, more Americans than ever have health insurance—meaning more have reason to be unnerved by future comprehensive reforms. Not to mention the existential uproar from the health insurance industry at being displaced by big government. The battle waged over Obamacare would be replayed ten-fold in any effort to enact nationwide single-payer.

But there’s another way forward. Even if Medicare for All remains a dream deferred, Medicare for More is politically viable—indeed, it’s essential. This would expand the reach of public insurance by letting more people opt out of private insurance and into Medicare and Medicare-like public programs.

The popularity of voluntary public health insurance was apparent even by 2009, when polls at the time showed 64 percent of the public supported a public plan to purchase health insurance, versus just 22 percent for single-payer. The public option was more popular than single-payer even among progressives.

Democrats in Congress and on the campaign trail proposed a public option to compete with other private plans on marketplaces where the uninsured could shop for coverage. The public option quickly became central to progressive support for the reform effort—a chance for liberals to prove that government-run insurance can work for the public at large.

To soften the impact of the public option on doctors and hospitals, House Democrats proposed to have it pay providers higher rates than Medicare does. The nonpartisan Congressional Budget Office estimated that the public option still would have reduced the federal deficit by $68 billion over six years.

Yet the public option unsettled key Democrats in the Senate. Because of the Democrats’ tenuous hold on a filibuster-proof majority, centrist senators like Joe Lieberman and Ben Nelson held tremendous power to dictate concessions in the healthcare bill, and the public option was steadily watered down in Senate negotiations. Unwilling to sacrifice the broader health reform effort, Obama and Democratic leaders acquiesced to the centrists’ demands and eliminated the public option before the bill became law.

Still, the public option remains a popular idea. A 2016 Kaiser poll found that 62 percent of those surveyed favored a public option for health insurance, while only 32 percent were opposed. What’s more, a third of those opposing a public plan came around after being told that it would drive down costs and expand consumer choice.

Obamacare’s implementation has only bolstered the case for public health insurance in general. The law’s coverage expansion pitted a private insurance expansion (its health exchanges) against a public one (expanded Medicaid). Between the two, the public insurance expansion has performed far better.

The Congressional Budget Office (CBO) expected 23 million people to be covered under private plans on Obamacare’s exchanges.  But in 2017, just 11.5 million actually signed up. And while this coverage has been a literal lifesaver for many, others have been frustrated by limited choices and shoddy, high-cost plans.

Meanwhile, the CBO vastly underestimated the impact of the law’s Medicaid expansion. Even though only 10 million people were expected to sign up, more than 14 million people wound up getting covered. And another 2.5 million people would gain coverage if their conservative-run states expanded the program.

The next phase of reform should lean into the success of Obamacare’s public insurance expansion. The income cutoff for Medicaid eligibility could be raised from 138 percent of the poverty line to 200 percent or more. This would give more working-class Americans alternatives to low-end private plans, allaying the envy that some health exchange shoppers feel toward their Medicaid-recipient neighbors.

And the further Medicaid creeps into middle-class America, the more political and economic clout it amasses. The larger Medicaid’s middle-class constituency, the harder it becomes for politicians to cut. And the more people the program covers, the harder it becomes for doctors to turn away Medicaid patients. Expanding Medicaid to cover more of the middle-class benefits the poor, too.

We should also give older workers access to good, popular public insurance by letting them buy into Medicare before age 65. This would also help stabilize prices in Obamacare’s insurance marketplaces for everyone else. Premiums have risen on Obamacare’s markets in part because enrollees have been older than insurers had hoped. By moving some of the oldest and most expensive people on to Medicare, the health exchanges would suddenly become much younger and cheaper to insure. This would drive down costs for everyone else, and would encourage greater participation among insurers.

Those remaining on the health exchanges would benefit from being given the choice to enroll in a public health insurance option. The strongest public option would be available everywhere and pay something close to Medicare rates. But a public option is most crucial in the parts of the country where private insurance competition is dwindling. More and more of the country is one insurer away from being left out of Obamacare coverage altogether. We should provide a public option as at least a fallback to ensure that private companies cannot veto universal healthcare—a fix that Obama proposed shortly before leaving office

No doubt, these fragmented incremental reforms fall short of the progressive dream of a single unitary national healthcare plan. But in a country where nearly 40 percent of the population already has government-provided insurance, building on existing systems that work would bring millions more into the fold.

“If I were starting a system from scratch, then I think that the idea of moving towards a single-payer system could very well make sense,” Obama said in 2009. “That’s the kind of system that you have in most industrialized countries around the world.”

“The only problem,” he continued, “is that we’re not starting from scratch.”

The historic role of progressivism has been to achieve egalitarian outcomes through the preexisting strictures of American society and its economy. Regardless of the merits of single-payer healthcare in a vacuum, we are not starting from scratch. Path dependency is a real and present force in our politics. Social democratic revolutions, on the other hand, have not been. Medicare for All is a worthy dream. But the prudent political course is to move toward that dream by securing Medicare for More first.

Obamacare operated within our peculiarly American constraints to inculcate the now-widely accepted belief that healthcare is a right. Rather than tearing up this foundation, progressives should build upon it to provide more Americans with access to public health insurance. This work betters the lives of Americans today, while shifting the ground for even greater progressive change tomorrow.

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