Trump’s Muddled Class Warfare

Among the various roles played by Donald Trump during his State of the Union address was that of class warrior. He described a divide between “wealthy politicians and donors” living in gated communities while supposedly pushing for open borders and “working class Americans” who are “left to pay the price for illegal immigration—reduced jobs, lower wages, overburdened schools, hospitals that are so crowded you can’t get in, increased crime, and a depleted social safety net.”

Trump’s efforts to stir up worker resentment focus almost exclusively on situations in which foreigners can be depicted as the real culprits. He has no difficulty demonizing undocumented immigrants or the Chinese government, yet he rarely has any critical words for the traditional targets of populist anger: the super-wealthy and powerful corporations. On the contrary, those interests have enjoyed a privileged place during the Trump era, receiving lavish benefits in the form of tax breaks and regulatory rollbacks.

The latest example of the latter came less than 24 hours after Trump concluded his remarks in the House chamber. His Consumer Financial Protection Bureau announced plans to gut restrictions on payday lenders that were developed during the Obama Administration and were scheduled to take effect later this year.

The new rules were designed to put the responsibility on lenders to make sure their customers could afford the loans they were being offered. This was seen as a necessary safeguard in an industry notorious for charging astronomical interest rates to vulnerable customers who frequently ended up with massive debts after rolling over a series of short-term loans.

Prior to being neutered by the Trump Administration, the CFPB conducted a series of enforcement actions against payday lenders for egregious practices. For example, in 2014 the bureau brought a $10 million action against ACE Cash Express, alleging that the company “used illegal debt collection tactics – including harassment and false threats of lawsuits or criminal prosecution – to pressure overdue borrowers into taking out additional loans they could not afford.”

Payday lending has effectively been outlawed in about 20 states, but the Obama-era rules would have made a big difference in the rest of the country where the disreputable business is still allowed to function with annual interest rates of 300 percent or more. It will come as no surprise that many of the latter states are ones in which Trump enjoys high levels of popularity.

I can’t help but wonder what working class Trump supporters will think of this policy. Coal miners cannot be completely faulted for believing that Trump’s moves to dismantle power-plant emission controls may help them get work, but will struggling low-income families be cheered to learn that the administration is making it easier for payday lenders to exploit them rather than following the lead of the states that put a lid on usury?

Or, to put it more broadly, how long will Trump be able to pretend to be a working-class populist while pursuing the worst kind of plutocratic policies?

Backlash of the Billionaires

Most of those who have thrown their hat in the ring for the 2020 presidential race have been met with varying mixtures of enthusiasm and indifference. Howard Schultz is another story. The former Starbucks CEO has engendered a wave of hostility based on concern that his plan to run as an independent would split the anti-Trump vote and usher in another term for the current occupant of the White House.

Schultz is making himself even more unpopular by unleashing a string of attacks on some of the key policy proposals being discussed by progressive Democrats, denouncing Medicare for All and taxes on the wealthy as un-American and ill-informed.

This could simply be an appeal to what remains of the right flank of the Democrats, but it also seems to be part of an emerging backlash among the super-wealthy and corporate elites to a progressive agenda that would affect them directly. Schultz is not the only billionaire complaining at the prospect of having to pay more to Uncle Sam. Michael Bloomberg, another potential presidential contender, has been mouthing off against Sen. Elizabeth Warren’s wealth tax idea and defending U.S.-style capitalism.

We may soon see large corporations speaking out as well. Foxconn did not explicitly link its decision to abandon plans to create 13,000 manufacturing jobs in Wisconsin to the election of progressive Tony Evers as governor, but Republican leaders in the state legislature are making the connection.

Big business has had the best of both worlds during the past two years. While a few corporations such as Foxconn have directly aligned themselves with Trump, most large companies have dissociated themselves from the president’s odious positions on immigration and nationalism. Some business figures such as Larry Fink of BlackRock have been promoting the idea that they are the true paradigms of civic virtue.

At the same time, these executives and their corporations have been making out like bandits from the tax breaks and regulatory rollbacks—including those eroding worker protections–promoted by the faux-populist Trump Administration and its Republican allies in Congress.

The time may soon be coming when large corporations and billionaires have to choose between pretending they are part of the resistance and giving up some of their economic privileges. Or maybe they will lose both.

After all, the idea that large corporations are a force for good is already a dubious notion. Take the case of Starbucks, which has cultivated an image of being a progressive employer but has had to pay more than $46 million to resolve collective-action lawsuits alleging wage and hour violations.

The big question is whether big business and the super wealthy will accept that they have to give back some of their advantages. We know that the likes of the Koch brothers and Sheldon Adelson will fight to their last breath. The Foxconn disinvestment decision could be a harbinger of a coming capital strike in some quarters.  

Yet it will be more interesting to see how far purported liberals like Schultz and Bloomberg are willing to go in resisting progressive reforms, and whether they will be joined by the corporate social responsibility crowd.  In the words of the old union song, they will have to decide which side they are on.

Mistreating Customers and Workers

For a long time, the corporation that stood out as America’s worst employer was Walmart, given its reputation for shortchanging workers on pay, engaging in discriminatory practices and ruthlessly fighting union organizing drives. Today, Amazon.com seems to be trying to take over that title, at least for its blue-collar workforce.

Yet when we look at the corporations that have been paying the most penalties for workplace abuses, there is another contender for the top, or really the bottom, spot among U.S. employers: Bank of America. In Big Business Bias, a report just published by the Corporate Research Project of Good Jobs First, we found that BofA has paid more in damages, settlements and fines in workplace discrimination and harassment cases than any other large for-profit corporation.

In Grand Theft Paycheck, a report we published last year on wage theft, BofA ranked third (after Walmart and FedEx) in total penalties paid in private wage and hour lawsuits and cases brought by the U.S. Labor Department.

BofA’s position in these tallies is to a significant extent the result of cases brought against its subsidiary Merrill Lynch, which the federal government pressured it to acquire during the financial meltdown in 2008. Merrill accounts for 95 percent of the $210 million in penalties BofA has paid in discrimination cases and more than one-quarter of the $381 million paid in wage theft cases.

Merrill brought with it problems beyond questionable personnel practices. In 1998 it had to pay $400 million to settle charges that it helped push Orange County, California into bankruptcy with reckless investment advice. In 2002 it agreed to pay $100 million to settle charges that its analysts skewed their advice to promote the firm’s investment banking business (plus another $100 million the following year). In 2003 it paid $80 million to settle allegations relating to dealings with Enron.

This track record was similar to that of BofA before the merger. For example, in 1998 the bank paid $187 million to settle allegations that in its role as bond trustee for the California state government it misappropriated funds, overcharged for services and destroyed evidence of its misdeeds. BofA later paid to settle lawsuits concerning its dealings with Enron ($69 million) and another corporate criminal, WorldCom ($460 million).

In the wake of the financial crisis, BofA had to enter into several multi-billion-dollar settlements concerning the sale of toxic securities and various mortgage abuses. It is for all these reasons that BofA tops the Violation Tracker ranking of the most penalized parent companies, with payouts of more than $58 billion.

BofA is not unique in this respect. Another major bank is also one of the ten most penalized corporations overall as well as high on the lists of those with the most penalties related to workplace discrimination and wage theft. That bank is Wells Fargo, which ranks sixth on the Violation Tracker list with over $14 billion in penalties, ninth in the discrimination tally with $68 million and fourth in the wage theft tally with $205 million.

Wells Fargo, of course, is notorious for creating millions of bogus accounts to generate illicit fees and other deceptive practices. Last year, the Federal Reserve took the unprecedented step of barring the bank from growing any larger until it cleaned up its act. The agency also announced that the bank had been pressured to replace four members of its board of directors.

Bank of America and Wells Fargo demonstrate all too clearly that mistreatment of customers can go hand-in-hand with mistreatment of workers.

Big Business Bias

The immediate culprits in many workplace discrimination and harassment cases are individual managers or co-workers, but in many situations the worst villain is the employer that fails to stop the abuse or engages in its own unfair practices.

The Corporate Research Project of Good Jobs First has just published a report called Big Business Bias showing for the first time which large corporations have paid the most to plaintiffs in discrimination or harassment cases based on race, gender, religion, national origin, age or disability.

As in many other things, the big banks turn out to be leading offenders. Bank of America (including its subsidiary Merrill Lynch) has paid a total of $210 million since 2000, more than any other large company. Morgan Stanley ranks fourth at $150 million and Wells Fargo ranks ninth at $68 million. The financial services industry overall has paid a total of $530 million in penalties. The retail sector has paid the same amount, so the two industries have the dubious distinction of being tied for first place.

The report, based on data collected for an expansion of the Violation Tracker database, covers private lawsuits (both class action and individual) brought in federal or state court as well as cases brought with the involvement of the Equal Employment Opportunity Commission (EEOC) and the U.S. Labor Department’s Office of Federal Contract Compliance Programs (OFCCP). It focuses on cases brought against corporations (and their subsidiaries) included in the Fortune 1000, the Fortune Global 500 and Forbes’ list of America’s Largest Private Companies.

We found that virtually every large company has paid damages or reached an out-of-court settlement in at least one discrimination or harassment lawsuit, but in the vast majority of cases the terms of the settlements were kept confidential. Our report is based on the subset of those cases with disclosed settlements as well as those with public court verdicts and EEOC or OFCCP penalties.

The report finds that since the beginning of 2000, large corporations are known to have paid $2.7 billion in penalties, including $2 billion in 234 private lawsuits, $588 million in 329 EEOC actions and $81 million in 117 OFCCP cases.

Following Bank of America in the ranking of most-penalized large companies are Coca-Cola ($200 million) and Novartis ($183 million). The corporation with the largest number of cases with disclosed penalties is Walmart, at 27. Its penalty total of $52 million would have been much higher if the U.S. Supreme Court had not ruled 5-4 in 2011 to dismiss a nationwide gender discrimination class action against the company.

Following banks and retailers, the industries with the most disclosed penalties are food/beverage products ($252 million), pharmaceuticals ($209 million) and freight/logistics ($187 million).

Race and gender cases (mainly relating to hiring, promotion and pay) account for the largest shares of discrimination penalties, with each category totaling just over $1 billion. Age discrimination cases rank third with over $240 million in penalties, followed by disability cases at $155 million and sexual harassment cases at $123 million.

Employees at all levels of the occupational hierarchy have filed discrimination lawsuits against large corporations. The report documents lawsuits whose plaintiffs range from executives, managers and professionals to blue-collar and service workers. However, it finds that managers are more likely to bring age discrimination cases while racial bias and sexual harassment suits more often are filed by blue-collar and service workers.

In addition to supporting the call by the #MeToo movement to end non-disclosure agreements and mandatory arbitration, the report endorses reforms that would require publicly-traded companies and large federal contractors to disclose how much they pay out each year in aggregate damages and settlements in discrimination and harassment cases.

Note: details on all the cases analyzed in the report can be found in Violation Tracker.

Oligopolies and Regulatory Compliance

There is growing awareness of the dangers posed by Amazon’s ever-increasing market clout, but the concentration of economic power is not limited to that online retailer. More and more U.S. industries have become oligopolies, and in some sectors the top two companies now have a market share in excess of 50 percent.

This concentration is made clear to me each time I revise the parent-subsidiary data in Violation Tracker. In the just-completed quarterly update, which will be posted next week, I had to make adjustments to reflect about three dozen instances in which one of the companies in our universe of some 3,000 parent companies completed the acquisition of another.

Among these deals: the purchase of Aetna by CVS Health, the acquisition of Express Scripts by Cigna, and the purchase of industrial gas giant Praxair by its competitor Linde.

But the one that stood out to me was the acquisition of oil refiner Andeavor by Marathon Petroleum. Andeavor is the name adopted last year by Tesoro, one of the largest petroleum refiners in the country. Over the last two decades it has bought refineries from large corporations such as Shell and BP, and in 2016 it purchased all of Western Refining.

Marathon Petroleum, which was spun off from Marathon Oil in 2011, has grown through previous deals such as the takeover of the infamous BP refinery in Texas City, Texas, the site of a 2005 explosion in which 15 workers were killed.

The marriage of Marathon and Andeavor will create the largest oil refiner in the United States, but at the same time it will join together two companies with very checkered environmental, safety and labor records.

Marathon’s operations, including those previously owned by BP in Texas City, have amassed more than $920 million in penalties, according to Violation Tracker. This total includes a $334 million settlement with the EPA and the Justice Department covering air pollution at refineries in five states, along with two dozen OSHA penalties.

Andeavor has accumulated $467 million in penalties, most of which comes from a single giant settlement with the EPA in 2016. It also has had about two dozen significant OSHA fines.

The combined company’s page in the updated Violation Tracker, which will include other new data, will show a total of nearly $1.4 billion in penalties. This will put Marathon in the dubious club of only a few dozen mega-corporations that have racked up ten-figure totals in Violation Tracker. It will put the company higher on that list than the long-time environmental miscreant Exxon Mobil.

Aside from the economic consequences, growing concentration may also be weakening regulatory compliance. As industries become increasingly dominated by large corporations with a history of breaking the rules, it is likely that those violations will become even more common. That’s another reason to get tough on oligopolies.

Dealing Boldly with Big Pharma

Three days after Donald Trump took office in 2017, the Pharmaceutical Research and Manufacturers of America trade association launched a multimillion campaign to bolster its image in the face of criticism from across the political spectrum of exorbitant drug price hikes. Under the banner of Go Boldly, PhRMA sought to persuade lawmakers and the public that biopharmaceutical producers were doing great things to improve our quality of life and were not just price-gouging crooks.

Two years later, the campaign is still in operation, apparently because the public has not been won over. That’s not surprising, given that Big Pharma is still behaving badly. Relieved that the Trump Administration’s drug cost initiative turned out to be toothless, major drug makers are implementing new rounds of price increases.

Promoting the idea that the industry is preoccupied with innovation is also being made more difficult by the announcement that Bristol-Myers Squibb is seeking to spend $74 billion to acquire rival Celgene. The deal would unite two companies that each have been struggling with their cancer treatments.

Bristol’s Opdivo drug has been losing ground to Merck’s Keytruda while Celgene has been experiencing setbacks in clinical trials and is facing a patent expiration in 2022 for its major product Revlimid. A marriage of the two companies would serve mainly as an excuse to eliminate jobs and raise prices, while doing little that would benefit patients.

The merger would also bring together two companies that have checkered legal and regulatory track records. According to Violation Tracker, Bristol has racked up nearly $1 billion in fines and settlements for a wide range of offenses. These include a $515 million settlement with the Justice Department of allegations relating to drug marketing and pricing; a $150 million settlement with the SEC concerning accounting fraud; a $14 million settlement of Foreign Corrupt Practices Act allegations; and a $3.6 million settlement of Clean Air Act violations.

It has also faced criminal charges, including one case in which it paid $300 million and got a deferred prosecution agreement to resolve allegations of accounting manipulation and another in which it pled guilty to lying to the federal government during an investigation of a secret agreement to thwart a generic competitor to its blood thinner Plavix.

For its part, Celgene paid $280 million in 2017 to resolve allegations that it promoted two cancer drugs for uses not approved by the Food and Drug Administration.

The prospect of one ethically challenged and market weakened drug company paying $74 billion to acquire another is emblematic of what is wrong with the U.S. pharmaceutical industry. It provides additional justification for aggressive reforms such as the bill introduced by Bernie Sanders and Ro Khanna that would allow the federal government to authorize generic alternatives to overpriced drug or the proposal by Elizabeth Warren and Jan Schakowsky that the federal government itself produce generic alternatives under certain circumstances.

If we want to Go Boldly, let’s do it with alternatives that empower patients not drugmakers.

The 2018 Corporate Rap Sheet

The Trump Administration has been taking steps to weaken its enforcement activities against corporate criminals and regulatory violators, but diligent prosecutors and career agency administrators are still trying to do their job. Over the course of 2018 there has been a steady stream of announcements of substantial penalties imposed on major corporations for a wide range of offenses. The following is a selection of significant cases resolved during the year:

Sale of Toxic Securities: In cases left over from the financial crisis of the 2000s, three major banks agreed to pay ten-figure settlements to the Justice Department to resolve allegations of misleading investors in residential mortgage-backed securities: $2 billion by Barclays, $2.1 billion by Wells Fargo and $4.9 billion by The Royal Bank of Scotland.

Interest Rate Benchmark Manipulation: The French bank Societe Generale agreed to pay $475 million to settle allegations by the Commodity Futures Trading Commission that it manipulated or attempted to manipulate LIBOR and other interest rate benchmarks.

Foreign Exchange Market Manipulation: The French bank BNP Paribas pleaded guilty to participating in a price-fixing scheme in the foreign exchange market and paid the U.S. Justice Department a criminal fine of $90 million.

Anti-Money Laundering Deficiencies: U.S. Bancorp agreed to a $453 million civil forfeiture to resolve a case brought by the U.S. Attorney for the Southern District of New York alleging that it violated the Bank Secrecy Act by failing to file required suspicious activity reports.

Foreign Corrupt Practices Act: The Securities and Exchange Commission required Panasonic Corporation to pay $143 million to resolve allegations of making improper payments and committing accounting fraud in connection with its global avionics business. It paid an additional $137.4 million to settle related criminal charges brought by the Justice Department.

Consumer Financial Protection Violation: Wells Fargo agreed to pay a total of $1 billion to the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency in connection with abuses relating to a mandatory insurance program tied to auto loans, mortgage interest-rate-lock extensions and other practices.

Product Safety Violation: Polaris Industries agreed to pay a $27.25 million civil penalty to settle Consumer Product Safety Commission allegations that it failed to immediately report to the agency that some of its recreational off-road vehicles contained defects that could create a substantial product hazard or that they created an unreasonable risk of serious injury or death.

Controlled Substances Act Violations: Rite Aid agreed to pay $4 million and CVS agreed to pay a total of $2.5 million in two cases, all to resolve allegations of improper distribution of controlled substances.

Sexual Harassment: Poultry processor Koch Foods agreed to pay $3.75 million to settle allegations made by the Equal Employment Opportunity Commission involving sexual harassment, national origin and race discrimination and retaliation at a plant in Mississippi.

Clean Air Act Violations: The Justice Department, the Environmental Protection Agency and the Louisiana Department of Environmental Quality announced that Shell Chemical would pay penalties of $350,000 and spend $10 million to install pollution control equipment to reduce harmful emissions at its plant in Norco, Louisiana.

False Claims Act Violations: Toyobo Co. of Japan and its American subsidiary agreed to pay $66 million to resolve claims under the False Claims Act that they sold defective Zylon fiber used in bulletproof vests that the United States purchased for federal, state, local, and tribal law enforcement agencies.

Bid-Rigging: South Korea-based companies SK Energy, GS Caltex, and Hanjin Transportation agreed to plead guilty to criminal charges and pay a total of approximately $82 million in criminal fines for their involvement in a decade-long bid-rigging conspiracy that targeted contracts to supply fuel to United States Army, Navy, Marine Corps, and Air Force bases in South Korea

Investor Protection Violations: AEGON USA Investment Management and three other Transamerica affiliates agreed to pay $97 million to the Securities and Exchange Commission to resolve allegations that they misled investors through the use of faulty financial models.

Hiring of Undocumented Workers: Waste Management Texas agreed to forfeit $5.5 million and entered into a non-prosecution agreement with the U.S. Attorney’s Office for the Southern District of Texas to resolve allegations that it hired numerous undocumented workers at its Houston operation.

Tax Evasion: The Swiss bank Zurcher Kantonalbank agreed to pay $98.5 million and entered into a deferred prosecution agreement to resolve charges that it conspired to help U.S. taxpayer-clients file false federal tax returns and hide hundreds of millions of dollars in offshore bank accounts.

Data Breach: Uber agreed to pay $148 million to settle allegations that emerged from a nationwide investigation of a 2016 incident in which a hacker gained access to personal information on 57 million riders and drivers.

Note: Additional details on most of these cases can be found in Violation Tracker, which now contains 327,000 entries with total penalties of $440 billion, or in the next update of the database, scheduled to appear in mid-January.

Abandoning Human Rights to Benefit Crooked Corporations

According to the grievance-based worldview of Donald Trump, the United States is constantly being cheated. He purports to be addressing this through his trade policies and his attitudes toward international organizations such as NATO. Yet he seems to be a lot less concerned about another kind of cheating: the ongoing fraud committed against the federal government by military contractors.

This is an old story yet it takes on new relevance amid the current controversies over the murder of U.S.-based journalist Jamal Khashoggi by the Saudi government and ongoing American support for the brutal Saudi military intervention in Yemen. Trump’s main justification for refusing to take stronger action against the kingdom is his claim that it would jeopardize potential U.S. arms sales to the Saudis, the value of which Trump wildly inflates.

Trump usually frames this in terms of jobs, but it is actually more a matter of revenue and profits for major weapons producers such as Lockheed Martin and Raytheon. It comes down to this: Trump is undermining the moral stature of the United States and giving a green light to despots who want to eradicate dissidents, all in the name of pumping up the cash flow of a handful of corporations.

Although he fancies himself a master dealmaker, it is unclear what Trump is receiving in return from these companies. In the past, Trump has made noise about the cost of some Lockheed and Boeing contracts but there was little follow-up. The big weapons producers are not now among the president’s favorite tweet targets.

There is every reason to believe that the big contractors are continuing their long-standing practices of charging excessive amounts for their weapons and then cheating on the terms of the contracts. Sometimes they get caught doing the latter and are made to pay penalties they can easily afford.

To take a recent example: in early November the Justice Department announced that Northrop Grumman had agreed to pay $27.45 million to resolve allegations that it overstated the number of hours its employees had worked on two battlefield communications contracts with the Air Force. This matter, like most of the cases brought against military contractors, was handled primarily under the False Claims Act, which allows for a civil settlement and monetary penalties but no criminal liability.

The Northrop case was unusual in that there was a parallel criminal investigation of one of the contracts, but the Justice Department reached an agreement with the company under which it forfeited an additional $4.2 million and no criminal charges were filed.

This was just the latest in a series of False Claims Act cases in which Northrop has paid out in excess of half a billion dollars in penalties for various contract frauds. It is far from unique in this regard. For example, as shown in Violation Tracker, Boeing has paid out $744 million in penalties in eight False Claims Act cases since 2000 and Lockheed has paid $125 million in 13 cases.

It is bad enough that President Trump is abandoning U.S. support for human rights; it is even worse that he is doing so to benefit a group of corporations that regularly cheat the government he heads.

Is There Still A Corporate Ulterior Motive Behind Criminal Justice Reform?

Is it just a coincidence that Donald Trump has decided to embrace criminal justice reform just at the time he is more likely to become a defendant himself? He’s not the only party that may have mixed motives in supporting the legislation that is being hyped as an outstanding expression of bipartisanship.

One of the prime movers behind the initiative has been Koch Industries, whose owners Charles and David Koch are the epitome of partisanship. Their role on this issue was initially puzzling, given that the Kochs were not known for supporting anything that was remotely progressive.

Three years ago, the full story began to emerge.  The New York Times reported that one part of the reform being pushed by the Kochs and other business interests would require prosecutors to meet a more stringent standard in proving illicit intent, or “mens rea.” The Times stated that the Obama Justice Department was concerned that the change “would make it significantly harder to prosecute corporate polluters, producers of tainted food and other white-collar criminals.” PR Watch provided more detail on what the Kochs were up to.

In other words, what was made to look like a high-minded civic effort was also, at least in part, a move by corporations to shield themselves from prosecution. In the case of Koch Industries, the issue is far from a theoretical one. In Violation Tracker we document 275 cases in which the company has paid a total of $736 million for environmental, safety, employment and other offenses. One of these was a criminal case: In 2001 one of its subsidiaries pled guilty and paid $20 million to resolve allegations that it covered up Clean Air Act violations at an oil refinery in Corpus Christi, Texas.

Mens rea “reform” is not part of the current criminal justice package, but the issue is far from dead. Arkansas Sen. Tom Cotton just published an op-ed in USA Today calling for it to be added to the bill. Since Cotton’s support may be essential to passage, he may get his wish – and presumably the Kochs would be happy with that outcome.

Cotton is not the only one who has been beating this drum. Utah Sen. Orrin Hatch and Iowa Sen. Chuck Grassley have introduced mens rea legislation that would apply not only to criminal actions but also to “regulatory offenses.”

During the confirmation hearings on Brett Kavanaugh, Sen. Hatch brought up the issue of mens rea. He and the nominee both spoke enthusiastically on the need for “reform.” Here, as in much of the conservative discussion of the matter, proponents like to give the impression their concern is primarily with the rights of bank robbers and the like.

Yet it seems clear that the real intended beneficiaries are corporations and their executives supposedly being victimized by unjust regulations.

The issues surrounding criminal justice reform are complicated, but one thing is clear: it should not be used as a means of undermining the prosecution of corporate crime and misconduct.

Have Voters Killed the Crappy Coverage Comeback?

Democrats seized the House while Republicans increased their majority in the Senate, but the unambiguous and across-the-board winner in the election was regulation – specifically, regulation of the health insurance industry.

Rarely has the public sent such a clear message that it wanted government to rein in corporations and market forces in favor of consumer and public interest protections. The desire to retain provisions of the Affordable Care Act protecting those with pre-existing conditions was key to Democratic gains. Republicans responded by pretending they agreed with that principle, but few were fooled by this deception.

At the same time, voters in three deep red states – Idaho, Nebraska and Utah – approved ballot initiatives in favor of ACA Medicaid expansion. This amounted to an embrace not just of regulation but of out-and-out government-controlled health coverage.

All these results should put an end to the longstanding Republican crusade to repeal the ACA, but it remains to be seen whether there is also a termination of the Trump Administration’s effort to undermine the law through steps such as allowing wider sale of substandard policies.

One encouraging sign came even before the votes were counted. On November 2 a federal judge in Miami, acting at the request of the Federal Trade Commission, issued an order temporarily shutting down a Florida company called Simple Health Plans LLC, which along with related firms was selling policies the FTC called “predatory” and “worthless.”

The FTC complaint against the companies spells out a variety of deceptive practices meant to make customers think they were buying real coverage when in fact they were getting medical discount memberships of limited value.

It’s telling that one of the websites used by the firms is called Trumpcarequotes.com. Trumpcare is actually an appropriate term for the crappy coverage—both because Trump has been touting such plans and because the Trump name has been involved in previous scams such as Trump University. Let’s not forget that after his election Trump had to pay $25 million to settle litigation related to that venture, a step that the New York State Attorney General called “a major victory for the over 6,000 victims of his fraudulent university.”

The ACA’s provisions relating to protection for pre-existing conditions are inseparable from those setting minimum standards for coverage. Ensuring the right of patients to buy insurance is meaningless if they end up with plans that pay for next to nothing.

The proliferation of junk insurance through the efforts of companies such as Aetna was one of the dismal realities of the U.S. health insurance market that gave rise to the ACA. Republicans have been promoting similar low-cost plans as their solution to the supposed crisis of Obamacare. This is a cynical ploy to use a perverse form of consumerism to restore the old days of limited regulation. Let’s hope the election results have taught them a lesson about the consequences of messing with healthcare.