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April 29, 1994
By Wednesday evening, mortgage rates were the lowest in almost a month; in three awful hours on Thursday, they rose a quarter of a percent.
The economic numbers were reasonable: January-March Gross Domestic Product up only 2.6%, and inflation under fair control, up 2.9%. The wreck in the bond market doesn't reflect any particular news, just continuing anxiety about potential inflation, and another move coming from the Fed.
Expect wide, rapid swings in mortgage rates, back and forth between 8.375% and 8.875% (at zero and zero prices) until the economy declares itself. A spike above nine can happen any time.
While Bill and Hillary are still dragging around their dead health care horse, the real, live trading has started in Congress.
Dan Rostenkowski, a fellow Democrat, and Chairman of the House Ways and Means Committee (that's Congress' ways, your "means" as in money) this week formally abandoned the Clinton proposal. He agrees with the Cadillac coverage in the deal, but says a big tax increase would be needed to pay for it.
The White House indicated its' annoyance with Rosty, and insists that the program will pay for itself.
Meanwhile, another Democrat, Proposed Supreme Court Nominee Emeritus and Past Possible Commissioner of Baseball George Mitchell, who in his spare time is Senate Majority Leader, is doing a remarkable thing: proposing reduced benefits, and trying to avoid any additional taxes.
Now, there is a judicious curve ball (er, horsehide?), and one Congress may be able to hit.
The sticking point in the dead horse trading seems to be the "employer mandate," which is Clintonese for forcing all employers to pay a large portion of the health insurance cost for all employed persons. In Congressional discussions, it's clear that that funding approach is being used because 60% of employees are now covered that way, and the other two routes -- huge new tax and/or single payer -- are sinkers.
The problem is the 40% of employees to be picked up by employers who may or may not have the money. There is talk of protecting companies with less than 1,000 employees, and even more relief for 10 or fewer. There are also proposals for bigger payroll taxes.
There is no talk at all about the likely efforts of small businesses to evade the mandate. Ten people get a better deal? This 280-person firm just turned into 28 separate companies. Payroll tax? No more salaries for owners of small firms: they will earn "dividends." Employees? Nope: today you're all independent contractors.
While Mrs. Clinton says, "We are not responsible for undercapitalized businesses," George Mitchell looks as though he will broker a good, affordable compromise.
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