On the president’s speech

July 24, 2013

When I finally got around to reading today’s speech from the president on the economy (Macleans), I expected to be disappointed. I did not expect to be so appalled.

The president began by getting history wrong…very wrong:

In the period after World War II, a growing middle class was the engine of our prosperity. Whether you owned a company, swept its floors, or worked anywhere in between, this country offered you a basic bargain – a sense that your hard work would be rewarded with fair wages and benefits, the chance to buy a home, to save for retirement, and above all, to hand down a better life for your kids

Really? From what I read of the “period after World War II” (namely, the 1950s), there were three recessions, the last of which extended into 1960 and allowed JFK to blast the economic performance of the Eisenhower Administration. There are many on the right who see Barack Obama as a reborn Richard Nixon. Whether or not you agree (and I have my doubts), Obama doesn’t help his case by essentially endorsing the Nixon ’60 candidacy.

Besides, if the “period after World War II” was so wonderful, why did Lyndon Johnson throw down a bill of indictment on it with his “War on Poverty”?  

Then things go further off the rails…

But over time, that engine began to stall. That bargain began to fray. Technology made some jobs obsolete. Global competition sent others overseas. It became harder for unions to fight for the middle class. Washington doled out bigger tax cuts to the rich and smaller minimum wage increases for the working poor. The link between higher productivity and people’s wages and salaries was severed – the income of the top 1 percent nearly quadrupled from 1979 to 2007, while the typical family’s barely budged.

From 1979? Is he kidding? Most economist recognize that the Great Inflation – which turned the steady improvement of American salaries into a nominal sham – began in 1968. The consensus on the productivity decline is even stronger – and places the start year for that debacle in 1973. The president chose 1979 not based on economic history, but political history – it was a deliberate attempt to indict the Administrations that sought to reduce government’s size and influence, either deliberately (Reagan), in theory if not practice (Bushes), or against its inclinations (Clinton).

OK, so maybe just history buffs and econ geeks would get upset about the above (I happen to be both), but the real problem comes in the president’s discussion of the present and the future.

On health care, all the president did was tout his corporatist-wet-dream, the “(Un)-Affordable Care(-less) Act.” At least this time he didn’t repeat the already debunked foolishness that everyone with a current health insurance plan will keep it. However, he also said nothing about the cozy relationship between Medicare and the AMA on rate-setting, even though he could have easily blamed it on the 1979-2007 crowd. His silence was deafening.

He was even worse on food prices. Even as the House Republicans grooved a fastball down his hotzone by ramming through rob-the-poor-to-pay-the-rich farm subsidies and ethanol policies that drive up the price of corn, meats (which feed on corn), sugar, milk, and – wait, do I really need to go on?

Instead, all he said was…

But a faction of Republicans in the House … gutted a farm bill that America’s farmers and most vulnerable children depend on.

He took the pitch! If the president was half the political genius he and his supporters think he is, he would have spent three paragraphs ripping the entire House Republican caucus on the farm bill fiasco (only 12 GOPers voted No). It was - it is – a political and policy slam-dunk. Yet the Pitchfork Corporatists (“America’s farmers”) get even billing with their victims.

Meanwhile, what was the first thing the president said he would “be fighting for”?

So I’ll push new initiatives to help more manufacturers bring more jobs back to America. We’ll continue to focus on strategies to create good jobs in wind, solar and natural gas that are lowering energy costs and dangerous carbon pollution.

In other words, more corporatist loopholes and giveaways which light up the tax code like a Christmas tree – with the rest of us (including folks who could create jobs without industrial-policy-writ-small if they didn’t have to pay for someone else’s sweetheart deal) footing the bill.

Gee, that sounds a lot like the “short-term thinking” the president himself ripped in the same speech.

Most will read (or hear) the president speech and see the same old big government. That would be accurate, but incomplete. The president likes to tell us he would use government where he can to combat corporate largess, but in fact, he actually proposes (and defends) using it to enhance corporate largess.

Whether or not this is “socialism” depends on one’s political position, but it is inarguably corporatism – and a very damaging corporatism at that.

Cross-posted to Bearing Drift (albeit with a different title)


It really is Bush’s fault – Part 4: TARP

December 11, 2012

I have put up three posts explaining why the current state of the economy is genuinely the fault of George W. Bush (although not for the reasons usually aimed at him). I have mentioned the damaging effects of temporary tax cuts, loose money, and rampant spending.

However, it was the Troubled Asset Relief Program that encased the Bush-the-Younger record in Fringe-like amber.

Now, I have spent more than four years ripping TARP (a.k.a. “the bank bailout”), but it needs repeating: TARP misdiagnosed the problem (which was actually paper losses created by the mark-to-market rule), followed that up with the wrong solution (a massive government buy-back of “toxic” mortgage-backed securities), destroyed political accountability by giving the Treasury Secretary the right to switch gears with no oversight (he promptly redid the entire thing as a bank capitalization, and in some cases forced banks to sell the government stock to do it), and due to the aforementioned mistakes completely destroyed what was left of American confidence in the economy (healthy banks were forced to take TARP money, making the entire banking sector look sick, while Administration officials from Bush on down expressed levels of near-complete panic).

One can certainly talk about Treasury Secretary Henry Paulsen’s role in this debacle, or the fact that neither major candidate for president bothered to seriously challenge the “consensus” – although there were some in Washington who did challenge it. However, it was President Bush who essentially set the tone for the discussion by declaring the $700-billion bailout was a necessary – free market be damned. He holds to that position to this day.

As a result, the American people still have not recovered their confidence in the economy – or themselves. Limited government suffered a political hammer-blow from which it still hasn’t rebounded. Bush’s successor has essentially received a free pass whatever the economy does, because if it was so bad that the Republicans (led by Bush) violated their political principles, it’s certainly can’t be a normal recession.

Except that it was a normal recession, created by the burst of a bubble that had been fueled by loose money, rampant spending, and tax cuts with a time-limit that made them purely Keynesian in character. A bubble is merely concentrated inflation, and in the case of the “aughts,” the concentration came in resources (including land). Contrary to popular belief, this is more the norm than the exception for economic downturns (the recessions of 1819, 1837, 1854, 1857, 1873, 1893, 1929-34, and 1990-91 all had their cause in some bubble bursting – usually land).

In short, the economic record of the Bush era was one of Keynesian stimuli and government expansion on an unprecedented scale, with just enough of an appearance of conservatism to discredit the entire limited-government/supply-side point of view by the end of 2008. As a result, government’s size, scope, cost, and borrowing are all dramatically higher; the economy is weaker; and conservatives are forced to shoulder blame for policies that caused this – policies that were the actual antithesis of what they would actually recommend.

This is the Bush economic legacy – one which has haunted the country for years, and perhaps decades.

Cross-posted to Virginia Virtucon


It really is Bush’s fault, Part 3: Spend-and-spend

December 7, 2012

Mark Shields once joked in 1992: “for years, the Democrats were the tax-and-spend party, and the Republicans were the borrow-and-spend party.” The 1990s in general clouded the issue, but, sadly, in the aughts that comparison came back with a vengeance.

The Congressional Budget Office detailed the disaster that was Bush the Younger’s domestic spending record a couple years ago. I noted it here. The trouble actually began long before 9/11, Afghanistan, or Iraq. In President Bush’s first three years… (CATO):

…real non-defence (sic) discretionary outlays will rise 18.0% in his first three years in office (FY2002-FY2004). That growth far exceeds the first three years of any recent presidential term, including Ronald Reagan’s first term (-13.5%), Reagan’s second term (-3.2%), George H. Bush’s term (11.6%), Bill Clinton’s first term (-0.7%), and Clinton’s second term (8.2%).

Keep in mind, this was just with the proposed FY2004 budget. The actual budget was worse.

It was in FY2004 (late fall of 2003, to be exact) that the President pushed Medicare Part D through Congress – a major expansion of the entitlement program that came as the warnings about Medicare’s sustainability even without Part D were growing.

Two years later, Bush added deliberate market intervention into the mix with an Energy Bill that vastly increased subsidies, tariffs, and regulations to favor corn-based ethanol – a policy that so badly skewed the corn market that it caused grain shortages throughout the world during his second term in office.

How bad did the spending binge get? Look at it this way: between FY2001 (Clinton’s last budget) and FY2007, federal revenue rose over 25% – yet we still fell from a surplus of over $100 billion to a deficit of over $150 billion, because spending rose by more than 40%.

The final year of the Bush Administration (2008) also included TARP, but that fiasco requires a s segment in this series all its own. Even by that point, however, the Keynesian high from temporary tax cuts, reckless spending, and monetary mayhem had run its course, leaving trouble in its wake.

Cross-posted to Virginia Virtucon


And the winner is . . . (part 2)

August 7, 2012

I knew George H. W. Bush would lose his bid for re-election on July 3, 1992 (never mind that he was leading in the polls at the time).

How did I know, you ask? Because those were the days of the release of the June unemployment numbers for that year.

Back then, every political candidate, consultant, activist, and junkie knew about the “unemployment rule.” Since 1948, if unemployment fell in the second quarter of an election year (between March and June), the incumbent party was going to win. If it stayed the same or rose, the incumbent party was going to lose. The lone exception all but proved the rule (Dwight Eisenhower’s re-election in 1956). There were two elections where unemployment was the same in June as it had been in March: 1968 and 1976. The incumbent party lost both times.

Since the 1990s, the rule has fallen out of favor and even knowledge . . . and yet it still holds. Unemployment fell from March to June of 1996, and President Clinton was re-elected. It stayed even between March and June 2000, and the Democrats lost. It fell from March to June of 2004, and President Bush the Younger was re-elected. It rose from March to June of 2008, and the Republicans lost.

So once again, in every presidential vote since World War II save for Ike’s re-election (and in every single presidential election for the last 52 years), if unemployment falls, the incumbent party wins. If it doesn’t, the incumbent party loses.

Unemployment in March of this year was 8.2%.
Unemployment in June of this year was 8.2%.

Mitt Romney will win.

You heard it here first.

Cross-posted to Bearing Drift


And the winner is…?

August 6, 2012

For the first time in weeks, President Obama took the lead in the Rasmussen tracking poll survey (by 2). As of this posting, he still leads in the Gallup tracking poll by 1. Most of the non-tracking, “snapshot in time” polls also have the president ahead. Worried Republicans are already starting to whisper about Election 2012 slipping away. It’s as if no one has paid attention to the last 25 years.

This is not to say I am certain Mitt Romney will win; in fact, I don’t know who will win at this point in time – and neither does anyone else. Predicting election results before the conventions is foolhardy. Full Stop.

Of course, it didn’t use to be this way. Based on Gallup’s historical numbers, between 1936 (when they first started polling) and 1984, the leader in the polls before the conventions won all but once (the infamous 1948 foul-up), and of the twelve who won, ten never lost their lead (Kennedy fell behind Nixon in 1960 before recovering after the first televised debate; and Reagan fell behind Carter in 1980 before his own post-debate recovery). So if one were basing their predictions on that 48 year span, the president is in fine shape.

Unfortunately for the president and his backers, things became much more unstable after 1984. Of the six front-runners going into the convention period between 1988 and 2008, only one was still in front coming out of it (Clinton in 1996, and even he saw 7 points shaved off his lead). Two of them (Dukakis in 1988 and Bush the Elder in 1992) fell behind and never recovered; two others (Bush in 2000 and Obama himself) were able to recover in September; one (Kerry 2004) managed a temporary recovery only to fall back again by Election Day.

In other words, being in the lead before the conventions start isn’t what it used to be.

This may surprise many political observers (and even a few activists and consultants) who have perceived conventions to be on the wane. Yet the 2008 conventions broke viewership records, and the GOP gathering actually topped the final American Idol episode from earlier in the year (a first in the AI era). Whatever one may think of conventions, they remain the best opportunity for the major parties to present their case to the American people.

This year the conventions begin and end later than ever before, meaning two vital pieces of information (how America reacts to them) are still unknown. Woe to (s)he who tries to guess the election winner without them.

Cross-posted to Bearing Drift


1812: the culmination of a fourteen-year mistake

June 26, 2012

Two centuries ago this month, the United States of America completed a fourteen-year series of blunders by starting an unnecessary war that led to the destruction of the capital, embarrassing defeats in what is now the Midwest, a peace that solved none of the issues that started the war in the first place, and a battle (two weeks after the peace was signed) that inflicted Andrew Jackson upon the nation. The events from 1798 to 1815 are a clear-as-crystal warning from history of the dangers of geopolitical naivete, “non-intervention,” and general disinterest in foreign affairs that, sadly, still find favor in far too many classical liberals today. That their prominent political progenitors (Thomas Jefferson and James Madison) were forced to jettison nearly every belief they had in limited government to justify Adams’ mistake is an irony so painful it is clearly lost on them.

Normally, when it comes to a major foreign policy decision, it is about an action taken – usually a war. This is one of those rare instances where we can examine the effects of a war not undertaken: in this case, a 1798 war with France. Much of the arguments against war (outside of the ones openly sympathetic to the tyrannical “Republic” in Paris) became “non-intervention” mainstays: the risk of state expansion, the preference for a foreign policy based on commerce only, the value of diplomacy, and the danger of lost blood and treasure. What the events after 1798 reveal is that non-intervention does not take place in a vacuum. In fact, it is quite clear that the decision not to go to war with France made the very fears aforementioned come true – and then gave us a war with France’s enemy to boot.

For example: Government power growing and danger to commerce didn’t need a war with France to rear their ugly heads. Jefferson himself, in a desperate attempt to avoid the merchant marine getting slammed by both France and Great Britain, convinced Congress to pass the hideous Embargo Act of 1807, easily the most intrusive peace-time economic measure this side of Obamacare. Commerce was ground to a halt not due to war, but ostensibly to prevent one. Ditto the expansion of government power. By contrast, Great Britain would have certainly maintained and protected US trade had we been at war with France (lest we forget, Britain herself had been at war with France since 1793).

Meanwhile, diplomacy and concern for loss of men and resources in battle is essentially laid waste by the actual War of 1812, in which we took on a much more formidable enemy (Great Britain as she defeated Napoleon) than we would have faced in 1798 (a weakened French Directorate that had sent Napoleon to Egypt). A War of 1798 would have likely meant the easy seizure of Louisiana (instead of paying $15 million five years later) as well as American possessions in the Caribbean. Meanwhile, most of the reasons for war with Britain in 1812 would have been resolved quickly years before that. London would have hardly considered Royal Navy deserters to American ships as a mortal threat if said deserters were still fighting the French (albeit under different colors). Border issues in re Canada would have been transformed from interesting geopolitics to useless distractions drawing men and arms away from the common enemy. As mentioned before, Great Britain would now consider American commerce abroad as a value to be protected, rather than a problem to be fought.

Would the War of 1798 have been unpopular in some areas? Yes, including most likely Virginia. Would it have been worse than the controversy surrounding the War of 1812? Only those with no knowledge of New England would even ask the question.

In short, the alternative to war is not always “peace.” It can often be twisted policies that surrender the very things peace was supposed to protect and a different war against the wrong adversary. In the case of War of 1798, its avoidance led America to both, the latter being the lamentable War of 1812.

Cross-posted to Virginia Virtucon


Portsmouth Historical Commission Dedicates May as Southern Unionist History Month

March 22, 2012

For a whole slew of reasons, Southern Unionism during the War of the Rebellion is of special importance to me. Some time in 2010 (during the whole Confederate History Month brouhaha), I came up with the idea of Southern Unionist History Month. Late last year, a friend of mine (Greg Eatroff) who serves on the Portsmouth Historical Commission came across a memorial in Lincoln Cemetery built by the Silas Fellows Post #7 of the Grand Army of the Republic, in honor of local Unionist veterans who had gone to their greater reward.

That inspired us to push forward on SUHM. Greg took the ball and presented this resolution to the Portsmouth Historical Commission; the Commission passed it last Tuesday night:

Whereas the history of the Civil War has at times, understandably but mistakenly, been seen as a battle between regions . . .

Whereas in reality the dedication to Union and Emancipation was shared by millions of Americans north and south . . .

Whereas there were many in the states that formed the Confederacy “who in the darkest hour of slavery kept alive in their souls a love of manhood rights, justice, and the unity of the United States of America”

Whereas these men and women who risked everything to preserve the Union are rarely remembered as much as they should . . .

Whereas in Virginia especially, support for Union was so pronounced that the state split itself in two . . .

Whereas many of the people of present day Virginia can also look to the family histories of Unionism of which they can be proud . . .

And whereas the city of Portsmouth was, for much of the war, a haven for Virginia’s Unionists, both black and white . . .

Be it resolved that the City of Portsmouth through its History Commission. . .

Declare May of this year to be Southern Unionist History Month,

Encourage other localities in Virginia and the Commonwealth itself to join in this declaration, and

Provide for various events and information during May to make Virginians more aware of Civil War Unionism in and around Portsmouth, Virginia.

The resolution will be present to the Portsmouth City Council next week.

Cross-posted to Bearing Drift


Ken Cuccinelli for Vice President

December 24, 2011

As of 2AM, the Virginia Republican primary ballot was finalized. The choices are Mitt Romney and Ron Paul; no one else made the ballot. As far as I’m concerned, if you don’t make the Virginia primary, you won’t be the nominee. Virginia has held primaries for President on the Republican side since 1988, and the winner has been the nominee every single time. In 2000 and 2008, the Old Dominion was a critical stabilizer for nominees Bush and McCain, respectively.

In other words, the choices are Ron Paul and Mitt Romney. I sincerely doubt Paul will win, and I prefer Romney based on foreign policy (he’s better on Communist China than Paul is). That said, Romney will be one of the weakest – if not the weakest – party nominee in recent memory. The base doeesn’t trust him; he will be the obvious last choice for a number of primary voters; and his persona, while reassuring to many, will be bland (at best) to others.

In short, Mitt Romney will need a game-changing running mate, from a critical swing state, and with the ability to win over conservative voters unsure about the guy at the top of the ticket. Marco Rubio could fit the bill, but Florida – even in 2008 – was better for the GOP than the national results were. Virginia, by contrast, was a carbon copy of the national numbers.

So Virginia would be a better place to find a running mate, and there is in fact a statewide politician who could solve several of Mitt Romney’s problems at once: Attorney General Ken Cuccinelli.

For those worried about “Romneycare” and Mitt’s on-again, off-again relationship with mandates, nothing would reassure them quite like a running mate who led a lawsuit against Obamacare, especially if the case hits the Supreme Court during the campaign season.

Given Virginia’s proximity to the national capital (and Cuccinelli’s career in Northern Virginia politics), his conservative credentials would be apparent almost immediately, providing an excellent “balance” to Romney.

Finally, a Romney-Cuccinelli ticket would, if victorious, bring us the first ever Italian-American Vice President. In addition to the historical importance of that, it could also make New Jersey competitive again.

Oh, and Cuccinelli would have two-and-a-half more years of executive branch experience than the entire Democrats’ ticket had in 2008.

I understand that most of the Virginia running-mate talk has centered around Bob McDonnell, but his persona is too close to Romney to be very effective. Cuccinelli, by contrast, could complement the ticket in all of the ways above noted.

So, yes, I will vote for Mitt Romney for president on March 6 (and no, it won’t be very much fun), but I consider it critical for Romney to pick the right running mate; and I am convinced that is Ken Cuccinelli.

Cross-posted to Virginia Virtucon


Oh no, Newt

December 17, 2011

Once again, as he always seems to do when he is at the cusp of serious political accomplishment, Newt Gingrich ate his own foot – and I’m being kind.

Gingrich took an acceptable concern - a state of judicial power that even lefty historian Sean Wilentz called “judicial supremacy” – and made a complete hash of it.

Here are his comments courtesy of Fox News:

referring to historical instances in which Jefferson, Lincoln, and FDR disregarded the Supreme Court, he explained there are two scenarios where the President has the “unique authority” to overrule the court. The first, he said, would be during times of war; he called the 2008 Boumediene Supreme Court case that ruled a Guantanamo prisoner has the right to habeas corpus a “direct assault” on the president’s powers to protect and defend the U.S.

The other situation, Gingrich argued, would be when the court makes a ruling “so egregious” — referring to Judge Biery — that it’s legitimate. He said that this kind of a system is “checked” by the principle of “two out of three,” which is how President Obama wouldn’t have the authority to overrule the Supreme Court if they ruled the Affordable Care Act unconstitutional.

Now, let me say, there are ways Congress can react to judicial overreach. Article 3, Section 2 is a perfect example – one Gingrich did not care to mention. Instead, he went with this bizarre “two out of three” nonsense.

Until this point, I had narrowed my choices for the Republican nomination to Romney, Gingrich, and Santorum. Now, Gingrich is with the rest of the self-disqualified crew. For me, it’s down to Romney and Santorum now.


Steve Jobs: Only in America

October 6, 2011

The passing of Steve Jobs has led to a lot of commentary. Most, as expected, focuses on his later life: the innovations he spawned, the consumer tech revolution he led, the fact that his vision came without government regulations or subsidies, etc. Kevin Williamson – over at NRO - summarizes it better than anyone:

Mr. Jobs’s contribution to the world is Apple and its products, along with Pixar and his other enterprises, his 338 patented inventions — his work — not some Steve Jobs Memorial Foundation for Giving Stuff to Poor People in Exotic Lands and Making Me Feel Good About Myself. Because he already did that: He gave them better computers, better telephones, better music players, etc. In a lot of cases, he gave them better jobs, too. Did he do it because he was a nice guy, or because he was greedy, or because he was a maniacally single-minded competitor who got up every morning possessed by an unspeakable rage to strangle his rivals? The beauty of capitalism — the beauty of the iPhone world as opposed to the world of politics — is that that question does not matter one little bit. Whatever drove Jobs, it drove him to create superior products, better stuff at better prices.

This is how most will remember Jobs, and I can understand why. However, there was more to it than that. Steve Jobs wasn’t just a great success story, he was arguably one of America’s greatest failure stories as well. His success speaks well for him, but the fact that he could recover from the depths to which he fell speaks more profoundly for America (and, I hope, to America as well).

Lest we forget, at age 30, Steve Jobs was an abject failure. Fired from his own company, bested by rival Bill Gates, he was – in 1985 – just another visionary who had a hand in the computer age, but was laid low by his own hubris. The 1980s Steve Jobs was a tragic story about the rough-and-tumble world of American business (the best depiction of this comes from a now long-forgotten 1998 TNT TV Movie, Pirates of Silicon Valley). That said, at least the 1980s Jobs was a noble failure. By contrast, the 1997 version was a joke: a last gasp move by a desperate and dying Apple; a has-been who needed funding from Gates himself retake the tech version of the Titanic. Those who remembered and admired Jobs shook their heads as he talked about moving Apple into consumer products. What could he be thinking?

Fourteen years later, the joke’s on us. Hardly anyone remembers (and no one under 30 is even knows) the events of the paragraph above. But I think they should, because while Jobs’ success is praiseworthy, his recovery is a remarkable and stunning tale that should provide hope and inspiration to every American.

We’d like to think that Steve Jobs could only succeed here, but success stories circle the globe these days. However, I genuinely believe there is nowhere else on Earth where someone could fail as spectacularly as Jobs did and come back to be such a great success and pivotal person. Jobs “had it all,” lost it all, and earned it all back.

That happens only here, in the land of the second chance; the land where we still let the market pick winners and losers; where we still let the market turn yesterday’s winner into today’s loser and – if justifiable – tomorrow’s winner once more.

Steve Jobs began his second act in technology at 42; in just fourteen years he rescued his company, restored his reputation, and revolutionized how we work, live, and play. As I said, he could have “made it” just about anywhere. But plumb to the depths he fell and still come back to do all he did?

Only in America; only in America.


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