The Outsider Perspective, Issue 12

Welcome to the 12th issue of The Outsider Perspective, brought to you by The Beltway Outsiders.

For those new this week, previous issues are up on the website. If you received this as a forward, please sign up here and welcome aboard!

The 2016 US Presidential election continues to lurch forward 

We’re 80 days away from the November Election. The stakes get higher each day for each gaffe or unforced error. We’re in the dog days of August, just prior to the September debate and the first early voting. And yes, you heard that correctly. Early voting begins in September for some states. I’m covering a lot of ground today: The latest on the polling arguments being put out by Trump surrogates, Evan McMullin campaign update, the shake up in the Trump campaign, Obama paying Iran ransom money, the US-Russia proxy war, and the slow death of Obamacare. Links follow the analysis.

Trump vs Clinton: Clinton is advancing. Trump has until Labor Day to turn things around.

Last week, I covered how the polls are not skewed and how “shy Trump” supporters couldn’t explain what we’re witnessing in the polls. Trump and his surrogates continue to advance the polls are wrong myth. Notably, Eric Bolling of FoxNews and a Trump surrogate on CNN embarrassed themselves trying to say Trump is not losing the race. It takes a special kind of arrogance and pride to boldly proclaim everything around you is a lie. Particularly when the claim is every poll is biased and wrong.

Here’s the reality: If you don’t believe the polls, look at the money. Clinton is moving resources out of battleground states and into red states. Clinton is fundraising and campaigning in states like Idaho, Utah, Georgia, Arizona, and South Carolina. These are incredibly red states where her internal polls are clearly saying it is worth her time to pursue. Her internal polling is also providing her campaign with the confidence that they can move out of “battleground” states into red states. Clinton is a careful, methodical, slow campaigner. Her internal polls will not be biased. She would not move resources like this unless her inner circle was assured that they could do so without harm to the campaign. People like Sean Hannity are blaming #NeverTrump conservatives for not supporting Trump sufficiently enough for him being behind. This is patently absurd. There is NO data that says conservatives are costing Trump the race. Trump is losing moderates and independents:

Between June and August, Republican support for Trump increased, going from 74% to 82%, while Trump’s overall support fell. And the share of GOP backers who said they strongly supported Trump went from 53% to 59%.

Trump’s decline in support came almost entirely from a drop among independents, which went from 41% in June to 36% in August. Among this group, the share who say they strongly support Trump dropped from 40% to 30%.

Trump is losing multiple demographics the Republicans have carried for decades. College educated voters are abandoning Trump in droves. Trump loses every minority group. He loses with women. He loses with college educated. He’s even in trouble with his lone bright point: non-college educated white males. Clinton is gaining on Trump in that demographic. In other words: Trump is behind in ever conceivable metric. Pretending everything is ok like his media surrogates are doing is purposeful deception. Trump’s problems are of his own making and he’s making Clinton’s campaign look better than it is.

Rallies and social media followers are not empirical measures of success. Obama had huge rallies in Pennsylvania in 2008. Clinton crushed him there in the primaries by 10 points. Romney had large rallies towards the end of his campaign in Pennsylvania. He lost big to Obama. If you’re pinning your hope on rallies, you’re not pinning your hope on evidence.

Trump is the Emperor without clothes. His loyal subjects continue to proclaim what a beautiful campaign he is running. There are no clothes and the campaign is flaming dumpster fire. The WSJ says Trump has until Labor Day to turn his campaign around. I agree. If Trump does not turn his campaign around by then, the GOP will be forced to save the Senate and House majorities. Trump supporters were warned this day would come for over a year. They didn’t listen. And now the GOP is faced with dire circumstances.

Evan McMullin’s independent bid for President continues to gain steam 

I wrote about McMullin’s campaign last week and how I believed he was conservativism’s last shot at providing the country with principled leadership. It’s a long shot. But at the rate Trump’s campaign is imploding, his shot isn’t as terrible as a normal year.

Last week when I wrote, McMullin had just gotten on the ballot in Colorado. They’ve since added Iowa, Minnesota, and Utah to the list of states they’ll be on the ballot. The plan is to either gather enough signatures before each state’s deadline OR receive the nomination of an independent party in a state. In Minnesota he was nominated by a 3rd party to be their nominee. This allows him to work through independent parties in a state instead of going in cold. So far the plan is working. His campaign has reported a growing number of donors and volunteers. Aside from ballots, his goal is also to get on the debate stage with Trump and Clinton. There is a possibility Libertarian candidate Gary Johnson could also be on the debate stage. In order to make the debate, a person needs to poll at 15% nationally. We won’t see anything positive on that front for a while because pollsters are only just now getting his name in their polling samples.

Some people are suggesting that in the event neither Clinton or Trump gains 270 electoral votes, that the vote would then flip to the House. While certainly a possibility, that is the longest shot of all in my opinion. Democrats generally start off with a 242 electoral vote advantage with states like NY, CA, and the Northeast built into their constituencies.

McMullin has to make it to Labor Day in great shape across at least 1/3 of the states on the ballot. He also needs either Romney or Jeb Bush to endorse him. That would push considerable resources behind his campaign. He has an incredible staff already. He needs more money to expand. Romney or Bush could do that. Labor Day would be when I would expect wheels to get into motion. I say Labor Day because I suspect Trump will not be able to prevent himself from shooting himself in the foot. If the GOP gives up on him, it will provide McMullin an opening to attack.

The Trump campaign shakeup 

Trump demoted his current campaign manager Paul Manafort and replaced him with two people: Breitbert.com CEO Steve Ballon and pollster Kellyanne Conway. Trump’s statement on the event:

“You know, I am who I am,” Trump told a Wisconsin television station Tuesday. “It’s me. I don’t want to change. Everyone talks about, ‘Oh, well, you’re going to pivot, you’re going to.’ I don’t want to pivot. I mean, you have to be you.”

The dream “pivot” everyone was expecting vanished with this move. Trump is doubling down on his brash behavior and seeking to expand that behavior down the stretch. It’s hard to take Trump’s new “apology” speech seriously with his new brash staff. Trump is who he is. He’s not changing for anyone. There is no pivot to being more presidential. Bannon is the big name here to pay attention to. He’s the CEO of Breitbart.com and has been the major force behind that network of sites to move full-Trump the moment Trump jumped into the race. The best piece on Bannon is by the former Editor in Chief of the site, Ben Shapiro, now with the Daily Wire. He covers everything he knows about Bannon from his time at Breitbart. I found his last two points particularly enlightening:

7. Trump’s Campaign Strategy Could Be The Launch Of A New Media Outlet. Because Bannon’s ambitions extend to Steve Bannon, he’ll tell Trump he’s doing a fantastic job even if he isn’t. That’s how Bannon Svengalis political figures and investors – by investing them in his personal genius, then hollowing them out from the inside. There’s a reason Sarah Palin went from legitimate political figure to parody artist to Trump endorser, with Steve Bannon standing alongside her every step of the way. There’s a reason Breitbart News went from hard-charging news outlet to drooling Trump mouthpiece. Bannon emerges from all of this unscathed. So what’s next on his agenda? If Trump wins, he’s in a position of high power; if Trump loses, Bannon could head up a new media empire with Trump’s support and the involvement of new Trump supporter and ousted former Fox News head Roger Ailes. Look for Sean Hannity to be a part of any such endeavor.

8. Bannon Is A Legitimately Sinister Figure. Many former employees of Breitbart News are afraid of Steve Bannon. He is a vindictive, nasty figure, infamous for verbally abusing supposed friends and threatening enemies. Bannon is a smarter version of Trump: he’s an aggressive self-promoter who name-drops to heighten his profile and woo bigger names, and then uses those bigger names as stepping stools to his next destination. Trump may be his final destination. Or it may not. He will attempt to ruin anyone who impedes his unending ambition, and he will use anyone bigger than he is – for example, Donald Trump – to get where he wants to go. Bannon knows that in the game of thrones, you win or die. And he certainly doesn’t intend to die. He’ll kill everyone else before he goes.

Bannon’s ascension is the predictable consummation of a romance he ardently pursued. I joked with friends months ago that by the end of the campaign, Steve Bannon would be running Trump’s campaign from a bunker. That’s now reality. Every nightmare for actual conservatives has come true in this campaign. Why not this one, too?

So what is Bannon’s play? Most people think it has nothing to do with a campaign. It’s a new news station Trump and Bannon could launch together:

Given the steep odds Trump faces in November, speculation has been growing in Washington that maybe what Trump is really up to is trying to lay the groundwork for a future political-media empire—a notion that gained momentum after Ailes, deposed at Fox News in the wake of widespread sexual-harassment allegations, was discovered to be advising him. Having Bannon in the tent, who already runs the most influential right-wing alternative to Fox News, would only make such a project easier to pull off.

Even more pointedly:

As smart and capable as he is, Bannon is still a political novice and thus an odd choice to run a campaign badly in need of message and organizational discipline. (He might make more sense as an executive producer of the media empire that V.F.’s Sarah Ellison reports Trump is eyeing as his next move, after the election.) On the surface, Bannon at least has the benefit of being politically sympathetic with Trump; Breitbart, under his leadership, after all, has become “Trump Pravda,” as one former staffer described it to me. But when I talked with Bannon, he expressed a wariness about the political genuineness of the Trump campaign persona. Trump is a “blunt instrument for us,” he told me earlier this summer. “I don’t know whether he really gets it or not.” It is likely that Bannon’s political calculus here, if not Trump’s, will be less about winning an election that seems a bit out of hand and more about cementing an American nationalist movement.

If that is the case, Bannon, and by implication Trump, will have little incentive to turn toward the center or offer real solutions to the complicated global political and economic environment in which we live. And if the outraged and xenophobic tone of Breitbart is any guide, we are in for a final three months of the campaign that will put the rest to shame.

In other words: Expect more of the same. Little new. And more needless attacks of conservatives and Republicans. Bannon and Trump have little interest in attacking Clinton or the Democrats. Or rather, they’re so blinded by their own hatred that they can’t see any difference between conservatives and liberals. I’ll end this section with The Weekly Standard’s Stephen Hayes take on this story:

The campaign overhaul means that Trump is choosing to end his campaign living in the alternate reality that Breitbart creates for him on a daily basis—where everything he does is the best, where everyone who questions him is an idiot or a traitor, where big rallies portend electoral victories, where House speaker Paul Ryan is the problem with modern conservatism, where polls that find him down are fixed, where elections he loses are rigged, where immigration and trade are the nation’s most pressing issues, and where, truly, Trump alone can fix it all.

Breitbart is the only place that is more Trumpian than Trump. When others roll their eyes at Trump’s campaign boasting and public self-reverence, Breitbart writers seem to believe he’s being too modest. When Trump can’t explain his own words, Breitbart faults the journalists who have asked the questions. (I speak from experience on this.)

Hiring Bannon allows Trump to seek external validation of what already exists in his own mind. It’s Trump’s way of channeling himself.

The Obama administration negotiated and paid ransom money to a state sponsor of terrorism 

The US State Department confirmed to the WSJ and AP that the $400 million the US paid to Iran was conditioned on the release of US soldiers first being released. From the WSJ:

The Obama administration said for the first time on Thursday that its $400 million cash payment to Iran in January was used as “leverage” to gain the release of American prisoners, fueling criticism that the exchange amounted to the U.S. paying ransom.

State Department spokesman John Kirby confirmed that the U.S. refused to allow Iran to take possession of the cash until a plane carrying the freed Americans had taken off from Tehran.

“If you’re asking me was there a connection in that regard, at the endgame, I’m not going to deny that,” Mr. Kirby said at a State Department news briefing.

“We took advantage of leverage that we felt we could have to make sure that they got out safely and efficiently,” he added.

One of the soldiers said that the Iranians informed they were being released once a second plane arrived. This is the definition of a ransom payment. The US negotiated and paid a ransom to a State Department listed state sponsor of terrorism. There are 3 countries listed as state sponsors of terrorism: Syria, Sudan, and Iran. We’ve had Iran listed since 1984. At one time we claimed to have a policy of never negotiating with terrorists. The Obama Administration broke that policy. Iran will use that money to fund their nuclear ambitions and send support to terrorist organizations actively targeting US soldiers, allies, and American citizens. There is no defense for this gross misconduct. Bringing back soldiers does not explain negotiating and paying out money to a state sponsor of terrorism. This will only embolden more kidnapping actions by Iran and other bad actors.

Ukraine and Syria are examples of how the US is in a proxy war with Russia

The Washington Free Beacon reports:

The Pentagon has identified eight staging areas in Russia where large numbers of military forces appear to be preparing for incursions into Ukraine, according to U.S. defense officials.

As many as 40,000 Russian troops, including tanks, armored vehicles, and air force units, are now arrayed along Ukraine’s eastern border with Russia.

Additionally, large numbers of Russian military forces will conduct exercises in the coming days that Pentagon officials say could be used as cover for an attack on Ukraine.

“Russian units will likely practice reinforcing the [Crimean] peninsula through such activities as amphibious landings and air defense exercises, and this may involve the change out of equipment and long convoys of military vehicles,” one defense official said.

The military exercises are an ominous sign. Similar large-scale Russian exercises were conducted near Ukraine a month before Moscow carried out the covert military operation to take over the strategic Black Sea peninsula in March 2014.

This wouldn’t be the first time Putin invaded under the auspices of the Olympics. Putin explicitly uses geo-political turmoil to push his own interests. Putin has started launching airstrikes from Iranian airspace for the first time. Putin is purposefully setting out to empower countries in his back yard that are enemies of the United States. Whatever the US seeks as policy in an area, Putin sets himself against it. Ukraine is another example of Putin pushing America and the West out of the region. Though never spoken out loud, the reality is this: we are at war. Syria, Iran, and the Ukraine are the proxies. Real Clear Defense offered the following analysis:

Most Americans don’t know we’re at war; we are, and Russia is winning.  Americans think war starts with a formal declaration of war, though this hasn’t happened since December 1941.  In other places, “peace” is only the less violent phase between armed contests.  One of those places is Vladimir Putin’s Russia which has been regrouping and preparing for the next war since his 2007 speech in Munich.

Wars aren’t always won by artillery barrages, rapid attack, and surprise troop maneuvers.  Wars are often won in “Phase Zero” also known as “shaping the battlespace.”  Shaping has been defined as “influencing the state of affairs in peacetime” as a prelude to conflict, though this definition falls short by assuming a clear line between peace and war.

Putin’s war is grinding on in Europe – in Crimea, Ukraine, and Georgia – and now he is bringing it to America. The putative Russian hacking of the Democratic National Committee, the Democratic Congressional Campaign Committee, possibly Hillary Clinton’s private email server, and the strategically timed leak of those sensitive communications, are only the tip of the iceberg.  There is also the relentless flood of Russian propaganda that is befouling the media of Europe and even America, no longer arguing about ideology but questioning the very existence of objective truth.

The entire piece is worth your time. There are two keys for us here: 1) shaping the battlefield, 2) the issue of Russia propaganda attacking the very essence of objective truth. The battlefield in America is over what constitutes truth. Their propaganda makes people believe the weirdest things. As many in this country, I feel on some level that everyone has taken crazy pills this election cycle. At one point we knew objective truth. But if we lack one thing, above all others, it is objective truth. This is the first point I made on this site. I believe there are multiple reasons for a loss of objective truth, but the influx of Russian propaganda cannot be discounted. It has hit America at a time when we are at our weakest in understanding truth. We were susceptible to propaganda and Putin is capitalizing on it.

Putin is using this confusing place to get his way in the world. Invading neighboring countries. Rattling the saber against NATO. Anything to advance his interests. America needs to wake up from this stupor. Seeing truth is the way forward.

Obamacare continues its slow motion death spiral  

Aetna is the latest major health insurer to announce it was leaving the marketplace exchanges. We first learned that Aetna was leaving the Obamacare exchanges because of massive losses, as Bloomberg reports:

The four biggest U.S. health insurers admit they’re each losing hundreds of millions of dollars on their Obamacare plans. Rather than expand coverage, many are pulling out of the exchanges that were set up by the ACA so people can shop for insurance plans, often with the help of government subsidies.

UnitedHealth expects to lose $850 million on Obamacare in 2016, while Aetna, Anthem, and Humana are all on track to lose at least $300 million each on their ACA plans this year, according to company reports and estimates from Bloomberg Intelligence. UnitedHealth says it’s quitting 31 of the 34 states where it sells ACA policies. Humana is exiting 8 of 19 states and reducing its presence to just 156 counties, from 1,351 a year ago. Anthem hasn’t announced plans to change its participation in the program.

On Aug. 15, Aetna said it will stop selling Obamacare plans in 11 of the 15 states where it had participated in the program, reversing its plan to expand into five new state exchanges in 2017. “The exchanges are a mess as they exist today,” says Aetna Chief Executive Officer Mark Bertolini. “They’re losing a lot of money for a lot of people.”

The big 4 insurers are seeing approximately a combined loss of $2 billion from the exchanges. These losses bring greater clarity to the sudden outburst of merger talk back in 2015. Bloomberg View columnist Megan McArdle noted in 2015 that insurers were trying to merger with each other for 3 main reasons: 1. The heavily regulations of the health insurance market breed consolidation. The heavier the regulations, the more need for industry leverage to make those regulations favorable to you. 2. Heavy losses form the Obamacare exchanges. 3. Health insurers are facing heavy consolidation from hospital groups as healthcare providers consolidate to gain leverage.

Facing the prospect of heavy regulations, consolidating competitors and hospitals, and Obamacare, these companies are making decisions based on survival. I wrote in one of the first issues of the Outsider Perspective that this consolidation wave was being driven by companies trying to survive. No one wants to be the one company left out of the consolidation. Whichever company is left in the cold from the merger frenzy is the one that will shrink and die.

Which brings us to the big news story: Aetna’s CEO threatened to leave the Obamacare exchanges if the Justice Department denied the Aetna / Humana merger. The Justice Department denied the merger. Now Aetna is pulling out of the exchanges.

This is not surprising result. The Department of Justice is dealing in politics. The insurance companies are dealing with survival. Obamacare isn’t the main threat facing insurance companies, but they know they have a service the government wants them to offer. And they know that the losses of $2 billion combined gives them leverage over the regulators. The insurance companies can demand their mergers be cleared in order to cover the exchanges. This type of negotiation was entirely predictable from the beginning of the Obamacare legislation passage. We’ll see more of this as the regulators fight the companies. Obamacare encourages consolidation of the marketplace. Until that encouragement is removed, we’ll only see more efforts to consolidate.