I am really tired of listening to all the misinformation out there is American political discourse these days. I think it is worthwhile to list a few simple and undeniable truths.
1) The debt deal just signed into law will not have the effect of slowing the economy. The actual spending cut for the next year is at most a rounding error in federal spending. Any drag from that cut will more than be outweighed by the maintenance of the AAA rating that the deal has allowed.
2) Terrorists are people who kill others in order to make a political point. Strong positions do not make one a terrorist. The Tea Party does not consist of terrorists, no matter what they think on MSNBC.
3) President Obama is not a good leader. He does not produce his own solutions to problems. Rather, he waits for others to act and then comes forward with a critique. He should have stayed a legislator.
4) President Obama is not a good negotiator. He has repeatedly made pronouncements about what he would or would not accept as a bottom line in various debates only to blow right past those positions in the end. He has also set a series of deadlines for action over the last few years and then let them pass without consequences.
5) President Obama does not understand the limited value of speeches. He (and perhaps his advisers) think that if the president makes a point in a speech that it is as good as if the country took action on that point. Both our friends and adversaries around the world have come to realize that the most likely response to anything from the White House is yet another teleprompter reading that carries no real weight.
6) The economy is on very shaky ground but there are a number of ways to improve it. The best of these ways do not increase federal spending or cut real federal taxes. Here are two of the very best: A) a one year tax holiday for repatriation of money held overseas by American companies. If some or all of that trillion dollars were to be brought home at a tax rate of 5 or ten percent, there would be increased revenue (since none of the cash would get here otherwise). There would also be a major stimulative boost to the economy from all that cash moving back into the US economy. B) a change in the taxation of corporations from an income tax to a consumption tax would allow for more income to be collected while reducing the burden on American business. That is because much of the tax would be levied on imports. This would raise the cost of imports while reducing the cost of American goods. The net effect would be to give a substantial boost to goods made in America while at the same time getting more revenue.
7) The idea of many environmentalists that all fossil fuels are bad is complete nonsense. Maybe it would be a good thing in the long run to replace oil, coal and gas with solar and wind energy, but there is no way that such a transformation can take place for many decades. Right now, impediments to production and use of oil, coal and gas just drive costs up for all Americans and slow the economy, something the country cannot afford.
8) Just because the government begins a program, it does not turn into a right for all the people. If the program cost too much or if it just does not work, it has to be terminated even if some folks claim to be hurt.
There are a lot more of these, but this is a start.
Wednesday, August 3, 2011
Tuesday, August 2, 2011
Surprising polling from Pennsylvania
Quinipiac is out today with polling that matches president Obama against possible GOP challengers in Pennsylvania. The results show Mitt Romney leading Obama by 44-42%. Obama leads both Bachmann and Perry, but he gets only 45% of the vote against the Texas governor and 47% against Bachmann. These are staggering figures for the Democrats.
First of all, the sample for the poll was registered voters. Using registered voters rather than likely voters normally leads to better results for the Democrats. Losing to Romney with this sample means that were there actually an election tomorrow, Romney would be about 6 or 7 % ahead.
Second, Pennsylvania is normally a blue state in presidential politics. Every four years it is named a "battleground", and then it votes reliably for the Democrat. Trailing in Pennsylvania is a very bad incidator for Obama.
Third, Bachmann is the kind of strong conservative who normally will not play well in Pennsylvania. The fact that Obama cannot even muster a majority against her is another sign that Obama is on very shaky ground in the Keystone State.
Obviously, we are well over a year until the election and much can and will change before then. Nevertheless, it must be keeping folks up at night at the White House to see a must win state like Pennsylvania slipping away.
First of all, the sample for the poll was registered voters. Using registered voters rather than likely voters normally leads to better results for the Democrats. Losing to Romney with this sample means that were there actually an election tomorrow, Romney would be about 6 or 7 % ahead.
Second, Pennsylvania is normally a blue state in presidential politics. Every four years it is named a "battleground", and then it votes reliably for the Democrat. Trailing in Pennsylvania is a very bad incidator for Obama.
Third, Bachmann is the kind of strong conservative who normally will not play well in Pennsylvania. The fact that Obama cannot even muster a majority against her is another sign that Obama is on very shaky ground in the Keystone State.
Obviously, we are well over a year until the election and much can and will change before then. Nevertheless, it must be keeping folks up at night at the White House to see a must win state like Pennsylvania slipping away.
Don't They ever get tired of this?
The articles and media stories explaining how the cuts in the budget deal with hurt the poorest Americans are all over the place today. I read one that said that the poor have been brainwashed by Fox News into believing that the cuts will help them. Another explained that the cuts in grants to states for services to the poor will increase costs by a factor of ten. It is amazing that reporters write this stuff and that editors let it get into print or on the air. Just think about it. If the feds cut a grant to a state by a million dollars, how can that increase the costs for the state by ten million? All that is needed is for the state to make up the cut. And how many of you out there have noticed that Fox News has shows where hypnotists put the audience into a trance and then tell them to support budget cuts? The only cable news shows that I know of that put folks to sleep are on CNN, and that is not hypnosis, just boredom.
The amazing thing to me is that the liberal press never stops this line of attack. The budget gets cut next year by a tiny amount and the world has come to an end. Of course, these are the same folks who find nothing wrong with calling the Tea Party terrorists. When the movement first appeared in 2009, they were called astroturf, racist, gun-toting crazies and other names meant to marginalize them. But America saw on TV that these folks were just ordinary Americans who were out there expressing their views. And they made sense. Of course, the liberal media had spent years glorifying protesters. Every person who carried a sign since 1968 has been a national hero to much of the press, so when the Tea Party suddenly became a dangerous entity by doing the same thing, the hypocracy was evident to all but the true believing progressives.
I find it surprising that those on the left still fail to realize that they have to deal with the actual facts of a debate rather than just winning by using name calling. After all, they already used their equivalent of nuclear war: they called the Tea Party racist. And they still lost! The progressives are totally confused by this fact. They think that they still control the narrative in this country and they have not adapted to the new reality where the truth comes out, and that is the real truth rather than the progressive truth. Hopefully, they will not figure out what to do before 2012. It is too important to the country to have the GOP win in that election.
The amazing thing to me is that the liberal press never stops this line of attack. The budget gets cut next year by a tiny amount and the world has come to an end. Of course, these are the same folks who find nothing wrong with calling the Tea Party terrorists. When the movement first appeared in 2009, they were called astroturf, racist, gun-toting crazies and other names meant to marginalize them. But America saw on TV that these folks were just ordinary Americans who were out there expressing their views. And they made sense. Of course, the liberal media had spent years glorifying protesters. Every person who carried a sign since 1968 has been a national hero to much of the press, so when the Tea Party suddenly became a dangerous entity by doing the same thing, the hypocracy was evident to all but the true believing progressives.
I find it surprising that those on the left still fail to realize that they have to deal with the actual facts of a debate rather than just winning by using name calling. After all, they already used their equivalent of nuclear war: they called the Tea Party racist. And they still lost! The progressives are totally confused by this fact. They think that they still control the narrative in this country and they have not adapted to the new reality where the truth comes out, and that is the real truth rather than the progressive truth. Hopefully, they will not figure out what to do before 2012. It is too important to the country to have the GOP win in that election.
Perhaps the biggest hidden item in the debt deal -- Obamacare may be repealed
I was reading coverage of the debt debate compromise, and I came across this extremely important excerpt from Powerline: "One of the diabolical aspects of the debt bill is that budgets for FY 2012 and 2013 will be “deemed” to be in effect, even though in fact, no budget will be proposed, reviewed in committee, debated or adopted. Will that make President Obama the first chief executive to serve an entire term without ever having a budget in place?"
For those who love the arcane workings of the federal budget process, this is newsworthy. But, it is not the big news here. If this is correct, there will be a budget deemed to be in place for the next two fiscal years, and that may well mean the end of Obamacare. Let me explain. If the Republicans beat Obama in 2012 and take a majority in the Senate, they are unlikely to get a 60 vote majority in the Senate. That would need a pick up of 13 seats in one election, a shift that is almost impossible. A group of 41 or more Democrats could fillibuster any attempt to repeal Obamacare and thwart the GOP plan to get rid of that law. Recall, however, that Obamacare ultimately passed the Senate through a process called reconciliation which does not permit there to be a fillibuster. Under the Senate rules, however, reconciliation can only be used if there is a budget in place. Senate Democrats have not passed a budget for three years. They would have no problem preventing passage of a budget in 2013 which would have prevented the use of reconciliation. Now, that tool is taken from them. In other words, the bar for repeal of Obamacare just went from winning the presidency plus 60 votes in the senate to only needing the presidency and 51 votes.
For those who love the arcane workings of the federal budget process, this is newsworthy. But, it is not the big news here. If this is correct, there will be a budget deemed to be in place for the next two fiscal years, and that may well mean the end of Obamacare. Let me explain. If the Republicans beat Obama in 2012 and take a majority in the Senate, they are unlikely to get a 60 vote majority in the Senate. That would need a pick up of 13 seats in one election, a shift that is almost impossible. A group of 41 or more Democrats could fillibuster any attempt to repeal Obamacare and thwart the GOP plan to get rid of that law. Recall, however, that Obamacare ultimately passed the Senate through a process called reconciliation which does not permit there to be a fillibuster. Under the Senate rules, however, reconciliation can only be used if there is a budget in place. Senate Democrats have not passed a budget for three years. They would have no problem preventing passage of a budget in 2013 which would have prevented the use of reconciliation. Now, that tool is taken from them. In other words, the bar for repeal of Obamacare just went from winning the presidency plus 60 votes in the senate to only needing the presidency and 51 votes.
Monday, August 1, 2011
Stock of the month for August -- SDS --Proshares Ultra short S&P 500
This is the first month that I have recommended shorting the market. There is just too much bad news out there for me to go long. I think it clearly is time to get smaller with your portfolio. In my opinion, the best way to carry out this strategy is to buy calls on Proshares Ultra short S&P 500 (symbol SDS). I will explain the details of the trade below, but first let me explain the reasons why I favor it at the moment.
1) The debt ceiling bill may fail in one house or the other. This seems unlikely at the moment, but, if the bill fails, the market will crash.
2) The ISM numbers this morning were truly terrible. When they are coupled with the GDP figures issued last week and many of the other indicators, it is clear that the economy has encountered more than just a bump in the road (to use Obama's term). The full import of these numbers has not been factored into the market in my opinion. I expect there to be a further drop over the next few weeks.
3) The unemployment report for July is likely to be another awful number. Indeed, it would be good news in my opinion if the unemployment rate just stays the same as it was in June. Weekly new claims for unemployment went down last week, but not to a level that indicates much in the way of job creation. Stories of large layoffs have begun making their way into the press with regularity. In short, things do not look good in the short term.
4) Bad unemployment numbers would further reinforce the current unease of the consumer with resulting drops in consumer spending. This could form a cycle that feeds on itself with the result that the economy falls back into recession. Even if unemployment stays constant, it will take a while for consumer confidence to return and drive the economy.
5) If the ratings agencies downgrade the USA from AAA to AA, the will likely be a strong market reaction. coupling this with all the other items listed above, we may see a decline of a substantial nature.
So, in summary, there is a reasonably large chance that the market is heading south in a major way.
So what is the best way to protect against a market decline? most people cannot simply sell their stocks and exit from the market, nor would it make sense to do so. A much better solution is to have an investment that will rise if the market tanks so as to offset any decline. Proshareshares Ultra Short S&P 500 (symbol SDS) goes up by a double percentage each day of the amount that the S&P 500 declines. For example, if the S&P goes down 2%, SDS will rise by 4%. Further, one can buy calls on SDS in order to greatly increase the leverage available.
Here is an example: At the moment, SDS is selling for $21.82 per share. The September 24 calls could be purchased for 75 cents. If some form of bad news comes out that sends the market down by ten percent from here, SDS would rise about 20% to $26.18 per share. The value of the september 24 calls, however, would rise to at least $2.20 and depending on the timing probably to something more like $2.60. This is an increase of about 250% in the value of the calls. So, if the market tanks, these calls will soar.
Of course, there are some major caveats with regard to investing in SDS calls. First, these are highly risky; if the market goes up or even stays the same, these calls will wither away to nothing. It is imperative that you not use these calls as a primary investment vehicle; they are more appropriate to hedge one's portfolio against a disaster. Look at the amount you pay as an insurance premium which will protect a part of your ortfolio from decline. Of course, if the market goes way up, you will make plenty of money on your other holdings so that the loss on SDS will not be material.
Second, Because the market gyrates so wildly sometimes, it is imperative to be nimble in trading these options. Just look at today's trading. The market started out way up because of the debt deal. After the ISM numbers came out at 10:00, the market plunged. SDS calls went from being way down for the day at the open to being up about an hour later. Because SDS is a double of the S&P, it moves up and down much more quickly than most securities.
Third, just because you have a position in SDS calls, you cannot imagine that you have handled all the market risk. You need to carefully analyse your investments and get rid of those with excessive risk for the likely return.
Fourth, the most appropriate SDS calls change daily or even more often. As a result, if you have lack substantial experience trading options, you should stay away from these calls.
Finally, as I always say, you need to do your own due dilligence before investing. I make suggestions, but you need to make the decision based upon all the facts. Do your own research.
Disclosure: I am long SDS calls.
1) The debt ceiling bill may fail in one house or the other. This seems unlikely at the moment, but, if the bill fails, the market will crash.
2) The ISM numbers this morning were truly terrible. When they are coupled with the GDP figures issued last week and many of the other indicators, it is clear that the economy has encountered more than just a bump in the road (to use Obama's term). The full import of these numbers has not been factored into the market in my opinion. I expect there to be a further drop over the next few weeks.
3) The unemployment report for July is likely to be another awful number. Indeed, it would be good news in my opinion if the unemployment rate just stays the same as it was in June. Weekly new claims for unemployment went down last week, but not to a level that indicates much in the way of job creation. Stories of large layoffs have begun making their way into the press with regularity. In short, things do not look good in the short term.
4) Bad unemployment numbers would further reinforce the current unease of the consumer with resulting drops in consumer spending. This could form a cycle that feeds on itself with the result that the economy falls back into recession. Even if unemployment stays constant, it will take a while for consumer confidence to return and drive the economy.
5) If the ratings agencies downgrade the USA from AAA to AA, the will likely be a strong market reaction. coupling this with all the other items listed above, we may see a decline of a substantial nature.
So, in summary, there is a reasonably large chance that the market is heading south in a major way.
So what is the best way to protect against a market decline? most people cannot simply sell their stocks and exit from the market, nor would it make sense to do so. A much better solution is to have an investment that will rise if the market tanks so as to offset any decline. Proshareshares Ultra Short S&P 500 (symbol SDS) goes up by a double percentage each day of the amount that the S&P 500 declines. For example, if the S&P goes down 2%, SDS will rise by 4%. Further, one can buy calls on SDS in order to greatly increase the leverage available.
Here is an example: At the moment, SDS is selling for $21.82 per share. The September 24 calls could be purchased for 75 cents. If some form of bad news comes out that sends the market down by ten percent from here, SDS would rise about 20% to $26.18 per share. The value of the september 24 calls, however, would rise to at least $2.20 and depending on the timing probably to something more like $2.60. This is an increase of about 250% in the value of the calls. So, if the market tanks, these calls will soar.
Of course, there are some major caveats with regard to investing in SDS calls. First, these are highly risky; if the market goes up or even stays the same, these calls will wither away to nothing. It is imperative that you not use these calls as a primary investment vehicle; they are more appropriate to hedge one's portfolio against a disaster. Look at the amount you pay as an insurance premium which will protect a part of your ortfolio from decline. Of course, if the market goes way up, you will make plenty of money on your other holdings so that the loss on SDS will not be material.
Second, Because the market gyrates so wildly sometimes, it is imperative to be nimble in trading these options. Just look at today's trading. The market started out way up because of the debt deal. After the ISM numbers came out at 10:00, the market plunged. SDS calls went from being way down for the day at the open to being up about an hour later. Because SDS is a double of the S&P, it moves up and down much more quickly than most securities.
Third, just because you have a position in SDS calls, you cannot imagine that you have handled all the market risk. You need to carefully analyse your investments and get rid of those with excessive risk for the likely return.
Fourth, the most appropriate SDS calls change daily or even more often. As a result, if you have lack substantial experience trading options, you should stay away from these calls.
Finally, as I always say, you need to do your own due dilligence before investing. I make suggestions, but you need to make the decision based upon all the facts. Do your own research.
Disclosure: I am long SDS calls.
Tax increases?
The presentation put out by Speaker of the House John Boehner for his caucus members has this statement right up front in the seven page document.
"Under the framework, the Joint Committee of Congress will
work off a current-law baseline, as required by the 1974
Budget Act, effectively making it impossible for Joint
Committee to increase taxes."
Translating that into English from Congress - speak, Boehner is telling House Republicans that the special committee tasked to come up with 1.5 trillion in further budget cuts by Thanksgiving will not be able to include tax increases in their recommendations.
At the White House this morning, presidential spokesman Jay Carney was asked about this point. He said that the bill before Congress does not require the Special Committee to use any particular baseline, so there is no reason why the Committee could not suggest tax increases.
To put it mildly, this is a big issue. Is Carney just covering up for Obama so that it does not look like the president caved in totally on the tax issue just to put the next vote on the debt ceiling beyond his re-election bid? Or is Carney correct?
I just read the entire 74 page text of the proposed bill. As a practicing lawyer for over 35 years, I am adept at reading statutes to see exactly what they say. The problem with this one is that much of what it does is to amend other statutes which are not fully set forth. Figuring out exactly what the bill means would take another long slog through a whole host of other provisions of the federal code. In other words, even after carefully reading the bill, I cannot tell whether the Speaker or the president's spokeman is correct on this point.
It is hard to imagine that we have gone through all these weeks and months of nonsense just to get to a point where it is unclear what the effect of the proposed statute will be. Someone is going to have to clarify this quickly or the entire bill may become untenable.
"Under the framework, the Joint Committee of Congress will
work off a current-law baseline, as required by the 1974
Budget Act, effectively making it impossible for Joint
Committee to increase taxes."
Translating that into English from Congress - speak, Boehner is telling House Republicans that the special committee tasked to come up with 1.5 trillion in further budget cuts by Thanksgiving will not be able to include tax increases in their recommendations.
At the White House this morning, presidential spokesman Jay Carney was asked about this point. He said that the bill before Congress does not require the Special Committee to use any particular baseline, so there is no reason why the Committee could not suggest tax increases.
To put it mildly, this is a big issue. Is Carney just covering up for Obama so that it does not look like the president caved in totally on the tax issue just to put the next vote on the debt ceiling beyond his re-election bid? Or is Carney correct?
I just read the entire 74 page text of the proposed bill. As a practicing lawyer for over 35 years, I am adept at reading statutes to see exactly what they say. The problem with this one is that much of what it does is to amend other statutes which are not fully set forth. Figuring out exactly what the bill means would take another long slog through a whole host of other provisions of the federal code. In other words, even after carefully reading the bill, I cannot tell whether the Speaker or the president's spokeman is correct on this point.
It is hard to imagine that we have gone through all these weeks and months of nonsense just to get to a point where it is unclear what the effect of the proposed statute will be. Someone is going to have to clarify this quickly or the entire bill may become untenable.
All Spin, All the Time
As usual, I was listening in my car this morning to WCBS, the CBS newsradio station in New York. To put it mildly, I was amazed at the level of spin that was masquerading as news. Now that there is a debt deal in Washington, CBS is promoting "news" that it wants to hear, not what actually happened. Here are some examples:
1) According to the business reporter, the cuts in the debt deal will mean higher unemployment and slower economic growth this year. This statement is clearly untrue. Indeed, it is so far from reality that I assume that it was just put out there by CBS in an attempt to shift blame for the poor economy from Obama to the Republicans who insisted on spending cuts. The truth is that in the next fiscal year, the level of spending cuts is six billion dollars. That's right, six billion dollars. Here's the description from a listing of the plan's features that I believe is accurate:
"The [spending] caps would be relatively modest at first to avoid stifling the shaky economy -- spending for the fiscal year that begins October 1 would be only $6 billion below the current level of $1.049 trillion. The caps would have a greater impact in later years, when it is hoped that the economy will have recovered."
Let's put this into context. Six billion dollars is about 0.15% of the federal budget. It is about 0.04% of GDP. In other words, this supposed cut is less than a rounding error. Indeed, many folks are furious that after all the upset and drama of the last few months, the cuts are so small. We can argue about the merits of the cuts, but on thing is certain: the cuts will not raise unemployment nor slow growth of GDP. CBS is just spinning.
2) According to CBS, the American people are all enraged at the process that was followed to come to the agreement. CBS says that the people wanted Congress to come to a deal in a more orderly fashion. Again, this is just spin. CBS interviewed people on the street in New York and picked out the responses that they liked. A few anecdotal responses do not support broad conclusions about America. Nevertheless, these responses do support that broad consensus among liberal media outlets that Republicans were holding the country hostage. A fair way to look at the issue would be to wait a week for the outlines of the full deal to emerge and than to poll people across the nation. But that would be reporting actual news, so it is not in the CBS playbook.
There were a few more instances of pure spin, but it is annoying me just to repeat them, so I will not. The actual keys about the debt deal are these:
1)For the first time in recent memory, there has actually been a long term spending cut plan adopted. Considering that president Obama started the year with a budget plan that called for substantial spending increases, the change in direction is extraordinary.
2)In all of the negotiations about the debt ceiling, the president never once proposed his own plan as to how to proceed. Senate Democrats did have the Reid plan, but that could not even pass the Senate. In short, all the plans put forward came from the GOP. The House GOP passed a budget and two further plans to which the Senate Democrats said no. Clearly, the leadership that got the country out of this mess came from the GOP. In fact, the Obama lack of leadership was appalling.
3)The so-called trigger mechanisms that are designed to force agreement by both the commission and the Congress to future cuts are skewed towards the Democrats. Absent agreement to other cuts, there will be substantial cuts in defense and Medicare. The Medicare cuts, however, will be cuts in payments to providers, not to beneficiaries. In other words, if there is no agreement, it is hospitals and doctors that will suffer, not the elderly. If, in fact, those cuts actually go into effect, the result will be that some providers will leave the Medicare system, thereby reducing care options for the elderly. At the same time, the insurance plans that supplement Medicare may be forced to make up the difference with the result that these plans will be driven out of business by the much increased expenses. All in all, I doubt that the Demcrats will be too upset that doctors, insurance companies and hospitals get less. And putting this in other terms, does anyone think that if the Medicare cuts go into effect that there will not be a move in Congress to undo them? Anyone who opposes that move will be blamed for taking healthcare from Grandma.
In other words, this part of the deal is truly slanted towards the Democrats. Can you say tax increases are coming?
4)By making most of the cuts to spending hit in the out years, the deal puts most of the reductions into fantasy land. If the Democrats take back total control of the government in 2012, these cuts will disappear faster than and ice cube in the Sahara Desert.
1) According to the business reporter, the cuts in the debt deal will mean higher unemployment and slower economic growth this year. This statement is clearly untrue. Indeed, it is so far from reality that I assume that it was just put out there by CBS in an attempt to shift blame for the poor economy from Obama to the Republicans who insisted on spending cuts. The truth is that in the next fiscal year, the level of spending cuts is six billion dollars. That's right, six billion dollars. Here's the description from a listing of the plan's features that I believe is accurate:
"The [spending] caps would be relatively modest at first to avoid stifling the shaky economy -- spending for the fiscal year that begins October 1 would be only $6 billion below the current level of $1.049 trillion. The caps would have a greater impact in later years, when it is hoped that the economy will have recovered."
Let's put this into context. Six billion dollars is about 0.15% of the federal budget. It is about 0.04% of GDP. In other words, this supposed cut is less than a rounding error. Indeed, many folks are furious that after all the upset and drama of the last few months, the cuts are so small. We can argue about the merits of the cuts, but on thing is certain: the cuts will not raise unemployment nor slow growth of GDP. CBS is just spinning.
2) According to CBS, the American people are all enraged at the process that was followed to come to the agreement. CBS says that the people wanted Congress to come to a deal in a more orderly fashion. Again, this is just spin. CBS interviewed people on the street in New York and picked out the responses that they liked. A few anecdotal responses do not support broad conclusions about America. Nevertheless, these responses do support that broad consensus among liberal media outlets that Republicans were holding the country hostage. A fair way to look at the issue would be to wait a week for the outlines of the full deal to emerge and than to poll people across the nation. But that would be reporting actual news, so it is not in the CBS playbook.
There were a few more instances of pure spin, but it is annoying me just to repeat them, so I will not. The actual keys about the debt deal are these:
1)For the first time in recent memory, there has actually been a long term spending cut plan adopted. Considering that president Obama started the year with a budget plan that called for substantial spending increases, the change in direction is extraordinary.
2)In all of the negotiations about the debt ceiling, the president never once proposed his own plan as to how to proceed. Senate Democrats did have the Reid plan, but that could not even pass the Senate. In short, all the plans put forward came from the GOP. The House GOP passed a budget and two further plans to which the Senate Democrats said no. Clearly, the leadership that got the country out of this mess came from the GOP. In fact, the Obama lack of leadership was appalling.
3)The so-called trigger mechanisms that are designed to force agreement by both the commission and the Congress to future cuts are skewed towards the Democrats. Absent agreement to other cuts, there will be substantial cuts in defense and Medicare. The Medicare cuts, however, will be cuts in payments to providers, not to beneficiaries. In other words, if there is no agreement, it is hospitals and doctors that will suffer, not the elderly. If, in fact, those cuts actually go into effect, the result will be that some providers will leave the Medicare system, thereby reducing care options for the elderly. At the same time, the insurance plans that supplement Medicare may be forced to make up the difference with the result that these plans will be driven out of business by the much increased expenses. All in all, I doubt that the Demcrats will be too upset that doctors, insurance companies and hospitals get less. And putting this in other terms, does anyone think that if the Medicare cuts go into effect that there will not be a move in Congress to undo them? Anyone who opposes that move will be blamed for taking healthcare from Grandma.
In other words, this part of the deal is truly slanted towards the Democrats. Can you say tax increases are coming?
4)By making most of the cuts to spending hit in the out years, the deal puts most of the reductions into fantasy land. If the Democrats take back total control of the government in 2012, these cuts will disappear faster than and ice cube in the Sahara Desert.
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