Image source: Pixabay
 

We have a deal. It will increase the deficit more than anyone can foresee now.

What’s In the Deal?

• Healthcare money goes straight to households via flexible spending accounts.
• The bill ensures back pay for federal workers after the White House had earlier called into question whether the money was guaranteed.
• Provisions reversed thousands of firings of federal workers initiated by the Trump administration since the shutdown
• Provisions forbid additional firings at least through Jan. 31, when a new interim spending measure expires.

The deal passed the Senate 60-40 but no one can really say how the healthcare spending accounts work.

The Wall Street Journal comments Senate Clears Key Hurdle Toward Ending Government Shutdown

The vote was 60-40 on a measure to take up House-passed spending legislation that required 60 votes under the Senate’s filibuster procedures. Eight members of the Democratic caucus joined almost all Republicans in voting in favor, allowing the bill to move forward after more than a dozen failed votes since September.

The Senate’s next big step is to amend the measure and send it back to the GOP-led House—but that can’t happen unless the Senate unanimously agrees to dispense with other procedural steps that would delay action.

Sen. Dick Durbin (D., Ill.), the No. 2 Senate Democrat, joined centrists in voting for the legislation. Sen. Tim Kaine (D., Va.) also voted in favor, after winning provisions that reversed the thousands of firings of federal workers initiated by the Trump administration since the shutdown—and that forbid additional firings at least through Jan. 31, when a new interim spending measure expires. The bill would also ensure back pay for federal workers after the White House had earlier called into question whether the money was guaranteed.

The eight members of the Democratic caucus who backed the bill include mostly centrists like Shaheen, Durbin, Kaine, John Fetterman of Pennsylvania, Maggie Hassan of New Hampshire, Catherine Cortez Masto of Nevada, and Jacky Rosen of Nevada, along with Angus King, a Maine independent who caucuses with the Democrats.

Any deal will still need approval in the House of Representatives, which has been out of session since Sept. 19. House Speaker Mike Johnson (R., La.) has put members on notice that he would give them 48 hours to return in the event the Senate passed a spending bill.

A key development that appeared to break the logjam in the negotiations was that Senate Republicans proposed that some healthcare funding be provided directly to households rather than be used to pay for a one-year extension of enhanced ACA subsidies.

That GOP proposal involves sending federal money into flexible-spending accounts instead of to insurance companies that use the money to offset the cost of premiums, so consumers pay a smaller monthly bill. The money could be used to cover deductibles and other out-of-pocket costs, which Republicans see as a way to give consumers more choice and control healthcare inflation.

“It looks like we are getting close to the shutdown ending,” President Trump told reporters when he returned to the White House Sunday evening. “You’ll know very soon.”

Hoot of the Day

The WSJ authors commented “The potential deal seemed to give Democrats little in exchange for voting to end the shutdown.”

Are you kidding me?

The direct cash to consumers is the start of Universal Basic Income (UBI). And now Republicans own that.

This mechanism once started will never end. Money handouts will go up and up and up.

Bond Market Reaction

The 10-year bond yield is up 5 basis points to 4.14 percent.

The 30-year bond yield is up 4 basis points to 4.74 percent.

Based on what I expect to happen, yields ought to be up a lot more.

Gold’s Reaction

“Why not take the people who have higher healthcare premiums and just mail them a check and let them decide?” Kevin Hassett, director of the National Economic Council said on CBS’s Face the Nation.

Why not?

Uh… Who is paying for this? Wasn’t the plan to cut back the cost?

Gold sure gets the picture. Gold is up $75 to $4,085 per ounce. Silver, copper, and oil are all up as well.

“Republicans are now talking about how they want to go after big insurance companies,” said Sen. Ron Wyden (D., Ore.), the top Democrat on the Senate Finance Committee. “If they’re serious, I’m all in.” 

Republicans are going to regret this UBI substitute.

Democrats were ready to deal for a mere one-year $35 billion extension of Obamacare subsidies, guaranteed to be temporary.

Instead Democrats get the start of a UBI program guaranteed to not be temporary.

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