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Healthcare Debate Still Not Over

|Includes: iShares 1-3 Year Treasury Bond ETF (SHY)

As the Administration again ramps up an aggressive media and lobbying effort to pass some form of healtcare legislation the chattering pundit class is already predicting victory.  However, investors have been on this roller-coaster ride before and should remain cautious.   

Right now, the thinking is the House will first be pressed into a vote.  Regardless of statements from Leader Hoyer and Speaker Pelosi, the votes are not yet there. 
Of interest, should be the fact that there have been a few recent articles on the influence of one Rahm Emanuel, White House Chief of Staff, and how he is either serving or not serving President Obama.  Emanuel is a key player here and his value to Obama is based on his "feel" for the Congress; specifically The House where he was a rising star.  When it comes to arm-twisting reluctant House Members, Emanuel has just as much on the line as Speaker Pelosi. 

Another issue for the House vote is the simple fact that once again many Democrat Members are grumbling about having to make a difficult vote and then  rely on the Senate to follow-through.  Reports of anxious calls from one side of the Hill to the other are accurate and should not be discounted. 

The reason for all the angst is that the prevailing view for final passage is based on the fact that the Senate will have to use what's referred to as the "reconciliation process" to get the up-or-down vote Democrats seek.  The problem with reconciliation is that, while they're being coy about exactly what they intend to do, Senate Republicans will wage a bloody war behind the scenes with the Senate Parlimentarian on whether important cogs in the Obama/Pelosi plan can be included in the version of the bill that will be offered via reconciliation. 

There are many senior Democrat Senators who are concerned about using reconciliation as a means to achieve victory, most notably Senator Byrd from West Virginia.  Byrd's opposition is fascinating in that the rules to include or exclude sections of legislation were created by him.  They're known as the Byrd rules! 
Therefore, when Senator Byrd states that the healtcare bill should not be brought to the floor via the reconciliation process Senators take notice. 

In this situation, Byrd's view will not dissuade Senate leaders which means count on Republican and Democrat Senators fighting it out, in private.  This is how it works.  Senators who seek to exclude a section of a bill being advanced through reconciliation advance their arguments, (at the staff level,) before the Parlimentarian.  Senators who support inclusion have their staff make arguments in support and the Parlimentarian makes the final call.  These debates are incredibly intense and take days to resolve.  Assuming that there will be many challenges to a 2,700 page bill, the reconcilliation process may take weeks. 

Understanding the Byrd rules for what they are means that key elements of the bill which prompted House Members to vote yes, could be dropped from the Senate version which means the bill that finally makes it to the Senate floor may look much different from what the House already passed. 

There are still a number of unknowns with respect to this debate and Obamacare might still not make it through the Congress. 

Disclosure: no positions