We all know the story of how Obamacare was pushed through Congress in the dead of night. Each day we’re learning more about what a nightmare it has been since. But we’ll bet you had no idea of the shady scam Barack Obama put in place to keep his debacle afloat.
Shady, yes, but surprisingly simple for Donald Trump to eliminate if he’s truly serious about dismantling Obamacare and killing it off once and for all.
In the face of Congressional Republicans’ failure to repeal Obamacare despite having a half-decade to brainstorm a repeal plan, President Donald Trump has since decided to attack the law through executive order. Last week he took actions to significantly weaken the law, actions which lead CNN’s Anderson Cooper to remark “Never have we seen a president so seemingly bent on reversing, negating, even obliterating his predecessor’s signature accomplishments.”
A bit hyperbolic for sure, but the order did pose a blow to Obamacare. It’s a “death by a thousand cuts” strategy to fight the law, but thus far Trump has:
> Rolled back funding for a program intended to help individuals navigate the Obamacare insurance marketplace 90 percent, and signed an executive order to allow for groups to purchase insurance against state lines.
> Stopped federal funding for Obamacare subsidies last Thursday. Given that roughly half of the consumers who purchase health insurance through Obamacare qualify for such subsidies, this strikes a major blow to the sustainability of the program.
As a result of Trump’s cuts to various Obamacare programs, the Kaiser Family Foundation reports that over 70 percent of regional programs and 55 percent of statewide navigators anticipate rolling back programs in rural areas because of the administration’s funding cuts. The overwhelming majority, or 89 percent, of navigators expect having to fire staff because of the cuts.
It’s not “repeal and replace,” but it’s a start.
If Trump truly wants to deal the coup de grâce to Obamacare, there’s still a massive source of funding for the law that Barack Obama deceptively implemented, and it relates to the one last piece of unfinished business from the past financial crisis: the status of mortgage giants Fannie Mae and Freddie Mac.
Having required massive bailouts in 2008, the two corporations were placed under control of the U.S. Treasury. Initially, the two organizations agreed to pay the Treasury a dividend each year equivalent to 10 percent of the bailout funds they took, and the Treasury was also issued warrants granting them the equivalent of a 79.9 percent equity stake in the two companies.
Since the two giants recovered faster than expected and became profitable, the Obama administration saw better returns in seizing the profits of Fannie and Freddie instead.
Since 2012, every quarter, the two giants have been sending 100 percent of their profits to the Treasury, rewarding the Treasury handsomely.
Despite the fact that taxpayers bailed out Fannie and Freddie to the tune of $187.5 billion, the Federal government has been paid back $275.8 billion thus far — or nearly $90 billion in excess of that figure.
And what have the funds been used for? Our current Treasury Secretary Steve Mnuchin has already admitted what many had speculated: that the funds were being used to fund Obamacare.
However, there’s a giant flaw in this set-up.
As a result of all their profits being confiscated, Fannie and Freddie can’t hold any cash reserves of their own. Therefore, any quarter in which the enterprises are unprofitable (which will be inevitable, given that another recession will come eventually), the American taxpayer will be required to make up the difference.
Why expose the taxpayer to risk to continue funding Obama’s failure? With the stroke of a pen Trump could kill two birds with one stone: by cutting off the stream of Fannie and Freddie’s funds towards the Treasury, he can end Obamacare funding and protect taxpayers.
As for the 79.9 percent stake the Feds will continue to have in the companies, the RNC estimates that the Treasury could generate $100 billion from selling that stake back to the public.
So the question is, why hasn’t President Trump acted on this? It sure seems easy to do…