by Barkley Rosser
re-posted from Econospeak with permission from the author
Lack Of Market Reaction To SCOTUS Ruling On Obamacare Sends Opponents Into Frenzy
The day before yesterday, former Obama advisor Austan Goolsbee published a column in the Wall Street Journal entitled “The Supreme Court Rules, The Market Yawns,” noting only a small drop in the stock market (about 26 points on the DJIA) on June 28, 2012, the day the SCOTUS ruled most of the ACA to be constitutional. A nice link can be found on Economists View for “Links for 07-05-2012” at http://economistsview.typepad.com/ . Commentary on Mark Thoma’s link was limited and restrained, mostly discussing fine points of mandates versus taxes and how long the new system might last (which I have many criticisms of, for the record, not my first choice for a reform).
OTOH, when Tyler Cowen made the same link almost no commentary at http://marginalrevolution.com/marginalrevolution/2012/07/from-austan-goolsbee.html , many of his commenters simply went bananas. Besides the name-calling and usual ranting, the substantive point argued was that the market did fall in the immediate aftermath of the announcement (which overturned the strong forecast on intrade, much revered by readers of MR), only to rally later in the day after positive news about European bonds (and to be followed by major gains the following day, supposedly on the bond news as well). Certainly there were hysterians who think Obamneycare is the end of the world who sold immediately, but it did not take much for others to leap in and start buying and move right on past the decision. One individual denouncing Goolsbee provided a link, but this one rather sensibly noted that stocks in the healthcare sector went in different directions, with hospital ones generally going up and health insurance ones generally going down.
While Goolsbee perhaps should have noted the initial market drop after the announcement, he was basically right. There really is no sound basis for thinking that Obamneycare is going to tank the economy. Many critics say it increases uncertainty, but in fact a negative decision would have increased uncertainty as many would be losing new gains from the law (children under 26 on their health insurance to name one) without knowing what might come next. That the GOP continues to oppose the law means that there remains uncertainty, although those ranting about uncertainty somehow never notice that their opposition to the law is aggravating this uncertainty “problem.”
As it is, the best evidence we have on how the law might work is to look at its predecessor in Massachusetts, RomneyCare implemented in 2006. According to a January article in Forbes (not a left wing publication at all), http://www.forbes.com/sites/kerapoza/2012/01/romney-care-massachusetts-healthcare-reform , not only is 99% of the population now with health insurance, but the law is so popular that no Massachusetts Republicans are remotely talking about repealing it. Small business people were quoted as supporting it, the group supposedly most likely to suffer under Obamacare (aside from those who expect to get free medical care from emergency rooms even if they have never paid a cent for any kind of health insurance or care). The current issue in MA is that there are efforts to reduce the costs of the program, but no movement at all to repeal it. It is a clear success, even if its prime author now opposes its nationwide application.
I cannot resist posing a point that has bothered me for some time. Much has been made of the fact that the individual mandate was originally proposed by a Republican think tank in 1989, the Heritage Foundation. It was supported by numerous GOP pols since then, with the implementation by a Republican in MA, Romney, simply the obvious highwater mark of this. This support only came to an end the minute Obama came out for it (rather than single payer) in an open attempt to have a bipartisan bill. Of course, in the end, not a single Republican in Congress voted for it, not one, without a single one professing the slightest embarrassment about jumping from supporting it to denouncing it as “unconstitutional socialism” not to mention even greater idiocies such as opponents shrieking in town hall meetings about “death panels” that went on for some time (where are those anyway?).
So, it is my observation that this is the biggest mass shift of the views of a political party on a major issue since the US Communist Party did so regarding Hitler in 1939 and back again the other way in 1941. I have asked numerous people to name any other shift by any US party on any issue since then that beats or even matches this one by the GOP. Nobody has come up with one.
My final observation on this is that at least back in 1939 there were enough members of the CPUSA who had principles and honor to resign from the party when it made its pro-Hitler shift in the wake of the Mototov-von Ribbentrop Pact. I have seen not a single member of the recent US Republican Party about whom the same could be said, and the public repudiations of their own views by Stuart Butler of Heritage and Mitt Romney are astoundingly pathetic by comparison.