This & That

I SEE BETTER THAN I HEAR – The president is scheduled to address the nation today from the Rose Garden.    His purpose…to address the trials and tribulations of the health care roll out. 

We are told that he will term the current difficulties experienced by those trying to access the program as “unacceptable.”  Indeed!  We expect that he will give us assurances that everything possible is being done to correct the “glitches” in the system.  We expect that he will enlighten us on all the benefits that millions of Americans are already experiencing as a result of this important piece of legislation.  “Keep calm and carry on” will be his message…no doubt delivered in front of a backdrop of middle class individuals and small business owners; all nodding their heads in agreement with the president’s message.  Stagecraft 101!

Unfortunately the reports that we are hearing do not paint the same rosy picture.  There are reports that the website was never beta tested.  There are reports that over 5,000,000 lines of code need to be re-written; a process that will take months to complete.  There are reports that the contractor in charge of developing the website was fired by the Canadian government before being hired by the US.  There are reports that he patch work repair job being done today will only make a long term fix take even longer and that the project is now 100% over budget.

Are any of these reports true?  We don’t know!  We don’t know because the government isn’t talking.  We find the government’s silence a damning affirmation that all is not going as well as the president would have us believe.

With all due respect Mr. President…enough!   Actions speak louder than words.  Get the thing fixed! 

Or take the political hit and delay the roll out until the program is ready for prime time.

BOUGHT AND PAID FOR – If you follow politics you are no doubt familiar with the term “influence peddling.”  Money is donated with the unspoken understanding that certain votes on certain issues will go a certain way.  Wink, wink…nod, nod!  That’s Washington politics.

But did you know that our elected officials can legally use monies contributed to their so called “Leadership PACs” for personal gain?

In a segment aired last night, “60 Minutes” unveils how lawmakers are funding their lifestyles through the legal use of campaign funds.  That’s right…it’s legal.  Apparently there is a loophole in the campaign finance reform legislation that allows lawmakers to set up “Leadership PACs” and use the monies deposited for their personal gratification.  Meetings at 5 star international resorts, golf outings at the country’s most elite and expensive clubs even hiring family members, qualified or not, to staff positions.  All legal…all paid for out of campaign donations.

Senator David Vitter, best known for engaging the services of a prostitute, has sponsored legislation to close this unseemly loophole.  Surprisingly, he cannot seem to find one co-sponsor among his self righteous colleagues.  Not one!

This report gives us a much better understanding why guys like Ted Cruz are willing to withstand withering criticism over their support of extremely unpopular issues. 

It’s not their ideology that they are clinging to…it’s their lifestyle.                  

A New Chapter Begins

Now that the government is open and its bills are being paid it is only natural to give a deep collective sigh of relief that the worst has passed.  Unfortunately what we have witnessed over the past few weeks is but the latest chapter in a book yet to be completed.

Ted Cruz has vowed that he is undeterred by his latest defeat.  He says that he will continue to do everything in his power to defund Obamacare.  He will have yet another bite of that apple in the very near future.

Members of both parties will begin budget talks in the next couple of weeks.  They have until December 13 to produce a budget compromise that has eluded congress for over five years.  You can be assured that the subject of defunding Obamacare will be at the center of those debates.

Meanwhile the rollout of the Affordable Care Act continues to be an embarrassment to the administration.  Word today is that the program is horrendously over budget.  There are reports that the core of the problems stems from the use of ten year old technology incapable of handling the requirements of the program.  Regardless of the cause, every day that the program fails to operate efficiently only serves to embolden Ted Cruz and his supporters.

We have only but turned the page on this story.  There is much yet to be written.       

Congress Agrees To Do Its Job!

Well, it’s over!

After 16 days of pointless partisan rhetoric, the 113^th Untied States Congress has magnanimously agreed to do its job and pay its bills.

87 House Republicans finally stood up to their Tea party masters and joined with all 198 House Democrats to approve a Senate bill to fund the government and increase the debt limit. 

The Senate bill, which passed earlier in the day by an 81-18 margin, is a temporary measure which funds the government until January 15 and increases the debt ceiling until February 7.  It also requires both chambers to appoint members to a negotiating committee charged with hamming out a ten year budget by no later than December 13, 2013.

And what did the Tea party caucus get in return for holding the country hostage for 16 days?

Nothing!

The Tea Party mistakenly believed that they could force the president to defund Obamacare.  They tried a government shutdown.  Democrats said “No.”  They threatened to take the country to default.  Democrats said “No.”  Backed into a corner and realizing that the Democrats were not going to move on Obamacare; the Tea Party folks placed a litany of demands on the table hoping to gain something… anything on which they could claim victory and go home.  Tort reform… tax reform…Reduced EPA standards…Keystone Pipeline…!  No! No! No! & No! 

Representative Marlin Stutzman (R-IN) perhaps summed up the frustration in the Republican caucus best when he said:  “We’re not going to be disrespected.  We have to get something out of this.  And I don’t know what that even is.”

The only thing that Republicans gained from this fiasco is an embarrassing defeat and damage to their brand; the full extent of which is yet unknown.  The voters will weigh in on that subject in 2014.

The president, not one to rub salt in the wound, said:  “There are no winners…no losers.”  He couldn’t be more wrong.

The players in this game have been living in a vacuum.  While politicians were bouncing talking points off one another and contemplating Boehner’s legacy, people were suffering. 

Economists estimate that $24 billion in economic activity was lost during the shutdown.  We’ll never get that back.  800,000 government workers furloughed…millions more in the private sector.  Tens of millions deprived of government services that they count on to survive.  The list goes on and on…

And for what?

For a deal that could have been made on day one if only those in charge had put country ahead of party.

Congratulations!  Job well done!

      

          

It's Up To Cruz And Boehner

In the past twenty four hours we have witnessed a glaring example of all that is wrong in Washington.  We have observed a confluence of special interests, self interest and money, crashing together in such a destructive way as to jeopardize the most the world’s most powerful economy.  All done to achieve a goal long since discarded as unachievable.

Here is a brief summary of what transpired in what may have been one of the most bizarre days in our history.

Senate leaders Reid and McConnell started the day by announcing that they had reaches an agreement on the framework of a shot term deal that would re-open the government and raise the debt limit.  Both gentlemen commented on how pleased they were with the progress.

Details of the Senate bill leaked to the House.  Suddenly Speaker Boehner announced that the House would bring a bill of its own to the floor.  The Senate suspended its negotiations in anticipation of the House bill.

Boehner took a straw count of his caucus and realized he didn’t have the Republican votes he needed to pass his bill.  So within a couple of hours of announcing that he would place a bill on the floor…Boehner withdrew the bill.

The chambers were still buzzing over this strange turn of events when Boehner announced that he would bring yet ANOTHER bill to the floor.  This bill dovetailed closely with the framework of the Senate bill except that it added a bizarre clause that would remove the subsidies under Obamacare for members of congress AND THEIR STAFFS.  Congressional staffers make $29,000 a year.  This clause would essentially cut staffer’s pay.  Boehner announces that a House vote on the bill will occur later that night.

The next thing we hear is that Jim Demint, president of the Heritage Foundation, a powerful conservative think and major donor to Republican candidates, has sent a letter to Boehner stating that the foundation opposes the House bill because it does not go far enough to defund Obamacare.  (Keep in mind that at this juncture the strategy of defunding Obamacare has long since been abandoned by the party rank in file as unachievable.)  The letter further states that the foundation will be scoring the vote…in other words keeping track of who votes “yea” or “nay”.  The letter assures Boehner that members who vote in support of the bill can expect a challenge from a foundation sponsored candidate come the 2014 elections.  Demint closes by informing Boehner that the foundation has set aside over $500,000 to run attack ads against any Republican who dares to support the bill.

Minutes later Boehner announces that he is withdrawing the bill and that the House will not be conducting any votes for the remainder of the day.  As the deadline looms, this schizophrenic behavior in the House has wasted valuable time.

Blindsided by the sudden and erratic turn of events in the House; Senate leaders who have been sitting on the sidelines, frantically take up negotiations.

Meanwhile, Fitch Ratings, the third largest of the major debt rating companies behind Standard & Poor’s and Moody’s, announced that it was placing US Treasury bonds on a “Rating Watch Negative.”  This “warning” is often the first step taken by the rating bureaus before issuing a rating downgrade.

What happens next rests on the shoulders of Ted Cruz and John Boehner.

The Senate will in all likelihood reach a bipartisan compromise.  The question is will Ted Cruz allow a vote to take place?  Or will Cruz filibuster the vote; delaying the measure at least long enough to breach the deadline.  You have to remember that Cruz is one of many Tea Party members who do NOT believe that breaching the debt limit will have a disastrous impact on the economy.

If Cruz stands down and the senate passes the bill, the burden then moves to Speaker Boehner.  Will Boehner bring the Senate bill to the House floor for a vote…a vote which will pass with bi-partisan support but may cost him his speakership?  Or will Boehner invoke the Hastert Rule, refusing to bring the bill to the floor for a vote because it does not have the support of a majority of the majority.  Such a move will save his speakership…but by all accounts cause serious damage to the economy.

Today is D-day!  It’s all up to Cruz and Boehner.      

       

No Excuse For ACA Rollout Failure

QUESTION:  Who is the one guy who wants to see the government shutdown continue more than Ted Cruz?

ANSWER:  The guy who designed the Obamacare website.

When Barak Obama was running for president his staff engaged in a web- campaign unprecedented in the annals of American politics.  So cutting edge was this cyber-campaign, it was said that they not only knew where you lived and where you worked…they knew on which side of your mouth you chewed your gum.  The Obama web-campaign was acknowledged as a key component in Obama’s successful bid to win the White House…twice.

So given the Obama administration’s access to such savvy people…one has to ask why the rollout of the president’s most important initiative…the Affordable Care Act (ACA)…has proven to be such an unmitigated failure.

The Affordable Care Act was signed into law on March 23, 2010.  The administration has had over three years to plan, design and test the implementation of this historic piece of legislation.  And yet, three weeks into the rollout, people are still unable to access the site after multiple attempts.

The Obama administration says that “they anticipated that these “glitches” would occur and we are working hard to fix them.”  These are not “glitches”.  “Glitches” are resolved in a matter of a few hours.  What we are witnessing are inherent problems in the core design of the website.

The rumor mill says that the website has received over 14 million “hits.”  The rumor mill says that only 4400 people have actually signed up for insurance.  These are only rumors because the administration has refused to release the actual figures.  They say that they will release them on a monthly basis beginning in November.  Translation:  either they don’t know what the actual numbers are…or the numbers are so bad that they don’t want to release them.  We know this because if the numbers were good the administration would be shouting them from the rooftops. 

Given the political, historic, economic and life changing implications hinging on the success of this program; the colossal train wreck that we are witnessing is unforgivable.

In the interest of self disclosure…we believe health care is a right not a privilege.  We believe that the self proclaimed greatest country in the world should provide quality health care for its citizens.  As a result we supported the ACA because it is the first viable attempt to provide all citizens with the care they need. 

We have commented on numerous occasions that the ACA is a flawed plan because it attempts to serve two masters:  health care for all and insurance coverage for profit.  It attempts to insert the concept of insurance for everyone into the existing free market delivery system.  As such, the ACA was bound to have difficulties that would require a bit of “tweaking” along the way.  But never in our wildest dreams did we anticipate that those difficulties would involve accessing the website or signing up for coverage.

This rollout has been an utter embarrassment for the administration. 

Today all eyes will be on the US Senate where party leaders are expected to bring a compromise bill to the floor that will end the shutdown and extend the debt ceiling.

Somewhere the Obama web guy is thankful for the distraction.

       

               

IMF Director Cuts Through The Noise

If you are a casual follower of all that has been going on in Washington over the past few weeks then you probably find it difficult to discern fact from fiction.   Are we going through a government “shutdown” or a government “slowdown”?   Would failing to raise the debt ceiling bring be an “economic disaster” or is the whole thing much a due about nothing?

So when we heard that “Meet the Press” was airing in interview with IMF Managing Director Christine Lagarde we thought we’d tune in and see if she could bring any clarity to the situation.

The International Monetary Fund (IMF) describes itself as:  “an organization of 188 countries, working to foster global monetary co-operation, secure financial stability, facilitate international trade, promote high unemployment and sustainable economic growth, and reduce poverty around the world”.  Ms. Lagarde has served as Managing Director since July of 2011.

Ms. Lagarde said that the IMF views the world’s largest economy as exhibiting slow but steady growth.   But there is real concern at the IMF that this latest round of political infighting in Washington could very easily take the US economy into another recession.  If that happens, the international economic community will fall into recession as well.  According to Lagarde, Washington’s failure to reach a deal on the shutdown and debt limit “would bring a massive disruption the world over”.

Host David Gregory asked Lagarde what she would say to those like Senator Rand Paul who assert that the whole debt ceiling hubbub is a “manufactured crisis”…who say the country will never default because “it will meet its obligations by paying the interest on the debt and deferring other payments to later dates”.  Lagarde: “when you are the largest economy in the world, when you are the safe haven in all circumstances, as has been the case, you can’t go into that creative accounting business.”

Lagarde was asked what advice she would give US lawmakers in dealing with the country’s economic issues.  “Move quickly but slowly” she said.  Move quickly (paraphrasing) to come to a long term solution to the solvency of Medicare, Medicaid and Social Security.  Reign in spending, but do it slowly over time; being careful not to gut spending in such a way that it harms the recovery.

Christine Lagarde and the members of the IMF are smart people who know a bit about economics and monetary policy.  They are unencumbered by partisan ideology.

We might want to listen to what they have to say.

           

Sometimes It Is Better To Be Lucky Than Good.

The Republican leadership went to the White House yesterday to meet with the President.  Their stated purpose was to negotiate the impasse over the debt ceiling and government shutdown.  In reality Republicans were there to negotiate the terms of their surrender.

Republicans believed that the President would cave over the shutdown…would cave over the debt limit…would cave over Obamacare.  Ted Cruz had all but guaranteed it.

But the President stood firm, and now Republicans find themselves staring up at an avalanche of unpopularity unprecedented in modern politics.

So Republicans trudged to the White House with hat in hand, hoping to save face and scratch some sort of win out of what has amounted to a colossal strategic blunder.

It appears Republicans have managed to get a six week extension of the debt ceiling and the President’s promise to sit down and discuss spending cuts, and tax and entitlement reforms.

That’s it!

As for as the Republican promise to keep the government closed until the President agrees to change the free spending culture in Washington...it appears that the government will re-open in a few days.

And then there is the defunding of Obamacare.  You may recall that the Republicans’ primary purpose for engaging in this political brinksmanship was to defund/repeal/kill the President’s signature piece of legislation.  But their reckless tactics raised such furor among the voters that Obamacare is not only off the table but it is poling at a higher favorability than it did before Ted Cruz embarked on his misguided mission.  Instead of the lead story above the fold being all about the problems the government is having with the health care rollout, all anyone is talking about is how badly they view the Republican Party.

And where is Ted Cruz, the architect of this suicide mission.  Silent!  After leading his troops blindly into a box canyon he has apparently run off to hide.  Cruz claims to be a history buff.  Perhaps he should have paid closer attention to the chapters on Custer’s Last stand and Pickett’s Charge.

A few short weeks ago the President was having a tough time leading the nation as well as his own party.  His favorability numbers were upside down in the polls.  His health care reform legislation was viewed in a negative light by the public.  His own Democratic caucus was gravitating away from him in anticipation of the upcoming mid-terms.  The Tea Party was at the White House gates, pitchforks and torches in hand.

Then Ted Cruz and the Tea Party took the Republican Party down the rabbit hole and suddenly things changed.

An angry President decided to stand firm on his convictions.  His approval ratings improved.  His health care initiative is growing in popularity even as it stumbles out of the gate.  His caucus has rallied behind him and his opponents are fighting among themselves.  Who knew?

Sometimes it is better to be lucky than good.  The president can thank Ted Cruz for his good fortune.