Health Insurance Losses Remain High in Senate Bill

June 27, 2017

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Today I will interrupt my discussion of Viking Economics in order to report on the Congressional Budget Office’s analysis of the “Better Care Reconciliation Act” proposed by Senate Republicans. Although the bill differs from the House Republican bill in many of its details, its effect on health care spending and insurance coverage is projected to be similar.

According to the CBO, the Senate proposal would reduce the number of people with health insurance by 22 million over ten years, compared to 23 million for the House bill. It would reduce Medicaid spending by $772 billion, compared to $834 billion for the House bill. It would reduce tax credits and subsidies for purchasing health insurance on the individual market by $408 billion, vs. $276 billion for the House bill. It would eliminate most of the Affordable Care Act’s taxes, which were aimed primarily at medical corporations and the wealthiest taxpayers.

At first, fewer people would have health insurance primarily because penalties for not having it would be eliminated. Some individuals would choose not to carry insurance, and some large employers would choose not to offer group plans. Although young and healthy individuals would be less inclined to obtain coverage, CBO expects that enough of them would do so to keep most insurance markets stable and generate the revenue insurers need to cover the sick. In a few sparsely populated areas, insurers would not have enough customers to keep them in the market.

As other provisions of the Senate bill took effect, more of the uninsured would be people who found insurance less available or affordable than it was under Obamacare.  That could be for a number of reasons.

Reversing the Medicaid expansion and spending less on Medicaid in general would result in an expected drop of 15 million in enrollment over ten years. (That would be an especially big blow to nursing home residents, the majority of whom rely on Medicaid because they have exhausted their savings.)

Many people who are not on Medicaid would be priced out of the market because of higher premiums. Insurers might have to raise rates in order to compensate for the loss of premiums from healthy people who elect to go without insurance. Older buyers would also face higher premiums because insurers would be allowed to charge them up to five times as much as younger buyers; that limit was three times as much under Obamacare.

For many people, the problem would not be higher premiums but less government help in paying for them. Tax credits would offset a smaller percentage of the premiums than under Obamacare, and they would phase out at a somewhat lower income level, 350% of the poverty level instead of 400%.

The CBO analysis talks about premium declines as well as premium increases. In the short run, insurers might have to raise premiums on the sick because fewer healthy people were signing up. But in the long run, the premium on a “benchmark policy” could drop 20-30%. The “benchmark policy” is a standard policy that is the basis for calculating your tax credit. You are expected to pay a certain percentage of the premium, and the government reimburses the rest. The main reason why the benchmark policy would be cheaper is that the bill allows it to cover less of expected health care costs. It only has to cover 58% of the cost instead of Obamacare’s 70%. So the premium is lower, but that is offset in two ways: your share of the premium is a little higher, and your deductible will be higher when you need care. The drop in premiums is a somewhat illusory benefit, since your out-of-pocket cost is higher. Obamacare has some additional subsidies to help with out-of-pocket costs, but the Senate bill eliminates them.

Inexpensive policies would also be available because states can obtain waivers from Obamacare’s strict rules on benefits (requiring “essential benefits” and prohibiting annual or lifetime caps on payouts). That might work for someone who wants a policy without maternity benefits. For people who need a comprehensive policy with no caps, the cheaper policy is very risky.

Low-income people not covered by Medicaid would often face a choice between having to pay too high a premium for a good plan, or having to pay too much out-of-pocket because their cheaper plan doesn’t cover very much. As a result, the CBO predicts that “few low-income people would purchase any plan.” For the 43% of the population with incomes below 200% of the poverty threshold, CBO predicts that the percentage who lack insurance would rise from 17.6% to 34.8% in the 19-29 age group, from 19.8% to 36.7% in the 30-49 age group, and from 11.2% to 25.6% in the 50-64 age group. For the entire population under 65 (all income levels), the percentage uninsured would rise from 10% to 18%. The CBO is too non-partisan to say so, but that sounds like regress, not progress.

Although President Trump initially endorsed the House Republican bill, he later acknowledged that it was too “mean”.  Now he is endorsing the Senate bill, which is about equally mean. One wonders whether the President even understands what he is supporting, since it is so far from what he originally promised. Most Republicans do not seem to care very much what’s in the bill either, as long as it pleases the Republican base by repealing Obamacare and cutting taxes for the wealthy.

Viking Economics (part 2)

June 26, 2017

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How did the Nordic countries, which are in many ways similar to other developed countries, arrive at their unusual blend of economic equality and prosperity? Lakey tries to answer that question with a narrative featuring some of the key events and personalities, but he does not attempt any serious comparative analysis of countries to sort out causes and effects.

One thing that is clear is that the Great Depression of the 1930s was a significant turning point, as it was in the United States. Strong pro-labor parties succeeded in moving politics to the left and gradually building mass support for egalitarian policies. For some reason, those policies went further in the Nordic countries, perhaps because those countries were economically weaker to begin with and more vulnerable to economic downturns. Once a distinctive Nordic model became established, it was able to weather some counterattacks from more conservative elements, as well as financial crises that forced governments to make tough political choices.

From conflict to consensus in Norway and Sweden

Lakey emphasizes that the more egalitarian Nordic model did not emerge without a struggle. He describes the countries a century ago as having huge wealth gaps and politically dominant elites.

In Norway, the early twentieth century was a period of trade union organization, formation of cooperatives, and rising nationalism. Norway dissolved its union with Sweden in 1905. The Norwegian Labor Party flirted with radicalism, joining the Communist International in 1918. Five years later, however, the movement split over the communist issue. Some workers left to form the Communist Party of Norway, but the Norwegian Labor Party became more dominant by attracting many farmworkers, small farmers and students as well as politically moderate workers.

During the Depression, some business owners and right-wing politicians supported violent measures to suppress the labor movement, but the movement proved too popular for them. In 1935, owners and labor leaders forged the “Basic Agreement” recognizing the rights of both capital and labor. “Labor leaders agreed that the owners could continue to own and guide their firms. Labor expected that their political instrument, the Labor Party, would restrict owners through government regulation and control the overall direction of the economy.”

For the next three decades, labor dominated politics. By the time the Conservatives got a change to govern, the basic elements of the Nordic model were established, with policies to promote full employment, regulate markets, and provide universal benefits paid for by taxpayers.

Similarly in Sweden, a violent government crackdown on striking workers in 1931 led to the fall of the government and the election of the labor-based Social Democrats. “Swedish voters reelected the Social Democrats to lead their society almost without a break until 1976, by which time the Nordic model was firmly established.”

Counter-movements and financial crises

In the 1980s, around the same time that Ronald Reagan and Margaret Thatcher were promoting tax cuts, reductions in government spending, and financial deregulation, similar policies were tried in Nordic countries. The failure of the Labor government to curb “stagflation,” a period of high unemployment and inflation, helped the Norwegian Conservative Party take control. In Sweden, the Social Democrats continued to govern, but also adopted some conservative measures to limit the power of government.

Lakey sees a direct link between financial deregulation in the 1980s and financial crisis in the 1990s. Banks had more freedom to make riskier and more speculative investments, often resulting in asset bubbles with prices reaching unsustainable levels. When the bubbles burst and banks experienced massive losses, Nordic governments moved to re-regulate banks and protect depositors, but not to bail out the banks and their shareholders. Both Norway and Sweden nationalized some of the largest banks, at least temporarily. By the time of the 2008 financial crisis, both countries were in a relatively strong position to handle it. “By 2011, the Washington Post was calling Sweden ‘the rock star of the recovery,’ with a growth rate twice that of the United States, much less unemployment, and a strong currency.”

The story in Iceland is different because it was less an exemplar of the egalitarian Nordic model than Norway or Sweden. Its labor-based political party, the Social Democratic Alliance, had always been a minority party, and the government spent less on health and education. Iceland did have collective ownership of major banks, through government and cooperatives, but they moved toward financial deregulation and privatization in the late 1990s. “The now-private banks leveraged their capital base [that is, used it to borrow and speculate] to buy up assets worth several times Iceland’s gross national product.” When the crash came in 2008, the entire banking sector collapsed, taking the country’s currency with it. The political result was Iceland’s first left-wing government, a coalition of the Social Democratic Alliance and the Left Green Movement. Although Iceland needed assistance from the International Monetary Fund and other countries, the new government resisted IMF demands for austerity, insisting on a deal that protected workers, homeowners and depositors while letting banks fail. Lakey describes the Icelandic recovery as an economic success, getting unemployment down to 3.2% by 2015.

Having come through a time of political and financial upheaval with their social democratic principles largely intact, Nordic countries may now be in a good position to tackle the challenges of the global, high-tech economy.




Viking Economics

June 25, 2017

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George Lakey. Viking Economics. Brooklyn: Melville House Publishing, 2016.

This is a book about the economies of four Nordic countries whose peoples have Viking ancestry–Norway, Sweden, Denmark and Iceland. It focuses especially on Norway, where the author, who was born in the US, has spent the most time. Lakey himself is a sociologist, not an economist. Although he draws on the work of economists, the book is not very technical. Lakey supplements his own reading and observations with many interviews and anecdotes.

For people who feel that US economic policy has been moving in the wrong direction, the Nordic countries are a good place to look for alternatives. They have been accomplishing something we have not been lately–a high level of national income without an extreme degree of economic inequality.

According to rankings by international agencies like the IMF and World Bank, the Nordic countries are among the richest in GDP per capita. Norway ranks higher than the US and the others a little lower. According to a Gallup international survey, Norway, Sweden and Denmark are all ahead of the US in median household income. So much of the income from America’s national production is concentrated at the top that households in the middle do not do as well. The Nordic countries have done a better job of maintaining a thriving middle class at a time when the American middle class has been shrinking.

Among 32 developed countries in the OECD, the four Nordic countries studied in this book rank in the top ten for economic equality. The US and the UK rank near the bottom. The OECD has also surveyed the populations of these countries on their life satisfaction. The same Nordic countries are consistently near the top of the rankings, while the United States is only a little better than average. Lakey also draws on research by Richard Wilkinson and Kate Picket on other social indicators that tend to be associated with wide disparities in income: “They find that inequality highly correlates with negative statistics in physical health, mental health, drug abuse, education, imprisonment, obesity, social mobility, violence, teenage pregnancy, and child well-being.”

Equality, productivity and innovation

Lakey acknowledges the widespread belief that differences in economic reward motivate people to do their best, and especially to devise better ways of doing things that the marketplace can reward. “The belief is that inequality motivates, by increasing both the risk and potential reward, attracting talented people who love adventure. The bold ones make the breakthroughs that propel invention and innovation. It sounds reasonable.”

Yes it does. No modern society pays all economic contributors the same. It hardly follows, however, that the extremes of wealth and poverty we see in the United States are optimal for encouraging productivity and innovation. Lakey reports, “Rates of start-up creation in Norway are among the highest in the developed world, and Norway has more entrepreneurs per capita than the United States….” He suggests a couple of ways that economic equality supports potential entrepreneurs: giving them access to education without burdening them with debt, and providing a stronger safety net so they can afford to take risks. People can leave a job to try something new without worrying about losing their health insurance, since coverage is universal. More equal societies do a better job of developing talent across the economic spectrum, and they have higher rates of social mobility.

Lakey also cites research showing a positive association between high productivity and strong unions. This may be counterintuitive, at least for Americans, since “U.S. unions sometimes defend inefficient labor practices and outmoded organization of work, even though undermining productivity–whatever it takes to keep workers in jobs.” However, Lakey argues that this is because the American system leaves workers so insecure. When union membership is higher, high wages are more universal, and the social safety net is stronger, workers have less to fear from productivity-enhancing innovation. In addition, companies may have to boost profits by increasing productivity, since it is harder for them to do it by cutting wages.

Another feature of social organization that contributes to both productivity and equality is the Nordic tradition of cooperatives. They have industrial co-ops, farm co-ops, consumer co-ops, housing co-ops, even parent co-ops providing child care. People are motivated to contribute because they know they will share in the benefits.

Nordic countries are also noted for developing the talents and productivity of women. Their rates of female employment exceed that of the United States, although women are still underrepresented in the highest managerial positions. Rates of employment for men are also higher than they are here. The Nordic countries do more to support employed parents, by subsidizing child care and providing paid family leaves for parents of both sexes. And although more adults are employed, annual work hours per worker are lower, for example 1,418 in Norway vs. 1,791 in the US in 2012. That’s 373 more hours off the job, or about 10 weeks. National production does not seem to suffer, since productivity per hour is higher in Norway.

Keeping poverty low

International comparisons of poverty rates often use a relative definition of poverty. They determine what percentage of a population lives on less than the national median income. That could be misleading if two countries have very different medians; a very poor country could appear to have little poverty if it had little variation around its very low median. For countries that are all pretty affluent, the relative definition makes for pretty fair comparisons. UNICEF calculated child poverty rates for the Nordic countries in the range of 4.7% to 7.3%. The rate for the US was 23.1%, the second worst among OECD countries. We should all think about the damage to human potential that figure represents, and its impact on our national productivity and well-being.

Lakey wants to correct the impression that Nordic states are just generous “welfare states,” since their strategy for fighting poverty involves much more than just handing out cash and other benefits to poor people. It is, first of all, a strategy emphasizing full employment and good wages. Norway has a pretty good record for holding unemployment down, keeping wages up, and preparing people for jobs with educational and training opportunities. “Free post-secondary schooling is available for technical fields like seafaring, business, engineering, and agriculture; for arts fields like performance and visual arts; and for professions like medicine and law.” Adult education is so common that one-sixth of the population is taking courses in any given year.

When jobs are available and wages are fairly high, the government can provide some cash assistance to families with children without worrying that the payments will destroy people’s motivation to work. That’s especially true when such benefits are universal rather than provided only to the very poor and unemployed. You have everything to gain and nothing to lose by taking a job.

Universal services and taxation

Programs designed just for the poor don’t have a very good track record for actually eliminating poverty. They tend to be inefficient because a lot of administrative effort has to go into determining eligibility, and potential recipients may try to cheat. They tend to be under-funded because popular support for them is limited (especially when there is a longstanding racial divide between the affluent and the needy). They tend to be stigmatizing for the people who participate in them. They tend to be too individualistic, helping one person at a time instead of changing social conditions more generally. “The twentieth-century descendants of the Vikings figured out that the individualistic charity model of the nineteenth century simply could not alleviate poverty. In each country, the designers turned against programs for the poor and created universal systems instead.”

Among the publicly-funded services available to Norwegians are tuition-free higher education, paid maternity and paternity leave, affordable child care, subsidized public transportation, subsidies for family farms, vocational counseling and job training, free health care and universal public pensions.

To pay for such benefits, Nordic countries tax their citizens at high rates, both through individual income taxes and corporate taxes. (In contrast, although US rates may look high on paper, the tax code has so many loopholes that revenue as a percentage of GDP is among the lowest for OECD countries.) Lakey describes the general Nordic attitude toward taxes as “To get a lot, we pay a lot.” The “lot” they get includes not only the benefits they receive personally, but the general benefits of living in a more egalitarian and less divided society.

Do high taxes inhibit economic growth, as is so often claimed by economic neoliberals in the United States? Lakey cites the work of economist Jeffrey D. Sachs, who modified his own neoliberal views after examining the evidence. He compared the Nordic countries with the Anglo-Saxon countries of Australia, Canada, Ireland, New Zealand, UK and United States, countries he characterized as “low-tax, high-income countries that share a historical lineage with nineteenth-century Britain and its theories of laissez-faire.” He concluded, “On average, the Nordic countries outperform the Anglo-Saxon ones on most measures of economic performance.”

Relevance to the United States

Maybe the culture and traditions of the Anglo-Saxon countries are so different from those of the Nordic countries that we are unable to learn much from them. On the other hand, maybe the problem isn’t as much culture and traditions as vested interests standing in the way of the public good. Lakey cites research showing that most Americans want more economic equality than they now have. “In one of the studies, participants were shown two different income distributions, in the form of pie charts. Without saying so, one chart reflected the distribution in Sweden and the second chart that of the United States. 92 percent said they preferred the first.”

Lakey also cites research by political scientists showing that in the US, the wealthy get what they want in political decision-making much more often than any other economic segment of society. He believes that politicians are so dependent on powerful financial interests that voting alone will not move a country in a more egalitarian direction. Only broad social movements featuring nonviolent direct action can bring about the desired changes.



Health Insurance Less Affordable under Senate Bill

June 23, 2017

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Senate Republicans have finally unveiled legislation to repeal and replace the Affordable Care Act. Now they are in a great rush to pass it without the benefit of hearings or any reasonable time for debate and amendments. That’s a clue about how much public interest and reaction they welcome. Hopefully, we will have an analysis by the Congressional Budget Office at least a day or two before the vote, but we can’t afford to wait for that before informing as many people as possible about what’s in the bill.

What the legislation does, essentially, is deprive the government of the revenue needed to accomplish the law’s original aim. It eliminates most of the new taxes imposed by the Affordable Care Act to cover the cost of subsidizing health insurance. Those taxes primarily affected the wealthy since they targeted investment income and wages above $200,000. Repealing those taxes (except for the “Cadillac tax” on unusually expensive employer health plans) shifts much of the cost of health care from the government back to the buyers of insurance, whether they can afford it or not. Some of the law’s provisions designed to protect the quality of coverage remain–although they are weakened–but the central aim of the Affordable Care Act is seriously undermined.

Benefits continue, but with a catch

Obamacare required all health insurance policies to include ten essential health benefits: Ambulatory (outpatient) care, emergency services, hospitalization, maternity care, mental health and substance abuse services, prescription drugs, rehabilitative and habilitative services, laboratory services, preventive and chronic disease management services, and pediatric services. These requirements would continue, except that states would now be able to apply for waivers of the rules. The same is true for the rule prohibiting annual or lifetime limits on what insurers must pay. Comprehensive coverage will probably be available to most people, but it’s no longer a sure thing.

Dependents could still remain on their parents’ insurance until age 26. Insurers would still have to accept patients with pre-existing conditions and charge them no more than other customers. But as the New York Times noted, “Patients with serious illnesses may find that their coverage is less valuable if they live in a state that eliminates benefit requirements or allows limits on coverage.”

Mandates are repealed

Large employers would no longer be required to offer insurance plans to their employees. I’ll have to leave it to the CBO to estimate how many workers would lose their insurance as a result of that change. Those who did would probably face higher costs in the individual market.

The Senate bill would also eliminate penalties for individuals who choose not to carry health insurance at all. The winners here would be healthy and wealthy people who can afford to pay their health costs out-of-pocket. The bill increases the amounts that people can put into Health Savings Accounts to save for future expenses. That’s a good deal for those who can afford it, since any returns on the investment are tax-free.

Medicaid is slashed

The biggest losers in the Senate bill are the 69 million Medicaid recipients, especially the 14 million who signed up under Obamacare’s new rules. Thirty states chose to participate in the Medicaid expansion, which raised the threshold for eligibility to 138% of the federal poverty level. Funding for that expansion would be reduced starting in 2021, with drastic reductions in 2024. That’s where the bill creates the biggest potential for lost insurance.

In addition, the bill would put a per-capita cap on future payments for all Medicaid recipients. Here is how Drew Altman of the Kaiser Family Foundation describes it:

The Senate plan imposes a harsher formula for its cap than the House plan, which already cuts Medicaid spending by $834 billion over 10 years. Because states have to balance their budgets every year, unlike the federal government, many will struggle to compensate for reductions in federal aid caused by a spending cap. Many states will be forced to choose between Medicaid and other priorities, like education, law enforcement and prisons. The inevitable result will be a reduction in health care spending on low-income people. And you cannot cut over $800 billion from Medicaid without adversely affecting health services for the poor.

Because the Senate bill not only rolls back the Medicaid expansion, but takes a good whack at Medicaid as a whole, the poor could wind up worse off than they were before health care reform was passed in the first place.

I suppose it’s a good thing that much of the damage will be postponed for a few years, giving the political winds time to blow in a different direction. On the other hand, maybe the motivation for dragging it out is to postpone the political fallout, so that the perpetrators of the crime can remain in office as long as possible.

Premiums and credits

The effect of all the changes on insurance premiums could be complicated, and I’ll be interested to see how the CBO sorts it out. Some of what I wrote about the House bill would presumably still apply:

Premiums would be expected to rise for older people and fall for younger people, since the law allows insurers to use a 5-to-1 rather than a 3-to-1 ratio between the two. Average premiums would probably rise for the first few years, since the elimination of the individual mandate would allow younger, healthier people to drop out of the market, forcing insurers to raise premiums on the older, less healthy people who remained. In later years, insurers might lower premiums, as older people who cannot afford the high cost are the ones to drop out.

For states that obtain waivers to weaken the quality of coverage–by declining to cover certain benefits, for example–premiums could fall, but only because policies aren’t worth as much.

What is more certain is that the tax credits that offset the cost of insurance would be less generous under the Senate plan. Ezra Klein has provided a good analysis. Under the Affordable Care Act, the credit is based on the cost of a “benchmark plan,” a plan available in your geographic area that covers 70% of expected health costs. Then, depending on your income, you are only expected to spend a certain percentage of that income on the premium, while the government picks up the rest. The credits phase out entirely for incomes over 400% of the poverty threshold.

The Senate plan cuts the credits in three ways: requiring the benchmark plan to cover only 58% of expected costs instead of 70%, raising the percentage of income that you have to spend on premiums, and phasing out the credit at 350% of the poverty threshold. Credit recipients would have to pay a larger share of premiums, plus pay higher deductibles when they need to file a claim.

Obamacare also includes additional subsidies to defray out-of-pocket costs–deductibles and copayments–for low-income people. The Senate bill eliminates these entirely after 2019, although people might need them more than ever.

Klein summarizes:

The new world created by the Senate health care bill will be based around higher-deductible plans that cover fewer health benefits and cost people more. The plan degrades Obamacare’s insurance regulations, and cuts insurance subsidies so that Americans won’t be able to afford plans as generous as the ones they purchase now. If the Medicaid expansion really does die out in 2024, then the poorest of the poor will be pushed from comprehensive, low-cost health insurance to extremely high-deductible plans.

To put it most simply: Obamacare was a transfer of wealth mainly from high-income taxpayers to lower-income health insurees. The Republican bill transfers it back again, inevitably making comprehensive coverage less affordable. And as Klein notes, “In a particularly Orwellian flourish, the name of this bill dedicated to diminishing the quality of the insurance coverage Americans can afford is “The Better Care Act.” (You know it’s Trumpcare if the name of the act itself is a shameless falsehood.) It would more accurately be called “The Less Affordable Care Act.”

Underlying this tragedy is the assumption that we as a nation cannot afford to provide the universal health coverage that other developed countries have achieved. Instead we have a wealthy class who resist being taxed, a government too weak to control health care costs–the bill specifically prohibits the government from negotiating drug prices with pharmaceutical companies–and private companies that must have their big profits.

Working-Class Conservatism

June 5, 2017

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Like so many others who have been closely following current events, I can easily be caught up in the outrage over President Trump’s latest tweet or poorly thought-out policy proposal. Nevertheless, I do try to stay focused on issues that transcend any one personality, no matter how–um–large. Even if Donald Trump were to be impeached, the wave of popular anger that helped elect him would not entirely subside. The fact that so many of his supporters keep sticking by him, almost without regard to what he does, indicates that he has tapped into a strong current of public opinion that will continue to shape our politics. The country will have to come to grips with what Trump represents to people, even if his own presidency is a colossal failure.

In some of my earlier posts, such as “A Leap into the Dark” just after the election, I acknowledged Trump’s general appeal to conservative voters (using that term rather broadly), but questioned his authenticity as a champion of the working class. He did, in the end, get the support of most Republicans across the socioeconomic spectrum, and much of what he is trying to do has the support of the Republican establishment. Now however, having recently read Michael Lind’s article on “The New Class War,” I want to ask if there is a distinctly working-class brand of conservatism, even if Donald Trump represents it rather inconsistently. I want to explore how the interests of working-class Trump supporters and establishment Republicans may diverge on certain issues, even as they converge on others. An angrier and more outspoken working-class conservatism could be helping the G.O.P. win elections, but it could also prove to be a divisive force that could weaken the party and create opportunities for Democrats.

Convergent interests

Climate change is a good example of an issue where the interests of many blue-collar workers seem to converge with those of the Republican establishment. Even as the scientific consensus on climate change  grows stronger, and more and more Democrats support action to control carbon emissions, most Republican leaders support President Trump’s withdrawal from the Paris Accord and his renunciation of President Obama’s Clean Power Plan. In this respect, the Republican establishment most represents the interests of fossil-fuel industry executives and shareholders. Led by Americans for Prosperity, a group financed by the Koch brothers, the industry has poured millions of dollars into the effort to influence–perhaps I should say mislead–public opinion, support its political allies, and defeat its political opponents.

Almost by definition, the main concern of working-class conservatives is saving jobs in those established industries. For Republican leaders like Mitch McConnell of Kentucky, constituent pressures combine with fundraising incentives to motivate conservative environmental policy. Of course, those leaders almost always frame the issue as opposing “job-killing” regulation, not preserving corporate profits.

Continuing to do what one has always done, whether or not it makes sense to do it, is a simple conservative impulse that cuts across class lines. Conservative columnist Ross Douthat, who has voiced skepticism about climate change, now admits that “in actual right wing politics no serious assessment of the science and the risks is taking place….Instead there’s just a mix of business-class and blue-collar self-interest and a trollish, ‘If liberals are for it, we’re against it’ anti-intellectualism.”

Without sacrificing their environmental concerns, Democrats who wish to appeal to working-class voters need to emphasize the ways that government can promote job creation in clean-energy industries, as well as facilitate the retraining of displaced workers for new jobs. Just talking about the potential dire consequences of future climate change may not impress someone trying to make ends meet right now.

Divergent interests

Global trade and immigration are issues where working-class interests diverge in many ways from the traditional positions of the Republican establishment. In the recent past, Republicans have been the biggest advocates for free trade, consistent with the belief that unrestricted markets can best create wealth for all. They have been less united on immigration, but advocates of global free markets often welcome the flow of labor across borders to supply the labor needs of expanding industries. Cultural conservatives may worry about the threat to American culture from “alien” ideas or practices, worries enhanced by the threat of terrorism. Donald Trump’s proposals to build a wall between the U.S. and Mexico and ban travel from Muslim countries appeal especially to cultural conservatives.

If there is a distinctly working-class position on globalism, it is based again on concerns about jobs and incomes. The free flow of capital and labor across borders has enabled corporations to profit by seeking out cheaper labor, but a lot of that has come at the expense of  workers born in the United States. That is one reason why labor’s share of national income growth has been falling. (Another is replacement of human labor through automation.) This strengthens the anti-trade, anti-immigrant sentiment within the Republican Party. It is a kind of conservatism, but not the pro-capital kind that has dominated the party in the Reagan-Bush era.

The G.O.P. is unlikely to renounce its support for globalism anytime soon. Although the United States is now a debtor nation with an embarrassingly large trade deficit, trade is still a two-way street. American companies want foreign buyers and American consumers like inexpensive foreign goods. Powerful retailers like Walmart oppose new taxes on imports.

Some new policies might benefit American workers, but Democrats are at least as likely to propose them as Republicans. International trade agreements could include stronger protections for workers. Displaced workers could have more opportunities for education or retraining. American industries could compete globally on the basis of quality–more like the Germans do–rather than on cost-cutting.

Another area in which working-class interests diverge from Republican establishment interests is taxation and spending. Wealthy Republicans have the most to gain from tax cuts and the least to lose from cuts in social spending. Working-class people have less to gain from tax cuts, since they are taxed at a lower rate already, and more to lose from cuts in social programs on which they increasingly rely.

The current debate over repealing and replacing Obamacare has dramatized this difference. Establishment Republicans have long advocated repeal, while giving little thought to replacement. Their main aim was to eliminate the new taxes on the wealthy that financed the new insurance subsidies. Trump supporters apparently believed him when he promised better health insurance coverage at lower cost. Then he double-crossed them by endorsing a House Republican bill that accomplished no such thing.  Similarly, the President’s tax “reform” bill turns out to be mainly a huge tax cut for the rich. His budget proposal includes not only that tax cut, but extreme cuts in programs that benefit many of his own supporters.

Working-class attitudes toward social spending are a little complicated, however. The American Dream is having a good enough job so that you don’t have to rely on any government programs. You want to get good health benefits at work, so you don’t need to obtain insurance from a government exchange or an expansion of Medicaid. Working-class conservatism often takes the form of anger that so many Americans do rely on Medicaid, or food stamps, or housing subsidies. In many ways, a vote for the Republican Party is a vote for a mythical America in which everybody is successful and nobody needs such things. Just as a vote against a clean energy policy is a vote for a mythical planet where human activity has little impact on the weather.

That gives the Democratic Party the opportunity and the challenge of presenting itself as the party of the real America. That’s the America where rapid economic change creates the need for a stronger safety net, since working-class incomes have become less reliable. It’s the America where enhanced threats from foreign competition and automation force us to create new and better jobs by investing more in the talents of our own people.

In short, the Democratic Party does not have to become the party of some “liberal elite” consisting of upper-middle-class professionals. It does not have to cede working-class voters to the more conservative party, where their interests are often overshadowed by those of the wealthy. Donald Trump may have gotten a lot of their votes this time, but they are very much up for grabs if he and his party let them down.

The complexities of race and class

In many of the discussions about how the Democratic Party is losing the middle class, it’s the white working class that is the focus. That raises the question of whether the attitudes of working-class voters have a racial–or even racist–component that attracts those voters to the more conservative party. That’s true to a degree, but any such conclusion has to be carefully qualified.

Much has been written about how the Republican Party–the party of Lincoln and in many respects the liberal party of the nineteenth century–became the more conservative party on racial issues. To make a long story short, the Democratic Party outraged much of its base in the “Solid South” by aligning itself with the Civil Rights Movement from the 1940s on. Then the conservative movement that captured the Republican Party in the 1960s and 70s built its majority largely by relying on a “Southern strategy.”

As with the immigration issue, establishment Republicans often take a free-market position on race. That view treats racial discrimination as an anachronism that free-market competition and equal opportunity should eliminate. Rational employers have an interest in hiring the best person for the job, and workers can succeed if they do the right things, like work hard, stay in school, and avoid having children before getting married (without the help of Planned Parenthood, of course!). The G.O.P. is also home to some cultural conservatives who believe, deep in their hearts, in a predominantly white, Christian society. But most Republicans just tend to minimize the problem of racial discrimination and prefer to solve it more by individual changes of attitudes than by government mandates.

White working-class attitudes about race tend to be conservative for at least two reasons. First, less educated people tend to be less enlightened about race. They are less aware of how systematic and enduring racial discrimination has been in American history. They are more likely to attribute the present condition of Black Americans to defects of character like lack of will power. But in addition, they do not have the greater economic security that comes with solid job credentials. Whites who cannot claim high status on the basis of educational attainment or income may take pride in being white, just as lower-achieving men may take pride in being real men, whatever they think that is. Putting down non-whites or women is one way of bolstering one’s own status. People who feel that way, whether they consciously articulate it or not, are more likely to be drawn to the political party that is less associated with movements for racial or gender equality, and less supportive of government assistance to the “undeserving” poor.

That, however, is not an unmixed blessing for the Republican Party. Racial and gender attitudes have changed so much in this country that no major party wants to be known as the party of white or male supremacy. The party establishment has to walk a fine line, tolerating some unenlightened attitudes without fully embracing them. The Democrats, on the other hand, will remain–and should remain–the party identified with the struggle for equality. Their best hope for winning over working-class voters is to try to alleviate the causes of working-class status anxiety. Again, promote investments in education and job creation, so that working people of all races and ethnicities can get ahead without having to be afraid of one another.

Although I thought that Donald Trump was going to lose the election because of his own failings, I did not agree with Hillary Clinton’s campaign strategy of attacking him and his followers instead of focusing primarily on economic issues. I thought it was a big mistake to describe his followers as “deplorable” racists and other kinds of bigots. Racial attitudes are now too complex and subtle for such a large segment of the population to be characterized that way. Economic insecurity and class tensions are no doubt complicated by the country’s unfortunate racial history. But I think that the best course for the more liberal party is to address the economic concerns that working families of all races have in common. Reject outright bigotry where it does exist, for sure, but do your best to convince people that a flourishing society has no need for it.