Fisher Investments Editorial Staff
Others

The Ghost of Christmas Future

By, 12/23/2009

Story Highlights:

  • After three procedural votes, the Senate will likely pass their version of a health bill Thursday.
  • The Senate bill has been much diluted by the debate and is very different from the House version—guaranteeing more heated debate to come.
  • Because the Senate version represents the most extensive bill 60 votes will back—the House will have to bend.
  • That makes the Senate version the worst-case scenario—never mind there's still the prospect nothing passes at all.

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Health care reform is poised to clear a symbolic hurdle come Christmas Eve. After three procedural votes, the Senate will likely pass their version of a health care reform bill. But it was no yellow brick road to 60 votes. (Or for that matter, to the slim 220 majority in the House of Representatives—218 are required to pass a bill.)

 

Along the way, major compromises have diluted the Senate version—forcing Democrats to abandon a public option and a proposed expansion of Medicare. All that and we're still nowhere near a final bill. The House and Senate need to somehow merge their two very different versions. (Most notably, the House version maintains a public option.) Expect plenty more infighting in the New Year.

 

Though nowhere near final, the bill passing the Senate Christmas Eve is a useful glance at what a final bill could look like. It's the Ghost of Christmas Future—hinting at what may come to pass, not what must. Simply: The Senate version likely represents the most extensive bill 60 votes will back. House Democrats have very little room to maneuver. They'll bend or face the prospect nothing passes at all (heaven forbid!). That makes the Senate bill (or something very much like it) the worst-case for a final piece of legislation. And in all, at this point it's moderated enough to little affect broad markets or the economy at large.

 

But that's the worst case. The political jiggery-pokery doesn't end there. Even if a merged bill looks exactly like the current Senate version, there's no guarantee it would garner the necessary House votes for passage. There's plenty of time between now and a final vote. And public outcry could easily resurface (recall last summer's town halls). It might not take many angry voters to convince just one Senator to break ranks and demand even more compromises. The result? An even more watery bill in 2010.

 

Or maybe nothing at all. We've a long road to travel yet, and thankfully, it's littered with bureaucratic and political stumbling blocks. Not the least of which are next year's congressional elections. Re-election minded politicians could think better of voting for the bill after facing a flood of angry constituents over Christmas break. And if the debate stretches too long, looming elections could force politicians to table the bill entirely.

 

The founders wrote the rules the way they did for a reason—to insure extreme political actions remained at a minimum. Markets like it that way, and so do we.

 

*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.

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*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.

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