Wednesday, November 4, 2009

Despite the President's Confidence, Talk About a Bad News Cycle!

Increasing evidence is that Barack Obama has suffered two body blows within a week-- and the stock market is rallying on the news. First is of course the off-year election defeats in states in which he campaigned--especially New Jersey, where he personally campaigned often. Nonetheless, despite his pre-election weekend personal appearance, the ending trend went against him.

More important from a policy standpoint is this report dated today from ABC News, Top Dems: No Health Care Bill in 2009 which begins:

Senior Congressional Democrats say reform before end of year is highly unlikely.

Senior Congressional Democrats told ABC News today it is highly unlikely that a health care reform bill will be completed this year, just a week after President Barack Obama declared he was "absolutely confident" he'll be able to sign one by then.

"Getting this done by the by the end of the year is a no-go," a senior Democratic leadership aide told ABC News. Two other key Congressional Democrats also told ABC News the same thing.

This may come as an unwelcome surprise for the White House, where officials from the president on down have repeatedly said the health care bill would be signed into law by the end of the year.

"I am absolutely confident that we are going to get health care done by the end of this year, and Nancy Pelosi is just as confident," Obama said Oct. 27 at a fundraiser for the Democratic Congressional Campaign Committee.

Along with what Republicans call "dithering" on Afghan policy, there is an increasing perception that Mr. Obama is a weak leader. This blog has criticized him for not proposing a specific healthcare bill. If no bill emerges this year, the idea of having various committees write different drafts of healthcare reform may go down as a major strategic blunder, on par with President Clinton claiming that Hillary was the functional equivalent of a government employee and putting her in charge of his reform effort. The result was a White House healthcare proposal that could not even get a vote on the floor of a House controlled strongly by Democrats.

Health care policy should not be a partisan effort. There should be changes to policy that appeal to the great majority of the people. This should not be a wedge or partisan issue.

Strangely, drug stocks are up sharply today on the above pieces of news, even though Big Pharma was treated well by the administration. I am not sure that this is an appropriate reaction by the market in the short term.
Longer term, they are decent value.

Perhaps 2010 will be a year for bipartisanship on Capitol Hill. You never know.

Copyright (C) Long Lake LLC 2009

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