The Private Equity for Families Blog

Better Than Ohio Sweet Corn

Writing a weekly blog is a privilege and I usually have more ideas than I can handle, but this week all the news was old news and all the problems were old problems. There wasn’t anything new and exciting until I saw this morning’s edition of The Wall Street Journal, “ObamaCare For Congress” by the Editorial Board of The WSJ. This opinion piece has restored my enthusiasm for politics and my hope for fairness:

Over the weekend Mr. Trump tweeted that “If a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies and BAILOUTS for Members of Congress will end very soon!” He later added: “If ObamaCare is hurting people, & it is, why shouldn’t it hurt the insurance companies & why should Congress not be paying what public pays?”

The WSJ” actually is giving Trump the game plan. It points out that many aspects of the ACA were legislated by executive order. That includes a provision that treats Congress as a small business allowing its employees to buy on exchanges meant for poverty level people:

The law did not specify what would happen to the employer contributions, though Democrats claim this was merely a copy-editing mistake. A meltdown ensued as Members feared that staffers would be exposed to thousands of dollars more in annual health-care costs, replete with predictions that junior aides would clean out their desks en masse. 

Mr. Obama intervened in 2013 and the Office of Personnel Management issued a rule that would allow employer contributions to exchange plans, not that OPM had such legal authority. One hilarious detail is that OPM certified the House and Senate as “small businesses” with fewer than 50 full-time employees, and no doubt the world would be better if that were true. This invention allowed Members to purchase plans on the District of Columbia exchange for small businesses, where employers can make contributions to premiums. This is a farce and maybe a fraud.”

Hope For Equal Treatment

I am completely overwhelmed by the hope that Nancy Pelosi’s staffers will have to pay the same premiums and penalties, and suffer the same frustrations, as the rest of us. This is the alpha and omega of populism. Congress is universally viewed as a smarmy group of elitists who often dine on K street sushi while the rest of us go to Taco Bell for chalupas.

Privileges Are Not Popular

We pay their minimum wage ($174,000). We pay their generous retirement ($139,000 per year for 32 years of service). Their eponymous boss allowed them to circumvent ObamaCare (buy on exchange intended for people under poverty level). They are exempt from traffic laws while traveling to and from Congress (think DUIs). They are not subject to the same insider trading rules that put Martha Stewart behind bars. They have a franking privilege which means they can send you endless solicitations for money without paying postage (why fix the post office). They get free airport parking at Regan National. According to the Motley Fool they can get up to 239 days off each year but the consensus is they get 110 “recess days” where they are allowed to work from home.  If they die in office they get $74,000 more than a Navy Seal.  They get a nice budget to form their staff ($1.2 mil for Congress and $3.3 mil for Senate).  I am not sure they have accountability to a boss other than lobbyists who get them elected (why reform campaign finance).  They don’t pay change fees on airlines. They don’t live where they work, and we usually pay their commuting expenses.

No wonder their approval rating is 20%.

Even Trump Can Execute This Plan

Trump has little media or bi-partisan support so far.  When the only guy you can recruit for replacement Press Secretary is nicknamed “Mooch” you know things are not going to change. But The WSJ is throwing Trump a bone by serving up an Executive Order game plan for reforming health care by making staffers eat the same drek they are serving us. Who is going to support Congress? They are more hated than Trump (39% approval rating). While this would mean Trump taking on venerable institutions that form the bedrock of our governance system I think a Trump Executive Order would force bi-partisan health care reform because ACA premiums are predicted to rise 30% next year. Self-interest will prevail.

Even if there is no reform, the consolation prize would be wholesale resignations by the army of junior staffers who have no real world experience but are doing all the big thinking for their rock star bosses. For me that would be better than Ohio sweet corn in August.

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Rob McCreary

Rob McCreary has more than 40 years of transactional experience as an attorney, investment banker and private equity fund manager, and has spent his career in building entrepreneurial organizations with successful track records Founder and chairman of CapitalWorks, he is responsible for developing and maintaining senior relationships with investors and portfolio governance.

This blog represents the views of Rob McCreary and do not reflect those of CapitalWorks or its employees. This blog is not intended as investment advice. Any discussion of a specific security is for illustrative purposes only and should not be relied upon as indicative of such security’s current or future value. Readers should consult with their own financial advisors before making an investment decision.

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