Baum on Money: Nightmare on Obama Street II

a | A

Happy Friday, folks. The hits just keep on coming for Obamacare. That and more in your daily reads.

Yellen aces her debut

Janet Yellen breezed through her confirmation hearing yesterday, with senators from both parties treating her with the respect she deserves. There were no fireworks, no take-downs and no real gotchas. In fact the only market moving headline (inferred, not stated) was that Fed tapering was off the table in December. "It's important not to remove support, especially when the recovery is fragile and the tools available to monetary policy, should the economy falter, are limited given that short-term interest rates are at zero," Yellen said. Short of Republican political shenanigans, it should be "Madame Chairman" come January.

If you like your plan, you can keep it (maybe)

Meanwhile, President Know-Nothing was making his apologias in a long-winded press conference to announce an administrative fix to Obamacare. The White House will allow insurance companies to renew policies for a year, even if they don't meet the minimum coverage requirements. The result will be "a big mess for insurance companies and the state officials who regulate them," writes the Washington Post's Sarah Kliff. The insurance trade group said such a plan "could destabilize the market and result in higher premiums for consumers." Kliff points out that Obama isn't ordering insurance companies to reissue cancelled plans; just asking them "to play ball on this one." It took just three hours for a state insurance commissioner to cry foul.

Where the money is

The Mercatus Center's Charles Blauhaus, who knows a thing or two about Medicare and Social Security (he's a public trustee for the programs), is out with a new study on "Why We Have Federal Deficits." ("Because we spend beyond our means" isn't the correct answer.) Blauhaus says the biggest factor is decisions made between 1965 and 1972: "specifically, the creation and subsequent expansion of Medicare and Medicaid and the automatic indexation of Social Security benefits." If Washington wants to fix the long-term deficit, it has to reform its key drivers. Makes sense. The fourth and future driver, according to Blauhaus, is the Accountable Care Act, which is certain to bend the cost curve in the wrong direction. Look no further than the law of supply and demand to figure that one out.

Almost a real-world experiment

Wall Street Journal columnist David Wessel looks at third-quarter economic growth in the U.S. (+2.8 percent), Japan (+1.9 percent) and the euro zone (+0.4 percent) and concludes that "economic policy matters." Of course it does. In the U.S., the Fed has been aggressively working to offset the fiscal drag. In Japan, both monetary and fiscal policy turned more accommodating last year. And the euro area? It has "unique challenges," to be sure, given the 17 different countries that share a single currency. Unlike the U.S., where fiscal and monetary policy are pulling in opposite directions, and Japan, where they are in sync, in Europe, they're both pulling in the wrong direction, Wessel says.

Dishing out dirt

When it rains, it pours. Politico Magazine has a juicy cover story by Glenn Thrush on life in President Obama's Cabinet. "Never has the job of Cabinet secretary seemed smaller," thanks to the White House's "obsessive message control" and power-hoarding. "The staffers who rule Obama's West Wing often treat his Cabinet as a nuisance," Thrush writes. There's plenty of dirt on various Cabinet members, but the real dishing is saved for the Commander in Chief.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.