Thursday, August 27, 2009

Gone, Gone . . . Gone

"Why are there so few Ted Kennedys in Washington today?" asks the Wall Street Journal's Gerald Seib. He answers:

In the past generation, the two parties have sorted out by ideology and by geography. They have moved steadily toward opposite ends of the political spectrum, leaving fewer moderate centrists from either party who can stand on the middle ground where compromises are made and deals are done.

"I think it has everything to do with the ideological polarization of the parties that began in the late '70s and built over a period of time, and the dominance of ideological thinking," says Thomas Mann, a congressional scholar at the Brookings Institution who has studied this evolution. "It has now built to an extent, and to a point, where it becomes extremely difficult for someone to really stray" from either end of the spectrum.

Sen. Kennedy. . . was an unabashed liberal, yes, but also an iconic figure, secure in his place as senator-for-life from Massachusetts and free to set his own course.

Tuesday, August 25, 2009

Green Shoots

The day of Bernanke’s reappointment, the stock market reached a new Obama-era high. My FOX Index is also at a recession era peak, 56.1% of the way from its March 9 bottom to its pre-crash healthy level (12,000 Dow, 1,300 S&P, 2,500 NASDAQ).

Most significantly, a housing recovery may be underway. Though home prices are still 30% below the mid-2006 peak, the Case-Shiller's U.S. National Home Price Index is now positive; prices in the second quarter posted their first quarterly increase in three years. Furthermore, consumer confidence in August rose to the highest level since the recession began.

Green shoots, yes.

Monday, August 24, 2009

Ben Bernanke

Obama is wise to reappoint Republican and Bush appointee Ben Bernanke to a second term as Federal Reserve chairman. Larry Summers, Obama’s White House economic advisor, wanted the job and was seemingly set to get it. But if Obama went with Summers, he would have to find a new economic advisor, and Obama would saddle his team with full responsibility for whatever went wrong economically.

By sticking with Bernanke, who will face tough questioning and many “no” votes from Congress, Obama continues to share blame for the recession with the Bush team and its Fed chair who failed to anticipate the severity of the housing and related credit crises, whose fingerprints are all over the Bear Stearns, Lehman Brothers, and AIG collapses along with the mishandled merger of Merrill Lynch into Bank of America, and who helped engineer the controversial taxpayer-funded bailout of major financial institutions. Moreover, Obama is making Bernanke the point person for getting financial reform legislation through Congress, and can leave Bernanke exposed and responsible for any interest rate hikes needed to cope with Obama’s looming federal deficits.

Furthermore, by reappointing Bernanke, Obama reassures stock market investors who credit Bernanke with acting swiftly once the crisis was underway to lower interest rates to zero and push out $2 trillion worth of credits, two actions that probably did the most to turn a Great Depression-like collapse into just a severe recession. Reappointing Bernanke, therefore, helps keep the current recovery going.

Bernanke found out last Wednesday about his reappointment, and two days later, at the Fed’s annual meeting, gave the kind of defense of his tenure as Fed chair that he may later present to Congress:

History is full of examples in which the policy responses to financial crises have been slow and inadequate, often resulting ultimately in greater economic damage and increased fiscal costs. In this episode, by contrast, policymakers in the United States and around the globe responded with speed and force to arrest a rapidly deteriorating and dangerous situation. Looking forward, we must urgently address structural weaknesses in the financial system, in particular in the regulatory framework, to ensure that the enormous costs of the past two years will not be borne again.

Good move, Obama. You now become the sixth straight president, in my humble opinion, to handle correctly that key Fed chair appointment.

Friday, August 21, 2009

Yukio Hatoyama

Under the U.S. occupation, Japan became a multiparty democracy in 1945. English-speaking, pro- American Catholic Shigeru Yoshida was its first noteworthy prime minister, serving from 1946-47, then from 1948-54. Japan’s postwar economic boom kicked off under Yoshida’s rule. So too did the long-running rule of Japan’s Liberal Democratic Party (LDP), though the LDP took its current form in 1955 under Ichiro Hatoyama, who ousted Yoshida in December 1954. The LDP has held power 53 of the 54 years since.

The LDP leader is Japan’s current prime minister, Taro Aso, Yoshida’s grandson. And for the first time in Japan’s post-war history, in eight days Japan will enshrine a genuine two-party system, when the Democratic Party of Japan (DPJ) takes over. The DPJ is headed by Yukio Hatoyama, Ichiro Hatayama’s grandson. Hatoyama is expected to prevail in the battle of grandsons, replacing Yoshida grandson Aso as prime minister, once the DPJ ousts the LDP.

Hatoyama, Obama-style, is running as the candidate of “change” (he uses the English word). Like Obama, he calls for expanding the social safety net, and blames “market fundamentalism” for Japan’s current economic problems. But Hatoyama’s main thrust is reforming Japan’s powerful but unpopular civil service. And a second goal, somewhat ironically given Hatoyama’s four-generation political lineage, is banning “hereditary” candidates; it’s a widespread LDP practice to pass Diet seats directly from father to son.

Wednesday, August 19, 2009


Obama’s job approval rating today dropped through another support level. It’s below 52.9%, Obama’s share of the 2008 presidential vote. In fact, it hit 51.4% today in the RealClearPolitics average; 51% in Gallup, 51% in Pew.

Obama still has a high rating compared to Bush 43’s second-term average. Bush’s ratings, however, killed not only his party’s chances in two elections, but also his ability to govern. Furthermore, Bush didn’t drop below his first-term election win percentage (47.9%) until May 2004, during his fourth year, and then only after the Abu Ghraib pictures were all over TV the previous week. That’s little consolation for Obama, especially since Bill Clinton’s job approval ratings never fell below Clinton’s election-winning percentages of 43.0% in 1992 and 49.2% in 1996.

Obama’s 52.9% winning percentage was the highest since 1988, and that higher figure’s an easier floor through which to fall. Still, it’s a fact that Obama, now just seven months in office, has less popular support than he had when he was elected. Yowzie.

Tuesday, August 18, 2009

Meeting at the Middle

Ross Douthat [left] and Bob Beckel face similar challenges. Douthat writes for the liberal New York Times, and Beckel is a commentator for the conservative outlet FOX News. But Douthat is a Republican with a book to his credit on how to reform the GOP. And Beckel is a Democrat who managed Walter Mondale’s 1984 campaign for president. Both have learned how to operate in unfriendly environments, very much like the New York Times’ David Brooks and FOX News commentator Mara Liasson, the odd pair we discussed favorably earlier.

Now both have columns on how to fix health care, Beckel (not Douthat) telling Obama how to win over Republicans, Douthat (not Beckel) telling Republicans how they should support Obama. Both columns make sense to me; too bad both will be ignored.

Beckel says Obama should support tort reform, quoting Obama in 1996 saying, "Anyone who denies there is a crisis in medical malpractice is probably a trial lawyer." Beckel’s key points:

➢ Democrats advocating medical tort reform will fundamentally change the healthcare reform debate and in the process may save universal healthcare legislation.

➢ [According to the Congressional Budget Office,] “studies have found that state level tort reforms have decreased the number of lawsuits filed, lowered the value of claims and damage awards... thereby reducing general insurance premiums. Indeed premiums fell by 40% for some commercial policies".

➢ adding tort reform to healthcare legislation will instantaneously change the debate; take a major weapon to defeat healthcare reform from the GOP arsenal[, and]; bring huge numbers of doctors and healthcare providers to the reformers side.

➢ National standards for medical malpractice would mandate full payment for economic damages[, and] a cap of $250,000 in punitive damages would be a reasonable award in most . . . cases. [Anyway,] trail lawyers won't abandon [Democrats] because they have nowhere else to go.

Douthat should be a hero to all Democrats for advising Republicans “to say ‘no’ to retirees.” Talk about something that won’t happen!

As Douthat notes, Republicans have suffered for decades from Democrats demagoging the GOP for proposing even modest changes to Social Security and Medicare. Now, all of a sudden, the tables are turned, and Republicans are surging by defending seniors against Obama’s proposals to lower Medicare costs. Douthat adds that Americans over 50 cast over 40% of the votes in the 2008 elections, and half the votes in the ’06 midterms. Republicans just aren’t going to give back the amazing gift Obama handed them when he proposed to reduce Medicare funding.

I was disgusted when many Democrats who knew better demagogued Republicans on Iraq because they knew voters hate war, and will back fighting only when the U.S. is directly attacked. In spite of Iraq, and in spite of Democrats’ past demagoging on Social Security and Medicare reform, I would agree with Douthat that Republicans should help Obama curb rising Medicare costs.

Republicans should be better than Democrats, not happily matching their demagoguery. Anyway, I applaud both Beckel and Douthat for searching for a middle way that works, however futile the effort.

Sunday, August 16, 2009

Don’t fact check using Michael Moore.

Steve Chapmen writes for the Chicago Tribune, sister publication of the LA Times. Without mentioning the famous “docudrama” maker, Chapman debunks many Michael Moore findings from “Sicko”. Chapman reports:

➢ the United States spends more on health care than anyone else, and . . . we rank below . . . other advanced countries in life expectancy. [But i]n their 2006 book The Business of Health, economists Robert L. Ohsfeldt and John E. Schneider [found] out . . . the U.S. would rank [first] in life span . . . if homicides and accidents are factored out.

➢ Canada and Europe may sound like Health Heaven, but they fall short of our model when it comes to combating life-threatening diseases. . . Samuel Preston and Jessica Ho of the Population Studies Center at the University of Pennsylvania examined survival rates for lung, breast, prostate, colon and rectum cancers in 18 countries and found that Americans fared best. . . [and] we get quicker access to new cancer drugs than anyone else.

➢ The U.S. also excelled [in] surviving heart attacks for more than a year. . . our doctors and patients don't take no for an answer. The researchers attribute the results to "wider screening and more aggressive treatment."

➢ [Having uninsured] Americans . . . is our greatest shortcoming. . . But they have it better than you might think. Some 62% of uninsured Americans are satisfied with their medical care. . . they get a lot of uncompensated treatment from the most advanced, ambitious and capable medical system in the world.

➢ In Britain, . . .having guaranteed access to care doesn't mean you'll actually get it. 20% of British cancer patients who might be cured become incurable while awaiting . . . treatment.

Chapman’s conclusion:

A hammer is a marvelous tool, but [if] you took an expensive watch to a repairman and he pulled out a hammer, you would be extremely nervous, if not aghast. . . The challenge in this country is to extend coverage to the uninsured without degrading quality for everyone. . .

[T]he president and Congress . . . need to put down the hammer.

Friday, August 14, 2009

Why Recovery Might Be Slow

Economic recovery seems to be underway. Still, with consumer spending the key to economic activity (70% of GDP), news that retail sales (consumer buying) unexpectedly dropped, along with the University of Michigan index of consumer confidence, plucks out a sour note of caution. Consumers have a hard time feeling positive with unemployment still rising and annual housing price levels still sinking.

Nouriel Roubini, a professor at New York University’s business school, predicted in 2005 that a once-in-a-lifetime housing bust would trigger a deep U.S. recession. So we should listen up when Roubini today tells us:

➢ during post-war recessions, average monthly job losses ranged between 150,000 and 260,000. Average monthly losses in this recession are still at 350,000. For the labor market to stabilize, job losses need to slow to 100,000 to 150,000 per month.

➢ the economy has lost over 6.6 million jobs since the recession began; in previous recessions job losses only ranged between 1.5 million and 2.5 million.

➢ companies are reducing compensation and work hours to keep a lid on labor costs. Private sector labor compensation slowed to 1.5% in the 12 months ending June 2009, the smallest increase on record.

➢ Average weekly hours in the private sector, despite slightly improving in July 2009, are still hovering at record-low levels. Company efforts to maintain profit margins through lower pay will backfire in the form of subdued sales as labor incomes suffer.

➢ 53% of the unemployed have been jobless for over three months and 34% of them for over six months, the highest share on record. Over 50% of the unemployed have lost their jobs permanently, again the highest on record.

➢ inadequate safety nets, the dearth of labor retraining programs and tight access to student loans suggest that when workers begin looking for work during the recovery, they will face skill mismatches helping raise structural unemployment from below 5% in 2007 to close to 7%.

➢ consumer credit has been contracting since Q4 2008, and mortgage equity withdrawal is negative as home prices have about 10% more to fall.

➢ investment recovery will lag consumption recovery. With sluggish consumer spending and rampant excess capacity in the economy (capacity utilization is at a record low of 68% compared to the historical average of 81%), firms will be reluctant to invest in structures and equipment. It may take years for capacity utilization to return to pre-recession levels.

➢ the inventory-to-sales ratio hasn't come down significantly (the ratio is still over 1.40, while the historical average ratio is close to 1.25). This is because sales are plunging faster than inventory drawdown.

➢ in short, the economy might sink into lower growth sometime in 2010, because the U.S. consumer is still pulling back.

Wednesday, August 12, 2009

What’s Going On?

You know we've got to find a way
To bring some lovin' here today – Ya

--Marvin Gaye, “What’s Going On”


Camille Paglia, a noted anti-feminist, is unhappy with how Obama is handling health care specifically and domestic policy in general. But she writes in the liberal “Salon,” and she wants to keep elite readers listening to her views. So here’s how she establishes her bona fides:

Buyer's remorse? Not me. . . President Obama. . .representing the U.S. with dignity and authority abroad. This is why I, for one, voted for Obama and continue to support him. The damage done to U.S. prestige by the feckless, buffoonish George W. Bush will take years to repair.

Comment: So what if “old Europe” elites attacked their American friends for letting cowboys into the White House? It’s embarrassing we still cater to that prejudice. Bush correctly backed Eastern European countries against Russian bullying, removed al Qaeda from Afghanistan, liberated Iraq from Saddam and stayed until American-led forces defeated both al Qaeda Iraq and the Iran-backed al Sadr militia, dealt effectively with China and India, skillfully with Pakistan, and did his best to isolate Iran. Today, the U.S. stands taller in the eyes of all who care about those accomplishments. But in Paglia’s world (a large one), Bush remains a “feckless buffoon”. No wonder liberals and conservatives don’t get along.


Dorothy Rabinowitz of the Wall Street Journal editorial board has found the White House’s only real war. It’s on fellow Americans:

former ABC reporter Linda Douglass [launched the] White House effort to set Americans against one another—the good Americans protecting the president’s health-care program [against] the bad Americans fighting it and undermining truth and goodness. . .[White House operatives] are . . . concerned with just one message. Which is that the Obama adminis- tration is in possession of vital answers to ills and inequities that have long afflicted American society (whether Americans know it or not), and that those opposed . . . are cynics, or operatives of the powerful vested interests responsible for the plight Americans find themselves in (whether they know it or not), or political enemies bent on destroying the Obama administration.

Comment: America has real enemies. They are overseas, not at home.


Fred Hiatt, Washington Post editorial page editor, writes that Obama has lined up:

key players who in the past would have opposed reform: insurers, the drug industry, hospitals, the American Medical Association.

Comment: OK, so the key industry leadership—insurers, the drug makers, the hospitals—and the key union (the American Medical Association) are all on board. Game over. Isn’t America just labor plus management chiefs, and when they agree, it’s settled?

Hiatt, you’re not serious! As I said, Obama’s problem with health care reform is that most people are happy with what they have, and feel threatened by change. That’s the main show. What a strange view to think of the politics of health care reform as just buying off the leadership of industry and labor. Honestly, wake up. Smell the unwashed masses.


Andrew Breitbart at writes:

The mainstream media and the Democratic Party are working in concert to make sure that what happened to President Bush -- sustained organized grass-roots protests ("mobs," if you will), relentless media criticism and permanent opposition- party obstructionism -- does not happen to their guy.

Comment: Breitbart is onto something. The media know that though there were many, they needed just a few anti-Bush folks to build the story America was fed up with our president. Now all of a sudden, a few people are on TV attacking Obama. Don’t people know how easy it is to find folks who share the reporter’s view? Media folks are saying, “We did it, so we’re qualified to expose any such effort as false. We’ll make sure they don’t do to us what we did to them.”

Can’t we instead just listen to the people’s various voices?

Monday, August 10, 2009

Polls: Nation Divided, Independents Libertarian, Voters Conservative, Presidents Hurt their Party

Two observers of Pennsylvania politics, Terry Madonna and Michael Young, have looked at why the re-election bid of Arlen Specter, the Quaker State’s longest serving senator ever, is drawing such heated opposition. They conclude the moderate Specter has become “the poster child for the accelerating ideological polarization of American politics.” Moderates are an endangered species. Moderation, they say, is “all but dead in American politics.”

The in-depth Pew poll we examined earlier re-enforces Madonna’s and Young’s conclusion. Pew found that the average difference between Republicans and Democrats is up from 11% in 2002 to an all-time high of 16% today.

That means there are two polarized camps battling for independents. And these independents, the Pew survey shows, lean toward Democrats on social and national defense issues, Republicans on the economy and the social safety net.

Yet the Pew poll responses by independents suggest a consistency Pew failed to note in its accompanying narrative. Independents are libertarians. They favor less government in their lives. On social issues, Republicans want an activist government; independents don’t. On national defense, Republicans support more involvement overseas; independents don’t.

But like Republicans and unlike Democrats, independents believe government has too much control over our lives, think government is inefficient and wasteful, feel government regulation of business does more harm than good, reject paying for environmental protection with higher prices, won’t go into debt to help the needy, don’t see society divided between “haves” and “have nots,” and do favor nuclear power. And consistent with their anti-government bias, independents are less likely to vote than either Republicans or Democrats.

The Pew survey's lining up independents with Republicans against government activism seems consistent with Pew’s previously-mentioned finding--one supported by a separate Gallup survey--that voters are twice as likely to be conservative as to be liberal.

Polls showing 1) independents occupy the key middle ground, 2) independents are wary of government control, and 3) voters lean conservative; all are cautionary notes for the Obama administration. Also cautionary: Pew’s discovery of how unsuccessful most presidents since World War II have been at helping their party. Under Reagan (1980-88), party identification shifted a significant 13% in Republicans' favor. Every other president (Truman, Eisenhower, Johnson, Nixon, Ford, Carter, Bush 41, Clinton, Bush 43) except Kennedy (no change during his shortened term) saw his party lose support during the president's tenure.

Wednesday, August 05, 2009

Media Know Best

Wow. NBC senior correspondent Andrea Mitchell telling us the people "may not know what's good for them":

You Saw It Here, First

Jay Cost, “Horse Race Blog,” on health care reform, August 5:

Every Democratic leader wants to be the one to expand the New Deal/Great Society social welfare state. . .you add yourself to the pantheon of great Democratic presidents if you succeed.

This blog, on health care reform, July 22:

Obama wants Universal Health Care, which will place his bust next to Roosevelt’s and Johnson’s (none for Truman, Carter, or Clinton) in the pantheon of great Democratic social reformers.

Tuesday, August 04, 2009


"Eternal vigilance is the price of freedom." We have heard that many times. What is also the price of freedom is the toleration of imperfections. If everything that is wrong with the world becomes a reason to turn more power over to some political savior, then freedom is going to erode away. . . Ultimately, our choice is to give up Utopian quests or give up our freedom.

-- Thomas Sowell, 8.4.09

Liberté, égalité, fraternité. Motto of the French revolution, of France, and, unofficially, of the European Union (see EU flag in illustration). “Freedom” and “siblinghood” are both in the spirit of the French and American revolutions. It’s “equality” that defines the main division in American politics today: people who want government to bring about equality v. people who value personal freedom for all.

Sowell has the essence of what Isaiah Berlin laid out in his famous 1958 inaugural Chichele Professor of Social and Political Theory lecture at Oxford. Berlin gently suggested that the difficulty with what he called “positive liberty” was its granting permission to some select minority to fix things on behalf of us all, starting us on the road to less freedom, even tyranny.

We elect leaders to help us toward a “more perfect” world, so what’s the problem with that? Well, as Berlin suggests and Sowell says, the problem comes when leaders actually believe perfection is possible; that they themselves are above human imperfection.

Better the built-in modesty of Berlin’s “negative liberty.” Better the freedom to make mistakes.

Monday, August 03, 2009

Stock Market Signals Economic Recovery

Today, a great day at Wall and Broad. The Dow is higher than it has been since November, the S&P broke through 1,000 for the first time since November, and the NASDAQ went over 2,000, where it hasn’t been since October 1.

Recovery is underway. I have waited until the FOX INDEX passed the halfway point from market bottom to full recovery to alter the INDEX; it now measures as a percentage the distance traveled from the market’s March 9 bottom, while continuing to mark the distance the INDEX remains below its pre-crash healthy level (12,000 Dow, 1,300 S&P, 2,500 NASDAQ). As of today, the distance traveled from the bottom to healthy has reached 52%.

The stock market is a leading indicator of how the economy will travel over the next six months. Unemployment, by contrast a lagging indicator, continues to get worse. Yet housing is the key to real recovery, and now there is solid evidence the housing crisis that triggered our current Great Recession is reaching bottom:

➢ U.S. home prices rose in May, the first monthly increase in three years.

➢ the annual declines in home prices—they have plunged 32% on average from their 2006 peaks—slowed in May for the fourth straight month.

➢ Sales of both new and existing U.S. homes rose in June for the third straight month.