Today's P/E ratio for the S&P 500 is 19.3. The historical avg is 15.7. that implies the S&P index could drop another 200 points to 862. #
I can't figure out who I care less about: Lindsay Lohan, or Levi Johnson. #
Wow. Seems like a slow news day. #
Last Friday, the Committee for a Responsible Federal Budget released a report commenting on the CBO’s long term budget outlook. As one might imagine, it’s not pretty:
Yesterday, the Congressional Budget Office (CBO) issued its Long Term Budget Outlook. Under CBO’s “Extended-Baseline Scenario,” the long-run fiscal picture has slightly worsened over the next twenty years, compared to last year, but significantly improved over the longer run – due largely to the impact of health care reform on spending and especially revenues. However, CBO’s overall analysis shows the budget to be on an unsustainable path, with debt moving to unprecedented and cripplingly high levels.
One has to wonder how any budget found to be on an “unsustainable path, with debt moving to unprecedented and crippling high levels” could at the same time show significant improvement over “the longer run”. The fact remains that whatever “significantly improved” picture any particular budget provides over another one, the bottom line remains “unsustainable, unprecedented and crippling” for our future. The Committee’s report goes on:
Under current law, CBO projects that public debt will rise from 62 percent of GDP this year, to 84 percent by 2040, and to 107 percent by 2080. This scenario is highly optimistic, since it assumes that all the 2001/2003 tax cuts will expire this year as scheduled, there will be no AMT patches or doc fixes, all of the savings in the health care bill will be sustained over the next two decades, and revenues will eventually exceed 30 percent of GDP.
“Highly optimistic” doesn’t begin to describe this budgetary charade. A 6 month “doc fix” has been passed the Senate and is awaiting House approval. Most believe it will continue to be passed in the foreseeable future. Legislators do not have the spine necessary to refuse the fix and weather the consequent political fallout which would see a mass exodus of doctors from the Medicare program. And anyone with the IQ of an onion knows that the “waste, fraud and abuse” savings promised for health care are simply throw-away promises made to balance out the numbers and get the bill passed into law.
So there are no savings on the way through health care. Optimistic is the wrong word to use here. It should be “fraudulent”. In fact, if we throw out the fraudulent health care assumptions, we end up with reality – which CBO calls its “Alternative Fiscal Scenario”:
Under CBO’s Alternative Fiscal Scenario, which does not make these assumptions, debt will rise to 87 percent by 2020, 233 percent by 2040, and to 854 percent by 2080.
There’s the most likely picture we’ll see in 2020. And frankly, at that point, it will almost be a runaway fiscal train. Impossible to stop and headed for a disastrous crash.
Even under the “highly optimistic” scenario, we’re in deep, deep trouble:
Yet, even under the current law revenue scenario – in which all the 2001/2003 tax cuts expire at the end of this year, policymakers discontinue the annual practice of enacting AMT patches, real bracket creep continues unfettered into perpetuity, and the excise tax on high cost health care plans grows to raise an increasing amount of revenue (3 percent of GDP by 2080) – revenues will fall short of spending. And under this scenario, revenue will grow to 30 percent of GDP. That’s twice as large a share of the economy as we will raise in 2010, and nearly 50 percent greater than any time in our history.
We’re certainly seeing history in the making, but it isn’t history in which we should be willing participants. The solution isn’t difficult to see, but politically its implementation is very hard to do. That’s because there are no political incentives to solve the problems. In fact, there are tremendous political incentives not to do that. That’s because no matter how much fiscal sense austerity measures (spending cuts, reductions in force, closing government agencies and departments, etc.) make, they’re painful and a political minefield. And we’ve yet to see the political class – regardless of their ideological bent – willing to seriously tackle this crisis in any meaningful way and take the political hits necessary to do so.
No one really expects that to change. Of course, that means the doomsday analysis by the CBO, which will be mostly ignored by politicians on both sides, is likely to come to pass. What the politicians of today plan on doing is letting those of their ilk in office at the time the fiscal train crashes deal with it and the fallout. How’s that for being ill served by the political class? Of course it’s nothing new – it’s been going on for decades.
Unfortunately for us, when the avoidable crisis finally hits in the near future, it will most likely be too late to do what is necessary and politically viable at the same time. Those stuck with the problem, at that time, will essentially have to commit political suicide. Of course, given the gravity of the situation they will face, they’ll have absolutely no choice.
What will come out of the trainwreck is anyone’s guess – but whatever it is will be a country that is weaker, less powerful and more vulnerable than it has been since its founding. And its enemies will be sure to take advantage of that situation, you can count on it.
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One of the things many election analysts continue to cite as a hopeful sign for Democrats in the upcoming mid-term elections is the fact that Obama’s approval rating has remained fairly high.
The thinking, then, is the vote won’t be about him or his agenda and that means Democrats may be successful in keeping the focus local and weathering the storm of electoral anger.
I don’t think so. And here’s why:
Thirty-eight percent of independents approve of the job Barack Obama is doing as president, the first time independent approval of Obama has dropped below 40% in a Gallup Daily tracking weekly aggregate. Meanwhile, Obama maintains the support of 81% of Democrats, and his job approval among Republicans remains low, at 12%.
That’s right – those that have the power to swing any election have mostly fallen out of love with Obama. And, one would assume, that would be driven by what he has done or not done as the case may be. But the point is 4 months before these crucial elections, only 38% of the group that secured him in office still approve of him and the job he’s doing.
You don’t think that will reflect in November?
Democrats and the left, of course, have no where to go but they can stay home – and I think many will. The Republicans and the right are fired up and energized. They’re going to turn out. Whether or not independents turn out or not, it appears they will not be overwhelmingly supporting Democrats because of “good approval ratings” for the president. In fact, the opposite case can be compellingly made.
I think it is becoming increasingly obvious to everyone, to include Congressional Democrats, that the GOP will win seats in both chambers of Congress. The only thing left to guesswork is how many.
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No one denies that Obamacare is modeled after the Massachusetts model signed into law there by Governor Mitt Romney. In fact, in 2006 then Senator Barack Obama called it a "bold initiative" that it would "reduce costs and expand coverage" and as recently as early this year, now President Obama called his initiative, “essentially identical” to that of Massachusetts.
And that’s precisely how Obamacare was sold to the American public. I use “sold” advisedly, since most of the American public made it clear they didn’t want what Obama and the Democrats were selling. But regardless, they passed it into law anyway.
So now we turn our attention to the experiment that has been running in MA for years and what do we find?
Massachussets has the highest average health care premiums in the nation, according to the <em>Wall Street Journal’s</em> Joseph Rago. In fact, Governor Deval Patrick has tried to cap insurance premiums, arbitrarily denying 235 of 274 rate increases submitted by the major health insurance companies serving the state (all nonprofits, by the way). However a state appeals board has since reversed Patrick’s arbitrary caps. The state is appealing the board’s decision.
In the meantime, the insurance companies have suffered $116 million in loses.
Robert Dynan, a career insurance commissioner responsible for ensuring the solvency of state carriers, wrote that his superiors "implemented artificial price caps on HMO rates. The rates, by design, have no actuarial support. This action was taken against my objections and without including me in the conversation."
Mr. Dynan added that "The current course . . . has the potential for catastrophic consequences including irreversible damage to our non-profit health care system" and that "there most likely will be a train wreck (or perhaps several train wrecks)."
As a result of the Patrick rate caps, three of the insurance companies are under administrative oversight because of concerns about their financial viability. And that’s not all. In order to cut costs, rationing and other measures are being contemplated:
Naturally, Mr. Patrick wants to export the rate review beyond the insurers to hospitals, physician groups and specialty providers—presumably to set medical prices as well as insurance prices. Last month, his administration also announced it would use the existing state "determination of need" process to restrict the diffusion of expensive medical technologies like MRI machines and linear accelerator radiation therapy.
Meanwhile, Richard Moore, a state senator from Uxbridge and an architect of the 2006 plan, has introduced a new bill that will make physician participation in government health programs a condition of medical licensure. This would essentially convert all Massachusetts doctors into public employees.
There are literally no surprises to be found in those two paragraphs. All of this was foretold by critics of the Obamacare plan. All of it. These are inevitable outcomes of such a plan. It was clear from the outset that Democrats and the administration were selling something they couldn’t deliver – essentially no changes in your coverage except less cost. Massachusetts has proven that to be the pure nonsense critics called it from the beginning. As Rago says:
In other words, health reform was a classic bait and switch: Sell a virtually unrepealable entitlement on utterly unrealistic premises and then the political class will eventually be forced to control spending. The likes of Mr. Kingsdale would say cost control is only a matter of technocratic judgment, but the raw dirigisme of Mr. Patrick’s price controls is a better indicator of what happens when health care is in the custody of elected officials rather than a market.
Or, as goes Massachusetts, so goes the country under Obamacare.
Is it any wonder 60% of the nation favors repeal?
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Apparently the only jobs the massive "stimulus" may have saved, at least temporarily, were government jobs. Now, even those are in jeopardy as state and local governments are forced to deal with the reality of their fiscal situation:
Up to 400,000 workers could lose jobs in the next year as states, counties and cities grapple with lower revenue and less federal funding, says Mark Zandi, chief economist for Moody’s Economy.com.
Layoffs by state and local governments moderated in June, with 10,000 jobs trimmed. That was down from 85,000 job losses the first five months of the year and about 190,000 since June 2009. But the pain is likely to worsen.
States face a cumulative $140 billion budget gap in fiscal 2011, which began July 1 for most, says the Center on Budget and Policy Priorities.
While general-fund tax revenue is projected to rise 3.7% as the economy rebounds in the coming year, it still will be 8%, or $53 billion, below fiscal 2008 levels, according to the National Association of State Budget Officers.
And that means that states will not be able to afford some of the services or staff they presently employ. And that, of course, means layoffs and even more workers seeking jobs. While to this point, many state and localities have been able to avoid layoffs by offering furloughs, that option is no longer viable for most.
And economic growth isn’t looking all that hot either. Wells Fargo economist Mark Vitner is amending his third quarter economic growth estimate from 1.9% to 1.5%.
If this is a recovery, I’d hate to see a depression.
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I'm sure the Republicans had a good reason for putting Mr. Steele in as RNC Chair. I wonder what it was. #
Huh. The weather widget on my HTC Incredible says we'll have a high of 77 today, with mixed rain and snow. That should be interesting. #
Based in the Constitution’s “supremacy law”, the Obama administration will argue that federal law is supreme to state law. In other words, the feds will argue that enforcing immigration laws is a federal responsiblity.
But that’s the rub isn’t it – it may be their responsibility, but they’re not fulfilling that responsibility to anyone’s satisfaction, especially the state of Arizona. Consequently, Arizona has felt the need, based in public safety and budget concerns, to take matters into its own hands.
The preemption doctrine has been established in Supreme Court decisions, and some legal experts have said such a federal argument likely would persuade a judge to declare the law unconstitutional.
But lawyers who helped draft the Arizona legislation have expressed doubt that a preemption argument would prevail.
I’m not sure what those doubting whether the “preemption argument will prevail” mean. Of course it will “prevail” if it is applicable. It has law and precedent behind it. However, given the fact that the federal government has all but abandoned the enforcement of immigration law, and I think Arizona should be able to provide ample evidence of this, I’d suggest the preemption clause won’t be applicable since the laws aren’t being enforced.
In fact, I think Arizona can argue and make a pretty compelling case of federal nonfeasance concerning immigration laws.
In that case, this may very well blow up in the Obama administration’s face, and verify what most Americans already think – the government has no interest in enforcing the immigration laws on the books.
Not exactly the meme you want out there with midterms approaching. Regardless of how this turns out, I’m finding it hard to see a “win” in this for the administration.
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And that may be exactly what will happen when, inevitably, much of the law and regulation pushed by the Obama administration and passed by the Democratic Congress are challenged in court – a poor tactical choice may come back to haunt the administration.
You probably remember the incident. I remember remarking at the time that such a public embarrassment could come back to haunt Obama. And that may end up being the case:
But the year’s most important moment may have come on the January evening when the justices gathered at the Capitol for President Obama’s State of the Union address.
They had no warning about what was coming.
Obama and his advisors had weighed how to respond to the court’s ruling the week before, which gave corporations the same free-spending rights as ordinary Americans. They saw the ruling as a rash, radical move to tilt the political system toward big business as they coped with the fallout from the Wall Street collapse.
Some advisors counseled caution, but the president opted to criticize the conservative justices in the uncomfortable spotlight of national television as Senate Democrats roared their approval.
Chief Justice John G. Roberts Jr. is still angered by what he saw as a highly partisan insult to the independent judiciary. The incident put a public spotlight on the deep divide between the Obama White House and the Roberts court, one that could have a profound effect in the years ahead.
A public challenging of the integrity and independence of the court was more than a rookie mistake. It was dumb politics. It was an unforced error by Obama that may indeed have “profound effect” on the court’s rulings.
The court may have had to sit there and take it at the time, but once back in their seat of power, it is they who are all powerful and can wreak havoc on the administration’s regulation regime and legislation.
That’s not to say the conservative side of the court will intentionally go after the administration’s agenda items – damn the law- but it may mean that they cut the administration no slack whatsoever and commit themselves to very strict interpretations of the Constitution that leave little latitude for meaningful legislative change to satisfy the court.
So what does that mean practically? Take health care reform and the possible coming government arguments that the mandate to buy insurance is a) a tax or is b) covered by the interstate commerce clause.
Of course the court then has to decide on whether it is indeed a tax, if that tax is Constitutionally legal and whether Congress has the power to levy it.
Or, it will have to decide if such a mandate is indeed Constitutional under the commerce clause.
Given the incident during the State of the Union address, is there anyone who believes the administration’s arguments will be given the benefit of the doubt when it comes to a ruling on either question? If, in fact, it could conceivably go either way, I think most believe the way it will go will be the way least favored by the administration at least on the conservative side of the house.
Of course you’ll hear charges of “judicial activism” if that happens, but I’d be more likely to find a more narrow definition of the commerce clause or Congress’s taxing power to be anything but activist in nature.
It’ll be interesting to watch this all unfold. It’ll be a while before any of this reaches SCOTUS, but when it does, the fireworks generated will be much better than anything seen on the 4th of July.
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The consensus among election experts is the 2010 midterm elections are most likely to see Democrats lose seats in both the House and Senate. The question, of course, is how many? And, will they lose enough seats for the Republicans to take control of the House and/or Senate?
Dealing with the Senate first, the answer is “no”. The most likely number of seats picked up by the GOP is 7. That would give them 48 and a very strong minority. That may end up being better, in this case, than a majority. Certainly 48 will give them the power to stop just about anything in the Senate, and, if they so desire, pass legislation only with their amendments attached.
In the House, Republicans need 39 seats to take control. They’ll most likely pick up between 32 and 39. Even if they don’t hit that magic 39, they’ll have a much stronger minority that will have to be reckoned with by Pelosi and company to get anything done there.
You know it’s going to be bad for Democrats, because Joe Biden is sure it won’t be.
What that all means is even if the GOP doesn’t have control of Congress after the midterms (and many argue – to include myself – that perhaps they’re better off not having control), they will have a considerably stronger hand then now in the national legislature.
Which brings us to the emerging campaign strategies of each party. On the GOP side, it appears that Republicans want to “nationalize” the elections. I.e. they want to make the midterms a referendum on the Obama administration. You’ll be seeing they tying everything back to the first 2 years of the Obama presidency, the economy, the oil spill and the out-of-control spending. I don’t think it will be hard to sell.
Given the precedent set under the Bush administration when Democrats successfully made all elections referendums on the presidency, it has become accepted by voters that party equals president and they act in concert. Hence the way you punish the president and his party is to turn out members of Congress that represent that party – or variations on that theme.
Given that, the Democrats will obviously attempt to counter the GOPs strategy by keeping things “local” if possible. How well that will work, given the tumultuous two years of the Obama presidency and the fact it is Congress under Democratic leadership which has passed deeply unpopular legislation, is anyone’s guess. Mine is it won’t work very well. Votes for health care and stimulus, for instance, will be key “national” topics with which GOP candidates will hit incumbent Democrats.
Which then leaves Democrats trying to fashion a Get Out The Vote (GOTV) strategy which they hope will re-create their 2008 electoral victory.
To avoid such losses, the Democratic National Committee has committed to spending tens of millions of dollars to re-create (or come somewhere near re-creating) the 2008 election model, in which Democrats relied heavily on higher-than-normal turnout from young people and strong support from African American and Hispanic voters.
They’re talking turnout here, not percentages – for instance, African-Americans have always voted in the 90% area for Democrats. The percentage they need in this election is 90% of African-Americans showing up at the polls. Same with Hispanic and young voters.
And that is the job the DNC plans on giving Obama in the lead up to the November vote.
The likelihood of that happening, however, is not especially good. We’ve been chronicling the “enthusiasm gap” for months. The far left is let down. Independent voters are disenchanted and the right is very enthusiastic about “change” again.
Funding is also drying up for Democrats. The latest big donors to drop Democrats are from Wall Street – a traditional well-spring of funding for the party.
The bottom line here is the stars seem to be lining up for the GOP in the midterms, barring any unforeseen event which might mitigate their advantage. The question will be have you had enough of hope and change as a billboard in NE Minnesota presently asks. Conventional wisdom says the answer will be a pretty resounding “yes”. The only question is how much they want to change the status quo.
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Charles Bolden, head of NASA, tells Al Jazeera that the "foremost" task President Obama has given him is "to find a way to reach out to the Muslim world and engage much more with predominantly Muslim nations to help them feel good about their historic contribution to science, math, and engineering." Thus, NASA’s primary mission is no longer to enhance American science and engineering or to explore space, but to boost the self-esteem of "predominantly Muslim nations."
Seriously. Watch the video at Powerline. An 18.5 billion budget spent on self-esteem outreach? Because, per the Obama administration, NASA no longer has a space exploration mission. In fact, as Powerline points out, space exploration didn’t even make the top three priority missions Bolden is charged with:
The other two are "re-inspire children to want to get into science and math" and "expand our international relationships.
So essentially NASA’s new mission is a) muslim outreach and self-esteem bolstering, b) exciting kids about science and math and c) expand international relationships, obviously not for space exploration though. Now that’s leadership.
And you wonder why we’re going broke, heading toward mediocrity and have clueless leadership engaged in misusing an expensive agency for self-esteem projects on your dime?
See the results of the election held in November of 2008.
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