Who exactly is winning in 2014?

The NY Times actually published a semi-reasonable article on the political battles shaping for the 2014 election:

 

Fiscal Crisis Sounds the Charge in G.O.P.'s 'Civil War'

http://www.nytimes.com/2013/10/20/us/fiscal-crisis-sounds-the-charge-in-gops-civil-war.html?_r=0

 

I'd rate it a C+. It does shed some significant insight, but only on one side of the fence. I mean, the Democrats are not as united as their fiscal "victory" suggests. There are still plenty of Democrats who will face the same challenges in their own primaries and elections. I mean, will Progressive Liberals really "sit down and shut up" and settle for moderate, mainstream Democrats who are in fact willing to compromise on even reasonable matters (e.g., tax reform), or will they too begin clamoring for a more activist Democratic party. Sure, there was at least some semblance of unity in the latest fiscal battle, but that was dirt-simple since the Republicans were only asking for something that they absolutely did not have the votes for in the Senate. But what will happen to that unity when the debate shifts to the severe compromise needed for tax reform, immigration reform, etc.?

 

Maybe the real bottom line of the article was the mention of how the Republicans are beginning to do a much better job of preemptively vetting populist candidates to assure that they can win a general election before they garner too much momentum at the primary level. Sure, that may make the Tea Party members of Congress a little less extreme, but hardly make them amenable to the interests of your average Progressive Liberal.

 

In short, the article does indeed suggest that there will be battles within the GOP, but does nothing to assure that Democrats will have any better luck winning back the House. Let alone the fact that even if the Democrats won a House Majority, that the new guys would be "true", Progressive Liberal Democrats, as opposed to the kind of semi-right moderates who only barely passed Obamacare in the Senate and are hardly amenable to tolerating non-centric Progressive causes.

 

Sure, Obamacare is (relatively) safe, some form of immigration reform will eventually pass (but how watered down), and maybe even some tax reform (but how palatable will it be to Progressive Liberals). So, yes, the future does look a bit brighter, but would your average Progressive Liberal agree?

 

IOW, there will be additional victories for the Democrats, but how pyrrhic will they be?

 

And, for sure, the "old" GOP is on its way out, but will the "new" GOP be that much more sympathetic, especially in the Senate, where a vocal minority can cause more than a little mayhem?

-- Jack Krupansky

Tax reform? Really?

I find it amusing for anybody to suggest that a majority of Democrats and a majority of Republicans would find common ground on the subject of tax reform. A quote by Republican Senator Lindsey Graham: "people like me would agree to bring in revenue... Not by raising taxes, by flattening out the tax code and bring in some repatriated corporate earnings at a lower rate." Really, would flatter taxes (lowering taxes on the "rich" and raising them for lower and middle class) be palatable to your average Progressive Liberal? Similarly, how many progressive liberals are willing to give Big Business a tax break on foreign earnings?

 

I mean, last I heard, Progressive Liberals were: a) opposed to a flat or flatter tax, and b) clamoring to raise the tax rate on "The Rich" even higher. Have they suddenly changed their stripes? After Obama's "victory" in the fiscal crisis battle?

 

See:

http://www.cbsnews.com/8301-3460_162-57608347/sens-graham-warner-describe-possible-components-of-big-budget-deal/

 

Everybody seems to hate the sequester, but it seems like it is the only thing that seems to be working, so I think this is yet another one of those things in Washington where "public pronouncements should not be confused with private intentions".

 

Meanwhile, growing the economy to close the budget deficit seems to be at least somewhat working as well.

 

All of that said, a lower tax rate of say 20% on repatriated earnings could indeed inspire a lot of companies to repatriate foreign earnings. But, is there any chance that your average Progressive Liberal would concede the 35% corporate tax rate? In truth, I think this is one of the few aspects of tax reform that has a ghost of a chance.

-- Jack Krupansky

Success with the NY state Obamacare exchange

Wow, I finally succeeded in getting a New York state Obamacare account and application set up so that I am finally able to see plans and prices. The full price range is $307 to $1,121. Bronze plans range from $307 to $407 with a $3,000 deductible. Platinum plans range from $443 to $1,121 with no deductible. Excluding United HealthCare plans, the highest platinum premium is $649 per month.

 

Until today I had an account that I could log into, but was unable to finish the application process. I had called customer service last week, described the problem, they put me on hold, and reasonably quickly came back and told me that they were aware of the problem, were working on it, but I would just have to try "later".

 

The problem was that I would log in and if I tried to view plans, the system would simply insist that my application was not complete, give me a button to continue where I left off, but clicking that button simply took me to the last page of the application process where all I could do is initial the application, check the fine print, and then click on the "Finish" button. I would do all of that, but the system would unceremoniously dump me out to the main "Individual" screen and not let me view or select any plans. Rinse and repeat, but no change.

 

The good news is that the long delays of the first week were resolved. IOW, I could quickly do nothing.

 

Also, even in the first week, I did not experience any long hold times with customer service.

 

I tried to complete my application every day, to no avail, but today I called customer service as before, described the problem, and once again they said they were still working on it. But... this time they suggested that I should create a brand new account and try again. Actually, I was going to suggest that myself since I was concerned that the many timeouts in the first few days may have left my account in some unworkable state.

 

So, I created a new account, which was reasonably fast and pain-free, and everything worked fine. And then I finished the application process and could see plans and prices.

 

Actually, there is still one glitch – it asks me if my 2014 income will be the same as in 2012 and will only prompt me for my expected 2014 income if I answer "Yes", when the answer is really "No." IOW, they have the yes and no options wired backwards, at least for my scenario.

 

And, meanwhile, my original "zombie" account is still out there, lifeless but not quite dead.

 

The real bottom line is that I will continue to be self-insured in 2014 and beyond since the penalty for not carrying insurance is still significantly less than $1,000 less than the penalty. That's the economic rule that I have decided to use.

 

Although, since I am 59, I'm not too many years away from Medicare.

 

Meanwhile, I continue to make semi-regular $25 monthly donations to the U.S. Treasury to pay down the federal debt.

 

BTW, I am thoroughly amused by the extent to which the White House itself has adopted the use of the term "Obamacare." For example, see:

http://www.whitehouse.gov/share/obamacare-three-words-saving-people-money

-- Jack Krupansky

The Big Day

Okay, this is it... the proverbial "Eleventh Hour" is here. Most sane observers know and expect that a deal will get done. And as I like to always put it, "The fix is in", meaning that the key players already know the parameters for the deal and it's merely a matter of letting all of the political theater play out so that the "far" wings of both parties can justifiably feel that their party "fought" to the bitter end, and then some.

 

That was the "lesson" of the previous budget negotiations, that the far wings of both parties felt betrayed by their own parties and felt that they caved without fighting hard enough. For better or worse, the leadership of both parties took that "lesson" to heart and played it to the hilt.

 

In all likelihood, the deal will come together later today.

 

Sure, there is a faint possibility that a small number of Senators or Congressmen could gum up the works and leave Treasury in a bad position for a day or two, but that's still the unlikely scenario. For example, it may take the House two or three votes over a couple of days to finally get a majority on board (which lets Republicans say that "I voted No before I voted Yes at the end when it was too late and the cause was lost.) And besides, Wall Street is already well prepared to handle any modest, short-term disruption in the Treasury market. A delay in payment of Treasury interest and matured principal would be a mere speed bump, not a "major economic catastrophe". It would be an embarrassment for President Obama more than a problem for Wall Street.

 

If nothing else, I'm sure that the Fed with its ongoing quantitative easing would be more than happy to buy up any Treasuries that people want to dump. After all, the Fed simply hands over the interest on its Treasury holdings back to Treasury. If anything, the whole process saves the federal government money. And the additional quantitative easing is an additional boost to the economy.

 

In short, today is very likely the end of the process (other than that any agreement will likely simply kick the can down the road for another confrontation in a few weeks or months), but Wall Street (and the Fed) are ready to deal with the situation if it does take a little bit longer.

-- Jack Krupansky

The budget crisis end game

Despite all of the political theater and gnashing of teeth and wringing of hands, the end game for the current federal budget crisis in the House is quite simple. Boehner knows how to read the writing on the wall, what the future holds, but he also must pay allegiance to the here and now reality in front of his nose. In other words, he needs to let the rebels run until they feel like they have achieved a moral victory, and once they have exhausted all of their ideas, Boehner can then afford to stand up and say "Okay, we held our ground and put up a good fight, but we just don't have the votes in this congressional cycle, so we need to acknowledge the reality of today and work towards a better future in 2014" – or something like that.

 

IOW, if Boehner tries to quash his rebels too early, he loses badly, but if he lets them learn from experience that they "don't have the votes and can't get them", then he wins both by letting them have their moral victory and being a respectful leader.

 

I expect that the rebels will have exhausted their limited legislative quiver within one or two or three days.

 

The debt limit? That's a completely different saga, but I expect it to be resolved by the conservatives forcing Obama to agree to another $100 billion in expenditure cuts. IOW, yes, the debt limit must and will be raised, but Obama needs to concede that the deficit is still way out of control. And Obama doesn't have the leverage to force a tax hike.

-- Jack Krupansky