Texas Ruling Puts Obamacare in Flux

Millions of Americans’ health insurance is in jeopardy now that a federal judge in Texas ruled the Affordable Care Act unconstitutional. If upheld, it would wipe out not just protection for those with pre-existing conditions, but also a host of very popular features, including coverage for young adults, low-income subsidies, the closing of the “donut hole” for Medicare Rx drug coverage and Medicaid expansion. For employers, it could mean the end of the hated employer mandate and the looming Cadillac tax on employee health plans.

The judge determined that the individual mandate is unconstitutional and, since it can’t be severed from the rest of the ACA, the entire law is invalid. Eighteen Republican state attorneys general and two GOP governors brought the suit.  Continue reading “Texas Ruling Puts Obamacare in Flux”

Two High-Tech Sectors Poised for Rapid Growth in the Coming Years

Every December The Kiplinger Letter publishes a Year-End special issue that dives deeply into one topic, ranging from demographic changes to robotic advancements. This year, we focus on which segments of the economy are positioned for strong growth over the next five years.

For Alerts subscribers, we wanted to share some of that analysis. Below is the first installment looking at high-tech sectors set to register rapid growth through 2023. Keep an eye out for other tech-focused Alerts that cover high-flying tech sectors.

Drones Will Be Unleashed for an Array of New Business Uses, Including Package Delivery

Look for commercial drones to soar as red tape is cut and technology improves. The fleet of small commercial drones will grow from 111,000 in 2017 to nearly 500,000 in 2022, according to projections by the Federal Aviation Administration. If regulations are updated faster than expected, which is a real possibility, growth will be even stronger. Continue reading “Two High-Tech Sectors Poised for Rapid Growth in the Coming Years”

Mortgage Lending Will Decline Next Year as Demand for Refinancing Falls

Mortgage lending at U.S. banks will decrease in 2019 as rising borrowing costs reduce demand from homeowners to refinance their current homes.

Despite higher mortgage rates, demand for home-purchase loans will increase slightly in 2019 because of rising wages and slower home-price growth. Home-purchase loan originations should increase next year about 4% from 2018, according to the Mortgage Bankers Association. This year, purchase loan originations should increase around 3% from 2017. Continue reading “Mortgage Lending Will Decline Next Year as Demand for Refinancing Falls”

Fed Puts Fewer Interest Rate Hikes in Wall Street’s Stocking

The stock market rallied strongly on Nov. 28 as Federal Reserve Chairman Jerome Powell made a dovish comment. Powell said that rates are “just below” the Fed’s targeted neutral level, which most Fed watchers consider to be 3%. This came after Powell called rates a “long way from neutral” on Oct. 3, provoking a major reaction in the financial markets.

Wall Street read his latest remark as a signal that the once-a-quarter rate hikes will stop sooner than expected. The Fed plan was to raise rates four more times. We expect hikes for sure in December and March, and likely in June. But the September 2019 hike looks to be off the table. Continue reading “Fed Puts Fewer Interest Rate Hikes in Wall Street’s Stocking”

Making Sense of Energy Market Turmoil

I don’t know how else to say this: Energy markets are going a little crazy. First, crude oil prices plummeted, turning an earlier autumn rally into a bear-market rout. From its high of about $76 per barrel on Oct. 3., benchmark West Texas Intermediate plunged to about $55 in only five weeks. Then, natural gas prices went haywire, with the benchmark gas futures contract leaping from about $3 per million British thermal units to nearly $5 in a span of days, only to plunge back to $4 today. What exactly is going on? Continue reading “Making Sense of Energy Market Turmoil”

McConnell Big Midterm Winner

There is no savvier, effective politician in Washington than Senate Majority Leader Mitch McConnell. The Kentucky Republican masterfully orchestrated a midterm campaign strategy for the Senate that not only stymied a nationwide Democratic surge, but led to his party gaining at  least one seat in the chamber, all while his party lost control of the House by a healthy margin.

The Senate map favored the GOP all along. Democrats defended a whopping 26 seats, compared with only nine held by Republicans. And eight of those GOP seats were in states President Trump won in 2016, while 10 of the Democratic ones were in Trump territory. Continue reading “McConnell Big Midterm Winner”

Taking Stock of the 2018 Midterms

Another Election Day has come and gone after the American people rendered a split decision on the Republican Party’s total control of Washington. As expected, the House of Representatives will be in Democratic hands for the first time since 2011 come January. Republicans managed not only to keep, but expand their Senate majority, knocking off a least three vulnerable Democratic incumbents in states that voted for President Trump in 2016.

What does this election cycle portend for Congress and the future of America’s two major political parties? Here are a few key takeaways:

Gridlock will almost certainly increase on Capitol Hill, perhaps as early as next week when lawmakers return to hold a lame-duck session of Congress to dispense with unfinished business. Although Trump and House Democratic Leader Nancy Pelosi said on Wednesday that they will pursue a bipartisan agenda and could possibly work together on an elusive national infrastructure plan, any initial comity is unlikely to last. Just hours after praising Pelosi, Trump upped the ante by firing Attorney General Jeff Sessions.

And once they assume the majority next year, Democrats will investigate everything from Trump’s tax returns to his business and possible political ties to Russia. Thorny immigration issues will inevitably arise, possibly as soon as next week. Plus, any bill passed by a Democratic-run House can easily be stopped by a Republican-led Senate.

More Republicans in the Senate means Trump—and GOP Leader Mitch McConnell of Kentucky—can push even harder. Despite the loss of Dean Heller in Nevada, the party picked up seats in Indiana, Missouri, North Dakota and possibly Florida as well.

Undecided Senate races aside, Trump and McConnell should have no problem accomplishing their top priority: confirming conservative judges to federal courts. A larger GOP majority also gives the president more power to overhaul his cabinet, which he wasted no time setting to with Sessions’ dismissal. He also won’t have to contend with internal naysayers as Sens. Jeff Flake and Bob Corker, two vocal Trump critics, are retiring at year’s end.

2016 foretold the future: Democrats continue to gain strength in urban and suburban areas, Republicans in rural ones. These electoral shifts may not amount to a “realignment,” as some observers are suggesting. But the trend lines are clear.

Take Minnesota, where on election night Democrats flipped two Republican-held districts in the Minneapolis suburbs, but lost two rural-based seats. Indeed, of the 32 seats Democrats definitely flipped (ballots are still being counted in some states), 31 are considered urban or suburban; some were represented by a Republican for decades. Contrast that with the 2006 midterms when Democrats took back the House by winning many of the districts that propelled Trump to victory in 2016.

The Senate tells largely the same story. Many forecasters thought incumbency might save such vulnerable red-state Democrats as Joe Donnelly in Indiana and Claire McCaskill in Missouri. Instead, both lost handily, thanks in part to Trump’s ability to juice GOP turnout in the party’s rural strongholds.

Last but not least, both parties set themselves up well for 2020, with Republicans winning statewide races in Florida and Ohio, both presidential bellwethers, and Democrats showing renewed strength in Michigan, Pennsylvania and Wisconsin, longtime blue strongholds that Trump won narrowly in 2016.

The joke around Washington is that the 2020 presidential campaign officially began as soon as the 2018 midterm results were in. Thankfully, that contest is far enough away Kiplinger need not offer a forecast just yet.

Congress Readies for ‘Lame Duck’ Session

Lawmakers will return their attention to governing, starting next week. Congress reconvenes on Tuesday to wrap up unfinished business before the new Congress is seated in January. Despite losing control of the House in Tuesday’s midterm elections, Republicans still run the show on both sides of Capitol Hill. They intend to take full advantage of their fleeting power during the lame-duck session that could run through the holidays.

Keeping the federal government open is the most pressing issue. Numerous agencies’ funding runs out Dec. 7. If lawmakers and President Trump can’t agree on how much money to appropriate each, the departments of Homeland Security, State, Justice, Interior, Agriculture and others would have to halt most operations come Dec. 8. Continue reading “Congress Readies for ‘Lame Duck’ Session”

Paul Ryan’s Last Stand

Maintaining Republicans’ House majority was outgoing-Speaker Paul Ryan’s final mission, even before President Trump dumped responsibility for holding the majority on the Wisconsin Republican. The task was Herculean from the outset: Defy modern history by being the first House leader not to lose a significant number of seats in a midterm when an unpopular president of the same party is in his first term.  Ryan’s decision to tell the world that he will retire seven months before Election Day was a tactical error, pundits said. A lame-duck speaker cannot keep his troops in line, and a retiring congressman cannot raise the huge sums of cash the GOP needs to keep the House, conventional wisdom held.

But despite what Trump will say if Democrats win control of the House (that Ryan’s lame-duck status is to blame), Ryan can take much credit for Republicans having a chance, albeit a slim one, of keeping their House majority. He has continued raising money hand over fist since his April 11 retirement announcement; he’s stumped incessantly for vulnerable incumbents and challengers across the country; and a super PAC closely affiliated with him, the Congressional Leadership Fund, has emerged as a game-changing force in this election cycle. Continue reading “Paul Ryan’s Last Stand”

Promising Trends Emerge for the Internet of Things

The internet of things is on the rise, with billions of additional devices, machines and sensors ready to connect to the web around the globe soon. But the pace of growth hinges on how fast the technology industry can overcome some major road blocks.

Security challenges are perhaps the biggest problem, with hackable products flooding the market and giving a bad rep to the potential of connected gear. Reliable wireless connectivity is another issue since businesses won’t enter the fray unless they know critical data can be transmitted without interruption, and at a reasonable price. Continue reading “Promising Trends Emerge for the Internet of Things”