Will Obamacare Implode On Its Own?

Republicans in Congress will need to decide this week whether they just want to step aside and let Obamacare implode on its own.

The GOP  has tried to repeal it, defund it and are now just trying to see to it that individuals get the same treatment as businesses and Congress.

President Obama and the Democrats are not having any of it.  To say that they are all in on Obamacare is an understatement.

The Republicans have tried to save the country from this ill-advised, ill-conceived and illegitimately  implemented law (numerous waivers and exemptions provided in contravention of the law) to no avail.

It may be time to let the Democrats live with the consequences.  It may be time to walk away with the record showing that there are absolutely no fingerprints from any Republicans on Obamacare.  The Democrats own it.  There is no one else to blame.

I am not in the camp that believes the effort the GOP has expended in this budget ordeal was not worth the time.

By next year at this time the voters will not remember much about the shutdown or the showdown on the debt limit ceiling.  They will still remember which side the parties were on Obamacare as they will still be dealing with its effects.  If I have to choose, don't count me as a Democrat going into next Fall's election no matter what the political pundits are saying right now.

Next year we will really see the devastating effects of Obamacare as the 2015 rates are announced.  The individual mandate penalty tax also goes from $95 or 1% or income to $325 or 2% of income next year.  The employer mandate will also take effect.  None of this will be good news for Democrats running for election.

I have long predicted that I believed that Obamacare would have a very difficult time of being accepted by the public.

The framework for the law was flawed from the beginning. A 2,400 page bill was not needed to deal with issues such as portability of coverage and pre-existing conditions.  You also don't solve the problem of the uninsured by first increasing the cost of health care insurance (particularly for those under age 30 who represent about one-half of those uninsured) and then developing a government subsidy to pay a portion of the added cost.

The partisan manner in which the legislation was jammed down the throats of the American people was also reprehensible.  It is the major reason that there is still so much conflict and controversy about this law three and a half years after it was passed.

Those who benefit from the law are relatively few but the cost of Obamacare falls on everybody who already had coverage, most of whom were reasonably satisfied with their heath care insurance.  This is not a model to gain popular support from the public.

Let's revisit a post that I wrote just over six months ago, "Obamacare Is Still Dangerous For Democrats" and see where we are today.

I wrote at that time that I believed there was a substantial risk of "Exchange Chaos."

The first question I have is whether the health insurance exchanges will be ready and will function as intended?  I believe there is a good chance that the entire process could be chaotic and confusing for the public. 

The fact is that the information technology challenge to establish the exchanges is considerable.  This challenge has become even more pronounced since so many states have decided to forego establishing their own exchange and have delegated that responsibility to the federal government.

If Obamacare gets off to a rough start with the public due to chaos and confusion with the health exchanges this could signal deep problems for the program going forward.  It is hard to recover from poor first impressions, especially if media attention picks up on it.   A compliant Obama-friendly media is not likely to play up any problems, however, if they jump on the bandwagon if things go poorly it will be difficult to turn around the public's perception of the program.

This seems to have played out pretty much as I predicted.  In fact, the problems with the technology supporting the exchanges seems to be so profound that the media has not been able to ignore it.

In fact, The New York Times had a scathing article on the troubles with the health portal this weekend.

A couple of my favorite quotes from that article.

“These are not glitches,” said an insurance executive who has participated in many conference calls on the federal exchange. Like many people interviewed for this article, the executive spoke on the condition of anonymity, saying he did not wish to alienate the federal officials with whom he works. “The extent of the problems is pretty enormous. At the end of our calls, people say, ‘It’s awful, just awful.' ” 

I particularly like this quote which blames the problems on lack of money.  Of course, when it's the government all problems are always the result of not enough money and taxes.  Please remember that the federal exchange website cost more than $500 million to develop!!  That is not exactly chump change where I come from.

Dr. Donald M. Berwick, the administrator of the federal Centers for Medicare and Medicaid Services in 2010 and 2011, said the time and budgetary pressures were a constant worry. “The staff was heroic and dedicated, but we did not have enough money, and we all knew that,” he said in an interview on Friday.

At this point the White House will not even disclose how many people have successfully enrolled for one of the health insurance plans on the federal exchange.

But just a trickle of the 14.6 million people who have visited the federal exchange so far have managed to enroll in insurance plans, according to executives of major insurance companies who receive enrollment files from the government. And some of those enrollments are marred by mistakes. Insurance executives said the government had sent some enrollment files to the wrong insurer, confusing companies that have similar names but are in different states. Other files were unusable because crucial information was missing, they said.

The Miami Herald has stated that Obamacare enrollees have become an urban legend in Florida.  They have searched high and low for individuals who have enrolled in Florida and can't find very many.

Will the Floridians who have enrolled for Obamacare please stand up?

Nearly two weeks after the federal government launched the online Health Insurance Marketplace at HealthCare.gov, individuals who have successfully used the choked-up website to enroll for a subsidized health insurance plan have reached a status akin to urban legend: Everyone has heard of them, but very few people have actually met one.

Why was I so skeptical of the Obamacare exchanges many, many months ago?

I worked in corporate employee benefits for many years.  The technology supporting just the payroll and employee benefits framework for a large corporation is very complex.  As the number of interfaces between various databases increase, it gets even more complicated.

The Obamacare healthcare exchange involves interfaces between the IRS, Social Security, Medicare, Medicaid, state governments, private insurance companies and more.  It simply could not work unless they had completed programming many months ago and had done extensive beta testing.  I saw numerous reports that indicated that they planned one test a day before they went live!  That is utter ineptitude.  It is also incredible that the Administration wants to penalize people for not complying with the individual mandate when they can't even get on to the website to enroll for coverage.

I would give better than even odds that President Obama will have no choice but to waive the individual mandate before we reach the end of the year.  At that time we will all wonder why he didn't do it when the Republicans asked for it in October.  I guess it only counts if he does it.

Why am I so skeptical of the ultimate viability of Obamacare?

It is incredibly difficult to get people to pay the full cost of healthcare coverage.  In fact, study after study shows that most people will only pay up to 20% of the real cost of the coverage.  That is the price at which people believe it is a "fair value". That is why many employer plans charge employees around 20% of the full cost and employer pays the rest.  That is why Medicare Part B premium costs are set at 20% of the full cost and the taxpayers pay the rest.

Why is this?

The reality is that most people will have very little in healthcare costs in a given year. A handful of people will have enormous costs. A few will have very large costs. The majority will have almost no costs.

The bottom half of the entire population only consumed 2.9% of all personal health care spending in 2009. The top half consumed the other 97.1%.

Out of almost $1.3 trillion in personal health care spending, only $36 billion was spent on those below the 50th percentile. The rest was spent on those above the 50th percentile.

The top 1% of healthcare spenders accounted for over 20% of all spending.

The top 5% accounted for almost half of all spending.
That is why most people will gamble on healthcare insurance if left to their own devices. Especially if they have lower incomes or have very little in assets. Most people do not have much in health care costs (particularly the young) and they know it. They will simply not part with their money today for the chance that they might get sick tomorrow. That is basic human nature. Live for today and think about that other stuff tomorrow.  Especially if you know that if you walk into an emergency room it is the law of the land that you must be treated without regard to your ability to pay.

Sure, there are subsidies in Obamacare to buy coverage but for most people they are not anywhere close to paying 80% of the cost.

For example, a 27 year-old singe female living in Cincinnati (where I live) making $30,000 (most likely a stereotypical Obama voter in 2008 and 2012) would have to pay an estimated $2,347 (8.4% of her income) for healthcare coverage for 2014 according to the Kaiser Family Foundation Subsidy Calculator.  She is not entitled to any subsidy at that level of income.

Her penalty for not enrolling for 2014?  1% of her income, or $300-if they can collect it.  Do you think she enrolls?

A forty-year old couple with two-children, living in Los Angeles, making $65,000 would have an annual gross premium of $9,397.  They would be eligible for a subsidy of $3,675 but would be responsible for $5,723 in premiums per year (8.8% of their income).

Their penalty would be $650 per year if they do not enroll.

If that family is already dealing with health care issues you can be sure they will enroll.  However, if they have been healthy, chances are that they will continue to roll the dice as they have been doing.

This is the basic economic problem facing Obamacare.  Those with high health care costs and pre-existing conditions are all going to sign up for coverage. However, Obama needs somewhere around 3 million young and healthy people to defy their economic self-interest and buy health insurance that they are not buying today to balance these costs.  I will be surprised if it occurs.

If it doesn't, the rates for 2015 will skyrocket across the board.  Just in time for the 2014 mid-term elections.  A death spiral in rates will be underway which will cause even greater numbers of healthy people to forego coverage with only those with high costs seeing the value in purchasing health care coverage through the exchanges.  The other alternative is too vastly increase the federal subsidies which will also vastly increase the costs of Obamacare.  Either option is deadly dangerous for Democrats attempting to defend Obamacare while running for election in 2014.

If Obamacare has not imploded by then, it is probably only a matter of time before it does.

The demise of the Republican Party right now is greatly exaggerated.  As time goes on, it will increasingly be dangerous to be a Democrat as Obamacare implodes.

Secretary of HHS Kathleen Sebelius will probably be the first casualty.  She will not be the only one before it is over.

Perhaps it is time for the Republicans to step aside and just watch the chaos become complete.

How long until this day comes?

Three Ways To Play Obama

Many Republicans I speak to are frustrated with the inability of their representatives in Congress to present a coherent strategy and consistent messaging in their battle with President Obama on the budget, Obamacare and the debt limit ceiling.

Those who read BeeLine know that I have presented very different ideas and approaches on how I would have conducted the negotiations.  On the other hand, I hesitate to criticize the Republicans in Washington for anything they have done for the simple reason that it is hard to develop a cohesive strategy when you have a couple hundred individuals who all think they know best.

The President always has an enormous advantage in developing a communication strategy.  Not many in the President's party are going to cross him.  Or stake out an alternative position.  Therefore, it is relatively easy for the President and his party to look like he is control and the opposing party to look disorganized.

You will see me throw no stones.  What is past is done.  What is important is what are the next moves the Republicans can make right now.  Of course, what is most important is that they stay and stick together.  I can't help but be reminded of Benjamin Franklin's famous statement that he made shortly after our other Founding Fathers signed the Declaration of Independence.

"We must hang together or assuredly we will all hang separately."

Here are the three ways that I would play Obama right now.

First, President Obama's biggest vulnerability is his seeming unwillingness to have a conversation or negotiate with the Republicans.  His attitude is it is "my way or the highway".  On other hand, the Republicans are being portrayed as being unreasonable and "crazy".

My suggestion is that John Boehner and Mitch McConnell announce that they are going to rent a room at the Willard Hotel in Washington, midway between the Capitol and The White House, and state they will be there tomorrow at 10am to have a conversation with the President about resolving the government shutdown and the debt ceiling.  If President Obama does not meet them they will return the next day.  And the next day. And the day after.  And the day after that.  Weekends included.

The Willard Hotel

The Republicans need to show they are ready to talk and resolve the issues.  They need to show that they are reasonable and willing to meet and go the extra mile to do that. The President will either show that he is willing or not.

This strategy also creates a media opportunity every day for the Republicans.  Showing up at The Willard would have to be covered every day by the media.  If Obama did not show, the Republicans would have the cameras and microphones to further their message.

I can't imagine that Obama could ignore this for more than a couple of days.  He simply could not afford to look like he is not willing to at least have a conversation.

Second, I would put a gigantic timeline on a wall somewhere in the Capitol that had two timelines, one on top of the other.  

The  top timeline would show the 1,347 days it took for the United States to win World War II.  It would begin with Pearl Harbor and end with V-J Day.  In between it would include all of the significant milestones of the war-Guadalcanal, Midway, Iwo Jima, Normandy, Okinawa.

Right below would be a timeline for the Obamacare implementation's 1,379 days.  It would begin with the signing of the law (March 23, 2010) and end at December 31, 2013 (the day before Obamacare takes effect).  In between I would show all of the waivers, exemptions, glitches and gaffes.  Every one.

I think it is important to visually show the difference between an effort where all Americans worked together compared to the division and disruption that President Obama and the Democrats have brought upon us with this highly partisan, poorly conceived and profoundly flawed implementation.

I would use these timelines as a backdrop every time any Republican spoke to the press or was interviewed on television.  I would have them mention it in every interview that we won WWII in less time than was given for Obamacare to be implemented.  And yet, we still have the disaster we see unfolding every day.  

I would have them add, "Why should we not just suspend the individual mandate for a year as President Obama already did for businesses?"  I would also have them add they don't understand why President Obama is so opposed to this since he was against an individual mandate when he ran for President."

Third, if I could not get President Obama to engage in discussions on the government shutdown before the debt ceiling limit is reached on October 17, I would be prepared to have the House Republicans pass a clean debt limit increase of $300 billion (enough to get us into early 2014) to demonstrate the Republicans are showing good faith even if the President is not.  

The fact is that I believe that most Americans think that everything that has transpired thus far has to do with the debt ceiling when, in fact, it has been about the Continuing Resolution on next year's budget.

Getting the debt ceiling issue out of the way temporarily should help the Republicans further simplify the issue for the American people that what is really in play here is Obama and the Democrats defending the indefensible as explained in this post.

I would also consider adding a trigger to increase the debt ceiling automatically by an amount to get beyond the 2014 elections if certain conditions were met.  Those conditions would be items the Republicans would like to see enacted and which there is broad popular support but which Obama and the Democrats have opposed.  For example, a requirement for voter ID (82% approval), approval of the Keystone Pipeline (66% support) and/or enactment of a Balanced Budget Amendment (65% support in the last poll that I saw).  Simply stated, the debt ceiling limit increase would be totally in control of President Obama and the Democrats before next year's mid-term elections.

The stronger party in any negotiation is the one that can live with the status quo. Who needs the deal more?  President Obama took his hard line position in this "negotiation" on his assumption that the Republicans needed the deal more.  He believed he would have the media on his side and he could effectively place the blame on the Republicans so that they would have to blink.

The Republicans did not help their cause originally because they asked for too much.  They played into Obama's hand. The Republicans are now playing the right hand with a very reasonable request but the public is too confused to understand it.  That is why the GOP needs to hammer away at my first and second points above.  They need to look reasonable and they need to show how poorly Obamacare has been implemented given the time allowed.

The Republicans are also at a point of no return.  People have had disapproval ratings of Congress for a long time.  They cannot go much lower.  However, Obama could lose a lot of ground.  He is already down to a 37% approval rating-his lowest of his Presidency. And as he loses ground it damages the entire Democrat brand.  In addition. if the Republicans give at this point they will lose in a very big way with their conservative base.  They really do need to hang together or they will assuredly hang separately with their base.

They absolutely need to walk away from this having gotten something significant from Obama on the government shutdown.  And on this matter they seem to be in a stronger position on living with the current status quo.  Aside from the blame game, the Democratic constituency is hurt much more by the government shutdown.  Thousands of federal government employees (a majority of which vote Democrat) are out of work, and the EPA, the IRS and scores of federal agencies have less ability to regulate the lives of the American public.  This does not sound like a Republican problem.

At this point President Obama's hand appears to be getting weaker every day. Obamacare is not going well.  The press is picking up new horror stories every day.  If this continues it will be harder and harder to argue against a delay or suspension of the individual mandate.  In addition, each day those federal workers are getting more upset.

The pettiness and political posturing of the Obama administration in dealing with the shutdown is also hurting them.  WWII vets being turned away from the WWII Memorial. The families of soldiers killed in action not getting death benefits. Volunteers who want to mow grass on federal property being turned away. The Park Service trying to block the view of Mt. Rushmore from a state highway.  Illegal immigrants are given access to protest on the National Mall but regular citizens are not allowed to walk across it. What is this?  Is government supposed to be used as a vindictive tool to inflict unnecessary harm on its people?  That does not sound like the United States of America.  It does sound like despotism.

The way to play with Obama is to put him in a position where he has to make some plays of his own.  He doesn't seem to like to get on the field.  He seems to be comfortable standing on the sideline telling everyone else how to play the game.  

It is time to get him in the game.

It is time the Republicans starting calling better plays.

And it is time to see what kind of defense Obama can play when you bring the game to him.

Matching Millionaires

I have seen the tv commercials for match.com, eharmony.com, christianmingle.com and seniormatch.com.

A recent study I saw indicated that one-third of marriages in the U.S. begin with online dating.

Therefore, it is probably not surprising that there is also a dating site for millionaires, MillionaireMatch.com.

What was surprising to me was that the site lists more than 2 million singles.

Another recent study I saw indicated that there are only about 9 million American households in the U.S.  This would seem to indicate that a substantial number of the nation's millionaires are on MillionaireMatch.com or there are a lot of make-believe millionaires looking for a few real millionaires on the site.

I guess it comes down to the fact that if I bend the truth on my height and weight on these dating sites why not go a little further a fudge a little on my net worth as well?

You might ask why a happily married man came across MillionaireMatch.com?  I came across this report on a survey by the site which explored the dating preferences of millionaires.

It seems that the vast majority of the millionaire men, 79.6% according to the survey, are seeking non-millionaire women.  However, 84.5% of the female millionaires want to date another millionaire.

Darren Shuster, a spokesman for MillionaireMatch.com said that the results of the survey surprised them.

“We were very surprised to learn that the great majority of our male millionaire members sought non-millionaires,” said Shuster. “It seems that financially independent men want to share their wealth with those less fortunate. With women, the story is much different.”

The female millionaires made it clear that they are not looking to use their money to take care of someone else.  However, the men seem to want to find someone they can take care of.

The women are also much more likely to be careful in protecting their money if they enter a marriage.

Eighty-two percent of the female respondents said they would insist on a prenuptial agreement, while only 17.4 percent of the male respondents would do the same.

This survey reminded me of my post from earlier this year, Degree Dearth=Date Dearth. In that post I wrote about the significant imbalance in educational attainment in our country between women and men.

60% of the college graduates this year will be women.  Only 40% will be men.  This seems to be having profound impacts on dating and marriage.

Women have historically tended to date and marry men of at least equal educational attainment and socio-economic status.  That is becoming an increasingly difficult goal for women.

The millionaire survey indicates that these attitudes are very much entrenched in women.  Even women who are financially secure are not looking down the economic chain.  They still want to marry up, or the very least, to marry someone of the same economic status.

I don't pretend to understand women or all the complexities in male-female relationships.  However, I do understand numbers.  With ever increasing numbers of well-educated and successful women relative to men, there are going to be a lot of available single women around unless women start revising their expectations.

Or the men start upping their game.

If you want to delve deeper into this subject of gender economics you might want to read this article by Sandra Tsing Loh from The Atlantic (September, 2012) entitled "The Weaker Sex" which points out that in nearly 40 percent of American marriages today, the wife already earns more than the husband.  The article's header summarizes the article this way,

"How the new gender economics has more and more professional-class women looking at their mates and thinking: How Long Until I Vote You Off The Island?"

Credit: Wesley Bedrosian, The Atlantic

A Penny And A Few Thoughts

I walk every morning.

I often see a penny lying on the sidewalk on my walks.  I have never fully understood why I see so many more pennies than nickels, dimes or quarters.

Is it because there are many more pennies in circulation?  Are people just more careless with their pennies?  Is it because many people won't bother to pick up a penny like they would with something larger?

This is a penny I picked up on a walk last week.

If I see a penny, I always pick it up.  I hope it is good luck.  More importantly, I know the power of that penny.  I am not going to ignore it.

One of the big reasons I don't ever ignore a penny is this story I read a long time ago about Brutus and Caesar.

Brutus and Caesar

Caesar was a great politician but like all politicians he had his share of enemies.  In order to insure that his children were taken care of if he met an early demise, he instructed Brutus to set up a trust for his children with $1,000 Roman dollars.  

Of course, Brutus was not the most trustworthy guy.  He skimmed off a penny and set up a trust for his own heirs invested in safe government bonds yielding 3%.  Caesar's children got $999.99.  Brutus left  instructions that no one was to touch the money he put in trust for 2,000 years. 

How would that work out?  One cent compounded for 2,000 years at 3% would grow to $473,000,000,000,000,000,000,000 ( that is 473 billion billion).  The current GDP of the United States is about $16 trillion.  In other words, one single penny compounded for 2,000 years would be able to buy everything in the U.S. economy for the next 30 billion years.

If one penny could grow to that sum over the last 2,000 years why isn't there more wealth?  The biggest reason is that people rarely can keep their hands off the money.  Compounding only works if interest compounds on interest.  Most people can't do that.  They spend the income as soon as they earn it.

Another big reason is that the original investment capital is lost and the compounding stops with it.  Brutus thought he was being smart by investing in the safest investment around-government bonds.  Unfortunately, those bonds were Roman Empire bonds.  The empire fell apart and the government bonds became worthless.  Not only was the compound effect lost but so was the original penny.

Now you know why I pick that penny up.

However, that penny and that story also explain why I am so concerned about our country and our debt.

History shows that it is impossible to keep up with compounding interest on debt beyond a generation of two.  The burden is simply too much.  The only way out is default of inflation.  That is the way the system purges the debt and clears the deck for the future.  Of course, those holding that debt are wiped out.

In a couple of weeks we will reach the current debt ceiling limit of $16.7 billion.  About $12 billion of that debt is held by the public.  The remainder is owed to various other government entities like Social Security.  These are called intragovernmental holdings and amounts to approximately $4.7 billion.

When you are dealing with compound interest you reach a point as a borrower that you simply cannot keep up with the compounding interest payments.  It is like a small snowball rolling down a hill.  It just keeps getting bigger and picking up speed.  Pretty soon it becomes a gigantic boulder that has the potential to crush everything in its path.

We are at the bottom of that hill and that snowball is getting bigger and bigger.

Were it not for the Federal Reserve's QE policy the snowball would be accelerating at a frightening pace.  It has been "printing money" to buy most of our current borrowing needs over the last couple of years which is keeping interest rates low.

Consider the fact that, thanks to the Fed, the average interest rate on our national debt right now is at an historic low of only 2.4%.

How does this compare to historical averages?  The average interest rate over the last 20 years is 5.7%.

Peter J. Tanous wrote about this recently on cnbc.com.

So here's where it gets scary: U.S. debt held by the public today is about $12 trillion. The budget deficit projections are going down, true, but the United States is still incurring an annual budget deficit by spending more than we take in in taxes and revenue.

The CBO estimates that by 2020 total debt held by the public will be $16.6 trillion as a result of the rising accumulated debt.

Do the math: If we were to pay an average interest rate on our debt of 5.7 percent, rather than the 2.4 percent we pay today, in 2020 our debt service cost will be about $930 billion.
Now compare that to the amount the Internal Revenue Service collects from us in personal income taxes.

In 2012, that amount was $1.1 trillion, meaning that if interest rates went back to a more normal level of, say, 5.7 percent, 85 percent of all personal income taxes collected would go to servicing the debt. No wonder the Fed is worried.

Of course, who knows where interest rates might go once the QE money printing stops?   

This chart give you a general sense in the average net interest borrowing costs of the federal government since the early 1980's.

Credit: Aldrich.com

What is especially troubling is how much of the debt outstanding is in short maturities.  This chart is from last year but it gives you the general idea.  Fully half of the debt matures ( and most be refinanced) within 36 months.

http://welltemperedspreadsheet.wordpress.com/2013/01/26/the-national-debt-is-closer-than-it-may-appear/

This is a dangerous situation to be in if interest rates rise as borrowing costs could rise in a very short time that would greatly increase the budget deficit.  Not only would the federal budget have to pay interest on new borrowings to finance the deficit but debt already on the books must be refinanced.

For example, in 2012, $3.7 trillion in treasury securities were issued.  $1.1 trillion was to finance the current year's deficit and an additional $2.6 trillion was needed to refinance older debt.

A 300 basis point increase in interest rates (3%) would mean this would increase borrowing costs (and federal spending) by an additional $111 billion annually.

That snowball can get big in a hurry.

Those pennies quickly add up on the borrower.

That is why there are usually only two ways out when debt starts to reach the levels we are at today.

Inflation or Default.

Therefore, watch your pennies.  And pick up as many as you can.  You may need them.

And So It Begins...How Will It End?

From the time Japan bombed Pearl Harbor until the United States landed troops on Okinawa in World War II took 1,211 days.

From the time Obamacare was passed into law on March 23, 2010, 1,288 days have passed.

Japan ultimately surrendered unconditionally to the United States 1,347 days after they attacked Pearl Harbor.

When Obamacare is scheduled to take effect on January 1, 2014 there will have been 1,380 days for the federal and state governments to get ready for the implementation of Obamacare.

However, despite a longer period to prepare for Obamacare taking effect than it took for the United States to win World War II, it appears that the Obamacare exchanges are woefully unprepared for the launch.

We have already witnessed scores of waivers, delays and exemptions including:

• delay of the employer mandate for one year

• waiver of the requirement that new insurance marketplaces verify consumers' income and health insurance status

• special waiver given to Congress and their staff to be allowed  to purchase their health care in the exchanges with federal subsidies which is not provided for in the law

• the cap on out-of-pocket costs required in the legislation has been delayed for one a year

• the small business exchange which was supposed to allow small businesses to purchase coverage for their employees has been delayed

Here is how The New York Times described the state of the exchanges as Opening Day for Obamacare is upon us.  You have to wonder if The New York Times is reporting it this way, how bad is it really?

Tuesday is the long-awaited kickoff for President Obama’s signature health care law, when millions of Americans can start signing up for new insurance options. Yet across the country, officials are issuing warnings that despite fevered efforts, their new insurance exchanges — online markets where people can shop for health plans and see if they qualify for federal subsidies — will not be fully operational for weeks or even months.

You can't get much more sympathetic to Obamacare than states like Maryland and Oregon.  Democratic blue through and through.  You can't blame Republican intransigence for any problems in states like this. However, here is what The Times says about the readiness of these two states.

In an indication of the difficulty of the job, some of the states with delays, like Oregon and Maryland, have been preparing for many months and have political leaders who strongly support the law.

What is going on in the 30 states that have declined to operate their exchanges and turned it over to the federal government?

“It makes you wonder about the exchanges that actually have been at this a shorter period of time,” said Jon Kingsdale, a managing director at Wakely Consulting Group, who is advising several state-run exchanges. “Do they even know what their problems are?”

Of course, it is not for lack of money. Billions of taxpayer dollars have gone into the effort.

Although the exchanges have been able to tap billions of federal start-up dollars and hire companies like Accenture, Oracle and Xerox to help with the work, their task has been highly complex and their time frame tight.

The web portals for the exchanges have to be able to share information in real time with insurance companies, state agencies and the federal government, which has built a “data hub” through which it can verify the income and citizenship of people applying for subsidies or Medicaid. Each portal has to undergo rigorous testing to ensure, for example, that data will flow properly, that the portal is secure and that it can handle heavy volume. Much of the testing is still going on.

Much of the testing is going on days before this is supposed to go live?  If I had done this with the benefits programs I used to administer I would have not lasted long in my job.

I wrote this six months ago in "Obamacare Is Still Dangerous For Democrats" and I still hold the same views.

The first question I have is whether the health insurance exchanges will be ready and will function as intended?  I believe there is a good chance that the entire process could be chaotic and confusing for the public.  

The fact is that the information technology challenge to establish the exchanges is considerable.  This challenge has become even more pronounced since so many states have decided to forego establishing their own exchange and have delegated that responsibility to the federal government.

If Obamacare gets off to a rough start with the public due to chaos and confusion with the health exchanges this could signal deep problems for the program going forward.  It is hard to recover from poor first impressions, especially if media attention picks up on it.   A compliant Obama-friendly media is not likely to play up any problems, however, if they jump on the bandwagon if things go poorly it will be difficult to turn around the public's perception of the program.

This truly looks like a potential train wreck but a lot will depend on how the problems are played in the media. Will the media cover for the problems or not? This will be an important indicator to watch.

It is also important to remember that, unlike other major social programs such as Social Security and Medicare, there is a different dynamic in play here than when those programs were implemented.  In those programs everyone was in the same situation.  You had a broad-based tax applied to most everyone and everyone would eventually benefit at some point.  That is not the case with Obamacare.  Everyone is not in this together.  There are winners but there are also a lot of losers.  How much noise do the losers make compared to the winners.  Will the system work as promised?  If the noise level and bad PR starts, do the Democrats continue to stand together.  Or do they start looking nervously at 2014?

The future of Obamacare will not be decided in the next few days.  It will ultimately be decided in the court of public opinion over the next few years.  When the public really sees it in operation, will they embrace it?  We have been told since its passage by the President and the Democrats that the public would come to love Obamacare.  We have yet to see that yet after nearly 1,300 days.  Watch closely over the coming months to see how the narrative on Obamacare plays out.

Laws that do not have public backing do not survive over the long term.   Both parties have left little question where they stand on the issue.  The question I am interested in seeing is whether both parties will still be standing in the same way on the issue come the 2014 elections.

And so it begins...how will it end?

Getting To Blink Or Blame

I continue to try to understand what the Republicans are trying to accomplish when it comes to Obamacare.

They clearly think it is bad law.  It will be detrimental to our health care system and bad for our economy and our country.  For every positive aspect in the law there are hundreds of negatives.  It has "train wreck" written all over it.

However, the Republicans appear to have been burned so many times by the promise and allure of government programs that the Democrats sell to the public (of course, someone else always pays the bill), they don't really believe it.  The only thing they really believe is that this law will create more government, more dependency and more Democrats in the future.

If they are correct, we have reached a sad state of affairs.  I prefer to believe that the majority of people in this country still have some common sense.  My advice to the Republicans is to fashion their strategy over the next few days to more common sense arguments.

Negotiations are won by playing up your advantages and taking advantage of the other side's weakness.  It is fairly simple.  However, you need to really understand what these advantages and disadvantages are.

Let's look at the state of play in the Continuing Resolution negotiations.

The federal government does not have a budget for the new fiscal year that begins on Tuesday, October 1.  It needs Congress to pass, and the President to sign, a continuing resolution to fund the government by that time or there will be a government shutdown.

Although all essential functions of government will continue, there will be enough disruption of government services, that is assumed that the public will not be happy.  Parks will close, passports will be delayed and the good people of the will lose their patience with the ineptitude of those in Washington, D.C.

Who is to blame if this occurs?

That is the first question to ask and answer when assessing advantages and disadvantages.

It really comes down to who appears to have been more reasonable to the public in their negotiating position before negotiations broke down.

As it has stood up until now, the Republicans look more unreasonable in asking for the defunding of Obamacare.  It simply looks to common sense folks that the Republicans are poor losers.  They lost in 2008 when healthcare reform was an issue in the election, they lost in the Supreme Court and they lost again in the 2012 election.  They put themselves in a terrible negotiating position by pressing the defund strategy.

I had written previously that this was flawed strategy and suggested a stronger and more defensible strategy in "There Is A Better Way To Defund Obamacare."  My argument was that the Republicans should merely ask that Obamacare be funded to the exact level that it was supposed to be when the law was passed.  After all, this is a budget negotiation, what is more reasonable than asking that the law live within its original budget projection?  This would mean that $27 billion would need to be cut from Obamacare's costs for 2014.  It also happens to be almost the exact projected costs of the individual subsidies in the law.  Without those subsidies, Obamacare cannot create any dependency.

If Obama did not want to agree, he was once again a budget buster.  If the government shut down, he was the one that caused it by being unreasonable.  After all, the Republicans only asked him live within the original cost projections of his law.

Of course, that opportunity was missed.  What can the Republicans do now?

Their most important priority is putting President Obama at a disadvantage.

That will not be accomplished by asking for an overall delay of Obamacare for one year.  My opinion is that this actually plays into Obama's hands.  Obama might actually welcome this deal in that it appears that Obamacare is faced with innumerable implementation problems.  By taking the deal, Obama makes himself look magnanimous while also buying an additional year to insure that the technology and other implementation issues can be fixed.  When it does go live a year from now, it will all look like much ado about nothing right before the 2014 elections.

Why would the Republicans want to give Obama another year to figure this out?

A better strategy is to look at Obama's weaknesses and take advantage of those in the negotiations.

First, Obamacare is certain to have a number of implementation and technology issues.  The large number of waivers and extensions (in contravention of the clear letter of the law) is clear evidence of that.  Republicans should be pushing for the overall law to take effect as scheduled to see this play out.

If Obamacare gets off to a rough start with the public due to chaos and confusion with the health exchanges this could signal deep problems for the program going forward. It is hard to recover from poor first impressions, especially if media attention picks up on it. A compliant Obama-friendly media is not likely to be eager to play up any problems. However, they may not be able to avoid it. If they jump on the bandwagon if things go poorly it will be difficult to turn around the public's perception of the program.

Second, instead of a one-year delay in the entire law the Republicans should only be asking only for a one-year delay in the individual mandate.  This is entirely justified in that Obama has already provided a one-year delay in the employer mandate.  Asking for a one-year delay of the entire law is not much different that trying to defund.  It looks like sour grapes to most people. However, asking for a one-year delay in the individual mandate is a simple question of fairness and equity.  It is a common sense request that would be hard for Obama to defend himself against.  You gave it to employers why not to individuals?  That is not fair!

Of course, he knows that without the individual mandate the entire Obamacare structure will fall apart.  Those with expensive health conditions will enroll.  The young and healthy will have no incentive to do so.  This will mean that health insurance rates for next year will skyrocket.  And those rates will be in the news right before the 2014 mid-term elections.  This is exactly what the Republicans need to occur to build the constituency to repeal the law.

An additional argument for the delay of the individual mandate is that when he ran against Hillary Clinton in the 2008 primaries Obama argued against the individual mandate that Clinton had as part of her health care plan.  It is time to remind the American public of this again.  Why is he so insistent on it now when he was against it then?  They should also be reminded that in 2006 he was against an increase in the debt ceiling limit.  Do you see a pattern here?

Third, the Republicans should insist that the subsidies that are being provided to Congress and their staffs to offset the cost of healthcare insurance in the exchanges should be prohibited.  Of course, this is actually the way the law is written but the Obama administration has simply ignored the law and ruled that Congress will receive a subsidy to pay 72% of the cost regardless of income.  

This is an extraordinary weakness for Obama in that he is providing benefits to those in D.C. that are simply not available to the average American.  It doesn't get much better than this in a common sense position that the American people will understand.  Of course, to do that they are also voting against their own self-interest.  They will be taking money out of their own pockets and from their staffs.  However, they were not elected to represent themselves, they were elected to represent us.  It is time to show us they do.

In summary...

Forget about any one-year delay of Obamacare in return for the passage of the Continuing Resolution.  

The Republicans should merely ask for a one-year delay in the individual mandate and that Congress and the White House participate in Obamacare in identical fashion as everyone else.

If they do this, the Republicans will be talking common sense.  The Republicans are on the high ground with this strategy.  Obama will be on defense.

If the government shuts down who is the public going to blame?

My bet is the guy who gave a one year delay to businesses but would not do so for individuals and the guy who wanted to give a special break to his Washington friends that he was not willing to give to the average American.

If I am a Republican and I use this strategy, I would then sit back and let Obama make his choice.  Does he really want to defend the indefensible?

The way I look at it, anything that happens from that point forward means I win.  Obama blinks or ends up with a lot of blame.  The government is starved of funds or Obamacare is starved of oxygen it needs to survive. I can live with either result.  Can Obama and the Democrats say the same?

Safe Haven

I watched the movie, Safe Haven, over the weekend.  Based on the book by Nicholas Sparks, the movie stars Josh Duhamel and Julianne Hough, in a tale about a young woman with a mysterious past who starts a new life in a small coastal town in North Carolina and becomes attracted to a young widower with two small children.  He helps her confront her past and find comfort in the "safe haven" of his love and in her life in the small town.

The "safe haven" for most savers and investors over the last 30 years has been the money market fund. The money market fund is an open-ended mutual fund that invests in short-term debt securities, short-term t-bills and commercial paper.  MMF's were not designed to provide a large yield but were usually attractive compared to bank CD's and savings accounts as they provided a higher yield than a savings account and more liquidity as compared to a CD.

To provide some perspective, there is over $2.5 trillion invested today in MMF's.  This is more than the sum of checkable and demand deposits at commercial banks ($2.3 trillion per Federal Reserve).

MMF's are also designed, unlike most other financial instruments, to provide a stable value of $1 per share so that the fund owner will not worry about the loss of capital.  This feature has also made MMF's a popular capital preservation vehicle for investors.

However, unlike deposits in banks with FDIC backing, MMF's have no deposit or fund guarantee.  If the underlying investments in the mutual fund go bad, it is possible to "break the buck" meaning that you do not get the $1 back that you invested originally.  This has only happened a handful of times since the inception of MMF's but it could have been a serious problem in the financial crisis of 2008 if the U.S. Department of Treasury had not stepped in after the Lehman Brothers bankruptcy to "guarantee" the $1 net asset value in participating MMF's.

MMF's position as the "safe haven" for investors may change in the future as the SEC has proposed that institutional MMF's might need to move to a floating or variable net asset value.  This would end the traditional $1 stable NAV for these funds.  Alternatively, MMF's could continue to operate with the $1NAV but they would need to place restrictions on the fund to control for heavy redemptions and potential "runs on the fund".

These new rules would be designed to reduce the systemic risk in MMF's for investors and the financial system. You can read all about these proposals and the potential effects on 401(k) plans in this article by PIMCO.

A major point in the article is what is reflected in this chart showing nominal (actual) and real (after inflation) of MMF's since 2003.  It shows just how damaging the low interest rate environment has been to savers.  The reality is that MMF's may be perceived to be a "safe haven" but they have quietly been eroding the real wealth of savers by about 2% per year over the last decade.

Credit: Franklin Templeton 

Compare these rates to the yields on MMF's from 1992-2004 where nominal rates were more typically in the 3-6% range.

Compare the difference to the saver between a 4% yield and a 0.02% yield.  $100,000 in a money market mutual fund provides $4,000 of yearly income to the saver.  At .02%, it provides $20!  A $2,000 real return becomes a loss of $2,000 after taking account of inflation.

Based on the estimated $2.5 trillion invested in MMF's right now, the loss of interest income for savers in the aggregate amounts to around $100 billion this year alone.  If you take all of the interest income on savings-bank savings, CD's and bonds, you are talking about $400 million or more. That is a lot of money being taken out of the pockets of savers.

To put that in perspective, the FICA payroll tax holiday that was in place a year or so ago carried a cost of $120 billion per year.  That was supposedly done to put more money in people's pockets.  However, at the same time, we were taking 3 times that much from savers.  Could that be a reason the economy is stuck in neutral?

Can you imagine what the reaction would be if a $400 billion annual tax increase was proposed on savers at the beginning of this recession?  There would have been rioting in the streets.  In fact, that is what happened in Cyprus earlier this year.

However, this is exactly what has occurred in this country with nary a peep.

I wrote about the adverse effects of the Fed's policies over two years ago in "Robbing Savers To Pay Goldman, Chase and Citi et al" and nothing much has changed.  However, you can also include the federal government as another major beneficiary of the low interest rate policy.

Quite simply, we have reached the point where a return to normal interest rates would be nearly fatal to our federal budget and most of the other G-7 countries.  In fact, a 1% increase in interest rates means an additional $1.4 trillion in costs for these countries.

This is what I wrote in February, 2011.

The policymakers are so driven to prime the pump in an attempt to save Wall Street and the banks who made the bad loans and investments they have purposely forced savers to get almost nothing for their efforts.  Why?  Quite simply they want to make it so unattractive to save that these savers will finally give up and take a flyer on the stock market or buy a new house.  At a minimum, they would like them to go to the bank and pull the money out and spend it on something!  

Of course, the savers they are targeting are your grandparents or your parents or some other responsible soul who played by the rules their whole life.  They saved liked they should to build a nest egg for retirement or their child's college eduation.  

Now the Fed policymakers come along and they want to "smoke them out of the foxhole" by fixing it so they get no interest on their savings.  If they can't get them to trade their savings for stocks or some other investment they have a second approach lined up.  INFLATION!  What do people do when they see their money being eaten up by inflation?  They quickly decide they would rather spend it on something today rather than get a lot less than something tomorrow.   

Beware the "safe haven" of money market funds and other low yielding investments that are resulting from the Fed's policies.

Watch Josh Duhamel and Julianne Hough instead.  $1.20 at Red Box (before tax, of course).  $6,000 in a money market for a year will pay for it.

The Old Man Who Could See

“The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.” ---Ernest Hemingway

I came across this quote from Ernest Hemingway last week.  It seems especially appropriate considering what is going on in Washington, D.C. of late.

Ben Bernanke says the Federal Reserve will not taper its money printing anytime soon.  The sad truth is that we seem to be as incapable of kicking the QE habit we have developed as a crack addict has in getting off cocaine.

Axel Merk of Merk Investments provides some perspective on just how far the Federal Reserve has gone to try to create "temporary prosperity".

Below is a chart depicting relative growth of central bank balance sheets since August 2008. This growth is often referred to as the amount of money that’s been printed, even if no actual banknotes are issued. When money is “printed” to buy, say $1 billion in Treasuries, the Fed credits the account of, say, Goldman Sachs, with said $1 billion. In return, the Fed’s balance sheet now carries the Treasuries on the asset side, growing by $1 billion, and the $1 billion credit to Goldman on the liability side. In total, the Fed balance sheet now stands at over $3 trillion. On the chart below, tapering refers to the rate at which the growth of the Fed’s balance sheet will level off, i.e. when the black line moves horizontally, rather than upward:

Contrast that with the European Central Bank (ECB) that’s actually mopping up liquidity. It’s not that the ECB is so hawkish, but their printing press is wired differently: instead of buying some seemingly random amount every month, the ECB’s balance sheet is demand driven. That is, when banks request liquidity (cash), the ECB provides it in return for qualifying collateral.

Should it come as a surprise that the euro is the best performing currency year-to-date? Last year, by the way, with all the trouble in the Eurozone, the euro also outperformed the U.S. dollar. That’s how well the cleanest of the dirty shirts has been performing. It seems to me that the seemingly clean shirt has been trading on unrealistic expectations that it might outshine the rest of the laundry.

There are indeed a lot of dirty shirts around the world.  Consider these observations from Egon von Greyerz of Matterhorn Asset Management on the mountain of debt that has built up around the world.  When you look at the mounting interest costs on that debt you begin to see why the Federal Reserve and other central banks are doing every thing they can to put the lid on interest rates.  You also see why inflation is ultimately the last refuge of political and economic opportunists.  It literally is the only way out.  Ultimately, if the public stands silent, government debts will be paid with currency worth cents on the dollar.

“The G-7 are the top industrialized countries in the world:  The U.S., the U.K., France, Italy, Canada, Germany and Japan.  Since neither China and Russia are included, you can question the validity of this group, especially since most of the G-7 countries are bankrupt.

Nevertheless, the G-7 represents around 50% of world GDP, which totals $30 trillion.  But these countries have a total debt of $140 trillion, which is a remarkable 440% of their GDP.  If you look back to 1998, the total debt of the G-7 was $70 trillion and their GDP was $30 trillion.  So, Eric, debt has doubled between 1998 and 2012, from $70 trillion to $140 trillion, and GDP has only gone up by $10 trillion.  What this means is that it takes $70 trillion of additional debt to produce $10 trillion of additional GDP.  

So the world’s so-called richest nations need $7 of debt to produce $1 of GDP.  The world is bankrupt, and all of the economic figures that are being published are just a mirage of a castle built on a foundation of worthless paper money.  The world can, of course, never pay back the debt with real money, and the world can’t even pay the interest with real money.

Every 1% increase in the interest rate means an additional cost for the G-7 of a staggering $1.4 trillion.  That is absolutely massive.  $1.4 trillion is only slightly less than the entire GDP of Canada.  If interest rates increase by 10%, then we are looking at an increase in interest expense for the G-7 nations which equals the entire GDP of the United States. 

Of course, at the same time, we also have a President talking about deploying U.S. military forces in a war effort in Syria that is undefined and ill-conceived.  It looks like nothing more than a refuge to cover for Barack Obama's ill-considered remarks, missteps and foreign policy failures.

I read The Old Man and the Sea in the 7th grade.  I didn't really realize at the time how well Hemingway could really see.  I thought he was just a good writer.  I now understand that he was much more talented than I thought.

Writing History Painfully

I often wonder how history will remember the Presidency of Barack Obama.  Will it be seen as the grand beginning to a new era of progressivism?  Will it be recorded as the beginning of the end of the United States as a world power?  I don't feel comfortable with either conclusion.

My best guess right now is that future generations will just wonder how the American people could have let themselves be bamboozled by someone who when, viewed in the fullness of time, was not much different than a 19th century snake oil salesman.  Articulate and personable with a nice smile who  was great on the stump.  However, in the end, that was all there was.

I know it sounds harsh but I can't escape this nagging feeling that history is going to judge Barack Obama in a very unfavorable light.  The world has been Obama's oyster almost his entire life.  Things came easily.  Private school in Hawaii.  Occidental. Columbia.  Harvard Law. Law Review Editor. Community organizer. Constitutional Law professor. State Senator. U.S Senator. President.  Nobel Peace Prize. He had a lot of help along the way.  He seemingly got pushed to the front of the line at crucial times in his life.  People wanted to help the nice young man and he took full advantage every step of they way.

However, it appears to me that Barack Obama's luck has run out.  He's finding that out every day.  American's foreign policy is in disarray.  Although many thought it was impossible, respect for America is lower than it was under George W. Bush.  The economy is still lackluster.  Our fiscal house is in horrible shape and we seem to be in eternal gridlock in Washington. At the same time, Obama appears incapable of leading, building consensus or doing anything to unite the country.

Daniel Henninger of The Wall Street Journal describes the Obama modus operandi as: "I think, therefore you do."

We should admit the obvious: Barack Obama is the most anti-political president the United States has had in the post-war era. Truman, Eisenhower, Kennedy, Johnson, Nixon, Ford, Carter (even), Reagan, Bush, Clinton, Bush. All practiced politics inside the tensions between Congress and the presidency that were designed into the system by the Founding Fathers. Not Barack Obama. He told us he was different. He is.

Mr. Obama doesn't do Washington's politics. Disappointed acolytes say it is because he is "passive." That underestimates him. For Mr. Obama, the affairs of state are wholly a function of whatever is inside his mind. 

Some things remain in his mind, like the economic benefits of public infrastructure spending, which appeared one more time in Monday's post-Navy Yard speech on the lessons of the financial crisis and Congress's obligations to agree with him. Some things enter his mind and then depart, like red lines in the Syrian sand.

From where he sits, it is the job of the political world outside to adjust and conform to the course of the president's mental orbit. Those who won't adjust are dealt with by the president himself. They are attacked publicly until they are too weak politically to oppose what is on his mind.

There is no better example of this than the President's speech to the Business Roundtable yesterday where he stated,

"Raising the debt limit, which has been done over a hundred times, does not increase our debt."

Excuse me? Did he really say that? This was not one of Obama's famous gaffes either. He read it straight off the teleprompter.

Here is a chart of increases in the debt limit and in the federal debt since President Obama took office. You can make your own determination of that statement.

Credit:Thrivent.com

Granted, raising the debt limit does not increase our spending obligations. But it certainly leads to increases in our debt as the chart shows . That fact is inescapable. However, the President did not say that. The President also conveniently ignores the fact that the only reason the Republicans want to negotiate with the debt ceiling is to attempt to reduce the rate of increases in spending and the resulting federal debt from our deficit spending. If the President showed any willingness to negotiate on normal terms it would not be necessary.

What is really remarkable is what Barack Obama said in 2006 when the Bush administration asked Congress for a debt ceiling limit increase. These are verbatim excerpts from his speech on the Senate Floor on March 16, 2006 when he stated he would not support an increase in the debt limit.

The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. Over the past 5 years, our federal debt has increased by $3.5 trillion to $8.6 trillion.  (Note: the current debt limit ceiling is $16.7 trillion which is almost $8 trillion more than in 2006)

And the cost of our debt is one of the fastest growing expenses in the Federal budget. This rising debt is a hidden domestic enemy, robbing our cities and States of critical investments in infrastructure like bridges, ports, and levees; robbing our families and our children of critical investments in education and health care reform; robbing our seniors of the retirement and health security they have counted on.

Every dollar we pay in interest is a dollar that is not going to investment in America’s priorities. Instead, interest payments are a significant tax on all Americans—a debt tax that Washington doesn’t want to talk about. If Washington were serious about honest tax relief in this country, we would see an effort to reduce our national debt by returning to responsible fiscal policies.

Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘‘the buck stops here.’’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.

I therefore intend to oppose the effort to increase America’s debt limit.

Over the years I have learned that things that don't make sense can continue for much longer than you ever thought possible.  The reason is that human beings often make decisions and come to conclusions based more on the reflexive parts of their brain than the reflective parts.  However, over the long term, you can't defy gravity.  Bubbles burst, false heroes fail and what appeared to be gravitas is revealed to be nothing more than glibness.

Politics is a tough business.  It is difficult to know who your real friends are.  It is also ultimately a game of survival.  For most politicians it is largely about maintaining power as well as positioning for the next step up the ladder.  You help those who can help you.  You distance yourselves quickly from anyone who cannot help your cause or could harm your own survival.

People can also turn quickly on someone.  Especially if they believe they have been duped or misled.

Barack Obama is in a different place right now than he has ever been in his lifetime.  The finely polished veneer is cracking and we still don't fully know what is really underneath.  My guess is that we will find out a lot more about the real man Barack Obama is over the next few years.  Will we start to see more Democrat defections on key Obama initiatives?  Will his approval ratings continue to fall with voters?

The real danger for Obama is that once cracks start to surface they tend to spread.  He has had a lot of cover up to now from both his party and the press.  How will he deal with it if that starts to slip?

There is much history yet to be written with Barack Obama.  Salesman or Statesman? Pretender or President?  Liability or Leader?

George Washington once said, "Truth will ultimately prevail where there is pains taken to bring it to life."

The last five years have been painful enough.  How much more pain is it going to take to get these answers?