No pessimist ever discovered the secret of the stars
or sailed to an uncharted land
or opened a new heaven
to the human spirit.
Helen Keller
Election Watch
RCP reclassified 4 Congressional districts from toss up to lean-GOP, making the current total of 220-178 with 37 remaining toss ups. This unofficially puts the GOP over the top in the race to fire Nancy Pelosi as Speaker of the House, but as the saying goes, "it ain't over until the fat lady sings".
I have to say there are some oddball polls out there, particularly with the traditional news magazines like Newsweek, which show the Dems up by about 3 points, but almost every other generic ballot out there is showing the GOP up by 7 or more points (some of them factor in expected turnouts). This also doesn't match what I'm seeing in the local media, where, for instance, Senator Mikulski is running ads based on being tight with the federal buck and Congressman Kratovil is stressing his independence. You also see a lot of negative ads from Dems, particularly where the Republican opponent is running ahead (Harris) or within striking distance (Ehrlich). On the issue front, the Democrats, at least locally, are emphasizing education and growing a high/clean tech economy; they seem to be avoiding discussions of the stimulus, cap-and-trade (although environmentalism is a sacred cow in Maryland politics), health care or the financial reform bill.
It's very clear locally that the politicians are acutely aware that the weak economy, jobs, and the massive federal deficit are the key factors driving voters to the polls, and the Democrats are playing defense. Since Congressional districts are comparably sized, you would expect if the Democrats were ahead, incumbent Democrats should be comfortably ahead. Instead, you see multi-term Democrats (like Reid, Murray, Boxer, and Feingold ) behind or within the margin of error, fighting for their political lives, while GOP open seats in Florida, New Hampshire, Kentucky, and Ohio have been led by Republican nominees almost consistently over the past several weeks.
I have zero patience with the local Democratic candidates pushing the high/clean tech economy issue; this is little more than the usual Democratic strategy of trying to pick business winners and losers. As I have repeatedly stated in prior posts, the best way to improve business and job opportunities across the board is to provide incentives as broadly and consistently as possible.
Another thing: remember the manufactured issue trumped up by Obama et al. against the US Chamber of Commerce, making much ado over "foreign donations"? About $100,000 in dues is collected from American chamber subsidiaries abroad; first of all, that money is spent on international programs, but even if you ignore that fact, the Chamber is pouring up to $75M into elections, and the amount of dues is relatively immaterial. Never mind the fact that labor organizations trying to protect their public sector member's higher pay and benefit packages (relative to the private sector) are pouring more money (and time and effort), but a 2008 SEIU resolution encouraged pooling of US and Canadian member money to promote their political agenda.
Moreover, remember Obama's attack on the Supreme Court's Citizens United decision? The Sunlight Foundation has found no direct evidence of direct corporate donations made possible by the decision; the top 4 groups with independent contributions are the two party organizations--and two labor unions (some $13M--about 3 times the amount spent in 2006).
But let's get back to the discussion of the US Chamber. You would figure that the US Chamber would support the conservative candidate, right? You would be wrong, at least from MD-1. I myself was startled to see and hear a US Chamber spot which said something to the effect "Call Frank Kratovil and tell him to keep up the good work on..." I checked the Baltimore Sun and discovered that the US Chamber is spending some $168K on behalf of Kratovil, part of some $2M being spent by the Chamber backing incumbent Blue Dog Democrats. Another Maryland conservative blogger claims that despite Kratovil's votes for the stimulus and cap-and-trade, that the Big Business-oriented US Chamber doesn't like Andy Harris' position in favor of a fair tax.
Let's be quite clear here: Big Businesses often follow the power and cut deals (e.g., the deal that Big Insurance cut with the White House in terms of getting the individual/business mandate, essentially to subsidize riskier individuals); that kind of influence is what lobbyists are all about. I've constantly argued against crony capitalism on this blog, and I've written against farm subsidies and other forms of corporate welfare. It's the rank hypocrisy of Obama and company in making the GOP its whipping boy as "the" party of special interests, while it quietly cuts deals with Big Pharma and the medical device industry and in fact received a disproportionate amount of contributions from the financial services industry while passing "financial reform".
The Small Business Myth:
Picking Winners and Losers Run Amuck
Reason Foundation's Veronique de Rugy wrote an interesting post Tuesday pointing out the general weaknesses of nuanced/targeted policy incentives. I believe Obama's tax philosophy on businesses is a natural extension of his "Robin Hood" approach to individuals. Small income is good; big income is bad. In Obama's world view, we've got to spread some income/wealth around. Big businesses don't need tax incentives any more than the top 2% income individuals keeping a 35% tax rate versus reverting to Clinton's tax hike to 39.6% (from the 28% under Reagan and a subsequent interim hike).
Ms. de Rugy focuses on two principal issues, which I'll summarize as (1) scalability in employment and (2) the nature of the incentive.
Larger companies often are able to specialize in ways smaller companies can't. For instance, when I was corporate DBA for the American subsidiary of a Japanese computer chip testing manufacturer, I also found myself also doing Unix system administrator and Oracle developer tasks in the small IT department. When I later worked for an IBM apps hosting unit, not only were these responsibilities handled by different teams, but the DBA team was subdivided into operational, backup, maintenance, and project groups (and further subdivided into ERP and core specializations). Just to make a point, suppose IBM decides, for business reasons, to layoff some specialized DBA's. I know small companies which could afford only one DBA, and if they were in the market, they needed a more senior DBA with a broader skill set.
Despite Obama's blanket assertion of small businesses being the engine of job growth, it actually turns out that big businesses (>=500 employees) hire about half of all workers and in fact during the "golden age of Clinton" and afterwards, large multinational companies took on more employees at a faster clip.
The point we want to raise here is: if you are making policy, why are you focusing on job creation for only half of the employment pie? If your objective is to ramp up employment as fast as possible, shouldn't you provide the necessary policy incentives across the board? Ideological distinctions on big companies being intrinsically evil is, at best, tunnel-visioned and is like trying to be President with one hand tied behind your back, cutting off your nose to spite your face.
The second point involves the nature of the incentive. For example, there is a reliance on a tax credit (say, versus a payroll tax cut). A company, say, without expected taxable income has no incentive to add to their workforce. Or, say, if you only give a credit for longer-tenure employees, where's the incentive to add temporary workers (e.g., a seasonal business), which can bridge people until a permanent position becomes available? The government should not pick winners and losers (say, for example, a solar cell company versus a dry cleaning business); shifting the tax burden by one business to another simply hurts the other company and that company's employees.
Ms. de Rugy also points out what I refer to as the small business TARP is doing little more than pushing on a string. If a bread company suddenly cut the cost of its loaves to a nickel, I have only so much room in my freezer. Whereas banks are naturally more conservative with lending, more than 90% of small businesses report they are able to get the credit they need; they aren't taking on additional loans because there isn't enough sustained consumer demand, not because they can't afford various service fees for additional loans.
The progressive Democrat agenda is adversely affecting economic growth. For example, Obama's ideological refusal to extend Bush tax cuts across the board particularly affects small businesses because two-thirds of small businesses report their income on individual tax forms. This means some small business owners getting incentives on one hand will be forced to pay the government more out of the other; apparently Obama likes small businesses as long as they aren't too successful.... In addition to the uncertainty over extension of the Bush tax cuts, there's the uncertainty over health care costs, energy taxes, etc.
All of Obama's mucking around with the economy creates uncertainty--remember how the Democrats initially refused to let the auto companies go bankrupt (insisting nobody would ever buy a car from a bankrupt auto company) and continued giving them handouts (courtesy of the American taxpayer)? Eventually they had to, of course; all they did was delay the inevitable. The same for all these gimmick policies (e.g., cash for clunkers); the auto makers couldn't depend on sustained sales and had to see what would happen once tax incentives expired. In fact, what many people did was simply push up their expected purchases to take advantage of the government windfall discount. So sales crashed after the program stopped, and car makers had to wait out to see what the equilibrium demand really was.
Ms. de Rugy doesn't say this, but I will: Obama's economic policy has been incoherent and at points desperate. One recurring Obamaism is: "we can't afford to do nothing". Obama should consider the prudent, sage advice of Benjamin Franklin: "When in doubt, don't."
Political Humor
A few originals:
- California State Attorney General, Jerry Brown, wants to remind voters that if they elect him governor, they won't have him to pay up to $110K per year in retirement benefits. (Don't you just love how the proactive AG came after the Bell, CA city manager et al. extravagant salaries and benefits after exposed by the media? No doubt Brown was jealous over someone getting a bigger pension than he's eligible for...) At a governor's salary of $212K a year, California voters could save over 50% per year by electing him; it's like paying for one year and getting the next year free. Nothing quite says change in 2010 like electing a man whom first won statewide office in 1970 and is going for a third term as governor... Maybe he'll bring that out-of-box thinking to Sacramento and lure other professional politicians out of retirement to join him...
- Oh, the wacky world of Tea Party Express-supported candidacies of Christine O'Donnell, Carl Paladino, Sharron Angle, Rand Paul and Joe Miller... Joe Miller suggests that we can take a lead from East Germany's Berlin Wall in terms of dealing with the porous Mexican border. First of all, Joe, you didn't learn from Rich Iott's Nazi reenactment kerfuffle; what better example to use than the Communist construction of a wall to keep citizens from leaving their "workers' paradise"? Fortunately, there is a country that not only has experience building Great Walls but can provide all the cheap labor you need building it: China. (With the trade deficit, that'll go over well...) Now about those tunnels...
Musical Interlude: The "British Invasion" of the 1960's Series
Yardbirds, "For Your Love"
