1 00:00:02,720 --> 00:00:07,200 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:08,000 --> 00:00:10,959 Speaker 2: I can't say affordability hooks because I agree the prices 3 00:00:11,000 --> 00:00:13,600 Speaker 2: were too high, psychical, a hoax, because they'll misconstrue that, 4 00:00:14,320 --> 00:00:18,400 Speaker 2: but they use the word affordability and that's their only word. 5 00:00:28,040 --> 00:00:30,760 Speaker 3: I'm Stephanie Flanders, head of Government and Economics at Bloomberg, 6 00:00:30,800 --> 00:00:33,239 Speaker 3: and this is Trumponomics, the podcast that looks at the 7 00:00:33,280 --> 00:00:36,560 Speaker 3: economic world of Donald Trump, how he's already shaped the 8 00:00:36,600 --> 00:00:39,880 Speaker 3: global economy, and what on earth is going to happen next. 9 00:00:44,760 --> 00:00:49,320 Speaker 3: We've talked about affordability a few times on this podcast, 10 00:00:49,600 --> 00:00:53,479 Speaker 3: especially in the wake of those special elections where it 11 00:00:53,560 --> 00:00:56,320 Speaker 3: was a major theme and potentially something that was pulling 12 00:00:56,360 --> 00:01:00,160 Speaker 3: down the Republican vote. We've seen the President responding to 13 00:01:00,240 --> 00:01:03,720 Speaker 3: the discussion, not always very positively. He's talked about it 14 00:01:03,760 --> 00:01:06,520 Speaker 3: being a hoax. He's talked about people needing to give 15 00:01:06,600 --> 00:01:09,080 Speaker 3: him more credit for the strength of the economy. But 16 00:01:09,160 --> 00:01:11,120 Speaker 3: it does seem like a theme that's going to run 17 00:01:11,160 --> 00:01:14,039 Speaker 3: and run, and not just because Democrats see it as 18 00:01:14,040 --> 00:01:17,440 Speaker 3: a potential winner next year. What I wanted to focus 19 00:01:17,440 --> 00:01:22,480 Speaker 3: on on this show is not just the political aspects, 20 00:01:22,680 --> 00:01:27,520 Speaker 3: but the very real insurance aspect of affordability, which is 21 00:01:27,560 --> 00:01:30,200 Speaker 3: about to get quite a lot worse. I wanted to 22 00:01:30,240 --> 00:01:34,440 Speaker 3: focus on how insurance was going to start playing an 23 00:01:34,560 --> 00:01:39,080 Speaker 3: even bigger role in that affordability issue as we go forward. 24 00:01:39,080 --> 00:01:43,800 Speaker 3: And indeed, on January first, we've seen the Congress be 25 00:01:44,040 --> 00:01:47,920 Speaker 3: unable to come up with a fix to restore any 26 00:01:48,440 --> 00:01:52,320 Speaker 3: of the Obamacare subsidies, and that we know is going 27 00:01:52,360 --> 00:01:54,960 Speaker 3: to have a very big immediate impact on the cost 28 00:01:55,000 --> 00:01:58,080 Speaker 3: of premiums and potentially on consumer behavior. So I wanted 29 00:01:58,080 --> 00:02:00,880 Speaker 3: to get into that a bit with our reporter covering 30 00:02:00,920 --> 00:02:04,400 Speaker 3: health policy in Washington, Rachel Causesang, Thank you very much 31 00:02:04,440 --> 00:02:08,519 Speaker 3: for joining us. Rachel, thanks for having me. And Brook Sutherland, 32 00:02:08,600 --> 00:02:10,880 Speaker 3: our Boston bureau chief, had given me a whole other 33 00:02:10,919 --> 00:02:13,840 Speaker 3: thing to worry about in this sphere by writing about 34 00:02:14,280 --> 00:02:18,520 Speaker 3: US manufacturing. She writes our Industrial Strength newsletter as part 35 00:02:18,560 --> 00:02:22,640 Speaker 3: of that, and Brooke highlighted to me that car insurance 36 00:02:22,639 --> 00:02:27,880 Speaker 3: and soaring car insurance premiums were already causing consumer behavior 37 00:02:27,919 --> 00:02:32,320 Speaker 3: to change and potentially impacting the outlook for even US manufacturing. 38 00:02:32,440 --> 00:02:34,080 Speaker 3: So Brook, thanks very much for joining us. 39 00:02:34,440 --> 00:02:35,440 Speaker 4: Thank you for having me. 40 00:02:44,000 --> 00:02:46,040 Speaker 3: I like to think of this as a really nice 41 00:02:46,120 --> 00:02:48,560 Speaker 3: kind of micro episode where we remind people that were 42 00:02:48,600 --> 00:02:51,040 Speaker 3: not always just at sort of thirty thousand feet. Rachel 43 00:02:51,120 --> 00:02:55,160 Speaker 3: I did mention the Obamacare subsidies. A lot of people 44 00:02:55,160 --> 00:02:57,400 Speaker 3: listening to this are sitting in the US, they may 45 00:02:57,880 --> 00:03:01,120 Speaker 3: even benefit from those subsidies. Will know that it's been 46 00:03:01,200 --> 00:03:04,320 Speaker 3: quite a big debate and a tussle in Congress over 47 00:03:04,320 --> 00:03:07,360 Speaker 3: the last few weeks. But where do we stand on 48 00:03:07,880 --> 00:03:10,839 Speaker 3: the subsidies and what's the impact going to be as 49 00:03:10,880 --> 00:03:14,519 Speaker 3: things stand for many US households. 50 00:03:15,160 --> 00:03:18,320 Speaker 1: So, as you mentioned, this has been an issue that's 51 00:03:18,760 --> 00:03:21,920 Speaker 1: been front of mine for Congress, as it caused the 52 00:03:22,000 --> 00:03:26,440 Speaker 1: longest government shutdown in history earlier this fall. But where 53 00:03:26,440 --> 00:03:29,000 Speaker 1: we're at is that these subsidies were put into place 54 00:03:29,080 --> 00:03:31,840 Speaker 1: during the COVID nineteen pandemic to help people pay for 55 00:03:31,919 --> 00:03:34,960 Speaker 1: insurance and in theory, help more people get access to 56 00:03:35,040 --> 00:03:38,760 Speaker 1: insurance in the middle of a public health emergency. And 57 00:03:39,240 --> 00:03:43,960 Speaker 1: the enrollment in the Obamacare marketplaces has more than doubled 58 00:03:44,040 --> 00:03:46,920 Speaker 1: since these subsidies went into effect, So it has had 59 00:03:46,960 --> 00:03:50,080 Speaker 1: a really material impact on how many people get insurance 60 00:03:50,360 --> 00:03:53,680 Speaker 1: through Obamacare. But now Augress kind of set this up 61 00:03:53,680 --> 00:03:57,360 Speaker 1: as a temporary policy and it's expiring at the end 62 00:03:57,360 --> 00:04:00,280 Speaker 1: of the year, and there's no sign that Demo Crats 63 00:04:00,280 --> 00:04:02,400 Speaker 1: and Republicans are going to be able to come together 64 00:04:03,000 --> 00:04:07,600 Speaker 1: to make some sort of deal to avert these subsidies expiring. 65 00:04:07,760 --> 00:04:10,040 Speaker 1: So they've tried over the past couple of weeks. They've 66 00:04:10,040 --> 00:04:13,600 Speaker 1: gone back, they've gone forth, there have been bipartisan negotiations, 67 00:04:13,680 --> 00:04:16,640 Speaker 1: there's been partisan votes on the floor, but it doesn't 68 00:04:16,720 --> 00:04:18,359 Speaker 1: look like they're going to be able to reach an 69 00:04:18,360 --> 00:04:19,720 Speaker 1: agreement in the next two weeks. 70 00:04:19,880 --> 00:04:23,400 Speaker 3: And in terms of the impact for a lot of 71 00:04:24,160 --> 00:04:27,800 Speaker 3: ordinary Americans who will have potentially already had or I 72 00:04:27,800 --> 00:04:31,240 Speaker 3: guess they will definitely already have had notice of the 73 00:04:31,320 --> 00:04:33,400 Speaker 3: higher premiums they would have to pay. What kind of 74 00:04:33,400 --> 00:04:36,000 Speaker 3: increases are we talking about and when would they kick in? 75 00:04:36,440 --> 00:04:39,000 Speaker 1: Right, So, we're talking about an average of about one 76 00:04:39,000 --> 00:04:42,559 Speaker 1: thousand dollars a year that average, and Obamacare and relies 77 00:04:42,560 --> 00:04:45,680 Speaker 1: are going to see their premiums increase. But for some people, 78 00:04:45,800 --> 00:04:49,839 Speaker 1: especially like early retirees, people between the ages of fifty 79 00:04:49,839 --> 00:04:53,040 Speaker 1: and sixty four who don't qualify for the Medicare program yet, 80 00:04:53,400 --> 00:04:55,560 Speaker 1: they could see increases of one thousand dollars a month, 81 00:04:55,600 --> 00:04:58,440 Speaker 1: depending on where they live and what's available. Other people 82 00:04:58,440 --> 00:05:01,960 Speaker 1: will see smaller increases, but I think overall the average 83 00:05:02,040 --> 00:05:04,719 Speaker 1: number is around one thousand dollars a year. I think 84 00:05:04,720 --> 00:05:07,960 Speaker 1: that's important to realize because these are fixed costs, like 85 00:05:07,960 --> 00:05:10,479 Speaker 1: they're monthly costs, Like no matter what kind of health 86 00:05:10,480 --> 00:05:13,240 Speaker 1: care that you use, your monthly costs are going to 87 00:05:13,279 --> 00:05:15,479 Speaker 1: go up every single month. And it's just going to 88 00:05:15,480 --> 00:05:18,800 Speaker 1: squeeze people and their monthly budgets, or they could choose 89 00:05:18,839 --> 00:05:21,360 Speaker 1: to become uninsured if they're healthy, and if you were 90 00:05:21,360 --> 00:05:25,000 Speaker 1: healthy people buy health insurance, then the costs go up 91 00:05:25,000 --> 00:05:29,080 Speaker 1: for everyone. So it's this vicious cycle that just only 92 00:05:29,080 --> 00:05:30,560 Speaker 1: continues to increase costs. 93 00:05:30,640 --> 00:05:33,160 Speaker 3: And Brooke, there's a pretty obvious vicious cycle that can 94 00:05:33,200 --> 00:05:35,800 Speaker 3: also happen if people are not getting enough car insurance. 95 00:05:35,880 --> 00:05:37,880 Speaker 3: I mentioned at the start that you'd written about this, 96 00:05:37,960 --> 00:05:40,800 Speaker 3: But what is it that you had spotted about people's 97 00:05:40,800 --> 00:05:43,919 Speaker 3: response to higher car insurance premiums? 98 00:05:44,720 --> 00:05:48,679 Speaker 4: Sure, and you've really seen insurance premiums skyrocket over the years. 99 00:05:48,720 --> 00:05:51,400 Speaker 4: And there's a couple of reasons for that, but the 100 00:05:51,440 --> 00:05:54,840 Speaker 4: biggest one is that cars are increasingly complex. They are 101 00:05:55,160 --> 00:05:59,760 Speaker 4: jam packed with sensors, semiconductors from everything from the bumper 102 00:06:00,160 --> 00:06:02,880 Speaker 4: to the headlights, and so what used to be more 103 00:06:02,960 --> 00:06:08,120 Speaker 4: minor fender vendors are now becoming significantly more expensive repair jobs. 104 00:06:08,360 --> 00:06:10,880 Speaker 4: And so what insurers have done in reaction to that 105 00:06:11,480 --> 00:06:14,279 Speaker 4: is that they're more likely to declare cars totaled. But 106 00:06:14,320 --> 00:06:17,920 Speaker 4: they also have to reflect those rising repair costs, and 107 00:06:17,960 --> 00:06:20,600 Speaker 4: so you know, insurance premiums have gone up alongside that. 108 00:06:20,640 --> 00:06:23,800 Speaker 4: In addition, you've also seen, of course, replacement cars rise, 109 00:06:23,839 --> 00:06:25,840 Speaker 4: and so this is all sort of happening in tandem, 110 00:06:26,160 --> 00:06:28,880 Speaker 4: and back to Rachel's point, just raising sort of your 111 00:06:28,880 --> 00:06:32,280 Speaker 4: basic fixed costs to get some of these things that 112 00:06:32,360 --> 00:06:35,000 Speaker 4: in many cases are necessities for people. As much as 113 00:06:35,040 --> 00:06:36,800 Speaker 4: people might need a car to get from point A 114 00:06:36,880 --> 00:06:39,080 Speaker 4: to point B, it's a little bit easier to make 115 00:06:39,200 --> 00:06:41,600 Speaker 4: changes around the edges on your insurance if you're trying 116 00:06:41,640 --> 00:06:44,760 Speaker 4: to cut back. And so the biggest trends that are 117 00:06:44,760 --> 00:06:48,760 Speaker 4: happening are people downgrading their insurance and dropping their collision 118 00:06:48,800 --> 00:06:53,440 Speaker 4: repair coverage or shifting from comprehensive coverage just liability coverage, 119 00:06:53,600 --> 00:06:56,359 Speaker 4: and that alone can be a really big saving and 120 00:06:56,440 --> 00:06:58,720 Speaker 4: maybe knock off about one thousand dollars from their annual 121 00:06:58,760 --> 00:07:01,680 Speaker 4: bill or they're opting for or higher deductibles, which will 122 00:07:01,720 --> 00:07:04,520 Speaker 4: lower their premiums in the short term, but also make 123 00:07:04,560 --> 00:07:06,720 Speaker 4: it less likely that they file claims when they do 124 00:07:06,800 --> 00:07:09,760 Speaker 4: get into those fender benders. And it's really just sort of, 125 00:07:09,920 --> 00:07:12,960 Speaker 4: you know, the latest example of consumers cutting back into 126 00:07:13,000 --> 00:07:16,480 Speaker 4: auto market in particular, or we've seen a lot of 127 00:07:16,520 --> 00:07:19,840 Speaker 4: strain recently. You've seen people opting for longer term loans 128 00:07:19,840 --> 00:07:23,040 Speaker 4: that lower monthly bills. A share of some prime borrowers 129 00:07:23,360 --> 00:07:25,600 Speaker 4: that are at least sixty days past DOE jump to 130 00:07:25,720 --> 00:07:29,000 Speaker 4: the highest level since nineteen ninety four in October, and 131 00:07:29,080 --> 00:07:31,920 Speaker 4: so this is really painting an overall picture of strain 132 00:07:32,120 --> 00:07:33,400 Speaker 4: in that portion of the market. 133 00:07:33,800 --> 00:07:36,800 Speaker 3: You can see that the President has been focused on 134 00:07:36,840 --> 00:07:38,800 Speaker 3: at least one piece of that, which is the interest 135 00:07:38,880 --> 00:07:41,360 Speaker 3: rate piece. You know, in the hope that if you've 136 00:07:41,360 --> 00:07:44,440 Speaker 3: put pressure on the federal reserve, that'll trickle down eventually 137 00:07:44,480 --> 00:07:47,520 Speaker 3: into lower costs for people who are borrowing in these 138 00:07:47,560 --> 00:07:50,640 Speaker 3: markets or potentially trying to extend their terms or anything else. 139 00:07:50,640 --> 00:07:53,560 Speaker 3: But it's a pretty blunt edged instrument if the underlying 140 00:07:53,720 --> 00:07:57,160 Speaker 3: risk of these policies is going up. But just on 141 00:07:57,200 --> 00:07:59,680 Speaker 3: that brook, if you have people changing their behavior. How 142 00:07:59,680 --> 00:08:04,360 Speaker 3: does that affect the industry. It clearly affects how I'm 143 00:08:04,360 --> 00:08:06,320 Speaker 3: going to feel as I'm driving along the road in 144 00:08:06,400 --> 00:08:08,320 Speaker 3: the States, because i might be worried that I'm going 145 00:08:08,360 --> 00:08:10,200 Speaker 3: to hit someone or someone's going to hit me is 146 00:08:10,240 --> 00:08:13,640 Speaker 3: not properly insured. But how does it come through financially 147 00:08:13,920 --> 00:08:14,840 Speaker 3: for these firms? 148 00:08:15,560 --> 00:08:17,480 Speaker 4: I think, you know, the first place where you're seeing 149 00:08:17,520 --> 00:08:21,680 Speaker 4: it is companies like Copart, which is a vehicle salvager. 150 00:08:22,000 --> 00:08:23,840 Speaker 4: And so what that means is, you know, as I 151 00:08:23,880 --> 00:08:27,200 Speaker 4: was describing, insurers are more likely to declare cars total 152 00:08:27,320 --> 00:08:30,120 Speaker 4: these days, even if they're in relatively minor accidents, just 153 00:08:30,160 --> 00:08:33,760 Speaker 4: because the repairs are so costly. And when that happens, 154 00:08:33,800 --> 00:08:38,079 Speaker 4: the cars are then put on coparts auction platform and 155 00:08:38,600 --> 00:08:41,920 Speaker 4: then they're resold. And this is you know, a really 156 00:08:41,960 --> 00:08:45,240 Speaker 4: growing pipeline for this company because these cars tend to 157 00:08:45,280 --> 00:08:47,560 Speaker 4: not be you know, quite as banged up as you 158 00:08:47,640 --> 00:08:49,720 Speaker 4: might think of when we talk about a total vehicle, 159 00:08:49,720 --> 00:08:53,120 Speaker 4: and they can often resell them, particularly in emerging markets. 160 00:08:53,160 --> 00:08:55,360 Speaker 4: They tend to be newer, nicer cars as well that 161 00:08:55,400 --> 00:08:59,160 Speaker 4: are ending up in this pipeline. But the volume of 162 00:08:59,240 --> 00:09:02,679 Speaker 4: cars making their way to the auction block is down 163 00:09:03,400 --> 00:09:07,960 Speaker 4: because people are filing less insurance claims or you know, 164 00:09:08,080 --> 00:09:10,240 Speaker 4: as if they have a higher deductleble, they may be 165 00:09:10,360 --> 00:09:14,280 Speaker 4: more likely to sit on, you know, a damage to 166 00:09:14,320 --> 00:09:16,679 Speaker 4: their car and decide to repair it later or maybe 167 00:09:16,679 --> 00:09:18,880 Speaker 4: not do it at all. And so that's reducing the 168 00:09:18,880 --> 00:09:21,720 Speaker 4: flow of cars that are making their way to this 169 00:09:21,880 --> 00:09:22,800 Speaker 4: vehicle salvager. 170 00:09:23,520 --> 00:09:25,199 Speaker 3: And we might talk in a minute about how that 171 00:09:25,240 --> 00:09:29,200 Speaker 3: sort of feeds through into the broader manufacturing industry and 172 00:09:29,280 --> 00:09:33,800 Speaker 3: the car industry. But I mean, Rachel, are we seeing 173 00:09:34,160 --> 00:09:38,000 Speaker 3: already or is it too early to see changes in 174 00:09:38,040 --> 00:09:41,040 Speaker 3: behavior in response to the higher premiums that are coming 175 00:09:41,040 --> 00:09:43,200 Speaker 3: down the track When it comes to health, I. 176 00:09:43,200 --> 00:09:45,360 Speaker 1: Think it's a little bit early. I think we'll get 177 00:09:45,360 --> 00:09:48,720 Speaker 1: a better sense of how many people choose to forego 178 00:09:48,800 --> 00:09:52,480 Speaker 1: insurance entirely when the end of open enrollment ends. So 179 00:09:52,520 --> 00:09:55,080 Speaker 1: there's you know, a period where people can choose to 180 00:09:55,280 --> 00:09:58,319 Speaker 1: sign up or not to sign up for their plans. 181 00:09:58,360 --> 00:10:01,280 Speaker 1: So we're not quite through that period, ye. But I 182 00:10:01,280 --> 00:10:03,920 Speaker 1: think one thing to note that's really important for the 183 00:10:03,920 --> 00:10:07,920 Speaker 1: Trump administration is that, unlike maybe car insurance premiums that 184 00:10:07,960 --> 00:10:11,200 Speaker 1: are more spread out, not nationwide, I think the impact 185 00:10:11,240 --> 00:10:14,080 Speaker 1: of these health insurance policies is going to be concentrated 186 00:10:14,520 --> 00:10:17,679 Speaker 1: in Republican led states especially. We're looking at Florida, We're 187 00:10:17,720 --> 00:10:20,079 Speaker 1: looking at Texas, We're looking at Georgia. Some of these 188 00:10:20,080 --> 00:10:23,880 Speaker 1: states that have less generous Medicaid programs under the Obamacare, 189 00:10:23,960 --> 00:10:26,960 Speaker 1: they've resisted kind of signing up for these policies that 190 00:10:27,040 --> 00:10:30,880 Speaker 1: help more people get insurance help hospitals. And I think 191 00:10:31,080 --> 00:10:33,600 Speaker 1: that's been the concern of some modern Republicans, and we've 192 00:10:33,600 --> 00:10:36,520 Speaker 1: seen pushback what they want to have some at least 193 00:10:36,520 --> 00:10:39,200 Speaker 1: short term extension to get them through the midterm elections. 194 00:10:39,360 --> 00:10:43,679 Speaker 1: So there are constituents in these really politically important states 195 00:10:43,760 --> 00:10:46,719 Speaker 1: aren't going to see these pricing increases so dramatically, and 196 00:10:46,760 --> 00:10:48,120 Speaker 1: that's what is a. 197 00:10:48,080 --> 00:10:51,800 Speaker 3: Bit confusing for people on the outside of this, and 198 00:10:51,840 --> 00:10:55,640 Speaker 3: in fact was made the outcome of the shutdown kind 199 00:10:55,679 --> 00:10:59,040 Speaker 3: of surprising because people thought the Democrats have chosen a 200 00:10:59,040 --> 00:11:02,439 Speaker 3: good issue for people to hang around the next of 201 00:11:02,480 --> 00:11:06,120 Speaker 3: the Republicans. But equally, if the Republicans got together with 202 00:11:06,160 --> 00:11:09,640 Speaker 3: the Democrats to fix it, you've neutralized what could potentially 203 00:11:09,679 --> 00:11:14,160 Speaker 3: be one of the most corrosive politically issues going into 204 00:11:14,200 --> 00:11:17,840 Speaker 3: the midterms. And yet that didn't happen. In the shutdown, 205 00:11:18,280 --> 00:11:20,679 Speaker 3: we didn't have that kind of agreement, and then even 206 00:11:20,760 --> 00:11:23,679 Speaker 3: now with these efforts in the Senate, we haven't seen it, 207 00:11:23,760 --> 00:11:26,760 Speaker 3: even though presumably there is quite a lot of blowback 208 00:11:26,840 --> 00:11:32,040 Speaker 3: coming from individual constituents for these senators in Congress people. 209 00:11:32,360 --> 00:11:35,240 Speaker 3: So why is it that they haven't signed up to 210 00:11:35,280 --> 00:11:39,400 Speaker 3: any of these bills. That's a good question. 211 00:11:39,640 --> 00:11:43,040 Speaker 1: And from my sources on Capitol Hill, I had talked 212 00:11:43,080 --> 00:11:45,200 Speaker 1: to them over the summer about this issue, because we 213 00:11:45,280 --> 00:11:48,280 Speaker 1: expected that there was leeway for some deal for them 214 00:11:48,320 --> 00:11:51,120 Speaker 1: to put some guardrails around these subsidies, to argue that 215 00:11:51,160 --> 00:11:53,880 Speaker 1: they were cutting down fraud and waste and abuse and 216 00:11:53,920 --> 00:11:56,760 Speaker 1: really targeting these subsidies to the people who needed them most. 217 00:11:57,120 --> 00:11:59,360 Speaker 1: But they just never did it. And what my sources 218 00:11:59,400 --> 00:12:02,680 Speaker 1: on Capital said they needed was some sort of clear 219 00:12:02,760 --> 00:12:07,720 Speaker 1: and firm cover from the President to support these Obamacare subsidies, 220 00:12:07,720 --> 00:12:11,120 Speaker 1: because there are again some conservative Republicans who are just 221 00:12:11,280 --> 00:12:16,760 Speaker 1: opposed to Obamacare want it repealed, that holdover from that 222 00:12:16,800 --> 00:12:19,960 Speaker 1: twenty seventeen fight that so badly bruised the president, and 223 00:12:20,280 --> 00:12:22,360 Speaker 1: he didn't provide that cover until it was too late, 224 00:12:22,600 --> 00:12:25,439 Speaker 1: and he still hasn't said that he would support a 225 00:12:25,480 --> 00:12:28,960 Speaker 1: straight extension of these subsidies, so Republicans have kind of 226 00:12:28,960 --> 00:12:31,200 Speaker 1: flailed to try to find some sort of option that 227 00:12:31,280 --> 00:12:34,280 Speaker 1: he'll support that would actually lower cost for consumers, but 228 00:12:34,320 --> 00:12:36,120 Speaker 1: they weren't able to do it. They just waited until 229 00:12:36,160 --> 00:12:39,800 Speaker 1: it was too late, and I think they ultimately didn't 230 00:12:39,800 --> 00:12:42,040 Speaker 1: feel that they could get the votes to support a 231 00:12:42,040 --> 00:12:44,280 Speaker 1: subsidy extension that would be good for a lot of 232 00:12:44,280 --> 00:12:45,800 Speaker 1: their members going into the midterms. 233 00:12:58,920 --> 00:13:01,560 Speaker 3: Is it at a focus about the gerrymandering of districts 234 00:13:01,880 --> 00:13:06,760 Speaker 3: and how few districts and even Senate seats, although that's 235 00:13:06,800 --> 00:13:09,320 Speaker 3: not a question of gerrymandering, but how little contest, how 236 00:13:09,400 --> 00:13:12,199 Speaker 3: much of Congress and the Senate is not contested when 237 00:13:12,200 --> 00:13:15,320 Speaker 3: we come to any election. And I guess this is 238 00:13:15,640 --> 00:13:18,199 Speaker 3: one manifestation of it. Is even if there's a lot 239 00:13:18,200 --> 00:13:22,160 Speaker 3: of pressure and potentially political blowback from an issue in 240 00:13:22,280 --> 00:13:25,320 Speaker 3: any given time, there's not very many Senators and there's 241 00:13:25,360 --> 00:13:28,360 Speaker 3: certainly not very many congress people at this point who 242 00:13:28,440 --> 00:13:32,160 Speaker 3: feel they're really vulnerable and they're not enough to make 243 00:13:32,200 --> 00:13:36,040 Speaker 3: the difference. It's a slow burn impact on policy. But Brooke, 244 00:13:37,080 --> 00:13:39,599 Speaker 3: I mean, it feels like what you're describing, and the 245 00:13:39,679 --> 00:13:43,760 Speaker 3: knock on effect for other parts of the industry could 246 00:13:43,760 --> 00:13:49,080 Speaker 3: have real economic consequences over time. If consumers are just 247 00:13:49,559 --> 00:13:54,600 Speaker 3: changing their behavior, cutting spending, not potentially not buying the 248 00:13:54,640 --> 00:13:57,640 Speaker 3: same kind of cars, what kind of ripple effects are 249 00:13:57,640 --> 00:14:00,840 Speaker 3: we likely to see and could they actually over time, 250 00:14:00,920 --> 00:14:02,400 Speaker 3: really have a big impact. 251 00:14:02,720 --> 00:14:05,360 Speaker 4: Sure. I think one thing that's important to remember is 252 00:14:05,360 --> 00:14:08,720 Speaker 4: that the manufacturing sector, you know, at least based on 253 00:14:08,960 --> 00:14:12,840 Speaker 4: the ISM's gauge of US manufacturing activity, has been contraction 254 00:14:13,040 --> 00:14:15,920 Speaker 4: for essentially three years, and so there's a lot of 255 00:14:15,960 --> 00:14:19,600 Speaker 4: focus on when that might change and when the manufacturing 256 00:14:19,640 --> 00:14:22,320 Speaker 4: sector might see a more sustained rebound. And there was 257 00:14:22,360 --> 00:14:24,520 Speaker 4: a lot of optimism heading into the beginning of this 258 00:14:24,640 --> 00:14:26,640 Speaker 4: year that was going to happen in twenty twenty five, 259 00:14:26,680 --> 00:14:31,640 Speaker 4: and then, of course we got instead very sweeping, broad 260 00:14:31,840 --> 00:14:34,560 Speaker 4: tariffs from the Trump administration that have really caused a 261 00:14:34,680 --> 00:14:37,800 Speaker 4: pause and a paralysis really in decision making in the 262 00:14:37,840 --> 00:14:42,320 Speaker 4: manufacturing sector. That's really pushed out that recovery. But even 263 00:14:42,360 --> 00:14:46,000 Speaker 4: with the optimism, you know that that recovery might finally 264 00:14:46,080 --> 00:14:48,880 Speaker 4: end up taking place in twenty twenty six. I think 265 00:14:49,440 --> 00:14:52,840 Speaker 4: the extent of its robustness is really going to hinge 266 00:14:52,840 --> 00:14:55,280 Speaker 4: on what you see from the consumer. There's been so 267 00:14:55,400 --> 00:14:58,400 Speaker 4: much talk, particularly in the post pandemic period, about whether 268 00:14:58,440 --> 00:15:01,760 Speaker 4: you could have a decoupling of the manufacturing economy from 269 00:15:02,000 --> 00:15:05,200 Speaker 4: the broader economy and from the consumer, and despite a 270 00:15:05,200 --> 00:15:08,560 Speaker 4: lot of prognostications about that, has not actually happened. And 271 00:15:08,600 --> 00:15:12,400 Speaker 4: it's very difficult for the manufacturing economy to decouple just 272 00:15:12,480 --> 00:15:15,760 Speaker 4: considering how much of GDP is driven by that consumer. 273 00:15:16,160 --> 00:15:19,080 Speaker 4: And so when you see that, you know, retrenchment, consumers 274 00:15:19,120 --> 00:15:21,400 Speaker 4: making trade offs, cutting back on things. You know, we've 275 00:15:21,440 --> 00:15:24,720 Speaker 4: also gotten some really notable warnings on the housing market, 276 00:15:24,720 --> 00:15:26,520 Speaker 4: and just like the past couple of days from home 277 00:15:26,560 --> 00:15:30,600 Speaker 4: depot from Carrier Global, which makes air conditioners and heating systems, 278 00:15:30,840 --> 00:15:33,200 Speaker 4: and it all sort of adds up to picture of 279 00:15:33,240 --> 00:15:36,520 Speaker 4: continued anxiety at least, and I think till you start 280 00:15:36,600 --> 00:15:39,520 Speaker 4: to see that dissipate, it's going to be harder to 281 00:15:39,560 --> 00:15:42,960 Speaker 4: see the manufacturing sector really break out and have a 282 00:15:42,960 --> 00:15:46,720 Speaker 4: more meaningful recovery. Tangential to that, you've seen companies make 283 00:15:46,760 --> 00:15:49,240 Speaker 4: investments here and there, but even during sort of the 284 00:15:49,640 --> 00:15:52,600 Speaker 4: building boon days of the Biden era, that really didn't 285 00:15:52,640 --> 00:15:55,800 Speaker 4: filter down to manufacturing earnings, and we're still not really 286 00:15:55,840 --> 00:15:56,320 Speaker 4: seeing that. 287 00:15:56,520 --> 00:15:58,280 Speaker 3: It's a good point that you can have that sort 288 00:15:58,280 --> 00:16:01,520 Speaker 3: of a slow burn effect where you don't have the 289 00:16:01,600 --> 00:16:04,040 Speaker 3: dynamism at that end where even if the big picture 290 00:16:04,160 --> 00:16:06,480 Speaker 3: is going better, you know, imports are down, some of 291 00:16:06,520 --> 00:16:09,520 Speaker 3: the things that the President was focused on are actually 292 00:16:09,520 --> 00:16:14,400 Speaker 3: moving in the right direction, despite the critics of his policies. Actually, 293 00:16:14,440 --> 00:16:17,640 Speaker 3: the dynamics of the sort of micro level for manufacturers, 294 00:16:17,840 --> 00:16:20,600 Speaker 3: especially if there's these costs going up and up on 295 00:16:20,680 --> 00:16:23,600 Speaker 3: households and they're having to make tough choices, I think, yeah, 296 00:16:23,600 --> 00:16:26,200 Speaker 3: I could continue to be quite tough. I mean, Rachel, 297 00:16:26,200 --> 00:16:27,960 Speaker 3: I'll give you the last word in the sense of 298 00:16:28,400 --> 00:16:30,320 Speaker 3: it's next week that on the show, we're going to 299 00:16:30,360 --> 00:16:32,760 Speaker 3: be thinking ahead to next year. But in this area, 300 00:16:33,640 --> 00:16:35,880 Speaker 3: what's your best bet? Do you think this is something 301 00:16:35,880 --> 00:16:38,520 Speaker 3: that even though they haven't fixed it now, when people 302 00:16:38,560 --> 00:16:41,240 Speaker 3: are actually paying these premiums, when you see people fall 303 00:16:41,280 --> 00:16:46,160 Speaker 3: off their health insurance, when the broader medical sector is 304 00:16:46,200 --> 00:16:49,080 Speaker 3: really struggling, do you think there will be a solution 305 00:16:49,200 --> 00:16:52,160 Speaker 3: out of Congress? Or is that it I hate different protection. 306 00:16:53,520 --> 00:16:56,600 Speaker 1: I seem to think that it's I think that's going 307 00:16:56,680 --> 00:16:59,160 Speaker 1: to be it like once they've had months and months 308 00:16:59,160 --> 00:17:01,240 Speaker 1: to make a deal on this, that they couldn't do it, 309 00:17:01,400 --> 00:17:05,000 Speaker 1: and they've Republicans have also pursued policies and Medicaid, like 310 00:17:05,040 --> 00:17:07,920 Speaker 1: the health insurance program for low income and disabled people, 311 00:17:07,960 --> 00:17:10,439 Speaker 1: that have cut funding to that program too. This is 312 00:17:10,480 --> 00:17:15,040 Speaker 1: a it's a trend, and these cumulative policies are expected 313 00:17:15,080 --> 00:17:19,200 Speaker 1: to result in ten million more people becoming uninsured over 314 00:17:19,240 --> 00:17:22,200 Speaker 1: the next decade, according to budget analysts. So I think 315 00:17:22,840 --> 00:17:26,520 Speaker 1: it's going to be tough to reopen this and create 316 00:17:26,560 --> 00:17:30,600 Speaker 1: these subsidies out of scratch. It's much harder than continuing 317 00:17:30,680 --> 00:17:34,040 Speaker 1: existing policy that maintains the status quo. Generally, that's an 318 00:17:34,080 --> 00:17:38,600 Speaker 1: easier fight than resuscitating these when hospitals are struggling and 319 00:17:38,640 --> 00:17:39,840 Speaker 1: when patients are struggling. 320 00:17:39,960 --> 00:17:42,639 Speaker 3: I mean, we've tended to say over the years that 321 00:17:43,080 --> 00:17:46,160 Speaker 3: the state of the US, and certainly even before Obamacare 322 00:17:46,240 --> 00:17:49,040 Speaker 3: was passed, the state of the US health system was 323 00:17:49,119 --> 00:17:53,920 Speaker 3: very much a function of the strength of the insurers 324 00:17:54,040 --> 00:17:57,160 Speaker 3: and to some extent, the hospitals that they had been 325 00:17:57,200 --> 00:18:02,280 Speaker 3: able to prevent reforms that in Congress that would potentially 326 00:18:02,320 --> 00:18:05,520 Speaker 3: be beneficial for individual consumers. Not least going to single pair, 327 00:18:05,560 --> 00:18:09,120 Speaker 3: which is the extreme example, but moving towards that had 328 00:18:09,119 --> 00:18:12,600 Speaker 3: been stopped every time by this overwhelming power of that lobby. 329 00:18:13,119 --> 00:18:15,760 Speaker 3: Is there some sign here that lobby is in itself 330 00:18:16,560 --> 00:18:20,080 Speaker 3: weakening in the face of this kind of ideological resistance 331 00:18:20,119 --> 00:18:23,360 Speaker 3: of the Republicans because they obviously don't want they would 332 00:18:23,440 --> 00:18:25,840 Speaker 3: like to have this insurance these subsidies kick back in. 333 00:18:26,320 --> 00:18:29,399 Speaker 1: Certainly, I think it is a demonstration of their waning 334 00:18:29,400 --> 00:18:32,240 Speaker 1: influence for both hospitals, which you know there are a 335 00:18:32,240 --> 00:18:35,000 Speaker 1: lot of times the largest employer in a congressional district 336 00:18:35,480 --> 00:18:39,280 Speaker 1: and also insures. And the President attacked health insurance companies 337 00:18:39,320 --> 00:18:43,159 Speaker 1: repeatedly on social media in kind of the course of 338 00:18:43,200 --> 00:18:45,480 Speaker 1: this debate, but he's made it very clear that he 339 00:18:45,840 --> 00:18:48,359 Speaker 1: is not a fan of insurance, thinks they're too profitable. 340 00:18:49,000 --> 00:18:52,240 Speaker 1: And with hospitals, they just weren't able to swing their 341 00:18:52,560 --> 00:18:54,879 Speaker 1: swing their members in the way that they used to 342 00:18:55,040 --> 00:18:58,280 Speaker 1: because you know, Republicans are scared to stand up to 343 00:18:58,280 --> 00:19:00,000 Speaker 1: Trump and they didn't want to be the people who 344 00:19:00,000 --> 00:19:02,760 Speaker 1: who stood in the way of his big signature domestic 345 00:19:03,200 --> 00:19:06,040 Speaker 1: policy and tax bill, like that's a big ask of people, 346 00:19:06,520 --> 00:19:08,680 Speaker 1: and in the past they were able to find champions 347 00:19:08,680 --> 00:19:11,120 Speaker 1: who would do that for them, and in the second 348 00:19:11,160 --> 00:19:13,280 Speaker 1: Trump administration they haven't been able to do it. I 349 00:19:13,280 --> 00:19:15,240 Speaker 1: think it shocked a lot of people here in Washington 350 00:19:15,359 --> 00:19:17,240 Speaker 1: how little they have been able to do to avert 351 00:19:17,280 --> 00:19:17,800 Speaker 1: these cuts. 352 00:19:18,280 --> 00:19:22,200 Speaker 3: Well, I think we're leaving President Trump with something interesting 353 00:19:22,359 --> 00:19:26,439 Speaker 3: to think about. The insurance this very boring micro topic. 354 00:19:27,080 --> 00:19:29,320 Speaker 3: If brooks rise, it could be one of the reasons 355 00:19:29,320 --> 00:19:33,800 Speaker 3: why we don't start manufacturing again in the US despite 356 00:19:33,840 --> 00:19:36,520 Speaker 3: his efforts, and it also might be why he continues 357 00:19:36,560 --> 00:19:40,560 Speaker 3: to not get credit for a great economy. Rachel, thank 358 00:19:40,560 --> 00:19:55,240 Speaker 3: you very much thanks for listening to trump Andonomics from Bloomberg. 359 00:19:55,320 --> 00:19:57,520 Speaker 3: It was hosted by me, Stephanie Flanders and I was 360 00:19:57,560 --> 00:20:01,840 Speaker 3: joined by brook Sutherland and Rachel Caused. Trumpanomics was produced 361 00:20:01,840 --> 00:20:04,960 Speaker 3: by Samasadi and Moses and Dam with help from Amy 362 00:20:05,080 --> 00:20:09,680 Speaker 3: Keene and special thanks to Rachel Lewis Kriskey. Sound design 363 00:20:09,840 --> 00:20:12,800 Speaker 3: is by Blake Maples and Kelly Gary and Sage Bowman 364 00:20:13,080 --> 00:20:16,119 Speaker 3: is Bloomberg's head of podcasts and please to help others 365 00:20:16,200 --> 00:20:20,000 Speaker 3: find and enjoy Trumpnomics, please rate and review it highly 366 00:20:20,160 --> 00:20:21,000 Speaker 3: wherever you listen.