What Will Obamacare do to The Economy?

           Anecdotal information is dripping out of the Obamacare faucet.  Three-hundred-thousand Floridians have had their health insurance cancelled because it does not meet the new Obamacare standards.  Another one-hundred-sixty- thousand Californians have heard the same news.  Story after story tells of some individual learning that their existing coverage is no longer available and their new options are tens or even hundreds of dollars per month more than their old plans.

Last night on Fox news, Megan Kelly claimed to have an IRS bulletin dated from July-2010 that estimated between forty and seventy-percent of individual plans would be cancelled when Obamacare is implemented.  This was estimated to mean that somewhere between ten and sixteen million people will have their insurance cancelled before the end of the year.  These are only the people that purchase health insurance for them selves.

A few nights ago, Kirston Powers of Fox news reported that her health insurance plan (in New York State) had been cancelled.  She went onto the Obamacare website and found a replacement.  She stated that her monthly premium changed from $150 to $290.  Ms. Powers further stated that she is happy to pay more for her health care if that meant that some other Americans would be provided with health insurance at rates that they can afford.  I applaud Ms. Powers for her generosity.  But, she did not decide on her own to make a contribution to the community clinic.  The new law is taking that extra one-hundred and forty bucks a month from her whether she is happy or not.  Furthermore, is it just me, or has nobody else heard of the good stories about somebody having their premiums reduced on the Obamacare exchange?  Yes, I have heard that some people that could not get insurance before, due to pre-existing conditions, have finally been able to obtain health insurance.  That is good.  However, I am thinking that that is where Ms. Powers’ one-hundred-forty dollars per month are going – to cover the costs of the high-risk-new-enrollees. 

When I think about that from an actuarial viewpoint, I think that everybody (on average) is going to have to pay more for the high-risk-new-enrollees.  Is there any other extrapolation that can be made?

  Are things better for employees who get their health insurance from their employers?  Not that I have heard.  There have also been stories of companies informing their employees of large increases to their paycheck deductions for health insurance due to the new Obamacare requirements.  Very large companies that are self-insured do not have to abide by the Obamacare rules, so their employees will not (presumably) see large increases in their paycheck deductions.  At least I do not think so.  But, I do not know.  Do you?

We are rolling out the largest government program in generations (maybe the largest ever) and I do not know where to look for the answers regarding its impact on the economy.  Is healthcare going to cost every worker more – while more Americans get free health care?  Where is all the tax money coming from for the health care tax credits being given to anyone earning less than 400% of the poverty level?  Will the smaller paychecks result in an economic slowdown?  And, at this point in our non-recovery, recovery; will this added slowdown be enough to push us into another recession?

I watched the White House daily press briefing yesterday and heard The President's Press Secretary, Mr. Carney, admit that, yes, some people (contrary to the President’s promises) will not be able to keep the health plans that they were happy with.  However, Mr. Carney pointed out that the plans involved were inferior and that, in the long run, the people that lose those plans will be better off.  Really?  Who makes that choice for the individual – the President, our government, the insurance companies?  Whoever the decision maker is; are they considering what the individual can afford? Or; what each individual wants to purchase?  Maybe when we are nearing sixty years of age, we do not want maternity benefits or free contraceptives.

By the way, those poor employees at the self-insured companies will be stuck with what the President’s spokesman, Mr. Carney, has stated to be inferior health insurance plans.  But, they will not have to pay more for them.  Nor will hey help shoulder the cost of the high-risk-new-enrollees.  You see; the really big corporations (that are self-insured) and their employees are exempt from Obamacare.  Therefore, the individual purchasers and the small to mid-sized businesses of America are shouldering the load.

I am very confused by the slow drip of anecdotal information.  Please somebody provide a macroeconomic impact statement of what this new law is going to do to us.  When I extrapolate the anecdotal information on my own, I do not see a happy ending.  Am I wrong?  I hope so, but nobody is talking.  Is this not the eight-hundred pound elephant in the room?

Republicans Look Angry

            This week’s congressional oversight hearings on the Obamacare website debacle provided a lot of theatre but no answers.  I particularly enjoyed the one Democrat Representative that called the event a “monkey trial.”  He was pretty close in his assessment of the hearing.  The underlying problem of the failed website was never uncovered, a timeframe for fixing it was not drawn out, and no one was identified as accountable.  What was the purpose of this hearing?

The only result of the hearing was the Republicans ranting that the failed website is symbolic of the entire Affordability Act – which they claim is not ready for prime time.  The Democrats on the other hand spoke of the wonderful outcomes many Americans are experiencing.  The Democrats provided anecdotal accounts of constituents with pre-existing conditions finally being able to obtain affordable health insurance.  The Republicans provided anecdotal accounts of people having their monthly rates being doubled and tripled.  The man on the street watching this hearing walked away not knowing whether Obamacare is a good thing or a bad thing.  What that man on the street did walk away with was a perception that the Democrats were optimistic and willing to “fix it not nix it” and the Republicans were angry, pessimistic and ready to pull the plug.

The entire Republican caucus (Senators and Representatives alike) need to hire a public relations firm.  This PR firm should hold a mandatory meeting every Wednesday night for all the Republicans to attend.  At that meeting, a review of the past week’s performance should be reviewed.  All the PR firm would have to do is show a few clips of news footage that depicts how angry the Republicans appear.  Then, the PR firm can offer an example of how the same message could have been delivered without appearing so negative.

“If we delay the implementation of Obamacare by three months we should be able to make it more successful” sounds so much better than “This whole program is a debacle and it must be delayed until we can figure out whose head has to roll.  We should also consider repeal and replacing the whole thing.”

The mid-term elections are only a year away.  It’s time for a kinder, gentler Republican Party to take center stage.  Principles do not need to be compromised – but the message has to be delivered much better than it is now.  Let us not forget how the message was sent and received during the 2012 presidential election.  Do the Republicans really want to alienate the majority of voters again?

The Obamacare Website is a Trojan Horse

           The website is not the story.  If the website never works – who cares, fill out an application, mail it to the Obamacare administrator, they will mail you back your options  You pick one of the options, mail back the form and wala, you have Obamacare insurance.

The website does demonstrate just another case of the administration’s incompetence but it will not have dire consequences for the Affordability Act.  I am a techie and (only from the news sound bites) I believe that the problem with the site is most likely, the attempt to validate each applicant’s income.  I do not know how they do it, but my guess is that they are taking an applicant’s information and querying the IRS’ database AND states’ databases.  The IRS database has old information with regard to an individual’s income.  Businesses only file once per year reports on each of their employees’ earnings.  The states, however, have quarterly income reports on each employee.  At least in Pennsylvania where I conduct business, I have to file a quarterly unemployment tax return that lists each employee by name, with their earnings.  A web server (the computer that hosts the Obamacare computer system) has to go out and request individuals’ income verification information from various sources.  The webserver may have been designed to handle all the volume of traffic that Obamacare is generating – but have the states systems been designed for the same volume?  If this is the problem, the answer is easy, replicate the states’ data onto the Obamacare web server.  Wala, problem solved.

But the website is NOT the story.  No matter what the technical problem is – it can be fixed.  The story is the hundreds of thousands of Americans that are receiving letters from their current health insurance companies telling them that there existing insurance plans are no longer valid under the Obamacare rules.  Obamacare requires that you get free contraception, free mental health benefits, and other benefits that you did not have in your old plan.  So you can now upgrade to the new Obamacare compliant plan.  AND, it will only cost you double what you used to pay.

This is the story. Senator Manchin (Democrat from West Virginia) stated that: “Affordable (in the Affordable Care Act) was not supposed to mean you pay more and get less.”  Yes, if you do not want the extra benefits Obamacare throws in, and your deductible goes up, you are getting less – but paying more.

Remember the sales pitch from the President?  “If you like your existing insurance plan and you like your existing doctors, nothing will change. Period!  End of Story.”  We should also remember Representative Pelosi’s statement: “Everyone will pay less for health insurance.”  Three-hundred-thousand people in Florida having been told that they can no longer have their existing insurance plans.  The same has been reported for one-hundred-fifty-thousand people in California.  This is just the start of such notifications.  There is a very good chance that Obamacare could result in less people having health insurance NOT more – as the President promised.  At the very least, the average cost for American health insurance will significantly increase.

Representative Pelosi was more accurate when she said: “We have to pass the bill before we will know what is in it.”  She was right – and now we are finding out what is in the bill.  And, it is not pretty.  I was aware that the Medicaid role was supposed to be expanded by 30 million.  Bit, I did not know that there were going to be subsidies to individuals that make less than 400% of the poverty level.  How much more debt can we afford?

Back to the website: if you were looking to purchase a car, would you not consider a Ford because their webpage was temporarily unavailable?  The cars are great, who cares about the website.  In Obamacare’s case, the product is flawed – so who cares about the website.

The administration is probably very pleased that the website is so horrendous.  The news coverage of the website is the Trojan Horse covering up the real story – that the Obamacare product itself is severely flawed.

With all that negativity about the website and the Affordable Care Act stated.  I have one surprising observation to add.  I do not believe that the Affordable Care Act should be delayed.  The uncertainty of whether or not this law will ever become reality, and what its actual impacts will be, have been the main driver of our jobless recovery.  We need to implement Obamacare so we know what it is, fix it, and allow businesses to figure out how to run their businesses (and hire people) in this brand new world.  It is not going to be a smooth ride – so let us get it over with as soon as we can.

Does the Tea Party Diminish the Republican Brand?

         You bet it does!

The day after the government shutdown was ended and default on our national debt was avoided; Bing.com’s headline news story was of “Civil War in the Republican Party: Business Versus the Tea Party.”  The story noted that the Tea Party was planning to target every Republican running for reelection in 2014 who had voted for the bill to keep our country solvent.  The story also noted that the National Chamber of Business was going to support those moderate Republicans against any Tea Party preliminary challenger.

Just the fact that there will be unnecessary, hard-fought preliminaries will hurt the Republicans’ chances in the general elections.  In addition to squandering money that would be better spent fighting their Democrat opponents, the blood drawn during the primaries will hurt the Republicans.

But, the real damage to the Republican brand is the no-compromise, my way or the highway reputation that it now carries.  The Tea Party is proud of this reputation – but it is not how Americans want their government to work.  It is exactly the cause of our government not working.  While the Tea Party attempted to portray President Obama as intransigent during the government shutdown, most Americans saw the Republican Party as the obstructionists.  The polls do not lie.  Republicans have been damaged.  Unfortunately, most Americans do not understand the difference between the Tea Party and the Republican Party.  How could they?  The Republican Party has allowed the Tea Party to take control of the Republican Party.

It is the Republicans’ Shutdown but it will be the President's Default

            Senator Cruz and the Tea Party bear full responsibility for the government shutdown.  To attempt to alter Obamacare using the measure of putting hundreds of thousands of people out of work was wrong.  However, the President owns the financial default – should it actually occur.  The President also owns any credit downgrade that will most likely occur whether or not we default.  The recession that will follow will also be the President’s recession.

The President should not have been fear mongering over the possible default.  Instead he should have stated, long ago, that he would issue a Presidential Order to assure that the 14^th Amendment of the Constitution is not violated (that amendment requires that all debt and obligations of the United States shall “never be questioned”).  Yes, the Tea Party would have yelled “Constitutional Crises” but the American people would have backed the President.  The House of Representatives probably would have gone so far to impeach the President.  But the Senate would not have ratified such an impeachment.  In the end, the President would have saved the United States from the embarrassment that is playing out across the world.

The President also owns the default and/or credit downgrade because HE IS THE PRESIDENT OF THE UNITED STATES.  He should be a leader that, when necessary, slaps heads to get things done.  The President deliberately chose not to lead so that the Republicans could dig them selves such a large hole that they will be rendered impotent in future negotiations.  The President will most likely succeed in his political motives of splitting the Republican Party.  It is a near certainty that Speaker Boehner will allow the senate bill to be brought to the floor of the House for a vote.  The Speaker will courageously break the “Hastert Rule” that a majority of the majority must support a bill in order to bring it to a vote.   Then, the senate bill will pass with all 200 Democrat House members and some Republicans; but with no Tea Party members.  The split in the Republican Party will be etched in stone by this vote.

Congratulations, the Republicans are in retreat.  No thank you for America’s retreat.  Americans are now looking forward to all of this repeating during the Christmas holidays.

The Obvious Shutdown/Fiscal Solution

            The House of Representatives went home to enjoy the three-day, Columbus Day holiday weekend.  The Senate stayed in Washington and attempted to reach a compromise on our national budget and our national debt ceiling.  The absence of the House of Representatives was accompanied by the absence of vitriol rhetoric from the far-right Republicans.  It felt as if a cease fire had been agreed to – the Democrats and the Republicans were actually talking to each other.

That perceived cease fire gave the hope that cooler heads might prevail.  And, Senators Reid and McConnell were working feverishly to do just that.  Then our Representatives returned.  They immediately went to work and passed a bill that includes items that they know the President will not accept.  The bubble of hope came to an end.  Our Representatives are back and so is gridlock.

It does not matter anymore.  Politicians have already pushed us back into a recession.  The credit agencies will no doubt lower our credit rating.  On August 5, 2011 Standard & Poor’s lowered our debt rating and listed the items that would cause another credit lowering.  Congress and the President have fulfilled every one of those items (see previous blog).  The difference this time is that the Chinese, who are estimated to hold $2 trillion of our $17 trillion debt, are seriously considering parking their money in Euros rather than dollars.  This time, interest rates will rise.  This time the fragile recovery will be shaken.  And, worse of all, this time is again setting up another next time – in three months.

Both the Senate and the House’s bills fund the reopening of government until mid-January, and raise the debt ceiling into February.  Neither bill does anything to address our fiscal problems other than to pledge (yet again) to solve those problems before the next deadline.  Haven’t we seen this movie?  Is there ever going to be a happily ever after?

The solution is so simple and obvious that the vast majority of Americans know what it is – and they want it.  The solution is:

Pass a bill that states:

o       We must create a trajectory to a balanced budget.

o       We have to get to that trajectory through a reduction in spending of $2 for ever $1 of new taxes. (Assuming that we are spending $1 trillion more than we take collect in taxes each year, this means, $667 billion of spending cuts, and $333 billion of new taxes.)

o       Until the specifics of spending cuts can be agreed to so that strategic cuts can be made (funding items that promote economic growth, while not causing too much pain to the needy as the Democrats say they can do), across the board cuts (like the Sequestration) will continue.  However, they may need to be even deeper than the Sequestration to obtain the needed savings.

o       Until any tax reform plan that may close loopholes, reduce marginal tax rates and still somehow raise revenue (as the Republicans say they can do), taxes will be raised on every American making more than $100K by whatever percentage is needed to obtain that $1 of revenue for every $2 of spending cuts.

There, that is it.  It is simple.  It addresses the legitimate concerns raised by Standard and Poor’s.  And, until our politicians can work together to come up with a more thoughtful solution, it provides a crude solution.  The crude solution provides the incentive for Democrats and Republicans to work together on a better solution.  What this solution does not include is another deadline.  Instead it creates a constant low-level headache that Congress can make better.  Congress can make the headache a little better, but it cannot eliminate all of our pain.  We have created a mess of our fiscal house and it is time to pay the reaper.  The good news for Congress is that Americans know the problem – and are willing to compromise (which will mean equal sacrifice for everyone).

The above solution purposely leaves the details for later – but it defines the fiscal end-game.  The insanity of not defining the end-game (as is done in the currently proposed dueling bills) does not provide any confidence in our great nation.  Standard & Poor’s have already told us that the fiscal end-game must be agreed upon.

The sacred cows still need to be dealt with; the Democrats sacred cow is entitlement programs; the Republicans sacred cow is taxes.  The vast majority of Americans know that these sacred cows have to be adjusted.  The vast majority of Americans fully understand mathematics.  The above solution is the articulation of every American’s hope.

United States Sovereign Debt Credit Watch

            On August 5, 2011, Standard and Poor’s (S&P) lowered the long-term sovereign credit rating on the United States of America to 'AA+' from 'AAA'.  S&P released the following statement to support their downgraded credit score:

“The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics.

More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.

Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government's debt dynamics any time soon.

The outlook on the long-term rating is negative. We could lower the long-term rating to 'AA' within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.”

Standard & Poor’s August 5, 2011, statement could be copied and pasted into a new press release today, tomorrow, or next week.  Unfortunately, we have made no progress since August 5, 2011.

“…the fiscal consolidation plan that Congress and the Administration recently agreed to falls short…”  That plan was the Sequestration plan that included across the board spending cuts that the Democrats now want to reduce.  In addition, the Republicans (and some Democrats) are pushing for a two year delay in the medical device tax. 

 “…the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened…”  The current gridlock in Washington makes the gridlock of August, 2011 appear like a period of bi-partisanship.

“…we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic…”   This is one area where the view has most likely not changed.

“…The outlook on the long-term rating is negative. We could lower the long-term rating to 'AA' within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory…”  Less reduction in spending is exactly what the President is pushing.  Higher interest rates have already occurred in the short-term bond market as concerns over default have been heightened.  A higher general government debt trajectory will most likely occur as a result of the increased spending, reduction in taxes, increased interest rates and the increased cost of the Affordable Care Act.

There is no more to be said.

Congress Took the Weekend Off

            Yesterday I blogged that nothing short of a bill signed into law before 9:30 AM EST Monday could rebuild the market’s confidence sufficiently to prevent a massive sell-off.  Well Monday is Columbus Day; which makes this a three-day, holiday weekend.  And guess where the members of the House of Representatives are?  They are at home, enjoying the long weekend while our government is shut down and our national credit card is about to hit is max out.  Yes, they will get paid for the holiday as workers in the hospitality industry near our national parks are laid off due to the inability of tourists to visit.

The Senate stayed in Washington this weekend.  The Senators should be thanked for their honest effort.  However, the story is not about the Senate.  Everyone knows that the Senate has the decorum to work in a bi-partisan manner.  The headline of the weekend is that talks between Speaker Boehner and President Obama have broken off.  The House will not be open for business until Tuesday afternoon and Treasury Secretary Lew has told us the United States will no longer be able to borrow any money beginning on Thursday, October 17^th.

Emotions between the Tea Party members of the House and the White House are raw.  The House needs one more round of venting their frustration before cooler heads will prevail.  That means no bill can become law until Thursday at the earliest.  That is the best scenario and it butts way too close to the deadline Mr. Lew established.  The credit rating of the United States will be lowered yet again.

Last time we had a raise-the-debt-ceiling fight (August, 2011) Standard & Poor’s (S&P) lowered our credit rating from AAA to AA+. S&P lowered the rating four days after Congress had passed the bill to raise our debt ceiling.  The other two rating agencies, Fitch Ratings and Moody’s did not lower the United States rating – they continue to this day to rate the United States credit with a triple-A score.  However, both Fitch and Moody’s did change their outlook on the US credit rating from positive to negative.  Moody’s did this on 6/2/2011 and Fitch did it on 11/28/2011.

It will not take until four days after the eventual bill that raises our debt ceiling for Fitch and Moody’s to lower our credit score.  If you are an investor, you should have taken all your money out of the stock market on Friday when the White House delayed their daily press briefing until after 4PM so that their bad news would not impact the market.  They were hoping to create good news over the weekend so that the markets would not crash and burn.  Have you heard any good news?  No good news most likely means Fitch and Moody’s have to lower their score before Thursday comes.

The previous blog entry describes why Congress’ inability to function will have a devastating effect on a county that is about to implement the largest social program since Medicare – and the most complicated ever.  Washington’s inability to function in a time of great change portends huge problems in the market without the ability to make the necessary policy adjustments to maintain a stable market.  We deserve to have our credit rating lowered – and it will be soon.

I hope the Representatives have a very happy Columbus Day.

 

Focus is on the Senate – Are You Joking?

            Fear is creeping in.  To allay this fear, the Senate is pretending to be taking over the shutdown/debt ceiling negotiations.  An attempt to strike a bi-partisan deal (in the Senate) before the markets open up Monday morning is now under way.  Who cares if the Senate develops a bi-partisan plan?  The President has bloodied the noses of the House Republicans and they are holding a grudge.  They may be putting their egos ahead of what is good for America – but that is where we are.

Furthermore, the markets have already been spooked.  Nothing short of a bill signed into law before 9:30 AM EST Monday can rebuild the market’s confidence in the United States government.  Nobody knows what problems will be caused in the economy due to the implementation of Obamacare – but everyone knows there will be problems.  Does anybody have confidence that our government can take the steps necessary to mitigate any economic damage or to correct the unfairnesses that are sure to be found during Obamacare’s implementation?  No!  Everybody expects the problems to be used as headlines for the “I told you so” stories and then used as bargaining chips to whittle away Obamacare – not to help settle out market disruptions.  Our government is broke.  This is not an atmosphere that promotes economic stability.  Forget about economic growth.

The above paragraph predicts despicable behavior; behavior that would put a politician's ego ahead of what is good for America.  Hmm, sounds like what the Democrats have done the past two weeks with the Republican created government shutdown.  Could anyone have imagined that the families of our fallen military personnel would be used as political pawns?  Just imagine the politics that will be played with Obamacare's implementation.  Maybe a drastic social change such as Obamacare should not be rammed through without bi-partisan support.

The Tea Party has one more punch to throw before they get knocked out.  They will say that the President said he would negotiate; they were prepared to negotiate – but the President reneged on his promise to negotiate.  With their egos clinging on the ropes, the Tea Party will make one more attempt to somehow diminish Obamacare.  They will pass a bill to reopen the government and to increase the spending limit – but that bill will include some restraint on Obamacare.

Poor old Speaker Boehner will have to allow one more stupid vote on yet another stupid bill.  He has to do this so that the Tea Party finally hears the roar of America’s outrage over their self-righteous insensitivity.  Those roars will be heard, the Tea Party will let go of the rope and fall onto the ring.

After this one last Tea Party indignity, Speaker Boehner will hold a vote on whatever bi-partisan plan that the Senate has developed.  The bi-partisan bill will pass in the House with all the Democrats (200) and slightly more than a majority of the Republicans (only 17 of the 235 are needed).  The vote will identify which Republicans will soon leave the Party to officially form their own Party.  The Tea Party will become an official party in American politics.  Then it will experience a slow death over the next five years and vanish.  The will be remembered as the 21^st century’s version of the Bull Moose Party.  During these five years, the Democrats will govern with moderate Republicans and progress will be made.  The kinks in Obamacare will be ironed out in a spirit of cooperation within this new coalition.  (Contrary to the predictions above that assumes the Tea Party stays entrenched within the Republican Party – which of course is more likely.  Please allow me to daydream into some fantasy world of optimism.)

Continuing my optimistic fantasy:  The Republican Party will grow in numbers as the moderate conservatives who have been dismayed with the Party’s dance to the far right will come back home.  Eventually, the Tea Party will learn of the need to compromise and will rejoin the Republican Party as well.  This situation will make it difficult for the Republicans to win the presidency in 2016.  That means that the Democrats will appoint several new members to the Supreme Court.  A strong majority of liberals on the Supreme Court is not good.  Maybe the new coalition will agree to more moderate appointments.  I hope so.

Consider the above discussion the spaghetti map of possible hurricane strikes.  The spaghetti lines show that the damage may be in one area or another – but damage will occur.  That is where we are; economic damage is guaranteed, how it unfolds is yet to be determined.

The Shutdown-Showdown and the Cruzification of the Republican Party

            Whoever coined the term “Cruzification,” congratulations!  It captures the Republicans conundrum.  However, there is noting Christ-like about the Republicans behavior.  The Cruzification the Republicans are about to endure is their own fault.

Here are the priorities that the President is addressing during the current debt-ceiling/shutdown negotiations: 1) the American people, 2) the world economy, 3) our long-term debt problem, 4) maintaining Obamacare on its current course, 5) assuring that he never has to submit to the Tea Party’s demands again.

The Republicans first stated that their only priority was to kill Obamacare.  This position caused the government shutdown and the Republicans favorability ratings fell to historical lows.  The Republicans then decided that all they wanted was to negotiate with the President.  In turn, the President said he would negotiate only if the Republicans pass a no-strings-attached continuing resolution (to reopen government) and a no-strings-attached increase to our debt ceiling (to allow the United States to borrow the money it needs to keep spending more than it taxes). 

The President’s “no-negotiations” and the Republicans “we just want to talk” was last week’s standoff.  Americans were rightly frustrated.

To cool down the situation, the President said he was willing to talk to the Republicans.  The Republicans took this to mean that the President was willing to negotiate – he is not.  The President re-affirmed that he will only accept clean (no-strings attached) bills to reopen government and to raise our debt limit.  The President has been very clear that he will not discuss other issues until after the passage of these clean bills.  If the Republicans would offer solutions to our debt and spending problems, the President would probably consider them.  However, the Tea Party cannot control themselves and they will surely push for a major slap-down of Obamacare.

The Republicans have not been listening to the President.  They (or at least the Tea Party) believe that they are now negotiating.  Republican Congressmen are drafting legislation to define the strings they want attached to the bills.  Unfortunately, there are ideologues in the Tea Party that do not understand public opinion, do not understand that they are hurting America and do not care.  They believe that their cause is so pure that they are doing what is right for America.  It would appear that the title “Tea Party” is a synonym for self-righteousness.

Next week the Republicans will state that the President has reneged on his offer to negotiate – when he never offered to negotiate.  The Republicans will allow themselves the delusion that they are right and that the President’s “not negotiating” will “poll” well for the Republicans.  The Republicans do not get it – Americans do not care about the sausage making.  Americans just want solutions.

The President could have achieved all his priorities except his last priority (removing the Tea Party’s influence) through the normal course of business.  However, the Republicans did not want to follow the normal course of business.  They wanted to inject Obamacare into the budget and debt-ceiling bills.  This gave the President the opening he needed to cut the legs out from under the Tea Party (and the Republicans).

Americans are blaming the Republicans for the government shutdown and for the potential to default on our debt.  Therefore, the President is holding all the cards.  He can push this battle right to the edge of the cliff and wait for the Republicans to blink.  Unfortunately, the self-righteousness Tea Party Republicans will not blink.  The stock market will drop two-thousand points, Americans will be distraught and the Republicans will be rendered impotent.

Another possibility is that Speaker Boehner will blink before this catastrophe occurs and allows a vote to be taken in the House.  If so, enough Republicans (and all 200 Democrats) will vote for the President’s “clean bills.”  Either scenario will split the Republicans along their intra-party lines; Tea Party versus non-Tea Party members.  The Republicans will not reunite after this event and by default; the Democrats will be the majority in the House.  There will no longer be a divided government – just a divided party.  The Tea Party will never again be able to hold the President “hostage.”

The President can do this because he also has another card up his sleeve – the Executive Order card that will prevent the United States from defaulting on its debt.  The President has repeatedly stated that he does not hold such a card – but he does.  He just doesn’t want anybody to believe that he would use it.  After all, his priority is to tear apart the Republican Party.  So after the market crashes but before the United States defaults on its debt, the President will use the Executive Order card.  The sun will rise in the East the following day and the President will be sitting on solid ground.

The President knows very well that the entire country will support him if and when he issues an Executive Order to assure that the 14^th Amendment of the Constitution is not violated.  That Amendment states that the debt of the United States shall not be questioned.  This will result in some Tea Party Republicans accusing the President of violating Article 1, Section 7 of the Constitution that requires the House of Representatives to appropriate all funds to be spent by the federal government.  The media will sell their products by claiming that we are experiencing a “Constitutional Crises.”  The Republicans will impeach the President in the House of Representatives.  The impeachment will not be ratified in the Senate and, in the end, the American people will think even less of the Republicans then they do now (if that is possible).

One way or the other, the Republicans will lose this fight (actually they have already lost).  The world economy will lose as well.  Even though the United States will never default on its debt, just getting close to the possibility of default will cause another lowering of America’s credit rating.  This time, the lower credit rating will result in higher interest rates.  The government shutdown will also impact economic growth.  The combined effect of the shutdown imposed slowdown, and higher interest rates will push us back into a recession.  With the rest of the world economy so fragile, the American recession will have a domino effect on the rest of the world.

The President must be assessing the very situation that this blog describes.  If so, he must be calculating that the power that he will derive from the decimation of the Tea Party will be so enormous that he will be able to push through legislation to rescue the economy - can you say stimulus number two?

It is so frustrating to watch the silliness in Washington – especially when you know how it will end.  Unless; a Republican leader will stand up and reign in the Tea Party.  Or, Senator Cruz stands up and capitulates.  Assuming Senator Cruz will not capitulate, another Tea Party leader (say Senator Paul) could make a speech that sends the message that it is okay to let the clean bills go through without any Obamacare stipulations at this time; one of those “live to fight another day” speeches.

The United States Chiefectomy

            Remember when a Commander-in-Chief meant that the President was really the chief of our armed services?  An enormous responsibility that entailed protecting America from the forces of evil and taking care of our men and women in uniform.  Our service men and women lay their lives on the line to protect the freedoms we enjoy.  For this, we all demand that they be rewarded with our respect and our care.  The fact that the current administration has allowed the government shutdown to impact our care for those military personnel that have died in service is unspeakable.  The fact that we have not heard the President speak out against the perpetrator of this injustice is unforgivable.

The President either knew or should have known that the forces he commands were being used as pawns in the politics of the government shutdown.  To regain our military personnel’s respect, the President must take action.  He must either own up to his colossal error, or find out the responsible person and demand their resignation.  If this was the President’s decision, he should schedule a prime time fire-side chat with America to explain himself, ask for forgiveness and assure our troops that he (and all of us) will never again let them down in their time of need.  He can reassure our troops that the American people knew it was a mistake, and the American people will never allow it to happen again.  A true chief not only apologizes but takes action that reinforces the line of unacceptable behavior.

Do you remember when the President was the chief executive?  A chief executive establishes values in the organization that he leads.  The chief executive’s values are known by those who work for him; no matter how far down the organization chart those workers happen to be.  The knowledge of these values enables the workers to make decisions when they face gray areas in the execution of their duties.  If the values are to do what is best for America, the worker will weigh the gray area and determine that spending money to close the World War II memorial is not the right decision.  However, if the values are the politics of demeaning your enemy regardless of the price paid by the everyday American, a different decision is made (and was made).  There is a slew of examples that could be listed here – but you already know most of them.

The Chiefectomy was performed by the American electorate who put a person in the office of the presidency without the qualifications to be a Chief.

The next time we elect a president, we should evaluate the candidates’ experience.  An individual that has never had to lead a large organization with success should not be a legitimate candidate.  The job of President of the United States is the most demanding in the world.  It demands an individual that has the courage to make tough decisions like whether or not to attack Syria (without outsourcing the decision to Congress, thus eliminating any advantage of surprise), an individual that always conveys the noblest of intentions so that cabinet members, and everyday bureaucrats execute their duties for the good of America – not for the purpose of political points.

Yes, the Republicans are being blamed for the government shutdown – and they should be; their behavior has been childish.  But, for the President of the United States to see his administration misuse the government shutdown as an opportunity to score political points is disgraceful.  Much more is expected from the Chief than from the people’s representatives.

Hostage Taking, Extortion, Brinksmanship, No Negotiating – I’m Looking for Leadership

            The President just held a news conference where he repeated over and over that he will not negotiate over the government shutdown or over the soon-to-be-here debt ceiling.  He provided the beacon of leadership these difficult times demand.  He said he will not be held hostage, not be extorted and he certainly will not negotiate.  Yes, that is just the kind of leadership we need at this difficult time.

While that beautiful display of non-leadership was taking place, Senator McCain stood on the Senate floor and pleaded for common ground with the Democrats.  He mentioned two specific examples where the Rs and the Ds could easily reach agreement: 1) eliminating the health device tax, and 2) moving Congress to the same health care plan that Obamacare is providing to ordinary Americans.  Senator McCain is noble for demonstrating leadership at this time.  It is obvious that the Minority Leader, Senator McConnell, cannot lead because he is in a serious primary election; with the Tea Party looking to unseat him.  The damn Tea Party has ruined America.  It has caused so much havoc that a good man like Senator McConnell cannot lead as he could and would - if he was not threatened by a bunch of barbarians that do not understand that policy making is all about compromise.

Speaker Boehner is also unable to lead due to the Tea Party shenanigans.  At a time when the Tea Party has created a crisis out of thin air – it has also handcuffed the leaders that might help calm the storm.  Thank you Senator McCain – I am looking for Leadership.

I am not letting the Democrats off the hook either.  They are all dutifully following the President’s lead and demanding that there be NO negotiations.  I get it, the Democrats want to destroy the Tea Party and they think this is their chance to make that happen.  I support the Democrats in trying to rid us of the Ted Cruzes of the world – but not through these means.  Please do not put the world economy on a respirator just to starve the Tea Party of oxygen.  In this situation, it is not okay to do the wrong thing for the right reason.

The budget has been cut by the Sequestration to levels that both parties have said would be untenable.  The Democrats have agreed to a continuing resolution (a budget) that would cut deeper than Sequestration.  Even with these spending cuts agreed to by the Democrats, the Republicans decided they wanted something else – to once again attempt to overturn the Affordable Care Act.  PLEAE, can we get over it?  The Democrats have won the battle over health care.  What the Republicans are doing right now is ridiculous. 

Once they got wind of the fact that Americans are tired of health care battles, the Republicans decided that all they want is to negotiate.  They do not know what they want to negotiate for - but they want to negotiate.  Unfortunately, the President has stated that all he wants is NOT to negotiate.

Here we are: the Republicans want to negotiate but do not know what they want to negotiate for - and the Democrats just do not want to negotiate.  Can somebody please just negotiate about whether or not anybody should negotiate?  This is insanity.

The reason that we are having a sluggish recovery is because of uncertainty.  The Affordable Care Act is going to have significant impact on our economy.  However, the never-ending fight over its very existence has left businesses wondering if it will ever become reality.  President Obama’s decision to delay its implementation for businesses by one year was a big mistake.  It has further befuddled businesses.  They are not sure it will ever become reality.  With that uncertainty, businesses are holding back on hiring people, firing people and/or making investments.  They know that the Affordable Care Act is going to impact the economy but they do not know how big the impact will be – or even if it will be a positive or negative impact (but most are assuming negatively).  Representative Pelosi so brilliantly stated that “we have to pass the bill before we can know what is in it.”   Now, businesses have to see it implemented before they can assess its impact.  Until it is implemented we will continue to live in a period of uncertainty.

When businesses thought that the Affordable Care Act was going to become a reality, they were starting to do things that are not great for the economy.  Several announced plans to move their full-time employees to twenty-nine hours per week so that they would not have to provide health benefits.  UPS announced that it will no longer provide health care benefits to family members of their employees.  Walgreens announced that it is no longer going to provide health care benefits at all.  When a pharmacy stops providing health care – something is wrong.  These announcements are not good news for the economy – let alone for Joe the plumber.  However, they loudly demonstrate that the Affordable Care Act is going to have significant impact on businesses, on working Americans, and on our economy.

The implementation of the Affordable Care Act may cause some short-term pain but delaying it will only make the short-term pain longer in duration.  It will not alleviate the pain.  The uncertainty that Washington continues to stir up is the cause of our sluggish economic recovery (and I believe that the recovery may now be over).  The lack of leadership is the cause of our uncertainty and the Tea Party is the cause of our lack of leadership.  You see, leadership is the ability to coalesce people around a common goal and to inspire people to work together towards achieving that goal.  The Tea Party is good at coalescing people around a burning-at-the-stake for the horrendous act of compromising.

Today our goal is to determine if we want to negotiate or not negotiate.  Thank you Mr. President for your impassioned leadership around this noble goal.  Thank you also for extending the olive branch of a possible six-week cooling off period.  That is just what we need, another six-week delay.  Let’s be honest – in six weeks we will be right back here again.  This slow-drip, kick-the-can-down-the-road drill is Chinese torture treatment.

To my readers: I cannot believe you made it to this paragraph.  The above rambling collection of thoughts was a grumpy old man’s therapeutic release of frustration over the state of our nation.  But if you made it this far – you must have that same frustration.  Count on the six-week deal being done before the end of the week.  Oh, be sure not to plan any visits to a national park in six weeks – they most likely will be closed again.  Although our leaders create nothing but uncertainty about our future – they are very predictable with regard to their incompetence.

Will a Democrat work with Senator McCain to get a deal done – PLEASE?

If the Republicans "Win" - the Republicans Lose

          The Republicans have offered a gift to the Democrats that they do not even begin to understand.  If the Republicans get what they are asking for (all federal government employees on Obamacare with no employee subsidies) it will become acceptable for businesses to do the same.

          Business will no longer provide health care.  All Americans will move to Obamacare.  To make health care affordable to the millions of Americans who will lose their company provided benefits, as well as for those that already purchase their own, a law to socialize health care is inevitable.  Also inevitable is a new tax to pay for this socialized health care.

          To learn more about this issue, please read "The Mother of All Government Shutdowns" article below.  The Democrats can turn this into a game-changer and the Republicans cannot see it coming.

          Note:  In the below article, I speculated that the Democrats already understood the gift the Republicans were giving them.  As time passes without the Democrats accepting this gift I am not as confident that this is true.

The Mother of All Government Shutdowns

            The main stream media is playing the current government shutdown as just another Democrat-Republican game of chicken.  The message unfolding is that this is just a Tea Party act of immaturity.  Hello?  Does anybody understand what is at stake here?  Do the Republicans understand that they are playing with fire?  The media is playing this shutdown as meaningless.  Economists are predicting that it will have a minor impact on our already sluggish recovery.  The impact will not be big enough to worry about unless it is protracted – but nobody believes that it will be protracted. 

HELLO?  IS ANYBODY PAYING ATTENTION TO THE UNDERLYING ISSUE?  THIS SHUTDOWN HAS THE POTENTIAL TO CHANGE AMERICA RAPIDLY AND FOREVER.

The Republicans are trying to demonstrate a win – but if they “win” it will be their biggest loss in history.  The Republicans wants our federal government to stop providing heath care benefits to all its employees.  By the way, the federal government is the largest employer in our great nation.  If (or when) the federal government stops providing heath care benefits to its employees, a big flashing green light will be sent to every business in America.  That green light will tell businesses that it is okay to stop providing health care benefits to their employees too.  Do you see the big deal now?

Wow!  Think about how that would change America.  Businesses would no longer pay $16 thousand per year to provide health benefits to a single employee and his or her family.  Instead the business would pay the $2,000 fine for not providing the benefit.  If it’s good enough for Uncle Sam, it’s good enough for the blue-chips too.

In an instant, millions of Americans will have to purchase their own health insurance.  In that same instant, panic will cause Congress to socialize health care faster than Speaker Boehner sun tans.  The Democrats end-game of providing socialized health care to all Americans will be achieved – in months instead of the current plan of years.

Big business would think they have hit the jackpot at first - believing that the Republicans got them out of the health care business.  That sense of elation will cease to exist when they realize that they will be taxed in some manner in order to pay for all the socialized health care.  Can you say Value Added Tax (VAT)?  In the long run we will be better off because the VAT will reduce our cost of exported goods and therefore make America more competitive in the global marketplace.  It is the period of uncertainty between the realization that something has to be done to fund the nationwide socialized health care and the final solution that will cause havoc in the markets.

I view myself as a moderate-conservative.  However, I support the Republicans for what they are doing (even if they do not know what they are doing).  I believe that we need to radically change health care in America.  Obamacare did nothing to bring the cost of health care down.  It provides access to more Americans but it is also making health care less affordable.  America cannot afford the Cadillac plan for every American.  What we can afford is the bare-bones plan – the one that the Republicans are unknowingly charting us towards.  More affluent Americans will still be able to purchase “umbrella” coverage to assure that they get special treatment.  But, every American will have the dignity of basic health services.

It is my estimation that President Obama and the Democrats understand the severity of this issue; and that the Republicans do not.  I believe that the President’s team is stalling in caving in because not because they do not want the Republicans’ offer – but because they want to develop the lift-off plan.  The President’s team is pulling all-nighters planning how to accept this gift from the Republicans and turn it into their dream without causing panic in the markets.  Good for them – that is their job.  They just have to accept the Republicans' gift before the Republicans' figure out their blunders.

Expect the Democrats to humbly capitulate before the end of the week (sooner if the Republicans start to realize what they are doing).  The Republicans and the stock market will be jubilant.  Then in two weeks, a lot of big businesses will start announcing that they are no longer providing health care.  The trend will snowball.  Then, the Democrats will be the jubilant ones.  The whole country will be heading to the Obamacare websites and Congress will begin the official socialization legislation.  Let's face it, with most Americans qualifying for tax credits to purchase the health care they now get from their employers, something will have to be done.

Mr. President, please forgive me for letting the cat out of the bag.  Sooner or later somebody (other then you and your team) would have figured out how dumb those Republican Tea Party wing-nuts are.  Now, let us all strap on our seat belts and hope the markets do not crash and burn. 

Oh, that debt-ceiling thing – doesn’t seem all that important anymore.  Note to the economists predicting only a minor impact from the shutdown; please revisit your assumptions.  And, give the President some help on how to ride this wave home without an economic wipe-out.  I like the Hawaiian simile for President Obama.

           President Obama may go down in history as the transformational statesman that his campaign had promised.  History will not recall the ineptitude of the Tea Party.