Monday, February 25, 2013
Washington D.C. - Sequester City
Where to begin? Clearly, the inmates have taken over this asylum. The panicked pleas of Dems about the dangers of the sequester are falling on deaf ears, and not only in the House of Representatives. The people by and large are ignoring the crisis of the moment, despite Obama's latest all-out, campaign style public relations effort. Maybe at some point, our President will actually get to work and do his job. The 50 some odd billion bucks to be sequestered in the remainder of this fiscal year (at an $85 billion annual rate) is a drop in the fiscal bucket. In fact, the increase in the budget due baseline to offset inflation is greater than the amount of sequester cuts! Only in Washington is that a cut.
Yet for the GOP, there is really no choice. Dems surpassed even their unbroken record for reneging on budget deals by stiffing the Repubs in the fiscal cliff settlement. In short, the only cuts you can get past the spendthrifts in blue are automatic ones. Look for the Republicans to pass a bill in the House allowing Dems to use some discretion in making the Defense Department's share of the cuts, but Dems will hold out for the same discretion for all agencies. Republicans are likely to give it to them too, but Dems don't really want to pass that either. They want the cuts to be as painful as possible, and then to blame the Republicans for not agreeing to more taxes. On Sunday, the Dems' irresponsibility finally seemed too much for even their close media friends to stomach, as the news magazines anchors actually took pains to pose some hard questions for the Administration shills. Republicans intend to resist any additional taxes on top of the fiscal cliff increase, and they should, though I would make an exception for the capital gains treatment hedge funds managers enjoy.
So the sequester looks like it is going to happen, and that's a good thing. It will not hurt the economy, and will help it in the long run. We need to cut this budget and this deficit. Then if we can get the Fed to normalize rates and do something to curb entitlement growth, we will start to revive our economic growth engine. Of course, the regulatory nightmare that Obama has unleashed on business (and which Harvard's Michael Porter recently attributed much of our economic malaise to) needs to be reined in too, but that is hoping for miracles, I'm afraid.
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If the sequester was the only source of Washington hi-jinx, it would be enough for most C-Span junkies, but the reality is it's at least a three ring circus. PPACA has been a never ending source of atrocities. HHS continues to spout rules, a top down approach that has no chance to work. Proof of this failure can be seen in the Feds curtailment of the high risk "uninsurables" pools. Someone finally got the bright idea that the claims associated with this group will be actuarially unmanageable, something even a first year actuarial student could have told them if they had bothered to ask. Or, for that matter, any Governor or Comptroller of a community rating state like New York. This, the completely unrealistically low MediCare Advantage rates, and the high comedy surrounding governors' decisions on whether to take the Federal money for Medicaid expansion (knowing the rug will probably be pulled from under them in a few years) or not to expand Medicaid at all, proves what we said from the beginning: this was never about health insurance, since there really has been no insurance provided for decades. What carriers do today is administer bill paying, they don't really take risk. PPACA is not there to provide insurance either. It is a stalking horse for single payor, European style, government provided health care. And unless the apple cart of PPACA is upset soon, that's what we will get.
Beyond PPACA, there is also the hilarity of the minimum wage increase proposal. For as long as I can remember, Republicans have opposed the minimum wage on largely humanitarian grounds - it causes unemployment, especially among youth. Today, youth unemployment in this country is a staggering 23.4%. That's depression level stuff. At what point will Dems recognize that there is a connection? Answer is, it doesn't matter, minimum wage increases are a sop to their union buddies, and another position that sounds compassionate on its face while causing great damage in reality.
The comment we received after our last post, while thoughtful, takes the GOP to task for taking positions opposing such compassionate sounding policies. I would be the first to agree that conservatives' messaging has been unsuccessful in recent years (other than in 2010). But frankly, we have a much harder job. Would you rather dole out medicine or cookies? Make no mistake, conservatives believe they are providing medicine, in the form of policies that will work. When that loses elections so be it. The other nightmare is that in the last two cycles, at least half a dozen Senate candidates have come through the primary system under the Republican banner who were incompetent, gaffe prone, maybe even mean spirited. Some blame the Tea Party, but I think that view is myopic. Each situation has been different. Having said that, there should be changes made to the primary system, particularly in states that have so-called "open" primaries. I think that only party members should be eligible to vote in primaries. Otherwise, you get the kind of fiasco we had in Missouri where Dems actually spent money on ads to get their voters to come out and vote for Akin in the GOP primary! And we all know what happened to that candidacy.
So let's stipulate that conservative candidates need to polish their statements and stop saying dumb things. When the media badgers you to answer questions about social issues that should not be part of the campaign, don't answer! How hard is that? But the answer is not to mimic the other party's poor policy positions, and this is true on taxes, spending, immigration, health care and so on.
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Well, I'm sorry for such a serious post. I really do want to lighten up, do a little more music, sports, and similar trivia. Speaking of music, the once Young, now Old, Rascals are reuniting for a couple of shows in the New York area. Now that would be fun. Also, pianist Cedar Walton is coming to Birdland next week, and I intend to make a visit there. And coming in May, Jane Monheit. Stay tuned for those dates.
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On Feb 15, we bought 500 shares of Petroquest (PQ) at 4.47, a zero buy. The oil patch is slumping despite high gas prices, as the Street discounts much lower prices coming. On 2/19 we bought 20 shares of the TIP ETF (TIP) for 120.21. Then on 2/20 we sold 200 shares of Marine Max (HZO)for 13.94. We paid 1.54 on 11/10/08. Are 9 timers ever bad? On 2/21, we bought 300 shares of Alcoa (AA), one of the dogs in our kennel that has shown some signs of life. That was a value buy. Then on 2/22, we bought 600 more shares of Petroquest (PQ), now down to 4.01. You gotta believe!
Yet for the GOP, there is really no choice. Dems surpassed even their unbroken record for reneging on budget deals by stiffing the Repubs in the fiscal cliff settlement. In short, the only cuts you can get past the spendthrifts in blue are automatic ones. Look for the Republicans to pass a bill in the House allowing Dems to use some discretion in making the Defense Department's share of the cuts, but Dems will hold out for the same discretion for all agencies. Republicans are likely to give it to them too, but Dems don't really want to pass that either. They want the cuts to be as painful as possible, and then to blame the Republicans for not agreeing to more taxes. On Sunday, the Dems' irresponsibility finally seemed too much for even their close media friends to stomach, as the news magazines anchors actually took pains to pose some hard questions for the Administration shills. Republicans intend to resist any additional taxes on top of the fiscal cliff increase, and they should, though I would make an exception for the capital gains treatment hedge funds managers enjoy.
So the sequester looks like it is going to happen, and that's a good thing. It will not hurt the economy, and will help it in the long run. We need to cut this budget and this deficit. Then if we can get the Fed to normalize rates and do something to curb entitlement growth, we will start to revive our economic growth engine. Of course, the regulatory nightmare that Obama has unleashed on business (and which Harvard's Michael Porter recently attributed much of our economic malaise to) needs to be reined in too, but that is hoping for miracles, I'm afraid.
-------------------------------------------------------------------------------------------------
If the sequester was the only source of Washington hi-jinx, it would be enough for most C-Span junkies, but the reality is it's at least a three ring circus. PPACA has been a never ending source of atrocities. HHS continues to spout rules, a top down approach that has no chance to work. Proof of this failure can be seen in the Feds curtailment of the high risk "uninsurables" pools. Someone finally got the bright idea that the claims associated with this group will be actuarially unmanageable, something even a first year actuarial student could have told them if they had bothered to ask. Or, for that matter, any Governor or Comptroller of a community rating state like New York. This, the completely unrealistically low MediCare Advantage rates, and the high comedy surrounding governors' decisions on whether to take the Federal money for Medicaid expansion (knowing the rug will probably be pulled from under them in a few years) or not to expand Medicaid at all, proves what we said from the beginning: this was never about health insurance, since there really has been no insurance provided for decades. What carriers do today is administer bill paying, they don't really take risk. PPACA is not there to provide insurance either. It is a stalking horse for single payor, European style, government provided health care. And unless the apple cart of PPACA is upset soon, that's what we will get.
Beyond PPACA, there is also the hilarity of the minimum wage increase proposal. For as long as I can remember, Republicans have opposed the minimum wage on largely humanitarian grounds - it causes unemployment, especially among youth. Today, youth unemployment in this country is a staggering 23.4%. That's depression level stuff. At what point will Dems recognize that there is a connection? Answer is, it doesn't matter, minimum wage increases are a sop to their union buddies, and another position that sounds compassionate on its face while causing great damage in reality.
The comment we received after our last post, while thoughtful, takes the GOP to task for taking positions opposing such compassionate sounding policies. I would be the first to agree that conservatives' messaging has been unsuccessful in recent years (other than in 2010). But frankly, we have a much harder job. Would you rather dole out medicine or cookies? Make no mistake, conservatives believe they are providing medicine, in the form of policies that will work. When that loses elections so be it. The other nightmare is that in the last two cycles, at least half a dozen Senate candidates have come through the primary system under the Republican banner who were incompetent, gaffe prone, maybe even mean spirited. Some blame the Tea Party, but I think that view is myopic. Each situation has been different. Having said that, there should be changes made to the primary system, particularly in states that have so-called "open" primaries. I think that only party members should be eligible to vote in primaries. Otherwise, you get the kind of fiasco we had in Missouri where Dems actually spent money on ads to get their voters to come out and vote for Akin in the GOP primary! And we all know what happened to that candidacy.
So let's stipulate that conservative candidates need to polish their statements and stop saying dumb things. When the media badgers you to answer questions about social issues that should not be part of the campaign, don't answer! How hard is that? But the answer is not to mimic the other party's poor policy positions, and this is true on taxes, spending, immigration, health care and so on.
-----------------------------------------------------------------------------------------------
Well, I'm sorry for such a serious post. I really do want to lighten up, do a little more music, sports, and similar trivia. Speaking of music, the once Young, now Old, Rascals are reuniting for a couple of shows in the New York area. Now that would be fun. Also, pianist Cedar Walton is coming to Birdland next week, and I intend to make a visit there. And coming in May, Jane Monheit. Stay tuned for those dates.
------------------------------------------------------------------------------------------------
On Feb 15, we bought 500 shares of Petroquest (PQ) at 4.47, a zero buy. The oil patch is slumping despite high gas prices, as the Street discounts much lower prices coming. On 2/19 we bought 20 shares of the TIP ETF (TIP) for 120.21. Then on 2/20 we sold 200 shares of Marine Max (HZO)for 13.94. We paid 1.54 on 11/10/08. Are 9 timers ever bad? On 2/21, we bought 300 shares of Alcoa (AA), one of the dogs in our kennel that has shown some signs of life. That was a value buy. Then on 2/22, we bought 600 more shares of Petroquest (PQ), now down to 4.01. You gotta believe!
