"Conservative" columnist and author, David Brooks, in a recent Op-Ed, attempts, as he seems to do ad nauseum, to earn credibility with the left by explaining why President Obama is not the radical that many on the right make him out to be.

Brooks, of course, is nothing more than the right-leaning version of Thomas Friedman. You know the profile...a self-important, highly enlightened, seer, sooth-sayer, and knower of all that illuminates people on all sides of every issue. He, like Friedman, loves to position himself as floating well above the fray—looking down on the great unwashed who don't have the sophistication, nor the intellectual capacity, to understand what is so painfully clear to someone blessed with his supernatural analytical skills and brainpower.

The thesis of Brooks' piece is that "Obama is as he has always been, a center-left pragmatic reformer."  He opines: "...he always describes a moderately activist government restrained by trade-offs. He always used the same on-the-one-hand-on-the-other-hand sentence structure. Government should address problems without interfering with the dynamism of the market."  Obama doesn't want to interfere with the dynamism of the market?  Who knew?

Putting aside that Obama had virtually no track record of reforming anything prior to becoming president, is there any denying that his rhetoric, of which there is quite a trail, almost always proselytized positions considerably to the left of what could rationally be represented as mainstream Democrat fare?  Sure, once he saw the presidency was within reach, he became more clever at obfuscating and misdirecting (aided by a fawning media), but can there be any other interpretation for what is on the voluminous video and audio clips over the years that document his liberal utopian ideals? 

You've seen them.

How about the one where he states that he's always been for government-run healthcare and describes how the government will systematically insinuate itself until it inevitably has full responsibility for running it?  Or, the numerous times he's discussed his views on social justice and the need to redistribute wealth in order to level the playing field, including a Chicago Public Radio interview in 2001 where he intimates that the constitution should have been radically reinterpreted to enable the redistribution of wealth. But instead, similar results are being achieved through community organizing/activism. You get the idea.

Brooks adds, "Conservatives are wrong to call him (Obama) a big-government liberal. That's just not a fair reading of his agenda."  Really?

Can Brooks possibly be so clueless?  Or, has he just been blinded by the light (apologies to Manfred Man)?  If Obama were able to rule with impunity, who believes he would not pursue the most radical left agenda in this country's history?  Brooks seems to confuse Obama's inability to sell his ultra-left policies with his desire for said policies. Humdinger of a miscalculation.

And what about the one area where Obama has supposed non-liberal bona fides—his prosecution of the war in Afghanistan?  Again, who thinks that if he had free reign, he wouldn't pull those troops out in a heartbeat?  Like Bush before him (re: Medicare prescription drug benefit), he's backing a position to earn points with the opposition in the misguided belief that it will help him gain support for his agenda. Didn't work then. Isn't working now.

If Obama isn't a big-government liberal, what else might we have to rethink?  Bush 43 wasn't a bumbling communicator?  Harry Reid isn't a milquetoast, ineffectual leader?  New Coke didn't suck?

If the deficit fits....
...<< MORE >>

There it was towards the end of today's healthcare summit—the perfect illustration of liberal and conservative mindset differences when it comes to crafting solutions to difficult problems. Dick Durbin, the senior senator from Illinois and member of the senate Democrat leadership team was waxing on about why tort reform is so very unnecessary, and more importantly, why it would be unfair to those victimized by medical malpractice.

As politicians are want to do, he used a tragic story to bolster his argument. In this particular instance, he was quarreling with the Republican notion that damage awards for pain and suffering should be capped at $250,000. A badly botched routine medical procedure was used as supporting evidence. The unfortunate victim, while undergoing a standard procedure to remove a mole, had her face badly burned and disfigured when the oxygen she was being given ignited. The woman had to deal with numerous painful surgeries and a life irreparably altered for the worst. Obviously, no rational, caring person could believe that $250,000 is adequate compensation for such suffering.

On the surface, it is difficult to argue with Durbin's reasoning. However, what he doesn't recognize is the dramatic ripple effect on a system that must plan for the possibility of uncapped or virtually uncapped damages to more than just a relative few. It is incumbent upon insurance companies to set premiums, often higher than we'd like, to deal with a lack of cost certainty. It would be fiscally irresponsible (and probably illegal for a public company) to do otherwise. One cannot prudently manage such a business without allocating substantial sums for potentially catastrophic lawsuit awards. Relatedly, medical personnel are forced to practice defensive medicine because they are fearful of crippling lawsuits and the effect such cases will have on their malpractice insurance and overall insurability. Of course, the practice of defensive medicine, irrespective of the existence of actual malpractice, serves to raise premiums even more. A very unvirtuous cycle.

So, in doing what may appear to be sensible and compassionate on the surface (i.e. allowing enormous awards) actually damages the overall system such that orders of magnitude more people are harmed through much higher premiums or lack of access (due to those higher premiums). Would we be better off as a society with lower premiums and broader coverage for all, or virtually unlimited damage awards for the relative few?  Is the unfairness to the few trumped by increased fairness to the many?

No doubt reasonable accommodations should be made for malpractice victims, but we simply cannot design policy to address a fraction of one percent of cases, when by doing so, we egregiously impact the other ninety nine plus percent. That is the difficult, but right thing to do.

And, we make these trade-offs all the time.

We set the guilty free on technicalities, as gut-wrenching as it is, because we are concerned that improprieties allowed to go unchecked will have a deleterious effect on our liberty and the integrity of our system of justice.

We could require that cars enable drivers and passengers to withstand head-on collisions at 65 MPH, but have concluded that the economic and societal costs of doing so would be prohibitive.

There are endless examples.

A balance is what we require. As tempting as it is to want to address every bit of current suffering, we have to have an eye toward the longer term, or we're just setting ourselves up for even greater misery down the road.

Common sense and basic economics tell us that the greater cost certainty derived through tort reform, coupled with competition made possible by allowing purchases across state lines is what will control and even reduce premiums. The Democrats' own rhetoric is proof. If insurance company profits are as outrageous as the Dems claim, then there will be a flood of insurer entrants into the marketplace who will want to compete for a piece of the profit pie...once the state monopolies are busted and the threat of exorbitant, unpredictable malpractice awards is mitigated. We know that medical personnel compensation is not the culprit. Salaries are all but stagnant. Nor is it plant or other basic operating expenses. That points the finger squarely at lack of competition and the cost problems associated with defensive medicine.

The market, not the government, is the solution.

Any time you hear a politician, Democrat or Republican, start a sentence with, "Let me tell you about a letter I received from one of my constituents..." cover your ears and hide your wallet. ...<< MORE >>

There's a story out today that highlights the American Academy of Pediatrics (AAP) call to redesign hot dogs (and other foods) because they present a choking risk to children. Past Chairman, Dr. Gary Smith, is quoted:  "Any food that has a cylindrical or round shape poses a risk."  Clearly, and unabashed and unapologetic roundist of the worst sort.

Hot dogs, so the article says, account for 17% of food-related asphyxiations in children under the age of 10. Hmmm. I've seen Kobayashi down 50 or 60 of the suckers in a few minutes without nary a Heimlich maneuver. But, who am I to doubt the vaunted AAP?  Who doesn't just prop little Billy up in his highchair, toss him a couple dogs, then head out to the backyard for a smoke?  That's ok; isn't it?

Where will the government and other organizations stop in their continual and absurd effort to protect us from ourselves?

Could bundt cakes be in the cross hairs because hemorrhoid suffers may mistake them for inflatable donuts and bruise their tail bones?

Might pineapple upside down cake be under investigation because there is concern some may feel it necessary to stand on their head in order to eat it?

What about NY strip steaks?  Perhaps they subliminally promote indecency and lead to a life of prostitution?

And, of course, everybody who saw the movie American Pie understands the temptation associated with hot apple pie.

A little common sense can go a long way, people. Really, it can. Government doesn't have to insinuate itself into every aspect of our lives; even when the matter is something as "critical" as the shape of a hot dog.

If they insist on this further intrusion, I guess we can all look forward to the movie,  Clear and Present Danger:  The Hot Dog Files. Jack Ryan never had a tougher mission.

Spoiler alert:  He kills the enemy by choking them with hot dogs.

...<< MORE >>

The Laurel and Hardy of left wing economic thought were at it again today. Actually, make that Hardy and Hardy.

Paul Krugman, in response to an interview where Obama tacitly approved of the bonuses granted to Jamie Dimon of JPMorgan and Lloyd Blankfein of Goldman Sachs, said, "How is it possible, at this late date, for Obama to be this clueless."

Not to be out done, Joseph Stiglitz, in a piece for Politico, called for another stimulus—ex post facto, and told us not to get caught up in all that angst over ever mounting deficits—you know, the deficits that were "out-of-control" when they were 80% smaller under George Bush.

If you follow politics and/or economics, you know that Krugman and Stiglitz are the go to guys when the left leaning media and liberal politicians are looking to validate progressive policy prescriptions with some academic heft. Seems reasonable on the surface. Both are Nobel laureates, after all. But, do you ever wonder how they earned the honor?

Let's examine Dr. Stiglitz a bit. Krugman has been in my cross hairs in a number of past blogs, so he gets a pass this time.

It's hard to find a progressive principle that doesn't have Stiglitz's stamp on it. He is often referred to as the most cited economist in the world. When one reviews his body of work, it's easy to see why those who favor an activist government look for his endorsement.

Stiglitz made his mark by "proving" that markets are not normally efficient. Standard economic theory held that markets are almost always efficient, except in some limited and well documented instances. In essence, Stiglitz made the case that the invisible hand is just that, invisible (i.e. doesn't exist). Furthermore, he "showed" that whenever markets are imperfect (which is regularly the case), then there is nearly always some government intervention which can induce superior outcomes.

Are you beginning to see why this research caught the eye of the folks in Norway? 

Finally, someone and something to justify the Big Government utopian desires of the Nobel committee and their elitist brethren around the globe. Imagine, research that says it's not just okay for the government to intervene, but actually necessary if we want better outcomes. Social justice here we come.

Wow, what a breakthrough.

Apparently, no one considered that when Adam Smith and the other founding fathers of capitalism orthodoxy discussed efficient markets, they probably meant relatively, not perfectly efficient, nor did they mean efficient all the time?  Guess that's why they explained how imbalances were typically corrected?

And, I imagine no one bothered to calculate the odds of ideologically aligned politicians coming up with flawless economic solutions to squeeze out incremental efficiency from all these imperfect markets?  Come to think of it, I bet they also didn't figure the probability of the government actually making things much worse?

As pointed out numerous times in past blog entries, markets can and do break. There are occasions when intelligent intervention can produce better outcomes. However, one has to recognize that the likelihood of highly imperfect politicians coming up with perfect or near perfect solutions is quite remote. As such, the first instinct should be to let markets heal themselves. The near- or mid-term results may be painful, but not nearly as damaging as ill-advised intervention.

If we listen to the Hardy twins, Krugman and Stiglitz, it will be just another fine mess that they've gotten us into.
...<< MORE >>

President Obama unveiled his fiscal 2011 budget today. It calls for $3.83 trillion in government spending. Let that figure sink in for a moment.

If you're having some difficulty wrapping your arms around it, perhaps a little perspective might help. It is roughly $1 trillion more than was spent in fiscal 2008. Are you aware of any business that can endure, over a three year period, a greater than 35% rise in expenditures coupled with no/little corresponding increase in revenue?  That's no way to run a Dairy Queen, let alone the United States government.

Our captain (and his predecessor) has already steered the ship of state into an enormous iceberg of debt. The question is, will we follow Gene Hackman, or a misguided band of irrational, panicked people to safe passage off the Poseidon?

If the President was truly serious about reigning in out-of-control spending, freezing non-entitlement, non-security discretionary outlays for three years would not be the solution. That piece of the pie represents only about 17% of the budget, and would lead to a meager $15 billion reduction in year one—less than four tenths of one percent.

Instead, why not rollback to fiscal 2008 spending levels?. In fiscal 2008, just two short years ago, the federal government spent about $2.9 trillion—upwards of $1 trillion less than is called for in the President's new budget. Would that really be so undoable?  It's not like we're talking about spending levels from 20, or 10, or even 5 years ago.

We were still funding two wars back then, and more recently have already spent hundreds of billions of dollars on "stimulus."   So, there's no need to accept the argument that another trillion dollars is necessary. GDP is back in the black, and the world financial system is on more solid footing (for the moment). The markets and economies of the world would boom if they thought we were taking the difficult steps necessary to get our economic house in order. And, businesses would finally have the impetus to hire.

Advice to President Obama:  Have Larry Summers do some deep breathing exercises and swim back to fiscal 2008 where the spending level was a heck of a lot safer. That's the path to our fiscal salvation.

Shelley Winters would be awfully proud.
...<< MORE >>

When did Grace Slick and Jefferson Airplane start writing State of the Union speeches?

Tonight, we were asked to step through the looking glass and back to a period when this rhetoric would be more believable—a time of idealism and unbridled hope. Unfortunately, this evening's ostensibly recycled 2008 campaign speech now carries the heavy baggage of twelve months of broken promises, including, most significantly, a complete rejection of bipartisanship—the single biggest plank in Obama's platform and reason for his election (besides the fact people were REALLY tired of Republicans and their missteps).

One pill makes you larger
And one pill makes you small

Sure, during the 2008 campaign, most knew that there was an incongruity between Obama's record and what he was promising. Many understood that he had virtually no substantive track record of reaching across the isle to compromise on difficult issues. Many more knew that his experiences and associations strongly suggested a near lock-step allegiance with the far left. Nevertheless, the words and themes were so, so mellifluous and soaring. They filled  us with great expectations and anticipation of better days. They made us dream of what might be. And, they made us want for something better than the difficult and divisive last years of the Bush administration.

Well, here we are a year later. The words and themes are the same, but the ring is very, very hollow. How can we be expected to trust him this time?  What of the repeated pledges regarding lobbyists, earmarks, safe nuclear, offshore drilling, going through the budget line by line, fiscal responsibility, etc., etc., etc.?  And, let's not forget one of my personal favorites, "Let me know if you have a better approach. Really; I mean it."  I feel so used.

And if you go chasing rabbits
And you know you're going to fall
Tell 'em a hookah smoking caterpillar
Has given you the call

What makes tonight's rehash of past promises, including, most specifically, yet another call for bipartisanship all the more stupefying is that it was done while simultaneously slapping the other party and its agenda right across the face. C'mon, is that any way to usher in a new era of cooperation?  Even if you believe it deep down in your bones, can't you finally step away from the bashing in the name of tackling tough problems together?  It's not like he hasn't said it a million times before and people don't understand his views on the past eight years. Kinda makes it hard to see the sincerity.

Despite all of this, I suggest giving the President one last chance. I know what you're saying, "Fool me once..."  Give him a week, or two, or maybe even four to see if there's been an epiphany and a legitimate effort to meet near the middle.

If not, it's game over. Go ask Alice.

When logic and proportion
Have fallen sloppy dead
And the White Knight is talking backwards
And the Red Queen's "off with her head!"

Funny, I feel like I just had some kind of mushroom.
...<< MORE >>

In a 5 to 4 party-line ruling on Thursday, the Supreme Court  reversed a 1990 decision and also struck down a key element of the 2002 McCain-Feingold campaign finance reform act. The net result is that unions and corporations can now use their own money to call for the election or defeat of individual candidates. In doing so, the court essentially said that the First Amendment rights of unions and corporations trumped concerns that their money may have a corrupting or disproportionate effect on elections.

Although the First Amendment offers very broad protection ("Congress shall make no law...abridging the freedom of speech..."), congress and the courts have, over the years, narrowed or sought to narrow the boundaries, particularly when the rights of individuals, groups, or institutions were thought to be improperly or unfairly impinged by the speech of others. Individual campaign contribution limits are but one manifestation of such narrowing.

Naturally, a 5 to 4 party-line decision engenders skepticism. Was it derived from constitutionally sound reasoning, or just ideologically motivated?  Of course, it can be both; they're not mutually exclusive.

Given the very expansive language of the First Amendment, it is, not surprisingly, open to a multitude of interpretations. In such complex situations, common sense is often the best guide.

The actions of the current and prior administrations, coupled with rapidly changing election/fund raising dynamics, demonstrate the soundness of this ruling. It would be difficult to argue that Bush 43 did not want to strip unions of power and influence. Similarly, there is no denying that Obama has corporations right in the cross hairs.

Therefore, isn't it reasonable that unions and corporations have every opportunity to defend themselves and their interests against such powerful onslaughts?  The old logic simply isn't sensible any longer. Previously, as Justice Kennedy noted, the court upheld regulations on corporate speech based on the theory that the voice of ordinary citizens could be drowned out by corporations and their vast sums of money. 24/7 cable news and grass roots Internet fund raising have made that notion obsolete. There is no shortage of raiseable cash available to those on each side of an issue. Nor is there a limit on ingenuity.

Cash may still be king, but it now shares the throne with creativity. The Internet has changed the rules. The most resonate messages are no longer exclusively the domain of those with the fattest wallets.

Don't be fooled by the spin. This is a reasonable and fair decision. If precedent is based on conditions that are no longer relevant or true, then it is rational for that precedent to be struck down.

Justice Felix Frankfurter said,  "If facts are changing, law cannot be static."
...<< MORE >>

George Bernard Shaw said, "We learn from history that we learn nothing from history."  How true; for today, the United States is reliving a 21st century French Revolution of sorts.

Like the French Revolution, the Obama Revolution began with noble intentions and was kindled by comparable root causes—including mismanaged wars, decreasing capacity to meet domestic obligations, mounting national debt, and class warfare.

In 1789, the rise of Enlightenment ideals, popularized and promulgated by the likes of Rousseau, Voltaire and others, helped to foment a sense of unrest and growing desire for upheaval. In the mid-2000's, a comparable feeling of dissatisfaction and want of change permeated America.

Like 1789, aspirations for change in the mid-2000's were initially driven by deep discontent with the performance of those in power, then later catalyzed by emerging charismatic voices for transformation.

In 2006 the American electorate "stormed the Bastille" and planted a flag, expressing a profound disdain for how government was operating. It wanted something better. In fact, it insisted on something better—someone equipped to coalesce the disparate interests of a political class spun out of control and unable to address the needs of a country facing increasingly intractable problems.
 
The King, Bush 43, was neutered, and his court (Republican congress) was exiled. In swept Barack Obama—Robespierre in an Armani suit.

Robespierre, as explained in the 1911 Encyclopedia Britannica, was a "bright young theorist but out of his depth in the matter of experience."  Further describing Robespierre, the encyclopedia continued, "the Committee of Public Safety gave him power, which he hoped to use for the establishment of his favourite theories, and for the same purpose he acquiesced in and even heightened the horrors of the Reign of Terror. It is here that the fatal mistake of allowing a theorist to have power appeared."

So, although the French Revolution removed a failing monarchy, it replaced it with a radical democratic republic, and an even more poisonous climate, highlighted by the Reign of Terror where rival political factions executed enemies with impunity. Today, public opinion and the ballot box have replaced the guillotine as the method of choice for purging unwanted politicians. On Tuesday, the metaphorical guillotine dropped on twelve months of tone deaf, hubristic one-party rule. The people spoke loudly—damning the failed promise of bipartisanship, the drastic lurch to the left, and the Reign of Economic Terror.

The French Revolution played out over ten years and led to several additional decades of turmoil as the country struggled to find its identity and settle on an appropriate form of government.

Things did not end well for Robespierre. The idealistic and once promising leader attempted suicide and was subsequently executed. He contributed to and was unable to contain the wild excesses of a movement that morphed into an unruly and unrestrained mob.

Although many in his party are doomed, there is still time for President Obama to avoid a 21st century version of Robespierre's fate, repudiation at the ballot box.

Will he be able to set aside his largely rejected ideology and do the peoples' business, or will he stubbornly and self-destructively continue to pursue his own "theories?"

Marx said, "History repeats itself, first as tragedy, second as farce."

Let's hope not.

 

...<< MORE >>

It wasn't on horseback at midnight, but it had every bit the sense of urgency and alarm as that famous ride in April of 1775. Barack Obama rolled into Boston on Sunday to alert the masses:  THE REPUBLICANS ARE COMING; THE REPUBLICANS ARE COMING.

Of course, the warning was not without reason. The GOP has already marched through Virginia and New Jersey, and is moving rapidly up the coast straight toward Massachusetts. Unlike 1775, however, the interlopers may actually be welcomed, rather than repelled.

In many respects, the Democrats have already lost this war. Should they squeak by in Tuesday's battle, the victory would be Pyhrric at best. The lantern's been lit at the Old North Church and every politician on the left can interpret the signal. Barring a material shift in sentiment between now and November, each race will be contested. Safe seats appear but a distant memory. This, no doubt, is disastrous for the DNC. Valuable resources will be required to defend what were previously impregnable strongholds. That means limited dollars to go on the offensive. Not a good spot for the Dems.

Obama trotted out an old and comfortable theme on Sunday, populism. He roared to the crowd about how Martha Coakley, like his administration, will fight for the people—against those mean banks, oil companies, and insurance behemoths, and I imagine virtually every other company and industry without a significant union population.

Isn't it ironic, though, that "being for the people" seems to have nothing to do with empowering them, and everything to do with making them more dependent?  If we could just press our thumb down a little harder on the job creators, or make the rules even more uncertain, and install another government program...or twelve...all would be better. Obama and friends can't seem to comprehend that all this "fighting for people" and against corporations nonsense has caused enormous collateral damage to the regular folks who work for, or potentially might be hired by, those evil corporations.

Coakley said, "People are angry at the policies of the past that frankly rewarded the wealthy and left main street behind. I think that’s wrong and we have to fix that."  They're fixing it alright. It was really dreadful back when everyone who wanted a job could find one. Things are a lot better now. Right?  Imagine the horror of rewarding the wealthy. Oddly, when the wealthy (i.e. those with investment capital) don't get rewarded, they're not so keen on deploying their money in economy-expanding, jobs-producing endeavors. Who knew?

Many pols on the left just refuse to acknowledge the simple elegance of our capitalist, quasi-free market system. Big risks sometimes beget big rewards (and often big losses). The residue of those risks are GDP expansion and job creation. Outlandish returns (as long as they are scrupulously earned) are an important element of what fuels the system. The potential for those returns is what attracts a disproportionate amount of investment capital to the U.S. When we go beyond necessary and intelligent regulation and instead inflict a thousand cuts, the capital drys up and the system ultimately bleeds to death.

For those of you not into all of the policy minutia, merely compare and contrast the tone this administration has established as it goes about attempting to lift us out of difficult economic circumstances, to the last time we faced such challenges (in the early 1980's). Which feels more right—a never-ending stream of finger pointing, threats, and shakedowns, or a climate of optimism, empowerment, and incentives?

Yes, the Republicans are indeed coming. Perhaps it will be a blessing in disguise for Obama and the Dems if they recognize the onslaught for what it is—an indicator of major dissatisfaction and an opportunity to alter strategy in time for the 2010 and 2012 elections.

Giddyup. ...<< MORE >>

You really have to hand it to Paul Krugman. The man is persistent. There has rarely, if ever, been an argument for government expansion that he hasn't advanced or embraced. Remember, this is the savant who thought the $787 billion  Keynesian-style "stimulus" was only one half to one third the size it needed to be, despite voluminous historical evidence as to the ineffectiveness of such programs.

In his latest New York Times missive, Krugman extols the virtues of European social democracy. He says that, "what everyone knows isn't true."  Adding, "Europe is an economic success, and that success shows that social democracy works."  Really?

Of course, as per usual, the supporting evidence he cites is only visible to those looking at a rose-colored fun house mirror through a pin hole in a piece of cardboard. And, in typical Krugman fashion, it's not so much his unique interpretation of data points as it is what he conveniently, or cluelessly, leaves out.

It's apparent from the beginning that the column is yet another exercise in obfuscation. Remarkably, he says, "Actually, Europe’s economic success should be obvious even without statistics. For those Americans who have visited Paris: did it look poor and backward? What about Frankfurt or London? You should always bear in mind that when the question is which to believe — official economic statistics or your own lying eyes — the eyes have it."

Just imagine his reaction if an assertion of American prosperity/economic justice were made by pointing to visible signs of wealth in Beverly Hills, or Park Avenue, or Beacon Hill?  Was it not he and other liberal economists/politicians who constantly preached that the boom years were more of a kaboom for the many who fell behind and/or slipped through the cracks?

Apparently he missed the contradiction in such an observation. Not content to simply mangle the qualitative, Krugman goes on to demonstrate his facility for twisting and rationalizing the quantitative.

He notes that since 1980 America's real GDP has outgrown that in the European Union (EU) 3.0% to 2.2%. But, he neglects to highlight the significance of the disparity. Allow me.  If average U.S. GDP over a similar time period were instead equal to the EU figure, we would incur, given today's GDP, upwards of $3 trillion in additional debt. But what's $3 trillion in the name of social democracy?

Moreover, he claims that EU and U.S. per capita GDP, a more important measure (in his estimation),  has risen at about the same rate, with the U.S. enjoying a slight advantage. My research, however, shows the United States 10th ($46,300) in worldwide per capita GDP, and the EU 38th ($33,000)—quite a non-trivial delta.

Krugman also says that Europe has caught up in its use of technology; that its productivity is close to that in the U.S.; and that European unemployment rates are substantially higher than those in the United States, but their citizens are not much more likely to be on the dole than people in the U.S. Hmmm.

So, in making his case for European social democracy, Krugman admits that the U.S. is ahead in virtually all the economic indices, but he expains away our various advantages as relatively meaningless.

Krugman forgets, or chooses not to mention, the many material benefits the EU derives from a U.S. not drug down by social democratic policies. Imagine how uncompetitive Europe would be if it wasn't able to draft behind the United States? 

Where do you think European productivity numbers would be if it wasn't for U.S. and Asian innovation/technology?  How much greater would their already enormous tax burden be if they had to provide for their own national defense?  How much worse would their GDP be if the U.S. was not the number one customer for their luxury cars and other items?  How much more significantly would their population be declining if it were not for the overall positive economic impact of a non-socially-democratic United States?

Turn the U.S. into a social democracy—throwing a wrench into the catalytic engine of worldwide growth, innovation, freedom, and defense—and see just how fast an already fragile EU economy would spiral downward toward total collapse.

The Amazing Krugman...all the clairvoyance of a boardwalk psychic with a migraine. ...<< MORE >>

If you caught the Sunday talk shows this week, you witnessed yet another poor Not Ready For Primetime Player trotted out to defend policies so flimsy that they would collapse under the weight of an anorexic butterfly.

John Brennan, assistant to the president for homeland security and counter-terrorism, was the latest somnambulant sinecure to take a bullet for the evermore astonishing ineptitude of this administration. Among the gems he uttered, and there were many, was something to the effect of:  The failed Christmas Day terror attack was a "unique incident" that won't affect the process of closing the Guantanamo facility. More remarkably, he indicated that many of the Gitmo-housed detainees of Yemeni descent are still on track to be returned to their home country, which just so happens to be the latest prime breeding ground of global extremists. Really.

I could almost hear Janet Napolitano muttering, "Tag; you're it."  "It," of course, being—Foolish Incompetent of the Day.

As ineffectual as dozens of Obama appointees have proven to be, shouldn't we really be focusing on who writes the script, rather than those who deliver the dialogue?  This is, after all, as most would agree, the most scripted administration ever. And, the screenwriters of the current drama happen to be Messrs. Obama, Axelrod, and Emanuel—-a.k.a. BadDreamWorks.

Obama's day one "commitment" to close Guantanamo was the drama's first act. Our protagonist, Obamathello, did so, foreshadowing subsequent trouble, with hope in his heart, but not a trace of a plan on his brain. The Enlightened One stood on the grand stage and sermonized about how Gitmo functions as a recruiting tool for our enemies. In a later plot twist, it turns out he was correct, but in a wholly unexpected fashion. The terrorists are energized by their ability to affect policy changes from a weak-kneed government, more concerned with offending than defending. Recruiting skyrockets.

The second act centers around the failed Christmas day attack and ensuing debate over how to respond. It highlights a central and ongoing conflict. Do we succumb to the self-anointed, hypocritical global moralizers that constantly strive to weaken America, and return enemy combatants to the battlefield, or do we recognize that a strong, aggressive defense of the homeland is completely consistent with our values, and THE primary obligation of government?

Act III is not yet fully written. The decisions made in Act II will determine whether or not this play turns out to be a tragedy or a triumph.

In a subplot, it should be noted, the protagonist's nemesis, Lord MacBush, releases, against his better judgment, numerous combatants from Gitmo in an ill-advised gesture to the aforementioned self-anointed, hypocritical global moralizers. Those combatants come back to haunt Obamathello. Will Obamathello choose to make the same mistake, or recognize it as a sign of what not to do?  Will he see the truth and aggressively prosecute the war on terror, or choose to commit national security suicide?

"This is the night that either makes me or fordoes me quite."  —Othello. Act V. Scene 1. ...<< MORE >>

A piece in Monday's Washington Post titled, "After Healthcare, We Need Senate Reform," seems to imply that the filibuster has become anachronistic, and should be eliminated or eviscerated.

If partisanship has, in fact, increased over the past decade or so (as is hinted in the article), that is a reason FOR the filibuster, not an argument against it . Do we really want the majority, particularly during times defined by a strong ideological divide, to have unfettered ability to ram through its agenda?  Sure, good bills may sometimes fall victim to purely partisan obstructionism, but what a small price to pay for the capacity to defend the system against ideologues run amok. Don't we employ a similar rationale in our criminal justice system?  Suboptimal outcomes (the guilty set free due to a technicality) are a tolerated evil in order to secure the greater good (our freedoms, and the integrity of the system). History has unambiguously demonstrated that enacted legislation, no matter how ill-advised, is extremely difficult, if not impossible, to repeal.

The Senate was specifically designed by the founding fathers to be the deliberative body. They fully anticipated that the House of Representatives, by its very nature, would be much more subject to bouts of impetuousness and instances of populism. The process in the Senate, therefore, is meant to be measured, and respectful of the minority.

Although the filibuster is not outlined in the constitution (it is a Senate-defined rule that has evolved and been changed over time), it is completely consistent with the framers' recognition that certain decisions, because of their gravity, should necessitate a supermajority vote (e.g. requirements to pass a constitutional amendment). Sure, the minority may, on occasion, or even frequently, filibuster the relatively trivial, but, that is simply a small, broken branch on the majestic tree of liberty that shades us from the tyranny of the majority.

Moreover, the Senate's deliberative style is critical insofar as it allows time for the electorate to be educated and heard. The filibuster lets light be shone  It facilitates opportunity for deeper analysis and reflection, and therefore—a more informed populace, better equipped to provide feedback to policymakers. And, it promotes transparency. If the majority cannot make an effective enough argument to adequately sway public opinion to its side (and therefore help to attract enough Senate votes to prevent/stop a filibuster), the proposed legislation is likely not ready for prime time. The filibuster is a necessary check and balance on the otherwise unchecked power of the majority.

A Senate devoid of the filibuster, or the option of a supermajority vote requirement, is one that can much more easily run roughshod.

Regardless of political affiliation, the filibuster is in our long-term interest. ...<< MORE >>

Thomas Friedman has an interesting piece in the Sunday New York Times. In it, he outlines the two strategies he sees for addressing climate change—the "Earth Day" strategy and the "Earth Race" strategy.

The former is embodied in what transpired in Copenhagen. It is about finding a "global mechanism for codifying and verifying" carbon emissions and reductions, country by country, and transferring billions of dollars to developing countries to help them meet their obligations. Friedman rightly implies that this method has a low probability of success because it depends on dozens and dozens and dozens of countries, all working together cooperatively, to affect the desired result. Any one or small group of relevant nations could derail the effort by not participating or fully meeting its commitments.

A much more effective means, Friedman suggests, is the "Earth Race" strategy. This approach is rooted in greed—"the only engine big enough to impact Mother Nature."  Of course, this begs the question, why are other large, intractable problems, like healthcare, not better subjected to the stimulative forces of capitalism's key driver?  But I digress.

Hmmm, the "Earth Race" strategy sounds suspiciously supply side for the quasi-liberal/moderate Friedman, doesn't it?  Well, it did, until he unveiled a key detail. In order to excite the greed necessary to positively impact the climate, he wants the "Senate to pass an energy bill, with a long term price on carbon that will really stimulate America to become the world leader in clean tech."  He further says, half-correctly, "Only a market, shaped by regulations and incentives to stimulate massive innovation in clean, emission-free power sources can make a dent in global warming."

Admittedly, this is a hands-down better solution than the exceedingly untenable "Earth Day" scheme. But, why shackle capitalism via such unnecessary regulation?

Friedman is dead on to identify greed as the only legitimate way to address a problem of such scale and perceived time sensitivity. However, the suggested regulation really only catalyzes those who need to deal with the potential penalty. Robust tax incentives, on the other hand, aimed squarely at innovators, have the advantage of unchaining the full power of the capitalist system. They provide all, not just those directly impacted, with a reason and motivation to find/build a better mousetrap. Would you rather have an industry or two working to innovate in order to avoid some regulatory consequences, or would you prefer to unleash the innovative capacity of our entire economy?

Take the auto industry as an analog. Government-imposed CAFE standards really just incent the car makers to innovate. There is no extraordinary benefit for others to solve the problem above and beyond what is available to any person/company who provides a useful product to an interested buyer. As such, capital is not drawn to this purpose over numerous other equally or more attractive opportunities. With tax incentives, though, orders of magnitude greater numbers of innovators can and will be induced to pursue unusually high profits. The innovators benefit, the targeted industries benefit, and society benefits. A win-win-win.

As we've seen in the auto industry with the regulatory approach, car makers have spent more time and effort finding ways to circumvent (and defer the effective date of) the regulations than actually inventing technologies to significantly and rapidly advance the state of the art. And, others have not been incented enough to act, or deploy the quantity of capital necessary for dramatic, speedy improvement. So, over the nearly 35-year lifespan of CAFE standards, incremental, rather than transformative progress has been made.

Kudos to Friedman for recognizing that greed is the best prescription for what's ailing the planet, and that incentives are a vital component. But, just as we don't want to pollute the environment, let's not pollute the free market waters. The suggested regulation would be superfluous and distracting. We should direct our full focus and energy toward implementing an incentive regime that attracts the requisite capital and innovative effort.

Then, and only then will we put ourselves on the fast track to energy independence and a healthier planet. ...<< MORE >>

1. How bad does the healthcare bill have to be if the Democrats can't secure the support of Olympia Snowe or Susan Collins?
2. Senators Shelby and Collins represent much of what is wrong with the Republican party. How could they vote for an appropriations bill that hiked spending allocations to many federal departments more than 10% over the prior year?  This is legislation that three Democrat Senators voted against, and one, Evan Bayh, called for Obama to veto.
3. Remember the president's solemn campaign promise to comb through the budget line by line to reduce waste and eliminate earmarks?  Remember the omnibus spending bill early in the Obama administration that was signed by the president with thousands of earmarks?  Remember how he promised to do better next time?  Well, next time was today. He signed a $1.1 trillion spending bill with thousands more earmarks. Maybe next, next time.
4. Who ever thought Howard Dean would make a little sense?
5. When did Bob Villa become president?  Obama was on TV yesterday for 10 minutes extolling the virtues of home insulation?  Wow!
6. 2012 is a long way off, but I wouldn't find it particularly shocking if Hillary mounted a challenge for the Democratic nomination?
7. The only person having a worse year than Obama is Tiger. Al Gore will have to settle for the bronze. Lifetime "achievement" awards go to Pelosi and Reid.
8. Let's hope Obama's didn't slip his letter to Santa into the Kim Jong Il envelope.
9. Chuck Schumer learned the hard way that the only people who say "no" more often than the Republican caucus are USAirways flight attendants.
10. The House passed a $155 billion "jobs" bill today. Doesn't Nancy Pelosi remind you of a wind-up toy that ran itself off a table and is lying upside down on the floor with its wheels still spinning?

...<< MORE >>

There are two great threats to economic liberalism. The first, we see more and more each day. It's manifest in the unbridled power grab of politicians who espouse its supposed benefits. It is also evident in the arrogance of illogical and mal-formed policies, so clearly designed to garner votes, rather than deliver results.

Since FDR, liberals have sought to construct an impenetrable voting block, composed of those beholden to, and dependent upon, government largess.

As I've highlighted in a previous blog entry, Roosevelt admitted as much when he said, "...tax, tax, tax...spend, spend, spend...elect, elect, elect."  The meaning, of course, was and is that Democrats use their power to curry favor with various constituent groups in return for votes, without much regard for the greater good. You scratch my back, and I'll support your cause and/or look the other way. The fact that 40% to 50% of the country doesn't pay federal income taxes is reflective of decades worth of effort to assemble an indebted class that is also a reliable voting block for liberal candidates and incumbents.

For the past 77 years or so, prior to 2008, the Republicans, even though they were often out of power, were able to provide an adequate counterbalance. The often wildly impractical intentions of liberals were frequently able to be watered down or outright defeated. And, in the instances when their programs did manage to see the light of day, the system was able to handle it because the initiatives were relatively isolated and not part of a multi-pronged, all out assault on our wealth creation engine.

Things are different this time. The system cannot absorb the stress of such an unprecedented expansion of government. The law of large numbers has caught up with liberal orthodoxy. More importantly, we're all getting an opportunity, given liberal government control, to evaluate in real time their medicine and its side-effects. It's not theory any more. This stuff does destroy opportunity and initiative, and threaten our welfare. But, despite very clear evidence as to its ineffectiveness and debilitating consequences, liberals continue their cynical efforts to bribe (e.g. see Mary Landriew), extort (e.g. see numerous national organizations), and threaten (e.g. see EPA) in order to force a deeply flawed vision down our collective throat.

Such hubris, in the face of strong and strengthening, public opposition, is actually catalyzing the second great threat to liberalism—economic literacy. For decades, a substantial portion of the population paid little attention to the inside the beltway machinations of Democrat and Republican policy specifics. People had a general sense that the two parties kinda canceled one another out and that things would just work somehow. And, whenever Republicans gained too much of an advantage, the mainstream media was always there to put its finger on the scale.

Now, with a mounting sense that something is amiss, people are starting to pay a lot more attention. It's become increasingly difficult for the media to convince us that black is white. Policies are being scrutinized to a much greater extent. This has to be quite worrisome to liberal elites. The driver of their dogma has been the voting support of factions who are the direct beneficiaries of liberal policies, not a virtuous cycle of evidence that said policies are creating a greater good for all.

This blog has expended a good deal of effort over the past 14+ months focusing on the incontrovertible facts associated with Democrat and Republican principles. It has attempted to highlight what the mainstream media has regularly chosen to ignore, cover-up, or obfuscate.

In today's New York Times, Greg Mankiw, a Harvard economist and former Bush 43 advisor, does a commendable job of pointing out those pesky facts.

Notwithstanding undeniable evidence regarding the lack of efficacy of Keynesian-oriented government spending approaches to economic maladies (note the last three stimulus packages—one from Bush and two from Obama), the Dems continue to force their Big Government agenda and ignore solutions that have worked time in memoriam. Can there be any other conclusion than they fear losing power and exposing once and for all the failings of their faction-first, power retention method of operation?

Mankiw asks, appropriately so, why not tax cuts?  After all, they have a rich history of delivering the intended results. He highlights as one piece of evidence, the academic work of Christina Romer (one of President Obama's top economic advisers) and her husband, David, that "tax policy has powerful influence on economic activity."  The Romer's research shows that "each dollar of tax cuts has historically raised GDP by $3."  That number happens to be three times the figure found in an administration-driven report. Not surprisingly, the administration report concluded that government spending (yeah, I know you're shocked) actually had a roughly 57% greater positive impact on GDP than tax cuts. Who would have figured that the administration would produce a report with findings that perfectly fit its Big Government mindset?  Coincidence?  You make the call.

Additionally, Mankiw says, "Other recent work supports the Romer's’ findings. In a December 2008 working paper, Andrew Mountford of the University of London and Harald Uhlig of the University of Chicago apply state-of-the-art statistical tools to United States data to compare the effects of deficit-financed spending, deficit-financed tax cuts and tax-financed spending. They report that “deficit-financed tax cuts work best among these three scenarios to improve G.D.P.”

Still not convinced?  Mankiw offers something more compelling:

"My Harvard colleagues Alberto Alesina and Silvia Ardagna have recently conducted a comprehensive analysis of the issue. In an October study, they looked at large changes in fiscal policy in 21 nations in the Organization for Economic Cooperation and Development. They identified 91 episodes since 1970 in which policy moved to stimulate the economy. They then compared the policy interventions that succeeded — that is, those that were actually followed by robust growth — with those that failed."

"The results are striking. Successful stimulus relies almost entirely on cuts in business and income taxes. Failed stimulus relies ...<< MORE >>

On the first day of Christmas,
my Obama sent to me
A TARP for the E-CON-O-MY.

On the second day of Christmas,
my Obama sent to me
Two curdled loves,
And a TARP for the E-CON-O-MY.

On the third day of Christmas,
my Obama sent to me
Three mensch men,
Two curdled loves,
And a TARP for the E-CON-O-MY.

On the fourth day of Christmas,
my Obama sent to me
Four galling nerds,
Three mensch men,
Two curdled loves,
And a TARP for the E-CON-O-MY.

On the fifth day of Christmas,
my Obama sent to me
Five Bi-den gaffes,
Four galling nerds,
Three mensch men,
Two curdled loves,
And a TARP for the E-CON-O-MY.

On the sixth day of Christmas,
my Obama sent to me
Six nominees a-backtracking,
Five Bi-den gaffes,
Four galling nerds,
Three mensch men,
Two curdled loves,
And a TARP for the E-CON-O-MY.

On the seventh day of Christmas,
my Obama sent to me
Seven acolytes a-tingling,
Six nominees a-backtracking,
Five Bi-den gaffes,
Four galling nerds,
Three mensch men,
Two curdled loves,
And a TARP for the E-CON-O-MY.

On the eighth day of Christmas,
my Obama sent to me
Eight prompters prompting,
Seven acolytes a-tingling,
Six nominees a-backtracking,
Five Bi-den gaffes,
Four galling nerds,
Three mensch men,
Two curdled loves,
And a TARP for the E-CON-O-MY.

On the ninth day of Christmas,
my Obama sent to me
Nine clunkers clunking,
Eight prompters prompting,
Seven acolytes a-tingling,
Six nominees a-backtracking,
Five Bi-den gaffes,
Four galling nerds,
Three mensch men,
Two curdled loves,
And a TARP for the E-CON-O-MY.

On the tenth day of Christmas,
my Obama sent to me
Ten czars a-regulating,
Nine clunkers clunking,
Eight prompters prompting,
Seven acolytes a-tingling,
Six nominees a-backtracking,
Five Bi-den gaffes,
Three mensch men,
Two curdled loves,
And a TARP for the E-CON-O-MY.

On the eleventh day of Christmas,
my Obama sent to me
Eleven bailers bailing,
Ten czars a-regulating,
Nine clunkers clunking,
Eight prompters prompting,
Seven acolytes a-tingling,
Six nominees a-backtracking,
Five Bi-den gaffes,
Four galling nerds,
Three mensch men,
Two curdled loves,
And a TARP for the E-CON-O-MY.

On the twelfth day of Christmas,
my Obama sent to me
Twelve spenders spending,
Eleven bailers bailing,
Ten czars a-regulating,
Nine clunkers clunking,
Eight prompters prompting,
Seven acolytes a-tingling,
Six nominees a-backtracking,
Five Bi-den gaffes,
Four galling nerds,
Three mensch men,
Two curdled loves,
And a TARP for the E-CON-O-MY!


Legend:

• Two curdled loves:  Nancy Pelosi, Harry Reid
• Three mensch men:  Robert Gates, Paul Volcker, Arne Duncan
• Four galling nerds:  Peter Orszag, Tim Geithner, Paul Krugman, Joseph Stiglitz
• Six nominees a-backtracking:  Tim Geithner, Bill Richardson, Tom Daschle, Kathleen Sebelius, Nancy Killefer, Hilda Solis
• Seven acolytes a-tingling:  Chris Matthews, Keith Olbermann, Rachel Maddow, David Shuster, Alan Colmes, Joy Behar, Bob Herbert

...<< MORE >>

I happened to catch Charlie Rose a few evenings ago. The show, as per usual, followed its tried and true recipe. Three parts egghead (media, political, and academic elites), and one part bonehead (Arianna Huffington). The resulting Illuminati stew was prepared to near perfection—with all ingredients contributing their stereotypical Upper East Side, affected, and oh-so-condescending opinions—not letting the facts be as much as a fly in the ideological pot. Heck, when there's little or no supporting evidence, at least make the case with complete conviction and emphatic indignation.

As this blog accurately and presciently predicted (about as hard as forecasting another losing season for the Pirates), the Left's primary excuse for the incontrovertible failure of the administration's economic policies is not that those policies are misguided, but that they were not of sufficient scale. That's right, the $787 billion albatross of a recovery-inhibiting package would have been fine and dandy had it only been twice the size. So say the thorns sitting around Charlie Rose. Believe it or not, they still don't see the writing on the wall. They're actually attempting to lay the groundwork for more Keynesian-style spending, even though the three most recent such efforts from Bush and Obama, and every one from prior presidents, has been a documented failure. Forget incentivizing the private sector; let the government handle it. It's never worked before, but maybe that means it's all the closer to working next time. Hidden vigorish, as Bob Prince used to call it.

Not surprisingly, the Left's point person for promoting more and more government has been the Nobel Laureate of Chicken Little economics, Paul Krugman. Krugman and his Liberal fear mongers are going so far as to advance the notion of a 21st century Works Project Administration (WPA). Apparently, since the government has crowded out virtually all private capital, and stiffled innovation, entrepreneurship, and business investment with the uncertainty surrounding its entropy-riddled over-management of the economy, it now thinks it's time to go on a hiring spree. Yup, the lender and subsidizer of last resort may be looking to become the hirer of last resort, too.

Won't that be special?  Disregard the fact that the government is broke (understatement of the century) and only about one sixth or seventh the size of the private economy. Also, ignore the reality that what we need is for the government to get out of the way, or at least support real growth with a concomitant incentive regime that leads to the creation of sustainable jobs, bountiful opportunities for investment, and trend or above trend GDP expansion—rather than temporary, make-work projects that leave little more in their wake than greater national debt.

Government expansion by any other name does not smell sweet. Apologies to Will.
...<< MORE >>

I know it. You know it. Independents know it. Republicans and Democrats know it. An educated flea knows it. And, I suspect the President's inner circle knows it, but doesn't want to admit it.

Sure, it's only been ten months. It's possible things could improve. But let's not kid ourselves. Barack Obama is shaping up to be one of the worst presidents of the last 100 plus years. Move over Hoover and Carter.

The question is, how did we get here?

Again, it's no secret. It's the media, stupid...with a big assist from a complicit populace. And, if we're not careful, it could happen again in 2012.

We shouldn't dismiss someone of Obama's limited relevant experience out-of-hand. Such individuals must have a chance to compete. Great leaders can emerge from nowhere. But, that's normally the beauty of long, hard campaigns. They're supposed to separate the pretenders from the contenders. It's a marathon for a reason, or at least it's intended to be. Unfortunately, in the last election, the mainstream media used the time to coronate, rather than investigate.

It's not necessary to rehash the details here. The warning signs were quite evident. All but the most partisan have to, at least in retrospect, recognize that there was little persistent probing in the media's examination of Obama's record, and equally unsatisfactory inspection of his policy views. They may have asked him the questions, but certainly didn't follow-up on his evasive, platitudinous responses.

Disturbingly, the groundwork is being laid for a repeat performance in 2012. Journalism is dead, or at least on a respirator. In its place is a bifurcated system that falls out along party/ideological lines. Candidates get to pick and choose their spots. They're conditioned to be attracted to the light that is guaranteed friendly coverage. You see, the candidates are also educated fleas. It's too bad that light is not a bug zapper every now and again.

One can easily imagine a Republican being swept into office in 2012 much the same way Obama was in 2008. He/she can largely avoid the mainstream media and have practically unlimited time on Fox News and conservative talk radio to present views that need not hold up under the weight of aggressive questioning.

As we're learning the hard way, we all lose when the system breaks down.

It's highly unlikely that the media bias problem will get solved anytime soon. As such, a much more discerning, thinking voter is required.

Adlai Stevenson, during one of his presidential campaigns, was told by a supporter that he was "sure to get the vote of every thinking man."  Stevenson replied, "Thank you, but I need a majority to win."

Nearly 60 years later, the truth still hurts.
...<< MORE >>

Memo to the President:  scrap the jobs summit and hold a job fair for new administration economists.

Have so few ever done so much to stifle opportunity and destroy prosperity?  It's not clear whether this gang is completely clueless, or simply too spineless to speak truth to power. Would it be unreasonable for one of them to at least put a bug in Obama's ear that his agenda for "economic fairness," the redistribution of wealth, and massive government expansion might actually be backfiring?

It shouldn't be particularly difficult to fire them. No need to strategize with Human Resources. Don't bother checking their expense reports for erroneous charges, or phone bills for unauthorized calls. And, forget about fabricating claims of sexual harassment, or monitoring their email traffic. 

Isn't attempted murder sufficient cause?  They are killing the economy, after all.

What self-respecting economist would allow this to continue?  Any schmo with an IQ over 80 and a passing familiarly with history has to know that transfer payments have nothing to do with structural, permanent economic growth. You know...the kind that creates real jobs...lots of them...ones that actually last...and exist...not the fake ones the administration keeps reporting...and the Boston Globe calls "wildly exaggerated." 

Yep, even the super liberal Globe called bullshit on this one. When they investigated the administration's claim of 12,000 jobs created in Massachusetts as a supposed result of the American Recovery and Reinvestment Act, it turned out the number was actually closer to zero. Ouch.

The most laugh-evoking line from Obama's jobs summit speech was, "We all know there are limits to what government can and should do, even during such difficult times. But we have an obligation to consider every additional responsible step that we can to encourage and accelerate job creation in this country."

Limits?  Even after a quadrupling of the deficit in less than a year, the President and his Liberal enablers are talking about an additional Keynesian-style stimulus, despite the fact that every previous such instance of government largess, including the two most recent (2/2008, 2/2009), has been a miserable failure.

Isn't it curious that "consider every additional responsible step" never seems to include pro-growth, supply-side measures, that when properly constructed, have a virtually unblemished track record of success?  What rational thinker, for example, doesn't recognize that cutting the tax rate on those evil corporations and small businesses...yeah, the ones that hire people...wouldn't be a seismic jolt to economic activity?  Even a lay person can easily comprehend that capital flows to where there is less friction and maximum prospect for return. Instead of the dollar being under siege and money fleeing the country, we would see capital rushing in to exploit the boundless opportunities.

Oh, there I go again, waxing quixotic and fantasizing about government officials doing what is right, rather than political.

Speaking of fantasy...I'm seeing Paul Volcker...he's drinking a beer with his economist buddies...whoops, wrong summit. Wait...he's channeling a little Johnny Paycheck...strumming a guitar...and singing, "Take this job and shove it."

Oh, that felt good.

Pass me a cigarette. ...<< MORE >>

As you've probably noticed, a battle is being waged within the GOP. Having recognized the damage done from eight years of regular forays away from its core values, many party faithful and Right-leaning individuals/groups are attempting to reestablish the brand. This intra-party tension is largely a good thing. It clarifies the agenda, and brings to light a litany of past policy decisions, enabling reflection on their impact—good and bad.

The Conservative faction appears to be winning the hearts and minds of a majority of those on the Right. One need not look beyond New York District 23 for clear supporting evidence. The District's Liberal Republican congressional candidate opted to pull out of the race amid a groundswell of support for the third party Conservative. Notably, this was a direct rebuke of local and national party leaders who endorsed the Republican, despite her Left-leaning positions, completely misreading the depth of discontent for Big Government politics.

What is most interesting, though, and what you need to be on the lookout for, is how this is going to play out in the media.

The spin machine is cranking up. Those on the Left, which includes a preponderance of the mainstream media, are and will be working hard to define and discredit the Conservative movement. Their primary method, of course, is to characterize the Conservative faction as radical and extreme. You will hear those words used over and over in a matter-of-fact fashion—the inference being that every clear-thinking individual understands this—you should, too; it requires no further examination.

Well, actually it does.

All parties have their fringe, but that's not what we're talking about here. True Conservative views are actually held by a plurality, if not majority, of the country. Said views are, by definition, mainstream. In a recent national poll, 40% self-identified as Conservative, as opposed to less than 20% who categorized themselves as Liberal.

What is radical about wanting to put power in the hands of the people, rather than the government? 

Is it radical to be for personal responsibility, free trade, property rights, the rule of law, a strong defense, state and local rights, and not a lot more government than is necessary to protect us and provide a reasonable social safety net?

Are those beliefs more or less radical than:

• Quadrupling the deficit in less than a year;
• Attempting to jam a bill down our throats impacting one fifth of the economy in a couple weeks with little/no debate and transparency;
• Endeavoring to tax carbon emissions such that various industries would be unfairly destroyed and many U.S. companies would be rendered irreparably less competitive;
• Lending credence to the notion that the U.S. may owe a carbon debt to the developing world as a means of redistributing our wealth;
• Attempting to muzzle legitimate dissent and elements of the media;
• Demonizing and strong-arming individuals, corporations, and industries who do not tow the administration line;
• Employing 30+ czars, not elected or vetted by the Senate, to impose their government-centric views on our way of life.

Don't stand for this political and media tactic. Let your displeasure be known. It is perfectly legitimate not to share the Conservative philosophy, but it is dishonest to portray that point of view as radical or extreme.

 

...<< MORE >>

The next five days or so could be the most critical in Obama’s presidency. A light mist of restlessness that appeared about six months ago has gradually grown into an intermittent drizzle of discontent, then a steady rain of displeasure, and now, threatens to become an out and out downpour of dyspeptic opposition.

If it keeps on raining, levee’s going to break

The President is in a bad spot. His mismanagement of the economy, ham-fisted handling of the healthcare debate, and trepidation over addressing the Afghanistan situation have siphoned off the substantial support he enjoyed post election. He must wistfully look back at those heady, anything is possible days of November thru January and wonder what the hell happened. His clout appeared to be almost limitless, and he wasn’t shy about wielding it. The power of his personality and perceived strength of the “movement” led supporters to line up behind him in cult-like fashion, and caused opponents set aside long-held principles in order to appear to be one of the enlightened.

But here we are, not even a year later, and there aren’t enough fingers in the Dutch army to plug the leaks in Obama’s reservoir of support.

No, crying won’t help you – praying won’t do you no good
When the levee breaks, mama, you got to move

Pieces of the levee are breaking away. More and more Democratic congress people are daring to speak out  against various Obama policies. Their objections have all but killed card check, cap and trade, and various central Liberal elements of healthcare reform, to name a few. More telling, we’re starting to see cabinet members and advisers break ranks. It’s clear that Defense Secretary Gates (and the top brass in the military) have embarked on an independent campaign to sway public opinion in favor of a troop surge in Afghanistan. Marginalized economic advisor, Paul Volcker, has expressed dissatisfaction about aspects of the administration’s financial system regulatory reform package. How long will it be before Larry Summers, he of the massive ego, starts to distance himself from the disastrous litany of economic policy prescriptions?

All last night I sat on the levee and moaned

As bad as it’s gotten for Team Obama, it has the potential to get much, much worse on Tuesday. That’s the day Virginia and New Jersey elect new governor’s. It appears quite likely that the Republicans will regain control of Virginia. Given that state’s long history of voting for the GOP (until the last couple of elections), it’s not a particularly surprising turn of events. Nevertheless, it will sting Obama and the Dems, and be a sign that the tide is turning and 2010/2012 could be very problematic.

New Jersey, though, is different. It has been a reliably blue state for some time, and the Democrats enjoy an enormous advantage in registered voters. However, years of wild entitlement expansion have placed New Jerseyites number one on the list of most heavily taxed citizens. Obviously, they’re not so thrilled about that distinction. Jon Corzine’s inept stewardship and uninspiring, wet-cardboard-like personality have only exacerbated the problem. People are leaving New Jersey in droves, further eroding the tax base. Many in the state appear ready for a course correction.

Mid-term elections are invariably difficult for the party in power. They tend to be not so much about will incumbents lose seats, but the magnitude of the losses. That was certainly the case in 2006 when the Republicans were absolutely and unequivocally thrashed. The beating was a clear referendum on the electorate’s dissatisfaction with Bush 43 and undisciplined Republican congress people. If the Democrats lose New Jersey, it may be a precursor to a comparable spanking.

The ramifications will be felt almost immediately. Democrats, although they will say otherwise, will recognize such a defeat as a rebuke of the President and/or his policies, but more importantly (to them), they’ll see it as a direct threat to their personal survival. And, is there any species with a stronger survival instinct than a politician?  Forget party unity; every man for himself. It will be Vichy France battling, albeit reluctantly, the Allied powers.

Despite all of Obama’s and Corzine’s problems, the Republicans are fighting an uphill battle in New Jersey. The polls are tight, but it is still somewhat difficult to see the GOP overcoming all the obstacles (e.g. multiple appearances by Obama and Bill Clinton; huge spending advantage and negative campaigning by Corzine; and the large delta in registered voters). But, if they do, look out below. It could ostensibly render Obama a first term lame duck. Starting in 2012, he may be able to work on that Olympic bid full time.

Going – I’m going to Chicago
Going to Chicago
Sorry but I can’t take you
Going down – I’m going down now
Going down – I’m going down now
I’m going down –

(Credit:  When The Levee Breaks by Led Zeppelin) ...<< MORE >>

For those of you who may be new to this blog (now getting several thousand hits per month), It exists for two primary reasons:  espouse the virtues of limited government, and expose disingenuousness on both sides of the political aisle. In the spirit of full disclosure, I am a fiscal conservative and, for the most part, a social liberal. To the extent possible, I endeavor to avoid being doctrinaire. Context can and does matter.

That brings me to today's topic—this evening's edition of Happy Hour on the Fox Business Network. I was particularly interested to watch because one of the guests was Marco Rubio, the attractive, young conservative U.S. Senatorial candidate from Florida. Rubio, a former Speaker of the Florida House of Representatives, is vying for the Republican Senatorial nomination against Charlie Crist. Crist, of course, has been in the national spotlight for some time as Florida's governor, and, to the chagrin of fiscal conservatives, for his recent support of cap and trade, as well as the $787 billion "stimulus."

Although it was initially assumed that Crist would run away with the nomination, several curious policy choices, including the aforementioned two, have made the situation much less certain. Rubio has become the darling of the limited government crowd, and, is rising rapidly in the polls. I was intrigued to see whether or not he could express his ideas clearly and concisely, and if he is as substantive and innovative as his record seems to indicate.

Given the format (i.e. a relatively short TV interview), I thought Rubio acquitted himself quite nicely. He came across as smart, reasoned, and articulate...and he did make a simple, but compelling case for the importance of limited government. I was struck, however, by one part of the interview that actually had nothing to do with Rubio. Part way through, the interviewer (and co-host of the show), Rebecca Diamond, posed a question that ostensibly went something like this...tell me your solutions for healthcare and the economy, but don't say tort reform or tax cuts. My immediate reaction was, huh? 

As it so happens, Ms. Diamond and I are Facebook friends, so I immediately fired off a post to her wall, the gist of which was, you just asked Rubio the answer to 2+2, but told him not to respond with 4. I further commented that just because one side persistently demagogues a particular policy approach, it doesn't make that approach incorrect or unworthy of discussion. A more appropriate and effective line of questioning, I suggested, would have been to attempt to draw out more specific, fact-based examples that supported the proposed solutions. It does not strike me as media's role to dictate what are and are not reasonable answers, but rather to explore how someone arrives at such conclusions, and if they fully understand their consequences. For the record, I believe the answers Ms. Diamond disallowed are just parts of the ultimate solutions (which I've detailed in previous blog entries).

Let me add that I have a good deal of respect for Ms. Diamond. I've found her to be diligent about being balanced, and I like her "every person" approach to issues. She doesn't get caught in the trap of querying to impress people with her knowledge, but rather poses questions that are on the minds of most regular people. She's also very responsive—replied to my wall post almost immediately after the show. Impressive. I have a different take on one of her co-hosts, Cody Willard. I may share those thoughts/experiences in a separate blog entry.

The situation does highlight how GOP policy prescriptions have been caricatured by opponents and the media, and how inept the Republicans have been at explaining why their approaches are relevant to all socioeconomic classes.

No denying the Democrats are hurting themselves more than a goth teenager at a piercing party, but the Republicans need to make their message more coherent and convincing if they're going to seal the deal in a big way in 2010 and 2012...and have a legitimate mandate to govern.

Marco Rubio could very well be a piece of that puzzle. ...<< MORE >>

Let me tell you a story about what government-run healthcare might be like. It's not for the faint of heart, so please be sure that small children and the elderly are kept at a safe distance.

Playing the role of faceless, feckless, and friggin' incompetent bureaucrats is Cox Communications, our cable and Internet service provider here in Scottsdale.

Allow me to set the scene for our little novella.

Act I

We were scheduled to arrive at our home in Scottsdale on Wednesday, the 14th. The prior evening we contacted Cox and arranged for them to reconnect our cable and Internet service the following day, Wednesday. They informed us it would be done sometime between 7AM and 7PM. That seemed like kind of a big window, but what the hell, we were leaving 40 something degree miserable Pittsburgh weather behind for the near perfect conditions of the north Sonoran desert. Life was good...or so we thought.

As planned, we did land in Scottsdale on Wednesday afternoon. Not surprisingly, the weather was beautiful. Low 90's and not a cloud in the sky. After collecting our luggage, we were whisked away by our good friend and neighbor, Frank, to a little piece of paradise called Troon North. Life was good...and getting better.

The 30 minute or so drive to our home reminded us of our good fortune and just how beautiful it is in the Southwest. We reach our destination, trundle up to the front door, unlock and open it, and are greeted by the fresh cut flowers Frank's wife, Kathy, placed inside. Could it get any better?  Why yes it could, Kathy also left us a box of cereal and half gallon of skim milk. Beautiful!  I can take care of my cereal fix without having to make a trip to the store. I'm certain this is how King's live.

Of course, being the web junkie that I am, my next move was to ascertain if the cable and Internet had been turned back on. I found a TV remote, pressed the power button and saw nothing but static. Damn!  Ok, life might not be perfect, but it was still pretty dang awesome. A quick glance at my Blackberry told me that there were still two hours remaining before 7PM. No need to worry, right?  I was quickly and pleasantly distracted when Frank and Kathy informed us that they prepared dinner and we could come over as soon as we were ready. Shortly thereafter we moseyed the 20 yards over to their home and were treated to a terrific dinner under the stars on their patio overlooking the first fairway of the Monument course at Troon North. Forget Kings, this is how the Gods must live.

After a great dinner with some terrific wines, we returned home. By now, it was well past 7PM, so I was ready to kick back, relax, and settle into my nightly routine of cable news, piano practice, and surfing the Internet. Let's see; where's that remote?  Ahhh, there it is. Click. Damn!!!

Act II

The following is an abridged account of at least twenty conversations (no joke), spread over two days, with various Cox representatives and supervisors. It is not embellished in any way.

Cox:  Hello, how may I help you?

Chuck:  My cable and Internet were supposed to be turned back on yesterday. Unfortunately, they weren't. I need it done ASAP today.

Cox:  Account number please?

Chuck:  We don't have an account number, yet, because the service has not been reestablished.

Cox:  Address?

Chuck:  Address provided.

Cox:  Name on the account?

Chuck:  As I mentioned, we don't have an account, yet.

Cox:  Name associated with previous account (before seasonal service was disconnected)?

Chuck:  Angela Dietrick, my wife.

Cox:  Is Angela available?

Chuck:  Yes, hold on.

Angie:  This is Angela.

Cox:  Is this Angela Dietrick?

Angie:  Yes.

Cox:  What is your account PIN?

Angie:  As my husband mentioned, we don't have an account, yet, so we don't have a PIN.

Cox:  Last four digits of your SSN?

Angie:  Digits provided (phone handed back to Chuck).

Cox:  May I put you on hold?

Chuck:  Yes.

Cox (several minutes later):  How may I help you?

Chuck:  Did I just get transferred?

Cox:  I don't know. How may I help you?

Chuck:  This is Chuck Dietrick, do you have my information?

Cox:  Account number please?

Chuck:  We don't have an account, yet, but you should have other information for us.

Cox:  Address where service is to be connected?

Chuck:  Address provided.

Cox:  Name on the account?

Chuck:  We don't have an account, yet, but Angela Dietrick was the name on the previous account.

Cox:  Is Angela available?

Chuck:  Hold on.

Angie:  This is Angela.

Cox:  Is this Angela Dietrick?

Angie:  Yes.

Cox:  Account PIN?

Angie:  We don't have an account, yet, so we don't have a PIN. The last four digits of my SSN are XXXX.  Here's my husband again.

Chuck:  Can you please get a technician to our home as soon as possible since nobody showed up yesterday.

Cox:  You said a technician was supposed to be there yesterday?

Chuck:  Yes. I'm sure you must have a work order that can be checked.

Cox:  One moment please. Yes, here it is. It says the technician couldn't get in the gate.

Chuck:  We provided the gate code when we arranged for the service to be reconnected.

Cox:  Oh, here it is. Is the gate code 1234?

Chuck:  Yes. Is that what went on the technician's work order?

Cox:  Hold on; let me check. Ok, here it is. It says, 9284. Hmmmm. That's odd. Guess we somehow transposed an incorrect ...<< MORE >>

Things are looking up for the President.

I happen to have it on good authority that the Nobel Peace Prize is just the beginning of a slew of accolades to be bestowed upon Barack Obama. Below is but a sampling of the tributes in the works for His Awesomeness.

Like another great Renaissance man, Leonardo da Vinci, the President's abilities span multiple disciplines. Beyond his "accomplishments" in international diplomacy, his achievements, and most importantly, his immense potential, is being recognized in the areas of popular culture, sports, and music—just to highlight a few.

For example, People Magazine, in an upcoming special issue, will be naming our esteemed leader the Sexiest Man Alive for the tingle he's sent up the leg of Chris Matthews and the entire national press corps.

The prestigious Fred Flintstone bowling award will be given to Mr. Obama for the exemplary grace he demonstrated while rolling a stylish 37 on the campaign trail in Pennsylvania in 2008. Executive Director of the Flintstone Center for the Bowling Arts, Barnard F. Rubblinski,  was effusive in his praise of the President's potential. He was overheard to say that with diligent practice and a little luck, the Bowler-in-Chief could be scoring in the 50's in no time at all.

Similarly, the President will be honored during the World Series with the Walter Matthau/Bad News Bears Memorial Award. It goes to the adult male who throws a pitch most resembling that of a 12-year old girl. I understand that Tatum O'Neal will be on hand to personally present the plaque.

And, early next year, the President will be heading to Cleveland for induction into the Rock and Roll Hall of Fame. Apparently, a Rolling Stone reporter heard Obama whistling The Who's, "We Won't Be Fooled Again," as he was boarding Air Force One in Copenhagen. Co-Founder and Publisher of the iconic music magazine, Jann Wenner, said the performance sent a chill up his spine, quite like when the Beatles landed at JFK in February of 1964.

Aren't we so very fortunate, just as those were who lived during the time of Michelangelo, Jefferson, de Tocqueville, and Churchill, to be in the midst of such greatness?

As the Chinese curse goes, "May you live in interesting times."

I feel a tingle up my leg. ...<< MORE >>

If you didn't catch David Brooks New York Times column on Friday, it's not dissimilar to many of his pieces over the past year or two. You see, it's become quite fashionable for so-called Republican moderates, in the media and in office, to express their guilt. Such expressions come in a variety of forms. For Brooks, it typically manifests itself as an attack on some symbol or symbols of conservatism. No doubt he feels a need to establish and affirm his "fair-minded" bona fides—to definitively demonstrate his enlightenment, and show that he's not one of the great unwashed. In this instance, the method for accomplishing that objective is an assault on the three kings of right wing talk—Beck, Limbaugh, and Hannity (BL&H).

Those who read this blog regularly know that I am not a fan of extreme rhetoric—from the Left or the Right. As such, I often take issue with BL&H. Although I believe Brooks' analysis of their power is mischaracterized, the intent of this entry is not to refute his argument;  but rather to examine the phenomenon of conservative guilt.

A confluence of two factors is behind the trend. First, the Democrats have unrelentingly and successfully labeled Republicans as incompatible with the interests of the middle class. Second, and more important, the GOP has gone more than 20 years without a messenger who can simply and persuasively make the case for why its platform is a prescription for prosperity, regardless of economic class.

Over that 20 year period, a pundit class has emerged to fill the leadership/communication vacuum. So, instead of the party, its positions, and values being delineated by a strong politician or group of politicians, they have been defined by the opposition, and a cadre of loud, but charismatic civilian ideologues.

Of course, this has had terrible consequences for the GOP. It is, after all, never good to lose control of your brand.

In attempts to disassociate from unflattering portraits painted by partisan Democrats and bellicose right wing commentators, and ingratiate themselves to the Left, Republican politicians have veered catastrophically from their core principles and become something very unattractive to the electorate—big spending bureaucrats who still can't match the Dems when it comes to constituent group give aways.

After years of Bush 43 and an undisciplined GOP-controlled Congress, it should be abundantly clear to all Republicans that you simply cannot out-pander the Democrats. And, following nearly a year of Obama, and several years of a Democrat-led legislative branch, it should be even clearer that those forgotten principles are, in fact, the right formula—for all. Expanding old, and piling on new, government services is very empathetic—until the system collapses from its own weight because there's no longer enough productive capacity to create jobs.

Hence, message to Republicans:  get back to your roots; find and elect persuasive leaders. Your task should actually be much easier than before. Obama's been a gift. Since you were apparently incapable of making the argument in the abstract, you can now make it based on readily available and comparable facts...or at least exceptionally convincing circumstantial evidence.

Don't feel guilty for not expanding government. New/bigger entitlements today have calamitous consequences tomorrow. There is no better way to express true compassion than through ensuring/improving our long-term economic viability and way of life. Focus on leveling the playing field and creating a sustainable economic system on top of which all have an opportunity to succeed—and are encouraged to do so.

A safety net, in the end, is meant to catch you when you fall, not ensnare you when you attempt to break free. ...<< MORE >>

As if President Obama needed any more ominous news regarding his political future, Germany just affirmed what has been a stark and sweeping move on the continent toward center-right government. The reelection of Angela Merkel and her Christian Democrats, along with new governing coalition partner, the Free Democrats (somewhat akin to our Libertarians), is another unmistakable rebuke of Social Democrats.

The election comes on the heels of a historic and devastating early June blow to European liberalism when voters chose center-right parliaments in Germany, France, Italy, Spain, Poland, Bulgaria, Hungary, and the Czech Republic.

Tired of 30+ years of burgeoning government, under-performing economies, fewer jobs, a declining population base, and greatly diminished worldwide competitiveness, European voters put down their collective foot.. Better late than never, I guess.

Now, Merkel, liberated from the Grand Coalition (governing partnership with the Social Democrats), is theoretically more able to pursue an agenda of lower taxes, less government control, and a reinvigoration of private markets and entrepreneurship. The task, given the considerable baggage of transfer programs run amok and an entrenched entitlement culture, will not be easy.

How ironic, though. Just as Merkel and other European leaders are walking back from the precipice of socialism, we are speeding blindly toward its cliffs.

At this point, there is little doubt that U.S. Democrat incumbents are going to take a pounding in 2010; it's really just a matter of degree. The American electorate is showing the same disdain for government expansionism that has recently and finally been exhibited by our European brethren.

The real drama, however, is how this will affect the 2012 calculus. Conventional wisdom says that Obama will be forced to move to the center in order to tourniquet the blood letting of critical Independent voters. Such a strategy did get Bill Clinton elected to a second term.

The landscape may be different this time, though. If a significant portion of the Republican base continues, self-destructively I might add, to be infatuated with Sarah Palin, Obama may have the cover necessary to stay on the hard left. It would not be irrational for the Dems to want to setup a turnout battle, particularly given the machine they put in place in 2008. Should Palin win the nomination, or even simply  force other Republican candidates to lean harder to the right in a primary battle, Independents might become sufficiently disenchanted with both parties that their vote gets spit relatively evenly and/or they show up in lesser numbers.

Odds, nonetheless, are that Obama will move to the center—either during the run up to the mid-term elections, or shortly thereafter, but the specter/influence of a Palin, or even Huckabee, may present Obama an option not available to Clinton in '96 when he ran against a pre-ordained and considerably more moderate Bob Dole.

So, will the situation in Germany impact Obama's strategy?  What must he be thinking when he sees virtually all of Europe turn to the center-right?  Will there be lessons in Merkel's experience?

If he does look to Germany for a clue, perhaps he'd be well-served to consider the advice of the smartest German of all, Albert Einstein:

"Learn from yesterday, live for today, hope for tomorrow."

He's never needed more hope than right now. ...<< MORE >>

Listening to President Obama's speech before the United Nations General Assembly, it was hard not to wonder if and when we are going to wise up as an electorate. In the next cycle and beyond, will we apply a different standard given that the current and prior President have failed so miserably in living up to their campaign rhetoric?

Remember the haughty manner in which candidate Obama dressed down George Bush for his inability to get foreign leaders to cooperate? 

Fast forward twelve months or so and there's the President imploring recalcitrant U.N. member states to step up because "this cannot solely be America's endeavor."

Unfortunately, despite candidate Obama doing everything, including issuing Joe Namath-like guarantees that things would be different this time, they are not different. America continues to stand virtually alone.

Recall how relatively easy it was going to be to secure the support of Russia and China in winning new U.N. Security Council sanctions against Iran?

Weren't Middle East peace talks supposed to go just swimmingly?

And, how about the war in Afghanistan?  Wasn't a flood of international support going to come pouring in?

Of course, it's been more of the same on the domestic front. The supposed post-partisan utopia—a world in which previously intractable problems would be knocked down one after another—has proven to be nothing more than a wild chimera.

George Bush was no better. In fact, it can be argued that he was worse. We should have seen through Obama's smoke screen. The words, after all, were 100% inconsistent with his track record. But, we were smitten. Love would conquer all.

Bush, on the other hand, appeared to be a somewhat known quantity. He, we were told, and the record (thin as it was) seemed to indicate, was a limited government conservative. He was against nation building. He wanted to restrain spending and reduce the deficit. He would trim, not expand, entitlement spending.

Yeah, right.

So, now what?  We've clearly been duped time and again.

Common sense, maybe?  Some basic guidelines?

Perhaps we can start tuning out campaign oratory. It's little more than fiction. Let's apply considerably more weight to records of actual achievement, instead of empty speeches before the Rotary Club. Governing, it turns out, is quite more challenging than speechifying. Accountability has a way of changing the dynamic (see Iraq, Guantanamo, and Afghanistan).

Maybe we can also agree that hard stuff is not going to magically stop being hard. As such, we should pay particular attention to the candidates' history (or lack thereof) of solving difficult problems, instead of their "sincere" assurances that they'll make it right.

Perchance, we might also recognize that inarticulate, bomb-throwing fools don't suddenly become Cicero's or Henry Clay's (see Sarah Palin).

Could it also be a good idea to be extra wary of weak resumes and/or those who've suddenly emerged on the national scene (see Carter, Bush, and Obama)?

Let's get back to basics...and not be fooled again. ...<< MORE >>

So this is post-racial America?

It would be horribly regrettable if the increasingly fiery and accusatory rhetoric of the past week or so, seemingly triggered by the Joe Wilson episode, helped to turn back the clock on racial progress. Unfortunately, it's starting to have that feel.

While the election of Barack Obama was not a cure-all for our race-related ills, it was an important and encouraging step toward that end...or so it appeared.

Real racism is such an immoral, destructive, and reprehensible sickness, not to mention macroeconomic stupidity of the highest order.

It's disquieting to see so important an issue cheapened by irrational and baseless charges. And, the more ridiculous the allegations, the more those who can least tolerate their poisonous venom are hurt.

Do we really want to go down this path?  By doing so, we're just distracting ourselves from legitimate matters of race. It is, after all, impossible to have genuine discourse in such a climate.

Wouldn't it, for example, be great to intelligently debate the appropriate remaining lifespan of affirmative action?  Surely there will come a day when discrimination has been sufficiently rooted out of the system, and it is more beneficial to phase out affirmative action and its associated stigma than to manipulate an environment that is able to function adequately on its own. No way that dialog is remotely possible in today's hyper-charged atmosphere.

The President was quick and right to dispel the notion that his skin color has anything to do with reasonable criticism of his policies. However, he and leaders from both parties need to be more forceful in rebuking those who perpetuate such claptrap.

Let's save the indignation for authentic, rather than imaginary, racism.

I can hear the President now. "Just when I thought I was out...they pull me back in!!!" ...<< MORE >>

It's a shame that Charles Bronson passed away in 2003, because Death Wish VI is just begging to be made. The murder victim in this instance is Democratic congressional hopes in 2010 and beyond.

Can it really be that the blue party (in more ways than one) is considering a censure of Joe Wilson for his turrets-ific "you lie" eruption during the President's joint session speech?  For the Republicans, it's undoubtedly better to be lucky than good.

After months of being battered, bruised, and beaten by self-inflicted wounds, the Dems were finally handed an opportunity to climb out of the Valley of Darkness and onto a parcel, tiny as it might be, of high ground. And, what do they do?  Tumble right back down.

Hello darkness my old friend.

Rather than focusing their and everyone's attention on healthcare reform, as the President desperately wants, they apparently thought it better to take time out and remind us what sanctimonious supercilious slugs they truly are.

How absolutely priceless is this initiative?

Speaker Pelosi allows Charlie Rangel to maintain his chairmanship of the most powerful committee in the House while he's being investigated for numerous ethical (and possibly criminal) violations, but may go forward with an attempt to rebuke Wilson for an injudicious and inappropriate remark. Simply amazing, but unfortunately, not surprising.

I can't help but imagine a Pelosi profile in Playboy: 

    Likes:  Really, Really Big Government; Cushy Private Jets; Double Standards.

    Dislikes:  Rude Republicans; Facts; Those Mean CIA Interrogators.

Frighteningly, these are the people to whom we are being asked to trust for the passage of legislation that effects one sixth of the economy?  The best and the brightest.

Jerry said it best to George as George lay prostrate with his pants down on Jerry's floor :  "And you want to be my latex salesman?" ...<< MORE >>

Some immediate thoughts on the President's speech on healthcare reform before a joint session of Congress:

• The speech was well-constructed. It should be reasonably well-received by the target audience—those without insurance, those worried about their insurance, and seniors—particularly if they're not interested in the details.
• It's too bad this wasn't the starting point several months ago; the debate could have been much more constructive.
• I am an insurance exchange proponent and was glad to see it proposed by the President. If implemented properly, it can promote competition, particularly across state lines.
• It is still very unclear to me how the government can force insurance companies to not consider pre-existing conditions without significantly driving up premiums. Insurance relies on actuarial science. If more risk/costs is/are foisted on insurers, they'll have to raise prices in order to ensure their viability.
• It's possible that all those with pre-existing conditions will end up in the non-profit, public option provider, but that then virtually makes certain that entity's ultimate insolvency and/or need for government support.
• It is impractical to expect the non-profit, public option insurer to be self-sustaining, as the President guaranteed. How can it be when the users of the option will almost certainly be those priced out of the exchange?  They will have been priced out because they'll be the riskiest and most expensive to insure. So, the non-profit cannot possibly be viable when it has to provide care for persons who will cost orders of magnitude more than those in a typical, actuarially sound risk pool. Therefore, the non-profit will assuredly go broke and/or require government subsidy.
• The only way the aforementioned might not be a guaranteed outcome would be if the non-profit was comprised of much more than 5% (the President's number) of the populace. That way, it would have a chance to spread the risk. However, in order to make that happen, it would have to undercut the private insurers on price; thereby crippling that market.
• The malpractice reform proposal was weak and will be unacceptable to Republicans. It's difficult for Obama to argue that we can do all the heavy lifting necessary for healthcare reform, but ostensibly eviscerate tort reform with drawn out state trials.
• The case was not made regarding how this will be paid for. It has always been laughable when either party claims their program is going to be paid for by eliminating waste, fraud, and abuse. Even if there is a slim chance that this might be the one time it's true, we've all been conditioned to dismiss such a rationale.

...<< MORE >>

On Wednesday, Barack Obama will be delivering a speech every bit as important as his campaign-saving soliloquy on race at the height of the Rev. Wright imbroglio. Things are much different now than they were in March of 2008, however. Back then, Obama could do little wrong. He was riding a wave of populist support, and a tsunami of media good will. He was the anointed savior of a system widely believed to have been drug down by sixteen years of bitter partisanship. Today, the tide has turned. Large segments of the populace have become unsupportive. His policies and job performance are held in low regard by half or more, and the mainstream media, while not necessarily on the attack, has at least demonstrated healthy skepticism.

What happened in such a remarkably short period of time?

Did we simply misjudge the situation?  Were his answers always right because the questions were never hard?  Did the rancor from the Bush and Clinton years convince us to ignore the record and believe the rhetoric?  Are Obama and team not the master strategists we thought?

Evidence to that effect is certainly starting to pile up.

It's hard to deny that the administration and congressional Democrats are in chaos over healthcare. Less than two days out from the President's supposed clarifying and unifying address, the message is more muddled than ever. The performances of Obama during his weekend rallies, and his acolytes on the Sunday morning talk shows, meant to lay the groundwork for Wednesday, have only increased the confusion.

Less nebulous is that the answer man apparently has only one answer—more government, and regrettably for Team Obama, it turns out a plurality of the voters don't like it so much. Will we see some flexibility on Wednesday, or will it be more of the stark partisanship and ideological rigidity that has defined the Obama presidency to this point?  Perhaps he'll take a page from the book of one of his idols, FDR, who was known for "bold, persistent experimentation?"  It wasn't unusual for Roosevelt to quickly discard failed or questionable policies, and implement big new ideas, regardless of what side of the isle they originated from. Not so for Obama. To date, despite a series of missteps and disappointing policy outcomes, he continues to cling to his statist view. It's the one size fits all approach to governing.

As the saying goes, when a man's only tool is a hammer, everything looks like a nail...and boy, are we getting hammered. ...<< MORE >>

Wasn't the picture of President Obama riding a bike on Martha's Vineyard without a helmet  telling?  Sure, we're all allowed an indiscretion here and there; nevertheless, it does provide a window into the hypocritical existence of politicians, particularly the ones who pontificate most about what's right for others...but conveniently exempt themselves.

Is it any wonder why limited government is so important?  The more we have to endure duplicitous policies, and their proclivity for bankrupting us and eroding our personal liberty, the worse off we are as individuals and a nation. You don't have to look far and wide to recognize that very few, if any, of our self-righteous representatives actually walk the walk.

They love to demonize corporate executives for using private jets, but are quick to turn around and attempt to authorize hundreds of millions of dollars worth of luxury planes for themselves.

They're terrific at moralizing and extolling the wonders of family values, like Senator Vitter and Governor Sanford, but don't hesitate to grab a little action on the side for themselves.

They're ready to force healthcare coverage down the throats of the general populace, but not willing to use that same coverage.

They're responsible for writing tax laws and overseeing the IRS, like Messrs Rangel and Geithner, but don't find it necessary to pay their own fair share.

Sure, not putting on a helmet is rather trivial in the grand scheme of things, but it does help to remind us that government is at its worst when it endeavors to legislate behavior and co-opt personal responsibility. We are much better served when government focuses on protecting its citizens and removing barriers that hinder individuals and organizations from achieving their potential.

Like in the movie, Easy Rider, the purpose of the journey is to achieve freedom.

Someone, please tell that to "Captain America"...er...President Obama.

 

...<< MORE >>

After reading Paul Krugman's New York Times Op Ed today, one is once again left to ponder, "what in the world were the Swedes thinking?"  Was the Nobel Prize in Economics selection committee comprised of DeVry graduates?

If Krugman is anything, he is consistent. Has anybody so decorated made more bad calls on public policy and macroeconomics in recent history?  He's the Pittsburgh Pirates General Manager of Nobel Laureates.

His incorrectness isn't a recent phenomenon, either. It dates, minimally, back to the early 80's when he was briefly a member of President Reagan's Council of Economic Advisors. While there, he (along with Larry Summers) famously penned a memo predicting that the decline in inflation from the highs of 1979 thru 1981 was a "temporary aberration," and would resume with a vengeance—adding more than 5 percentage points to then current levels. Not only did inflation never again reach the point it was when the memo was written, it actually declined by 4 to 5 points at its low. That's right, future Nobel Laureate, Krugman, missed his inflation forecast by upwards of 10 percentage points. Economists are generally shamed when such estimates are a mere few tenths of a point off the mark.

Fortunately, Reagan had the common sense to follow a different path. President Obama would be wise to do the same.

Krugman, as most know, has been the "intellectual heart and mouthpiece" of the Big Government movement. It was he who gave credence to the Left's call for a $787 billion "stimulus" package by arguing that such an amount was probably only one half to one third the total actually needed.

Needless to say, that theory has proven, by most accounts, to be wildly erroneous. The economy's natural resiliency has allowed it to rebound, albeit several quarters later than would have been the case had the "stimulus" been pro-growth-oriented, rather than transfer-payment-centric (as advocated by Krugman). It should be noted that the recovery has come with only about 11% of the "stimulus" having been spent (somewhere in the neighborhood of 1/20th to 1/30th what Krugman insisted was necessary).

In today's Op Ed, Krugman picks up on his favorite target, Reagan's economic policies. It's no surprise that he would try to discredit Reaganomics, since Reagan's philosophy of limited government and personal responsibility is in such stark contrast to Krugman's statist view.

As is typical with Krugman, he puts his own unique spin on the numbers in order to support his ideology. He trots out the tired argument that the wealthy benefited disproportionately because their real incomes grew considerably more rapidly than that of the middle class. True, but needless to say, he ignores many less convenient truths. The Left likes to disregard the fact that household wealth, a more comprehensive measure than income, was at all-time highs during the Bush years. And, unemployment was at record lows. As Reagan said, and all of us are learning the hard way, "the best social program is a job."

Krugman also says, "...most of whatever gains ordinary Americans achieved came during the Clinton years."  Fittingly, he fails to acknowledge that the advance was due to one of the greatest positive developments in personal responsibility in decades—Welfare reform—pushed by a Republican congress, and signed by the President. Isn't it amazing that when opportunity and initiative collide, good things happen.

The most remarkable part of the Op Ed, however, is his screed against those who oppose the inclusion of a public option in the healthcare reform Bill. Almost comical in his lack of awareness, he says, "Opponents of the option—not just Republicans, but Democrats like Senator Kent Conrad and Senator Ben Nelson—have offered no coherent arguments against it. Mr. Nelson has warned ominously that if the option were available, Americans would choose it over private insurance—which he treats as a self-evidently bad thing..."  Well, da!!!  Could it be anymore self-evident?  Wouldn't you think that if proponents could point to just one government success story—that is one that isn't in jeopardy of bankrupting itself and the country, the general populace would be supportive?

This simply is no longer the era of the New Deal or Great Society. The demographics don't support a further expansion of the social safety net, unless along with it comes the political courage to make major cuts in other areas.

Krugman plainly doesn't get it. Like in the kids game, he is the last one to realize he doesn't have his finger on his nose. ...<< MORE >>

Today, the Philadelphia Daily News joined the chorus on healthcare reform by attempting to make the case for why the public option is crucial. Central to its thesis is the notion that a government run alternative is necessary to "keep insurance companies honest."  Funny, I thought that was the role of the regulatory bodies that oversee them, and the "free market" itself?

If true, why stop at healthcare?  Shouldn't other critical markets be "kept honest" with the government as a competitor?

Food is pretty essential. Maybe the government ought to be in the business of producing and distributing it?

What about telecommunications?  Perhaps the government should become a cellular provider?

How about the commodity markets?  Legislators are always exercised about the price fluctuations of oil and other natural resources. Might it make sense for the Feds to build and run an exchange?

Everybody needs shelter. Do you think the government should be in the home building business?

Sounds silly, doesn't it?

Let me repeat what I've stated many times in the past. I am a limited government pragmatist—emphasis on pragmatist. I do not believe that unfettered markets always function flawlessly. Inefficiencies arise. Prudent intervention can be necessary. The proper response, however, is a sensible adjustment to the regulatory and incentive regimes, not direct government insinuation into the marketplace.

Our lawmakers just don't seem to understand that it is the competing self-interests of disparate parties, coupled with intelligent, competition-enhancing regulations and incentives, that always lead to the best, albeit still imperfect, outcomes.

There is no denying that the health insurance market is seriously flawed, as is the legal climate in which its professionals are forced to operate. Given that the aforementioned two areas appear responsible for the preponderance of upward price pressure, shouldn't we focus our efforts on breaking down the contributory elements?

The argument that insurance companies have gained monopoly or near-monopoly power in various regions has legitimacy. Let's use the regulatory and legislative tools at our disposal to lessen their stranglehold, but do it in a way that empowers the private market to help find the equilibrium point. It is completely justifiable for the government to stimulate an environment whereby hundreds of smaller, more nimble companies provide innovative coverage across state boundaries. Doing so will stabilize prices, or minimally, slow their rate of growth. The government need not be a direct competitor in order to kindle such viable solutions.

We must also recognize the tremendous costs of defensive medicine. Those who quote the 1% to 5% price tag for jury awards (out of the total healthcare cost pie) fail to acknowledge the orders of magnitude greater indirect costs incurred due to medical personnel acting in ways that mitigate their legal exposure.

It's hard to not recognize/admit that healthcare costs are skyrocketing largely because of artificial, rather than standard micro/macro-economic factors. Doctors and nurses certainly are not making more money. In fact, by all accounts, their compensation is at or near all-time lows. So, if it's not labor driving up the price tag (the typically most significant input cost, particularly in service-oriented industries), then what is it?

Logic dictates the culprit is insurance. But, is it that simple?  Are greedy insurers to blame?"  The data tells a somewhat different story. While insurance companies do earn solid profits on a nominal basis, the previous quarter rank for the insurance industry, among all other sectors, from a profit margin standpoint, was #86. That's right, 85 industries achieved higher margins. Imagine the rank after they are required (rightfully so) to address pre-existing conditions and stop terminating coverage when a patient requires expensive care.

That certainly does not absolve the industry of responsibility; however, it does point to a couple of problem areas. It validates, in my estimation, President Obama's claim that the absence of a universal patient record and robust, interconnected healthcare IT infrastructure, is contributing to an astronomical rise in the cost of claims processing. Moreover, it highlights that those costs, potentially combined with others (e.g. unknowable tort liability), have erected barriers to entry that make it unattractive for competitors (principally smaller ones) to enter the market.

The government has a legitimate role to play in helping to remove the barriers. The proposed dollars to catalyze the creation/adoption/installation of a standard patient record, and the infrastructure on which it can ride, is a step in the right direction.

The matter of cost uncertainty must also be addressed, though. Insurance providers, like all companies, need a reliable way to estimate their costs. Unfortunately, that is difficult/impossible to do in an atmosphere of capriciously large jury awards (or the threat thereof). Responsible tort reform will lead to less upward price pressure because insurers will no longer be forced to price for wildly random contingencies. That, along with the realization of Obama's healthcare IT objectives, will allow significantly greater competition because smaller, innovative companies can compete in an environment where low margins and unpredictably catastrophic costs (e.g. egregiously punitive jury awards) are much less likely.

A proper diagnosis of the root causes of hyper-escalating costs will point to the right course of action. No need to transplant multiple organs when diet and exercise is the appropriate prescription.

Kitchen sink legislation that checks all the boxes of its supporting constituent groups is every bit as bad as defensive medicine.

We need to unleash and enable private competition, not shackle it. ...<< MORE >>

It's pretty clear that the various Democrat-sponsored health bills are dead in the water. The plans are simply antithetical to common sense. Even the President's most ardent supporters have to be watching in disbelief as really smart person after really smart person is sent to slaughter attempting to defend them. Can you recall any other big, controversial issue for which someone wasn't able to make a compelling case, no matter how much you might have been opposed?  It has actually been uncomfortable to witness the complete dismantling of these people and their arguments with the very simplest of probing questions. If that alone doesn't highlight the proposed legislation's debilitating problems, see your doctor; you may be in Kool-Aid shock.

So, what now?  Healthcare is clearly on an unsustainable path. And, the President is right; it does require reform.

Surprisingly, the ball could be in the Republicans' court. The GOP has largely been on the sidelines. Sure, they've helped to stoke the fires of discontent. But, for the most part, they've sat back as Democratic infighting and grassroots anger has fractured the partisan efforts of the administration and congressional leadership. Conceivably, the GOP might be abiding by that old Napoleon dictum, "Never interrupt your enemy when he's making a mistake."  But, is that really the proper approach?  Is it enough to be united in opposition?  To be fair, they have offered their own programs and amendments, but they haven't done so in as forceful and unified a fashion as possible. A clearly defined Republican alternative needs to be in the public's consciousness. So far, they've failed to get one there. The debate and the populace would benefit from an understandable and tangible comparison of the two programs.

If the Republicans do not make a stronger effort to promote their ideas, and instead count on the continued implosion of the Democrats, they risk ultimate failure, because a less radical, but still economically disastrous piece of legislation will eventually pass.

It is not difficult to imagine a scenario whereby something terrible makes it to the finish line because the opposition wears down and/or the public becomes immune to the counterarguments. The legislation might look better in comparison to the original, far out of the mainstream draft, but it still could be catastrophic. If someone is hitting you on the head 100 times a day, but finally agrees to do it 50 times, you're better off because of the reduction, but at the end of the day, you're still getting hit on the head.

There is a reasonable deal to be made if ideology is set aside. The potential elements are not unknown—tax credits for the uninsured, medical savings accounts, pooling, portability, tort reform, standardized electronic medical records, etc, etc. etc.

Democrat and Republican centrists would be wise to find common ground where it exists and compromise where it doesn't.

It's the right thing to do.

P.S. To those of you who are regulars, thank you very much for your readership. If you comment infrequently or never at all, please take a moment to express your opinion on this entry or any of the many others. A dialogue is much better than a monologue.
...<< MORE >>

Just read a piece by Bob Shrum, Democratic political consultant, titled, "The GOP decline starts Phase Two."  In it, he posits that the Republicans will be left holding the bag in 2010 and 2012 when "...the instant news cycle, which trumpeted the bad news, will turn around as the economy does."  He adds, "Increasingly, we'll hear that America's on the up, with the predictable tidal effects on our national politics."

For those of you not familiar with Shrum, he's been either THE primary "brain" or one of the primary "brains" behind the failed presidential campaigns of Dick Gephardt, Michael Dukakis, Bob Kerrey, Al Gore, and John Kerry. That's right, he's blown more majors than Greg Norman.

I'm not sure there is anybody who has proven himself less adept at judging the political winds. If his ear were any more tin, he'd be on Broadway in a revival of the Wizard of Oz.

How about this gem:  "...the economic news should—and I believe will—embolden Democrats to pass health care reform worthy of the name. As the economy rises and mobocracy declines, Democrats will hold the high cards in the next congressional campaign. They will be rewarded for the stimulus they passed and for a health care bill they enacted..."

And, if that's not enough, he continues, "In 2010 and 2012, Democrats will not only win elections; they will achieve a political transformation—the Obama era, with progressive values ascendant."

I'll have what he's having!

Apparently he's matriculated to the Obama school of it must be true if you say it enough.

Obama's had numerous questionable relationships over the past couple decades, but you have to give him credit for not putting the Shrum anvil around his neck. Of course, there is always 2012.

Shrum, either conveniently or ignorantly, ignores a variety of factors that make his analysis dead wrong.

First, the electorate is not interested in the ascendancy of progressive values. It was attracted to and sold a new form of politics—one that pushes ideology to the side in favor of bipartisanship. It wanted practical solutions to real problems. Unfortunately for Democratic candidates in 2010 and 2012, most now believe they were the victims of a bait-and-switch. A choking amount of Big Government dogma has been substituted for "change you can count on."

Shrum also mysteriously avoids the public concern over growing deficits. Ironically, it was he and his cronies who, in the 80's and 90's, brought the deficit into the American consciousness as a means of combating the successes of Republican supply side policies. Of course, the deficits in those years were 2% to 6% of GDP (healthy, or at least not harmful, by most economists' standards), compared to the current and projected astronomical percentages (likely in the teens) that virtually all credible economists recognize as economically catastrophic. How frightening for the Democrats to be in the cross hairs of a weapon of their own design?

In yet another miscalculation, Shrum incorrectly assesses the ultimate recovery and the public's likely reaction. The "stimulus" is not and probably will not be seen as the catalyst for a return to prosperity. On the contrary, it is largely recognized as a mis-managed, bloated, partisan, special-interest-laden piece of legislation that has prolonged the recession and limited the vitality of the eventual recovery.

GDP expansion and job creation will almost definitely be constrained by the mountainous debt resulting from the Democrats' Big Government programs. The lack of availability of jobs and likelihood of depressed wages will not sit well with the Democrats' core constituency, let alone the all-important Independent voters. Most economists estimate it could be upwards of 4 to 5 years, or longer, before the unemployment rate has a chance to get back down to 5%...let alone the low 4's where it was not so long ago. The fact that over 40% of Americans don't pay taxes won't benefit the Democrats if their policies result in monumental job losses and lower wages.

Again, the Dems will be bitten by rhetoric of their own creation. Remember the "jobless recovery?"   That's the tag line they attached to Bush 43 when his administration was "only" able to create several million jobs after the shock of 9/11. Obama would stand on his head to be able to claim such job growth.

Also, most don't recognize that the economy needs a net gain of 125,000 to 150,000 jobs per month (due to population growth and new household formation) in order for the unemployment rate to simply hold steady. The dearth of pro-growth policies coupled with the crowding out of private capital by government borrowing to finance the debt make it quite difficult to project anything more than the most tepid of recoveries.

Moreover, although hard to estimate, we can't forget how much damage the Democratic brand has incurred and will incur from those pillars of statesmanship, Nancy Pelosi and Harry Reid. Some correctly argue that the Republicans are no shining light themselves, and as such, it will be a wash. Not true; the Dems are in power, and the lion's share of the blame always goes to those who are.

None of the above even begins to consider that mid-term elections are notoriously difficult for the incumbent party, or other factors such as more than 60 Democrats in the House won in 2008 despite being in traditionally Republican districts.

Politicians and operatives never let facts get in the way of their efforts to obfuscate.

As the Tin Man said, "What have you learned, Dorothy?"

Apparently, not much insofar as Bob Shrum is concerned. ...<< MORE >>

As the financial/economic catastrophe continues to abate and focus shifts toward healthcare reform, the seeds of a forthcoming crisis have quietly been germinating in the background. Oil, under $35 a barrel as recently as the end of 2008, has more than doubled in recent months.

Sadly, virtually nothing has been done to prevent or significantly lessen the probability of another major shock. In fact, the contemplated carbon tax would only exacerbate the situation.

For those who believe that $147 oil and $5 a gallon gasoline are a thing of the past, think again.

Those days are coming, and sooner than most think.

Of course, much/all of this could be avoided if Congress and the President were to be proactive and sensible in addressing this eminently avertable disaster-in-waiting.

It doesn't take Carnac the Magnificent to foresee how this will play out. Prices will continue to rise as the global economy rebounds. Our elected representatives and their enablers in the media will articulate their strong contempt for those evil speculators and greedy oil company executives who have caused this to happen to the poor old U.S. of A. Then, all sorts of draconian measures (e.g. taxes, regulations, etc.) will be proposed/implemented that will further inhibit the "free" market and make the problem even worse.

It doesn't have to be that way. There are many, many reasonable solutions available to the non-ideological.

Consider the following as one of the innumerable possibilities.

As of 2005, roughly 19% of domestic electricity was produced by nuclear power plants. That percentage has remained relatively constant since. Today, there are 104 commercial nuclear power plants in the U.S., virtually all of which were built well over 30 years ago. 70% of our emission-free electricity is the result of nuclear power.

Imagine the economic stimulus and boon to national security (via greater energy independence) if our legislators/regulators would simply rationalize the mountainous restrictions that make it all but prohibitive to construct new plants. The private markets would respond with hundreds of billions in investment dollars. The number of plants could be doubled in 5 to 10 years, if not sooner. New technology actually enables plants to be constructed in as little as 3 years now. And, it could be accomplished without a dime of government money.

For those of you who are more Big-Government-inclined Keynesian's, envision what could have been accomplished with a fraction of the $787 billion "stimulus". New nuclear plants, depending on size, generally cost between $1 billion and $5 billion. For, the sake of argument, say the average cost would be $2.5 billion. Obama and Congress could radically increase our electric grid capacity; create well over a million construction, plant operation, and other related jobs; dramatically reduce emissions; and greatly improve our energy independence and national security for the low, low price of less than a third of what they spent on short-term, non-stimulative projects with little/no structurally sustainable benefits to the economy.

Reagan had it right. Government is not the solution to our problems. Government is the problem.

Remember this months from now. Our politicians fiddled as a preventable crisis was allowed to smolder and eventually burn out of control. Don't let their ideology block what is prudent and logical. According to a Zogby poll, 67% of the population are behind the construction of new nuclear power plants, with nearly half indicating strong support. Those figures will only increase as the situation intensifies.

Renewable energy is the future. However, the country needs to bridge the gap between now and the time when those renewables are viable/scaleable. We have proven, safe, clean technology available to prevent a potential economic/security shock that could make the last couple years look like a walk in the park.

We have nobody to blame but ourselves if we don't vote out those who act so politically and irresponsibly. Guess that's redundant.

I just pulled an envelope with a card in it out of a hermetically sealed mayonnaise jar on Funk & Wagnalls' porch.

It says, "The answer is:  Benedict, Bob, and the American Voter."

Carnac, in his infinite wisdom, divined the question to be..."Name a Pope, a Hope, and a Dope."

Wouldn't it be nice to prove him less than omniscient? ...<< MORE >>

Forget the Beer Summit; the real teachable "moment" has been the past six months. Will there ever be a better opportunity to evaluate the efficacy of Big Government?

This blog has not been shy about highlighting the deleterious effects of a system run amok. We continue to needlessly bleed jobs and endure the longest economic contraction in 80 years because Congress and the Executive Branch have chosen to co-opt the free market, rather than catalyze it. An economy itching to demonstrate its natural resiliency is being smothered by the wet blanket of fiscal liberalism.

There have been no shortage of contributing factors—including the tragically ill-conceived $787 billion non-stimulative "stimulus" program, and the disaster-in-waiting that is Cap and Trade.

But, one program stands out as almost comical in its absurdity. Cash for Clunkers.

Friday was priceless. Those elected whiz kids of ours in the House of Representatives scrambled to appropriate additional funds for their monument to foolhardiness. Did you see them taking a victory lap—holding up the Clunkers program as an exemplar?  Their giddiness was palpable. Yep, they have been triumphant at getting people to accept free money. Brilliant. Well, free in the immediate sense anyway. We'll all be paying for it down the road.

Who knew that a couple hundred thousand people would each be willing to take $4,500 off the government's hands?  Might it be possible that another four or five hundred thousand would be willing to do the same?  Better set aside a couple billion dollars more just in case. Thank you House of Representatives.

Clearly, the government has concluded it can lose money on every car, but make it up in volume. Shrewd.

What a shame that Obama and friends don't seem to understand the ephemeral nature of government giveaways. Bush and company certainly didn't get it in February of 2008 when they handed out over $150 billion in "rebates" with absolutely no effect on our longer-term economic well-being. We got a small bump in GDP for a single quarter after a fraction of the recipients spent some/all of the money, then quickly resumed our downward slide.

In the face of incontrovertible evidence, so many still do not recognize that for stimulus to be meaningful, it needs to have a structural, long-term impact. If it doesn't lead to sustainable demand growth, then it only serves to stoke the deficit. Subsidies can create virtually unlimited demand. That's the good news. Unfortunately, subsidy-enhanced demand typically disappears when the support is withdrawn, and the subsequent government borrowing necessary to finance the deficit spending results in lower demand elsewhere. It has to. What would otherwise be expansionary private investment capital gets siphoned off to fund the debt.

Since this Cash for Clunkers program is so outstanding, at least according to our representatives, why not Money for Mortgages and/or Dollars for Dresses?  It wouldn't be fair to discriminate against the housing and retail sectors, would it?

Let's discuss over a beer. I'm feeling smarter already. ...<< MORE >>

If you're struggling to figure out which way the political winds are blowing, set aside the partisan rhetoric and simply look at what is undeniable. There is no clearer sign that Obama's public support is flagging and his stewardship of the economy weak than the rapidity with which various congressional Democrats are retreating from his healthcare plan. Ignore the Republicans. All you need to know can be gleaned from watching those on the Left. Had the President's policies thus far proven to be even remotely successful, the Dems would be tripping over themselves to pass the Granddaddy of all Big Government programs—healthcare reform.  Instead, they are in full survival mode—trampling one another while running for cover. Capitol Hill is beginning to look like a South American soccer stadium.

The mid-term elections are quickly approaching, and incumbent Democrats are terrified that Obama's less than stellar record is going to be an anvil tied around their collective waist.

What's particularly interesting, though, is how much prestige the legendarily circumspect and disciplined Obama has put on the line with recent healthcare-related statements. In fact, his declarations have gotten more muscular as the prospects for their success have become more fragile (e.g. "Don't bet against me."  "We are going to get this done."  "It will happen this year. I'm absolutely convinced of that."). The later statement renegs on an earlier promise of an August deadline.

Today's weekly radio address was classic Obama—littered with more straw men than a Wizard of Oz convention  (e.g. "Now we know there are those who will oppose reform no matter what.")  We do?  It seems there are multitudinous proposals from both sides of the aisle.Obama's, of course, is right out of his Big Government playbook. Unfortunately, his play calling has come under serious fire as play after play has been thrown for a monumental loss (e.g. stimulus, cap and trade, card check, etc.).

Obama is right to attack the healthcare predicament. We are on an unsustainable trajectory. Unfortunately, he prescribes more government for a system already on life support because of government.

The root problem, to no ones surprise, is skyrocketing costs—escalating at over three times the rate of inflation, but linkable to a tort environment which causes a cascade of responses that lead doctors and others in the profession to practice wildly expensive defensive medicine. Why order a test or two  when ten or twelve will do a more effective job of fending off catastrophic lawsuits?  Responsible tort reform plus reasonable regulatory oversight of pricing, when coupled with Obama's desire to overhaul healthcare IT, would dramatically rein in costs and put us back on a path to viability.

Also, pay no attention to the noise about the often cited 46 million uninsured. The number of involuntarily uninsured is a fraction of that figure. The two least covered groups are those between 18 and 24 (70.4%) and 25 and 34 (75.1%), the vast majority of whom deliberately reject coverage because of a perhaps unwise but understandable personal cost/benefit calculus. If we can get costs under control, the value proposition will be such that this predominantly healthy group will find it smart to opt for insurance. 99.2% of those who most need coverage (age 65 and older) have it.

Putting government in charge of anything significant has never, ever reduced costs. Just the opposite. Why risk doing it to a segment of the economy that represents 17% of GDP, particularly given government's track record?  Imagine healthcare's crippling share in 5, 10, 20 years if Obama prevails.

The public has begun to have that nightmare, but it's congressional Democrats who are shrieking in horror. ...<< MORE >>

Although the free market has absorbed numerous body blows over the past six months, the public opinion free market has remained remarkably resilient. The same supply and demand fundamentals that drive our capitalist system (well, until recently anyway), also apply to the shaping of public attitudes.

Despite being consistently misled by politicians and absolutely ignorant on most issues, it's astonishing how reliably and predictably the general public senses unhealthy imbalances on either side of the political spectrum, and moves instinctively to correct inequities.

Moreover, this process always plays out notwithstanding the pontification of self-appointed experts who spin tales of tectonic shifts in sentiment—the kind that are supposed to permanently or near-permanently alter the landscape.

Remember the purported death of the GOP in 1992, only to be followed in 1994 by a historic rejection of Democrats and embrace of Republicanism?  In conjunction with that change came pronouncements of an electoral college lock that some claimed might take generations to crack. It wasn't long after, however, that the Republicans lost control of the House and Senate, and eventually the presidency. So much for the stranglehold.

Today, it's not difficult to see that the seeds of a reversion back to the mean are being sown. As always, history is quite illustrative.

After Nixon's contemptible corruption, the public unsurprisingly went for the squeaky clean Jimmy Carter.

When Carter proved to be uncharismatic, a tedious micro-manager, and an ineffectual leader, the country moved in the direction of a magnetic, eloquent, and big-picture-oriented Ronald Reagan.

As soon as the populace tired of George W. Bush's clumsy oration, divisiveness, and proclivity for projecting American power around the globe, it reached for Barack Obama, a smooth talking conciliator.

Now, the focus is on President Obama. Following an initial and unprecedented insinuation of Big Government policies by his administration and Congress, the formerly "can do no wrong" invincible one is seeing the effects of the public's growing disenchantment and belief that he and his cohorts are overplaying their hand.

The evidence is all around.

Obama's poll numbers, which have been eroding steadily over the past several weeks, as they typically do for new presidents, have recently fallen off a cliff in certain key areas as the public begins to sense that something is amiss with the huge lurch to the Left.

What must undoubtedly be most troubling for the Obamaites is the significant loss of support from Independents—dropping 6 points last week alone in a national Gallup poll. In Ohio, a critical battleground state, the numbers are more disconcerting—a full 48% of Independent voters disapprove of Obama's job performance. In Virginia, the figure is 52%.

Poll numbers aren't the only referendum on Obama's policies and performance. Various seminal races around the country also reflect the current mood of the populace. Republican candidates are well in front among all voters, and dramatically ahead among Independents, in the NJ and VA Governor's races. New Jersey, of course, has been reliably Democrat for a long time, while Virginia has been a recent addition to the Democrat column. Senate Majority Leader Harry Reid's efforts to get reelected in Nevada may also prove quite telling for Obama and the Democrats if current poll numbers are an indication.

Interestingly, of late, all of this is having a material impact on how the legislative sausage is being put together. Democrats in Congress are reading the tea leaves and beginning to recognize that public opinion is a legitimate counterweight to their majority voting position—a much needed, and until recently, missing check and balance.

And, as we know, the congressional Hippocratic Oath is, "Above all, do no harm...to my re-election prospects." As such, we're seeing an awful lot of trial balloons floated to test what might and might not be palatable to the general public.

So, it remains to be seen how much of the Democrat's ambitious agenda Obama and friends will attempt to pass—knowing full well that there will be a reckoning in 2010 and 2012 if voters deem it to be over the line, or if it doesn't deliver the advertised results.

The pendulum will swing back; it always does. The question this time, though, is, will it first swing so far to the Left that it knocks out a structural support—making our economy unstable for decades?

When it does swing back, we unfortunately have a spotty track record of being able to put entitlement toothpaste back in the tube, should it be necessary to do so. Other than welfare reform during the Clinton/Republican Congress era, I don't know that it's been done.

Jefferson said, "Government is best which governs least."

It's pretty clear we will all be weighing in on that theory over the next 3+ years. ...<< MORE >>

Virtually ignored among the Michael Jackson media frenzy is one of the most positive Middle East developments since the 1979 Egypt-Israel Peace Treaty.

Yesterday, the leading group of Iranian clerics defied Ayatollah Ali Khamenei by calling the disputed presidential election and resulting government illegitimate. This represents the most significant challenge to the authority of the supreme leader in the Islamic Republic's 30 year history.

Therein lies the conundrum for American foreign policy. Do we bet on the reform movement, or is it too risky to wait for that to fully take root?  Should we instead address, sooner rather than later, the nuclear ambitions, support for terror, and overall destabilizing effect of Iran's radical leadership?

There are compelling arguments on both sides.

Reasons to wait include:  Iran is, and has been, a relatively open society. For the most part, its people can come and go as they please. They have near unfettered (discounting the recent crackdown) access to the Internet and other outside influences. The Iranians are among the most well-educated people in the world with a literacy rate of 77%. The populace is also remarkably young. More than two-thirds are under the age of thirty. And, they have one of the more enlightened views in the region of females. Women comprise greater than half of the university students, and they hold pivotal positions throughout society. Finally, if the reformers win out, and the Islamic regime collapses under its own weight, the democratic reverberations could be felt across the region.

Of course, those more hawkish can legitimately argue that although the general population may be moderating more and more over time, radicals still call the shots, and their intentions toward Western, Iraqi, and Israeli interests are quite evil. Can we chance a nuclear weapon in their hands or the hands of some rogue nation/entity to whom it may be passed?  Not an easy call.

Ideally, we (and/or Israel) should wait as long as absolutely possible. If the U.S.or Israel feels the need to attack, we/they may blunt the immediate threat, but no doubt stoke nationalist pride in the process, and likely delay illusive Middle East peace by decades.

The race for control between Iranian extremists and reformers is fraught with peril. It's critical that the U.S. and Israel play its hand wisely, or any potential near-term victory may prove to be Pyrrhic at best.

Let's hope that President Obama's naturally cautious approach plays to our advantage in this instance. ...<< MORE >>

As with virtually all Big Government programs, the medicine is bad, but it's the side effects that kill. And, the Grim Reaper of Obama's litany of government-first programs is H.R. 2454:  American Clean Energy and Security Act of 2009. In case you're not familiar, this is the legislation that proposes to institute a cap and trade system for reducing CO2 emissions.

Irrespective of which side of the climate change debate you come down on, it's difficult to avoid the simple scientific fact that the U.S., acting unilaterally, can do nothing to materially impact the amount of greenhouse gases released into the atmosphere. As of 2004, the U.S. emitted roughly 22% of all CO2, and that percentage represented a very substantial decline from previous years. As China, India, Russia, Eastern Europe, Brazil, and other rapidly industrializing countries/regions experience monumental growth and dramatic standard of living improvements, the United States' share of the total continues to decline precipitously.

As scientists know, CO2 acts globally, thus, its impact on the environment is similar wherever around the globe it is released. So, potential U.S. reductions will be overwhelmed by the considerable increase in emissions from other parts of the world.

Given the aforementioned, some still argue that the U.S. must lead and set an example for the rest of the world. But, at what cost?  Should we absorb what will arguably be the largest tax increase in history for the honor of capturing the global moral high ground—particularly when there are much more economically friendly, even stimulative, solutions?

Obama himself commented last year in the San Francisco Chronicle that "Under my plan of a cap and trade system, electricity rates would necessarily skyrocket. They (utilities) would have to retrofit their operations. That will cost money. They will pass that cost onto consumers."

It should not be hard to recognize that the impact of inflicting consumers with these new costs will be economically ruinous. Obama's own numbers point to a roughly $650B tax hike over the first eight years (CBO places it above $820That's real change...not catastrophically illusory transformation. ...<< MORE >>

"What can thy silence do for him, except it tempt him—yea, compel him, as it were—to add hypocrisy to sin?"  —Nathaniel Hawthorne, The Scarlet Letter.

If the GOP keeps going at this pace, there may not be enough scarlet letters in the alphabet. Of course, Mark Sanford can account for a good part of the alphabet on his own. "A" for adultery, "I" for idiot, and "H" for hypocrisy. 

When will the Republican's learn?  If you're going to talk the talk on family values, you've also got to walk the walk. Is there anything more off-putting than the "do as I say" guy who doesn't?   Let's face it; power corrupts. Only the very special can avoid the temptation. What sounded good when there was little or no opportunity, suddenly is an afterthought when opportunity abounds. If you believe that a faithful husband is one without prospects, don't put your money on a politician, let alone one of such high profile.

It's okay, noble even, to be for traditional values, but why not be for the most traditional value of all—freedom. Republicans have always advocated freedom in political and economic contexts. How about extending it to a social/civil rights context?  Shouldn't our lifestyle choices, to the extent they don't intrude on others rights, be outside of the purview of sanctimonious and hypocritical legislators?  I think so. The GOP would be on much firmer footing if they would adopt this philosophy. And, their message would be abundantly more consistent.

Mark Sanford should resign the governorship post-haste—not because of his personal failing, but because of an egregious dereliction of duty. To have left the state in such a clandestine fashion is an inexcusable offense. ...<< MORE >>

Another day, another oversight entity…or two.

Yesterday, President Obama rolled out his much anticipated proposal to overhaul the financial regulatory system. As usual, the actual plan bore little resemblance to the pre-announcement hype. Instead of streamlining and simplifying, it up-sizes and complicates. Littered amongst Obama’s hodgepodge of indiscriminate and ill-conceived measures are a new Consumer Protection Agency and Systemic Risk Council. So, an already flagrantly complex structure may become that much more untenable with the potential adoption of two more regulatory bodies.

Is there anything more illustrative of Obama’s government-first philosophy than his affinity for appointing Czars, councils, oversight boards, etc.?  To date, there are twenty-five or so. Imagine if he spent half the time focused on unlocking the creative and productive capacity of our capitalist system as he does on inflicting us with bigger and bigger government. Maybe we still wouldn't be hemorrhaging jobs and dealing with an economic contraction months after all other such contractions since WWII turned positive.

Who but politicians and academics believe that employing dozens of Czars is a recipe for success?  It wreaks of randomness, not to mention a quixotic faith in government over markets. Why would one intentionally create such overlap and confusion?  Would any responsible business pursue a similar course to achieve its objectives?  Doubtful.

Consider for a moment the absurdity. We have an Energy Czar and a Secretary of Energy. There's a Drug Czar and a Secretary of Health and Human Services, not to mention a Surgeon General. We've got a Bank Bailout Czar and a Treasury Secretary and Chairperson of the FDIC. How about a Border Czar to go along with the Secretary of Homeland Security?  We've also got Czars for the Middle East, Iran, Pakistan, and Afghanistan?  Guess Hillary Clinton and the whole State Department can hit the beach this summer. Those are but a few examples of our government run amok.

How far can we be from a Czar Czar?  Don’t all those Czars need somebody to watch over them?

Obama had better be careful, or he may end up being remembered as Barack the Terrible. ...<< MORE >>

Despite continual protestations by President Obama and his minions that all of his/our problems have been inherited, many are coming to the realization that he is in fact, the owner. His herculean efforts to buy time and deflect blame, heretofore successful, are starting to ring hollow. "Trust me" governing doesn't seem to cut it any longer. A recent Gallup poll on Obama's handling of the economy showed a greater than 20 point decline in his rating.

Even a  sycophantic media and generally supportive populace can't hide from the mounting evidence of policy failure after policy failure. If you doubt that's the case, simply overlay Bush 43 on top of the Obama fact set, and see if your opinion doesn't change.

Imagine Bush being cut slack for an economy still contracting well beyond the length of every recession since WWII. Bush was derided mercilessly for about 1.4 million lost jobs the year after the shock of 9/11, while Obama has largely gotten a pass for the 3+ million jobs lost since he took office. Unemployment never exceeded 6.3% in the aftermath of 9/11. Today, it's 9.4% and rising. The Bush economy added several million jobs in the post 9/11 years, even though the media frequently characterized it as a jobless recovery. Obama's plan doesn't foresee significant job gains for quite some time.

The media has virtually ignored Obama's made-up and completely unprovable statistic of "saved jobs."  It's hysterical to think what would have happened had Bush tried to pull that maneuver.

Consider the Obama "stimulus."  Virtually every assumption he and his team used to sell the plan has already proved to be wrong—including unemployment which was supposed to peak at 8.2% (already 9.4% and climbing); the yearly deficit which was expected to max out at $1.8T (currently projected to be well over $2T); and GDP growth, already affirming suspicions of over optimism (calling for near-term growth greater than that realized during the height of the Internet bubble).

Again, use the Bush test. What would have happened had GWB been responsible for a "stimulus" package that spent under 10% of the total allocated amount in year one—the most critical window for stopping the bleeding and resuscitating the economy?

What would the media have said if Bush had proposed to increase the deficit by five-fold in a single year?  Remember the Democrat's PayGo charade (every dollar of increased spending was supposed to be offset by a dollar in reduced spending)?  The media and Dems bludgeoned Bush with that tactic every time he proposed a new program—even those that were likely to increase revenue.

Think about all of the above in the context of not a single persistent pro-growth policy from the Obama administration. Picture what Bush would have been accused of had he been so negligent as to allow such economic deterioration without driving major stimulative initiatives—of the free market, rather than government spending variety.

If you need proof that Obama's programs have been non-stimulative, just check out the dramatic increase in the savings rate. It has far outstripped investment and consumer spending. The lack of proper incentives are causing government dollars being poured into the system to be hoarded, rather than used to increase the size of the economic pie and create jobs and wealth.

Of course, we can't ignore the auto industry bailout. Envision Bush's fingerprints fully on this debacle. The media certainly would have thrashed him for favoring big business, even though they look the other way as Obama gives little respect to contract law in order to serve his primary constituency, big labor.

And, on the foreign policy front, arguably, things have never been worse with North Korea and Iran.

So, what does it all mean?

For one, it reinforces the significance of communication skills and media bias. Bush's verbal ineptitude, coupled with the media's disfavor, would never have allowed him to reach this point so relatively unscathed.

More importantly, it highlights the dangers of policy proposals able to pass through the process with so little vetting. We are all done a disservice, including the party in power, when vigorous debate is quashed or not covered adequately. Unfortunately, bad decisions are the residue.

Given all of these failures, it will be interesting to see how the media and electorate reacts to the forthcoming debate, or lack thereof, over healthcare. Obama and the Dems have a lot riding on it—most notably, the 2010 and 2012 elections.

We and the media have great power...and with that great power comes great responsibility. Let's ensure that "trust me" politics is a thing of the past. ...<< MORE >>

It's disappointing that many Republican politicians and pundits have opted to play the race card regarding the nomination of Judge Sotomayor, particularly since they themselves have unceasingly decried such tactics from Democrats for decades.

We all lose when cavalier accusations of racism are made; because nothing stifles debate quicker than shifting the focus to the purported bigotry of the debater and away from the actual issue. As a result, we never get to thoughtfully examine whether or not affirmative action has run its course, or what's wrong with requiring identification to vote, or the many other things to which racial undertones are often ascribed. And, of course, the constant charges of racism just reinforce stereotypes, perpetuating whatever feelings of prejudice may still exist.

Can we also stop saying nonsense such as, "...well, if a white person said that, there would be hell to pay?"  Although the legal definition of what constitutes racist speech or behavior may be one thing, there is another, simpler and more practical definition. To me, racism is very insidious. It is about believing that a particular class of people is inferior. That kind of belief has extremely damaging and persistent social and economic consequences for the affected class. It is very different, in my view, from a preference, especially when the preference is for a non-white. Such a preference may be quite illegal, but it does not carry with it the same debilitating implications. When a white person is subjected to such discrimination, all white people are not suddenly viewed as incapable. They do not slide down the social ladder as a result.

Let me be clear. I am not condoning or excusing the potential illegality of reverse discrimination, just putting it in its proper context. It is something very different from classic racism, even though it may feel identical to the impacted party. We should not trivialize the term by using it in a fashion that dilutes its real meaning. Discrimination can be transitory. Racism has a persistent and deleterious effect on entire classes of people. ...<< MORE >>

LeBron James proved once again why athletes so often disappoint when it comes to being a role model. A couple nights ago, after losing the Eastern Conference final to the Orlando Magic, James eschewed customary post game pleasantries and opted to pout in the solitude of the team bus. A day later, supposedly after having had the opportunity to regain his composure, collect his thoughts, and benefit from counsel, he further compounded the effrontery by inserting his size 18 Nike's squarely in mouth—uttering the following gems:

• "It's hard for me to congratulate somebody after you just lose to them. I mean, I'm a winner. That's not being a poor sport or anything like that."
• Somebody beat you up; you're not going to congratulate them for beating you up."
• "I'm a competitor. That's what I do. It don't make sense to me to go up and shake somebody's hand."

Most disheartening is that James has, by all accounts, worn his super stardom well. He's been accessible, good natured, and a positive ambassador for the NBA. Of course, it's somewhat sad that we consider civil behavior from athletes to be so praiseworthy, particularly when it comes with tens of millions of dollars and worldwide adulation. Nevertheless, James demonstrates that sports doesn't necessarily build character—it reveals it. It's pretty easy to be the cooperative good guy when you're collecting MVP's, being featured on 60 Minutes, and the face of countless products; but what happens when a little adversity gets mixed in?  We may have just gotten a glimpse. Hopefully it was an aberration.

To James' credit, he is only 24, and has had to grow up in the public spotlight since his teens. Prior to Saturday night's gaffe, most of us would not have handled fame and fortune any better.

What has been most attractive about James, until recently, is that he's been a breath of fresh air for a league long dominated by thugs and thuggery. He's shown that anti-social behavior does not have to be the norm...that vigorous competitor and decent person are not mutually exclusive terms.

I've always found the ultra-competitive persona—one that extends beyond the field of play—very annoying. Michael Jordan and Tiger Woods cultivated such an image, and it is arguably their least appealing trait. Hopefully, LeBron won't go down the same path. It's always been curious why the media paints as virtuous behavior that disallows acceptance of defeat of any kind. We heard it all the time about Jordan, and we hear it today about Tiger. They can't deal with losing at cards, scrabble, ping pong, etc. You name it, and they have a near psychotic aversion to losing at it. Somehow, the media tells us that's a good thing. It's emblematic of a fighting spirit—a certain uber competitiveness. No it isn't. It's illustrative of an enormous character flaw. One can try hard and enjoy the spirit of competition without taking it to the personality disorder stage.

So LeBron, give it all you've got, but walk away in the end respecting the game and the competitors. If hockey players can beat the heck out of one another for seven games and still shake hands at center ice when it's all over, you can certainly muster some sportsmanship. We don't need another self-centered athlete to set a bad example for all his young, impressionable acolytes.

Come to your senses and realize that like one of the classiest men ever to compete in the sports arena, you're "the luckiest man on the face of the earth."

...<< MORE >>

Treasury Secretary Geithner is headed to China next week. His agenda is pretty much the same as its been for all officials of recent administrations—encourage a more freely floating Yuan, and promote a less export-centric Chinese economy.

As usual, resident Senate China policy alarmists, Chuck Schumer (D) and Lindsay Graham (R), are raising their oft articulated concerns about China's purported currency manipulation. They, and many others, believe China keeps the Yuan artificially low in order to make its manufactured goods more attractive abroad, and concomitantly, U.S. exports less competitive in Chinese markets.

Of course, the way in which China does this is to purchase U.S. dollar-denominated assets (e.g. Treasury Bonds) in order to drive up the value of the dollar. Despite calls for China to stop, or at least moderate this currency ploy, it just so happens we've never been in greater need of China's large-scale purchase of Treasury assets. It would be extremely difficult to fund our enormous and growing debt without them.

So, expect a lot of lip service from Geithner for public consumption, but don't anticipate that he'll push hard behind closed doors. It just wouldn't be prudent, and will not be, if and until we get our economic house in order. As long as China's vitality rests on exports, our two economies will be tightly coupled. Ignore the rhetoric about the U.S. being vulnerable to potential cutbacks in China's purchase of Treasury's. We're protected by the prospect of Mutually Assured Destruction (M.A.D.). Yep, the same principle that helped the U.S. and Soviet Union avoid nuclear armageddon during the Cold War, is what will help us evade a bilateral economic meltdown. Right now, they need us to buy their goods, and we need them to fund our debt.

Although it's in our long-term interests to see China grow its own markets and expand its middle class, we'd potentially be in dire straits if they were to see internal demand ramp up dramatically while we remain in a quagmire of gargantuan deficits.

Be careful what you ask for. China's acquiescence to our wishes could actually be detrimental to U.S. economic health should we continue to be fiscally undisciplined. ...<< MORE >>

Now that President Obama has nominated Sonia Sotomayor to the Supreme Court, many will assert that she, generally considered to be Left or far Left, should be confirmed because Bush was able to get his Right or far Right selections, Roberts and Alito, approved. Is that a legitimate argument?  It is often said that elections have consequences. Isn't one of those consequences the opportunity to put forward nominees who share the president's ideological bent?

But what does it mean to be a Left- or Right-leaning Justice?  And, is it reasonable to expect a quid pro quo approval? 

Simplistically stated, a Right-leaning (or conservative) judge is typically thought to be a strict constitutional constructionist—someone who interprets the constitution and existing law, rather than looking for (or inventing) meaning that isn't there. He/she feels bound by precedent, and tends to protect or uphold existing rights, rather than expand them. Critics, of course, would contend that conservative judges often suppress rights.

On the other hand, a Left-leaning (or liberal) judge is characteristically thought to be someone who has an activist point of view—a predisposition to craft arguments that support a particular perspective. A liberal judge is thought to be more likely to navigate around precedent and find rights where none were previously enumerated.

Historically speaking, there is no doubt that Justices from both ends of the conservative/liberal continuum have ruled in improper fashion. A conservative court in the case of Plessy v. Ferguson upheld the constitutionality of racial segregation and ushered in the 58-year doctrine of "separate but equal," ignoring the unequivocal unconstitutionality of Jim Crow laws that had been on the books for generations.  On the flip side, liberal courts have frequently bastardized the various amendments, with Roe v. Wade and its creative interpretation of the 14th amendment being a prominent example.

Given the choice, though, isn't judicial conservatism the preferential, and less dangerous alternative?  Don't we run the risk of losing control of our sovereignty when judges run amok and transcend their traditional and constitutionally defined role as interpreters of the law?  Isn't it better to err on the side of deference to the law and legislative process?  Is it proper for courts to champion various causes because lawmakers don't have the political will or persuasive power to push forward controversial policies?  The lifetime appointment of federal judges certainly makes it quite difficult to right any wrongs.

So, when the Left disparages Roberts and Alito as far Right, is that really a bad thing?  Aren't we better off when our fate lies in the hands of elected representatives, rather than those with little accountability?  Shouldn't we use the legislative and amendment processes to craft social and economic policy, rather than activist judges appointed and/or approved as proxies by politicians too timid to take a stand and fight for what they believe to be right?

None of the aforementioned should be interpreted as an indictment against Sotomayor. It's much too early in the process to understand with any reasonable certitude where she falls on the continuum.

The Senate needs to vet her thoroughly, and the Republicans should vote for her if she meets the standard of an intelligent and impartial arbiter of the law, not as a quid pro quo for Roberts and Alito.

Our sovereignty is much too precious a thing to risk should she, or any nominee, prove to have activist proclivities, whether they be conservative or liberal.

...<< MORE >>

The Notre Dame community is to be applauded for the way in which it comported itself amidst the controversy surrounding the commencement invitation to President Obama. Other than the spectacle put on by outside radical elements of the abortion debate, the University and its students demonstrated a civility and respect for differing views that isn't frequently seen on campuses around the country. Hopefully, many on the Left will take the cue and afford the same courtesy to controversial conservative speakers.

Whatever you think of the President, there's no denying he deserves credit for insinuating himself into the fray. One can argue that his actions haven't always matched his rhetoric (including on this issue), but today, the rhetoric was powerful. It was the very best of Barack Obama.

The words and ideas were not in any way surprising. In fact, the key themes were very predictable. However, it was all woven together in such a rich, masterful, and elegant fashion. The text exuded reason, empathy, and practicality. It did not attempt to defend a particular position, but rather to provide a framework for understanding. Obama correctly and astutely pointed out that the differences may in fact be irreconcilable because both sides have passionately held convictions and strong arguments.

I thought the story of the doctor who wrote Obama when he was running for the Senate was especially compelling. The doctor essentially said he was a strongly pro-life Christian who was not going to vote for Obama in the general election (he voted for him in the primary), not because of his stance on abortion, but because of words he had just seen on Obama's campaign website. It stated that he would "fight right-wing ideologues who want to take away a woman's right to choose."  The doctor's very apt point was that if Obama considered every pro-life person to be an ideologue, he couldn't possibly be reasonable. The doctor wrote, "I do not ask at this point that you oppose abortion, only that you speak about this issue in fair-minded words."

Fair-minded words. What a country this would be if all politicians and pundits would heed that advice.

So, let's see if fair-minded words translate into sensible policy. Obama got off on the wrong foot with the pro-life crowd when he issued executive orders in the initial days of his presidency that lifted abortion restrictions established by the Bush administration.

There is, however, common ground to be found in a number of areas, including funding and/or support for: carrying babies to term, adoption, programs to help reduce unintended pregnancies, limitations on late-term abortions, etc.

Congratulations to Notre Dame and the President for engaging in the debate.

Now both sides just need to go out there with all they got and win one for the country. End scene. ...<< MORE >>

Speaker Pelosi claims to have been misled by the Bush administration on waterboarding. Here are some other things they told her:

• Roger Clemens did not do steroids
• You can have great abs in just 8 minutes per day
• Your eyes really don't look that buggy
• Hunting with Dick Cheney would be a great way to repair the Republican/Democrat divide
• That pantsuit is quite flattering
• The public can't get enough of those awesome press conferences you hold
• Feel free to use Air Force jets as much as you want
• The troops love it when you visit them in Iraq
• The ShamWow holds 12 times its weight in liquid—or the drool from one Harry Reid speech
• More cowbell

...<< MORE >>

Since Barack Obama entered the national consciousness roughly two years ago, his recipe for political success has been pretty unbeatable:  Three parts sanctimony; 2 parts theater; and a pinch of substance.

You've seen it many times. Make some grandiose, feel-good, but sufficiently squishy proclamation; do it in front of Greek columns or other suitable item(s) of stagecraft; proceed to offer very little in the way of details or time frames; then ultimately reneg when following through becomes inconvenient. Of course, this would not work with most politicians, but when you've been anointed by the media, it's a winning formula. The question remains, will the general populace ultimately consider it manipulative?

Transparency has been an enduring theme of the Obama campaign/administration. It's been the subject of numerous grand eloquent speeches on how America is of the people, by the people, and for the people. The President says we all have a right to know what our government is doing—unlike what those evil Bush/Cheney people told us. You can almost hear the echoes of Justice Brandeis, "Sunshine is the best disinfectant."

Remember way back when candidate Obama waxed rhapsodically on the wonders of public campaign financing, only to leave it at the altar when it became ever so apparent that he had a huge fund raising advantage over his opponent?

Well, since then, the hits just keep on comin'. And, why shouldn't they?  He barely got a slap on the wrist for the campaign financing about face.

How about the classic, "No lobbyists will serve in my administration?"  Guess his Chief Strategist, David Axelrod, doesn't count, nor do the many others—some of whom were granted special waivers, some of whom were not.

Then there was the five day public comment period for all pending legislation. Of the eleven or so bills he's signed so far, only six have been posted on the government's website, and none were there for five full days before being sent to Congress. The public is not alone. Congress has frequently only had hours to consider thousands of pages of provisions in very complex and expensive bills. Apparently it's better to ram these things through before annoying questions get asked.

Can't forget earmarks. What was it about going line by line to eradicate wasteful spending and eliminate earmarks?  So much for 8,500 of them in the omnibus spending bill.  Whoops.

Recall the D.C. school voucher program?  In one of Obama's most inspired cabinet selections, he chose Arne Duncan as Education Secretary, a very well-respected school superintendent with a rich track record of reform and results. It was thought that Duncan might be able to propagate the successes of the flourishing D.C. voucher program to other troubled districts around the country. Evidently, results dramatically superior (e.g. students nearly two years ahead in reading and math) to the public school control group, at a lower cost per student, was not enough. In the end, Obama caved to a powerful constituent group, the NEA, and pulled funding from his budget. And, he did it without so much as an explanation to the nearly 2,000 D.C. kids left in the lurch. That would have shed to much light on the hypocrisy.

Recent days have not been lacking in examples, including a refusal to release new photos of alleged prisoner abuse. Funny, I remember how apoplectic the Left became over Abu Ghraib. They were hell-bent on making the photos public, no matter the consequences for our troops or the nation as a whole. Again, transparency is a lot  more inconvenient when there are consequences.

What does it all mean?  Is Obama noble in his intentions, but just naive and/or weak-willed?  Does he really plan to do as he says, or has he simply mastered the art of political expedient communication?  Does he merely reflect a reaction to what many perceive to have been an overly secretive Bush/Cheney administration?  And, most importantly, will he and/or should he pay a price in the next election for not following through on so many commitments? ...<< MORE >>

The last several weeks have been replete with numerous positive economic indicators. The stock market is surging; housing is showing signs of life; corporate profits have been better than expected; consumer confidence and spending are on the upswing; the rate of job losses is declining; and manufacturing is on the threshold of expanding again.

It's reasonable to expect that GDP will turn positive this year. In fact, some anticipate growth as soon as this quarter. That may be slightly optimistic, but what should we look forward to insofar as a recovery is concerned?

President Obama's ten-year budget projections call for above trend line increases in GDP. Is that realistic?

If we use Europe as a guide, dramatically increased government spending and robust economic growth have not gone hand-in-hand. For the period 1970 to 2007, roughly coincident with Europe's move toward social democratic policies, GDP growth has averaged 2.4%, compared to nearly 3.1% for the U.S. A delta of .7% may seem rather trivial (it isn't), but it carries with it enormous economic consequences, particularly as more and more dollars are needed to fund exploding entitlement costs and aging populations. In the U.S., economists estimate that GDP needs to grow between 2% and 2.5% just to break even from an employment standpoint.

The current decade has been even more bleak for Europe. Since 2001, GDP has grown by 1.87% on average—close to a full percentage point less than the U.S. (2.78%).

With all of their government spending and social engineering, one might expect that the trade off would be lower unemployment. Not true. European unemployment rates have been doggedly and substantially higher than ours. The EU25 rate has consistently been 3 to 4 percentage points (sometimes more) above what we've experienced.

What about poverty?  Has European spending at least reduced the ranks of the very poor?  The data shows a rather mixed bag. The U.S. appears to fall somewhere in the middle of European countries in terms of poverty rate.

One of the more disconcerting statistics is government spending as a percentage of GDP. In 1903, the figure was 6.8% for the U.S. In 2009, it's projected to be 44.72%—a greater than 8% increase over the average of the previous 5 years—not particularly encouraging. Less encouraging are the comparisons with major Western European countries. In 2007, France was at 61.1%, Sweden and Denmark 58.1%, Italy 55.3%, the UK 50%, and Germany 48.8%. Yep, we're on the march to be the equal of those paragons of economic stagnation.

I remain sanguine about our long term outlook, but that enthusiasm is diminished by unprecedented increases in spending, coupled with a policy environment that appears quite unfriendly to our prospects for trend and above trend growth.

Big government and big debt burdens do not have a favorable history. Until we lighten the hand of government, reinvigorate the private sector, and reemphasize personal responsibility, we are in for a European-style long and steady decline in our economic vitality and international stature.

Think what you do when you run into debt; you give to another power over your liberty. —Benjamin Franklin ...<< MORE >>

With Justice Souter's announcement of his forthcoming retirement, one of Washington's favorite parlor games, speculating on a Supreme Court nominee, is shifting into full gear. Both sides of the isle have wasted no time in attempting to put a stake in the ground with respect to criteria that will facilitate the prospective replacement's Senate confirmation. Interestingly, there is a movement afoot to consider a non-lawyer.

Although all 110 Supreme Court Justices to-date have been lawyers, there is actually no constitutional or statutory provision that requires such a background. In fact, there is also no age or citizenship constraint. Arguably, the closest we've come to the selection of a non-lawyer was FDR's near choice of Princeton professor, Edward Corwin. But, he happened to be a constitutional scholar.

So, would a non-lawyer be a good idea?  In my estimation, no. Undeniably, there are plenty of "lay" people with the requisite intellectual horsepower. That's not the concern. I'm apprehensive that interest in non-lawyers is really about shopping for ideological and/or key issue alignment. No doubt, that is also the case, implicitly or explicitly, when choosing among lawyers. There is, I believe, an important distinction. Lawyers are trained to follow and respect the law. They are accustomed to operating within a defined legal and professional framework. And, they have a directly relevant and reviewable track record, not one that requires considerable extrapolation.

Almost by definition, non-lawyers are likely to be associated with a particular perspective or issue area. If they are politicians, they are apt to have views associated with their party. If they are business people, they are inclined to be sympathetic to the interests of industry. You get the picture.

Obama needn't take the risk and endure the scrutiny connected with heading down the non-lawyer path. Democrat/Liberal presidents have a perfect track record of selecting simpatico Supreme Court nominees. There really hasn't been a thought-to-be Liberal nominee who turned out to be Conservative. Republicans/Conservatives can't make the same claim. They've had numerous blunders (by their definition); including  Teddy Roosevelt's choice of Oliver Wendell Holmes, Eisenhower's nominations of Early Warren and William Brennan, Nixon's selection of Harry Blackmun, Ford's tapping of John Paul Stevens, and George H. W. Bush's mistake with Souter.

Obama would probably be wise not to open Pandora's Box and set a precedent that would be more beneficial to subsequent Republican/Conservative presidents. ...<< MORE >>

"The only thing worse than a liar is a liar who is also a hypocrite."  Tennessee Williams must have been referring to politicians.

One of the latest examples is the way in which President Obama and his acolytes are vilifying and demonizing Chrysler bond holders. It seems that property rights and the rule of law mean very little to Robin Hood and his band of merry redistributionists. Apparently, Obama prefers that they set aside those irritating fiduciary obligations and tow the populist line. Nevermind that the bonds are held in pension funds and other investment vehicles depended upon by thousands of hard-working Americans. And, bankruptcy courts are set up to determine what is most equitable under the law. None of that appears to matter. They're just pawns on Obama's social engineering chess board.

Of course, Team Obama typically explain away these sweeping usurpations of rights as necessary and proper given the very trying times. Funny, I don't remember the same crowd buying that argument from the Bush administration subsequent to 9/11—not counting their quite brief bout with nationalistic fever in the immediate aftermath (one pandemic that never materialized). They hung the Patriot Act around Bush's neck like an albatross, despite the fact it passed the Senate with a rather inconvenient 98 to 1 vote. Clearly, there is no shame in politics.

I guess our economic freedoms aren't quite as important.

The President deserves a lot of credit, though. It has to be exceedingly difficult pulling strings in every nook and cranny of the economy. He's picked more winners than a cigar chomping handicapper at Yonkers on a Saturday afternoon. Here's hoping he hits the trifecta. Right now, it looks like a long shot. ...<< MORE >>

In light of Senator Arlen Specter's party switch today, I thought it was relevant to post (below) a Letter to the Editor I had published in the Pittsburgh Business Times three years ago to the day.

I consider myself a moderate and have always had great respect for moderates. Although Specter has defined himself as a centrist throughout his political career, charges of opportunism and insincerity have always cast doubt on his motives. Today's move will no doubt add fuel to that fire.


Friday, April 28, 2006

Letters
Strategy needed, not sound bites
Business Times

In the past several days the drumbeat has begun again.

Several congressmen, including our own Sen. Arlen Specter, have reinvigorated their intimations of price gouging by the oil companies and have re-floated the possibility of windfall profits tax legislation as a remedy.

Well, here's a news bulletin for Specter and his colleagues—the reason we find ourselves in this serious predicament is because of the dangerous incompetence of Congress, not the misdeeds of oil companies.

A very rudimentary understanding of economics and market dynamics is all one needs o understand that oil prices are driven by basic forces of supply and demand, as well as the risk/supply perceptions and projections of global commodity traders.

Why would the folly of windfall profits tax legislation even be considered for an industry whose return on capital is typically at or below the average of all S&P 500 companies?  Is there not anybody in Congress who has the intellectual honesty to recognize the distinction between a raw-dollar and percentage-based return?

If Specter wants to be constructive, let me suggest that he put together a coalition of his colleagues to immediately begin work on bipartisan, comprehensive energy policy legislation.

Has this country ever faced a more serious, yet eminently solvable challenge?  Our national and economic security, as well as our capacity to be an engine for freedom and growth across the globe, depends on our ability to achieve a considerable measure of energy independence. It should be a national embarrassment that countries like France and Brazil are out in front of us in securing their energy interdependence.

The tools to make it happen are at our disposal. Why not craft a five- to ten-year plan that extricates us from the uncertainty and instability associated with our current addiction to foreign oil?  And, we can do it without jeopardizing the environment. Bipartisan leadership and its concomitant give and take is all that's necessary. Is that possible anymore?

We can spread our bets across many current and emerging technologies, and then move more disproportionately over time to the ones that prove most effective. Ethanol, biodiesel, hydrogen fuel cells, clean coal, solar, wind, nuclear, increased refining capacity, drilling in ANWAR and elsewhere, conservation and more rigorous CAFE standards are some of the elements that can form the foundation of a prudent and effective policy.

So, Sen. Specter, I implore you to stop the sound bite politics, dig in your heels and be a force for substantive and meaningful reform, not something that is a Band-Aid at best and does nothing to address the long-term problem.

A sensible energy independence policy would catalyze innovation and economic vitality for decades to come.

The domestic and worldwide benefits would be enormous.


Chuck Dietrick  I  Presto ...<< MORE >>

As we approach the 100 day marker in Obama's presidency, has reality matched the hype?  An objective analysis seems to indicate no. He has a reasonably strong personal approval rating; although, as I point out in a March 9, 2009 entry titled, "Popular(ity) Misconception," in many respects, it is at or below the level of many other presidents since WWII. More foreboding, however, is the large disconnect between his personal popularity and the popularity of his specific policies. Poll after poll show significant gaps  

It's hard to deny that he has benefited from favorable coverage. The mainstream media's cheerleading has no doubt goosed his approval rating to some extent. Unfortunately for Obama, the populace tends to be quite a bit more circumspect when it comes to the issues central to their lives and the lives of their children and grandchildren. And, at the end of the day, it's policy that matters.

Despite a convincing election victory and a traditional honeymoon period, perceptive Obama faithful must see some ominous signs on the horizon. Most noteable, I believe, is that a supposed great orator and charismatic leader is having tremendous difficulty getting a material number of people, beyond his most zealous supporters, to sign on to the specifics of his agenda. Sure, many like the broad outline, but blanch when the details (e.g. deficits, government control, etc.) become more clear. More troubling is that Obama doesn't appear to have the fight in him to aggressively push for implementation of his policy vision in its pure form. Instead, he has been quite willing to drop items off his priority list (e.g. carbon tax), water them down substantially (e.g. education reform), and consider parliamentary gimmicks (e.g. reconciliation process that requires simple majority in Senate, rather than supermajority) for passage of controversial aspects of his program (e.g. budget, healthcare, etc).

Compare and contrast the aforementioned with Reagan's effort to achieve comprehensive tax reform, one of the two central priorities of his presidency (along with fighting Communism). Bear in mind that Reagan, unlike Obama, was operating with substantial minorities in the House (177 to 258) and Senate (45 to 55). Notwithstanding this daunting disadvantage, Reagan worked effectively with key Democrats and persuasively took his case to the American people. As such, Congress voted in overwhelmingly bipartisan fashion. The Tax Reform Act of 1986 passed the House and Senate by votes of 292 to 136 and 74 to 23. In fact, the Senate passed its version (before it went to conference committee) by a vote of 97 to 3. Reagan's approval rating at the time was 62%, roughly in line with Obama's today. Moreover, Reagan's achievement came halfway through a lame duck second term—when such sweeping legislation is generally viewed to be next to impossible to pass (how many times have we heard Obama has to act now because it will be prohibitively difficult to do it later).

Come the 100 day anniversary on Wednesday, the media will likely be bombarding us with stories of Obama's performance—most of which will likely be upbeat in nature. Draw your own conclusions. Certainly, there have been positives. Many are intangible. But, what about specifics? 

Has the foreign policy ball been advanced?  Sure, we've made some overtures in the name of improving our moral standing, but what has it gotten us?  More foreign troops in Afghanistan?  More stimulus spending in Europe and Asia?  Reduced threats from Iran and North Korea?

How about domestically?  Do you like the idea of doubling the deficit in 5 years and tripling it in 10?  Do you want a considerably bigger government with more direct control over private enterprise?  Do you favor putting impediments in the way of those most responsible for economic expansion, rather than providing them with incentives to spend, invest, and create jobs?  Do you think it's odd that the President hasn't gotten more traction for his policies at what should be the peak of his popularity?  Is it reasonable that he has paid nothing more than lip service to bipartisanship—a key theme of his campaign and reason why many voted for him?

As I said, it's all about the policies. I'm largely in favor of Obama's focus on healthcare, education, and energy. It's his government-first approach I find disquieting. If you agree or disagree with the policy specifics, it is incumbent to send that message clearly; otherwise, personal popularity will be used as a proxy to push through an agenda that may be out of touch with the sensibilities of a large percentage of the population. ...<< MORE >>

Did you hear or read what comedian and Academy Award winning actor, Jamie Foxx, said about Miley Cyrus on his radio show?  Irrespective of whether or not he is within his rights (that's fodder for a separate debate), I think it's fair to say the words were inappropriate, offensive, and over-the-line. Not surprisingly, Foxx responded to the controversy with what has become a common refrain among those in the public spotlight—chill, it was just comedy.

Perhaps we need a 28th amendment:  "Congress should make no law abridging the freedom of people, in the United States or abroad, to be as offensive as possible in the name of comedy."

Think of the possibilities. I can see it now. Mahmoud Ahmadinejad and Kim Jong Il on stage at Caroline's with their two-man show.

Mahmoud:  Two suspected homosexuals walk into a mosque. They are executed immediately!

Kim:  An IAEA inspector, a U.N. Security Council representative, and a U.S.government official walk into a uranium enrichment facility. They're stoned,  drug through the streets, then hung in the town square!

Mahmoud:  Hey, Kim. Kill the Jews...please!

Kim:  Mahmoud, did you hear the one about the capitalist?  What, you're reading about capitalism?  Put his head on a stick!

Mahmoud:  A woman speaks out of turn in the presence of her husband. He cuts out her tongue and nails it to her forehead!

Can't wait for their HBO Special. Should be a blast...literally.

Try the veal, and be sure to tip your waiters and waitresses. The insanity will continue all week...or until somebody stops the madness. ...<< MORE >>

"I frankly don't understand all the brouhaha lately from Congress and even from some of my colleagues about referring to foreign law."  So said Justice Ginsburg on Friday, reigniting a controversy that elicits passionate reactions from both sides of the isle.

Should something as fundamental to our system of jurisprudence, strict adherence to the Constitution and U.S. law, be dismissed so cavalierly?

Ginsburg, in an attempt to clarify and perhaps tamp down potential outrage said, "...the controversy was based on the misunderstanding that citing of a foreign precedent means the court considers itself bound by foreign law as opposed to merely being influenced..."

Should that explanation assuage concern?  Influence is influence; isn't it?  Are not opinions based on, or at least persuaded by, foreign courts the logical extension?

Justice Roberts said during his confirmation hearing, "If we're relying on a decision from a German judge about what our Constitution means, no president accountable to the people appointed that judge and no Senate accountable to the people confirmed that judge, and yet he's playing a role in shaping the law that binds the people in this country."

Isn't Roberts right?

Is it not also right that decisions handed down by foreign courts are crafted in an entirely different context?  Can U.S. judges possibly sort out the dissimilarities in government, culture, morality, standards of decency, etc., not to mention the unique circumstances that gave rise to a particular foreign law or constitutional provision?

Don't we run the risk of causing the same chaos in our legal system, as we've inflicted on our financial system, by making the rules of the game unclear and ever-changing?

What's the etiology and/or justification for this practice?

Ginsburg said, "You will not be listened to if you don't listen to others."  Aren't her words really part of a phenomenon of the past generation or so where it has become fashionable among many intellectuals to feel guilty about America's position in the world—to be overly, and often inappropriately deferential to our foreign brethren, as a sign of enlightenment and sophistication?

On the surface, it is hard to argue with Ginsburg's comment. Listening IS a two-way street. Unfortunately, she mis-prescribes the medicine for better international citizenship. If we have, in some instances, become out of touch with the international community, that is for our legislature, representatives of the people, to decide and act upon. To place that responsibility in the hands of judges, or for judges to seize it, is to move us further down the path to confusion and disorder. Of course, for many politicians, judicial activism is simply a convenient way to circumvent the will of the people and achieve tectonic societal change without having to endure the scrutiny of a controversial vote.

Isn't that what happened with Roe vs. Wade?  Don't the preponderance of objective legal scholars agree that Roe was decided on a fictitious right to privacy in the 14th amendment.?  That doesn't necessarily mean Roe is incorrect social policy; it just means the system was bastardized and compromised.

Judicial abuse of this sort is frequently decried by outraged conservatives. Liberals, commonly, are not as critical. In fact, they are mostly supportive. Unlike most conservatives, Liberals tend not to be strict constructionists. They see the Constitution as a living document, subject to varying interpretations in changing times.

Liberals should not be so sanguine, however. Judicial activism, and more specifically, the citing of foreign precedent, can cut both ways. What's to stop a far Right U.S. court from pointing to punishments handed out in Singapore or the Middle East as anything but cruel and unusual?  What about abortion rights, the litmus test for nearly all Liberals?  The U.S. is one of only a handful of countries in the world to ostensibly allow abortion on demand. What if a conservative court were to cite global consensus as a means of overturning or dramatically weakening Roe?  When one goes shopping for a legal diagnosis, surely there is something to be found somewhere in the world.

To be fair, Ginsburg is not alone. A majority of recent/present day justices have written and/or joined opinions that cite or rely on foreign materials. That includes so-called conservative Justices Rehnquist, Kennedy, and O'Connor.

It should also be pointed out that foreign citations have historical precedent, including an 1855 case that said the Magna Carta is relevant.

But as we know from Dred Scott and Plessy, and a host of other infamous decisions, precedent does not always connote correctness. ...<< MORE >>

Did you hear the one about the rogue nation that brazenly violated international law only to have the world community look the other way?  Funny?  It would be if it wasn't so pathetic.

Should we throw our arms up and walk away in disgust, or is there something worthwhile to be gained from our continued participation in the United Nations?  That's not rhetorical. I'm interested in your opinion.

It's been 80 years since the inception of the first inter-governmental organization, the League of Nations, and the United States is still searching for satisfaction. The League was formed in 1919 as a result of the Treaty of Versailles (ending WWI). The thought was that a union of nations, with its collective force, could provide a deterrent  to aggression by belligerent states, and thus, prevent the devastation of another world war. The League was also meant to arbitrate disputes between and among nations, to facilitate disarmament, to promote/protect human rights, and to improve global quality of life.  Noble objectives, all.

Britain and the United States are generally recognized to have been the primary forces behind the League, with President Woodrow Wilson having been its most important advocate. Ironically, even though Wilson was a vociferous sponsor and lobbied hard for U.S. participation, the United States never actually became a member nation. Wilson could not muster the requisite number of votes in the Senate for passage, largely due to concerns that membership came with a certain loss of sovereignty (primarily because of disarmament covenants in the charter).

Of course, the League ultimately proved feckless in the face of rising German aggression. It watched from the sidelines as another world war broke out—the very manifestation of what it was formed to prevent. Exit League of Nations; enter United Nations.

The U.N.was established in 1945 with objectives similar to those of the defunct and discredited League of Nations, but with membership requirements not as threatening to the sovereignty of member states. As a result, the U.N. achieved, then and now, dramatically broader participation (currently 192 members). The League peaked at 58 member nations, but fluctuated to much lower numbers.

Unfortunately, it appears the U.N. has been equally inept at dealing with global conflict and human rights infractions. Although WWIII has not broken out, there have been any number of regionally-focused wars and skirmishes, and many well-documented egregious infringements on human rights—all transpiring with little/no mitigation by the U.N.

So, is it worth it?  Hundreds of billions of dollars go into funding and maintaining the U.N., but, over its 64-year history, it is difficult to identify concrete successes that justify the costs. One can point to a peacekeeping accomplishment in Kosovo, or election-monitoring achievements in various fledgling democracies, or humanitarian aid programs in third-world countries, but is that enough?  Or, is that the wrong question?  Might one argue that things would be much worse without the U.N.'s existence?  Is its mere being enough to dissuade some countries from acting more reprehensibly than they otherwise might?

Can anything be done to make the U.N. more effective?  Is it reasonable to expect countries with such divergent interests, ideals, economies, and cultures to act in concert for what some perceive to be the greater good?

Take the U.N. Security Council; it has 5 veto-holding permanent members—the United States, Great Britain, France, Russia, and China (representing the victorious Allied powers in WWII). Is that a workable configuration?  Should we expect Russia and China to vote for sanctions on nations such as North Korea or Iran when Russia and China are often the subject of international scrutiny themselves?  Does the U.N. Security Council's reluctance to take punitive action actually embolden misbehaving states?

What about President Obama's policy of engagement?  Is it the right approach?  Does it lend prestige to isolated and/or terrorist states/entities, or does it represent an enlightened, pragmatic effort to seek common ground?  Or, do the countries/groups in question only respect and respond to power?

Should we accept the status quo, try to change it, or just back away?  What are the consequences of each?  These are all vexing questions.

What do you think?  We all have knee-jerk reactions to particular events, but after taking time to examine the issues and evaluate prospective actions, the alternatives often prove to be much more complicated and nuanced than originally thought. ...<< MORE >>

After having written ninety-some entries over the past six plus months, I'm going to take some time to contemplate what might be next for this blog. I'm gratified that the readership, purely by word-of-mouth, has escalated substantially—reaching several thousand hits in each of the past few months. However, the back and forth discourse and exchange of divergent views has been conspicuously lacking. The real value of these things, I believe, is when they are two-way. I'm disappointed that I've been less than successful in stimulating family and friends, with some exceptions, to help get the snowball rolling downhill.

Nevertheless, thanks to those of you who have found the time to pay attention and give me feedback, and much appreciation to those of you who were not hesitant to share your views on a host of important topics.

I'll likely be back blogging in the not too distant future. Hope you'll stay tuned. ...<< MORE >>

It struck me after observing Barack Obama in Europe these past several days, and reflecting back upon his brief time as President, that he is a 21st century Rousseau—infatuated with reason, distrustful of aristocrats (i.e. corporate executives), believer in the evils of inequality, fully confident in his intellectual superiority and the wisdom of his ideas, and thoroughly convinced that a utopian society can be built on common sense. It's the Enlightenment, part two.

Descartes said, "I think, therefore I am."  One suspects that Obama is convinced he "thinks, therefore it must be."

Unfortunately, as he is learning (or should be), reason, in 2009, is no better at combating perceived ignorance than it was in the 18th century. The world simply doesn't operate in the uncontaminated realm of academic theorists. Those darn human frailties and self-interests keep getting in the way.

Despite the media spin that the European trip was a modest to monumental success (depending on the outlet), make no mistake, it is an unmitigated disappointment when measured against the expectations set during the campaign. Remember how easy it was supposed to be?  Obama and Biden would use their charm and deft touch to repair our image and get formerly recalcitrant allies and enemies to see things our way.

Sure, the European leaders put on their happiest faces for the Global Superstar-in-Chief, but once you take a peek under the covers of platitudinous rhetoric, it's not hard to see that Obama will be coming home with next to nothing. And, if you buy into the theory his inner circle continuously pounds into our collective consciousness—you know the one—that Obama must strike now because he'll never be more popular, don't expect this to be an important down payment on future successes—as team Obama will attempt to convince us.

So, despite all the promises from two years on the campaign trail, and mega media hoopla, including a standing ovation from a contingent of international reporters (so much for journalism), exactly what was accomplished?  Other than the ever-popular "relationship building," and "groundwork laying," it's easier to delineate what wasn't accomplished.

At the top of that list is zero additional combat troops for Afghanistan. Ouch!  In fact, Sarkozy categorically and matter-of-factly stated there would be no French boots on the ground. Merkel was nearly as unequivocal.

The lack of cooperation wasn't limited to the Overseas Contingency Operation formerly known as, "War On Terror."  Obama also secured zero commitments for additional stimulus dollars. What a kick in the pants when the Europeans are the fiscally responsible ones.

Of course, Obama was quick to tout NATO's commitment of trainers and $100 million in new Afghan aid. Yep, $100 million. Bernanke has more than that between his office couch cushions. The President did get NATO member nations to unanimously endorse his Afghanistan strategy focused on driving al-Qaida from its safe-havens in Pakistan. Whew!  And I was worried they wouldn't want us to do all the work for them.

Just like the original Enlightenment represented a brief period in history when a quixotic few vainly believed a perfect society could be crafted out of common sense, this new Obama-led Enlightenment is almost certain to be superseded by real-world forces oblivious to today's Rousseau's.

Perhaps their efforts to reshape the world would be successful if they had more faith in basic human nature, rather than a desire to impose their idealistic geopolitical views on the "un-enlightened." ...<< MORE >>

In 1936, Winston Churchill, speaking about the reluctance of Great Britain and other Western European countries to understand changing geopolitical realities and fully recognize the threat posed by Nazism, said, "So they [governments] go on in strange paradox, decided only to be undecided, resolved to be irresolute, adamant for drift, solid for fluidity, all-powerful to be impotent."

Those words have an eerie resonance when it comes to the Obama (and Bush to some extent) administration's handling of the automakers.  Appeasement and refusal to acknowledge the obvious have placed the industry and taxpayer in much greater peril.

As this blog has stated on numerous occasions, including in posts dated 11/12/2008, 11/18/2008, 12/5/2008, 12/8/2008, 12/12/2008, 12/21/2008, 2/16/2009, and 2/17/2009, clear-thinking non-ideologues know that the best path to a vital Big Three is a pre-packaged Chapter 11 bankruptcy; whereby, debt, labor, supplier, and dealership contracts would be prudently restructured.

On 2/17/2009 this blog commented, "There's nary a coherent thinker around who doesn't recognize that the automakers require a pre-packaged Chapter 11 in order to shed their unwieldy obligations and become viable for the long term. Instead, in the name of dogma, we throw billions and billions of dollars at the Detroit Three only to have them repeatedly come back to the government trough because they can't or won't affect necessary structural changes. So, we wasted critical time and tens of billions of dollars, all because the obvious has been the enemy of the ideological."

Here we stand five months later, still irresolute, still clinging to ideology, still hoping against hope that the running faucet of government cash infusions will stem the tide and miraculously enable us to avoid the hard, but necessary work of true reform. Today, President Obama announced yet another 60 day window for GM (and 30 days for Chrysler) to get its act together. How laughable. It's no secret that this only delays the inevitable, as it has done several times before, and increases the cost of, and pain associated with, doing what's necessary.

Today, Obama finally mentioned the previously taboo "B" word—bankruptcy. Yep, the spin machine is shifting into overdrive in order to mitigate the damage of another failed policy. The verbal gymnastics are classic Obama as he attempts to position himself out in front of something that has run him over repeatedly for months.

Here's what he said, "Now, while Chrysler and GM are very different companies with very different paths forward, both need a fresh start to implement the restructuring plan they develop. That may mean using our bankruptcy code as a mechanism to help them restructure quickly and emerge stronger. Now, I want everybody to be clear about this. I know that when people hear the word "bankruptcy" it can be unsettling, so let me explain exactly what I mean. What I'm talking about is using our existing legal structure as a tool that, with the backing of the U.S. government, can make it easier for General Motors and Chrysler to quickly clear away old debts that are weighing them down so that they can get back on their feet and onto a path to success; a tool that we can use, even as workers staying on the job building cars that are being sold."

Just beautiful. When he says, "when people hear the word 'bankruptcy' it can be unsettling," isn't he talking about his own administration and the Democrats in Congress who consistently and disingenuously portrayed bankruptcy to mean a liquidation with concomitant massive job losses and catastrophic economic implications, rather than a healthy and orderly restructuring with little/no business disruption, in order to fool the public (which hasn't worked) and curry favor with organized labor?  Interesting that he now tries to clear a path for a course of action (that was right all along) he and his minions dismissed as foolhardy over and over again.

Another 60 days and billions of additional dollars to be wasted...all because the President lacks the political will to stand up to his constituent groups, primarily organized labor, and do the right thing. The sad irony is that labor would have been much better off if the restructuring was completed months ago. Instead, the auto industry is weaker than ever and less able to employ the very workers to whom Obama unflinchingly panders.

Ultimately, Obama, will reach the end of the line and be forced to pluck his head from the sand and do what was obvious all along—just as Great Britain, facing the growing storm clouds of Nazism, did in the 1930's. Unfortunately, like in Europe much opportunity will have been wasted in the interim.

Let's hope there will be an automotive recovery "in our time."
...<< MORE >>

Can we put to rest the notion being circulated by President Obama and his acolytes that passage of his expansive budget (or something close) is a fundamental and necessary step on our road to economic recovery?

A few facts may be illuminating. Average recession duration since World War II is 10.4 months—with a range of 6 to 16 months. Our current downturn is right about at the 16 month mark. Over the past several weeks we have begun to see tangible signs of improvement in a myriad of economic indicators. Some, such as durable goods (admittedly historically volatile) and the various housing-related gages, have turned positive, while others have exhibited a considerable slowing in their rate of decline.

The reason for this is much more simple than most politicians and pundits would have us believe. Our economy is incredibly resilient. Markets eventually clear. Prices and supply adjust accordingly, and demand ultimately is reinvigorated. There are rational steps government can take to accelerate this process, many of which have been addressed in previous blog entries. In this instance, however, the recovery is largely proceeding in spite of government action, not being hastened by it—with the very real exception of the Federal Reserve's efforts to reduce interest rates.

Virtually none of the dollars from the gargantuan non-stimulative "stimulus" package have made their way into the economy. Independent assessments indicate that over 78% of the total will be spent long after the economy has turned positive, and will have little impact on long-term sustainable growth.

Despite all of this, the President is promulgating the canard that a further massive expansion of government, in the form of his $3.6 trillion budget and $9.3 trillion increase in the federal deficit over 10 years, is necessary to get us back on our feet. Any clear thinking person can see that there is no such linkage.

If the President and others want to dramatically expand the role and size of government, fine, let them sell their package on its merits, not on the back of a disingenuous premise that it's a prerequisite for relieving our immediate economic pain. The President loses credibility when such an obvious untruth is used to promote a controversial agenda.

The President, in my estimation, actually has identified the right budget focal areas. Healthcare, energy, and education reform are all critical for our longer-term economic vitality. Unfortunately, he negates the proper recognition of priorities and jeopardizes our prospects by proposing government-centric solutions that spectacularly expand bureaucracies that have no history of effective and efficient stewardship of such programs.

Will he indefinitely turn a blind eye to market-based incentives that have proven time and time again to be most successful? ...<< MORE >>

Recent developments in the housing space demonstrate that sound, stimulative policy, coupled with natural capitalistic forces, can have a dramatic impact on a depressed and dysfunctional market. This blog, in a 12/17/2008 entry titled, "Mortgage Rate Salvation," and a 12/14/2008 post titled, "Not So Extreme Home Makeover," promulgated the potential benefits of demand side stimuli (e.g. mortgage rate and tax incentives) and how they could stem the housing downturn.

Just months later we are seeing the fruits of such actions. Housing starts, refinancings, sales of existing homes, and home prices have all begun to show very clear signs of stabilization, and in some instances, actual growth.

The Federal Reserve, through its quantitative easing efforts, has effectively reduced interest rates to the point where risk taking is no longer being drowned out by fear. Homes are moving again and inventory is being worked down—halting a deflationary spiral and its concomitant deleterious effect on consumer wealth. Couple that with a significant rise in home refinancings, and the seeds for a revitalized economy have been planted. Most importantly, this was accomplished with no direct outlay of taxpayer dollars, and as such, little risk (assuming the Fed remains vigilant in its management of interest rates). Compare this to all the convoluted, bureaucratic, expensive, and ineffective plans and programs the government has proffered.

A similarly positive outcome is available to us regarding the banking crisis if the government would look to catalyze, rather than co-opt the market. This situation is nowhere as complex as it is being portrayed. In fact, it's the government's hyperbolic commentary and haphazard policies that have paralyzed the markets. ...<< MORE >>

It has been fascinating to witness the protean Barack Obama these past two plus years. He came to national prominence with an indisputable record of liberalism; campaigned for president as an agent of collaboration, pragmatism, and change; "governed" initially as a partisan ideologue; and now, is morphing, possibly out of panic, into a political opportunist.

Quite a journey in such a short period of time. But, really not so surprising when his lack of real world decision-making experience is considered. As President Obama and the country are learning, accountability changes a lot. It's one thing to throw grand ideas against the wall and cleverly adjust the specifics depending on audience, but it's another thing entirely to be held responsible for results, not to mention every utterance. It's also considerably more challenging when the media isn't as much of a fawning enabler.

Like many golfers, Obama was a world beater in the safe confines of the practice range (i.e. the campaign), but he has shown to be all too human on the harsh and unforgiving course that is Washington politics. No wonder he's attempting to stay in campaign mode as much as possible.

I'm a firm believer that nobody can be truly ready for the immense pressure, scope, and challenge of the presidency. However, the learning curve can be scaled more rapidly if one enters the playing field with the scars associated with real management responsibility. Alternatively, it is possible for the experience vacuum to  be filled by close advisers.

Unfortunately, Obama and his inner circle are lacking on both counts; they are collectively and conspicuously bereft of any meaningful executive experience. And, compounding the problem, those who might typically be expected to offer balance or counter arguments, were for a time, I believe, rendered mute by Obama's bizarre, media-perpetuated aura of infallibility. Fortunately, that bubble has burst. The manifestation of all this has been undisciplined, meandering, and muddled messaging—punctuated by thin-skinned, often panicked responses to criticism.

It explains why one day the economy is a catastrophe and the next it's on the road to recovery. It elucidates why the President extraordinarily and unusually recommends buying stocks in the midst of a market meltdown. It helps to illuminate why he pledges to get rid of earmarks, then signs a bill loaded with them, only to subsequently decry and defend them at the same time. It makes clearer why he and his team make direct ad hominem attacks on private citizens/media members who dare to question his policies. It clarifies why two days after excoriating President Bush for his use of signing statements, President Obama does the exact same thing. It informs us as to how overconfidence led him to misinterpret his mandate and propose a radical expansion of government. These are but a handful of many such examples.

So, as we witness President Obama's maturation and flirtation with political opportunism, perhaps we can take solace in the fact that he's in strong company when it comes to setting aside ideals in favor of political expediency. It was Thomas Jefferson, who in one of the most dramatic turnabouts in presidential history, eschewed long-held beliefs regarding keeping federal power in check and protecting states rights by completing the Louisiana Purchase via executive order (due to perceived time constraints), rather than a constitutional amendment, which he believed was the proper course of action.

Let's hope Obama doesn't expand government the way Jefferson expanded U.S. territory.
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Former U.S. Senator from Illinois and Senate Minority Leader, Everett Dirksen, was famously (or infamously) purported to have said, "A billion here, a billion there, pretty soon you're talking real money."

Has that quote ever been more relevant than today, a day in which President Obama signed, in private, the abominable (or is it Obamanable) $410 billion omnibus spending bill?  The bill funds discretionary government spending for the next six months. As a brief aside, note that whenever a president, particularly the King of All Media (apologies to Howard Stern), signs a bill in private, consider it a five-alarm indication that it's an unmitigated disaster.

Back to the business at hand. The $410 billion represents an after inflation 8% increase over the previous period. Yep, in a time when almost all individuals and businesses are cutting back, or at least redoubling their efforts to spend judiciously, our government thinks it's wise to grow outlays by 8%—on top of the increase already baked in for inflation. That is a roughly $30 billion difference.

$30 billion...sounds like a fairly big number, but is it in the context of recent events where billions are discussed in the hundreds and thousands? 

Well, sometimes, $30 billion is not $30 billion. How so?  It's no secret that the $410 billion will become the new omnibus baseline. Does anybody believe there's a chance the government will actually reduce spending in the future?  Doubt it. So, looking out over Obama's 10-year budget projection timeframe, the higher baseline could reasonably equate to an additional $774 billion in total spending. That can't be right, can it? 

Do the math; the numbers don't lie. Start with $380 billion in one column. Multiply it by 1.02 (the assigned inflation rate). Take that total and multiply it by 1.02. Do that 20 times to represent all 20 periods in the 10 year budget timeframe. Then, put $410 billion in another column. Do the exact same thing you did in the column with $380 billion at the top. Now, simply subtract the values in the $380 billion column from the corresponding values in the $410 billion column. The result of each of the 21 subtraction operations (includes the baseline year) represents the additional spending for each period (i.e. $30 billion in the baseline year). Total those 21 amounts and you end up with something in the neighborhood of $774 billion.

Hmmm, that number looks somewhat familiar. Oh yeah, the "down payment" on healthcare reform in Obama's budget is $634 billion. Therefore, had the President exhibited a little discipline, not to mention respect for a campaign promise to cut out wasteful/unnecessary spending, he could have ostensibly funded the entire healthcare down payment...and had a $140 billion left over.

A billion here, a billion there....

...<< MORE >>

If you believe the media, or the administration's perception of its national regard, you'd think President Obama was more popular than a lemonade stand on a 100 degree day.

A closer examination of the facts is quite revealing, though. Of the ten preceding presidents since WWII, starting with Truman, five had substantially higher approval ratings (from roughly 70% all the way up to 87%) at this point in their initial terms, two were similar (give or take a few points), and three were about five to seven points lower. Not quite the juggernaut that many in the chattering class would have us believe, particularly when you consider Obama is following one of the most disliked presidents of all time.

Why is that?  One can certainly presume that as the candidate of a predominantly Left-leaning media, it is in the media's best interest to dramatize Obama's popularity. After all, the more he is presumed to be unnaturally esteemed, the easier it will be for him to steamroll his media-backed Big Government agenda through the Congress.

It is no wonder that Rahm Emanuel has pursued a strategy of going for the gusto early. He, Obama, and others in the administration clearly believe that the best time to push through a bold (some might say radical) agenda is while the iron is hot (i.e. the President is most popular).

There are two flaws in their calculus, however. One, his mandate was for a new type of collaborative governing, not a fundamentally ideological shift to the Left. Second, by eschewing the bipartisanship on which he campaigned, he is only hastening the decline in his popularity, and ultimately making it more difficult to deliver the transformative change in which he is so interested.

Again, history is illustrative. The Presidents who did not suffer the wild swings and/or declines in popularity were the ones—Eisenhower, Kennedy, Reagan, and to some extent Clinton—who were most adroit in finding common ground with the opposition. The others largely allowed harsh partisan battles to diminish their capacity for pragmatism and ability to achieve more of their goals.

In four or eight years, Obama's biggest lament , in my estimation, will be the opportunity he's wasting to protect his popularity and thus achieve a much more significant portion of his agenda. The substance of his program is not terribly dissimilar to that of the Republicans. The difference lies in the methods. The GOP is quite interested in major energy, healthcare, and education reform. They simply want to see the market, rather than the government, play a leading role in the transformation. If Obama can find it within himself to seek out legitimate common ground and compromise (e.g. Reagan and Tip O'Neill), rather than continuing his current pattern of listen then disregard, he'll be able to drive material change. If not, get ready for an indefinite trip back to the quagmire of bitterly divided government.

Even though there are forces at play working to convince us that dissenters are on a fools' errand, this President is not popular in a heretofore unseen way. History proves that quite clearly. It can be a very quick and precipitous drop to the bottom. Check out Truman, Carter, and both Bushes if you're not convinced.

Obama can accomplish consequential change, but it's much less likely without genuine compromise. If he is more than an ideologue, then it's the end result that should matter, not the path to the finish line. ...<< MORE >>

• Healthcare reform is the latest in a series of manufactured emergencies being used by politicians to ram through legislation that otherwise wouldn't survive the scrutiny of a more deliberative process. There is no doubt the healthcare system must be transformed if our economy is to achieve its long-term potential, but the President is being disingenuous by suggesting we won't emerge from recession until healthcare is fixed. The two are unrelated. Just more political slight of hand.
• Stupidity has no party affiliation. Senator Charles Grassley (R-Iowa) is strong-arming companies like Microsoft to stop employing H-1B visa workers in lieu of (he thinks) U.S. citizens. In a fit of myopia, Grassley fails to recognize that it is in our collective economic interest to attract as much brainpower as possible into the country, particularly in these difficult economic times. H-1B visas are used for highly skilled workers with scarce skill sets, not cheap labor. More dangerously short-sighted parochialism from Congress.
• When Obama and the Democrats say they won't be wedded to the failed Republican policies (i.e. tax cuts) of the past 30 years, isn't that analogous to a doctor saying he won't be tied to the tired old way of treating infections with antibiotics?
• It's shocking, although it shouldn't be given the past six weeks, that Obama has not directed Pelosi and Reid to pull back on this disaster of an omnibus spending bill. If not a cut in spending, why not at least freeze the total appropriation at last year's level?  An 8% increase over the previous year (2 to 3 times the rate of inflation!) with the extra baggage of 8,000+ earmarks makes him appear very hypocritical. It also represents one of Obama's more blatant examples of words being a long way from deeds.
• The markets cannot stabilize until the Obama administration decides what it's going to do with distressed banks. No rational investor would put money into a market that is subject to such political capriciousness. Also, it wouldn't hurt if the "stimulus" actually had some stimulative elements.
• As stated months ago on this Blog, we'd benefit considerably from a relaxation of Mark-to-Market accounting rules and a return to the Uptick rule.
• Not since Joe Namath has an individual or group been more overrated than the Obama economic team. The one guy who actually has a track record of success in dire economic times, Paul Volcker, has been muzzled and sent to the end of the bench.
• It was always somewhat amusing to witness the deification of Robert Rubin and his disciples (e.g. Larry Summers, Tim Geithner, etc.). Everyone always seems to forget that they were beneficiaries of a confluence of three of the largest bubbles (Internet, Y2K, Telecom) in modern history. Right place at the right time.
• Has there been a greater Presidential bait-and-switch than the one Barack Obama has perpetrated?  One might argue that Bush 43's oft repeated campaign rhetoric of unequivocal opposition to "nation building" is similar in magnitude. Of course, there's always Woodrow Wilson. He won reelection in 1916 on the back of a slogan, "He kept us out of war."  A year later, he led the U.S. into WWI.

...<< MORE >>

What to make of the recently leaked letter from President Obama to Russian leader, Medvedev, regarding a deal to back off deploying a missile defense system in Eastern Europe in return for Moscow's support in discouraging Iran from pursuing nuclear weapons and a long-range missile capability? 

On the surface, it appears amateurish, and contrary to popular diplomatic wisdom. Why would a salvo be launched from the top without first doing the necessary groundwork to assure the desired response would be forthcoming?  Protocol dictates that Obama underlings should have been dispatched first to secure an unequivocal commitment from Medvedev. Anything short of complete support by the Russian would typically be a signal to pull back so that the initiating party, Obama, would not be embarrassed. It is almost always a goal in such delicate circumstances to preserve plausible deniability. Clearly, that did not happen in this instance. The Russians have essentially balked, or at least expressed serious misgivings, and President Obama is left hung out to dry. Not only does he appear feckless, but he has potentially damaged relations with the Czechs and Poles, two of the primary beneficiaries of the proposed missile shield.

Is it that clear cut of a foreign policy blunder?  Perhaps not; there are other possibilities. It is feasible that Obama was prepared for a no answer. He could have viewed the diplomatic attempt as a win/win situation. If Medvedev would have agreed, Obama scores an early and significant diplomatic victory, and establishes that he is, in fact, more capable than Bush in dealing with difficult foreign policy challenges—just as he claimed during the campaign. If the answer was no, as it appears to have been, then Obama has the necessary cover to move forward and deploy the shield in Eastern Europe, having demonstrated to the world that he made a good faith attempt to address Moscow's concerns.

There are at least a couple problems with the above thesis, though. One, it is very, very unclear that Obama wants to go forward with the missile shield. If he doesn't, his swing-for-the-fences letter is exposed as political naiveté. The potential fallout is that his stature on the international stage is diminished, and Medvedev/Putin are emboldened, not unlike Khrushchev was after his first interaction with President Kennedy.

The second problem, of course, is that Obama has already demonstrated a propensity for decisions of the ready, shoot, aim variety. So, I may be positing more sagacity than actually exists. Given his articulated inflated opinion of himself, coupled with his administration's clumsy handling of cabinet appointments, executive orders (e.g. Guantanamo), legislation formulation, bipartisanship promises, etc., it is fully possible that this was just a plain old gaffe born of gullibility, egotism, and overconfidence.

Shrewd or artless?  It is simply too early to tell. We'll just have to see how the circumstances unfold. ...<< MORE >>

This is change alright. But, is it the change for which we bargained? 

Whether because of arrogance or ideological blindness, President Obama, I believe, has grossly misinterpreted the will of the American people. The country voted for an individual who would enable government to work for us. Instead, we got a President who is causing government to consume us.

So, here we stand at perhaps the most profound inflection point in decades. The direction of the country hangs in the balance. Obama, much like Bush did in the aftermath of 9-11, is using exceedingly difficult circumstances to impose his agenda. Only this time, the proposed changes, arguably, have much more far-reaching ramifications for our sovereignty.

What kind of nation is it we want?  The markets are certainly voting rather clearly. But what of the general populace?  Do we prefer a meritocracy—one that respects the basic tenants of free market capitalism; or, do we desire to be a social democracy, similar to what has prevailed in most of Western Europe over the past 40 years or so?  Make no mistake, the two are very different; unfortunately, as we're learning, they also don't mix.

Why do many demonize capitalism and romanticize collectivism?  Might it be the benefits of the former and the baggage of the latter are not fully understood?  The grass, as millions are learning, is not so green on the other side.

The role and implications of excess in a capitalistic system certainly seems to be misconstrued. Mistakenly, many believe excess can be legislated away and redistributed without impact to the underlying system. Yes, there are reasonable controls to be instituted, but when has government ever stopped at reasonable?  Markets are not perfect by any means, but is government anywhere near as rational or efficient?  Would things be this bad right now if the markets were not paralyzed by government's entropy?

What of the Big Government sympathizers?  It's noble to want to improve conditions for the less fortunate. But, done improperly, without allowing the market to do the heavy lifting, the government often worsens things for us all. Look at Europe. Innovation and opportunity have been suffocated under the big fluffy pillow of social welfare. New business formation and job growth have stagnated for decades. Virtually nothing is spent on national defense. Perhaps it's not so bad for those who have grown up on the government teat, but it's an unmitigated disaster for the younger class—they're not eligible for the same benefits. The weight of an entitlement-centric system has caved in upon itself. And, because the market structure is crippled, options are limited. Even with an outrageous percentage of GDP dedicated to welfare, the continent has rarely been as poor as it is now. And, they've institutionalized away almost any capacity to get out from under the dead weight of government excess.

Is that what we want? 

The Obama budget and "stimulus" appear to be pointing us in that direction. Incongruously, they combine extravagantly high-cost social programs with growth-inhibiting economic policies. Stunning in their arrogance, they scream the laws of economics don't apply—no matter the reams of documentary evidence to the contrary.

The ultimate responsibility for this predicament, however, lies squarely on our shoulders. Through our ignorance and indifference we've allowed intellectual dishonesty to permeate our political discourse. We've permitted counter-factual myths to take root and become generally accepted "truths."  Consequently, devastatingly bad policy has been and is being built on that unstable foundation.

Most accept as a given that the "wealthy" don't pay their fair share of taxes, even though their burden has increased year after year and the top 1%, 5%, and 10% now pay 40%, 60%, and 70% of federal taxes respectively. The bottom 40% ostensibly pay zero.

It has been repeatedly drummed into our consciousness that the "wealthy" disproportionately benefited from across the board income tax cuts, despite the fact that those on the lower end of the scale enjoyed the largest percentage decrease, and the so-called wealthy invested the capital from reduced tax rates into jobs- and wealth-producing endeavors. The consequences for subscribing to these falsehoods are policies that render less efficient the very engine that supports our way of life and aspirations of emerging countries around the globe.

Many also buy into the "income inequality gap" propaganda. As a result, we've become victims of redistributionism. Notwithstanding a seeming misguided belief by scores in positions of power, our economy is not a zero-sum game. We cannot enrich the poor by taking from the "wealthy."  Too bad the redistributionists don't have the foresight to recognize that when incentives are taken away from those who control capital, they're not motivated to, or capable of, creating the jobs the country needs.

Perchance, could it be more important for all to benefit, rather than for the gap to be narrowed?  Isn't the gap a canard, anyway?  Shouldn't the government be most concerned with adequate opportunity for all?   Is it better to be equal and poor, or unequal and more well off?  Shockingly, many seem to prefer the former.

It is critical that we continuously and tirelessly work to empower the underclass. To make it happen, though, the market must be allowed to flex its muscles. The government's role is to remove barriers to opportunity and prosperity, not construct them.

The path we're on is quite tenuous. It's time to pay attention and cut through the political doublespeak. Separate the truthful from the specious. Don't allow facts to be distorted. We're getting a firsthand look at what life is like in Big Governmentville. Speak up if you don't think it's so great. There may not be another chance for quite a while.

Remember, every great power has been felled by an inability to defend itself, government excess, or a combination of both.

Financial institutions have been excoriated by politicians for their excess and for becoming "too big to fail."  How sadly ironic that the government is on the exact same course. Do as I say, not as.....
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Bobby, Bobby, Bobby (Jindal, that is). Now what?  You've just given the worst speech of your political career and sent your presidential prospects plummeting faster than Lehman Brothers over a September weekend.

Perhaps you can take solace in the fact that Bill Clinton had a similar experience. Remember the 1988 Democratic National Convention?  Michael Dukakis chose Clinton to give his nominating speech—an enormous honor for a smart, high-potential, relative unknown on the national stage. Sound familiar?  Unfortunately, young Bill laid an egg of monumental proportion. Sound even more familiar?  Clinton was nearly booed off the stage. The pundits labeled his effort the most boring convention speech of all time. In the blink of an eye, a shooting star burned up in the atmosphere of big time politics.

So, how did he get elected President four short years later?

Fortuitously, he had the wisdom and good fortune to appear on Johnny Carson within a week of the convention debacle. On the show, Clinton displayed a self-deprecating sense of humor about his already legendarily bad performance—saying, among other things, that it was all calculated to make Dukakis look good. Johnny and the public ate it up. The deal was sealed when Clinton got up and played the saxophone. In a matter of a week, we had witnessed an abrupt political death, and an equally sudden resurrection. Amazing.

Can Jindal have a similar revival?  Possibly, but it will be challenging. Jindal's speech, I believe, was more damaging than Clinton's was in 1988. Whereas Clinton was merely boring, Jindal came across as amateurish and not-ready-for-primetime. A Carson-like moment may not be enough. He needs to re-establish his bona fides. Louisianians understand he's a man of substance, but others, due to his rebuttal performance, do not. Fortunately for him and his supporters, he does have plenty of time to mature and recover. Although he does not possess Clinton's charisma, he has connected with the people of Louisiana. He has to find a way to make that translate nationally.

Jindal does share many of Clinton's positive characteristics—he's smart, highly-educated, from an interesting background, well-versed on policy, and full of ideas. His success, however, will hinge on a capacity to present those ideas in an interesting fashion. That does not mean abandoning the core tenants of Republicanism—limited government, strong defense, and values. It does mean communicating them in a manner that is meaningful to Independents, moderates, and younger voters.

There's no doubt that the events of the next four and possibly eight years will require the message to be tweaked around the margins. If Obama's head first dive into the Big Government pool yields unequivocally positive results, then it may very well be back to the drawing board for the GOP. For the sake of the country, let's all hope Obama's right. Unfortunately, there's that long and pesky economic history which indicates otherwise. If Obama's policies don't work, or if the results are ambiguous, Jindal and the Republicans will have room to maneuver.

My sense is that the Republican case, beyond core principles, will need to focus on personal freedom. If we stay on the present path, the government is going to play an increasingly intrusive role in our lives. Though it may be fine initially as people mistakenly think they are getting something for nothing; over time, many, particularly those who are aspirational (including the young), will rethink the non-trivial loss of control they are likely to have over their lives.

Jindal and the GOP must tap into that uniquely American spirit of independence—the notion that every person, through hard work, and industry, can control his or her own destiny. They need to reinvigorate our entrepreneurial character, and belief that the best way to improve our lot as a nation is to expand the size of the pie. We all benefit, especially the less fortunate, when the economy is growing and vibrant. Prosperity is not, as many on the Democrat side of the isle seem to believe, a zero sum game. There is an inextricable link between the well-off and the not so. Jobs, as we are experiencing every day, do not get created out of thin air. Healthy, adequately capitalized businesses, big and small, coupled with an educated, motivated, and properly incented workforce, produce those jobs.

Personal responsibility, not dependence on government, the Republicans must convince, is an enabler of freedom. We can do more to lift up the weakest if we avoid creating a culture that cultivates dependence, saps ambition, and devalues effort and risk-taking. There is no shortage of historical examples from which the Republicans can draw.

So, pick your chin up, Bobby; it's not over for you, but you're going to have to be that much better from here on out in order to make a difference.

It won't be easy, but it's doable. ...<< MORE >>

With each successive day, this administration is proving that packaging is not a clear indicator of contents. On the box we bought it said, "Change."  Its ingredients were: a new style of governing—one where ideology is left behind and replaced with pragmatic collaboration; a government populated by the best and the brightest—all pulling together to constructively solve difficult problems; a well-oiled machine, ready to step in on day one and make a difference; Camelot.

Well, so far, Camelot feels a bit more like Sandlot.

Today's Fiscal Responsibility Summit is yet another example of what the Obama administration has come to embody. It was political theater of the first order. It's brilliance, should it continue to go unexposed, lies in the fact that it plays marvelously to the casual observer—which happens to be the preponderance of the electorate. It's designed to give the illusion of open-mindedness. John McCain played the perfect stooge at today's Summit-ending Q&A session when he was tapped by Obama to pose the first question. Beautiful. Just beautiful.

What has resulted from all this posturing and pseudo-listening over the past 30+ days?  From the GOP's standpoint, exactly nothing. At every turn, Obama has pushed his Big Government agenda, all while singing from the bipartisanship hymnal. Every major policy proposal has been out of the Liberal playbook—not a single bone for fiscal conservatives.

Of course, he has every right to pursue his program. The intellectual dishonesty, tough, is off-putting. More than likely, it will also have political consequences down the road. The bloom will come off the rose. The opposition and the American people don't like to be played. They will eventually see through the pretense. If it doesn't stop soon, it will assuredly lead to more partisanship and less trust. Exactly what Obama was elected to rise above.

The tipping point could very well be the budget negotiation. Obama just pledged to halve the deficit within four years. On the surface, that is music to the ears of many, including Republicans. But, how does he get there?  There's the rub. He somehow wants to reduce an already $1.3 trillion (and growing) deficit while simultaneously raising taxes and expanding government in unprecedented fashion (e.g. massive healthcare and energy spending hikes). This is liable to be the last chance for bipartisanship. The Republicans obviously cannot support a budget so constructed; it is antithetical to everything for which they stand. It is also contrary to general  knowledge of what not to do in a major slowdown. Raising taxes in the midst of a deep recession?  Besides lacking any common sense, it is eerily similar (minus the spending cuts) to Roosevelt's move in 1937 that triggered another significant leg down in the Depression.

So, will we get more political sophistry from Obama, or will he make a legitimate effort to incorporate some Republican pro-growth ideas into the budget. If he does, there's probably a deal to be had. If not, it will be a replay of the "stimulus" saga—a shutout in the House, and near shutout in the Senate.

It's possible that Obama's first budget volley was intended to be so outrageously Big Government as a negotiating ploy—starting sooo far to the Left that he can be conciliatory on a few items, while not detracting materially from a very Left-leaning  plan. It remains to be seen. To date, he's conceded virtually nothing, while working diligently to give the opposite impression.

A lot of people bought the Obama package thinking it was fresh and organic; only to find out it's loaded with trans fats.

So much for truth in labeling. ...<< MORE >>

If I've heard it once, I've heard it a thousand times. Politicians and pundits, discussing the housing meltdown, have made speculators the demon du jour, just as they were six months ago when the price of oil was through the roof. How many times have you heard the "not playing by the rules" rhetoric?  Besides being blatantly false, it's a dangerous message to be sending, and a large part of why Wall Street is crumbling.

Risk has become the latest four-letter word. It is at the center of a fashionable and troubling attack on free markets and the investor class. Risk taking was, in many respects, out of control. Regulators were asleep at the switch. Against the rules, however, is far different from lacking control. Words matter, particularly when they are perceived to be indicative of the policy preferences of our President and Legislature. These attacks, whether purposeful or inadvertent, are being interpreted as an assault on Capitalism. Is it any wonder why the market is off 50% and heading lower?

Many politicians struggle with this Capitalism thing. It's hard for them to get their arms around the fact that excess is its residue. We are the biggest magnet for capital, talent, entrepreneurship, and innovation because the rewards are so great. In return, we export progress, wealth, and security around the globe.

Capitalism benefits from sensible regulation, but recoils when the hand of government is too heavy. And, boy is it ever heavy right now.

The pendulum is swinging way too far in the wrong direction. We need no more proof than the following quote from a few days ago:

“Nor should we turn a blind eye to the fact that the spirit of free enterprise, including the principle of personal responsibility of businesspeople, investors, and shareholders for their decisions, is being eroded in the last few months. There is no reason to believe that we can achieve better results by shifting responsibility onto the state.”

Was this said by one of the Republicans leaders in the House or Senate?  Or, perhaps Hannity or Limbaugh?

Nope, it was Vladimir Putin. That's right, PUTIN. In the same interview, he said,

"The US should take a lesson from the pages of Russian history and not exercise excessive intervention in economic activity and blind faith in the state’s omnipotence."

When Putin starts lecturing the United States on the evils of Socialism and the merits of Free Markets, something's up. In my view, it signals one of two things...the end of the world as we know it; or, we've hit bottom and will start to see an upturn sometime soon.

I'm an optimist, so I choose the latter interpretation. Of course, it won't happen without all of us saying enough is enough.

...<< MORE >>

What was so tantalizing about Barack Obama was that for the first time, perhaps since President George Washington, common sense might no longer have been the enemy of ideology. Just maybe we wouldn't have to endure iteration after iteration of ridiculous government initiatives and programs until there is nothing left to do but what was so very, very obvious in the first place. There was palpable anticipation that we might be able to coalesce the best ideas from each party into policy proposals that would solve the current and future's most vexing problems. So far, that is still a dream.

Pick any issue and I guarantee that a small group of rational non-politicians, not burdened by partisanship, could deliver a far more credible solution than could ever be expected from Congress and the President.

Consider the "stimulus."  Setting aside the debate over its size, it's clear to most, that if the goal is to stimulate the economy, this is about the worst possible way to spend $800 billion. Even Paul Krugman, the Nobel prize winning economic conscious of the Left, agrees that the package is terribly non-stimulative. Why did it end up this way?  Ideology trumped reason. We ignored what's consistently worked in the past for a litany of giveaways by a beholden group of politicians. So, we get to waste $800 billion and simultaneously balloon the deficit, only to come back in several months with another costly program that's supposed to do what the first one failed so miserably to accomplish.

How about the auto industry debacle?  There's nary a coherent thinker around who doesn't recognize that the automakers require a pre-packaged Chapter 11 in order to shed their unwieldy obligations and become viable for the long term. Instead, in the name of dogma, we throw billions and billions of dollars at the Detroit Three only to have them repeatedly come back to the government trough because they can't or won't affect necessary structural changes. So, we wasted critical time and tens of billions of dollars, all because the obvious has been the enemy of the ideological.

Think about energy policy. We know it will take at least 10 or 20 years to dramatically reduce foreign oil dependence, yet we don't do what's necessary to accelerate and smooth the transition. We could be much more aggressively evolving the power grid to predominantly use renewable sources such as nuclear first, then solar and wind. We could also be drilling for more domestic oil in the interim to better insulate ourselves from the unstable nations who presently supply us. Every clear thinking individual knows that the oil industry has a near perfect environmental record over the past couple decades. Technology has made drilling-related spills practically obsolete. Politicians simply don't have the courage to shed their long-ingrained predispositions and stand up to the partisan interest groups on both sides.

Look at gun rights. Most sensible people can agree that the 2nd Amendment gives us certain liberties. Those same people probably can also consent it makes sense to require fire arm registration. Furthermore, I bet they'll concur that an M-16 isn't necessary to hunt squirrels. Common Sense.

Go down the list.

Do we really need the complex maze of restrictions and regulations that put obstacles in the way of responsible stem cell research?  They've plainly been layered on to assuage various interest groups.

Is there any lucid person who doesn't realize our tax code is too complicated?  Surely there are fair and practical simplifications that can be agreed upon by evenhanded people.

Who is confused about the unsustainability of our entitlement system?  If a social safety net is generally desirable, then tough compromises must be made. Continuing to postpone the inevitable only makes the ultimate solution that much more painful.

A month ago, there was hope that these and many other issues/problems might be addressed in a way that brings both sides together and incorporates the best ideas from up and down the political spectrum. Today, that optimistic view has been replaced by the realization that we are much more likely to be re-inflicted with the business-as-usual virus.

Too bad. A great but rapidly weakening country could have been reinvigorated.
...<< MORE >>

• The "stimulus' bill was so urgent that the final vote was held in the middle of the night and Congress had no time to read the complete and final product, yet Obama lets it sit on his desk for three days?
• The Republicans were right to oppose the dreadful "stimulus" bill, but House Leader, John Boehner, was wrong to direct his caucus to vote against it before Obama met with them.
• Arlen Specter is toast. Unfortunately for the Republicans in Pennsylvania, they have a very weak bench.
• Why has Charlie Rangel been allowed to maintain his Ways and Means Committee chairmanship while he is under investigation by the Ethics committee for numerous serious infractions?  Apparently, the shelf-life on Nancy Pelosi's pledge to "drain the swamp" has expired.
• Are the Democrats politically suicidal enough to support the Fairness Doctrine?  I doubt it.
• It's remarkable that the largest government spending program in history does little to nothing to address the issue, housing, that virtually all believe to be the root of the economic downturn.
• Bet the farm that we will see another "stimulus" of similar size before the dust settles. Just hope it's not as ill-conceived.
• It's a shame the general populace doesn't recognize that the uncertainty caused by government's misguided and convoluted words and actions is what's preventing the economy from recovering. The real solution, private sector re-engagement, will not happen until the road ahead is more clearly defined and the government gets out of the way.
• As I've posted numerous times, the auto industry will be back for more money (which looks imminent) and not get on the path to recovery until a pre-packaged Chapter 11 is negotiated. Unfortunately, this administration apparently believes in a government first approach.
• By now, shouldn't Illinois have forfeited its right to a second U.S. Senator?
• In recent times the two worst congressional leaders have been Tom DeLay for the House Republicans and Harry Reid for the Senate Democrats. Strictly speaking, DeLay was effective in the short run, but ultimately damaging to the party because of his hyper-partisanship. Reid is simply inept beyond comprehension.
• "If stupidity got us into this mess, why can't it get us out?"  —Will Rogers
• "One of the penalties for refusing to participate in politics is that you end up being governed by your inferiors."  —Plato

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I always find it curious when policymakers repeatedly ignore unambiguous historical data in the hopes that somehow things will be different this time. I've detailed several examples in previous posts. I have not, for the most part, touched on the states and how their experiences are regularly disregarded by federal officials.

Within our union we have 50 examples of various courses of action and their resulting assortment of outcomes. It's correct that the states are not truly independent units; they are impacted by a variety of federal and other external stimuli. Nevertheless, you'd think there's still much to be learned by comparing and contrasting the way in which their individual economies are managed.

It is not coincidental that the states who consistently find themselves in the most fiscal difficulty are the ones who are a study in governmental excess.

There are many examples, but California is the prototype. As someone who lived there for over six years, I can comment first hand. The not so invisible and extremely heavy hand of Republican and Democrat rule has left the state in shambles. Isn't it amazing that people are surprised when the combination of ridiculously excessive individual and corporate taxes, coupled with egregious over-regulation of everything regulateable, has led to massive budget deficits, a dramatic outflow of capital—human and business, and striking levels of inequality?

As Californians frequently remind us, all major trends start there. Congress, as well as our current and past President, are certainly doing their destructive best to make sure that axiom holds true.

California is now faced with a budget deficit expected to exceed $42 billion. In the legislature's collective effort to grapple with the situation, they are actually contemplating tax increases. That's right, in order to protect their absurd culture of spending on entitlement programs and far out of the mainstream causes, they may find it "necessary" to raise an individual income tax already near or above 10%; a corporate tax that can exceed 10%; a sales tax rate among the highest in the country; excise/luxury taxes that are mind boggling, and a host of other fees and taxes.

Of course, the kicker is, that despite all of this spending, CA still has substandard infrastructure and public services, and the eighth worst income inequality gap in the country.

Sounds peachy, doesn't it?  Hope so, because it's coming all of our way. The outrageous fiscal irresponsibility of the federal government has only just begun. There are several more massive spending initiatives queuing up.

It simply won't work. It never has. We'll continue to be in deep and deepening trouble until our "leaders" stop impeding our quasi free market system from working its magic. The path to shared prosperity is not lined with government spending.

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Subsequent to the stark party line vote on the "stimulus" package, scan the Internet or pick up virtually any news-oriented publication and you'll see commentary on the difficulty of bipartisanship. A consensus of pundits and reporters agree that Obama's rhetoric about cross-party cooperation was well-intentioned, but in the end, probably naive. The musings of an idealist. They remark that it's simply too hard to get both sides together—the differences are too engrained, and the issues are too polarizing. Really?

There are numerous historical examples of divergent sides coming together to pass important legislation. Republicans in the Congress were largely responsible for passing LBJ's Great Society. Bill Clinton and congressional Republicans came together on sweeping welfare reform. And, Truman, with the benefit of strong bipartisan support, was able to push through the very expensive and controversial Marshall Plan. It is clearly doable.

Isn't it amazing, particularly given the gravity of our current economic situation, that the media has been quick to ignore the very essence of what Obama campaigned on, and probably the single biggest issue that swayed Independents and liberal/moderate Republicans in his direction?  And, they disregard it without so much as a fleeting admonishment and/or cursory examination.

As we all know, and as Obama has pointed out somewhat arrogantly on several occasions, elections have consequences. He, his administration, and his party certainly have the right to push through their agenda. But, isn't it odd that somebody who wrapped himself in the blanket of change and bipartisanship would so readily cast aside what made him appealing to so many?

Make no mistake about it, there was a deal to be had. The Republicans just needed a bone or two and large numbers of them would have willingly signed on. Instead, Obama and the Democrats presented them with something that was impossible to support. Near every element is antithetical to fiscal conservatism. The GOP would have backed infrastructure spending and the extension of unemployment benefits, as well as a handful of other items, had the bill included one or two of any number of time-tested and truly stimulative incentives (e.g. reduction in the:  corporate tax rate, capital gains tax rate; payroll taxes; marginal income tax rates. Meaningful incentives for home buyers would also have been agreeable. Etc., etc., etc.). A material number of Republicans were ready to grudgingly accept the near $800 billion price tag had a mere quarter or third of the total been targeted at their solution(s).

So, don't walk away from this "stimulus" debate believing that bipartisanship is impossible. It was and is possible...and it wouldn't have been terribly difficult. Obama simply chose a different path. That's unfortunate for those who believe there are real problems to be solved and cooperation is essential. It is even more regrettable that in this time of greatly diminished confidence, the President wouldn't be so forward thinking as to realize the advantages associated with a more unified government.

Let's hope the Obama experiment in bipartisanship is not over. ...<< MORE >>

Guest Blog By:  HEATHER DIETRICK

In an era where Fox News seems to have embraced the irony of its slogan, it appears as if the other news organizations are following suit, albeit in a more surreptitious way. Take for instance this week's "Room for Debate" post on the New York Times' website:  http://roomfordebate.blogs.nytimes.com/2009/02/13/obama-beyond-the-beltway/. The segment's tag line suggests that it will feature competing viewpoints from ideologically opposing sides. To the contrary, this week's post features five congruous opinions on Obama's trip around the country to stump for his struggling stimulus plan. In so many words, all five commentators give three cheers for the trip, with no criticism of his running back to the fan club after the big boys in Washington wouldn't play nice. In a supposed nod to the conservative viewpoint, the New York Times features the opinion of Dan Shnur, McCain's communications director for the 2000 campaign, who happens to cross party lines to sing the praises of Obama's stumping.

With Hannity filling the screen sans Colmes these days and Bill Kristol off to the Washington Post, our major news media are becoming increasingly polarized. I just hope that the viewers are alert to the allegiances of their news sources and are willing and able to dig beneath the bias to form their own opinions.

If I were David Brooks, I'd be sending my resume to the Wall Street Journal, since this looks like the wave of the future.

...<< MORE >>

In a surprisingly long list of Obama administration missteps over its first three weeks, one stands out as having the greatest long-term political ramifications. Prior to the election, right or wrong, most Americans came to the conclusion that Republican mismanagement was largely responsible for the economic collapse. Democrats appeared to have bought themselves a considerable window of time whereby liability would continue to be assigned to the Republicans. Presumably, Obama and team would be able to use that period of special insulation to make particularly difficult decisions and begin the process of reinvigoration.

Chalk that up under "the best laid plans."  The tightly focused, near error-free machine that was the Obama team during the campaign has morphed into the Bad News Bears. Or, more appropriately, Da Bad News Bears. Nowhere has that been more evident than in their mishandling of the "stimulus" package.

Obama has managed to assume responsibility for the troubled economy much earlier than was necessary. That would be fine, and perhaps even boldly preferable, if he was seen to have spearheaded a broadly popular and economically sound piece of legislation through the Congress, but unfortunately, it's quite the contrary. Instead, his name is stamped in big bold letters across a disaster of a package that is viewed by the majority as more harmful than good.

It didn't have to be that way. The Audacity of Hope has turned into the Tragedy of Arrogance. In a gross misinterpretation of their electoral mandate, not to mention repudiation of their campaign mantra, Obama and the Democrat leaders adopted an "our way or the highway" approach. Obama and Pelosi went so far as to lecture Republican Eric Cantor and others that "we won so we get to write the bill."  Funny, I didn't realize that's how bipartisanship worked. If I'm not mistaken, the mandate was for change and a new way of collaborative governing, not the same old partisan posturing.

Well, whether he likes it or not, title to the economy is now in Obama's and the Democrat's hands. If they're not very, very careful, the repossesser may be knocking on the door of 1600 Pennsylvania in four years. ...<< MORE >>

I'm still trying to figure out if Senators Collins, Snowe, and Specter are evil geniuses or bumbling fools.

Somehow, despite recent overwhelming Democrat success at the polls and near total Republican ineptitude and disarray,  the good ol' GOP miraculously found themselves in a position of power over the "stimulus" bill negotiation. The Democrats needed to sway two Senators in order to prevent the legislation, in its then current form, from being killed.

In the name of moderation and bipartisanship, in step the "Pros from Dover":  Collins, Snowe, and Specter. One would have suspected that given Obama's rhetoric on cross-party cooperation and the Republicans unexpected but ostensible veto power, that the resulting legislation would have been acceptable to a majority of each party. Nope. The Three Stooges managed to agree on something equally as bad as what came out of the House of Representatives. Remarkable.

Their first mistake was attempting the negotiation in the first place. Had Collins, Snow, and Specter stood firm with their colleagues, Obama and the Democrats would have had no recourse but to enter into a true bipartisan process, instead of the farce that they perpetrated. Democrats and Republicans could have collectively crafted a bill from the ground up that would have had broad support—support that would have translated into a unified message and greatly bolstered confidence on Main Street and Wall Street. Oh well.

What were Collins, Snowe, and Specter thinking?  Were they driven by ego, hubris, perceived political considerations at home, brain cramps....?  Whatever it was, it was certainly misguided, and probably damaging to each of them down the road. Specter will likely pay the highest price. Pennsylvania is not liable to be as forgiving as Maine.

One thing is clear, neither of these three ever took Negotiating 101 in college. I'd bet at least one had an ancestor who represented the Indians on the Manhattan transaction, Napoleon on the Louisiana Purchase, or the Russians on the sale of Alaska.

The biggest loser in all of this is the country. We ended up with an inferior, potentially damaging piece of legislation, particularly in the long run, that will do little in the short run to lift us out of the doldrums. Instead, we'll have to rely on our economy's natural resilience. Opportunity lost. The other losers very well could be Obama and the Democrats. They had a real chance to build on the election and solidify Republican support for a new type of government. Alternatively, they've galvanized the opposition and lost a tremendous amount of goodwill.

So, by shooting themselves and the country in the foot, Collins, Snow, and Specter may have markedly improved the Republican Party's chances in 2010 and 2012. Personally, I'd rather see the country back on track. ...<< MORE >>

Former presidential candidate and part-time Republican wing nut, Ron Paul, recently proffered legislation to eliminate the Federal Reserve. Paul believes that since its creation in 1913 the Fed has been responsible for a boom-and-bust monetary policy that has caused every economic downturn in the ensuing century.

Paul postulates that "abolishing the Federal Reserve will allow Congress to "reassert its constitutional authority over monetary policy."  If you didn't fully grasp the previous sentence, read it again. That's right, he wants Congress to control monetary policy!  Wouldn't that be special?  Imagine partisan windbags on both sides of the isle grappling over the money supply and interest rate policy. Can you think of a faster path to economic ruin?

Like all politicians with an agenda, Paul cherry-picks the facts. The Fed does have a spotty record over the past 96 years or so. What Paul neglects to point out, however, is that for much of its history, Fed independence was largely a myth. It was dominated directly and indirectly by the Executive branch. In fact, for years, the Federal Reserve Board actually included administration officials (Treasury secretary and Comptroller of the Currency). Although taboo in recent decades, past Presidents were quick to pressure the Fed to act in accordance with administration objectives.

Moreover, for years, the Fed was hamstrung by flawed economic theory. It wasn't until Milton Friedman's breakthrough work that inflation was understood to be "always and everywhere a monetary phenomenon."

Since the Fed has achieved ostensible independence, and become cognizant of the key inflation driver, it has been much better equipped to manage our economy's vicissitudes. As a result, downturns have generally been shorter and more shallow.

If President Carter's catastrophic fiscal policies weren't enough, envisage the additional carnage that would have resulted if Fed head, Paul Volcker, wasn't empowered to administer the right monetary medicine. Any chance that Congress would have had the courage to allow interest rates to skyrocket, thereby tamping down business investment and spiking unemployment, in order to choke off inflation?  I think the answer to that question is pretty clear.

Sure, we've had to endure a Greenspan-induced bubble or two, but does anybody seriously believe that is worse than if Congress were in charge—not withstanding the swell job they're doing right now with the stimulus package? ...<< MORE >>

Has a public policy with such an incontrovertible record of success ever been as maligned as tax cuts?  Yesterday, Obama flippantly dismissed them as the "same tired arguments and worn ideas..."

The great irony is that the very people who should be most supportive, Democrats, fight them at all costs. The revenue they so need to fund their expansive and expensive social agenda is choked off by short-sighted and reflexive ideological opposition. Undeniable empirical evidence that federal receipts are substantially increased as a result of tax cuts is set aside in favor of class warfare rhetoric. Why?  Is it so repugnant to see the more fortunate benefit, even when it means the less fortunate will also gain, often in a disproportionately positive fashion?  In the 1930's many New Dealers believed that heavy taxes on the rich were a moral imperative. Unfortunately, the nowhere-near-rich were forced to endure more than a decade of pain while Roosevelt attempted to extract his pound of flesh.

The history of tax policy from 1789 until today is rather unequivocal—federal revenue and tax rates have an inverse relationship. In fact, the data is so consistent that a regression analysis would surely show an R squared value near 1.

Whatever happened to JFK Democrats?  He was a staunch fiscal conservative, but still supported the standard Democrat social agenda (e.g. raising the minimum wage; empowering unions; growing entitlements; etc.). Kennedy was the first president to push through major tax cuts while the government was running a deficit. He did so with a goal of doubling GDP—understanding that a higher budget deficit would have to be endured for a short time until the anticipated growth brought the budget back into balance. Which it did.

Significantly, Kennedy rejected advice from noted Keynesian and preeminent Harvard economics professor, John Kenneth Galbraith. Galbraith, in his book, The Affluent Society, criticized "private affluence and public squalor (class warfare speak of the time)."  He strongly encouraged Kennedy to stimulate the economy by dramatically ramping up outlays for public works (even though doing just that was a categorical failure for both Roosevelt and Truman). Sound familiar?

Kennedy ended up spearheading the passage of an investment tax credit for businesses, followed by across-the-board reductions in individual and corporate income tax rates. Those measures triggered a major economic boom in the 1960's, which included a doubling of federal revenue. Real GDP growth jumped from 2.5% in 1960 to 6.4% in 1965. Unemployment fell from 6.6% to 4.0% during roughly the same period, and the budget deficit was wiped out.

The results were similar during the Reagan years. In the 1980's, as a result of Reagan's tax cuts, revenue doubled. Tax "fairness" also improved. For example, total taxes paid by the top 1% of earners rose from 18% to 28%.

Despite much demagoguing to the contrary, Bush 43's tax cuts also delivered solid outcomes. Revenue rose $276 billion between 2003 and 2006, and those in the upper income brackets now pay a record percentage of all taxes.

So, why aren't Democrats supply siders?  Either they just don't recognize the facts, or they believe there is more political mileage in playing the rich against the poor. To the detriment of their constituents, when it comes to tax policy, the Democrats shoot themselves in the leg more than Plaxico Burress on a St. Patrick's Day bar crawl.

JFK liked to say that a "rising tide lifts all boats."  In 2009, the tide is rising, but it's from a tsunami of government spending. ...<< MORE >>

From a Politico.com piece by Glenn Thrush and Patrick O'Connor (in italics):

A fired-up Barack Obama ditched his TelePrompter to rally House Democrats and rip Republican opponents of his recovery   package Thursday night – at one point openly mocking the GOP for failing to follow through on promises of bipartisanship.

In what was the most pointedly partisan speech of his young presidency, Obama rejected Republican arguments that massive spending in the $819 billion stimulus bill that passed the House should be replaced by a new round of massive tax cuts.

A presidential record—only 15 days to eschew a central campaign theme. So much for a new spirit of cooperation. Apparently, Obama, like Bush 43, thinks bipartisanship is getting the other side to do exactly what you want. It seems people are catching on that listening and soliciting ideas does not equate to compromise—a little give has to accompany the take.

Set aside the technical and historical economic arguments I've made in past posts and just consider for a moment how bad this "stimulus" proposal must be if a popular President with a substantial majority in each house and a generally supportive media can't get it across the finish line. Where are the vaunted instincts we heard so much about during the campaign?  What happened to the promise to scrutinize spending initiatives page by page and line by line?  Why can't the supposedly savvy Rahm Emanuel read the tea leaves?  Who thought it was a good idea to give the exceedingly liberal Democrat House leadership carte blanche to craft the package. Wasn't it obvious they'd stuff it like a Thanksgiving turkey?  Shouldn't a shrewd presidential team have been more adept at controlling the process?

I hoped that Obama's election might trigger a real groundswell of optimism and a resurgence of confidence. Perhaps it's not too late. Unfortunately, all the missteps, coupled with the repeated talking down of the economy and incessant fear mongering, are having the opposite impact.

During the 1980 presidential campaign, Ronald Reagan famously said, "Recession is when your neighbor loses his job. Depression is when you lose your job. Recovery is when Jimmy Carter loses his job. "   For the sake of our collective economic health, let's hope the 2012 Republican nominee is not paraphrasing that quote.

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In the vernacular of college basketball, Obama ran a successful fast break or two after the opening tip, but since has turned the ball over several times and surrendered much early momentum. It's time to call a timeout, take a step back, and regroup. He needn't abandon his strengths, but he should assess what the defense is giving him and adapt his game plan accordingly.

To quote Will Ferrell's parody of George W. Bush, "Presidentens harrrrd."  And it's made all the more difficult when the incoming administration paints virtually all that was done in the previous eight years with a brush of incompetence. It is always dangerous to be defined in such self-righteous, superior terms, particularly in a job as utterly complex  and unpredictable as President of the United States. Karma has a way of biting you in the behind.

Obama's approval rating has already dropped from 72% to 58%. That should signal his team that policy trumps personality. Results matter more than rhetoric. If Obama thought he could skate by on charisma and likability, he's learning otherwise. Anybody who saw his interview prior to the Super Bowl had to be impressed with his congeniality and charm. Clearly though, the public is demonstrating an ability to separate personality from performance. So far, there has been little congruence between discourse and deeds.

Obama is fortunate that he will have an opportunity to recover from his administration's early stumbles. The media applies a different standard of scrutiny to president 44 than it did 43. Even though it's rather remarkable that at least five major Obama appointees (Daschle, Richardson, Killefer, Geithner, and Holder) have withdrawn their nominations or had serious issues/conflicts revealed, you're not seeing the near universal condemnation and cries of incompetence that would accompany such a situation if the new president were not a media darling.

The media, though, should not be underestimated; it will be more challenging than most people believe.

The President has made such a big deal about transparency. No doubt that stance has won him initial favor with the public and with a press that abhorred Bush's perceived secretiveness. Obama is finding out, however, that it's a double-edged sword. Most citizens, I believe, don't care a heck of a lot about how the sausage is made. They want and expect ethical behavior, but are mostly concerned that the trains run on time. They certainly don't want government continually preaching about how it's acting in their best interests. Actions speak louder than words. The populace is not so much interested in the nitty gritty details of each and every policy debate, as it is with quiet managerial and organizational competence and sound outcomes. Obama might want to put down the books on Lincoln and pick up one on Eisenhower; he could learn something.  Ike entered the presidency with enormous goodwill, but didn't use it to lecture—simply to govern. Transparency is a noble goal, but symbols only go so far.

Most interesting is whether Obama's stated desire to make government work by tearing down the old partisan divides is feasible in today's 24/7 cable news and Internet-centric world. It is not yet clear that the media, albeit friendly, is fully prepared to deal with a President who doesn't fit into a neat ideological box. The inevitable residue of cross-party cooperation is message confusion. If Obama pursues his bi-partisan ideal, will he be able to define himself in a way that doesn't weaken him in the eyes of the media and the public?  I think that will prove to be a most difficult challenge. His communication skills at least give him a fighting chance.

Time out is over; now get back in the game and fight, fight, fight. ...<< MORE >>

Following, in no particular order, are some initial thoughts about, and impressions of, our new president. Obviously, it is far too soon to know if these inklings are perceptive or completely lacking in intuition. In any event, it will be interesting to revisit this post in twelve months and beyond.

• Obama talks a great game when it comes to bipartisanship; however, true bipartisanship is about more than convincing the other side to do things your way. It involves actual, substantive compromise. Candidate Obama, aided by a sympathetic media, was masterful at giving the impression he was listening to opposing views. President Obama is getting a quick lesson that listening is not enough when you're actually the Decider-in-Chief. Listener-in-Chief won't cut it—as was just proven with the House's vote on the stimulus package. Despite "listening" to Republican ideas, the President garnered exactly zero Republican votes. Listening, without compromise, is ostensibly meaningless.
• It is not yet clear to me who Obama is. In many respects, he has shown himself to be quite different than advertised. During the campaign, the Right attempted to paint him as a committed ultra Leftist. So far, that characterization has not proven particularly accurate. For each traditionally liberal action, such as the big government approach to stimulus he supports, or appointments for CIA and Trade Representative, there have been many other more moderate actions (e.g. cabinet picks for Education, Defense, NSA, Treasury, and State; and indications that he won't rubber stamp organized labor's agenda). It's possible that he is left of center rather than left of left, and merely used the Chicago machine to advance his political aspirations. It is also feasible that he had a centrist epiphany. We shall see.
• Obama should realize that although his election was an inspiration to many, and he is generally viewed as an inspirational figure, the position requires overt optimism. His incessant talking down of our current situation in order to lower expectations and shift blame is impeding our ability to recover. As Eisenhower said, "Optimism and pessimism are infectious, and they are spread more rapidly from the head downward."  Obama, and most others, are dramatically overestimating what is necessary to reverse the downturn, and the time frame in which it can happen. It is almost all a matter of confidence.
• Although blessed with numerous positive traits, I worry that Obama may be afflicted with an especially undesirable characteristic for a president—a desire to be all things to all people. He has shown early signs of being hyper-sensitive to criticism. In a 60 Minutes interview prior to the election, he said that he pays particular attention to negative media so that he can better craft his message. That is a double-edged sword. During the campaign, we witnessed how he'd say one thing to a west coast constituent group, then turn around and say something very different to a gathering on the east coast. At some point, you have to have the courage of your convictions. Basic principles and philosophies can't seemingly change with the wind. Margaret Thatcher once said of Ronald Reagan, "He only had five or six ideas, but all of them were big and all of them were good."
• Style points quickly fade into oblivion when not followed by real results. In his rush to make a bold statement on Gitmo, Obama may have out run his coverage. It appears that he made a commitment before fully thinking through and understanding all the complexities (his complete national security team was not even in place). Bush took ready, shoot, aim to a new level. Let's hope Obama is not following in his footsteps.
• Obama's decision to keep his Blackberry is troubling. That device will be the target of hackers across the world. It's stubborn and amateurish to put national security at risk (no matter the enhanced protections) for a relatively minor convenience. Style should not trump sound judgment.

Overall, I think Obama is having a bit of trouble finding his footing. He would benefit from calming down, slowing down, worrying less about style, and focusing on making sound, well-informed decisions. He has a tremendous amount of domestic and international goodwill, but that will evaporate quickly if a sketchy decision comes back to bite him. I like his upside, but he needs to smooth out the edges.

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It's disconcerting that the new administration is pushing forward with a "stimulus" package that is conspicuously lacking stimulative elements. The government's very own Congressional Budget Office (CBO), which scores prospective and actual legislation, says that only 5%, or thereabouts, of what is proposed will actually impact the economy in year one. What good is "stimulus" if it's not immediate?  Of course, the answer is...no good at all.

Unfortunately, what we are witnessing is politics as usual. The package is nothing more than a spending bill that panders to the usual suspect constituent groups. It's social policy in sheep's clothing. It grows the federal bureaucracy and increases the deficit, but does virtually nothing to permanently improve the productive, job- and wealth-creating capacity of our economy.

Where is the stimulus in a temporary tax credit for individuals and families, or in aid to state and local governments, or in government-financed infrastructure spending?  Doesn't anybody find it remarkable that the proposed package includes roughly $150 billion for an individual/family tax rebate/credit...yeah, that's right, nearly identical to the one that failed so miserably in February of 2008—and every time prior?

The federal government, although quite large, is just a fraction of the private sector. Why then would we not direct our efforts toward incenting the private sector to deploy its considerable resources?  Not only would the impact be orders of magnitude greater, it would have the added benefit of not depleting our tax dollars—allowing those dollars to be directed toward desirable social and economic ends, or, heaven-forbid, saved for a rainy day.

I'm afraid the reason we don't veer away from these empirically discredited approaches is that we're still constrained by ideology. So much has been invested in stigmatizing business and those who control investment capital, that when the actual right thing to do involves those groups, many policymakers find themselves painted into a corner. Regrettably, that leads to very sub-optimal outcomes.

If Congress and the administration come to their senses, they will focus on housing and corporate taxes.

Housing comprises 5% to 6% of GDP, but in recent years, has accounted for as much as 75% of total job growth. Legislation that helps to substantially reduce the glut of inventory (ideally via tax incentives for buyers) would go a long way toward reinvigorating the industry's powerful job creation machine.

The United States has the second highest corporate income taxes in the world. It has been demonstrated continually that when countries reduce their corporate income taxes, they attract disproportionate amounts of investment capital, and ultimately increase tax revenues in rather dramatic fashion. Total corporate tax revenue to the Treasury is less than $350 billion. Its total elimination or considerable reduction would trigger a tsunami of investment and concomitant rise in tax receipts.

Let's not confuse social policy with legitimate, stimulative economic action. Our situation is such that we cannot afford to pass a Trojan horse social package under the guise that it will jump start the economy. The best way to address social ills is from a position of economic strength. ...<< MORE >>

I'm a bit disappointed that Obama's address was bereft of memorable rhetoric. That's regrettable, because a difficult objective (of which there are many), articulated with a creatively turned phrase, does have a way of living on in our collective consciousness—making it all the more likely to receive the attention and support it requires to be accomplished. Nevertheless, despite being relatively prosaic, the speech text does have encouraging, if not particularly inspirational, elements.

"...our time of standing pat, of protecting narrow interests and putting off unpleasant decisions—that time has surely passed."

The protection of narrow interests has inhibited our government's effectiveness since 1789. In more recent years, it's increased our dependence on foreign oil; slowed education improvements; prevented entitlement reform; and encumbered stem cell research—just to name a handful. If President Obama can bridge the partisan divide and get Congress focused on what's right, rather than what advances the interests of its members, we'll be much better off. Of course, that is so much easier said than done, but to his credit, Obama has banked the goodwill necessary to give him a fighting chance.

"Now, there are some who question the scale of our ambitions—who suggest that our system cannot tolerate too many big plans."

Ironically, the emergence of 24-hour cable news and the Internet has focused us, and consequently our government, on fewer, rather than more issues. As a result, we've morphed into serial addressers of critical matters. Clearly, the world has grown too complex for that to continue. We should and must be able to simultaneously debate and tackle multiple major issues at a time. Health care shouldn't have to wait its turn behind energy or education. Tax reform need not be forced to queue up after the environment or the nomination of a Supreme Court Justice. Virtually every corporation deals with multiple priorities at a time. There is no reason that the government, with all its resources, can't do the same. In order for that to happen though, President Obama will need to overcome the media's desire to be singularly focused on what it defines as the big story of the moment.

"The question we ask today is not whether our government is too big or too small, but whether it works."

There is no doubt that government is broken. Ideology and partisanship have trumped the public good. Of course, great risk accompanies an effort to make government work again. The risk is that politicians come to believe government is always the solution. Let's hope President Obama has the wisdom and ability to improve the effectiveness of government instead of its size.

"We will not apologize for our way of life, nor will we waver in its defense, and for those who seek to advance their aims by inducing terror and slaughtering innocents, we say to you now that our spirit is stronger and cannot be broken; you cannot outlast us, and we will defeat you."

This is arguably the strongest, most forceful and direct statement in the address. It helps to allay the fears of some that President Obama will be weak on terror and/or too beholden to others' opinion of America. I particularly like the "we will not apologize for our way of life" part, because it is that way of life, although imperfect, that is the catalyst for global peace, prosperity, hope, and freedom.

So, while the address is short on memorable lines, it does speak to a number of important themes, the successful execution of which, will enable us to achieve our full potential at home and across the globe. It's performance, after all, not speeches, that will ultimately tell the tale. ...<< MORE >>

President-Elect Obama recently indicated he would work to end the "don't ask, don't tell" policy. Assuming he doesn't reneg, kudos to him for having the political courage to step up to the plate on an issue that was so inelegantly handled by President Clinton, and detrimental to Clinton's efforts to generate initial momentum for his presidency.

One would hope that in 2009, our men and women in the armed services are ready and able to accept one another's sexual orientation. It's an insult to all those who serve to believe they are any less capable of doing what is expected of everybody else in the workplace. I don't buy the unique circumstances argument. Tolerance is tolerance; plain and simple. A military culture that prides itself on obedience can certainly be disciplined enough to get beyond archaic prejudices and stereotypes.

Aren't we hypocritical to expect deeply rooted religious and sectarian differences to be settled in the Middle East and elsewhere when our own troops are forced to accept a policy that sanctifies bigotry?  It's time to recapture the moral high ground.

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Thomas Friedman, in his 1/13/2009 New York Times column, titled: "Tax Cuts for Teachers," correctly identifies education as a major problem, but misses the mark on the solution. Friedman does make a number of salient points. He is absolutely correct that if we're going to stimulate, we should invest in people and projects that actually stimulate again and again (i.e. people who build productive businesses and/or solve important societal problems), not tax rebates or bridges, that are done stimulating once they are spent or built. He is also correct that our international competitiveness is in serious jeopardy due to a dearth of students pursuing careers rooted in math and science.

The problem is his proposed remedy?  He would eliminate "federal income taxes on all public schoolteachers so more talented people would choose those careers."  Therein lies the rub—the not-so-invisible-hand of government in place of a more market-determined efficient solution.

I happen to believe that the state of our educational system is the number one or two issue facing the country, along with the need to tamp down global extremeism. It strikes me as misguided, though, to substitute government action for private sector innovation. We would be better served if the government focused on catalyzing the free market to develop creative/effective reforms, rather than attempting to solve the problem itself.

Do we  really want the government picking winners?  Should we expect other constituent groups to sit idly by and not make the case for their value and relative under-appreciation?  How would we respond if nurses, research scientists, accountants, green technology workers, and others all proclaimed their worth and presumed right to pay no federal income taxes?  We must recognize and appreciate the precedential value associated with each government action. Even though, when viewed in a vacuum, the proposed action may appear reasonable, it quickly becomes unreasonable when it is used as the basis for many future actions—the collective weight of which are unsupportable.

This is the proverbial slippery slope. We all know that government would never be disciplined enough to not expand such an initiative to include other groups. The pressure would be immense. Soon the overwhelming preponderance of the tax burden would fall on an increasingly smaller percentage of the population. Already, the top 1% account for 40% of federal income tax revenue. The top 5% generates 60%. What if the top 5% paid 80% or 90% of the tab?  There would be dramatically reduced incentive to innovate and produce. Capital and talent would quickly be directed to locations outside the United States where industriousness and risk are more fairly rewarded. Remember when the UK had a top tax rate of 98% (on investment income)?  It was a major contributor to Great Britain's precipitous economic and social decline. The country only began to recover when it broke the cycle of entitlement spending and concomitantly lowered taxation rates to be more competitive with other industrialized nations.

There are many ways to chip away at the structural shortcomings of our tattered educational system. We've seen many of them work in smaller-scale, incubator environments. Let's remove the NEA- and other-imposed shackles, and unleash the full imaginative force of the marketplace to drive long over-due reforms. Friedman's solution demonstrates that not all tax cuts are created equal. The problems of our educational system are too broad to be fixed by such a narrowly defined approach. ...<< MORE >>

Haven't you expected more Optimism from Obama?  I know I have. He advises us how bad it is at every turn. He discusses the "heavy lift" he's confronted with to get the economy back on its feet. He repeatedly emphasizes that this is the worst financial crisis since the Great Depression. Alright already; we get it. Things ain't so good.

No doubt this is what virtually every other politician would do. It is sensible from an expectation-setting standpoint, and it's CYA-rific. What politician wouldn't want that?  But, haven't we been conditioned to expect more from the inspirational Obama?   We've  witnessed his pragmatism; now how about some hope?   Would it hurt to more aggressively express confidence in his ability to facilitate a recovery?  That shouldn't be too risky for a self-assured, motivating leader, should it?

Perhaps this is just what you get with lawyers and the culture they've spawned. It's life in the land of the disclaimer. The never-ending search for plausible deniability. I expect more from Obama.

A little unsolicited advice:  Leadership does matter. Words are meaningful. The presidential bully pulpit is powerful. Get beyond the negative. The media are there every minute of every day to remind us about all that is wrong. Focus on accentuating the positive. Reagan did that masterfully. He instilled us with confidence—never talking down our prospects. And, most important, he had the political courage to tell us that things would be better. He would see to it. That "shining city on a hill" is still there. It would be visible again if you would just help clear the fog of negativity.
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Many of the great 18th century political/economic philosophers thought socialism was the ineluctable result of a capitalist system that ran its course. They harbored a Utopian view that as a society evolved and became more wealthy, it would naturally become more altruistic—ultimately manifesting itself in the form of socialism. European thinkers such as Jeremy Bentham, Jon Stuart Mill, and Jean Jacques Rousseau espoused reforms that leaned toward the egalitarian. They nobly believed in "the greatest happiness for the greatest number."

While the United States embarked on its grand experiment—capitalism—influenced by the thinking and writing of Adam Smith, David Ricardo, and others; Europe gradually drifted more and more toward collectivism, the political philosophy that prioritizes group over individual goals.

Interestingly, in recent years, Europe and the United States appear to be reversing course. While Europe has made a decide turn away from collectivism/socialism, recognizing, to some extent, that the welfare states they created were in danger of imploding; the United States appears to be edging toward collectivism.

Even though history is illustrative of the stifling impact of such a system, its appeal is nonetheless quite hypnotic. What right-thinking person is not for the greater good?  Who isn't for improving the lot of the less fortunate?  Most believe that the whole is greater than the sum of its parts. It all sounds terrific on paper. Lamentably, it hasn't fared as well in practice. Capitalism, for all its shortcomings, still appears to be our best bet for social justice, while still respecting individual freedoms and personal liberty. To paraphrase Churchill's quote about democracy, capitalism is the worst system with the exception of all others that have been tried.

In the face of the current economic crisis, will the United States step over the fine line that separates independence and dependence?  Will we become a nanny state where government is master, rather than servant, or will we find a way to reinvigorate our independent, innovative spirit?

The United Kingdom found itself in such a circumstance in the mid/late 1970's. Actually, it had long prior stepped over the line?  The question was, would it slide further into economic ruin and international irrelevance, or would it find a way to pick itself up and reverse decades of decay?

Enter Margaret Thatcher.

I just read a marvelous biography of Thatcher by Claire Berlinski (www.berlinski.com), titled, "There is No Alternative."  Those of you who know me understand that I read historical biographies almost exclusively. If you are daunted by the tedium of most such works, understand that this book is cut from a different cloth. It is anything but the typically formulaic, chronological presentation of a historical figure's life. Instead, it is focused sharply on why Margaret Thatcher matters. I found it much more compelling than the two other books I've read on Thatcher.

The central theme is Thatcher's repugnance for socialism and how, largely through the force of her will and actions, she was able to reverse the fortunes of a country (and ultimately a continent) that looked to be irretrievably mired in a malaise of socialistic policy. The country had gone from world superpower to European second tier state in a few short decades.

According to Berlinski's account, Thatcher believed that socialism is not simply misguided, but associated with "wickedness and decay."  It "impoverished and polluted British society."  She just didn't think that socialism was an inefficient system, she was convinced that it was "corrupt, immoral, disgusting..."  Thatcher argued that free markets "forced individuals to take responsibility for the outcomes of their actions."  She thought that "a moral being is one who exercises his own judgment in choice, on matters great and small..."

The free market, as said by Berlinski, "is a simple concept, and the empirical evidence that it provides goods and services more efficiently than a command economy is about as strong as we can hope to have in the social sciences. Command economies everywhere have resulted in waste, shortages, poverty, and immiseration. That is why the great command economies of the twentieth century collapsed and the free market is still here."  Eloquently stated.

One must wonder if Thatcher was familiar with the Objectivist works of Ayn Rand?  She certainly seemed to subscribe to the theory that the only social system which fully recognizes individual rights is capitalism.

Hopefully, President Obama will be able to walk the aforementioned fine line. If not, pray that there is a Thatcher in our future.

Leadership does matter...not that that's news to anybody who paid attention the past eight years.

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As regular readers know, I consider myself to be a limited government pragmatist. In fact, one of the two primary purposes of this blog, along with the exposure of intellectual dishonesty among the political and chattering classes, is to promulgate the importance of limiting government's insinuation into our quasi free market system.

Here we stand (barely) following a multi hundred billion dollar intervention into the financial markets by the Federal Reserve and Treasury—some of it warranted, some of it not—and poised on the threshold of nearly an additional $1 trillion of so-called stimulus, an amount, in real dollars, that is two times what was spent on the New Deal. Why?

It seems as if Washington has been enveloped by a spend first, ask questions later mentality. The herd is stampeding, and it's about to trample prudence and common sense.

Most intelligent observers, including President-elect Obama, agree that the current crisis is largely one of confidence; yet, what is the prescription being concocted?  Massive government spending. That's right, the same medicine that failed miserably in the 1930's. Since when does government spending engender confidence and stimulate broad-based economic recovery?  Sure, it will be good for those on the receiving end of the contracts, but what does it do for the other 99% of companies?  Does it provide them with an incentive to invest in plant and equipment?  Does it encourage them to hire?  Does it inspire and/or fund innovation?  Of course it doesn't.

Without a doubt, the best way to dig ourselves out and drive the widest possible participation is to incent the private sector. Remember good old-fashioned, All-American greed (properly regulated, of course). If, as most agree, the private sector is being paralyzed by fear and trepidation, then why not induce a response that trumps said fear and trepidation?  That would most successfully be done via tax policy. Unfortunately, that also happens to be the third rail of Democrat/Republican politics. As such, Obama, in all probability, will be forced to capitulate to party orthodoxy and use most of his bullets on "solutions" that will drive up the deficit, rather than provide legitimate long-term, sustainable, and structural benefits to the economy. We will be lucky if a third of the package is tax-oriented; and most of that will probably be more spending dressed up as tax cuts (i.e. rebates with no lasting value) .

The Federal corporate income tax, for example, could be eliminated for a period of time at a cost of roughly $300 billion per year. Imagine the spark that would provide. And, if history is a guide, rather than costing us money, it would very likely increase government revenue via taxes: 1) paid up and down the production supply chain; 2) by end consumers, and 3) from higher employment. There are many other potential tax incentives that would be equally catalytic (without even getting near individual marginal rate reductions—a non-starter for Democrats).

If policy makers only understood and were motivated by Occam's razor (i.e.all other things being equal, the simplest solution is the best), maybe they wouldn't continually saddle us with the most convoluted, expensive, politically motivated, and ineffectual alternatives. Regrettably, they instinctually see government in a lead, rather than supporting role.

And we get stuck with picking up their tab. ...<< MORE >>

In an editorial today titled, "Recession, Taxes, and Mr. Obama", the New York Times does its liberal best to perpetuate the old tax and spend stereotype.  

The piece essentially suggests why it would be a mistake for Obama to delay a repeal of the Bush tax cuts for those in the highest bracket. Following are some of the gems that cause fiscal conservatives to bang their heads against a wall.

"Yet as the recession deepens, one small group could actually catch a break: the richest Americans, who are likely to see a proposed tax increase postponed."

Funny, it doesn't feel like a break. Who knew that this small group was so fortunate to hand over to the government more than 50% to 60% of its income when federal, state, local, FICA, property, and sales taxes are all considered. Do the heavily burdened small business owners who comprise 65% of all those making over $250,000 feel lucky?  Is it a lucky break that many of those who provide the lion's share of capital to fuel our job and wealth creation engine are being squeezed to an inch of their economic lives because of inadequate access to credit and already onerous taxes?

"The objective (of Obama's pledge to raise taxes) was to restore fairness and raise revenue by undoing Bush-era tax cuts that overwhelmingly benefited the rich while worsening the budget deficit."

Restore fairness?  The portion of total taxes paid by the wealthiest 1%, 5%, 10%, 25%, and 50% has done nothing but increase over the past 10+ years. The bottom 40% pay no federal income tax at all, and the bottom 50% now account for less than 3% of total tax receipts, as opposed to 4% in 1999. Tax cuts (whether by Kennedy, Reagan, Bush, or others) have been proven time and time again to be revenue enhancers. The "worsening budget deficit" is due to a combination of out-of-control spending (by both parties) and mistakenly non-budgeted expenditures to fund the war effort, various natural disasters, and misguided stimulus packages.

"The wealthy are unlikely to slow their consumption much if their income tax rates return—as Mr. Obama has proposed—to their pre-Bush levels."

To quote John McEnroe, "You cannot be serious!!!"  With this type of reading of the economic tea leaves, it's no wonder the New York Times Company is on life support. Apparently they have somehow missed the dramatic pullback in spending and investment from all income brackets. I guess they are oblivious to the mammoth reduction in sales of high-end homes, expensive cars, private jets, jewelery, boats/yachts, precious works of art, premium wines, and many, many other artifacts of those in the top bracket. They must also be unaware of the psychological impact of difficult economic circumstances and tax increases. An ability to spend often does not translate into a willingness to spend.

"Mr. Obama must press for increases in coming years. The fight for tax fairness—and for the practice of paying for government services rather than borrowing or printing money—must be a goal in itself, rather than becoming a perennial bargaining chip."

In the New York Times government-centric view of the world, that's the only choice—raise taxes or borrow/print money. It's the liberal Faustian bargain—sell our soul to the government in return for government's supposed superior ability to know what's best. They will solve our problems. It is anathema to believe in the capacity of individuals and the private sector to be/become self-sufficient; thereby reducing the need for, or size of government bureaucracies.

As I've explained and detailed in numerous previous posts, there are very legitimate and necessary roles for government. The Times, though, highlights an important philosophical divide. They, and many on the Left, see government in the lead. They believe government is, or can be, the solution. I believe individuals and the private sector should be at the forefront with government in an underpinning role. Only then can we create a culture of personal responsibility and self-sufficiency that is so important to limiting the size of government , protecting liberties, and ensuring our long-term viability. I'll say it again. All great empires have been felled by government excess and/or an inability to defend themselves. If we don't respect the need for limited government...

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Political correctness can cut both ways. When it discourages the perpetuation of racial or ethnic stereotypes, it is an unequivocal positive. But, when it unfairly assigns relative guilt, it is an unmistakable negative. That is the case in the workplace when the crude, crass, and tactless are frequently confused with the illegal. And, for many years, it has also been the case with respect to the Middle East, where the the world community and so-called intellectual class have found moral equivalence in the Israel-Arab conflict.

In the face of what arguably appears to be endless provocation and inexhaustible intransigence, why is Israel consistently ridiculed by the chattering class, not to mention virtually all governments whose country's initials are not U.S.?  On some level, it's perfectly understandable. Those who wield power, and Israel is its region's dominant military force, should be held to a higher standard. That is a legitimate and necessary means of curbing abuses, or at least shining a light on them. When it comes to Israel, though, there seems to be so much more.

After one objectively examines the long and tragic history of the Middle East, and particularly the conflict between the Jews and Arabs, it is difficult to conclude anything other than the preponderance of the blame lies with Arab leadership. By no means should that indicate Israel is without fault. They are. Time and time again, though, the Palestinians have walked away from peace, whether it was the 1948 U.N.-crafted two-state solution, or the Clinton initiative with Yassar Arafat and Ehud Barak.  A lesser, but more recent example is the situation in Gaza. In September of 2005, Israel withdrew completely from the Gaza Strip, leaving the Palestinians with complete administrative authority. Rather than using that opportunity to improve the lot of their people via programs to upgrade infrastructure, schools, and social institutions, they instead chose to further their radical agenda. At almost every turn they've elected to make hate, mayhem, and victimization their sine qua non. The world stands ready to recognize Palestinian independence, yet, elements of their leadership opts for intolerance and the vile rhetoric of genocide. They consistently pursue conflict over compromise; one state over two.

Despite much effort, it is difficult to find a responsible justification for the Palestinian strategy of wanton attacks on innocent civilians and a propensity for purposely putting their own people in harms way. Perhaps, if the land at the center of the dispute was clearly, definitively, and unfairly taken from them, and they had no other recourse, one might find some twisted rationalization for their campaign of violence and track record of unyielding inflexibility, but subsequent to any balanced assessment, the most pro-Palestinian conclusion possible, in my view, is that ownership rights are ambiguous. To even reach that conclusion, one has to set aside multiple decrees by the international community and its representative body, the U.N., not to mention a chain of ownership favoring the Hebrew people that dates back to roughly 1800 B.C. when the region was first settled. No doubt there have been periods in the nearly 4,000 year history of the area when Arab peoples have predominated. but there have been just as many if not more where Hebrews have flourished.

Given that checkered and uncertain history, would not the rational course of action be compromise? 

Of course it would.

So, why do so many who are so smart regularly condemn Israel's efforts to reactively rather than proactively eradicate the terrorism that so threatens its people and its existence, and choose to ignore the Palestinian leadership's ruthless intimidation and unwillingness to compromise?  The charitable view, which I hope is the case, is because it is important to look out for the less fortunate and hold the feet of the powerful to the fire. Unfortunately, that has only emboldened radicals and legitimized, in some eyes, their irrational actions and goals; thereby postponing any genuine and lasting peace.

It is an understatement to say the situation is complex. As such, it is nearly impossible to draw conclusions on a case by case basis. Israel has made ill-advised decisions along the way and overstepped its bounds on multiple occasions. It is certainly just and appropriate to criticize them when they have done so. My comments, however, are aimed at those, who after looking at the totality of the circumstances, see an equivalence between Israeli and Palestinian actions. With those people I respectfully disagree.

Let's hope that 2009 brings with it a new beginning in the Middle East so that the Israeli people can live free from terror, and the impoverished and oppressed Palestinians can find capable leadership, gain independence, and begin to build a productive, peaceful society. ...<< MORE >>

Over the past 50 years, two President's have been true inspirational leaders, Kennedy and Reagan. On January 20th, we have a chance for a third. 

Each President is faced with unique challenges and differing circumstances, but there are common threads from which one can draw wisdom. Hopefully, President Elect Obama has done just that.

Kennedy and Reagan recognized that there is a role for government, but it's the tremendous innovative and productive capacity of the United States private sector that is the engine for prosperity and liberty. They understood that we as individuals in a free nation have unlimited potential, and together can accomplish phenomenal things. They gave us reason to be optimistic, and motivated us to act on that optimism. Most importantly, though, Kennedy and Reagan appreciated that government is a better facilitator than problem solver.

Over the past several months, we've experienced a very activist government. Some of that activism has been well-founded; some has not. In this current climate, the great risk, of course, is that government intervention comes to be viewed as necessary and routine, rather than situational and anomalous. If not harnessed properly, Obama's considerable political capital and good will could work to his and our long-term disadvantage. Let's hope he won't use it to expand government, but rather to empower the people and reinvigorate our wounded quasi-free-market system.

As I ponder what themes Obama might focus on in his inaugural address, and how he'll attempt to boost national confidence and unleash our great potential, it is hard not to hearken back to Kennedy and Reagan. Their presidencies, though only twenty years apart, were framed by very different global and domestic circumstances; yet each, in his inaugural address, was able to arouse our national spirit, desire to achieve, and sense of personal responsibility.

Reagan's words on January 20, 1981 are just as compelling and on-the-mark today as they were then:

- "It is my intention to curb the size and influence of the Federal establishment and to demand recognition of the distinction between the powers granted to the Federal Government and those reserved to the States or to the people. All of us need to be reminded that the Federal Government did not create the States; the States created the Federal Government. Now, so there will be no misunderstanding, it is not my intention to do away with government. It is, rather, to make it work—work with us, not over us; to stand by our side, not ride on our back. Government can and must provide opportunity, not smother it; foster productivity; not stifle it."

- "In this present crisis, government is not the solution to our problems; government is the problem."


Kennedy's words on January 20, 1961, and in many other memorable speeches, were also noteable for their adeptness at stimulating individuals to take responsibility, and for their recognition of the importance of limited government:

- "And so, my fellow Americans: ask not what your country can do for you—ask what you can do for your country."

- "A tax cut means higher family income and higher business profits and a balanced federal budget. Every taxpayer and his family will have more money left over after taxes for a new car, a new home, new conveniences, education and investment. Every businessman can keep a higher percentage of his profits in his cash register or put it to work expanding or improving his business, and as the national income grows, the federal government will ultimately end up with more revenues."

- "Our tax system still siphons out of the private economy too large a share of personal and business purchasing power and reduces the incentive for risk, investment and effort — thereby aborting our recoveries and stifling our national growth rate."


Both men clearly understood the transformative power of freedom and liberty. And, they comprehended the fine line government must walk so as not to overstep its bounds and impinge on the freedom and liberty for which we've worked so hard.

In 2008, has government gone too far?  If it hasn't crossed the line, it has certainly straddled it. Its performance has definitely rattled our confidence—in the economy, and in government itself. On a positive note, the structural problems of our financial system have largely been blunted, albeit painfully. So, on January 20, 2008, President Obama has a remarkable opportunity...and fortunately, the skill to take advantage of it. I have high expectations that he will get beyond the perfunctory and deliver something in the Kennedy/Reagan tradition—challenging, yet optimistic; inspiring, yet achievable; but most importantly, empowering of the people and our capitalist system, not the government. Hopefully, my practicality has not been blinded by my optimism.

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How fitting that in what may be its last major decision, the Bush administration economic team proved once again to be woefully inept. It's hard to imagine a worse outcome than the $17 billion bailout given to GM and Chrysler. It was proffered with virtually no compulsory requirement for the restructuring that is so necessary to the Detroit Three's long term viability. It's worse than the horrible House bill that died in the Senate, and it's decidedly inferior to the Corker plan that was shelved because of a single sticking point that ultimately could have been worked through.

As I've stated in previous posts, a pre-packaged Chapter 11 process is the best prescription for sustainability. The Corker plan, although imperfect, went a long way toward achieving the objectives of a bankruptcy filing. It was a deal worth doing, or at least pursuing further. One would have thought that once the Bush administration decided to pick up the ball, the Corker plan would have been the baseline for crafting a final agreement that addressed the major issues—substantial debt reduction, cost competitiveness with the foreign transplants, and equity ownership by the UAW. Bad assumption. Not only did they not keep and/or build upon the stakeholder (bond holders, UAW, management, etc.) concessions spelled out in the Corker plan, they gutted them completely. Instead of specific restructuring measures, they left us with vague targets—and non-binding ones at that. An absolute, unequivocal strikeout. Worse yet, the administration didn't even go down swinging.

How could they be so ham-fisted?  My only explanation is that they've gotten caught between ideology and political expediency. For most, if not all of the second term, the administration seems to have softened its ideological zeal in an attempt to find more politically palatable solutions. Unfortunately, they've had nowhere near the deft touch or goodwill necessary to make such a strategy work. Whereas Obama looks pragmatic and forward-looking, Bush appears clumsy and misguided.

So, $17 billion has been handed out with no guarantee that the requisite tough decisions are going to be made to give the Detroit Three a fighting chance for success. Moreover, we've given money to a private company, Chrysler, that almost certainly is going to fail or be merged into GM or some other auto maker. Way to go George and Hank—one last terrible decision for posterity. ...<< MORE >>

In a 10/6/2008 blog I commented that certain policy actions, such as one focused on lowering mortgage rates, would go a long way toward catalyzing the housing sector. I also mentioned in that blog, and in one earlier this week, that other demand side incentives (e.g. tax credits; capital gains tax abatements; etc.) could be effective in getting buyers off the sidelines and ultimately slowing, stopping, then reversing the decline in home prices (in lieu of the definitive solution—allowing the market to clear itself). In the not-too-distant future, I believe we're going to see the first evidence of at least one of those suppositions.

As a result of the Fed's latest moves, including its quantitative easing efforts, 30-year mortgage rates have pulled back substantially—to levels near or below 5%. Should we get a drop of an additional 50 to 100 basis points, I think we'll begin to see the first signs of an economic recovery. Notwithstanding the positive impact of lower rates on prospective home buyers, it will be of even greater and more immediate consequence to the refi market. Once the refi train gets rolling, millions of homeowners will have thousands of extra dollars (each year) in their pockets. One should not underestimate the benefit this will be to the currently stagnating/declining consumer side of the economy (which happens to comprise 70% of GDP).

Consumers, revitalized by lower mortgage payments and sharply declining gasoline prices, coupled with properly incented prospective home buyers, can go a long way toward putting our sputtering economy back on the tracks. If mortgage rates continue to decline, I'm much more bullish on the prospects of a 2nd half 2009 upturn. ...<< MORE >>

I just watched a 60 Minutes piece on the housing collapse that was long on scare tactics and short on explanations/solutions. The "expert" who was interviewed stated rather dramatically that we are at best halfway through the mortgage crisis. He pronounced that the Subprime meltdown has simply been the opening act for the forthcoming crumbling of Alt-A and Prime mortgages. It was mentioned that many of these previously thought-to-be sound mortgages are already in foreclosure, even prior to any harmful interest rate resets. Of course, the implication was imagine how bad it will be once the resets occur. All of this was just dumped out there as a fait accompli, with no explanation of why it's happening or how it might be stopped.

Despite 60 Minutes poor reporting, the outcome is not pre-ordained. There are smart policy actions that can stem the tide and avert much of the future pain. But, we need to understand cause and effect.

One school of thought is that if we significantly slow the rate of foreclosures there will be less inventory on the market and prices will stabilize. Sounds reasonable, but it ignores a critical element—why are foreclosures happening in the first place?  By not understanding the cause, the effects of our remediation efforts, including the government-sponsored Hope Now initiative, have been less than desirable.

To date, setting aside the issue of over-extended speculators, the preponderance of foreclosures is due to the sharp decline in home values, not problems with interest rates. Many buyers purchased homes with very little or no money down. As such, the precipitous decline in values has led to a situation where buyers must decide if it makes sense to continue funding a substantially depreciating asset. Since many have practically no skin in the game (i.e. material down payment), it is in their economic interest to walk away. That will be true if their mortgage rate remains at the initial teaser level, or even if it is lowered further as part of some forbearance process. If we don't recognize that simple fact, then we're going to be swimming upstream and not doing what's necessary to get the housing market functioning again.

The solution is two-pronged. One part is a foreclosure mitigation program. However, it must have reasonable expectations and be structured in a fashion complementary with the buyer's economic interests. For most, merely fixing the rates at lower levels will not be sufficient. the majority will require a workout with the institution holding the mortgage that includes a meaningful reduction in principal (proportional to the decline in the home's value).

The second component is tax and mortgage rate incentives for purchases of new and existing homes. Again foreclosures create excess inventory which puts downward pressure on prices which leads to more foreclosures which leads to lower prices which...well, you get the point. A very non-virtuous cycle. The bottom line is that incentives will clear excess inventory and help prices to become stable and ultimately rise again. The incentives can take multiple forms—a large tax credit; a reduction/elimination of capital gains when the home is sold; etc.

The first prong addresses supply; the second deals with demand. Together they can return housing to an equilibrium state and put us back on the path to economic expansion.

It should be noted that the ultimate demand-oriented solution is to let the market clear itself. A healthy economy with low unemployment is the first, best way to get housing on track. The suggestions above carry the baggage associated with artificial, temporary demand. They may pull demand forward, rather than actually create new demand. And, they run the risk of reinflating the bubble. For a government that likely does not have the political courage to let the market work on its own, they represent the next best option. ...<< MORE >>

No, that's not a new car from GM, it's a comment on the GOP's handling of the ongoing negotiations to prevent the collapse of the U.S. auto industry.

In the blink of an eye, the Senate Republican caucus has gone from principled to partisan. The bill that came out of the House was deeply flawed and rightly opposed by Republicans in the Senate. It did little to nothing to drive the considerable and requisite restructuring of the Detroit Three. Senator Corker (R) of Tennessee stepped up and led an effort to ameliorate legitimate GOP concerns by brokering a deal that addressed substantive obstacles in the path of long-term viability. He apparently was able to secure agreement from the industry's major bond holders to accept in the neighborhood of 30 cents on the dollar—a herculean achievement. That major concession would have greatly reduced the enormous debt burden on the balance sheets of GM, Ford, and Chrysler, and, along with additional 11th hour concessions from the UAW (further closing the compensation parity gap with the foreign transplants) , would have gone a long way toward delivering the material restructuring I've been calling for on this Blog. It might not have been as good as what could be accomplished via a pre-packaged Chapter 11 process, but it should have been sufficiently workable, nevertheless.

Unfortunately, it seems that Corker did not have the full support of his caucus. The Republicans apparently backed away from the tentative agreement. From the reports, one can presume that the GOP was reflexively looking to either break the union or inflict as much damage as possible. If so, pragmatism was blinded by partisanship. The UAW, from all I've heard and read, has been an honest broker in this ongoing negotiation, yet, the GOP has responded in its traditional anti-union fashion, ignoring the fact that this time organized labor may actually be making real and material concessions.

Treasury should now step in and commit enough TARP dollars to backstop GM and Ford (Chrysler should be Cerberus' responsibility) until the next administration takes control. They should do so on the exact terms that were tentatively agreed to last night before the Republicans backed off—assuming they are as UAW President, Gettelfinger, communicated during his press conference this morning. ...<< MORE >>

Since Roe v. Wade was decided in 1973, supporters on both sides of the abortion issue have been vigorously and often violently debating when life begins.   It’s safe to say, though, that the true answer can never be known.   There is another genesis-related phenomenon that is equally perplexing—exactly when does Democrat life begin?  Of course, some say it happens after years of exposure to various environmental factors; others suspect it’s hereditary.   For me, I’m convinced it has something to do with elementary school math.

Now don’t get me wrong, there are many legitimate reasons for holding Democrat viewpoints.   I harbor many myself.   I’m just intrigued as to why illegitimate, counter-factual arguments are frequently used to make the case for their positions.   The best I can tell, it’s largely because of our national mathematical ineptitude.

Talk about low hanging fruit.

No doubt it’s a lot easier to say that those in the upper income bracket are not paying their fair share of taxes because they receive a dramatically larger absolute dollar benefit from a tax cut, even though their proportional cut is smaller and they are progressively paying a higher and higher percentage of all taxes.   Guess it’s just simpler to play the class warfare card than to meaningfully describe why asking more from the upper end can benefit those on both ends and those in between.

Thank goodness most people never really learned ratios in elementary school math.

It’s got to be a lot easier to convince people that the oil companies are evil and must be inflicted with a windfall profits tax because their returns in raw dollar terms are astronomically large, despite the fact that their profit margins are right on par with the average of all S&P 500 companies.   Guess that’s simpler than explaining why government intervention into a functioning market makes sense.

Thank goodness most people never really learned ratios in elementary school math.

It has to be a lot easier to convince people that sacrosanct entitlement programs are being gutted when in fact only a reduction in the rate of growth is being requested.

Thank goodness most people never really learned ratios in elementary school math.

Politicians and policy advocates should think long and hard before sponsoring legislation aimed at improving our national aptitude in math.   Who knows what might happen if we actually begin to see through the nonsense they’re promulgating?

...<< MORE >>

How fitting is it that Chrysler's majority owner, Cerberus, is named for the mythological three-headed dog that guards the gates of Hades?  In 2008 there's another three-headed dog, and unfortunately, it's no myth. It has become increasingly apparent that one of those heads must be chopped off. Perhaps a Sara Palin pardon is in order. That should be good for at least one severed head.

If the government is not going to do what's right and insist on a pre-packaged Chapter 11 restructuring for the Detroit Three, then it needs to do the next best thing and force GM and Chrysler to merge (or preferably, sell itself to a foreign manufacturer). There is simply too much capacity in the market, and Chrysler is the least viable long-term competitor. It has fallen substantially behind the technology curve, and its only asset with legitimate value is the Jeep brand. It makes no sense for the government to loan money to Chrysler, particularly without major participation from Cerberus. If Cerberus isn't willing to put additional capital at risk, the taxpayer shouldn't bear the burden?  $7 billion for Chrysler is essentially a bailout for Cerberus prior to an inevitable merger with another auto maker.

During last week's hearings, one Congressman attempted to extract a commitment from Chrysler CEO, Bob Nardelli, that if Chrysler got its $7 billion loan, it wouldn't subsequently merge with GM. Wonderful, a potential government-imposed obstacle to market efficiency.

It is reasonable, and probably even desirable, for the government to shore up the U.S. auto industry. However, its support should be contingent upon a restructuring that puts the industry on the proper competitive footing. What comes out the other end must be self-sustaining over the long haul. Let's not help to perpetuate inefficiencies that have driven and will continue to drive our domestic auto makers toward insolvency.

...<< MORE >>

The dance that’s taking place on Capitol Hill among U.S. auto industry executives, the United Auto Workers, and Senate/House Finance Committee members is fascinating.   For the uninitiated, it can be disconcerting to see how the sausage is made.   Neither party has distinguished itself.   Beyond the normal pontificating and grandstanding, one of the more troubling aspects to emerge has been the exposure of a rising protectionist tide.   It’s pretty clear that many of our representatives don’t have a particularly high regard for free trade.   One would expect this from the UAW, after all, they are primarily charged with protecting their membership’s interests.   It is worrisome, though, that our elected officials don’t fully appreciate the benefits associated with free trade.   Nevertheless, it’s not especially surprising given how successfully some, including the anti-globalists, have made free trade a metaphor for the exportation of American jobs.

The hearings have been rich with irony.   Wagoner, Mulally, and Nardelli were routinely condemned with righteous indignation over the inefficiencies in their businesses, but simultaneously warned against remediating some of those very inefficiencies, namely when seeking lower cost labor outside the U.S. is concerned.   A Senator bellowed that he would be extremely angry if one of the Detroit Three, after having been the recipient of a government loan, were to locate a plant in Mexico.   It’s not too difficult to see how government, once in the door, can quickly become the house guest from hell.

Admittedly, government is in a tough spot.   It does have an obligation to create/maintain an environment in which industry can compete, and in which U.S. workers can get a fair shake.   It absolutely should endeavor to defend U.S. jobs.   Ideally, that is best accomplished by fostering a level playing field among all trading partners (e.g. reciprocal agreements; support/sponsorship of worker retraining initiatives; etc.).   When government steps beyond that realm and into the sphere of direct market intervention, things get much dicier, and a lot less predictable.

Why should we even care about free trade?  Well, for one, it lifts all boats.   It raises the standard of living across the globe, and by doing so, contributes to the establishment of a virtuous cycle. Trade opens markets, which leads to bilateral wealth creation, which begets middle class formation/growth, which begets bigger markets, which begets more trade.  It is the very engine for capitalism, and capitalism’s two key catalysts—innovation and creative destruction.   Early 20^th century economist, Joseph Schumpeter, used the term “creative destruction” to describe the transformational power of innovation and how it results in sustainable, long-term economic growth.   Schumpeter recognized that even as the value of established companies and/or products is destroyed, they are systematically replaced with ones that are better, more productive, efficient, and desirable. Economic Darwinism in action.    

There is no doubt that creative destruction can be painful for some.   In the short run, it obsoletes skill sets; it results in worker/company dislocation; it disrupts.   But, for its adherents, it breeds new opportunities; it stimulates creativity; and leads to more appealing work and industrious, competitive companies.   To not participate is to decide to stagnate; to become insular; to be left in the dust.   The world is moving on.   We can get on the train or be left at the station.

It’s understandable why some of our politicians turn away from free trade.   In many respects, it is a leap of faith, particularly for a wealthy, powerful country like the United States.   On the surface, it seems much easier to exert our considerable influence to strong arm trading partners and justify the erection of protectionist barriers.   In the short run, that can save jobs, and/or prop up markets, but over the long haul, particularly in a progressively global economy, we only weaken our competitive position and set the stage for our eventual marginalization and deterioration as an economic power.     

The conclusions of economic experts as well as the empirical evidence in support of free trade are overwhelming.   A 2006 survey of American economists found that roughly 90% believe that barriers to trade should be eliminated and employers should not be restricted from outsourcing work to foreign countries.   Harvard economics professor Gregory Mankiw states, “Few  propositions command as much consensus among professional economists as that open world trade increases economic growth and raises living standards.”

U.S. workers will ultimately be advantaged by the advancement of policies directed at making them more nimble participants in a dynamic global economy, not those that reduce company competitiveness, and concomitantly, the ability of said companies to generate new jobs.

The U.S. needs a vibrant manufacturing base for a variety of economic and national security reasons. As such, it's in our interests for the government to make extraordinary efforts to help secure its future. But, in government's zeal to assist, it should be very careful not to lessen our commitment to free trade. The long-term ramifications would be disastrous for U.S. competitiveness, our standard of living, and continued worldwide growth.

...<< MORE >>

Earlier today, Governor Arnold Schwarzenegger declared California to be in a fiscal crisis—not a surprise for a state inflicted with arguably the most burdensome tax regime in the country, and among the costliest systems of social welfare.

Despite example after example, we can't seem to figure out that government excess and a culture of entitlement ultimately leads to ruin. We've seen it for decades in Europe, and we see it in many states across the U.S. The high correlation of tax rates and disproportionate spending with suboptimal financial performance is no coincidence. The R squared must be approaching 1.

It's illustrative to compare California with another state of similar demography, Texas. Although both are heavily populated (numbers 1 and 2), and each has a mix of high technology, life sciences, industrial, and agricultural interests, the similarities quickly begin to fade thereafter.

In 2006, California was ranked 8th in revenue per capita, thanks largely to the highest state income tax rates in the country, capping out at 10.3%. By comparison, Texas ranked 48th, largely a byproduct of its 0% income tax rate.

Exorbitant tax rates might not be so problematic if they weren't a springboard to out of control spending. In 2006, California ranked 4th in expenditures per capita, whereas Texas ranked 42nd. California actually spent roughly $8,000 more per household than Texas, an additional 80%. Does anybody believe California is getting a return reflective of that disparity?

Notwithstanding Texas' low spending rate, its economy is among the most vibrant and resilient of all the states. Unemployment in Texas (5.6%) is significantly lower than the national average; while California is hamstrung with an 8.2% rate, third worst in the country. California was one of the first states to slip into recession; Texas was one of the last. California is hemorrhaging businesses who can no longer cope with its deadly duo of suffocating taxes and overregulation; whereas Texas is an attractive location for new business formation and expansion of existing businesses.

The California/Texas comparison is not an anomaly, there are numerous others. It is astonishing how frequently policy makers ignore compelling data and a simple, winning formula in favor of decisions that entrench their power and make us more dependent.

Reasonably limited government and personal responsibility is the best prescription for sustainable fiscal viability. California is learning that the hard way.

...<< MORE >>

Shouldn't a country as wealthy as the United States have a healthcare system that enables coverage for all of its citizens?  Most would say yes. Unfortunately, how to get there is the root of a wide ideological divide. Reflexively, Republicans fret about the inefficiencies of bureaucracies, while Democrats warn about inequality, lack of access, and the need for government action. It's easy to dig in along party lines, but that isn't going to help us solve a very complex and daunting problem.

As I've opined in numerous posts, government excess is the single biggest threat to our liberty. Of course, I've also stated that there are many legitimate roles for government. Is publically-funded healthcare (beyond Medicare, Medicaid, Veterans Administration) one such role?  The gross wastefulness alone of the current system should at least require us to explore other options.

Rougly sixteen percent of our Gross Domestic Product goes toward medical care. That is substantially more than any other country. Despite the enormous expenditure, the U.S. lags many nations in overall health. According to various sources, we are 45th in life expectancy; 29th in infant mortality; and 19th out of 19 industrialized nations in preventable deaths. Not a great return on our $2.3 trillion annual spend ($7,439 per person). Clearly, much is wasted. A mere 10% savings would shave $230 billion from the total—$100 billion more than the purported yearly cost of Obama's healthcare plan starting in 2018. 7.3% of the total U.S. healthcare outlay is for administration—compared to 2.1% in Finland and 3.3% in the United Kingdom. Over $100 billion could be saved by matching Finland's administrative cost ratio.

The absence of a universal Electronic Medical Record (EMR) is the root of much of the administrative inefficiency. Remarkably, as of 2006, fewer than 10% of American hospitals have implemented health information technology (HIT), and only 16% of primary care physicians use EMRs. Amazingly, paper is still the dominant vehicle for healthcare transactions in the U.S. Only 2% of healthcare industry gross revenue is spent on HIT. By comparison, the finance industry spends 10%

Another primary source of healthcare overspend is the proliferation of chronic diseases, particularly heart disease and diabetes, that account for upwards of 75% of healthcare costs. Logically, a much more substantial and targeted investment in prevention would likely carve hundreds of billions out of the total annual cost.

So, before we make the move to a government-funded system, might it not make more sense to solve the problems that are the source of the United States' disproportionate costs?  After all, government funding is not a free lunch. The money has to come from somewhere. Should we take it from education, or infrastructure, or defense, or green initiatives, or research, etc.?  Or, should we properly regulate, incent, and backstop the private sector?

Personally, I'd prefer to see a government-sponsored Manhattan-Project-type effort aimed at defining and implementing a universal Electronic Medical Record and also at putting into operation a major preventative care regime. Those are foundational elements for any efficient healthcare system. It would seem folly to attempt to renovate a house that sits on top of a structurally unsound base. By eliminating most of the waste, costs should be materially reduced; thereby resulting in affordable healthcare for the masses, and a system more easily eradicated of inequalities.

...<< MORE >>

There is no doubt that the bursting of the housing bubble has caused a ripple effect that's exposed serious weaknesses in the global financial system. The consequences of an unregulated and widely misunderstood credit default swap market, predominantly used to insure mortgage backed securities, has placed undeniable stress on the system. It's not hard to figure out that when there's a run on an insurer (i.e. Credit Default Swap issuer), just like when there is a run on a bank, that insurer or bank, given allowable leverage ratios, is not going to have the capital to meet its obligations. And, since the use of these complex instruments exploded over the past decade or so, it's understandable how the entire system has been impacted.

What is less understandable, though, is how the financial media, led by CNBC, has portrayed the situation. Just like they help markets to overshoot on the way up, they cause them to overshoot on the way down. A very bad situation has been exacerbated by hyperbolic reporting, analysis, and commentary. When markets go bad, it is normally the resulting crisis in confidence, more so than the actual problem, that causes the most damage. That certainly appears to be the case this time. One can reasonably argue that the issues, serious as they are, could have been mitigated by a few actions—government stimulus, an elimination of mark-to-market accounting, and conscientious media coverage. So far, we've only gotten about .5 out of three. The media has gotten so reckless that the Fox Business Network has sued the government to force it to reveal the names of financial institutions who have drawn down money from the Fed's Discount Window. How irresponsible can they be?  Banks that are using the Window for very legitimate purposes would potentially be overrun with panicked depositors/investors if their names were released. Is that really in the public interest?  Wouldn't it be more prudent to reveal the details later, after the crisis has subsided?  Clearly, not for Fox Business. They're more interested in sensationalism and its positive influence on ratings.

How many times have we heard the CNBC talking heads and their guests cavalierly throw around the "D" word?  Are we really on that path?  Might they not provide a bit more historical context?

Perhaps a reality check is in order. The prior quarter's GDP was down one half of one percent. During the Depression, there were initial quarterly drops in GNP of near 10%. In fact, Real GNP dropped 30% between 1929 and 1933. It dropped 42% in Nominal terms. Unemployment is currently 6.5%. Remember when full employment was considered to be 6% (now it's generally thought to be 4%)?  Unemployment peaked at 25% in 1933. Today, it was announced that Real Income increased 0.3% in the prior month. That's right, incomes are still going up. By 1933, there was a 21% drop in wages.

Don't get me wrong, things are definitely bad. But, please don't be fooled by the so-called experts on CNBC and Fox Business. We are currently off course, but the thesis for global growth has not changed. China and India still have hundreds upon hundreds of millions of people to move into the middle class. Their GDP's are but a fraction of what they can and will be. Brazil and Russia continue to have enormous potential, as does Eastern Europe and much of Latin America. The more quickly confidence can be restored, the more rapidly we'll get back on the path to prosperity. The fundamental financial plumbing problems have largely been fixed or are in the process of being fixed. So, right now, it's really almost all about confidence.

The media does have a responsibility to educate, to warn, to be a watch dog, but it has to do so in a responsible and ethical fashion. Admittedly, it can be a very fine line. Mistakes will be made. The media's performance during this period of turmoil , though,can be characterized by a lot more than simple mistakes. They've compromised their standards and integrity in a brazen attempt, I believe, to advance their own interests.

As the saying goes:  "A recession is when your neighbor loses his job;  a depression is when you lose your job."  To the financial media, their job is the global economy.  Guess that's why they often view the world with Depression-colored glasses. ...<< MORE >>

With the government seemingly committing hundreds of billions of dollars every day toward its efforts to rescue the economy, it's easy to believe that a hole is being dug from which we can never escape. Remember Budget Director David Stockman's famous quote in 1983 ("...budget deficits as far as the eye can see") after Congress wouldn't reduce spending to go along with the recently passed Reagan tax cuts?  Apparently the eye could only see to 1997. That was the first year of a four-year period of  healthy surpluses. In fact, since World War II, we've had six different periods where a deficit has turned into a surplus. More interestingly, in 1945 we had the largest ever deficit as a percentage of GDP. Two short years later, we had the largest surplus.

This demonstrates the amazing resiliency of our economy. It also brings some discredit to those who say we can't grow our way out deficits. Trust me, there was no reduction in spending during any of those reversals. Imagine the possibilities if we could combine spending restraint with pro growth policies. In our $14 trillion economy, each GDP point is worth $140 billion in revenue. Much/all of that could be surplus (i.e. debt reduction) if we could just hold spending relatively flat.

A little discipline goes a long way. ...<< MORE >>

On Thursday the Supreme Court of Canada ruled ruled that obese people have the right to two seats for the price of one on flights within Canada.

I agree that obesity can be a disability, or at least a disadvantage, but should that translate into a requirement for the private sector to use its resources without compensation?  Do governments have authority to supersede property rights?  If so, where does that authority begin and end?  For example:

• Should restaurants be required to serve larger portions to big people?
• Should bookstores be obliged to give books to the less intelligent?
• Should pharmaceutical companies be forced to furnish drugs to the diseased?

I'm certainly no expert on the Canadian judicial system, but this decision strikes me as having been made by a court more interested in setting social policy than interpreting the law. The potential ramifications of such activism are disquieting to democratic societies everywhere. Social policy should be established by accountable, elected representatives, not judges.

...<< MORE >>

Are our elected and appointed officials doing what's necessary to reinvigorate the economy?  Here we are, months into an economic firestorm of historic proportions, and we're still picking through the rubble rather than getting on with the business of rebuilding the house. Sure, most can agree that we had to address the unraveling of the financial system due to the fallout from a bursted housing bubble. The Treasury and Fed have managed, albeit clumsily, to triage the system such that death is no longer imminent. Nevertheless, the patient remains critically ill. The medicine is available, but the doctor won't prescribe it.

The medicine is massive individual and corporate tax incentives. Forget about the preposterous Keynesian-style stimulus that has proven time and time again to be stimulative to nothing but the deficit. Marginal tax rates for individuals and corporations must be reduced substantially. Productive activity is kindled when the rate on the next dollar of income is lowered. That is the fuel for entrepreneurship and investment. Simply handing out money directly or through tax credits does little or nothing to permanently enhance the productive capacity of our economic system. It's a catalyst for short-term spending (and saving), not for long-term, sustainable growth.

There's talk of passing a stimulus package of unprecedented size, targeted primarily at infrastructure (including Green infrastructure), when the new administration takes office. Given the choice of that type of stimulus and the one we had in February ($600 and $1,200 checks), the infrastructure-oriented one is clearly better. But, why focus on such a limited area when the problem is of such broad scale?  Through tax policy, we can unleash the productive capacity of all businesses and all individuals, rather than just those industries who are targeted for Federal funds. Doesn't that make a lot more sense?  No matter how many hundreds of billions of dollars the government allocates, it can never represent more than a small fraction of what the entire business and consumer communities are capable of. Additionally, tax policy doesn't require direct government outlays and all of the associated negative residue.

Let's get much more proactive and incent the trillions of dollars that are on the sidelines to be put to productive use. Consumer and business confidence will increase markedly, and we will start creating jobs again instead of hemorrhaging them by the hundreds of thousands. ...<< MORE >>

The administration and some congressional Republicans still don't get it. Although strongly rebuked at the polls on November 4th, largely for mixing their message and setting aside long-standing free-market principles, they are pushing a back-door scheme to bailout the Big Three. Rather than providing money from the TARP program (not a good idea), as the Democrats favor, they would instead reallocate $25 billion from previously passed legislation aimed at supporting the production of green vehicles. However you slice it, it's still public money to support a failed or failing business model.

I do not take lightly the loss of jobs that will likely ensue from one or more bankruptcies among the Big Three and their suppliers and dealers, but the only rational way to protect the U.S. auto makers (and their workers) and put them on a path to long-term viability is to address the untenable legacy costs that are an albatross around the industry. It simply isn't practical to expect those issues to be resolved without a restructuring process enabled by Chapter 11 bankruptcy protection—existing contracts and state law make it near impossible.

The labor cost imbalance issue is pretty well understood, so I won't readdress it here (see a previous post titled, Car Wreck). What isn't as widely known are many of the other inefficiencies baked into the Big Three cake. For example, consider that GM and Toyota produce roughly the same number of vehicles globally. Unfortunately, GM sells those vehicles through over 7,000 dealerships; whereas, Toyota only needs about 1,200. Gross and debilitating inefficiency. Additionally, the law in many states makes it virtually impossible for a manufacturer to close a dealership. So, as distasteful and disruptive as it may be, the best medicine is to allow bankruptcy and reorganization, and work toward a business model that is sustainable and will provide good, stable jobs in perpetuity. That's  what's best for American workers and the overall economy. ...<< MORE >>

Today, Goldman Sachs CEO, Lloyd Blankfine, and 6 other top executives decided to eschew their 2008 bonuses. Perhaps it was for noble reasons, or perhaps it was because they wanted to avoid the inevitable backlash. Whatever the rationale, it points to a bigger issue—why did they qualify for enormous bonuses in this environment? 

Executive compensation is often misaligned with the realities of company performance. This is a complex and nuanced subject for which there is no easy solution. However, it's pretty clear that compensation, if the imbalances are to be mitigated, should be linked primarily to variables that are largely under company supervision. Those variables can include things such as top line revenue, bottom line profitability, expense control, etc. Another factor might even be a relative comparison to competitor performance. Such a comparison enables performance outside the mean to be rewarded or punished. It is possible to be an effective manager in a hellaciously difficult economic climate in which numbers may be down substantially, but not as catastrophically as might be the case with weaker management. Many argue that Goldman Sachs is such an example.

One compensation scheme that should not be used, in my estimation, is where share price is the principal variable. Share price is frequently over-susceptible to broader market or industry segment movements, whether they be up or down. It often does not reflect actual underlying operational strength or weakness. I do think it's appropriate to include share price among a group of more controllable variables when defining a compensation plan, because share price can be a gauge of investor confidence. Management should not be isolated from that measure.

One thing we should be learning from this unprecedented time is that this is not a black or white issue. If compensation is to be regulated, it must be done with the utmost care. Absolute and relative performance measures, in combination, probably produce the best result. In some cases, though, neither are ideal. Of course, common sense is the safety net when all else fails. ...<< MORE >>

I attended a religious ceremony this weekend that got me thinking about a number of things. First and foremost, it struck me that it was not so much about God as it was community. To me, it was a vivid illustration of the power of a strong support system, and how that system can be used to mold youth and instill life-long values. After all, isn't religion really about community, or more clearly stated, living life in a way that leaves the world a better place. That seems to be the very best of what religion has to offer. So, what about all the other elements associated with religion?  Are they necessary?

Voltaire, in a famous and often-analyzed poem, has a line that translates to, "If God did not exist, it would be necessary to invent him."  That is a cynical view of humanity in my estimation. It implies that man is inherently bad and that societies would ultimately break down if people were not constrained by the religiously-rooted threat of eternal damnation. The evidence, I believe, points in a different direction. People are innately good. Nowhere is that more manifest than in the idealism of youth. It's fair to say that many young people today would not identify themselves as religious, yet they seem to have an intrinsic desire to get involved and improve the world around them. Perhaps one could argue that even though they may not self-identify as religious, they have still been shaped by a society founded on, and influenced by, religious principles. Therefore, if religion fades away, so may the instincts that were derived from said principles. It's hard to say, but I prefer the more optimistic view.

Religion obviously carries with it a lot of baggage, but whether it's necessary or not, it is, or can be, a catalyst for the type of community support system I witnessed this weekend.

So, is there a linkage to politics?  Yes. Republicans are most closely associated with the controversial elements of religion, while Democrats have very successfully tied themselves to the non-contentious notion of community service. As a result, a significant percentage of young and progressive voters—those who may not be religious, but who have values rooted in community altruism, have a strong affinity to the Democrats. Republicans must find a way to meld their religiously-oriented values message with one that is focused on a more widely palatable aspect of religion—the notion of community and serving the public by making the world a better place.

If the Republican Party is once again going to be the "Party of Big Ideas," one of those ideas should be a creative and appealing new approach to national service. That is a value of growing importance to a segment of the electorate that is increasingly absent from the Republican ranks.

...<< MORE >>

Will we ever get to the point where it's the norm rather than the exception for politicians to stand up to their constituent groups and tell them when they've gone too far?  Such an opportunity has arisen on the so-called "Card Check" bill (i.e. The Employee Free Choice Act). Organized labor has successfully lobbied Democrat legislators to proffer a bill that makes it much easier for workers to unionize the workplace. In and of itself, that is not a bad thing;  workers do, in many instances, deserve more rights. The devil, of course, is in the details. And, one of those very devilish details is language that allows workers to join a union as soon as a majority of them sign authorization cards. If enacted, a foundational principle of our society, the right to a secret ballot election, would be compromised. It's hard to imagine that Democrat legislators don't know that provision crosses the line. Apparently, they're more interested in currying favor with a powerful and financially friendly group of supporters, than maintaining a critical pillar that helps to sustain our national character.

The bill's other provisions are reasonable, or minimally, the basis for negotiation. Stronger penalties against employers that take illegal steps to dissuade collective bargaining, and a process for mediation and arbitration if both sides fail to reach a first contract are both legitimate terms. Even if one were to completely ignore the potential open season for union intimidation of non-supporting workers, and give 100% weight to the organized labor argument that management wields too much power and is too coercive in its zeal to fight union formation, it is still inappropriate to attempt to correct a perceived wrong via the eradication of a fundamental right. Just as we didn't need to make a sweeping expansion of civil rights contingent upon restrictions to free speech, we don't need to address worker rights by eliminating the right to, and protections of, a secret ballot. ...<< MORE >>

The auto industry bailout is inevitable. As distasteful as it might be to many, there is a potential, albeit unlikely silver lining.

It is quite obvious that Obama is a close ally of organized labor. It is equally obvious that the disparity in labor costs between U.S. and foreign manufactures (along with egregiously poor design decisions) is what has led the Big Three to the brink of insolvency. Even though more friendly UAW contracts were negotiated (effective in 2010), they simply do not go far enough to allow GM, Ford, and Chrysler to be competitive. Setting aside the very relevant issue of terrible management by the Big Three, how can they compete when the cost of one of their vehicles is roughly $2,000 more than one also made in the U.S. with American labor, but by a foreign-owned competitor (e.g. Toyota, Honda, etc.). The all in labor costs of a Big Three auto worker is in the neighborhood of $30+ per hour more than a U.S. auto worker employed by a foreign competitor. That's a $60,000+ per year per worker cost disadvantage. Ouch!

Here's the opportunity. Any rational-thinking person recognizes that the government should not hand over tens of billions of dollars in bailout money to support a failed business model. Unfortunately, the realities of politics often trump what is rational. Imagine the favorable reaction of the market and the general electorate if Obama were to come down strongly in favor of tying Big Three bailout funds to a more competitive labor cost structure. The response would be explosively positive. It would signal a leader who is interested in doing what's right, not what's politically expedient. Consumer and business confidence would instantly skyrocket. What greater validation of the campaign mantra, "Change we can count on?"

Do I think it's going to happen?  Nope. But a guy, can dream, can't he. ...<< MORE >>

Now that an African-American has risen to the highest office in the land, is affirmative action an obsolete policy?  Or, is Obama's ascendancy a one-off event that exaggerates the magnitude of racial/minority group progress?

If affirmative action is truly about opportunity and access—if it is about increasing inclusion of historically excluded groups in the workplace, in our schools, and in business, then shouldn't it be an enduring policy?

At first blush, the answer would appear to be yes. Most would agree that diversity has benefits, particularly when it does not come at the expense of merit and competence.

Society as a whole is advantaged when biases are chipped away. Discrimination has tangible costs. Those costs are often economic in nature—resulting in enormous governmental expenditures targeted at assisting the disadvantaged. The sum total of those outlays are a drain on our national productive capacity, and they threaten long-term economic flexibility and vitality.

It's not that simple, though. Many believe that affirmative action reinforces minority stereotypes—that it ostensibly harms the very groups that it intends to help.

Ultra conservative African-American former ambassador and presidential candidate, Alan Keyes, says,
"Preferential affirmative action patronizes American blacks, women, and others by presuming that they cannot succeed on their own. Preferential affirmative action does not advance civil rights in this country."

I would give that argument more weight if were not so absolutist. Considering the scale of discrimination 20, 30, 40+ years ago, it's difficult to give credence to a position that seems to say that government action wasn't necessary at all—that severe and systemic discrimination could be avoided if minorities would just pull themselves up by their bootstraps. That's exceptionally naive.

It is a legitimate question, though, to wonder if we've reached a tipping point. A good deal of progress has been made. Has the progress been significant enough that affirmative action can be eliminated because its stigma is more harmful than its requirements are helpful?  That's possible.

In the final analysis, though, I see affirmative action as quite consistent with a basic American ideal—access and opportunity for all. Elimination of the policy will not remove its stigma; it has been too engrained in the American psyche. That can only occur naturally as more and more minorities ascend to positions of power and influence and achieve success.

Let's think of affirmation action as nothing more than a reiteration of that most fundamental American principle—equal opportunity.

For more discussion on the topic, check out:  http://www.opposingviews.com/questions/do-we-still-need-affirmative-action ...<< MORE >>

What should the role of organized labor be in today's society?  It's pretty clear that the current system doesn't work. One only has to look at the three major unionized industries: airline, auto, and government, as well the most unionized state, Michigan, to realize that something is broken.

Workers deserve some rights.  They make non-trivial commitments to their employers. On the other hand, business must retain its ability to be nimble; it has to be able to respond to rapidly changing market dynamics. If it can't, we'll only see more and more jobs move overseas—obviously, the worst of all outcomes for U.S. labor.

If there is a solution, my sense is that it involves retraining. But, in what form?  Can we afford to impose some additional tax on business, the revenue from which would be used to fund the retraining of displaced workers?  U.S. corporate taxes are already the second highest in the industrialized world. There is growing pressure to reduce those taxes in order to make U.S. business more competitive, and to encourage greater investment in America?

Is there a bipartisan compromise?  Why not cut corporate taxes across the board by 10%, but impose a new business tax of 5% that would be directed toward training programs for displaced workers?  If the experience of all other industrialized nations who have cut corporate taxes is a guide, revenue to the government would rise substantially, business here and abroad would be incented to form/expand in the U.S., and millions of jobs would be created. Moreover, business would not lose its flexibility to respond to changing market/competitive conditions, and workers would have a retraining safety net to mitigate the sting of dislocation.

It can't be worse than the current system. ...<< MORE >>

I like Obama's choice for Chief of Staff, Rahm Emanuel. His skill set, philosophy, and temperament are just what the new President is going to need. Some have commented that Emanuel is too much of a Washington insider and too partisan, and his selection sends a bad message from a campaign that ran on a theme of change and unity. I disagree. While Emanuel can indeed be quite partisan, he, more importantly, has demonstrated a real tendency toward pragmatism, particularly on economic matters. He also has a solid track record of reaching across the isle to find solutions to tough, divisive issues. Obama's biggest challenge is going to be fending off the Party's most liberal elements and instincts. I think Emanuel recognizes that much of the pent up demand from years of minority status will have to be modulated in order to ensure another four years and not lose congressional seats in the mid-term election. Don't misinterpret, though. Obama is a Liberal with an agenda that is consistent with someone of that political persuasion. He will propose and help to enact liberal policies. He has every right, if not obligation to do so. I'm simply suggesting that Emanuel will be a moderating force who recognizes that it is not in the Democrats' long-term interest to acquiesce to the most radical leanings of the Party. ...<< MORE >>

It has become fashionable to say the Republicans are indistinguishable from Democrats when it comes to spending. The Democrats were quite effective during this election cycle in painting Republicans as indiscriminate spenders who ran up enormous deficits. When taken at face value, that is undeniable. Unfortunately for the GOP, many in the party, including the Administration, did walk away from their limited government principles in order to introduce major new programs and authorize substantial increases in spending. No doubt that was damaging in 2008, and will likely be for years to come.

I realize that intellectual honesty among the political and media classes is dead, but let me attempt to inject just a smidgen of reality and context. With the possible exception of Defense Department funding, find me any spending initiative that passed with GOP support, that was not criticized by Democrats as not going far enough. No matter what the Republicans spent, the Democrats wanted more. Remember the $400 billion expansion of Medicare to add a prescription drug benefit?  The Democrats wanted more. Remember the $87 billion in expanded subsidies for farmers?  The Democrats wanted more. Remember the $40 billion in increased veterans' benefits?  The Democrats wanted more. Remember the billions of dollars for No Child Left Behind?  The Democrats wanted more. Remember the $30 billion to fight AIDS in Africa?  The Democrats wanted more. See the pattern?

So, what does this portend for an Obama administration that is backed by a Democrat-controlled House and Senate?  You guessed it; a heck of a lot more spending. How will they pay for it?  Well, Democrats spent a lot of time espousing their "PAYGO" (short for Pay-As-You-Go) principle every time Republicans purposed a tax cut over the past eight years. PAYGO theoretically ensures fiscal discipline by requiring that any tax cut or increase in entitlement spending be offset by an increase in other taxes or a reduction in other entitlement spending; thereby, preventing deficit spending. That sounds terrific in principle, and is a great tactic by a minority party to stall/prevent the majority from getting what it wants, but will it be practiced by a majority party that historically has done nothing but, spend, spend, spend?  If it is practiced, we know that spending cuts of any substance are off the table—they are anathema to Democrats. Of course, that only leaves tax increases. And, massive tax increases they will have to be in order to fund the trillions of dollars worth of increases on the agenda for Obama and his colleagues in Congress.

We're going to see the clash of two very different philosophies. Can we tax and spend our way to a balanced budget and economic prosperity as the Democrats seem to believe?  Or, should we unleash the private sector to invest its enormous sums of capital in order to stimulate the next great economic boom?  We shall see. My guess is that the former will be tried first, but we will ultimately gravitate toward the later after the former falls flat. ...<< MORE >>

I'm very enthusiastic about the economy. Check that. I'm very enthusiastic about our economic future. Why?  Green means green. We are on the threshhold of an explosion of innovation and opportunity in Green and Green-related industries. In fact, I believe the resultant economic impact will be equal or greater than what we've experienced from the Internet revolution. That may appear bold, but I think it's easily achievable.

Think about it. Within 5 to 10 years (sooner in some instances) the way we build homes, manufacture cars, produce energy, and manage the use of energy—in homes, appliances, computers and peripherals, office buildings, hotels, etc. will all have changed dramatically, or be in the process of doing so. That means tens of millions of new jobs and a massive reinvigoration of the global economy. Consumers are increasingly demanding these products and services. That will attract more capital, which will lead to more innovation, which will drive prices lower, which will result in greater demand...a perfect virtuous cycle.

Much of this is already in progress. It will continue without any government intervention. The opportunity is too vast for smart money not to follow. There is a role for government, though. We can draw in more capital, more quickly with intelligently designed incentives. Today, capital is constrained by an unnatural aversion to risk. That trepidation can be mitigated with minor adjustments to the risk profile of potential Green investments. Tax policy is a great way to achieve this, particularly because it doesn't require direct outlays of cash by the government.

The government shouldn't pick winners, but it can catalyze the private markets to act sooner. Of course, the government will be a prime benificiary of the ensuing economic expansion. GDP will once again achieve its long-term potential, and tax receipts will fill government coffers. ...<< MORE >>

California's Proposition 8, banning same-sex marriage, passed 52.5% to 47.5%. I think that's a setback for our country. It's not difficult to figure out why many conservatives oppose gay marriage. A lot, of course, resist it on moral/religious grounds. Others, are against it because they are traditionalists. They see it as an encroachment on the culture and a menace to time-honored values, and as such, a threat to social order and society itself.

With respect to the former, it is difficult to argue against one's religious beliefs/teachings. They are what they are. I happen to believe those teachings are misguided, especially if you think (which I do) that homosexuality is principally pre-determined, not learned.

As far as the societal threat issue is concerned, I find those anxieties to be seriously misplaced. Maybe I'm overly simplistic, but in a world with a great deal of conflict and hatred, shouldn't the overriding cultural concern be promotion of strong and loving family units, irrespective of whether they are comprised of heterosexual or homosexual couples?  Don't we trace much of what's wrong in the country—poorly educated children, wide availability and use of drugs, violence, etc.—to a general erosion of the family?  If that's the case, then why not enable greater family formation?  Same-sex marriage isn't the panacea, but it is a step in the right direction—a direction that comes down in favor of strong relationships over discrimination.

If we all applied a bit more common sense and a little less ideology, I'm pretty sure we would be much better off. Why diminish/devalue ourselves through exclusion? ...<< MORE >>

Get ready, the bailout train has left the station again, and should be arriving at its destination on or about January 21st. It promises to be a doozy, too—probably $300 billion or more.

Do we really need to put that much public money at risk—on top of what has already been committed?  Don't CNBC and Fox Business tell us daily that there are trillions and trillions of private dollars sitting on the sidelines?  Wouldn't it be smarter to find ways to pry that capital loose, rather than take it directly from government coffers?  But how?  Remember, greed works; it always has. It just needs to be more tantalizing than fear is paralyzing. Currently, fear is winning. Healthy greed is what drives people and institutions to take risk, and risk taking is the grease that keeps the engine of capitalism from shutting down.

So, why not incent those with capital such that the opportunity for attractive returns is so compelling that fear takes a back seat?  Because, we appear to have entered a phase (and let's hope it's only a phase) where there is great disdain for those who reap rewards for their risk taking. For the Left, it has become an ideological third rail. It is understandable to some extent. We have just witnessed an unprecedented level of risk taking abuse, and concurrently, an unprecedented period of super-sized executive compensation. Nevertheless, we have to recognize that capitalism cannot thrive until we get back to the point where properly regulated risk taking is untethered.  It's okay for the owners of capital to profit, because they might also take a loss. That's what risk is about. The system can't work, otherwise. Big profits are okay, too. They are what motivate similarly big and chancy investments.

Government money is best used when it doesn't make sense for the private sector to invest, such as on very early cycle research and development. This is not such an instance. Private money is chomping at the bit. The greed/fear calculus merely needs to be adjusted by smart government policy. Let's unleash the private sector to do what it does best. Don't foolishly and unnecessarily put public money in jeopardy. We can't afford bigger deficits and bigger government. ...<< MORE >>

The conventional wisdom is that Obama will fill the very critical Secretary of the Treasury post with either Tim Geithner (NY Fed President), Paul Volcker (former Fed Chairman), Larry Summers (former Treasury Secretary), or Robert Rubin (former Treasury Secretary). Some also mention Warren Buffet (unlikely) and Jon Corzine (NJ Governor and former Goldman Sachs chief) as possibilities.

Clearly and impressive list, but where's the change we can count on?  If Obama is of a mind to be bold and also to deliver on his bi-partisan and diversity pledges, he might want to consider Sheila Bair, the Republican appointed Chairwoman of the FDIC. Bair has been at the forefront of the financial crisis and has been innovative in her approaches to stemming the meltdown tide, particularly in the housing market. She's actually shown much more interventionist tendencies than many limited government Republicans would prefer. That makes her near perfect for Democrat purposes. She can carry the flag for an enormous housing rescue plan, for far-reaching regulation of the financial markets, as well as for plans to pump huge amounts of money into the auto and other troubled industries...and she can do it all as a Republican. That won't eliminate the cries from the right, but it would definitely blunt a good bit of their criticism. ...<< MORE >>

"Why don't you take a good look at yourself and describe what you see, and baby, baby, baby, do you like it?"  In addition to being a great Led Zeppelin lyric, it is also a question that John McCain and congressional Republicans have to be asking themselves tonight. 

Obama must be congratulated for running a well-disciplined and historic campaign. Nevertheless, the Republicans, miraculously, despite much that was stacked against them (largely of their own doing), could still have won this election. Why didn't they?  For one, they set their principles aside and played on the Democrats' field for much of the past several years, and they were exceptionally inept at effectively expressing their vision.

Republicans have always been about small government, a strong national defense, and values. It's no secret they dropped the small government ball during Bush's two terms. In many ways, I believe they felt compelled to do so because of Bush's stark inability to articulate a vision and describe why Republican core ideals, particularly the economic ones, are good for the entire country, not just the privileged class. Without a deft, communicative, persuasive leader, the Republicans, seeking some traction, gravitated toward traditional Democrat play book maneuvers—money and programs for all in hopes it would curry favor and pay dividends at the ballot box. As should have been anticipated, the results were disastrous. The base became disillusioned, and Democrats successfully demagogued Republican actions as still not enough. A classic no win situation.

What now?  The situation is dire, but perhaps not as bad as many perceive it. Most importantly, Republicans need to recognize that they don't have to abandon their core principles. They do, however, have to invest considerable energy into figuring out how to explain/communicate why those principles matter—particularly to younger voters.

The Democrats have an enormous and growing voter registration advantage. By one estimate, the margin is 86 million to 55 million. That is a colossal hurdle to overcome every 2, 4, and 6 years. The Republicans cannot continue to cede a large percentage of young voters to the Democrats. They've got to recognize that their brand is stale. It has to be updated such that young people understand why they have a stake in what the Republicans are promulgating. It needs to be seen as less ideological and more tolerant. It needs to recapture the "party of big ideas" high ground. Again, it doesn't mean core beliefs require altering; it does, though, mean a dramatic change in the messaging.

On the bright side, younger, more educated voters, should be the most amenable to a well-constructed, logical argument. They do, after all, have the most vested interest in the future. Younger voters can be educated on the history and perils of government excess, and its impact on deficits, and ultimately on our nation's prosperity. Young voter idealism ought not be squelched, but helped to recognize that the less fortunate cannot be lifted up if the country is not on sound fiscal footing. And, sound fiscal footing is the direct byproduct of controlling the size of government.

Tonight was rough for the Republican party, but it should also be a wake-up call and a new beginning. A plurality of the nation supports a great deal of what Republicans have traditionally stood for. The voters simply have to be reinvigorated by fresh, charismatic, skillful leadership that is equipped with an updated message—one that is particularly compelling to younger voters.

Good luck to Barak Obama and his administration. The country is resilient and can rapidly address its numerous issues if there is reasonable cooperation from all sides—and strong leadership from the top. ...<< MORE >>

GE just announced an order to turn away from Boeing and purchase 5 Chinese aircraft, with an option to buy 20 more. Just wait to see how this gets Congress' underwear in a bunch. Given that GE has taken money as part of the financial bailout program, no doubt many congresspeople believe they now have a say in their business decisions. Since GE and other bailout participants did agree to certain compensation and dividend guidelines,  how big of a leap is it for Congress to believe it can also tell companies who they can and cannot do business with?

This exposes the dark underbelly of unwise and/or poorly structured government intervention into private markets. There is often a legitimate role for government, but that role should not involve dictating operational business decisions. That is a recipe for disaster. A better approach would include legislation that broadens shareholder rights. Shareholders, as owners, should be the ultimate arbiters.

If the government ends up intervening into this transaction, that is what makes free market purists, of which I am not one, so skittish. Once Pandora's Box is opened, often times it leads to grossly unwarranted policy overreaches.

Personally, I'd rather see GE buy American, but they have a fiduciary obligation to make business decisions that are in the best interests of their shareholders. It is true, though, that those interests can be more than just financial in nature. If GE is not in violation of any national security or other restrictions, then they should be free to proceed as they see fit. And, equally as important, their shareholders should be allowed to evaluate the reasonableness of management's stewardship of the company, and independently determine if it is in their best interests as owners to continue to employ them. ...<< MORE >>

There's been a lot of talk this election cycle about Socialism; most often as an indictment against liberal Democrats. It is almost always used as a pejorative. But, is it?  Why are conservatives quick to lay the charge on liberals, and why are liberals equally quick to run away from it?  Simply and classically stated, Socialism is about collective (i.e. government) ownership and administration of the means of production. It advocates a "fairer" distribution of goods so that a more egalitarian society may result. Socialists believe that capitalism concentrates wealth and power and that leads to inequities in the socio-economic strata. The intention is certainly noble; it's the residue that's problematic.

Often times, our idealism gets in the way of common sense. In our zeal to improve the lot of the less fortunate, we regularly and mistakenly conclude that government should be the fixer, rather than the enabler. If we only had a greater appreciation for history, it would be easier to be less blinded by our more quixotic instincts. Ask yourself:

• Are there numerous examples of successfully run large and complex government programs?
• Should we expect that the government will improve in its capacity to run these programs, particularly if more and more programs are added to the mix?
• How can entrepreneurship, the engine of innovation, flourish when the government is responsible for a central plan?
• How can our economy be nimble and vibrant if the efforts of thousands and millions of enterprising individuals are replaced with a single government bureaucracy?
• Is it not the trial and error efforts of millions of individuals that enable us to identify the best solutions?  Is it reasonable to believe we can get to the same endpoint with but one dictated government plan?
• What has been the common economic approach of failed and failing countries?

Perhaps the classical form of Socialism discussed above isn't right for the 21st century?  Maybe there is a softer-edged version that might blend synergistically with a capitalist system?  Let's call it Social-Capitalism for lack of a better term. Can we be half pregnant with socialism?  Norman Thomas, the deceased, 6-time presidential candidate for the Socialist Party of America had an interesting thought on the matter, "The American people will never knowingly adopt socialism, but under the name of liberalism, they will adopt every fragment of the socialist program until one day America will be a socialist nation without ever knowing how it happened."

A different philosophy was espoused by John Stuart Mill, the most renowned of the so called Utopian Socialists. He was a proponent of capitalism, but he believed it was merely a stepping stone to a more ideal state. He thought that capitalism would run its course and ultimately be superseded by a form of benign socialism where the focus is shifted to notions of liberty and justice.

As I've stated in previous posts, Europe is a terrific example of the failure of creeping socialism. It demonstrates the flaws in Mill's notion of utopia. In Europe, innovation is a fraction of what it once was.  Incentives to produce and excel have been drastically reduced. Personal responsibility has declined sharply, and a sense of entitlement has increased markedly. What Mill missed, I believe, is that liberty and justice are best delivered when individuals control their destiny, and government doesn't dictate, but enables all to participate.

...<< MORE >>

"Tax and tax, spend and spend, elect and elect!"  That's a famous quote by financier Harry Hopkins, Franklin Roosevelt's most trusted economic advisor. In essence, he was rather honestly communicating that government is in the business of maximizing taxes and spending the receipts on various segments of the population in order to return the most votes possible for the party in power. If that doesn't burst the altruism bubble, I don't know what will.

That tax, spend, and elect strategy has been a central pillar of Democrat politics for well over 70 years. Sadly, Republicans have not been deaf to the siren song of political power either, as was unambiguously demonstrated when a number of them walked away from the term limit pledge in 1994's Contract with America. As the saying goes:  power corrupts and absolute power corrupts absolutely.

So, what's the point?  See through the rhetoric. Consider the long term. Recognize that politicians most frequently do what's good for them, not what's for the common good. Understand that these enormous spending programs have dire economic consequences over the long haul. As the country's demographics continue to skew older, and there are many fewer workers supporting those who do not work, the chickens associated with unwise and profligate spending will come home to roost.

What should we do?  Be a watchdog for the size of government. Don't let entitlements continue to become a dangerously larger and increasingly untenable percentage of GDP. Most importantly, push for government support of individual accountability and responsibility. Support programs that encourage ownership—ownership of our retirement savings; ownership of our health care; ownership of our children's education. Take the power from the government and give it back to the people.

Only when the strings of government dependency are cut and replaced with a framework for personal responsibility, can we put this country on a path to sustainable prosperity. When we do, those at or near the bottom of the socio-economic ladder will see their status rise and their quality of life improve dramatically. Government has never operated, nor will it ever operate efficiently enough to manage the distribution of resources among such an enormous and diverse population. Don't be foolish enough to think this time will be different. It's just not possible. ...<< MORE >>

If the election unfolds the way it currently appears, I will be rooting for President Obama starting January 21st. Although I agree with few of his specific policies, I do concur with what I hope are their underlying honorable intentions. I, too, fully believe that the best path to a stronger America for all is through a substantial improvement in the condition of those on the lower rung of the economic ladder. Obama and I simply have different philosophies on how to get there. Obama sees the government in a lead role; I see it as a supporting player. Obama believes the government is a primary problem solver; I believe problems are best solved by the private sector. Obama sees the government dictating; I see the government catalyzing, enabling, and facilitating. The government should help to lay the foundation, not build the building. Obama sees an expansive, activist government;  I see a government that is more narrowly focused—one that is primarily interested in finding and funding ways to increase the size of the pie, rather than determine how to portion out a finite pie.

These are legitimate policy differences. Each have merit and can be argued intelligently. The distinguishing factor, in my view, is the long-term effects of each approach. While Obama's methodology may have some short-term stimulative benefit, and certainly scores high on the compassion meter, it falls down when one considers the longer term. What are we left with when the government merely hands out money that is not linked to any structural improvement in our economic system (e.g. better educated, competitive workers; a robust, job-creating industries; etc.)?  The short answer is a larger deficit and often a permanently bigger government that leads to even bigger deficits in subsequent years. That's a very non-virtuous cycle of government largess.

On the other hand, when the government champions policies that drive structural economic improvement, they give the gift that keeps on giving—an ever-expanding economic base with opportunity that's ripe for all to benefit from. Let's increase business and worker competitiveness, not their dependency on the government.

What has history taught us about such dependency?  Every formerly great empire ultimately failed for one of two reasons:  It couldn't defend itself, or it collapsed under the weight of its own excess. For a contemporary example, just look to Europe and its economic demise over the past 30 years or so. It is no secret that Europe cannot support the layers upon layers of social welfare programs and disproportionately worker-centric legislation that's become an albatross around its neck. Now, they are electing new leadership and struggling to unwind this culture of entitlement in order to recapture their once competitive spirit and return to the days of economic expansion and prosperity. No easy task.

So, as I said, I'll be rooting for Obama come January 21. I just hope he acquires an appreciation for the destructive powers of government overindulgence. If he doesn't, get ready for "The Contract with America, Part 2" in 2012. ...<< MORE >>

I've always challenged the supposition that the oil companies control the price of a barrel of crude. Sure, they pull a variety of levers (e.g. exploration, etc.) that impact price at the margin, but by and large, the price of oil is determined by worldwide supply and demand, coupled with commodity trader speculation about future supply and demand. That view has certainly been validated by recent economic developments. As current worldwide demand and perceived future demand estimates have dropped precipitously, so has the price of a barrel of oil.

The oil companies, however, are not as innocent when it comes to the price of gas at the pump. Simple facts don't lie. The retail price of gas peaked in July of 2008 at $4.11. Concomitantly, the wholesale price at that time was roughly $3.50. That's a spread of about $.60. Today, the national average retail price is $2.66, while the wholesale price is $1.46. That's a spread of $1.20. All things considered, that $2.66 price should be $2.06.

Don't get me wrong. I have no interest in telling the oil companies what to charge. The market should largely be left to its own devices. I do, though, have an interest in pointing out their hypocrisy. If they are going to defend the rapidity of price hikes at the pump when oil spikes, they can't retreat from the hard questions on why prices don't come down with similar alacrity when oil tanks. Short of exigent circumstances (e.g. disruptions in refining capacity, etc.), of which there are none, there is no reason why the price cannot move down as fast as it moved up...other than oil companies deciding to make more money. That's their right. It does come with a price, though. Their disingenuousness on this matter will make them harder to defend when the "oil companies are evil crowd" inevitably come after them again. A windfall profits tax would be a tragically wrong government incursion into the free market, and a very high price to pay. Let's hope oil companies drop the price at the pump now. The economy can really use a shot in the arm, plus, it could save them a lot of pain down the road. ...<< MORE >>

The financial meltdown has invigorated a lot of discussion about increased regulation of markets. Undoubtedly, much of the turmoil we've experienced can be traced to regulatory regime problems. Unfortunately, the response will probably lead to a hodgepodge of additional regulations, when in fact, what we need is simplification and clarification. Let's consolidate and empower the regulatory bodies that already