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The Shocking Reason Democrats are Plotting Against Obamacare

By Bill Bonner, Chairman, Bonner & Partners on December 16, 2013

US stock benchmarks were flat on Friday. Too many office parties. Too many distractions. Too many investors with no clue.

“Is the news good or bad?” they asked. “Is that good or bad for asset prices?”

Having no good answer, they let the week pass without showing much conviction one way or another.

So let’s move on…

The problem with most people is that they aren’t cynical enough. A little more distrust… or at least suspicion, combined with sneering contempt… would help them understand how things work.

A Bum Plan

We say that after reading the latest arguments about Obamacare…

“Errors Continue to Plague Government Health Site,” was the top story in the Wall Street Journal on Friday. In the newspapers… and all across the World Wide Web… people are grousing and sniping at Obama’s new healthcare program. They don’t understand how it could be so mismanaged… so complicated… and so incoherent.

But what did they expect?

The Affordable Care Act is not designed to help anyone live longer or to lower the cost of healthcare.

You may care about those things. But the people who run the government have their own motives and incentives. And they are not the same as yours. Instead, they aim to satisfy a more basic desire of government: to control people and transfer wealth.

The failures of Obamacare may not make much sense to the earnest world-improver.

But the cynic sees it more clearly. He knows the real aim of Obamacare is to take wealth and power from one group – the public – and give it to the lobbyists who wrote the legislation; the politicians and professionals who will manage it; and the crony capitalists who will benefit from it most.

In other words, cynicism helps you connect the dots.

Why would Congress exempt itself from the program? Because it knows it’s a bum plan.

Why would the law take more than 2,000 pages to explain? Because there are so many boondoggles and giveaways hidden in it.

Why isn’t there more resistance from insurance companies, drug manufacturers and the medical industry? Because they’re all in on it.

A Single-Payer System

And another pertinent question: Why is the implementation so sloppy and incompetent?

Ah… glad you asked.

Apparently, a website that was meant to service a sector that accounts for one-sixth of US economic output was set up without any significant testing. It was almost as if they didn’t want it to work.

And maybe they didn’t…

Why?

Maybe they are aiming for something more. The Daily Beast explains:

Could anger at the Obamacare rollout make Americans more receptive to a kind of Medicare-for-all system? That’s what activists are hoping – and they’re plotting a state-by-state fight. As the rollout of Obamacare clunks forward, activists who opposed the law from the beginning say it is time to seize the moment, to tear down the current healthcare edifice and start anew, especially now as frustration with the law’s implementation is reaching a peak.

 

On Monday, Sen. Bernie Sanders (I-VT) introduced the American Health Security Act, which would require each state to set up a single-payer healthcare system and would undo the exchanges that have plagued Obamacare. Meanwhile, various state-led efforts are under way that advocates hope will sweep the country statehouse by statehouse, as soon as lawmakers see the advantage of a single-payer system.

Single-payer system? Who would be the single payer?

The federales!

Wouldn’t that put them in direct control of 17% of US GDP?

Yes, it would.

Are they intentionally mucking up Obamacare so they will end up with more of what they want?

Maybe…

Gross’s Latest Grouse

While we’re on the subject – the subject being a severe lack of cynicism – we turn to a man who should know better: Bill Gross.

Gross is grousing, too. But his beef is not with Obamacare. It’s with the unequal distribution of wealth. He joins a long list of luminaries, from Pope Francis (who was named TIME magazine’s Man of the Year partly as a result) to Barack Obama to Warren Buffett.

Search the list as closely as you want. You won’t find our name.

Why?

Because it’s none of our business how much wealth other people have. We let the chips fall where they may. We’ll take what we can get without complaint. But other people think they have the right to decide how many chips we get.

Are you still with us, dear reader? Gross wants the same US Congress that imposed Obamacare on us to also impose a higher tax rate on us.

Why?

The higher taxes on capital gains will help solve the problem of unequal wealth, he says.

Nobody knows for sure why the rich have gotten so much richer. Several reasons have been suggested. Tyler Cowen, for example, says the US economy has become a “hyper-meritocracy” that – like professional baseball – rewards a few star pitchers and treats everyone else like dime-a-dozen batboys.

Maybe he’s right… but instead of theorizing, let’s just follow the money. You will see that a big part of the reason why the rich are so rich is that the feds made them that way.

Rather than let the chips fall where they may, Washington put the chips where it wanted them: in the pockets of their rich neighbors, supporters and grateful future employers.

Here’s how it worked: The Fed has jacked up the stock market with QE and ZIRP. The total value of that jack-up – from a low below 7,000 on the Dow to a high over 15,000 – was about $8 trillion.

And that’s just the stock market. In the bond market, too, it’s been Christmas almost every day for the last 30 years!

Who got the money? The poor? Oh, dear reader, you make us laugh.

On the other hand, Gross could be much more cynical that even we can imagine. He runs Pimco, the largest bond fund in the world. Not exactly a homeless shelter, if you know what we mean. Perhaps he has done the math…

The feds boost asset prices by, say, $15 trillion (including bonds and real estate). Then maybe the capital gains rate goes up. Say it goes up 20 percentage points! So, the rich pay the tax and they’re still ahead by nearly $10 trillion.

And maybe that would get the Pope off their backs, too.

Regards,

Bill


Market Insight:

The Real Reason Healthcare Costs Are Soaring
From the desk of Chris Hunter, Editor-in-Chief, Bonner & Partners

Investors in US healthcare stocks have been richly rewarded in 2013.

As you can see from the chart below, the healthcare sector was the second-best performing S&P 500 sector – up 33.7% year to date.

 

Source: Bespoke Investment Group
And it’s not just this year that has been kind to investors in the sector. The iShares Dow Jones US Healthcare ETF (NYSE:IYH) has outperformed the S&P 500 over the past 5- and 10-year periods, too.

Obamacare provides a strong tailwind for healthcare stocks. Medicaid coverage leads to increased use of healthcare services.

But there is a bigger, more powerful trend at work. And it’s a demographic one. The US Administration on Aging reports that, by 2030, the US will have about 72 million people over the age of 65. That’s twice the number as in 2000.

These retiring boomers will need increased amounts of hospital care… pharmaceuticals… and other healthcare services.

The problem is that healthcare is becoming a crowded trade right now. And sectors that outperform in one year… are vulnerable to mean reversion in the next.

2 Comments
  1. theyenguy

    Government has always desired to control people and transfer wealth; but now the Government is getting supersized. Please consider that Jesus Christ, opened the First Seal of the Scroll of End Time Events on October 23, 2013, and released the First Horseman of The Apocalypse, Revelation 6:1-2, the Rider on the White Horse, who has a bow, yet no arrows, symbolizing his ride over the world, to effect a bloodless global coup d’état, and pivoedt the world from liberalism to authoritarianism and to transfer sovereignty from traditional democracy strongholds to nannycrats of all types to effect totalitarian collectivism, as evidenced by the bond vigilantes to call the Interest Rate on the US Ten Year Note, ^TNX, higher from 2.48%, and thc currency traders to sell the Major World Currencies, DBV, and the Emerging Market Currencies, CEW, thus introducing debt deflation and recession worldwide.

    Under liberalism, citizens of democracies were the legislators of economic value and the legislators of economic life that shape one’s means and one’s ends.

    Now, nannycrats working in public private partnerships like Obamacare are the legislators of economic value and are the legislators that shape one’s means and one’s ends.

    Reply
  2. Jaycurve

    theenguy…hey who could be right…not only was October 23rd my Birthday,but my hometown,Winmalee was ablaze..we lost 200 houses and it sure did feel like the end of the world…for about 10 days…when the blaze burnt itself out…it sure did look like the end of the world…..Funny thing it then rained for ten days…now everything is reshooting…all the sunlight is allowing the forest floor to flourish and rebuild….maybe we need a burnout in the stock market and economy…so we can have reshoots.

    Reply

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