Recent Supreme Court Decisions Impact U.S. Government and Economy

by Victor Sperandeo with the Curmudgeon



Two recent Supreme Court high profile decisions have potential consequences far beyond the obvious.  The ACA/Obamacare ("King vs Burwell") and the Gay Marriage (Obergefell vs Hodges) rulings have important implications that haven't been mentioned by the mainstream media.  Yet they could have real meaning for the economy, and to the stock and bond markets (in the long run).


Permit me to candidly discuss these two Supreme Court cases.  They have already been extensively reported by the press, TV and Internet media without much probing, criticism, or implications.  I beg to differ!


Opinion on the ACA/ Obamacare Decision:

The Obamacare ruling was not based on written law.  The “Affordable Care Act " (ACA) provision on subsidies should have been interpreted the way it was written, without any subjective inferences.  

The ACA law stated that if a state did not set up an exchange the people within a given State could not receive a government subsidy.  The intent was to control the redistribution of premium payments.  That made the ACA unaffordable for some, while more well to do folks would be “overcharged” based on their income.


The strategy of the (Democratic) ACA law writers was to force States to set up the exchanges.   A very poor strategy, in my opinion, as 36 States didn't do it while only 14 did comply.  This strategy was confirmed by Jonathan Gruber who was a high paid consultant and writer of the law. The Supreme Court Justices ruled 6-3 (in a completely convoluted way) that "States" really meant the Federal Government!


Apparently the words in the ACA clearly did not mean what was stated in that law.  The first Supreme Court case on the ACA (in June 2012) also reinterpreted it by saying that the "FEES" written in the law were really "TAXES."   How wonderful?


Both the June 2012 and June 2015 Supreme Court rulings on the ACA were primarily due to Republican appointed Chief Justice John Roberts, who re-wrote the law in each case!  In my view, his opinions were disgustingly arrogant and corrupt. The fact that two Republican Presidents appointed two Supreme Court Justices (Roberts and Kennedy) that voted for the illegal interpretation of the ACA has shown that there is little difference between our two political parties.   In my opinion, the Supreme Court decisions on the ACA proved that from the very beginning the law was politically driven, and was manipulated (with no-one in Congress admitting to have read all of it).  


The Supreme Court obviously votes according to each Justice's own ideology, but corruptly and blatantly "changes" the law for the outcome they desire.  The law is not the law as was written, but whatever the judges want it to be.  Why? Note that the U.S. judicial system is supposed to be above politics, especially the highest court in the land!



Sidebar -- The Frankfurt School        

In 1923, Marxist intellectuals set up a form of political think tank called the Frankfurt School which attempted to create change by destroying the culture from within.  The Frankfurt School (German: Frankfurter Schule) was a school of social theory and philosophy associated in part with the Institute for Social Research at the Goethe University in Frankfurt, Germany. The members were a famous group of men at the time.  Many moved to the U.S. to become university professors, and U.S. government officials.


There were eleven stated goals of the School including:


 #2. "Continual change to create confusion."

 #8.  "An unreliable legal system with bias against victims of crime."  

 #9.  “Dependency on the state or state benefits.”

Their apparent agenda was to discourage people from thinking and planning LONG TERM to create businesses, economic growth, jobs and wealth.  In summary, the Frankfurt School was set up to create a lawless society, dependent on the state, and thereby cause confusion!  How better to overturn society and take all the power from the people, and put power into the elites hands?




Opinion on Gay Marriage Decision:

The second Supreme Court case has merit in that Justice Anthony Kennedy invoked the 14th amendment to make his case.  However, the history of States creating State Laws on marriage (via democracy of the voters) was overturned.  Justice Kennedy (the deciding vote) changed 226 years of state run law to that of Federal law.   For another opinion on Justice Kennedy's role in this case, please see this article from the New Republic.

The 14th amendment was to protect African Americans after the Civil War.  It does have legal meaning, but the Constitution never discusses marriage directly.  Here's a relevant quote:             

"No state would be allowed to abridge the "privileges and immunities” of the citizens.  No person was allowed to be deprived of life, liberty, or property without due process of law.  No person could be denied equal protection of the laws."

Being a Libertarian, I am personally for gays to obtain the rights they are entitled to under the law.  I think the changing of history of what has been called "marriage" between a man and woman by the court is indeed controversial.  This gay marriage case is not obviously corrupt. The decision was only by one vote, but for a very controversial law. Whereas "Brown vs the Board of Education" (1954) using the same 14th amendment, was a 9-0 decision!  

However, these two Supreme Court decisions may be undermining the “confidence" in the U.S.  That might inhibit business formation and future economic growth.   Let's now explore that theme in greater detail.


Result -- Loss of Faith in U.S. Government & Economy:

Considering recent racial profiling incidents, immigration debates, and income inequality issues, one might argue that the U.S. Government is pitting its citizens against each other:  men vs women, black vs white, gay vs non-gay, rich vs poor, old vs young, illegal immigrant vs U.S. Citizen, etc.  


This seems similar to the Frankfurt School's plan (see Sidebar) to bring down a free and rich society and change it to a Marxist, egalitarian society which is totally controlled by elites.

Let's not forget the proliferation of "lying" before Congress by U.S. government officials:  James Clapper on the NSA spying,  Attorney General/DoJ's Eric Holder  on Fast and Furious, Lois Lerner and three other IRS commissioners (missing emails),  Fed Chairman Ben Bernanke (who claimed QE did not cause income inequality to increase), Congress passing TPA -- fast track (claiming it will create jobs), President Obama (“you can keep your health plan” under ACA),  Sec. of State Hillary Clinton's private email server (Benghazi, Libya ambush) and  many others.  They seem to be all falsehoods without any serious consequences or even reprimands of the perpetrators!


Even the Supreme Court justices, who are appointed for life, twist and reinterpret the law (e.g. the ACA) and change tradition (in the Gay Marriage case) by a one vote margin.  


How's the Legislature branch of government doing?  The latest Rasmussen Reports national telephone survey found that just 12% of Likely U.S. voters rate the job Congress does as good or excellent. 

A Rasmussen Reports June 25th survey had only 26% of likely U.S. voters think the country is heading in the right direction.  That finding is down two points from 28% the week before and ties the low for the year first reached in April. 


Considering all of the above data points, I’m concerned that the belief and confidence in the U.S. has been eroded so much that it will grossly effect long term investments and net new business formation in our country.  The issue is far worse than whether you are for or against a particular decision or political party. 

Expert Opinion from Brent Berarducci of Blacklion Capital Management:

“The impact as it relates to loss of confidence in our legislative and judicial system will have tremendous impact over the long run.  If we are not confident that words have meaning and justices will interpret them accordingly, then that goes to the very foundation of capitalism - property rights.


The door is now wide open for ‘windfall profit’ taxes, wealth and/or property confiscation, and any other measures that prevent entrepreneurs and risk takers from enjoying the fruits of their risk taking and labor.  In the absence of confidence in earning and retaining outsized returns, entrepreneurs will be dissuaded from taking those risks and creating the enterprises that result in increased productivity, jobs, and ultimately personal and national wealth.


While it is easy to measure the impact of a business started and failed it is almost impossible in the short/intermediate run to measure the loss of a business never created. That calculation will ultimately roll up into flat and/or declining GDP and exacerbated wealth and income equality.  Those who are well capitalized now will retain their wealth and play defense rather than deploying it and going on offense.  Of course, the progressives of both parties will cite the depressed GDP and exacerbated inequality as a reason for more government intervention until all confidence is lost in the economy. That combined with the Fed’s excesses may destroy confidence in our fiat currency and lead to the hyperinflation and social breakdown Victor has previously articulated so well. “


Curmudgeon Comment:

As bad as the U.S. government is, it may be the lessor of all evils.  Consider the alternatives:

So the winner of the global nation beauty contest is???  NO ONE!

Victor's Conclusions:


As James Madison (one of the U.S. Founding Fathers and one of the greatest men in all of U.S. history) stated:

“It will be of little avail to the people that the laws are made by men of their own choice if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood.”

I would add to the above that laws are often changed to whatever the desired result is wanted by one or two men for any political reason.

Please note the Bill of Rights, the Declaration of Independence, and the Constitution have only 7818 words COMBINED!  The Constitution took 116 days to write and took 10 months for all 13 States to approve.  The Bill of Rights has only 462 words and took 1550 days to be ratified.


Let's contrast that with the ACA, which has 11,588,500 words, was likely not read in its entirety by our elected representatives and never got one Republican vote.

We leave the reader with two important questions to ponder: 

Till next time...


The Curmudgeon


Follow the Curmudgeon on Twitter @ajwdct247

Curmudgeon is a retired investment professional.  He has been involved in financial markets since 1968 (yes, he cut his teeth on the 1968-1974 bear market), became an SEC Registered Investment Advisor in 1995, and received the Chartered Financial Analyst designation from AIMR (now CFA Institute) in 1996.  He managed hedged equity and alternative (non-correlated) investment accounts for clients from 1992-2005.

Victor Sperandeo is a historian, economist and financial innovator who has re-invented himself and the companies he's owned (since 1971) to profit in the ever changing and arcane world of markets, economies and government policies.  Victor started his Wall Street career in 1966 and began trading for a living in 1968. As President and CEO of Alpha Financial Technologies LLC, Sperandeo oversees the firm's research and development platform, which is used to create innovative solutions for different futures markets, risk parameters and other factors.

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