Streetwise for Mar 7,  2010

Streetwise

Lauren Rudd

Sunday, March 7, 2010

Cynical Posturing Hurts Nation and Portfolios

The melodramas currently being orchestrated within the hallowed halls of Congress will not only affect your portfolio and investment strategy, but brings to mind Harvey ‘Big Daddy’ Pollitt’s comments in the movie version of “Cat on a Hot Tin Roof.”

In that movie, Pollitt (played by Burl Ives) is given to say, “Didn't you notice a powerful and obnoxious odor of mendacity...There ain't nothin' more powerful than the odor of mendacity...You can smell it. It smells like death.”

There was a distinct odor of mendacity emanating from the Nation’s Capital after Senator Orrin Hatch’s recent treatise in the Washington Post, warning that the use of reconciliation to pass healthcare reform would be a dire threat to our democracy. Yet, Senator Hatch has somehow forgotten about the numerous times he voted to pass measures by reconciliation.

Specifically, the 2001 Bush tax cuts, which passed via reconciliation. There was also the Jobs and Growth Tax Relief Reconciliation Act of 2003, accelerating the Bush tax cuts and adding new ones, and the 2005 Deficit Reduction Act, reducing Medicaid spending. There was also the Tax Increase Prevention and Reconciliation Act of 2005, which extended the Bush tax cuts for some tax brackets via reconciliation. Smells like a bit of mendacity to me.

Then we have the recent escapades of one Jim Bunning, the Republican Senator from Kentucky who single handedly blocked the Senate from voting on a bill to extend unemployment and COBRA insurance benefits, pay for transportation programs, provide loans to small businesses and extend Medicare reimbursement rates for doctors.

This one Senator halted desperately needed benefits for over 400,000 people, many of whom are clinging to the cliff of survival by their fingernails. It forced the Department of Transportation to furlough nearly 2,000 employees without pay, suspended dozens of transportation and highway safety projects across the country, jeopardized loans to small businesses and cut Medicare reimbursement rates for doctors.

And all he had to do was sacrifice a few hours of sleep and give up watching a college football game, which he nonetheless farcically complained about. However, Mr. “pay as you go,” Bunning left out the small detail that during the eight years of the Bush Administration he was fine with two wars that were unpaid for, which along with all the Bush tax cuts, unpaid for, added up to an unpaid tab of trillions of dollars. There it is again, that wafting odor of mendacity.

However, bathing the Democratic Party solely in the light of righteousness would also be in error, as both sides of the aisle are to blame for Washington’s current lack of congeniality. The rules engendered by the Senate have morphed into allowing a single Senator to completely block any and all Congressional activity. It brings to mind the scene in the movie Fantasia known as the Dancing Brooms. Here Mickey Mouse has borrowed the Sorcerer’s hat and quickly realizes that to simply garner power is, by itself, insufficient. With power and authority must go knowledge and responsibility, lest the unexpected and unintended erupt into unmitigated disaster.

Meanwhile, a tip of the hat to Republican Gov. Charlie Crist for stating that, “While there is great virtue in being true to your principles, conviction must be tempered with practicality and pragmatism. Taken to an extreme, conviction becomes inflexible, even destructive. Extreme views rarely solve problems and frequently create them.”