Wednesday, December 31, 2008

Why the alliance between blacks and liberal Democrats works.

Star Parker is a conservative African-American who puzzles over what Caroline Kennedy has in common with black America besides the Democratic Party. After all, economic inequities are more pronounced inside the Democratic tent than inside the Republican one. Exit polls showed Barack Obama captured 52% of those with incomes over $200,000, and 60% of those under $30,000.

Church attendance correlates reliably over time with party affiliation. Those who attend church frequently vote Republican. Those who don't usually vote Democratic. Except blacks. They have the highest church attendance in the country, with 76% attending church regularly, along with 67% of Republicans. Only 50% of white Democrats do.

A Gallup poll shows blacks aligned with Republicans on social issues -- moral acceptability of homosexuality, abortion, and sexual promiscuity. On energy and environmental issues, blacks poll more closely with conservatives than with liberals. Working blacks have little interest in paying higher taxes to fight global warming, while blacks favor offshore drilling because it lowers energy costs. And Parker notes wealthy liberals, despite having their own kids in private schools, oppose school choice. By contrast, black families jump at the chance to pull their children out of failing public schools and send them elsewhere.

So what pulls wealthy liberals and blacks together? The answer: income redistribution. A Zogby poll found that 80% of Democrats, 90% of liberals, and 76% of blacks support taxing the wealthy to help low-income Americans. And you know, it makes sense. The people best able to afford income redistribution are those at the top; they really do have more money than they need, unlike the folks working hard below them.

Tuesday, December 30, 2008

Sparing Tony Blair from Eternal Damnation

Now comes New York magazine’s Jennifer Senior’s profile of Tony Blair, drawn from watching Blair teach a class at Yale. Senior seems to love Blair in spite of the ex-P.M.’s 1) support of the Iraq War; 2) continued loyalty to George Bush, and; 3) his openly professed Catholic faith. Senior attempts to overcome this disastrous trinity of errors by explaining how different Blair really is from Bush:

 While Blair believes “faith can become a means of self-identity [that] defines [one’s] culture [and] political attitude,” leading to wars with religious components (I’m Sunni, and you’re Shia; I’m Catholic, and you’re Protestant), faith can also represent a “spiritual awakening” that defines one’s values and beliefs, “not in a cultural sense but in a personal sense.” That’s Blair, according to Senior. “His faith is personally and deeply felt, something he’s studied and thought hard about.”

 Senior contrasts Blair’s faith with that of Bush. Bush’s faith “absolutely distinguishes him politically. Though he may never have said outright that he’s the leader of a Christian nation, he reportedly told Palestinian leaders that he believed God told him to end the tyranny in Iraq, and he has described, now infamously, the war on terror as ‘a crusade.’” Senior sees Bush’s faith as “thin,” a “cultural resource that provides a canopy over who we are, and it functions to legitimize, to sacralize, what we would have done in any case,” and “when you have a thinning out of religion, it’s more likely to promote violence.”

Senior believes Bush’s faith led us into an immoral war, but she strives to exempt Blair from the exact same decision. According to Senior,

Blair’s analysis [shows] how two very different kinds of politicians who call themselves Christians can get to the same place. Blair believes in just wars. It was he, ultimately, who convinced Bill Clinton to intervene in Kosovo and halt the ethnic cleansing of Albanians. Says [Blair’s Yale co-teacher Miroslav] Volf, “Blair is standing at the center of faith, and he’s asking, ‘How can this faith and the good of that faith be socially promoted?’ Whereas Bush stands almost at the boundary of the faith, meaning, ‘How do I defend from incursion from the outside?’”

Senior agonizes, “if God is the ultimate judge, will He factor in good intentions, when so many lives were lost in Iraq?” The sentence gives away both Senior’s personal lack of faith (“if God is the ultimate judge”) and her view of Iraq (immoral war). Bush, she proclaims, “will vanish without a trace, and good riddance to him. But Blair will not. If he figures out how to make real amends—to contribute something to the world” he may yet justify his faith.

Thank you Ms. Senior. You are so noble to have found a way to have spared Blair, a Christian friend of George Bush who like Bush still supports the war that liberated Iraq from Saddam Hussein’s tyrannical rule, from the depths of the liberal hell and eternal damnation to which in your view Bush and his pals so richly deserve to be consigned.

Monday, December 29, 2008

Outliers: Cultural Determinism

David Brooks has reviewed Malcolm Gladwell (Turning Point, Blink)’s [picture] latest bestseller, Outliers. Brooks believes Gladwell has offered us kind of a cultural-deterministic version of history. As Brooks writes:

Chinese people work hard because they grew up in a culture built around rice farming. Tending a rice paddy required working up to 3,000 hours a year, and it left a cultural legacy that prizes industriousness. Many upper-middle-class American kids are raised in an atmosphere of “concerted cultivation,” which inculcates a fanatical devotion to meritocratic striving.

In Gladwell’s account, individual traits play a smaller role in explaining success while social circumstances play a larger one. As he told [New York's Jason] Zengerle, “I am explicitly turning my back on, I think, these kind of empty models that say, you know, you can be whatever you want to be. Well, actually, you can’t be whatever you want to be. The world decides what you can and can’t be.”

“Concerted cultivation”? According to Wikipedia, it

causes a transmission of differential advantages, meaning [the beneficiaries] end up having an advantage in life over children reared based on other methods. [Such] children . . . are set apart in academic environments and they also learn to have more confidence when confronted with social interactions.

Wednesday, December 24, 2008

Education Secretary Arne Duncan

We earlier identified Arne Duncan as one of the two leading reformist candidates to be Obama’s education secretary. So Duncan’s selection should be great news for those of us upset with the current state of U.S. public education (that should be all of us).

It actually helps that Duncan reportedly has backing from the teachers unions. He has worked with them in Chicago, managing reform in part by seeing schools get more resources, and by making teachers part of the reform process.

Still, we need to see more from Obama. It seems quite possible that the teachers unions’ favorite—Linda Darling-Hammond—will land a key role alongside Duncan, once Obama fleshes out his appointments list.

Power to Gen X

Michael Barone captures the sense to which the Obama presidency constitutes passing the torch to a new generation. Bush 43 and Clinton, both born in 1946—Baby Boomer Year One—governed for 16 years, and represent the two halves of that badly divided generation. Obama, Barone says, “born in 1961, is technically a baby boomer. But his early years were straight out of Generation X—abandoned by his father and, for a time, his mother; experimentation with drugs; a sense of drifting.”

Obama wants to move America beyond Boomer divisions. His goal has the younger generation’s strongest support. It's a fact. Barone has found that:

The constituency Obama assembled during his campaign has a decided new-generational tilt. The Edison-Mitofsky exit poll tells us that Obama carried voters under age 30 by a margin of 66% to 32%. On the flip side, by my calculation, he won voters 30 and over by just 50% to 49%. That means that he won by a larger percentage among young voters than any president, and that among [older] voters . . . he may or may not have carried . . . a majority of electoral votes.

Nixon and the FBI

Mark Felt [picture], associate director of the FBI during Watergate, died last Thursday. In its obituary to Felt, the man best known as “Deep Throat”—the source the Washington Post used to bring down the Nixon presidency—the Post wrote Felt “was, by all accounts, loyal to [FBI boss J. Edgar] Hoover. He was also suspicious of the Nixon White House effort to bring the FBI under its control.”

How could Nixon, a person who shared Hoover’s and the FBI’s perspective on who was loyal to America and who wasn’t, have been so unwise as to make an enemy of Felt, the country’s number #2 G Man? We know that after graduating from Duke law school, Nixon applied to become an FBI agent but was rejected. Did that scar him for life, and prevent the close working relationship with Hoover that might have held Felt’s loyalty? Possibly. More likely, though, Nixon knew Hoover loved power enough to blackmail presidents of any political persuasion, and determined that he, not Hoover, would be Washington’s chief dirty trickster. Nixon played rough, so in the end, lost to Felt and Hoover’s career G Men.

“All who take the sword will perish by the sword.”

Tuesday, December 16, 2008

Healthcare Reform is Coming

Last Thursday, Barack Obama announced he wanted “swift action“ on healthcare reform. "It's hard to overstate the urgency of this work," he said. He has Tom Daschle [picture] poised to drive the program through, working with the Democratic coalition from one end of the spectrum to the other (Daschle is the former Senate Democratic leader), and with key interest groups including the American Medical Association (unhappy with a current regime that often leaves doctors undercompensated).

But Daschle has also said he will use “the Senate's rules to prevent opponents from filibustering healthcare legislation", a move that one senior Republican staff member warned would make it "extremely difficult" to get any GOP support for major reform. One good way to drive reform through—have an enemy to build your movement around. On healthcare reform, that enemy would be Republicans.

Conservative commentator Charles Krauthammer has highlighted some of the difficulties with the Obama-Daschle anti-GOP approach to reform. Speaking on “Special Report with Brit Hume,” Krauthammer, an M.D. himself, noted Daschle explained he will cut costs:

in part by saying he will work on prevention. Now, I have been in the business for 30 years, and you hear it every year, and you want to weep when you hear it again and again. Prevention is a nice thing, but it doesn't save money.

HUME: Why?

KRAUTHAMMER: For example, the biggest preventative healthcare success in American history is the reduction in smoking. What happens instead of dying young if you smoke, you die older, spending years in a nursing home, and the costs end up higher. I'm not in favor of dying young, but it's more expensive if you live longer.

If you die of a heart attack at 50, that's awful, but it's cheap. If you live into your 80's, you will end up with Alzheimer's or cancer or a chronic disease that's expensive. . .

The way to save money in healthcare, the most immediate and effective, is to eliminate defensive medicine. I was a chief resident 30 years ago and a lot of our tests are entirely unnecessary and are a way to prevent lawsuits. The Democrats will never do that because of their dependence on the trial lawyers.


With a coalition built on excluding Republicans, you know trial lawyers will succeed in keeping medicine expensive for the rest of us.

Saturday, December 13, 2008

Thirty Years On

China has now been longer in the Deng mode than it was in the Mao mode.

--Tom Grimmer, Toronto Globe and Mail

In December 1978, the Chinese Communist Party put Deng Xiaoping in control of the country, the U.S. recognized China, and Deng headed for America; TIME's Man of the Year [picture]. Tom Grimmer punctuates that historic turning point by writing:

Thirty years on, we know what Mr. Deng set in motion. By now, we can almost recite the gee-whiz statistics: the world's third-largest economy, 40 million new Internet users every year, 600 million cellphones, $2-trillion (U.S.) in foreign-exchange holdings and — my own favourite — the planet's biggest consumer of cement. This country has seen the greatest poverty-alleviation effort in history. Yes, yes, we've heard it all. But somehow, knowing this does not quite do this place justice.

I arrived in China seven years after Mr. Deng's triumph, in the fall of 1985. I was employed by a Chinese "work unit." My local colleagues lived in cold-water flats they didn't own, rode ancient bicycles and looked forward to the annual train ride to see their parents in another province. Getting a passport was next to impossible, and you needed permission to read certain papers containing foreign news. Now they own their apartments, many have cars, and they go online to book their holidays abroad. Most surprising, they don't seem to find this transition, in less than a generation, the least bit jarring.


It’s jarring, it’s wonderful. China’s success benefits us too.

Thursday, December 11, 2008

The G-20; My “Top 15; ” A New G-20

The G-20 emerged as a big deal last month when its member-nation leaders gathered in Washington D.C. for an emergency summit to take on the world financial crisis. Actually, the G-8 (U.S., Japan, Germany, U.K., France, Italy, Canada, Russia) created the G-18 in 1999. The G-8 wanted to broaden their Euro-centric group to include other “systemically important countries” or “emerging markets”. So the G-8 invited finance ministers from Argentina, Australia, Brazil, China, India, Mexico, Saudi Arabia, South Africa, South Korea, and Turkey to join them in Berlin that year, and the enlarged finance minister grouping has met annually since. The G-18 later became the G-20 when it added Indonesia and the European Union.

In my discussion of the “Top 15” [see above chart] last year, I focused on countries that belong on some revised version of the Security Council, a political/economic/security power grouping, not the G-8, which groups economic powers. Still, it’s noteworthy that Brazil, China, India, Mexico, and Indonesia are already in my “Top 15” along with the G-8’s U.S., Japan, Canada, Russia, and the E.U. (two slots for the West European nations).

In 2006, I also looked that the “next 25” nations, ranked in power just below the top 15. If we had used the “next 25” ranking to expand the "Top 15" from 15 to 20, we would have added Turkey and South Korea to a new “Top 20”. The remaining countries currently in the G-20—Argentina, Australia, Saudi Arabia, and South Africa—ranked lower on my “next 25” list.

The countries from my “Top 15” not part of the G-20 are Pakistan, Iran, Nigeria, and Bangladesh. These four nations represent far more people than Argentina, Australia, Saudi Arabia, and South Africa (515 million to 131 million). Furthermore, Pakistan has nuclear weapons, Iran may soon have, and Iran and Nigeria, like Saudi Arabia, have oil.

Three of the G-20 nations not in my “Top 20”—Argentina, Australia, and South Africa—are among the top 20 economic powers; the basis for selecting the G-20. Saudi Arabia isn’t. It ranks 23rd in GDP measured by purchasing power parity (GDP/PPP). Iran, on the other hand, ranks 19th in GDP/PPP (19th if we are able to hold the EU to two G-20 representatives rather than its current five).

One can understand, I guess, why the big economic powers chose to include Saudi Arabia instead of Iran in their G-20. Still, I would make the G-20 our top big power grouping by reducing the EU from five to two representatives (whatever two they choose), replacing Saudi Arabia with Iran, and adding Pakistan, Nigeria, and Bangladesh.

Tuesday, December 09, 2008

Checking on Election Predictions (II)

Polls get a bad rep. They called the 2008 election very well. In my election predictions item, I said that drawing from the “Real Clear Politics” and “Rothenberg Political Report” poll-based analyses, Obama-Biden would win by about 8%, with roughly 380 electoral votes. Obama-Biden won by 7%, with 365 electoral votes, but lost Missouri by only 3,632 votes. A Missouri win would have given Obama-Biden 376 electoral votes.

In the senate, I predicted Democrats would pick up 8 seats to reach 59, taking Saxby Chambliss’ Georgia’s seat—but not Coleman’s in Minnesota nor McConnell’s in Kentucky. I was wrong about Chambliss. He won, but only after a December runoff, and Coleman’s lead in Minnesota of less than 200 votes is the only thing preventing Democrats from in fact gaining 8 seats.

In the house, I guessed Democrats might gain 28 seats, for a margin of 90. They have gained 21 for a margin of 80, meaning I was off by 7. I also said, “It will be an historic victory for liberals, their greatest triumph since 1964.” That’s true. 1965 is the last time liberals totally controlled Washington. On many senate votes, liberals will have the 60 needed to cut off debate, pass legislation, and confirm liberal justices and judges.

Monday, December 08, 2008

Coming Obama Disappointment #1: Public Education

Terry Moe, educational specialist at the Hoover Institution, wrote the seminal study (with John E. Chubb), Politics, Markets, and America's Schools, when he was at the Brookings Institution in 1990. Moe argues that while Democrats genuinely want “to help disadvantaged kids stuck in bad schools,” the party:
is immobilized. Impotent. The explanation lies in its longstanding alliance with the teachers' unions -- which, with more than three million members, tons of money and legions of activists, are among the most powerful groups in American politics. The Democrats benefit enormously from all this firepower, and they know what they need to do to keep it. They need to stay inside the box.

Acceptable educational “change,” therefore, cannot “affect anyone's job, reallocate resources, or otherwise threaten the occupational interests of the adults running the system.” Moe says Democrats should instead get serious about 1) accountability, 2) school choice, and 3) the downside of collective bargaining—onerous rules, assignments based on solely on seniority, and absolute tenure. Moe hopes Obama will somehow make the changes Democrats should favor.

The New York Times’ David Brooks has identified a camp of educational reformers within the Obama network that is championing for education secretary either Joel Klein, the highly successful New York public school system head who Brooks says has been “blackballed” by the unions, or Arne Duncan, according to Brooks “the reforming Chicago head who is less controversial.”

Brooks worries the job will instead go to some uninvolved governor, with Linda Darling-Hammond [picture], a defender of the status quo who heads Obama’s education transition team, named deputy secretary. If it’s Darling-Hammond, she won’t be the Washington Post’sideal candidate ":
someone who is not afraid to break with orthodoxy, who is more concerned with results than with ideology, who has a proven ability to lead large systems toward change and is passionate about regaining America's place as the best-educated country on the planet[, someone focused] on the only interests that matter -- those of America's schoolchildren.

Anyone betting on this kind of Washington Post-type outcome had better demand long odds.

Thursday, December 04, 2008

Checking on Election Predictions (I)

In my election predictions item, I said of the impact of Obama’s election on Wall Street, “I believe the stock market will within 30 days show real unhappiness with the result.” Today is 30 days since the market closed just before Obama’s election, and my FOX INDEX, which measures the distance to a healthy market (12,000 Dow, 1,300 S&P, 2,500 NASDAQ), is at -5,133, or -1,744 below the -3,389 it stood at on November 4 [see chart]. This represents an index decline of -66%. To be sure, since word leaked Obama would appoint Tim Geithner treasury secretary, the index is up 1,046, or 20%.

And that’s to the good. Still a ways to go, however, before the market reaches pre-Obama levels.

Wednesday, December 03, 2008

Obama Puts Foreign Policy in Perspective


Barack Obama seems relaxed about how his administration will handle foreign policy. Obama should be for these reasons:


1. He just won the first election since 9.11 not dominated by foreign policy. Republicans used national security to win victories in 2002 and 2004, successfully painting the Democrats as soft on terrorism. Democrats are interested in big government at home, and crises overseas get in the way.

2. The Obama/Democrat policy on Iraq proved to be win-win. Liberals think the Iraq war was a stupid distraction, and were pleased when in 2006 Iraq became a disaster that helped Democrats control congress. But Obama and company are at least as happy that Iraq has turned out OK, allowing the U.S. to leave and put resources into problems at home.

3. Democrats want domestic issues front and center. Democrats are a coalition of interests that believes government should run the economy, education, health care, and labor relations, and seeks new resources to pay for government programs. Because Democrats are happy with Obama’s priorities, Obama is free to run foreign policy as he chooses.

4. Bush already moved foreign policy toward realism. No wonder Obama keeps Gates as Defense Secretary. Foreign policy today is much different than was in 2006 before Rumsfeld left, different in ways Obama likes. Building peace between Israel and Palestine, helping shore up a moderate government in Pakistan, facing head-on the danger of a nuclearized Iran, working with China to contain North Korea—all these policies carry over well for Obama.

5. Clinton fits into Obama’s foreign policy. Once Clinton turned against the Iraq war, there was no real difference between the two. It was, however, still in Obama’s political interest to continue bashing Clinton over her vote for the war. That was then. Now both share the same pragmatic approach to foreign policy, Obama will shift resources and attention toward domestic issues, and Clinton will work with the professionals to keep foreign policy from boiling over into a crisis. When crises do come, Obama will run the show.

The blog entries below provide perspective on an Obama foreign policy. The commontariat may be disappointed to be working with Clinton after having sought to engage Obama directly. The commontariat believes Obama’s willingness to turn over foreign policy to Clinton proclaims national security’s diminished importance. It forgets the world usually forces itself on sitting presidents.

The earliest entries show me wrong in thinking foreign policy would help McCain against Obama. Of course, the economy took over.

Clinton as Secretary of State: Second Thoughts?

Wow. Clinton as Secretary of State

Obama’s Sandbox

More Support for Obama Softness


Obama and "Soft Power"

Sunday, November 30, 2008

Obama’s Big Donors

The Obama organization claimed small donors ($200 or below) dominated Obama’s campaign fundraising. That’s not true, according to the nonpartisan Campaign Finance Institute (CFI). The CFI reports 74% of Obama’s money came from those who gave over $200, and thus had to profile their identity. That’s almost exactly the same figure for Bush in 2004. Bush received 75% of his donations from those giving over $200.

Of course, Obama raised 57% ($200 million) more than Bush.

Thursday, November 27, 2008

Wealth Swings to Hong Kong


As New York gained from Europe’s problems after World War I, so Hong Kong will capitalize from the current financial crisis slamming New York. Los Angeles Times correspondent Don Lee writes about how world finance is shifting to Hong Kong:

With the U.S. and Europe worse off than others, there's little doubt that more capital and talent will swing toward Asia. And few places look as well positioned as Hong Kong to take advantage of that. “[T]here are three great listening posts: London, New York and Hong Kong," says Donald Straszheim, former global chief economist at Merrill Lynch in New York, [and] "Hong Kong is increasingly becoming globally important.”

The latest financial crisis has Western governments promising tougher regulation of banks and trading houses. . . "People want government to do more, but not to the extreme of the U.S., where the government takes control of everything," says Man Cheuk Fei, chief editor of Hong Kong Economic Journal. "Hong Kong senior officials argue that this is a golden opportunity to build one or two investment banks. . . . They can compete with the U.S. in the future."

Thanks to China, Hong Kong has surpassed New York in the number of initial public offerings in recent years. As much as 70% of Hong Kong's economic growth now depends on the mainland, says Donald Lam, assistant general manager at Hang Seng Bank, one of this city's largest.

David Dodwell, a British native who has lived here 20 years, says Hong Kong should come out stronger from the global economic turmoil, which he believes "will be the tipping point marking the end of U.S. hegemonic power." China "is going to be an increasingly powerful locomotive for the global economy," he says.

Tuesday, November 25, 2008

The Ugly Chinese

James Fallows likes to pick a subject and follow it in depth for an extended period, often leading to a book. He has written about technology, national defense, Japan, the media, Iraq, flying, and now China, with a forthcoming book entitled Postcards from Tomorrow Square. So what does Fallows see in China?

 Chinese “are generally optimistic about what life will hold 20 years from now[, 86%] satisfied with the country’s overall direction—the highest of all the countries [the Pew project] surveyed. . .”

 “National-level democracy might come to China or it might not—ever. . . But from the national level down to villages, where local officials are now elected, the government is by all reports becoming accountable. . . The system prides itself on learning about problems as they arise and relieving social pressure before it erupts.”

But Fallows picks on China for its “ignorance” of the outside world. One example: most people in China considered their country very “trustworthy,” while most people outside China thought the country was not trustworthy at all. I guess we outsiders know China better than its populace does.

To make his point about how unready Chinese are to handle the outside world, Fallows compares China’s party school emphasis on “loyalty, predictability, and party-line conformity” to the Bush administration’s staffing “its Embassy in Baghdad’s Green Zone mainly with people who followed the party line in Washington.”

So let me get this. China might be as horrible abroad as the Bush administration, which has basically won its prolonged, difficult struggle to bring democracy to Iraq. That bad, huh?

Friday, November 21, 2008

Obama’s Good News: Geithner for Treasury

Yesterday, the S&P 500 dropped to 752, below its last bear market low of 769 hit in October 2002. The last time the S&P was this low was 1997, when the index was on the upswing. Overall, My FOX INDEX, which measures the distance to a healthy market (12,000 Dow, 1,300 S&P, 2,500 NASDAQ), hit a new bottom of -6,179 (index is 3 months old—we run the FOX INDEX whenever it hits new lows), 92% of the way from healthy to the October 2002 bottom. Yesterday was indeed a Black Thursday [see chart].

Today, the market moved up sharply on the leaked news Tim Geithner, the head of Federal Reserve Bank of New York, will be named treasury secretary Monday. Obama has made the market nervous—traders worry about where he will take the economy. Geithner represents competence, he’s a known quantity, he’s been active working with Paulson on Paulson’s rescue plans, and Geithner’s appointment signals Obama wants a calm, steady hand guiding our economic future. Good news for the market and for America.

Wednesday, November 19, 2008

GM, Citicorp Troubles Cripple Market

Stocks fell to new 5-1/2 year lows today. People are losing faith in the survival of General Motors, the United Auto Workers, and Citicorp, as congressional Democrats talk about making cars greener. My FOX INDEX, which measures the distance to a healthy market (12,000 Dow, 1,300 S&P, 2,500 NASDAQ), dropped 577 points to its new bottom of -5,610 (index is 3 months old—we run the FOX INDEX whenever it hits new lows). It’s now 83% of the way from healthy to the bottom the market hit in October 2002, at the end of the last bust.

Clinton as Secretary of State: Second Thoughts?

Obama’s picking Clinton as Secretary of State seemed an astute move, bringing her inside the tent. But the Washington commentariat, the media’s elite, seems to think otherwise. The Washington Post’s David Ignatius says, “the idea of subcontracting foreign policy to Clinton -- a big, hungry, needy ego surrounded by a team that’s hungrier and needier still -- strikes me as a mistake of potentially enormous proportions.” His Washington Post colleague, guru-in-chief David Broder, believes Clinton is wrong for the job because Obama

does not need someone who will tell him how to approach the world or be his mentor in international relations. One of the principal reasons he was elected was that, relying on his instincts, he came to the correct conclusion that war with Iraq was not in America's interest. He was more right about that than most of us in Washington, including Hillary Clinton.


And the most influential Washington commentator on foreign policy, the New York Times’ Tom Friedman, doubts Obama will have Clinton’s back (he really means Clinton will have Obama’s back), “given all that has gone down between them and their staffs. . . particularly with Mrs. Clinton always thinking four to eight years ahead” to a “run again for the presidency.”

Friedman specifically rejects the “team of rivals” argument for appointing Clinton, a rejection given fuller treatment by historian Matthew Pinsker, who writes that while Obama loves Doris Kearns Goodwin's Team of Rivals book on the Lincoln presidency, in fact bringing all his rivals into his cabinet gave Lincoln serious problems.

Having Ignatius, Broder, and Friedman all diss the Clinton appointment is a sign that strong opposition is coming from the Obama camp, which is sharing its concerns with the commentariat. Clinton herself is getting ready for rejection by putting out the word she may not be interested in the post after all, though that “might simply reflect her need to create an alternative storyline if the deal falls apart.”

Anyway, the commentariat loves all this. With Democrats back in power after eight years in the wilderness, the media are once again players.

Friday, November 14, 2008

Wow. Clinton as Secretary of State.

I’m amazed by reports that Obama’s offered Secretary of State to Clinton. It would be an excellent selection, totally negating Obama’s error in overlooking Clinton for vice president. It pulls the party together, and should therefore give Obama enhanced power over congressional leaders.

And Obama avoids having any Clinton in the White House, something he would have had on his hands with Clinton as Veep. Clinton will be in another building, saddled with running a big bureaucracy, in constant conflict with the White House and Defense, and often on the road to less important spots (Obama will grab the best stuff).

Why would Clinton do it? She’s ready for something new, she will appreciate she has a better job than Biden’s (the job she wanted in August), and she gets to shape American foreign policy—probably the part of being president she most looked forward to. Meanwhile, Obama has her “inside the tent, (shooting) out.”

It’s About the Schools


The New York Times’ Nicholas Kristof writes that Obama is “sending signals that education may be on the back burner at the beginning of the new administration. He ranked it fifth among his priorities.” To Kristof, that’s a big mistake. Improved urban primary and secondary education is key to America’s economic future, Kristof believes.

How do we get to better schools? Kristof says,

A study by the Hamilton Project, a public policy group at the Brookings Institution, outlines several steps to boost weak schools: end rigid requirements for teacher certification that impede hiring, make tenure more difficult to get so that ineffective teachers can be weeded out after three years on the job and award hefty bonuses to good teachers willing to teach in low-income areas. If we want outstanding, inspiring teachers in difficult classrooms, we’re going to have to pay much more.


Pay teachers “much more.” OK. Obama will happily back that recommendation.

Thursday, November 06, 2008

Liberals Frighten Market

In my “election predictions” item, I concluded with this statement, “I believe the stock market will within 30 days show real unhappiness with [the liberal sweep].”

Wow, 30 days! Much too long! In the first two days after Obama’s election and liberal gains in both houses, the market has recorded its biggest two-day drop since October 1987. Many factors are at play in a down economy. But one of those factors is the liberal threat to raise taxes and push anti-business, pro-union regulations. Wall Street is showing its fears about what liberals will do, and wants Obama to reassure American business.

Wednesday, November 05, 2008

. . . But Defeat is an Orphan

As journalist Monica Langley wrote,

Axelrod . . . set out "seven pillars" the campaign must do well: the vice-presidential choice, the convention, a European trip to meet with heads of state and the four debates.


We said Axelrod/Obama had trouble with the first three “pillars.” But didn’t Obama-Biden win the four debates (Axelrod’s “pillars” 4-7), displaying steadiness and calm?

Why not? Front-runners are always steady and clam. And America’s September-October financial meltdown provided Obama his best possible outside event, vaulting him to a significant lead. Wall Street’s panic brought the Bush administration back before the cameras. Bush as president had responsibility for the economy. McCain wanted to be talking about foreign policy, anything but Bush. Obama wanted attention on Bush’s economy. Democrats, before September 15, were struggling to make the economy an issue. Things seemed bad, there were potential housing and credit crises, but the country was still growing.

No wonder McCain misspoke on September 15 [picture]. He needed the economy working. He had no backup plan for the economy going bad in a big way, an event that always turns out the party in power. Additionally, the Great Depression, the Kennedy-Johnson years, and Clinton’s presidency (“It’s the economy, stupid”) all tell us Democrats help us get out of bad economic situations caused by Republicans. So McCain inexpertly tried to wish an economic crisis away (“fundamentals are strong”).

Obama and victory’s 1000 other fathers are chief beneficiaries of an economy gone very bad—bad at just the time to settle an election.

Victory Has a Thousand Fathers

It’s pretty obvious the financial tsunami did in McCain’s election prospects, though Obama may have won a closer race anyway. But the journalists who write “history’s first draft” are busy minimizing the financial meltdown that riveted the country’s attention for most of the campaign’s final six weeks, while maximizing McCain-Palin’s media-exposed errors and Obama’s strategic brilliance.

Of course, McCain did hurt himself with that one bad quote. As Monica Langley described it in the Wall Street Journal:

[On September 15], the Dow Jones Industrial Average tumbled more than 500 points, with Lehman Brothers Holdings Inc. in bankruptcy court and other financial firms, such as American International Group Inc., struggling. On the stump, Sen. McCain sought to reassure voters. "The fundamentals of the economy are strong," he said. Sen. Obama attacked: "Sen. McCain, what economy are you talking about?" he said.


But one bad statement is different from Langley and others saying Obama was steady in the face of crisis, McCain wasn’t. Or suggesting Obama adeptly at McCain’s expense played out a strategy set months earlier, as Langley did when she quoted Obama chief strategist David Axelrod [picture]:

"From the start [of the general election campaign], we defined [the] election as about change versus more of the same." At their Chicago headquarters, Axelrod . . . set out "seven pillars" the campaign must do well: the vice-presidential choice, the convention, a European trip to meet with heads of state and the four debates.

If I could rewrite this “first draft” history of Axelrod’s “seven pillars” (above--incidentally, why modestly leave out the “of wisdom”? T.E. Lawrence’s autobiography was Seven Pillars of Wisdom, not “Seven Pillars”), I would say Axelrod/Obama 1) blew the vice presidential choice, 2) overdid the European trip, allowing McCain to separate “celebrity” Obama from ordinary Americans, 3) responded to their Europe error by toning down Obama’s closing speech in front of 80,000 screaming people so Obama wouldn’t come off as Hitler at a Nuremberg rally, and 4) arrived at September 15 tied with McCain in the polls, because people weren’t buying the idea that McCain-Palin were, as Axelrod said, “more of the same.”

Then the economic tsunami hit.

Historic Victory

From Tom Bevan, who runs the website “Real Clear Politics:”

Obama captured more votes than any candidate in history; a higher percentage of the popular vote than any Democrat since Lyndon Johnson, and a higher percentage of the white vote than John Kerry four years ago. . . make no mistake about it: last night voters handed Barack Obama and his fellow Democrats a mandate to take the country in a new direction.


Or an old direction, back to the New Deal and Great Society.

Monday, November 03, 2008

Election Predictions

Real Clear Politics” and the “Rothenberg Political Report” are my best sources for how the election will come out. Extrapolating from their work, I’m expecting Obama-Biden to win by about 8%, with roughly 380 electoral votes, for Democrats to pick up 8 senate seats to reach 59, including Saxby Chambliss of Georgia’s seat—but not Coleman’s in Minnesota nor McConnell’s in Kentucky—and for Democrats to gain 28 more house seats, for a total of 263 and a margin of 90.

It will be an historic victory for liberals, their greatest triumph since 1964. I believe the stock market will within 30 days show real unhappiness with the result.

In Battle of Quotes, Obama Wins 6 to 1

"I actually did vote for the $87 billion before I voted against it."

--John Kerry, March 16, 2004

Newsweek’s inside coverage of how Bush won re-election in 2004 made much of Kerry’s statement on funding the Iraq war (above). The Bush people saw immediately how it captured Kerry’s flip-flop-flip position on Iraq and the war on terrorism, and used Kerry’s words mercilessly against him. You could not have invented a better quote, and Kerry said it himself! One quote. One election lost.

I remember thinking, “Sure that quote was important, but isn’t it risky to build elections around a single ill-considered statement?” After all, “all who take the sword will perish by the sword” [Matthew 26:52]. And so it was. Democrats did the turnabout in 2008, using McCain's own words to defeat McCain. Here’s how:

1. Democrats used 3 phrases to define Bush and elect Democrats to Congress in 2006.


“my belief is we will, in fact, be greeted as liberators.”

--Dick Chaney, March 16, 2003

"Mission Accomplished"

--Banner behind George W. Bush during speech on USS Abraham Lincoln, May 1, 2003

"Brownie, you're doing a heck of a job."

-–George W. Bush, to FEMA director Michael Brown, while touring hurricane-ravaged Mississippi, Sept. 2, 2005

2. With a single old quote, Obama then nailed McCain to Bush.

“I voted with the president over 90 percent of the time, higher than a lot of my even Republican colleagues."

--John McCain, May 22, 2003

I didn’t think Obama would get away with marrying McCain to Bush. They are so different. I overlooked the power of that one televised quote from 2003, which held up because McCain’s “agree with Bush” votes later continued to hover around 90%.

3. Obama used two quotes, one just as the meltdown began, to portray McCain as unqualified to deal with the economy.

"The issue of economics is something that I've really never understood as well as I should.”

--John McCain, December 18, 2007

"Our economy, I think, is still -- the fundamentals of our economy are strong. . . “

--John McCain, September 15, 2008

These two McCain errors, tacked on to the reality of our economic meltdown, probably cost McCain any chance of winning.

Obama made a big mistake himself, and it hurt him for months afterwards, when he said:

You go into some of these small towns in Pennsylvania, and like a lot of small towns in the Midwest, the jobs have been gone now for 25 years and nothing's replaced them . . . And it's not surprising then they get bitter, they cling to guns or religion or antipathy to people who aren't like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations.


--Barack Obama, April 5, 2008

The Obama campaign, however, never repeated that mistake, and Obama did everything he could to remind voters that he came from a low income background, raised by a white single mother and white grandparents from Kansas.

Two weeks ago, McCain thought he had the quote that might sink Obama at the last minute, when the Democrat told “Joe the Plumber:”

“I think when you spread the wealth around, it’s good for everybody.”

--Barack Obama, October 12, 2008

McCain was right to jump on Obama's statement. The quote showed Obama more interested in income redistribution than wealth creation. The problem is that in a bad economy, voters don’t see a problem with income redistribution. So in the end, the quote hardly touched Obama.

Sunday, November 02, 2008

More on Obama Changing Courts

In his article “Obama presidency could reshape courts,” Fred Barbash of “Politico” makes some of the same points as Northwestern’s Steven Calabresi. Like Calabresi, Barbish feels Obama,

through his appointments could have a profound impact on the judiciary for decades to come. In fact, Obama stands a greater chance than any Democratic President since Lyndon Johnson of making an impact on the both the appeals courts and the Supreme Court, especially if the Democrats get 60 seats in the Senate, which must confirm appointments.


And Barbish also spots that “Obama’s ideal appointee recognizes ‘who the weak are, and who the strong are in our society,’” setting the table for judges who place empathy ahead of justice.

Both Obama and ex-Judiciary Committee chair Joe Biden care greatly about the courts. Barbish quotes Harvard Law School’s Cass Sunstein, an Obama friend, advisor and former faculty colleague at the University of Chicago Law School saying, “The first thing to know about Obama, which hasn’t gotten sufficient attention, is that he is himself appointable to the Supreme Court. He is a constitutional specialist who has taught for many years,” and who “is obviously alert to the fact that there’s been a rightward drift on the court.” And as Biden put it, “the ideology of [the] judge makes a big difference.”

A big difference. Understatement.

Friday, October 31, 2008

Halloween Fright: Democrats Will Reshape Courts

Steven G. Calabresi, a professor of law at Northwestern University, has a really scary piece in the Wall Street Journal. Obama and Democrats are going to transform the courts into all-time citadels of activism.

Calabresi starts slowly, noting “one of the great unappreciated stories of the past eight years is how thoroughly Senate Democrats thwarted efforts by President Bush to appoint judges to the lower federal courts.”

In the key District of Columbia Circuit Court, Reagan appointed 8 judges, an average of 1 a year. But Bush was able to name only 4. Two seats on this court are vacant, and Obama will fill those 2, plus the seats of 2 older Clinton appointees who will retire, and most likely the seats of 4 older Reagan and George H.W. Bush appointees who may retire as well. As a consequence, the legal left will once again have a majority on the nation's most important regulatory appeals court.

The balance will shift as well on almost all of the 12 other federal appeals courts. Obama will swing 9 of the 13 (not counting the Ninth Circuit, which the left solidly controls today). On the Supreme Court, 6 of the current 9 justices will be 70 years old or older on January 20, 2009. There is a widespread expectation that the next president could make 4 appointments in just his first term, with maybe 2 more in a second term. We are poised for heavy change.

Here’s what’s really frightening: Obama's extreme left-wing views about the role of judges. He believes that judges ought to decide cases in light of the empathy they ought to feel for the little person in any lawsuit.

According to Calabresi:

 Obama in July 2007 said: "[W]e need somebody who's got the heart, the empathy, to recognize what it's like to be a young teenage mom. The empathy to understand what it's like to be poor, or African-American, or gay, or disabled, or old. And that's the criteria by which I'm going to be selecting my judges."

 This means plaintiffs should usually win against defendants in civil cases; criminals in cases against the police; consumers, employees and stockholders in suits brought against corporations; and citizens in suits brought against the government. Empathy, not justice, is the federal courts’ mission.

 In September 2001, Obama noted that the Warren Court "never ventured into the issues of redistribution of wealth and sort of more basic issues of political and economic justice in this society," and "to that extent as radical as I think people tried to characterize the Warren Court, it wasn't that radical."

 Obama added the Court "didn't break free from the essential constraints that were placed by the Founding Fathers in the Constitution, at least as it has been interpreted;" that the U.S. Constitution has so far only guaranteed negative liberties from government—with no right to welfare or economic justice.

 This raises the question of whether Obama supports the Constitution as it is written. Does his provision of a "tax cut" to millions who pay no income taxes foreshadow constitutional rights to welfare, health care, Social Security, vacation time and the redistribution of wealth?

 Federal judges must take an oath of office to "administer justice without respect to persons, and do equal right to the poor and to the rich." Obama's emphasis on empathy in essence requires judges to violate this oath. Instead of a blindfolded person weighing legal claims fairly on a scale, Obama wants to tear the blindfold off, so the judge can rule for the most deserving of empathy. The legal left believes the federal courts are very right-wing now. The reality is different. Federal courts hang in the balance.

 Obama could give us a constitutional right to welfare; a constitutional mandate of affirmative action wherever there are racial disparities, without regard to proof of discriminatory intent; a right for government-financed abortions through the 3rd trimester; the abolition of capital punishment and the mass freeing of criminal defendants; ruinous shareholder suits against corporate officers and directors; and huge punitive damage awards against businesses such as those selling fattening food.

Wednesday, October 29, 2008

Bad Editors Responsible for Media Bias

The sheer bias in the print and television coverage of this election campaign is not just bewildering, but appalling. And over the last few months I've found myself slowly moving from shaking my head at the obvious one-sided reporting, to actually shouting at the screen of my television and my laptop computer.

-- Michael Malone, ABCNews.com "Silicon Insider" columnist

Malone is a journalist who’s previously worked for the San Jose Mercury News, Forbes, and the New York Times, produced three series for PBS, and wrote 12 books. He thinks he understands why media bias for Obama and Democrats is so extreme this year: bad editors. Malone writes:

Picture yourself in your 50s . . . discover[ing] that you're presiding over a dying industry. The Internet and alternative media are stealing your readers, your advertisers and your top young talent. . . The Newspaper Guild is too weak to protect you any more, and there is a very good chance you'll lose your job before you [reach] retirement.

. . . desperate times call for desperate measures. Even if you have to risk everything on a single Hail Mary play. Even if you have to compromise the principles that got you here. After all, newspapers and network news are doomed anyway -- all that counts is keeping them on life support until you can retire.

And then the opportunity presents itself -- an attractive young candidate whose politics likely matches yours. . . offers the prospect of a transformed Washington with the power to fix everything that has gone wrong . . . With luck, this monolithic, single-party government will crush the alternative media via a revived fairness doctrine, re-invigorate unions by getting rid of secret votes, and just maybe be beholden to people like you in the traditional media for getting it there [emphasis added].


Like I said, here.

Monday, October 27, 2008

Obama’s Sandbox

Obama won’t have the initiative on domestic policy. That role will be with the Democratic congress. And the nature of the Democratic Party—it’s a collection of interest group hierarchies that gain power by respecting and deferring to each other—means union views on trade protection will seriously inhibit America’s and Obama’s ability to expand our economy through free trade.

Make no mistake, free trade and the economic expansion it produced has helped move America and the world toward prosperity for over 60 years, my entire lifetime. We are going to suffer because unions hold a misguided, Michael Moore-type view of how job creation works. For nearly three decades, the U.S. has been blessed by being able to ignore union bosses. No longer.

International economics aside, Obama will have relatively free rein to shape and execute foreign policy and national security. He names the key officials involved, and congress can’t keep pace with swiftly developing world events. Foreign policy is fun. It involves lots of nice food and drink, big speeches, travel, and TV face time. Wherever Obama goes, he comes in at the top of society, with all that that involves. In the end, it’s why folks most want to be president.

Fortunately for Obama, Bush leaves the world a safer place than it was in 2001. Al Qaeda is on the run. Contrary to what Obama says about Afghanistan’s being the “main front,” al Qaeda is in Pakistan (not Afghanistan) because it has nowhere else to go. It would have much rather prevailed in oil-rich Iraq, in the heart of the Middle East, less than a 500-mile straight shot to Israel.

Bush has also impressed Russia and China with his willingness to use force in Iraq and elsewhere, a language they understand. Obama, for all his appeasement rhetoric, will have a group of sober advisors around him who know how to handle Russia and China. They realize both powers respect force, not chatter.

Obama nevertheless faces two great “militants + the bomb” challenges in Iran and Pakistan. And he needs to find a two-state solution to the Palestinian question. Richard Haass, the head of the Council on Foreign Relations, shows pretty well in his Newsweek “Memorandum to the president-elect” that solutions are hard to find. Still, I’m sure Obama welcomes the opportunity, finally, to act, not instruct.

It’s his sandbox.

Market Still Searching for Bottom

The stock market reacted to good news today by sinking to new 5-1/2 year lows. Sales of new homes rose 2.7% in September, and Frederic Ruffy, options strategist at WhatsTrading.com, said, “With respect to the housing market, it appears that the bar had been set too low: The actual numbers were not nearly as bad as [economists had] forecast."

The market ended up discounting good housing news, falling off the edge in the last half hour in an all-too-frequent pattern, and closing at the day’s lows. My FOX INDEX, which measures the distance to a healthy market (12,000 Dow, 1,300 S&P, 2,500 NASDAQ), dropped 280 points in the final half hour to -5,269, its new low (index less than 3 months old—we run the FOX INDEX whenever it hits new lows). It’s now 78% of the way from healthy to the bottom the market hit in October 2002, at the end of the last bust.

“Baked into the pie”: Reduced Freedom Under Democrats

Michael Barone of US News takes a crack at Obama’s wish list. He predicts Obama, Sen. Harry Reid, and Speaker Nancy Pelosi will have no trouble raising taxes on the rich. Not me. I predict Republicans have made such an issue of tax increases that Democrats—the party of the wealthy anyway—will, with the exception of allowing Bush’s temporary tax cuts on higher incomes to expire, rely on deficit spending, not tax increases, to finance their costly programs.

And budget constraints in a bad economy will limit Democrats’ spending. Barone notes, however, there are issues pushed by Democrats that have no budgetary costs. And they will likely come to pass:

• One is the "fairness doctrine," which is intended to shut down talk radio, the one communications medium in which conservative voices are dominant.

• Another is the so-called card check bill, which [means] secret-ballot unionization elections, required now, would be a thing of the past. The aim is to vastly increase union membership, pumping money into a Democratic pressure group.

• Also “baked into the pie” is trade protectionism. The breakdown of the Doha Round and Speaker Pelosi's refusal to bring the Colombia Free Trade Agreement to a vote mean that both multilateral and bilateral trade liberalism channels will be clogged.

1. Less freedom. 2. Less freedom. 3. Less free trade.

Saturday, October 25, 2008

Stoning Sarah

Daniel Henninger of the Wall Street Journal offers some plain talk on media treatment of Sarah Palin:

The stoning of Sarah Palin has exposed enough cultural fissures in American politics to occupy strategists full-time until 2012. We now see there is a left-to-right elite centered in New York, Washington, Hollywood and Silicon Valley who hand down judgments of the nation's mortals from their perch atop the Bell Curve.

It seems only yesterday that the most critical skill in presidential politics was being able to connect to people in places like Bronko's bar or Saddleback Church. When Gov. Palin showed she excelled at that, the goal posts suddenly moved and the new game was being able to talk the talk in London, Paris, Tehran or Moscow. She looks about a half-step behind Sen. Obama on that learning curve.

Lorne Michaels, the executive producer of "Saturday Night Live," lives on the forward wave of American life. This week he gave his view of Sarah Palin to EW.com: "I think Palin will continue to be underestimated for a while. I watched the way she connected with people, and she's powerful. Her politics aren't my politics. But you can see that she's a very powerful, very disciplined, incredibly gracious woman. This was her first time out and she's had a huge impact. People connect to her."

Friday, October 24, 2008

A Wave. A Tsunami.

At a breakfast with reporters Friday morning, Democratic strategist James Carville urged the assembled to look around, and remember how everything looked today. "Nothing will be the same" after Election Day, Carville suggested. "This place is going to get hit" with political change on a scale folks haven't seen before. . . Washington's ruling class is about to undergo massive political upheaval. . . The country seems poised for another "wave" election, where the close seats fall in one direction. "We've not had a leader elected in this kind of environment in our lifetime," said [pollster Stan] Greenberg. You have to go back to 1930 and 1932 to see two wave elections in a row.

--Eleanor Clift, Newsweek

1930. 1932. The first two post-’29 Crash elections. In an entire article about Democrats storming to massive victory, this is as close as Clift gets to crediting the real source of the upcoming Democratic sweep— the well-timed Crash of ‘08.

Seattle P-I associate editor Kenneth Bunting, in a similar “We Win! We Win! We Win!” column, at least notes:

There is little doubt that Obama's political fortunes were aided by the timing of the nation's awful economic crisis. Liberal analysts who won't admit that reality are in a similar state of denial as conservative ones who won't acknowledge that McCain's tactics, lack of message and vice presidential choice have backfired.


McCain’s tactics? Lack of message? Oh, of course that disaster Palin. Don’t think so. McCain was hit by a tsunami, a real October surprise, but the media will continue claiming they elected Obama and a Democratic congress by exposing the frauds running against them.

Here’s more crashing wave reality. My FOX INDEX, which measures the distance to a healthy market (12,000 Dow, 1,300 S&P, 2,500 NASDAQ), dropped 1,200 points over the week to -4,992, its new low (index less than 3 months old—we run the FOX INDEX whenever it hits new lows). It’s now 74% of the way from healthy to the bottom the market hit in October 2002, at the end of the last bust.

Thursday, October 23, 2008

Fact: Media Trashes McCain

Howard Kurtz, who watches media at the Washington Post, has the latest on media bias from the Project for Excellence in Journalism. Post-convention coverage of McCain is 57% negative to 14% positive, a ratio of 4:1 negative. For Obama, the figures are 29% negative, 36% positive, a 4:5, negative/positive ratio. The McCain-Obama differential has grown since the Wall Street meltdown to 5:1 negative stories on McCain, 5:1 positive for Obama. Kurtz adds, in an editorial comment, it was McCain who said, "the fundamentals of our economy are strong."

Wednesday, October 22, 2008

Pelosi and Reid Will Rule America

Mike Gerson is a Council on Foreign Relations senior fellow, a Washington Post columnist, and was (2001-06) Bush’s chief speechwriter. He has written about how Obama will govern; an analysis with which I agree.

Implicitly, Gerson makes two major points:

1. Obama is a reconciler.

Obama does not appear to view himself as a lapsed radical. He sees himself as the reconciler of opposites, the seer of merit on both sides, the transcender of stale debates. He is the racial healer who understands racial anger.


Obama is the reassuring figure who gained fame telling the 2004 Democratic convention America needs to come together. As Gerson says, Obama’s “entire manner douses inflammatory charges of extremism.”

But:

2. Pelosi, Reid and the Democratic congress have an agenda “the reconciler” won’t stop.


The least responsible, least respected, least popular political institution in America -- the Democratic-led Congress -- [will] also be the most emboldened. Democratic leaders with large majorities [will] be pushed by conviction and hubris, and pressured by Democratic constituencies, toward divisive measures that punish and alienate businesses, seek backward-looking political vengeance and impose cultural liberalism.

Biden Unplugged

From Kirsten Powers, New York Post columnist:

On the stump recently, Sen. Biden declared he had "three words" for what the nation needs: "J-O-B-S."

Lucky for him, his name isn't Dan Quayle, or that would have followed him for the rest of his career.

Tuesday, October 21, 2008

The Restoration

We have noted efforts to parallel current developments to the New Deal's coming in 1933. Now Paul Rubin in the Wall Street Journal has an article, “Get Ready for the New New Deal.” Rubin writes, “this election has been fought on the margins, over marginal issues.” I agree. It’s like 1932, when Roosevelt famously attacked Hoover for his deficit spending and promised a balanced budget. The big jolt won’t be the campaign, it’ll be what follows. Rubin says, “this election will make more than a marginal difference. It might fundamentally change America.”

But how? The New Deal was an earthquake for America in 1933, but it makes a difference we’ve experienced that shake already. Obama’s not prepared or able to offer America something radically new. Instead, we’re going back to the time when our intellectual, liberal elite last totally controlled Washington and tried to make us love Big Government, the great days of the New Deal and Great Society, before Vietnam ruined it all.

It’s the American Restoration, putting the meritocracy back in power, where they believe they rightfully belong. In the English Restoration of 1660-1679, Charles II [top picture] got things right side up again, gave the nobility their lands back, and returned the Royalists to power after Oliver Cromwell’s ghastly interregnum, when Puritans ruled the landscape and even abolished Christmas celebrations. As Charles II restored the bawdy theaters, as Roosevelt brought back martinis [picture] with his end to Prohibition, Obama’s Restoration—fueled by the richest political campaign in history—will make our wealthy, secular, Europeanized cultural elite dominant again over mainstream America.

Mao Again Turns in Grave: Farmers Can Sell Land

China has given farmers control over their land. On Sunday, the ruling Communist Party Central Committee [pictured] voted to allow farmers to "lease their contracted farmland or transfer their land use right" (government retains nominal title over all Chinese land, but lease guarantees have successfully fueled urban China’s development). The party worries about the growing urban-rural income gap, and hopes land consolidation will boost the scale of farm production, while sales will provide rural residents funds for new businesses. The party’s goal: double rural area per-capita disposable income to $1200 annually by 2020.

China has held back on individual farmland ownership because it fears landlords once again dominating landless peasants. Leaders are also concerned about China’s rapidly disappearing arable farmland. Central government policy is to hold the line at 120 million hectares of farmland, but China’s already down to 121.7 million hectares, as Beijing pleads with local governments to control “strictly” land sales for urban development.

Monday, October 20, 2008

Democrats Near Filibuster-proof Majority

Reid Wilson at “Real Clear Politics” has the latest on the senate races. And it’s looking very, very bleak for those of us who want brakes on America’s lurch to the left. Democrats are one seat from an outright majority of 60. If current trends continue, they will be there.

Since our last look, another seat has shifted to Democrats—Norm Colman’s in Minnesota, meaning comedian Al Franken will be U.S. Senator Franken for the next six years. Two other seats are in real jeopardy—Mississippi (yes, Mississippi) and Mitch McConnell’s in Kentucky (yes, McConnell!). McConnell [pictured] is in trouble because he led the fight for Bush’s financial rescue plan, and because fellow Kentucky Republican Senator Bunning has been on the warpath against Bush’s plan. If one of these two goes Democrat, the party will have its filibuster-proof majority of 60.

Here’s a silver lining for Republicans. Should corrupt Alaska Senator Ted Stevens be acquitted in his current corruption trial, Stevens will probably keep his threatened seat, meaning Democrats will have to add one elsewhere to reach 60.

Sunday, October 19, 2008

Whose to blame: Fannie and Freddie?

Was our economic crisis caused by the GSEs (Government Sponsored Enterprises)? Stuart Taylor, in the National Journal, thinks so. He writes that “Powerful Democratic (and some Republican) advocates of affordable housing”, including Senate Banking Chair Chris Dodd, Sen. Chuck Schumer, and House Finance Chair Barney Frank have been the GSEs' “most potent and ardent champions”. Taylor adds, “the agencies and their employees have orchestrated a gigantic lobbying effort [of] more than $174 million . . . made campaign contributions of more than $14.6 million . . . the largest going to Dodd and Barack Obama.”

Taylor reports that:

• Because Freddie and then Fannie had been ravaged by accounting scandals that led to the departure of Fannie CEO Franklin Raines [picture], a Clinton administration official who had collected $90 million from 1998 through 2004, Alan Greenspan warned government to restrain the GSEs.

• When Daniel Mudd succeeded Raines in 2004, according to the New York Times, "his company was under siege. Competitors were snatching lucrative parts of its business. Congress was demanding . . . more loans to low-income borrowers. Lenders were threatening to sell directly to Wall Street unless Fannie bought . . . their riskiest loans. So Mudd . . . steered Fannie into [the darkest] corners of the mortgage market.”

• In summer 2005, the Senate Banking Committee adopted a bill to impose tighter regulation on Fannie and Freddie, with all Republicans voting for, all Democrats voted against in committee and Democrats killing it on the floor.

• In 2005, Fannie and Freddie began buying subprime and "alt-A" mortgages with virtually no down payments taken out by people with low credit scores and low incomes relative to their monthly payments. To finance more and more affordable housing, the GSEs dramatically lowered their traditional underwriting standards.

• Between 2005 and 2007, Fannie and Freddie "sold out the taxpayers" by financing almost $1 trillion in highly risky mortgages. . .their special privileges as GSEs enabling them to lend at high rates and reap enormous profits for their stockholders and executives while borrowing at low rates based on the government's implicit promise to rescue them from failure, as in the end it did.

Saturday, October 18, 2008

Whose to blame: Deregulators?

The Economist thinks so. Here’s evidence that something bubble-like was going on in the financial sector: the financial industry’s share of the stock market climbed from 5.2% in 1980 to 23.5% last year (see chart).

The financial sector grew because traders learned how to corner an ever larger share of the world’s wealth through use of currency deregulation, the end of national controls on capital, markets for futures and options, and currency swaps, interest rate swaps, and finally the infamous credit default swaps (CDSs) that were never even run through a market to fix a nominal value on them. CDSs nearly bankrupted the world’s 18th largest company, AIG.

The Economist says governments should have regulated the markets for these new instruments. In the 1920s, margin allowed for unsecured stock purchases that led to the Crash of ‘29. Something like that happened over the last decade with swaps, yielding the Crash of ‘08.

1981

This blog and others have looked to 1933 as the model for what’s to come. Democrats, in control of everything, turning a Republican mess into a “new deal” that transformed America. Another model, one less comfortable to Democrats, is the one I lived through in 1981—the arrival of Reagan and the conservatives. Yes, Democrats with glee will reverse “the Reagan revolution” and the peace and prosperity Reagan’s policies of less government, lower taxes, and a strong national defense generated over the following 25 years (21 of which had Reagan, the Bush family, or Gingrich in power).

But recall Reagan first year excesses that hint at the coming 2009. Under David Stockman, tax and budget cuts reduced aid to education, welfare, and food stamps, and budget policies that took place, in Stockman’s words, in an atmosphere where "none of us really understands what's going on with all these numbers" helped produce a sharp economic contraction that led to 10.8% unemployment by December 1982. To get the tax cuts through congress, Stockman said, “The hogs were really feeding. The greed level, the level of opportunism, just got out of control.” The deficits that began under Stockman dominated American economic policy discussion until Clinton and a Republican congress brought them under control in the late 1990s.

Meanwhile, James Watt was taking a hatchet to environmental policy (bad), and Reagan himself (with Transportation Secretary Drew Lewis) dealt a major blow to unions by breaking the striking air traffic controllers union (good—but unions expect Obama to just as dramatically help unions by passing a law to take away the secret ballot in union elections).

When the new folks get power, expect extremism.