The stock markets went wild Thursday on the news that the White House and the Senate’s Democratic leadership have deigned to talk with their Republican antagonists about the ending partial government shutdown. Should the talks lead to an agreement of any sort that actually ends the shutdown there will likely be a boom on Wall Street that leads to champagne bottles being popped and big fat cigars being lighted with fifty dollar bills. In the even more unlikely event that the agreement not only halts the government shutdown but also some eliminates the more job-killing aspects of Obamacare and averts the inevitable collapse under the weight of federal debt, we expect that a $100 bet on a diversified portfolio can be parlayed into a sizeable fortune for those smart enough to cash out quickly.
As much as we hate to dampen Wall Street’s enthusiasm, the long-awaited negotiations seem unlikely to yield anything of lasting importance. The White House would sooner allow a default and all other potentially catastrophic consequences of an un-funded government than allow any changes to its beloved Obamacare, even though the health care reform law is much hated by almost everyone else, and seems confident that its press allies will ensure it suffers no political consequences. The Republicans appear similarly intent on extracting some sort of significant concession from the administration lest they offend their conservative base, even if the press has convinced much of the rest of the country that they’re bunch a anarcho-terrorist hostage takers, and it is hard to imagine them winning enough spending cuts or entitlement reforms to save face.
Both sides seem to be taking a beating in the public opinion polls, though, so some desultory deal or another will eventually be struck. A stop-gap measure that keeps the shutdown out of the news until the upcoming budget ceiling brouhaha is the most likely outcome, we’d wager, and if the Republicans think they have a stronger hand then the country will be right back to where are now. The White House has thus been so determined to keep the Republicans’ hands off Obamacare that they’ve even rejected a proposal to delay the much-reviled individual mandate, which would give them another year to fix their famously fouled-up computer system and put off the wrath of young voters forced to pay for being insured past the next congressional elections, but it wouldn’t be surprising if the administration were just as adamant about the need to increase the federal debt by a few trillion more over the coming years. The Republicans will still be forced by their most crucial voters to fight with any tactic at hand, including a government shutdown and all the resulting bad press, and yet another downturn in the stock markets becomes inevitable.
There’s little chance the government will remain eternally shut down, alas, so the stock markets should eventually recover to whatever extent the new Federal Reserve honcho chooses to keep the printing presses running. Ending Obamacare and restoring sanity to the nation’s finances will await a Republican administration, or such calamities that even a Democratic administration is forced to address them, and whatever bargains are hammered out in the meantime will be of little help in reviving the country’s moribund economy. Everyone involved in the negotiations will be mostly concerned with the political results, and none will realize that a forgetful public will be voting on the basis of their health insurance bills and employment prospects when the far-off mid-term elections at long last come around.
Any Republicans getting skittish about the latest polls should keep in mind that Obamacare and America’s looming insolvency are still going to be around when the votes are cast, and that it will be helpful to remind the public that the party remained steadfast against both even when the public was irked about it. Those frenetic fellows on the trading floors and the talking-heads on the 24-hour news cycle are quite intrigued by what’s going on in Washington in the next few days, but we’ll be paying more attention to football and the baseball playoffs.
– Bud Norman