President Trump moved fast. On Friday, the newly sworn-in president signed a number of executive actions, giving us an early look into what his presidency will be like.
As I have argued before, Trump's populist shtick is an open fraud — so far he gives every sign of governing like the usual plutocratic Republican. But within the GOP, there is still tension between the anti-government and business wings of the party — mainly because business depends on government in many ways. And somewhat surprisingly for a New York billionaire who seemed to relish upsetting the conservative movement during the primary, Trump is so far behaving more like an anti-government ideologue than a pure business lackey.
The president has done two major things since assuming office: rescinded an Obama administration order on home loans, and signed an executive order directing federal agencies to start scaling back ObamaCare. Let's take these in turn.
Understanding Trump's move on home loans first requires a bit of background. The extant mortgage finance system with the traditional 30-year loan is a product of the New Deal, through the sale of mortgage insurance via the Federal Housing Administration and the creation of the secondary mortgage market via Fannie Mae and Freddie Mac.
FHA is totally funded by the payments homeowners make into the system, and after the housing collapse it together with Fannie and Freddie (which were both taken over by the government during the crisis) became responsible for the vast majority of mortgage lending. Over the past four years the FHA accounts have accumulated some $44 billion, and so when interest rates spiked after Trump's election victory, it was a good opportunity to offset the move by cutting the price of insurance. But as Ben Walsh and Paul Blumenthal explain:
The Obama administration had said last week that the Federal Housing Administration would drop the cost of mortgage insurance it sells by almost a third to 0.60 percent. But after Trump took office, the Department of Housing and Urban Development, which oversees the FHA, told lenders the fee cut was off. The reversal of the reduction will mean that homebuyers who borrow $200,000 under the program will see their mortgage insurance fees go up by $500 a year relative to what the Obama administration had ordered, according to figures released by the FHA when the cut was announced. [Huffington Post]
Trump's election by itself made it harder to buy a home, and now he's going to deliberately make it even harder.
On ObamaCare, Trump's order is extremely vague and wide-ranging. It directs federal agencies to "exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the act that would impose a fiscal burden" on basically anyone at all.
As Anna Marie Barry-Jester points out, this has ominous implications for the individual mandate, because the secretary of health and human services has wide latitude to grant hardship exemptions for people so they are not penalized for failing to buy insurance. By defining those exemptions high enough, Secretary-nominee Tom Price could effectively gut the mandate — especially if he's willing to bend the letter of the law, as seems likely.
On both of these issues we see ideological conservatism moving beyond business interests. This is the product of a politics that hates New Deal programs as such, and wants them destroyed at whatever cost — indeed, a loud minority of Republicans have been demanding the abolition of the FHA for years. But as Walsh and Blumenthal point out, the FHA action is bad for business — it means less home buying and building. Both the National Association of Realtors and the National Association of Home Builders expressed disappointment and hoped for an about-face.
Meanwhile, axing the individual mandate would quickly destroy the ObamaCare exchanges, devastating insurers who have set up shop there. More fundamentally, the whole massive, delicate Jenga tower of the American health care system has been carefully rearranged around ObamaCare rules and structures. Anyone concerned above all with the profits of insurance companies and hospitals would tread very carefully so as to avoid disruption. But Trump's approach smacks more of the movement conservatism that passed dozens of flat repeals of ObamaCare.
I cannot emphasize strongly enough that this sort of ideological commitment does not remotely foreclose corruption. On the contrary, such hatred of government and worship of markets might produce it automatically.
But there are certain instances in which business has a foundational dependence on huge liberal government programs, and housing and health care are first among them. Ideological conservatives are furious about this, and stubbornly persist in the belief that the country can be returned to a pre-1932 economic basis without disaster. We might just be about to find out how preposterous that idea is.