THOUGHTS ON THE HEALTHCARE PASSAGE

CNN is reporting that the Obama healthcare plan has the votes for Congressional approval.  Intrade is also confirming this as the possibility of passage has surged to 90% as of this morning:

The implications of the plan is relatively simple.  While the social aspect is certainly beneficial for all, the economic consequences are less beneficial.  As we’ve argued before, this is terrible timing for healthcare passage.  With very weak aggregate demand due to high unemployment and weak private sector balance sheets the last thing we need is higher costs for businesses and higher taxes for consumers.  This plan will contribute to both.  Small businesses, the engine of job growth, will be particularly hard hit by this plan.  In addition, tax hikes are the ultimate end result.   The last second addition of investment taxes is a disaster for the market.  This plan alone won’t kill the recovery, but Congress certainly appears to be doing their best to do just that.