The U.S. Senate picked Christmas Eve for its vote on what's euphemistically called the Patient Protection and Affordable Care Act. If you've got a really fast Internet connection you can download all 2,074 pages of it by clicking here. Then you can read it.
Please read it. You can be sure the senators who voted for it didn't. Somebody ought to. It reaches out and touches — rather, exerts government control over — a sector of the economy that represents about 16% of all consumer spending, and more than 11% of overall production.
It's also worth studying the tortured history of this legislation, because it tells the story of one of the most important factors in the economy's recovery from recession, and the stock market's enormous rally from its March lows.
Set the way-back machine to the day Barack Obama was inaugurated as president. The S&P 500 index stood at 840.24. And according to the Rasmussen polling organization (I'm referring to Rasmussen numbers throughout this column), 65% of Americans approved of Obama, with 44% "strongly" approving.
Congress instantly passed a so-called "stimulus" bill — more than 1,000 pages that nobody had time to read, that spends $787 billion on, well, something or other. In terms of the amount of money spent compared with the time spent thinking about it, this bill simply has to be history's most expensive legislation-per-minute.
It set in motion an aggressive agenda of rapid-fire lawmaking, with the House of Representatives throwing together and quickly voting for major economic legislation including a cap-and-trade carbon tax, a "card check" system that would enable easier unionization of workplaces, and "cramdown" rules that would allow bankruptcy judges to arbitrarily modify mortgages. It seemed that these laws would speed through the Senate and onto the new president's desk for signature.
Amid that frenzy of legislation, on March 9, with only a few weeks gone by since Obama's inauguration, the S&P 500 had fallen 19.5%.
Despite having seemingly delivered so far on his mandate for "change" — after all, that's what all these new laws were about – Obama saw his approval rating drop to 56% from 65% at inauguration, with those "strongly" approving down to 38% from 44%.
So what have we learned so far? First, that the stock market didn't like all that "change." Second, that the voters didn't either.
It turned out that the politicians listened (they can't read, but they definitely can listen). Every single one of those legislative initiatives stalled out in the Senate — and not because of Republican opposition, but rather because Democrats themselves started to turn away from them. None of them has been passed into law.
Even so-called health-care reform, the centerpiece of Obama's agenda, still hasn't been enacted into law. Republicans didn't stop it — they don't have the power. Democrats did.
And by the way, today's Senate vote won't accomplish anything. It's just another grudging step. Next it will have to be reconciled with a very different House version, and then the compromise bill will have to pass both chambers.
With none of Obama's "change" agenda having been enacted, the stock market seems quite happy. The S&P 500 is up an amazing 65% from the March lows, and up 33% since Obama's inauguration. Seems like the market is getting to like this guy — now that it knows he can't accomplish anything.
You'd think that voters would love Obama, now that his incompetence at achieving his agenda has done so much to support the stock market (think of the trillions in 401(k) wealth he's created for everybody, simply by failing). But no. His approval ratings now stand at 44%, down from 65% at inauguration. Those who approve of him "strongly" are now only 25%, down from 44% at inauguration.
On the other side, those who disapprove of Obama "strongly" are now at 46%, nearly triple from only 16% at inauguration, and higher than the 44% who approved "strongly" at inauguration, back when he still had rock-star status.
Stop for a moment and consider these numbers. 44% of Americans approve of Obama at all. And the same number, 44%, disapprove of him "strongly". There's another 10% who disapprove of him, but not "strongly."
Obama is no longer seen as a rock star. In fact, it seems he's seen by many as a bit of a jerk.
For Obama, this is a no-win deal. He lost popularity when his "change" agenda was being rammed through the legislative pipeline in a big hurry last spring. Now he's losing even more when it isn't being rammed through.
If I were Obama right now, I think I'd be looking for ways to gracefully back out of this whole president thing and maybe go back and complete my first term as a senator.
And if I were an investor, I'd be sighing a great sigh of relief.
For those of us who believe in smaller government, Obama's failure is a great joy. Let's admit that — I don't feel guilty about getting my way.
But for all of us who own stocks in our trading accounts and our 401(k)s, regardless of our political beliefs, this really is terrific news. If you are one of the people who "strongly" approved of Obama and still do, say what you will about whatever it was you wanted Obama to "change." But you might as well admit that you're richer for the fact that there hasn't been any change at all — the stock market has gone up, precisely because there has been no change.
Donald Luskin is chief investment officer of Trend Macrolytics, an economics consulting firm serving institutional investors. You may contact him at don@trendmacro.com.
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