As we approach the Fiscal Cliff, or more properly Slope, I thought the Republican negotiating strategy was very revealing. Gerrymandering, the process by which Congressional districts are tortured into shapes that resemble something drawn by a drunk with a permanent marker, are certainly part of the issue. Although the original intention was  to allow for districts that reliably elect minority candidates, the result has been districts that don’t turn over. The strength of incumbency in the House of Representatives has the consequence that general elections matter less than the primary for the dominant party in that district. If a district reliably votes 60% Republican (or Democrat) the winner of the election will be the successful primary candidate from the party that normally prevails. Primaries matter a great deal for the House. Therefore, the failure of House Speaker John Boehner’s Plan B two weeks ago is not an example of Republican self-destruction, but rather of enlightened self-interest.

A House Republican is more concerned about a Tea Party primary challenge than a general election loss to a Democrat, given the polarization of so many districts. Therefore it makes little sense for Republicans to compromise their principles in trying to resolve the fiscal cliff. They have little upside in any case from strong economic growth (it is Obama’s Economy after all) and plenty of downside from a more Conservative challenger.

The New York Times added an interesting perspective to this last week, when they noted that on top of gerrymandering there appears to be a tendency of people to live in districts where their neighbors share similar views. This is not a welcome development for those who believe that compromise is the only solution to America’s fiscal challenges. In fact, further electoral polarization would seem likely to drive even more partisan disagreement in Washington.

This is one reason why optimism about the fiscal future is not warranted. The tight races in elections are steadily diminishing, and we are headed for now in a direction of increasingly shrill disagreements. But under these circumstances one decision does appear illogical. In an era during which both political parties appear to be moving away from one another and towards their base, why would any voter split their vote? For just as President Obama won a renewed mandate from the American people, so did the House Republicans who retained their majority. Some districts, and some voters, clearly split their vote between a Democratic President and a Republican member of the House of Representatives. This happened notably in Florida where Obama barely clinched the state’s electoral college votes with 50.0% while the state chose Republicans for 17 of its 27 members of the House of Representatives.

Clearly a substantial number of voters in Florida split their vote between a Democratic President and a Republican member of the House of Representatives. When Congressional relations were altogether more cordial such as under President Clinton the implicit desire for compromise possibly made sense. But following the last few years who can seriously expect compromise rather than the perpetual stalemate that has brought us to the edge of the Fiscal Cliff? The voters who split their vote don’t really hold a coherent view. The parties are sufficiently far apart that expecting grand compromise appears rather naive.

Instead of blaming Washington, a portion of the problem lies with an electorate that in some cases has failed to carefully consider what type of government they want. As a result, hasty, superficial decision making based on sound bites has brought us the government we deserve, rather than the one we need.

Important Disclosures

The information provided is for informational purposes only and investors should determine for themselves whether a particular service, security or product is suitable for their investment needs. The information contained herein is not complete, may not be current, is subject to change, and is subject to, and qualified in its entirety by, the more complete disclosures, risk factors and other terms that are contained in the disclosure, prospectus, and offering. Certain information herein has been obtained from third party sources and, although believed to be reliable, has not been independently verified and its accuracy or completeness cannot be guaranteed. No representation is made with respect to the accuracy,  completeness or timeliness of this information. Nothing provided on this site constitutes tax advice. Individuals should seek the advice of their own tax advisor for specific information regarding tax consequences of investments.  Investments in securities entail risk and are not suitable for all investors. This site is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.

References to indexes and benchmarks are hypothetical illustrations of aggregate returns and do not reflect the performance of any actual investment. Investors cannot invest in an index and do not reflect the deduction of the advisor’s fees or other trading expenses. There can be no assurance that current investments will be profitable. Actual realized returns will depend on, among other factors, the value of assets and market conditions at the time of disposition, any related transaction costs, and the timing of the purchase. Indexes and benchmarks may not directly correlate or only partially relate to portfolios managed by SL Advisors as they have different underlying investments and may use different strategies or have different objectives than portfolios managed by SL Advisors (e.g. The Alerian index is a group MLP securities in the oil and gas industries. Portfolios may not include the same investments that are included in the Alerian Index. The S & P Index does not directly relate to investment strategies managed by SL Advisers.)

This site may contain forward-looking statements relating to the objectives, opportunities, and the future performance of the U.S. market generally. Forward-looking statements may be identified by the use of such words as; “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms. Examples of forward-looking statements include, but are not limited to, estimates with respect to financial condition, results of operations, and success or lack of success of any particular investment strategy. All are subject to various factors, including, but not limited to general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors affecting a portfolio’s operations that could cause actual results to differ materially from projected results. Such statements are forward-looking in nature and involves a number of known and unknown risks, uncertainties and other factors, and accordingly, actual results may differ materially from those reflected or contemplated in such forward-looking statements. Prospective investors are cautioned not to place undue reliance on any forward-looking statements or examples. None of SL Advisors LLC or any of its affiliates or principals nor any other individual or entity assumes any obligation to update any forward-looking statements as a result of new information, subsequent events or any other circumstances. All statements made herein speak only as of the date that they were made. r

Certain hyperlinks or referenced websites on the Site, if any, are for your convenience and forward you to third parties’ websites, which generally are recognized by their top level domain name. Any descriptions of, references to, or links to other products, publications or services does not constitute an endorsement, authorization, sponsorship by or affiliation with SL Advisors LLC with respect to any linked site or its sponsor, unless expressly stated by SL Advisors LLC. Any such information, products or sites have not necessarily been reviewed by SL Advisors LLC and are provided or maintained by third parties over whom SL Advisors LLC exercise no control. SL Advisors LLC expressly disclaim any responsibility for the content, the accuracy of the information, and/or quality of products or services provided by or advertised on these third-party sites.

All investment strategies have the potential for profit or loss. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be suitable or profitable for a client’s investment portfolio.

Past performance of the American Energy Independence Index is not indicative of future returns.