Bill Owens: Confounding And Confusing Events 6/24/19

Jun 24, 2019

Mr. Trump is searching for a pathway on healthcare.  Democrats pounded the issue in the 2018 mid-term elections with great success.  Mr. Trump has indicated that he will produce “something terrific” and even asserted that the Plan will be delivered within a month and cause the Republicans to take the Senate, the House and the Presidency in 2020.  Mr. Trump asserts that his plan will be cheaper, cover more people, and preserve coverage for the people with pre-existing conditions, but he continues, for well over three years to offer no details.  The GOP in general is not anxious to get into this fight again, with good reason.  The ability to draft such legislation is slim to non-existent.  The quickest step to reducing healthcare costs would be to get control over drug costs, and then work from there.

Mr. Trump is reportedly furious about reports that America is hacking into Russia’s electrical power grid.  This is an interesting development, as it appears that those with understanding of the US/Russian dynamic have some sway in the administration.  Unfortunately, the Russians have to be confronted head-on, not praised as Mr. Trump tends to want to do.  This is an important effort to make a statement and regain our footing in a dangerous battle with the Russians.  The question is why is Mr. Trump furious, it is because he doesn’t want to offend the Russians, or he is afraid of a national security leak?  I am thinking the former, not the latter. 

On Sunday, June 16th, Secretary Ross, despite the likely meeting between Mr. Trump and President Xi Jinping at the Group of 20 Summit was quoted as saying, “Even real shooting wars end with negotiation, and this will ultimately end in negotiations.”  And he went on to say, “Whether that will be in 10 minutes, 10 weeks, 10 months or longer is not possible to judge”.  This is in the context of many US small businesses having significant difficulty obtaining product of equivalent quality at equivalent prices from other sources throughout the world.  It is also very clear from the comments made by business owners that manufacturing is not coming back to the US.  Let me repeat, it is not coming back to the US.  So the point is?

We, again, have a budget impasse which threatens shutdown, deep cuts and a default on the US debt.  These issues must be resolved by September 30th of this year.  At this juncture, the struggle is intra-GOP as Republicans try to persuade President Trump that a bi-partisan budget deal is the desired outcome.  Mr. Mulvaney is seen as problematic in this process and not just because he coughs, and having served with Mr. Mulvaney in Congress, it is not hard to understand.  He is a person of limited capacity, who’s bellicose and has little understanding of complex economic issues, including the budget and trade.

A recent study covered in the Wall Street Journal indicates that over the last 10 years many Americans have moved up and down the earnings ladder with a relatively small percentage staying in the higher income brackets.  Is it caused by the vagaries of the economy or one’s individual business causes this outcome, it is not discussed in the article.  It is certainly easy to understand that a business can have a “good year” followed by a mediocre year, followed by a poor year or whatever other combination may arise.  What was also not discussed in the article was what the floor and ceiling were for these people, in other words, did they move from making $50,000 to $450,000, back to $75,000 or was it more within a range of $150,000 to $300,000 and back to $175,000.  In my view, that would likely be the flow of the economy at work, or could be reflective of illness or other factors. 

The debate circus begins one week after the circus like atmosphere at Mr. Trump’s kickoff rally.  Democrats will have 10 candidates on both Wednesday and Thursday night for 120 minutes or 12 minutes each before subtracting time for introductions, commercials etc.  Let’s say that gives each candidate 9 minutes of air time.   The key is don’t say anything ridiculous – I recognize that’s subjective – don’t make funny or sad faces, but don’t look too stern, and of course act naturally.

On Wednesday, June 19, 2019, the Fed kept rates “steady”.  Consumers yawned at most, if not completely disregarded this momentous news.  Why, because “steady” means no change.  So why are the pundits excited, beyond the fact that they are boring.  For one, the Fed issued mixed signals from no change for the rest of 2019, so we’ll wait and see how things develop.   The only other possibility is that they (the pundits) live really dull lives.

On Wednesday, June 19th, Speaker Pelosi outlined the issues with the US, Mexico, Canada Agreement (USMCA) which include the same issues which have been discussed previously including enforcement tools, labor and environmental protections, and provisions on pharmaceuticals.  Maybe more importantly, the Speaker did not provide any timetable for the House taking up the legislation.  This reinforces my belief that she is the crucial linchpin in this process as she controls whether or not this bill ever makes it to the floor.  Mr. Trudeau, Mr. Trump and Mr. Lighthizer all need to resolve the issues with Mrs. Pelosi otherwise the USMCA could suffer a long wait. 

Mr. Owens is a former member of Congress representing the New York 21st, a partner in Stafford Owens in Plattsburgh, NY and a Senior Advisor to Dentons to Washington, DC.

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