The Surrender to Obama is Complete
If John Boehner was the leader of America in 1776, we’d all be singing “God Save the Queen” to this day.
After a 16-day standoff with Obama, Boehner and the rest of the House leadership capitulated without so much as a fig leaf to allow them any cover. The white flag now proudly flies on Capitol Hill.
Immediately after the vote to end the government shutdown, I spoke with Congressman Steve Stockman from Texas. He was deeply disturbed by the way his colleagues in the U.S. Senate handled the situation. Stockman voted no, and he rightly observed that Republicans who voted for the continuing resolution (CR) were doing more than endorsing Obamacare: They were endorsing the entire Obama agenda.
He said that the CR was like giving Barack Obama a blank check to do whatever he wants.
The most disturbing news came from Senate GOP leader Mitch McConnell: “One of my favorite old Kentucky sayings is there’s no education in the second kick of a mule. The first kick of a mule was when we shut the government down in the mid-1990s and the second kick was over the last 16 days. There is no education in the second kick of a mule. There will not be a government shutdown. I think we have fully now acquainted our new members with what a losing strategy that is.”
Let me go ahead and translate that for you: McConnell has preemptively surrendered future battles over Obamacare, spending cuts or any real reform to the political dysfunction in Washington, D.C. Barack Obama has won. Without even controlling Congress, he’s controlling all of the policy decisions on Capitol Hill.
I now realize that the GOP is not only weak, it’s tactically stupid. Why even begin fighting Obama if you didn’t have any desire to win? If Republicans just intended to lose, they should’ve never fought in the first place.
The sad result of this surrender is that spending, which had finally started to turn down, will once again begin to increase. Deficits will likely begin to rise faster again. Any hope of restricting the massive regulations that are smothering businesses has vanished.
The Biggest Loser
So who are the winners and losers of the government shutdown? The single biggest loser is John Boehner, followed closely by the Republican Party. By standing up to Obama for 16 days, they created excitement among Tea Party activists. The coalition of people in favor of balancing the budget and ending the spending madness in Washington were actually beginning to believe Boehner was honest. But then he did a 180 and gave Obama everything he wanted.
Now everyone is mad at Boehner. The liberals that didn’t want a shutdown are mad at him. The conservatives that wanted to hold out until he achieved some small victory are mad at him. At least half of his caucus would likely vote to oust him, but they’re so leaderless that there’s no one to replace him. So the Boehner era slouches onward.
The next set of losers is the feeble Republican caucus in the U.S. Senate. Their leader, Mitch McConnell, was so out-to-lunch during this 16 day standoff that he may have trouble holding his own Senate seat in Kentucky’s Republican primary later this year. Even if he wins, I’d be surprised to see him re-elected.
McConnell has become what he once detested. Way back in 1984, he ran for Senate against an entrenched incumbent, Walter Huddleston. The campaign featured ads making fun of Huddleston for becoming a creature of Washington, D.C. But after nearly 30 years as a U.S. Senator, McConnell has become the quintessential D.C. insider.
The clear winners are big government, Harry Reid and Barack Obama. Their no-negotiation strategy worked, so look for it to continue. Why negotiate with quislings anyway?
Reid and Obama got everything and then a cherry on top, and they currently rule Washington with an iron fist. Expect the size and scope of our federal government to keep on growing.
The only possible winner on the right is freshman senator Ted Cruz of Texas. He garnered a national following during his talking filibuster against Obamacare. He’s now seen by serious opponents of government overspending as the only man with the courage to take on the entrenched Washington elites.
The final loser is the economy – and the American people who’ve suffered through nearly six years of economic malaise. The only growth sector these days is the federal government. Unfortunately, that’s not a recipe for success.
Your eyes on the Hill,
P.S. – Check out our newest feature, the Political Intelligence Portfolio, below. It highlight some of the biggest gainers so far this year – and explains why politics has had a huge influence on their rise. This is not meant to be investment advice, rather, it’s an example of the value of political intelligence. We want to emphasize just how profitable having the right information is. So take a look… Here are five of the S&P 500′s biggest gainers, year-to-date:
Political Intelligence Portfolio
explanations of the profitable side of political intelligence.
|Company||Symbol||Current Price||YTD Gain|
|Explanation||Several factors are working in the medical device industry’s favor. One is an aging population that will keep the demand for healthcare products rising. The other is Obamacare, which will push millions more Americans into the healthcare system. Boston Scientific has also recently gained FDA approval for a new catheter and has improved some of its financial numbers, such as profit margins. It’s no surprise that Boston Scientific is booming – the government is all-in for them.|
|Explanation||All year, competing airlines have been keeping a wary eye on the possibility of a U.S. Airways/American Airlines merger. But those fears were laid to rest when the federal government and six states sued to block the deal, ostensibly to protect consumers from higher fares and extra fees, as well as to continue fostering competition industry. Delta had already been doing well – they have some of the lowest non-fuel costs in the industry, and they’re revenue performance is on track for a 4% increase in Q3 alone – and the failed merger only bolstered the airline’s intrinsic value. When the government is your enemy’s enemy, the government is your friend.|
|Explanation||Celgene is something of an FDA darling. The company’s success stems from its drug discovery and acquisition focus, and it currently has six commercial stage products that are expected to generate $6.2 billion in 2013. That doesn’t even include royalties from Focalin and Ritalin. Any time the FDA smiles on a drug company, there are profits to be had.|
|Pioneer Natural Resources||PXD||$223.61||98.76%|
|Explanation||Things are going well for Pioneer right now. For starters, the government is gung-ho for energy independence, which is music to the company’s ears. Better yet, Pioneer is the largest operator in the Sprayberry/Wolfcamp oil field, which is recognized as the top oil field in the U.S. As long as Obama continues to wage his war on coal, Pioneer should be sitting pretty.|
|Explanation||PBI has spent the better part of 2012 and 2013 ensuring their future profitability by entering into contracts to provide goods and services to the federal government, including branches like the Secret Service, the Department of the Navy, and the Social Security Administration. These contracts are worth more than $1.5 billion in revenue, but most importantly, government tailwind is the best insurance out there for a company’s profitability.|