Walking through the Capital dome on my way to the House the Representatives, I couldn’t help but sense the presence of ghosts of friends from decades past. There was Tip O’Neill with his ever-present scowl. Ted Kennedy was hurrying off to another meeting, barking orders in his peculiar Boston accent. Mike Mansfield was maintaining his ever aloof and professorial demeanor.
President Ronald Reagan was giving a hearty laugh after retelling the same off color joke for the umpteenth time, turning the faces of the female press crimson. I found the spot where 30 years ago, I ambushed Treasury Secretary Nicholas Brady and got a heads up on the impending bailout of Latin America, financed by, what else, Brady bonds.
I stood briefly to admire the timeless paintings in the filtered light, Washington Crossing the Delaware, the Victory at Saratoga, and the Surrender at Yorktown. My ancestors were present at all three. Then I hurried over to the House chamber, up the wide marble steps, and into the office of the Minority Speaker of the House, Nancy Pelosi.
The Madame Speaker welcomed me into her spacious, high ceilinged office and then immediately reached for my lapel. She touched my Marine Corps pin and said “Thank you for your service.” I replied that it was a very long time ago and that many more had made far greater sacrifices since. She then launched into a description of her recent trip to Afghanistan where she described to the troops in Kandahar the opportunities and benefits that awaited them on their return.
To open on a light note, I asked her how it felt to be the most powerful woman in history after Cleopatra and Catherine the Great. She replied “Having the levers of power at hand does have its uses.”
Agree with Nancy and she can be ingratiating and even motherly, taking the opportunity to pour me a cup of tea and offering a cherry Danish. Argue with her and she turns into a pit bull, whipping out well-rehearsed arguments and data so fast it almost knocked me back on my heels.
Pelosi is one of the most liberal Reprentatives in congress. Her multi ethnic constituents in the 8th California congressional district in San Francisco repeatedly return her to office with a resounding landslide. Most locals don’t even know who ran against her. In fact, many of her supporters bitterly complain that she is not liberal enough and compromises too often.
The nation’s greatest concentration of wealth creation is also an easy commute from her San Francisco office, and Nancy is well attuned to technology issues. Apple (AAPL), Google (GOOG), Hewlett Packard (HPQ), Oracle (ORCL), and Facebook (FB), have together created $1 trillion in market capitalization over the last decade.
If the Democrats retake the House in November she will reclaim her former job as House Majority Leader, making her third inline to succeed the president. If not, she will remain a major source of input to the president on economic policy. So I thought it judicious to listen what she had to say. Thin skinned, died in the wool conservatives might want to skip the rest of this story.
As the Supreme Court’s decision on Obama’s health care plan was imminent, I asked for her analysis of the likely outcome. She insisted that basic health care was a right and not a privilege. The Affordable Health Care Act will be a crucial tool to get health care spending under control and cut significantly into the budget deficit.
For business, it is a competitiveness issue, with backbreaking health insurance costs cutting into profitability and leaving managers reluctant to add employees. Foreign competitors bear no such overheads, the cost borne by generous national health programs. Employees here are “job locked” by the old system, which prevents them from moving or changing careers for fear of losing company health insurance.
Every developed economy that implemented national health care has been able to keep spending to 8% of GDP compared to the 13% now suffered by the US, on its way to 18%. As the most efficient economy in the world, there is no reason why America cannot match these results. The program should also create 4 million jobs extending care to 50 million people.
Pelosi says the constitutionality of Obamacare is “iron clad” and expects the Supreme Court to rule in its favor by a 6-3 margin. The right of congress to regulate interstate trade is clearly enshrined in the 1803 Marbury versus Madison case. While an activist conservative court may chip away at the act, such as through barring the individual mandate, severability prevents them from throwing out the entire measure.
While full implementation does not begin until 2014, 80 million have already benefited. They include children under 26 added to parents’ policies, coverage for consumers with pre-existing conditions, and shrinking the drug benefit “doughnut” for seniors. Young children who get cancer are no longer treated as having a pre-existing conditions for life. However, Nancy concedes that the administration has lost the public relations battle over the issue.
The Democrats need to win 25 seats in the November election to retake the House. She thinks there is a 50:50 chance of that happening. Even if they fail to regain the majority, the Tea Party’s influence will be greatly diminished, making compromise and deal making much more likely. That could lead to a resuscitation of the “Grand Bargain” that was nearly reached last summer. This would be a hugely market positive development.
She urged Republicans to “take their party back from the radicals” who don’t believe in any public role for the government beyond defense. The sole accomplishment of the Tea Party has been to hand control of the Senate to the Democrats by running weak, ideologically rigid candidates in the primaries, most notably in Delaware, Nevada, and now Indiana.
Nancy admitted that when growing up, a career in politics was the last thing on her mind. She was the progeny of the premier Italian political dynasty in Baltimore. Her father was both mayor of Baltimore and a member of congress. Her brother was also a mayor. After spending a childhood handing out campaign leaflets, her rebellious nature prompted her to run a mile from the family business.
It turns out that she ran all the way to California. With her five children nearly grown, she took a post on the San Francisco Library Committee. Then “one thing led to another” and she ended up in her current job, which she has been working at tirelessly for 25 years.
At her first speech to congress in 1987 she boldly announced that “I am here to fight AIDS.” A pall cast over the chamber as the members went mute. While the disease was ravaging San Francisco, it had yet to go national. Reagan denied funding for research because he believed the people who got it deserved it, overruling his own surgeon general.
It proved an important time for California to have aggressive representation in Washington. In 1989, the Loma Prieta earthquake hit, and federal funds played an important part in reconstruction. The base closures of the 1990’s cut a wide swath across the state. Almost every military facility in the San Francisco Bay area was closed, where many structures were up to 150 years old, in favor of more modern bases in San Diego and Bremerton, Washington. At one point, an aircraft carrier was used to move the 1,500 personal vehicles owned by transferring troops to save money.
I thanked Nancy for generously carving out an hour from her jam packed schedule and called it a day. As is usual with these high level political meetings, I gleaned a dozen or so valuable investment ideas. I will send out the trade alerts when I see good entry points.
The Capitol Dome