Today is a travel day so this will be a short post. Fortunately the main topic that I want to talk about is uncomplicated – the speech that Donald Trump gave on Wednesday night. The purpose of the speech was to turn around Trump’s cratering public approval on his handling of the economy. I will also address a slightly more complicated topic: health insurance and the complete inability of Trump and Republicans in general to address public concerns about healthcare affordability.
To paraphrase Thomas Hobbes, Trump’s speech was nasty, brutish, but, mercifully, short. Apparently it was short because the networks told him that they would only give him 15 minutes (although they didn’t cut away when he went over). It was a blizzard of lies. I can’t find a single factual assertion Trump made that was true.
So many lies, so little time, as well as reader patience. However, the major media organizations are doing a decent job of fact-checking, so I won’t inflict upon you another laundry list of his mendacities.
Yet one hallucination I will highlight — in this case I say “hallucination” rather than lie because Trump, surrounded by sycophants, may actually believe it — is his persistent claim that the world despised the US economy a year ago and now admires his achievements. From the speech:
One year ago, our country was dead. We were absolutely dead. Our country was ready to fail. Totally fail. Now we’re the hottest country anywhere in the world. And that’s said by every single leader that I’ve spoken to over the last five months.
What was the world actually saying about America a year ago? From The Economist, in October 2024:
Furthermore, truth wasn’t the only thing completely lacking in Trump’s diatribe. Also lacking was anything resembling an actual policy to deal with concerns about affordability.
It was notable that while making the false claim that overall prices are coming down, the specific prices Trump highlighted (with fake numbers) were turkeys, eggs and gasoline — all prices over which policy has very little influence. Egg prices, for example, fluctuate wildly over time, not because of anything the government does, but because of the vagaries of bird flu. And, by the way, the Trump Administration has shut down a research project that was developing a bird flu vaccine.
Healthcare, by contrast, is an area where policy has a huge effect on affordability. It’s also an area in which Trump talked utter nonsense.
Here’s what you should know: The Affordable Care Act, aka Obamacare, offers Americans who aren’t covered by Medicare, Medicaid or through their employers the ability to purchase insurance coverage from private insurers, with the federal government subsidizing most enrollees’ premiums. However, enhanced subsidies put in place under the Biden administration will expire on January 1st, 2026, leading to large cost increases for many families.
Costs will soar for two reasons. There’s the direct effect of losing subsidies. But there’s also an indirect effect, because the loss of subsidies will lead millions of people to drop their coverage — and those who drop coverage will, on average, be healthier than those who don’t, worsening the risk pool. Insurers, anticipating this effect, have already sharply raised premiums.
Charts from KFF show the effects on some representative couples. More than 20 million would be affected, but the worst hit will be older, moderately well-off Americans who are earning just a bit too much to remain eligible for subsidies. For example, a 60-year-old couple with an income of $85,000 will face a premium hike equal to more than a quarter of their pre-tax income:
Source: KFF
What should the Trump Administration do? Here’s Trump:
I’m also taking on the gigantic health insurance companies that have gotten rich on billions of dollars of money that should go directly to the people. The money should go to the people. That’s you, so they can buy their own health insurance, which will give far better benefits at much lower costs.
So Trump says that he’ll replace the current system, in which people buy their own health insurance with the aid of government subsidies, with a system in which the government gives people money they can use to buy their own health insurance. How is that different?
In fact, it isn’t different except for one devastating detail: Republicans in Congress will never approve subsidies adequate to make health insurance affordable. Because the Republican plan would be far stingier than the one currently in place, millions of people will be forced to drop their insurance. And as I said, because it’s the younger and relatively more healthy that will drop their coverage, the pool of those who keep their coverage will be older and sicker. And you know what happens next – premiums go up even further. No wonder that four Republican congressmen in purple districts defied Mike Johnson and voted to extend the Obamacare subsidies.
So what should we make of Trump’s speech? Many commentators are describing it as a nothingburger, because it’s unlikely to do anything to move the political needle. (PS: The price of nothingburgers has risen 18 percent since Trump took office.)
Let me say something about the latest report on consumer prices, which showed lower inflation than expected. The general view among economists I follow is that this report was seriously distorted by the effects of the government shutdown, although we don’t know by how much. For now, the best guess is that troubling inflation, and with it public concern about affordability, will persist.
But leaving the short-run politics aside, the speech revealed something important: Namely, Trump has no idea how to govern. Faced with adversity, he’s unable to propose policies to improve the situation. All he can do iscontinue to gaslight the public and claim that everything is great, while smearing his opponents.
That was a short speech, but it presages a very long next three years for ordinary Americans. And for congressional Republicans, it presages a very ugly November 2026.
MUSICAL CODA