The week’s political news was dominated by the release of Senate Republicans’ long-secret plan to drastically scale back federal health care spending and repeal the Affordable Care Act’s tax increases. But a proposed takeover of Whole Foods by the world’s largest online retailer also turned the entire grocery industry on its head, the United States and Russia moved closer to military confrontation in Europe and the Middle East, and we had two special elections — each with a surprising result and potential consequences for Nancy Pelosi’s continued leadership of House Democrats.
Here’s what you need to know.
Senate Republicans unveiled their health care bill
On Thursday morning, the long-secret Senate Republican health care bill’s text was finally released. The Congressional Budget Office is expected to estimate how much it will cost and how many people it will cover as soon as possible, in advance of a final vote that leadership wants to hold next week. It differs from the House bill in many specific details, but retains its broad shape and overall implications.
- The bill’s big picture: The Better Care Act repeals hundreds of billions of dollars in tax hikes on families earning more than $200,000 a year and on a range of businesses, and pays for the tax cuts by slashing hundreds of billions of dollars in health care spending. Obamacare subsidies for the lower middle class are reduced, and Medicaid payment for the poor is actually cut to below what it was before the Affordable Care Act passed.
- The biggest losers: Older Americans who are too young for Medicare eligibility would likely see large premium increases, anyone currently eligible for Medicaid is going to have problems, and people who are young today but may need Medicaid long-term care benefits decades in the future when they are old will be among the very biggest losers because the cuts compound over time.
- The biggest winners: If you are young, in good health, and make too much money to qualify for subsidies, you will probably find it easier to get a cheap, decent insurance plan on the individual market. And if your annual income is more than $200,000 a year, you’ll get a 3.8 percentage point cut in the taxes you pay on your dividend and capital gains income. For the very wealthy, that’s a huge tax cut — and if you believe that high taxes on investment income stymie economic growth, there could be huge long-term benefits to delivering the tax cut.
Mitch McConnell doesn’t have the votes — yet
There are 52 Republican Party senators, and in the case of a 50-50 tie, Vice President Mike Pence can step in to put the bill over the top. So Republicans can afford to lose two senators and still pass the bill. But at the moment, they are facing more dissent than that.
- Four conservative objectors: Rand Paul, Mike Lee, Ted Cruz, and Ron Johnson announced in a Thursday press conference that they aren’t yet prepared to vote for the bill. Conservative critics charge that the bill doesn’t do enough to unwind the basic regulatory structure of Obamacare and that its spending cuts are phased in too slowly.
- Some “concerned” moderates: Another bloc of senators — led by Susan Collins and Lisa Murkowski but with Dean Heller, Rob Portman, Shelley Moore Capito, and a few others chiming in at times — has raised a variety of “concerns” about the bill, mostly the scope of the Medicaid cuts.
- This is (probably) bargaining: Most observers see the objections as more about senators positioning themselves to get the bill tweaked than actually threatening to kill it. The core idea of spending much less money on subsidizing people’s health care in order to enact a large tax cut seems broadly embraced by the Republican caucus. The objections are largely about the fine details, though it remains to be seen whether they can really be worked out within the aggressive time frame that McConnell favors.
Amazon bought Whole Foods
The e-commerce giant made its biggest acquisition offer ever — and its clearest gesture that there are no bounds to Jeff Bezos’s aspirations — by announcing a $13.7 billion bid to purchase the upscale grocery chain Whole Foods.
- Why it matters: Amazon operates on near-zero profit margins, and will likely take that same philosophy to Whole Foods, making it harder for grocery competitors to stay profitable. Beyond that, Amazon has been struggling for years to establish a viable online grocery delivery business. Whole Foods’ existing scale, supply chain, and hundreds of locations in affluent areas should supercharge those efforts.
- Is Amazon too powerful? Amazon’s low prices make it an extraordinarily consumer-friendly company, essentially making it immune to antitrust scrutiny under the consumer-focused legal standards that have prevailed since the late 1970s. But a set of researchers led by New America’s Lina Khan argue that this shows the shortcomings of the legal standard more than anything else. She argues regulators should step in and stop the merger to limit Amazon’s burgeoning power over other business players.
- Should competitors step in? Competing chains — Kroger, Walmart, Target, etc. — have seen their share prices hammered since news of the deal emerged. That's led some observers to question whether it makes sense for the grocery industry to simply let this happen without a fight. It’s possible that one of the affected players will step up with a competing bid that would prevent Amazon from sealing the deal or at least raise the price it has to pay.
Democrats lost narrowly in two red House races
Democrats narrowly lost an arguably overhyped special election to fill the vacancy created by former Rep. Tom Price’s nomination to serve as secretary of health and human services. They also narrowly lost an unquestionably underhyped election to fill the vacancy created by former Rep. Mick Mulvaney’s nomination to serve as director of the Office of Management and Budget.
- Disappointment in Georgia: Democrats regarded the Price seat in Georgia, which has been solidly Republican in congressional races forever but where Donald Trump only narrowly beat Hillary Clinton, as far and away their best chance for a win. Their nominee, Jon Ossoff, raised vast sums of grassroots dollars and enjoyed the enthusiastic support of the party establishment. Falling short there comes as a fairly crushing disappointment to Democrats and a triumph for Donald Trump and his GOP.
- Surprising strength in South Carolina: Conversely, Democrats wrote off the Mulvaney seat in South Carolina, which has been competitive in congressional races but clearly Republican in presidential ones, as essentially hopeless. Their nominee enjoyed zero national press hype, and didn’t get major financial support from grassroots donors or party committees. But he actually came closer to winning than Ossoff did, showing that benchmarking every congressional district to the outcome of the Trump-Clinton presidential race is a mistake.
- Pelosi under fire: Coming up short in Georgia served as the occasion for another round of grumbling about House Minority Leader Nancy Pelosi, whose skills as a fundraiser and a floor general are unquestioned, but who generally seems to be a sub-optimal public spokesperson for a party looking to pick itself up off the ground. The issue here is less that she was heavily featured in anti-Ossoff attack ads (any Democratic leader would be) than that Ossoff — very much an establishment-backed candidate — was clearly advised by his team to distance himself from her. If even the national party’s favorite challengers are going to shy away from backing the party’s caucus leader, then how can she ever win a majority?
US-Russia tensions heated up
In a slow week for news on the Trump/Russia investigation, the actual relationship between Moscow and Washington became extremely tense. The United States shot down a Russian plane in Syrian airspace on Sunday, leading to Russian threats to start shooting American planes. The Russians then canceled a long-planned high-level diplomatic meeting, and the Pentagon is asking for more money to spend on assisting European allies in shoring up their defenses against Russia.
- The paradox of Trump and Russia: Even as Trump personally articulates pro-Russian views (casting down on America’s commitment to NATO, saying nice things about Vladimir Putin, denying the reality of Russian election tampering), his administration is overwhelmingly staffed with fairly conventional Republican Party hawks. Especially in the Syria, actual policy has turned more aggressive toward Russia and Russian interests than it was under Obama.
- Trump’s schizophrenic foreign policy: Russia isn’t the only case where the Trump administration seems to have a split personality. In the dust-up between Qatar and Saudi Arabia, both the Pentagon and the State Department have tried to lower the temperature of the conflict and criticized the Saudis for going too far and making unfounded allegations. Trump, both on Twitter and in public statements, has consistently backed up the Saudis.
- What’s next? Nobody knows, and that’s what has such a wide range of foreign diplomats a little unnerved. It’s generally not clear that the world can take Trump’s statements at face value as reflecting American policy, but also not clear that the contrary views of senior officials would truly prevail in a crisis.
