Miscellany: 1/31/10

Obama: Big is Bad (Unless You're a GSE)


I have a fundamental problem with Obama's apparent death wish for America having a globally strong, diversified financial services industry following the 2008 economic tsunami. It seems as if he is opposed to anything being big--whether it's corporate officer compensation structures or companies: he's willing to give you tax cuts or government checks--as long as you don't earn that much; he's willing to give community banks loan incentives--but not big banks. This is an ideological, not pragmatic policy, which makes a vice of American success stories.

I understand the issue of "too big to fail"--but the problems of these organizations are not based on their size, but on the nature and extent of investment which violated principles of diversified risk. I understand there is concern that diversified conglomerates could use proceeds from regulated businesses (e.g., banking with government-guaranteed deposits) to fund unwise investments, not unlike what happened during the S&L crisis tackled by George H.W. Bush. There are things I have not researched, like why there were mortgage-backed securities heavily weighted in states clearly in a real estate bubble; it's not like we haven't seen a housing bust in California before, for instance.

Clearly there is a problem with transparency here (e.g., AIG's insufficient reserves for the credit default swaps it was writing), and there should be rules and regulations over cash flows, internal or external, involving a regulated entity. But it is frankly absurd to penalize economic success; all Obama and the Democrats will succeed in doing is making America a non-player in a vital sector of the global economy.

Parting shot: Obama didn't consider Freddie Mac or Fannie Mae too big, even though they dominated the secondary market with an implicit government guarantee. In fact, he got the second most contributions for any legislator over the last decade (through 2008), despite being on the national stage for only 5 years. Maybe the reason the real losers from the economic tsunami--AIG, GSE's, and other parties--haven't gotten Obama's attention like his favorite scapegoats, the banks, is because of their contributions to Obama's campaigns...


Sunday Talk Soup


Barbara Walters hosted ABC's This Week, leading off an interview with Scott Brown. The interview included a couple of questions where I plainly disagree with Brown. For instance, he implied support for Obama's so-called jobs bill, which I think is fundamentally flawed (tax cuts need to be broad-based and permanent), and on the question of gay marriage in Massachusetts, he simply referred to it as settled law, the people have spoken, etc. As far as I remember, the Massachusetts Supreme Court decided to overturn the centuries-old traditional definition of marriage by judicial fiat, and Democrats have blocked attempts to set a referendum on the issue. (In fact, the Massachusetts legislature has been rather provocative in pushing the issue, repealing a nearly century-old law which rejected barring marriages to non-residents where "gay marriage" is not recognized in their home states; this seems to set Massachusetts on a collision course with state reciprocity agreements and the Defense of Marriage Act.)

But it could be what Brown is referring to the indirect voice of the people through their legislators. The problem with that point of view is that people cast their votes for a variety of reasons and it's difficult to establish a mandate on any of them, although Brown most clearly ran on being senator #41 (to block progressives from steamrolling health care "reform"). Brown's election itself reflected a number of facts: the unpopular health care bill and its corrupt deal making; the flaws in homeland security made clear through the close call of the underwear bomber; a fundamental dissatisfaction with an unchecked tax-and-spend agenda; and the divisive progressive agenda versus a focus on the #1 issue: dealing with the economy and jobs. I suspect that Brown's considerable amiability and specific reference to a traditional New England independence on issues also appealed to voters.

The subsequent round table discussion was interesting. (Could I please go through a Sunday without having to listen to condescending, boorish Times progressive columnists like Maureen Dowd or Paul Krugman?) I found Scott Brown to be rather direct and articulate; when asked about Obama's reversal of "don't ask, don't tell", Brown said that he would first like to hear from the ground commanders in Afghanistan and Iraq. The round table progressives  considered that to be evasive, but I personally think it's sound management policy: it doesn't suggest or imply that the generals have a veto over public policy, but they are the ones whom will have to deal with any subsequent issues in enforcing the policy, and it's important to get their feedback on how to implement policy. I personally think that Obama is motivated primarily by political considerations. I've made my position known on this issue: gays have been discreetly serving in the military for decades. As long as behavior does not affect their performance, military discipline and cohesiveness and is compliant with existing restrictions on political and related activities, I have no problem with it. However, I am puzzled by ideological proponents whom seem to imply gay people are more gifted when it comes to learning and speaking Arabic; I would say most people speaking Arabic are not gay. (This reference is related to a high-profile case, Dan Choi; the argument is that since there aren't many linguists in DoD, and this one is gay, it hurts the military to lose him. But Mr. Choi knowingly violated policy by outing himself on a progressive cable talk show.)

Krugman also said that Scott Brown was being hypocritical because the proposed national health care reform was essentially no different than Massachusetts law. I have to say there are issues with the Massachusetts law that I have issues with and Mitt Romney will need to address if he, as expected, enters the 2012 race for President: in particular, the issue of mandatory coverage and the uncompetitive gold-plated insurance mandates. Krugman should think of better role models for the national health care plan, given the fact that Massachusetts has among the most expensive health care insurance policies in the nation. The Democrats have been playing all sorts of sham games to pretend the government putting more people into the health care system would actual "reduce" the deficit and bring down insurance costs--hardly the case in Massachusetts, with high prices and mounting program deficits; among the gimmicks: they lessen the price tag of their legislation by staggering benefits (tax now--benefits start later, raiding Medicare funding and/or soaking the rich/job creators. Even if you confiscated every penny made by high-earning Americans, it wouldn't close the Democrats' deficit. Guess what that means for the "free lunch" middle class?

This sort of Alice in Wonderland policy is shown again in Obama's shockingly bad education loan proposals, which gives students an unfair incentive to join the public versus private sector (loan forgiveness). Tuition costs have soared since my departure from academics in 1991. If students and their families weren't guaranteed funding, colleges would have to find ways, just like the private sector, to cut costs and become more competitive. (This is literally the same type of thinking beyond extending loans to higher-risk groups without traditional collateral, made possible by easy money, gimmick loans and Fannie Mae and Freddie Mac buying up the bad mortgage notes. This extended and aggravated the impact of the housing bubble bust, because buyers have been walking away from loans with negative equity positions.)  Teaching loads can be ridiculous, and I'm speaking as someone with a decent research and publication record as a professor. I could write a series of posts on this topic, but for example, I knew professors whom taught multiple sections of the same class(es), same textbook, same lecture notes, same exams, same assignments, etc.--in a field where textbooks are virtually obsolete by the time of publication. I tended to select new textbooks or even assemble collections of various articles for classroom materials (i.e., this goes beyond typical assigned readings). Universities have become bloated with huge capital budgets, etc., not unlike an overly big federal government. It's difficult to explain the culture shock--I remember when eating at a college cafeteria was maybe a buffet line (with a yogurt/salad bar) (in fact, I worked at my college cafeteria my first year or two). When I did work for a software publisher a couple of years ago, university clients sometimes wanted me to eat on campus (versus expense a lunch elsewhere). At one school, I saw a dedicated pizza line, another for more organic food offerings, a station dedicated to burgers, hot dogs, fries, etc., at least 4 other buffet lines, a freshly baked desserts kiosk, etc. I think I would have had the "freshman 30", not just the freshman 15 (pound weight gain).

I would be willing to look at some fee/tax proposal, waived on electing health care insurance or some sort of medical expense escrow account, financial responsibility bond, etc. But I think the best solution would be to enact some sort of catastrophic health insurance, which would address an issue of insurers dropping policyholders whom have maxed out their benefits, and to shore up state/regional high risk pools to address the accessibility issue. I'm not holding my breath. I think Brown is exactly correct--leave health care to the states, which have traditionally regulated it (and I consider the national legislative schemes a clear violation of the Tenth Amendment). A national scheme would provide a single point of corruption. Oh, and by the way, Paul Krugman, there are substantive differences between the House and Senate plans, starting with funding. Two thousand page bills violate in fact and appearance the fundamental  concept of the rule of law.


Political Cartoon

My guess is Pat Oliphant is showing the reaction of Democrats to Obama's offer to stump on their behalf: the rats are leaving a sinking ship, retiring or otherwise.

Musical Interlude: Country/Pop Sentimental Anti-War Songs

As someone who seriously considered a religious vocation (but then I went to an undergraduate school where two out of every 3 students were attractive, young women, and then on to the University of Texas: several years earlier, Farrah Fawcett had attended UT; need I say more?), I always have been troubled by war and the nature and extent of our military involvement. It never has been an ideological stand; as a realist, I understand that war criminals and aggressors must be confronted on their own terms. Negotiations and ideological protesters are instruments to be manipulated for their own purposes.

I am not an isolationist, but I believe in scaling back and simplifying our foreign commitments and choosing our battles based on political prudence and a direct, compelling interest of the United States. If I had been President, there would never have been interventions in Vietnam and the second Gulf War, at least based on the circumstances of which I'm aware. (I would have provided assistance in different, more measured ways, similar to how the French assisted us during the Revolutionary War.)

And as a military brat, I am particularly aware of what it means for a family to see a loved one off, worrying if it's the last time you'll see him. One of my favorite films, Joyeux Noël, quotes Henry Wadsworth Longfellow: "If we could read the secret history of our enemies, we should find in each man's life sorrow and suffering enough to disarm all hostility.” I've selected two songs I like, which really reflect on the human tragedy of war, not in a strident way but in a more subtle, poignant fashion.

The first song is from singer/songwriter Bobby Goldsboro, perhaps better known for his hits "Honey" and "Watching Scotty Grow"; I first heard "Broomstick Cowboy" on a Goldsboro anthology I had purchased. "Broomstick Cowboy" was the title track of a mid-60's album that didn't chart, but I was blown away the very first time I heard the track, which became my instant favorite.

The second song, a Jimmy Webb classic, was a #4 hit for Glenn Campbell. I remember working for a computer software services company a couple of years back; a colleague and I were at an affiliated campus of my alma mater in Houston when we decided to head to Galveston for a seafood dinner (this was before Hurricane Ike). We had double-checked the casual dining restaurant address on the web before leaving (my colleague had been there a number of times with his family on vacations), but when we got there, the pier location had been converted into a chain establishment known for chicken wings and its physically attractive waitresses, and we eventually decided on a family restaurant more inland (which, unexpectedly, had fabulous desserts). (I don't think the chain restaurant survived Hurricane Ike.)  As we drove up and down the beach boulevard, double-checking the original restaurant address and watching the sea gulls swoop down, the lyrics of Jimmy Webb's song just kept looping through my mind.

Bobby Goldsboro, "Broomstick Cowboy"




Broomstick Cowboy

Dream on, little Broomstick Cowboy,
Of rocket ships and Mars;
Of sunny days,
And Willie Mays,
And chocolate candy bars.
Dream on, little Broomstick Cowboy,
Dream while you can;
Of big green frogs,
And puppy dogs,
And castles in the sand.
For, all too soon you'll awaken;
Your toys will all be gone.
Your broomstick horse will ride away,
To find another home.
And you'll have grown into a man,
With cowboys of your own.
And then you'll have to go to war,
To try and save your home.
And then you'll have to learn to hate;
You'll have to learn to kill.
It's always been that way, my son;
I guess it always will.
No broomstick gun they'll hand you;
No longer you'll pretend.
You'll call some man your enemy;
You used to call him 'friend.'
And when the rockets thunder,
You'll hear your brothers cry.
And through it all you'll wonder
Just why they had to die.
So dream on, little Broomstick Cowboy,
Dream while you can;
For soon, you'll be a dreadful thing:
My son, you'll be a man.


Glen Campbell, "Galveston"



Galveston


Galveston, oh Galveston, I still hear your sea winds blowin'
I still see her dark eyes glowin'
She was 21 when I left Galveston

Galveston, oh Galveston, I still hear your sea waves crashing
While I watch the cannons flashing
I clean my gun and dream of Galveston

I still see her standing by the water
Standing there lookin' out to sea
And is she waiting there for me?
On the beach where we used to run

Galveston, oh Galveston, I am so afraid of dying
Before I dry the tears she's crying
Before I watch your sea birds flying in the sun
At Galveston, at Galveston

Miscellany: 1/30/10

Fourth Quarter 2009 Growth: Are We Out of the Woods?


The fourth quarter showed 5.7% growth (on an annualized basis), the second straight quarter of growth (real GDP grew at 2.2% in the third quarter). Whereas Obama and his progressive Dem cronies in Congress will be quick to credit the "recovery" (so-called stimulus) bill, the growth was not a result of consumer spending (roughly 70% of the economy) but more business, government, and foreign spending.

Most of the business spending had to do with inventories being drawn down to a reorder point. None of these are sustainable so long as consumer spending remains muted. It's like an unemployed person whom normally commutes to a job; running on a tank of gas, he's driving less (maybe going to job interviews, church, grocery shopping, etc.), and eventually he has to stop by a service station to fill up. You can't read very much from the fact he's filling up the car. It becomes stronger indicator when the time between fill ups drops, i.e., when businesses start turning over their inventories on shorter cycles. But some economists argue that it will take the strongest GDP in years just to drop employment by a single percentage point--and it appears that for the year we are seeing forecasts of 2.5-3% GDP growth.

No wonder the Dems are starting to panic about the unemployment rate; the last thing they want is to face voters this November with their political opponents wanting to remind them that unemployment still remains over their much-hyped 8% cap for passing an inefficient, ill-focused, ultra-expensive stimulus bill. Obama's Clintonian "I feel your pain" message isn't going to go over well with voters this fall.

Obama's "Job Bill": Thumbs Down!

Obama's job policy leads me to make the following analogy: Obama is like a fisherman whom habitually goes to the same fishing hole, which has been overfished. He refuses to give up on the pond, insisting that he will surely land more fish: he'll lure them with bigger, better bait. But that assumes there are enough fish in the pond to jump at the bait being offered. The problem is that he's picking the wrong place to fish. Bottom line: fish are going to be found in conditions where they thrive, and he needs to broaden his tunnel-visioned focus on where to find job growth. In the context of this example, jobs are more plentiful under conditions which the private sector finds inviting. We have a President whom is continuing to run up the national debt past $12T crowding out private investment, just as there are signs that China and other foreign investors are showing less interest in buying US Treasury debt; he has been actively meddling in various industries (the auto and financial sectors), threatening the health care sector with rigged government "competition", speaking of new taxes and penalties with health care and cap-and-trade legislation, talking down the economy, freezing free trade pacts, engaging in divisive class warfare, and vowing to raise high tax bracket rates at the end of the year (despite the adverse effect on investment and job creation).

What I've heard, in video snippets, is Barack Obama speaking of coaxing businesses in 2010 to hire incrementally new employees and/or giving employees raises. This is essentially pushing on a string--probably rewarding employers for actions they would be making anyway for business reasons, not gimmick tax breaks. Consumers will start to spend more when they aren't worried about their next paycheck. Businesses are not going to respond to gimmicks; it's amazing that Obama hasn't learned this lesson from the last two stimulus bills, where many taxpayers have saved the proceeds or used it to pay down debt.

The basic point, as Mike Pence pointed out in yesterday's Republican retreat where Obama was an invited guest, is a broad-based business tax cut. Obama is trying to manage a recovery by making certain occupations and businesses more equal than others, based on this megalomaniacal delusion of statist economical micromanagement. We have to go back to the basics of economics: the law of supply and demand. If you cut the cost of labor, you raise the demand. But you need to do it widely, across employers and industries. Some Republicans have discussed a payroll tax holiday (think of it as a starter log to get the economic fire going), although I would prefer a permanent tax cut (which, among other things, would hedge against a double-dip recession).

The Democrats have already blown it big time. If they had come in with more centrist administration policies and legislative agenda (say, post-1994 Clinton), they could have possibly done to the Republicans what the Democratic-Republicans did to the Federalists in the aftermath of the Adams Presidency. We conservatives and the Republicans can only watch in absolute amazement; the Republicans don't have much say (only 41 seats in the Senate) in the Democrats taking all the rope they need to hang themselves. I'm hoping the Republicans will seek a legislative mandate this fall for reducing the government burden, for deep cuts in government (not just freezes, cementing growth in the federal bureaucracy), for tax simplification, and for legitimate bipartisan compromises in tackling tough entitlement solvency issues.


Political Cartoon

IBD cartoonist Michael Ramirez should have pointed out that the first option is no longer realistic. See IBD poll results below for how independents, who helped elect Republican Scott Brown to the US Senate in Massachusetts, earlier this month graded Obama compared to his self-assessed B+; notice he rates lowest on his domestic agenda. (Of course, I think independents are grading Obama on a curve.)

Musical Interlude: Mac Davis, "Whoever Finds This, I Love You"

Mac Davis is known primarily for songs he's written for other artists, especially Elvis Presley ( "In the Ghetto", "A Little Less Conversation", and the song below), Gallery ("I Believe in Music"), and Bobby Goldsboro ("Watching Scotty Grow"). He later scored a number of his own singles, especially "Baby Don't Get Hooked on Me" and "Hard to be Humble", but my favorite was his first hit single (which didn't quite break the Top 40), a sweet song about an old man befriending a little orphan girl. Elvis Presley, who lost his mother early as a  young adult, wanted to sing "Don't Cry, Daddy" in tribute to his father, a widower.




"Whoever Finds This, I Love You!"

On a quiet street in the city a little old man walks along.
Shuffling through the Autumn afternoon.
And the Autumn leaves reminded him another summer's come and gone.
He had a long, lonely night ahead waitin' for June.
Then among the leaves near an orphan's home a piece of paper caught his eye,
And he stooped to pick it up with trembling hands.
And as he read the childish writing, the old man began to cry,
'Cause the words burned inside him like a flame.

"Whoever finds this, I love you!"
"Whoever finds this, I need you!"
"I ain't even got no one to talk to!"
"So, Whoever finds this, I love you!"

The old man's eyes searched the orphan's home,
And cam to rest upon a child with her nose pressed up against the window pane.
And the old man knew he'd found a friend, at last,
So he waved at her and smiled.
And they both knew they'd spend the winter laughing at the rain.

{Recitation

And they did spend the summer laughing at the rain, talking through the fence, exchanging little gifts they'd made for each other. The old man would carve toys for the little girl, and she would draw pictures for him of beautiful ladies surrounded by green trees and sunshine, and they laughed alot. But then on the first day of June, the little girl ran to the fence to show the man a picture she had drawn, BUT HE WASN'T THERE! And somehow, the little girl knew he wasn't coming back. So she went back to her little room, took out a crayola and a piece of paper, and wrote:

"Whoever finds this, I love you!"
"Whoever finds this, I need you!"
"I don't even have no one to talk to."
"So, whoever finds this, I love you!"

Bonus Video: Elvis Presley, "Don't Cry, Daddy"

Miscellany: 1/29/10

Likely Change of Venue for the KSM Trial


No doubt the snowballing opposition of New Yorkers, most notably Mayor Michael Bloomberg's recent reversal of support for the local venue, of the ill-advised KSM civil trial in New York City, which would hit the city with an enormous security expense in a deep recession, is finally having an effect on the White House, with reportedly the White House directing the Justice Department to search out alternate venues.

This would be an improvement over the status quo, but President Obama should consider making the right decision--a military tribunal--instead of paying off a political chit to his progressive cronies. I disagree on principle with his attempt to reduce the concept of terrorism to mere criminal activity. I have zero interest in risks of national security leaks or in providing KSM a platform for promoting his unacceptable ideology.


Obama Visits the GOP House Republican Retreat in Baltimore


I watched the televised exchange between the President and the House Republicans on FNC earlier today; I'm not going to give a comprehensive review but simply am simply going write a few general comments over the give-and-take (including discussions with some of America's rising political stars, including Paul Ryan, Eric Cantor, and Mike Pence).

• The double speak is simply nauseating. Remember Obama's demagogic appeals that the Republicans are the party of "no", no good ideas, etc.? But in the discussion, he rattles off a number of issues acknowledging bipartisan support (such as the Afghanistan surge), and then argues that he has included Republican ideas in his health care reform.
• He constantly shot down basic Republican ideas, using CBO estimates to trivialize the benefits of malpractice tort reform (despite demonstrable success in Texas, where the number of insurers and doctors subsequently increased and insurance rates came down), not to mention the lower costs of defensive medicine, the significance of which he himself has acknowledged in the past. 
• Another dismissed idea was the issue of interstate insurance competition, which he argues, unpersuasively, would simply lead to cherrypicking the best health risks and leaving heavily-mandated states with soaring insurance rates, and he also argued that it would be a race to the bottom of mandated coverages (as companies cut benefits to lower prices). Just what constitutes basic coverage is precisely the issue; I believe that open competition by allowing Americans the liberty of choosing the basket of coverages will allow the market to decide which benefits are mandatory, and states will have to drop unnecessary coverages, e.g., in vitro fertilization, to remain competitive. Part of the problem small businesses face is (unlike big companies which can self-insure with a minimum basket)  being captive consumers for high-cost special-interest state mandates). (Oh, that's right: the President defines "special interests" in principle to be supporters of the GOP; the lobbyists he hired in the White House, the crony unions he's repeatedly supported in the auto bailouts and reorganizations and health care deferrals aren't, of course. Of course, who were top 2 recipients of AIG donations? Democrats Chris Dodd and Barack Obama. What party received the most contributions (57%) from Fannie Mae and Freddie Mac? The Democrats. The top 3 recipients? Democrats Chris Dodd, Barack Obama, and John Kerry. You have to wonder if these companies knew which party would take care of them if things turned sour... Obama wants to tax successful banks, not the mismanaged companies which have blown over $100B of taxpayer money.)
• He brought up the issues of preexisting conditions and scapegoated insurers, never bothering to acknowledge repeated conservative references to strengthening state/region based high risk pools and reinsurance for catastrophic conditions. I suspect the insurance industry would be willing to consider a fair share of catastrophic or high risk costs allocated on a flat percentage basis against premiums.
• There was a discussion (Mike Pence) of a Republican broad-based business tax cut versus Obama's "sculpted" tax cuts. Obama, of course, prefers the government picking winners and losers, refusing to acknowledge that the best path to business recovery and job growth is to spread tax cuts all around. He once again raised the fact (I'm providing a liberal-to-conservative translation) that he has cut Treasury checks for the 40% of American wage earners whom do not pay the Treasury a dime for US government overhead (because, of course, these suffering people are "more worthy" than economically successful parties whom actually pay taxes) Although earlier in the discussion, he tried to portray himself as a pragmatic, not an ideologue, it was quite clear he had zero interest in cutting taxes on high tax bracket individuals and companies--and that is a core progressive principle/line in the sand. Counterproductive, of course, because he doesn't see globally uncompetitive tax rates results in LESS domestic investment and jobs, not more. He just doesn't get it.

The bottom line is that Obama hopes he can convince the GOP House members by the sheer force of his charismatic personality to abandon their conservative principles and to win them over with trivial concessions and lip service. And no matter how receptive he may be to considering Republican ideas, he has virtually no credibility when it comes to jawboning Pelosi and Reid and reinforcing legitimate bipartisan action on the Hill.

Political Cartoon


IBD cartoonist Michael Ramirez shows that "change" hasn't happened to Barack Obama himself; he's now into at least his fourth year of Bush bashing. If there wasn't a real George W. Bush, I believe that Obama would have had to invent him in order to rationalize his own mediocre performance in office.

Musical Interlude: My Favorite Beatles' Second Phase Hits

The final installment in my Beatles retrospective focuses on the post-1966 era, as Beatles albums transitioned from collections of unrelated love singles and other tracks towards more of a concept album approach, in particular, "Sgt. Pepper's Lonely Hearts Club Band", which I personally regard as the greatest album ever recorded. It was unusual in the sense that no singles were released from the album. But the signature four-bar instrumental introduction to the title track medley and McCartney's spot-on vocals make for one of my all-time favorite Beatles performances. George Harrison, despite a limited ration of tracks on Beatles albums, composed some of the group's strongest tunes, including the earlier-cited "Something" and the track listed below (with the ironic guest performance of legendary rock guitarist Eric Clapton).

Finally, how can I leave out the song born from the love/hate relationship among members of the world's greatest band already in the process of breaking up; Paul McCartney wrote and performed the song, which he credits to a dream in which his beloved late mother, Mary (whom died of breast cancer years earlier) appeared. One can read a number of meanings into the lyrics; for example, I think Paul may have been full of anxiety over the conflicts among band members or the uncertainty of the future without his fellow band members: how do you follow up or top an act with 20 #1 hits, more than Elvis Presley? [We saw this concern play out before; for instance, McCartney penned the Peter & Gordon single "Woman" under a pseudonym, wanting to prove that his work could sell without his famous name attached to it.] In essence, mother Mary in the dream (and song) comforts him, tells him not to worry and despair, that things will work out in the end, McCartney's signature optimism. [The "naked" description refers to the song without Phil Spector's production techniques applied to the original track.]

"Sgt. Pepper's Lonely Hearts Club Band/With a Little Help From My Friends"



"While My Guitar Gently Weeps"



"Let It Be" ("Naked" Arrangement)

Miscellany: 1/28/10

Bernanke Is Confirmed 70-30


Federal Reserve Chairman Ben Bernanke was confirmed to a second term by Obama. Along with Obama's retention of another Bush appointee, Defense Secretary Robert Gates, Bernanke is perhaps the most important appointment, rather paradoxical for habitual Bush-basher Barack Obama. As I write this, I haven't seen the roll call of final votes, but 23 of the 40 Republicans voted for cloture to proceed to a floor vote.  I reluctantly supported confirmation in an earlier post; I do have concerns about the Fed's reactive mode and ineffectual role in dealing with 2 major asset bubbles over the past 15 years or so, I don't like the fact that Bernanke has largely sidestepped the government bubble: progressive drunken-sailor spending, a baked-in federal deficit of a half trillion to $1.5T over the next few years (assuming the Democrats don't get their way on major federal footprint expansions, e.g., health care), and entitlement fund solvency issues. I don't like the fact that policymakers and the Fed did not address the economic dependency on other contributions to liquidity (e.g., private-sector funding and foreign investment inflows) I don't care for the fact that Bernanke did not address the dependence of the housing sector on nontraditional mortgages, with little collateral, vulnerable to resets on mortgage interest rates approaching the historical mean, never mind mortgage-backed securities which were not diversified for geographical risk (i.e., houses outside of hot areas like Florida, Nevada, California, etc., had much lower price appreciation) and the fact that implicitly government-backed Fannie Mae and Freddie Mac were snapping up relevant mortgages. (At the same time, I also remember that Greenspan, not Bernanke, was Fed chair during the housing bubble buildup; the point is--why was it necessary for Bernanke to go into firefighter mode over a year and a half after he assumed the chairman position--after the market was already starting to correct?)

I am giving Bernanke credit for performance during the tsunami and some unconventional, innovative tactics, like buying up troubled mortgage-backed securities. But more importantly, the last thing I wanted Obama to do is appoint a Keynesian economist (e.g., like (shudder) Paul Krugman) to replace Bernanke.


The State of the Union Address: An Initial Quick Review


This was not a good speech. In fact, it was my perception that the reaction from those attending was somewhat somber.

-- Supreme Court Decision

Probably the thing that people will take away most from the speech, although it probably won't be reported as such by the liberal mass media, is when Obama, arrogantly speaking right in front of the Supreme Court in attendance, politically attacked last week's Citizens United v FEC decision (which allows independent expression of policy positions or political endorsements for all organizations, but maintains restrictions against direct funding to campaigns). The flagrant dishonorable attempt to politically intimidate the Supreme Court is unconscionable and unworthy of a legitimate American President. Obama's polemical interpretation of the decision, echoed by other progressives as well, can be easily refuted (see, for instance NRO Anthony Dick's column).

In particular, Obama made a demagogic, tacitly xenophobic attack on the decision, stoking fears of foreign corporations trying to manipulate our elections. What Obama did not tell the American people is that Obama is latching onto a point of view in  Justice Stevens' dissent, which has no legal standing, and the majority opinion specifically addressed this issue, saying it was beyond the scope of their decision. (The Supreme Court ruled on 2 U.S.C. Section 441a; it did not set aside 2 U.S.C. Section 441e, which prohibits foreign nationals, explicitly including corporations, not only from direct contributions to local, state or federal campaigns, but "expenditure, independent expenditure, or disbursement for an electioneering communication.")

[Obama and his fellow liberals/progressives maintain an untenable double standard when it comes to First Amendment rights. Why should a corporate-owned newspaper be able to endorse a candidate but not, say, an energy corporation? Why is it acceptable for a nonprofit to express their point of view but not a publicly-traded company? Since when can you disparately strip away liberties of the economically successful? What's particularly appalling is when Obama cuts back room deals with unions, Big Pharma, insurance companies, and publicizes support from certain medical groups and AARP, but argues inconsistently that groups not part of corrupt deal making with the progressive White House and Congress are less equal when it comes to expressing their point of view; it's government censorship, and the principles don't vary based on the net worth of a person or economic value of the organization.]

No doubt Justice Sam Alito, who seemed to be mouthing that the President's populist attacks on the Supreme Court decision weren't true, will be accused of having a Joe Wilson moment. (As I wrote this, I did a Google search on Joe Wilson and Alito and found already a handful of progressive blogs, tweets and at least one MSNBC commentator saying exactly that.) The progressives are also attempting to argue that conservatives are being hypocritical, e.g., suggesting past GOP platform disagreements with Roe v Wade, liberalizing elective abortions. [But there is no comparable in-your-face message from Republican Presidents in State of the Union addresses.] That is a disingenuous argument in many respects; for example, Republicans have advocated constitutional amendments to set aside Roe v Wade or attempted to restrict the use of tax dollars to fund abortions, but Obama and progressives are taking a position against freedom of speech, a core right. The real intent was for Obama and his progressive cronies to intimidate opposition to a progressive statist agenda.

-- Obama Staying the Course on His Progressive Agenda

I didn't quote this in an earlier post, but a centrist Democrat Congressman (Marion Berry) recently announcing his decision to retire mentioned the following regarding Obama and the this year's elections:

I’ve been [expressing concern over the impact of the unpopular progressive agenda on centrist Democrats' chances this fall] with this White House, and they just don’t seem to give it any credibility at all. They just kept telling us how good it was going to be. The president himself, when that was brought up in one group, said, ‘Well, the big difference here and in ’94 was you’ve got me.’ We’re going to see how much difference that makes now.”

In other words, Obama thinks he's a better politician than Clinton. I don't know if Clinton had a reaction to this, but at this point, I think Obama is in a state of denial, if not delusional. There have been some polls recently done showing Obama losing to an unnamed 2012 opponent and others showing him narrowly losing to a hypothetical race against Huckabee or narrowly leading Romney. He has actively and unsuccessful supported Democratic candidates in 3 prominent statewide races over the last 3 months for offices held by Democrats for several years. Now, there is no doubt that maintaining honeymoon approval ratings is unrealistic, and anyone in a leadership role during a protracted recession is going to lose some popularity, but there is no doubt the country is signaling displeasure with a divisive, ineffectual agenda in which economic issues, the primary factor behind Obama's election, have been largely ignored since the so-called stimulus bill (not to mention some issues related to the War on Terror, i.e., the KSM trial and the underwear bomber).

For partisan Republicans worrying that Obama had learned Clinton's lesson from 1994 and would sharply shift to a centrist agenda to mitigate this fall's effects of the super-majorities in Congress, Obama didn't do that. He seems to cling to the progressive delusion that it's not due to intrinsic disagreements with legislation itself, but problems of a communication nature, i.e., he's getting (or not getting) his point across: the average voter needs to be "educated" on the issues.  In fact, he reaffirmed the climate change and health care reform legislation. And he's making an implausible connection between health care and employment. There is no doubt that health insurance costs are high, but the progressive attempts to address this issue are wildly misguided.

Fundamentally we need to reform the concept of health care insurance--we need insurance to cover catastrophic costs, not to be debating whether we should pick up the costs of someone's Viagra or otherwise routine, manageable expenses; Obama fails to acknowledge the issue of state-specific mandates and the fact that premiums are much higher in high-mandate states. We also need for health care patients to have more of a vested interest in more efficient spending of dollars, we need to address issues constraining primary-care physicians, including the busy time of handling paperwork and high medical malpractice insurance, and we need to address how to fairly distribute catastrophic costs and high-risk patients. Whereas his focus on preventive medicine is laudable,  he doesn't address the salient fact that many expensive preventive measures are dubiously cost-effective, and an implicit requirement to take on unnecessary costs aggravates health care inflation. We don't need the hubris of progressive legislators and Presidents arguing that government bureaucrats, without the private-sector intrinsic incentives for cost-savings and innovation, can better manage the health care sector.

-- Obama Continues Rerunning His Campaign Stump Speeches and Bush-Bashing

Obama also engaged in some bad math and accused Bush of leaving him with a fiscal year 2009 budget a trillion in the red. That's not true and misleading in a number of respects. First, the TARP funds in theory should be paid back (and already has been for most banks). The $787B stimulus plan, totally on Obama's watch, turns out, according to the most recent CBO estimate, to require another $75B in spending (i.e., unemployment benefits higher than projected). Also, the Democratic-controlled Congress passed the TARP legislature. When you look at, say, a $1.5T deficit for fiscal year 2009, with Bush in the White House for just under a third of the fiscal year, (and in fact the Dems refused to pass the budget until after Obama was President). When Bush left office, unemployment was still under 8%, so I would expect that relief spending picked up while Obama was President. For progressives, "math is hard". How Obama passed off the blame for the majority of a $1.5T deficit in fiscal year 2009 to a President who occupied the office for less than a third of the fiscal year and never signed the stimulus bill or the budget bill on his watch. Obama's ludicrous claim for credit for keeping the economy from collapsing is yet another pathetic attempt to disingenuously rewrite history; the major issue during the economic tsunami was keeping the life blood in the economy through the banks from freezing up. That crisis was addressed primarily under Bush's tenure, not Obama's.

A lot of things had already been anticipated, such as the misleading discretionary spending freeze (cf. yesterday's post). Obama wants to use the repaid TARP funds--which are supposed to pay down the deficit--to fund small business lending via politically-favored community banks; I'm opposed to this; the money should be repaid to the Treasury, and any loans to community banks should be approved on their own merits. I'm also nauseated by Obama's nuanced policies of a similar nature (e.g., investment tax credits only for smaller companies). The only thing I did hear of a positive nature in his discussion of taxes (mostly he spent his tax cut discussion explaining why 40-plus percent wage earners whom do not pay taxes deserve a check from the federal government, but no tax break for the economically successful whom already pay the lion's share of taxes) is the idea of letting companies in general accelerate depreciation. Obama's picking winners and losers for preferential tax rates or other benefits (set-asides, etc.) is, as I've discussed in other posts, a violation of the rule of law.

I was also suitably annoyed by his attempts to rationalize a federal takeover of the student loan market. (Right now if a lender loses money in exchange for servicing loans at a particular rate, including delinquencies, the federal government has to make up the difference.) Currently the private sector services about 64% of relevant loans. Obama is simply transferring the loan principals from the private sector to the federal public debt. Gee, do you think Obama has applied the lessons learned from Fannie Mae and Freddie Mac (which accounted for nearly a half of the mortgage market, transferring risk to the backs of the American taxpayer)  to Sallie Mae? The government being a "fair competitor"? Yeah, right. And then Obama starts talking about capping loan repayments to a percentage of post-collegiate income and then forgiving loan balances if students take a government job (versus the private sector)? This goes beyond reckless spending and promises we can't afford with already massive deficits; this is a stunningly appalling bad idea teeming with moral hazards. I can't believe Obama is really stupid enough to believe this nonsense; the Congress would have to be nuts to go along with it; it's essentially a back door approach to nationalizing higher education. What I think it really is is some cynical ploy to force Republicans to vote against it and then try to use it as a political weapon to use against parents and college students worried about financing, arguing to voters in 2012 that the Republicans are against college students and parents with high school kids worrying about financing their kids' college education. [I'm almost surprised he didn't propose a federal public option, building a federal university system to provide some much-needed price competition to existing colleges and universities!]

Obama talked about building up our exports--strange thing: maybe I need to look at the speech again, but I didn't hear a word from him calling for the ratification of the South Korea and Colombian trade agreements or any new free trade agreements. The only thing I heard from him regarding trade pacts was reaffirming the usual set of progressive union-based demands. Once again, he's proposing an unrealistic goal for exports; let me get this straight: a President--who is not a committed free trader, proposes new business taxes or penalties (e.g., banks, health care and climate change) and regulations (e.g., financial industry, etc.), enacts massive new deficit-financed spending competing with the private sector for investment dollars, refuses to lower higher-bracket tax rates to more globally-competitive rates,  has attempted to increase the public sector footprint (e.g., auto industry micromanagement and nationalizing student loans), reflexively backs high labor cost/inflexible union demands, and wants to increase tax rates at the end of the year on the economically successful--thinks he can rebuild our manufacturing base by mere fiat? Give me a break!

Obama once again attacked the GOP opposition, mocking them for not showing "leadership" (there's a pot calling the kettle black...) and merely paying lip service for being receptive for new ideas for health reform. His key point there was "lowering premiums" while expanding the coverage base beyond the existing 84% or so. I don't think anyone can promise to lower health care costs under trends where policyholders have little incentive to lower health care costs, an aging population where health costs correlate with age, a fragile pipeline of medical professionals to accommodate even larger patient loads, and dumping even more patients, preventive services on the system. There are compelling arguments to conservative/Republican suggestions already out there: for instance, address the pipeline issue by tackling medical malpractice tort reform and lowering the busy work (i.e., leaving more time to accommodate patients) related to government procedures and paperwork (not to mention addressing below-market reimbursements). Yeah, right: the reason that health care "reform" is failing is not the 40 or 41 GOP senators voting against Obama's death wish for the health care industry, but the fact that the American people know there's no such thing as a free lunch and recognizing  corrupt deal making (e.g., the Louisiana purchase, the Cornhusker kickback, and the union deferments and exclusions) for just what it is.

-- Revoke 'Don't Ask-Don't Tell"

I've made clear in prior posts I have no problem with gay people in the military; I know homosexuality is a natural phenomenon that occurs across species, and I think there should be a fair opportunity for individuals to participate in the service of our country. I knew a couple of lesbians serving the Navy while I was stationed in Orlando. What is the purpose (beyond the obvious reason for paying off a political chit) for modifying a policy that simply says, "Be discreet about your sexual behavior and preferences"? Is there some compelling military need for recruiting openly gay individuals in the middle of a recession? I would suggest that the military enforce sanctions on an as-needed basis, say, inappropriate activities or disruptive events (e.g., wearing a military uniform in unauthorized circumstances or otherwise implying a government endorsement of political or social causes, unwanted sexual attention or harassment, etc.)

-- Energy Policy

I was pleased to hear Obama is being more open to offshore oil & gas development, but the proof is in the pudding, i.e., rules and regulations (say, for instance, if the most promising site is 75 miles offshore, is Obama only going to allow drilling much further out?) What about lifting environmentalist obstructionism in oil shale territory (e.g., Colorado or the Bakken formation)? What about nuclear power?

-- Obama's "We Can't Afford to Wait" Argument

In typical progressive speak, Obama refers to the solution to the recession as government intervention and the private-sector approach the same old policies of the last 8 years. [Let's see: Bush imposed steel tariffs, exploded domestic spending and the federal deficit, expanded entitlements (e.g., Medicare drug prescription coverage), and presided over one of the largest federal interventions in American history during the economic tsunami--it seems to me that Obama isn't "change"--it's MORE of the same...]

Tell me, Obama, was AIG unregulated? What about Fannie Mae and Freddie Mac? No SEC? No insurance regulators? No Federal Reserve? No bank regulators? No accountants? No credit raters? No Congressional oversight? If the federal government, after the intelligence and other failures in 2001 led to 9/11 and various streamlined agencies still failed to uncover the underwear bomber years later, why do we expect progressive pseudo-economics to work? Is it that European progressive policies have resulted in booming growth and low unemployment on the Continent?

What Republicans are referring to is to providing some stability so the private sector isn't having to deal with an uncertain economic environment, including inconsistent handling of circumstances (some companies bailed out, others not). Personally, for instance, I think Goldman Sachs should have not received full price for the value of their AIG swaps; they should have suffered the consequences for selecting a vendor which did not have enough reserves to cover their losses. On the other hand, automaker debt holders were paid by the Obama Administration something like 29 cents on the dollar while lower-standing union cronies were rewarded with equity.

Obama's conviction that he and his fellow progressives must do something--anything sounds desperate, with an abiding faith stronger in government bureaucracy than in economic liberty.

I'm ABSOLUTELY convinced that Obama and his progressive Congressional cronies have prolonged the recession and unnecessarily, inefficiently and counter-productively run up the nation's credit card. The best thing Obama and the Congress could have said was, in the interests of the country, ceased all attempts at micromanaging the economy, simply pass relief spending measures, and let the market find a bottom. It's seems they haven't learned a thing from FDR's inept handling of the economy during the Depression. What snapped us out of the Depression wasn't FDR's domestic policies but WWII.

-- Obama's "Recovery" / "Jobs" Bill: Putting Lipstick on a Pig...


I was watching new Fox News commentator Sarah Palin, hoping that she would take the opportunity to say of Stimulus III that it's not the politically-spun, euphemistic "Jobs" bill: "You can put lipstick on a pig..."  (particularly a Big Government bubble pig...) We don't need multi-billion dollar Big Government boondoggles like the super-train connecting Orlando and Tampa. (It's not like there's a flood of people visiting Orlando, undecided on whether to go to Tampa but would, the main factor being how quickly they could get there...) If you like the way Amtrak consistently loses money, you'll LOVE the super-train.

The American people already know how expensive and ineffective the Democrats were at passing Stimulus II. Simple question, America: how much do you expect the Democrats to effectively spend your grandchildren's money this time around? Isn't it time we stop throwing good money after bad?


Bonus Videos: Teleprompters for Obama Visit to Sixth-Grade Class?


In teaching classes, I always came with structured, typewritten lecture notes or overheads, but I didn't spend my time reading from them, like Barack Obama or Sarah Palin reading from a script, however well-delivered. There were a couple of reasons. First, the notes provided a logical structure for student learning. Second, I found the practice of writing my notes imposed a certain preparatory discipline. The notes served mostly as a checklist; I would elaborate on and rephrase key points, work in some extemporaneous examples and occasional humor, constantly check the students for nonverbal cues, solicit and answer questions, etc.

(My teaching ratings didn't really reflect the effort I put into my classes, but I usually had a heterogeneous group of students, whom came to the classroom with differing backgrounds, abilities, and motivations. The predominant attitude in most universities is that students appreciate and favorably rate more demanding professors; my personal opinion is that it depends on context (including a professor's tenure and reputation). For instance, I don't think teenagers really appreciate parents right after being grounded. I'll never forget while at Illinois State as a visiting professor one of my late students joining me as I went into class after allowing time for the ratings; as we entered the room, one of the other students told the tardy student that he had missed a chance to get his pound of flesh.)

As a former professor, I often analyze Barack Obama as I would a fellow professor. (In fact, he used to be an adjunct lecturer at the University of Chicago.) Obama, in fact, does have outstanding oratorical skills (although I myself have had my own moments of being in the zone, when I knew I had the attention of everyone in the room, e.g., at conferences or business meetings). What particularly strikes me about Obama is when he gets into these long-winded, meandering or overly abstract, professorial discussions, oblivious to the fact he has lost connection with his target audience. (Of course, I realize some might make the same point about my own blog posts.) He sorely needs a good editor, to strip out sound bites, predictable rhetoric, and trite observations and avoid heavily nuanced, complex, or legalistic, arcane discussions; he also needs to watch his tone which can come across as condescending (e.g., guns and Bibles) and to be more respectful and less judgmental with the political opposition and his predecessors. He also needs to limit the times he's referring to himself; one speech included 132 such references. It's good when a speaker like Obama has confidence; it's another thing when a communicator is unaware of his own limitations.

Here is a clipping from Obama's visit to a northern Virginia classroom, followed by a humorous clip from Jon Stewart on the incident:

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Obama Speaks to a Sixth-Grade Classroom
www.thedailyshow.com
Daily Show Full Episodes Political Humor Health Care Crisis

Of course, this shouldn't be surprising; given by the November family dinner teleprompter mishap first reported by the Onion:
 (Note: the Onion is a news satire organization)




Unfortunately, the Onion did not brief us on any teleprompter tips from Rick Warren or Joel Osteen for the President's leading Sasha and Malia in bedside prayers.


Political Cartoon


Gary Varvel notes how Obama, instead of accepting responsibility for the office he holds and coming up with positive, proactive solutions to deal with the economy, lacks confidence and is defensive, taking every opportunity to scapegoat his predecessor for his own lackluster performance, convoluted decisions and unfocused, divisive leadership.

Musical Interlude: My Favorite John Lennon Tunes


One of the things I remember about the Beatles era is that a pastime of fans was declaring their favorite, e.g., Paul was the "cute one". For those of us who went through school as the unpopular bright kids, there was one natural role model: the articulate, intelligent, introspective, nonconforming idealist, John Lennon. There is something appealing about one of the most talented musicians ever whom took a timeout for his family in the 1970's and then came back with an Grammy-winning album with 3 Top 10 singles, including my favorite Lennon solo track below. John Lennon was murdered just weeks after release of Double Fantasy. There were tribute songs (including Harrison's "All Those Years Ago" and McCartney's "Here Today"), but I particularly liked Elton John's, included below.


Beatles, "In My Life"




In My Life

There are places I remember
All my life, though some have changed
Some forever not for better
Some have gone and some remain
All these places had their moments
With lovers and friends
I still can recall
Some are dead and some are living
In my life I've loved them all

But of all these friends and lovers
there is no one compares with you
And these memories lose their meaning
When I think of love as something new
Though I know I'll never lose affection
For people and things that went before
I know I'll often stop and think about them
In my life I love you more

Though I know I'll never lose affection
For people and things that went before
I know I'll often stop and think about them
In my life I love you more
In my life I love you more

John Lennon, "Woman"



John Lennon Tribute: Elton John, "Empty Garden"

Miscellany: 1/27/10

Obama the Fiscal Conservative? Yeah, Right....


Obama reportedly in his State of the Union address tonight will call for a freeze in domestic discretionary spending over the coming 3 years. "Sheer madness!" screams liberal "Nobel Laureate" economist  Paul "Enron Consultant" Krugman. Doesn't he realize you don't dampen demand (i.e., by cutting federal spending) in the middle of a recession? Cool your jets, Krugman. That $15 extra per paycheck for the so-called stimulus bill and this fiscal year's double-digit percentage increases in federal agency budgets (as the same time households and state/local governments are having to live within their budgets) haven't done much for the economy, except increase the amount of interest necessary to service the national debt, a cost that is literally hundreds of billions of dollars, and perhaps crowd out investment dollars which could go to the private sector instead of propping up progressive policy overspending. If Krugman wants to start about streamlining government operations, laying off white-collar/non-operational positions in the federal bureaucracy, shuttering redundant facilities and offices, freezing government compensation, and revising unsustainable gold-plated federal government worker plans, I'm willing to listen (I don't expect to hear him champion this approach). (Krugman does float one interesting idea, which is to cut business employee-related tax burden, although I would argue a permanent payroll tax cut is a better concept because job creators do not respond to what they regard as temporary/teaser tax gimmicks.)

But Obama is talking about freezing $477B out of a $3.5T budget, roughly 14% of the budget. Keep in mind that keeps a baked-in ongoing trillion dollar deficit (and even assuming the Bush tax cuts expire at the end of the current year, we are still looking at roughly half that amount as a permanent deficit--not to mention, is it really smart economics, if unemployment remains sticky for the rest of the year, to allow taxes on job creators to be automatically raised at the end of the year?) Say, if we're talking about holding agencies to their same budget numbers next fiscal year instead of, say, a 4% increase, 477*.04=$19B savings. If Obama really expects American voters to believe that $19B in the face of a $1T deficit constitutes his best effort at squeezing savings out of a bloated budget, I would like to sell those voters a Bridge to Nowhere in Alaska.

Keep in mind the progressive Democratic Congress had already been extraordinarily generous in their omnibudget for the current fiscal year, allowing some agencies up to double-digit percentage increases. Obama putting the domestic budget on a diet after this year's record budget is sort of like an obese person deciding to have a Lean Cuisine for lunch after eating a (swimming champion) Michael Phelps breakfast ("three sandwiches of fried eggs, cheese, lettuce, tomato, fried onions, mayonnaise, an omelet, a bowl of grits, three slices of French toast with powdered sugar, and three chocolate-chip pancakes"). The response of the true fiscal conservative is not simply to stabilize the diet of a top-heavy bureaucracy: the agencies need to lose to lose some weight, i.e., should restrict normal calorie intake (smaller budgets and reduced staffing) and do some exercises (become more productive).

But I see it more cynically than that. I see Barack Obama as simply trying to pay lip service in a political version of  Democratic good cop/bad cop, knowing that his partisan progressive colleagues have no intention of backing away from their strongest hand in decades to permanently expand the federal government footprint. They are more than willing to sacrifice centrist colleagues, e.g., the Blue Dog Dems. The progressive  intent is very clear: despite resistance to previous entitlement legislation (e.g., social security and Medicare), these programs have become the sacred cows of American politics, with even modest reforms (like recalibrating increases to inflation versus labor costs) rejected, despite a collapsing ratio of active workers to retirees and actuarial considerations (e.g., increased longevity). That is why the Democratic Party Health Care Bill is so important to the statist progressives: once you have people dependent on federal programs, it's very difficult to get them weaned off. Look at how hard it was to get welfare reform passed; it took the 1994 election, restoring control of the House to Republicans for the first time in decades, to get Clinton to consider signing the legislation, and that remains a sore point within the progressive community today.

Reagan and subsequent Republicans have been unable or unwilling to simplify administrative structures (e.g., after Jimmy Carter and the Democrats split off energy and education). For example, it isn't clear to me conceptually why we need separate departments of energy, transportation and the interior; departments of defense, veteran affairs, and homeland security; departments of agriculture, commerce, and labor; or departments of health and urban services, housing and urban development, and education. It would take a politicians with profiles in courage and my strong commitment, willing to take on inevitable unpopularity (e.g., who empathizes with the business owner having to lay off workers when a company is losing money?) and demagogic attacks by ideologues to do the right thing on behalf of future generations. It's about time we saw politicians with guts to say "no".

Another Example of Obama Phony Fiscal Conservatism: 
Freezing Pay of White House $100K-plus Officials

It sounds good on paper: Obama, for the second year in a row, will freeze salaries for roughly 1200 White House officials and negate bonuses for probably up to an estimated additional 1800 bureaucrats. The missing part of the picture which listeners to the State of the Union Address may not realize is what Obama, of course, does not mention at all:

Courtesy of USA Today & OPM Data

So there are over 380,000 federal government workers earning at least $100K getting regular/step increases in pay (and possibly merit bonuses or raises), Cadillac health care plans, virtually guaranteed job security, and gold-plated retirement benefits, while private-sector companies have had to lay off workers, freeze or cut pay and bonuses, and lower 401K employer matches. Obama's "pay freeze" is little more than a cynical, misleading politically symbolic act which I regard as a progressive decoy tactic in class warfare. Obama's lip service to fiscal conservatism insults the intelligence of the American people.

I personally despise Obama's nuanced positions, just like (see above) where he freezes a FRACTION of total government expenditures, expecting voters to infer he is making more than a token effort, or he'll offer investment tax cuts for certain small businesses which blatantly violate the concept of the rule of law. One of the things I hope that the GOP will seriously consider in this fall's election is making complexity of government--manifestly obvious to most taxpayers in increasingly convoluted tax returns--an issue.


Political Cartoon


John Deering points out the fact that (just like in closing Gitmo), the devil (of health care reform) is in the details. No doubt "math is hard" not only for Barbie, but for progressives, not only in calculating glacier meltdowns but also for the Obama Administration members on Sunday talk shows giving different numbers on jobs "saved" or "created" by the ineffectual, so-called stimulus bill. (Simple math problem: divide $787B by the number of jobs saved/created; compare to the average American household income. How efficiently does government make jobs versus legitimate job creation in the private sector?)

Musical Interlude: My Favorite George Harrison Tunes

I continue my Beatles' series with guitarist George Harrison, starting with my personal favorite Beatles' song he wrote and recorded, "Something". [There is a second Harrison-penned song which will be included in a future Beatles interlude segment.] I first sang it with my high school choir, but in particular, I remember one night when a girlfriend came over to my place, the song came over the radio, and I sang it to her; there was something magical about that moment in time. I was also a fan of his post-Beatles' projects; I really like the simple love song "You" (awesome bridge and sax), and my beautiful niece Claire, as a little girl, loved to dance to "Got My Mind Set on You", but if you ask me for my favorite...

The Beatles, "Something"




Something in the way she moves
Attracts me like no other lover
Something in the way she woos me

I don't want to leave her now
You know I believe her now

Somewhere in her smile she knows
That I don't need no other lover
Something in her style that shows me

Don't want to leave her now
You know I believe her now

You're asking me will my love grow
I don't know, I don't know
You stick around now it may show
I don't know, I don't know

Something in the way she knows
And all I have to do is think of her
Something in the things she shows me

Don't want to leave her now
You know I believe her now

Harrison, "What is Life"





What is Life

What I feel, I can't say
But my love is there for you anytime of day
But if it's not love that you need
Then I'll try my best to make everything succeed

Tell me, what is my life without your love
Tell me, who am I without you, by my side

What I know, I can do
If I give my love now to everyone like you
But if it's not love that you need
Then I'll try my best to make ev'rything succeed

Tell me, what is my life without your love
Tell me, who am I without you, by my side
Tell me, what is my life without your love
Tell me, who am I without you, by my side

What I feel, I can't say
But my love is there for you any time of day
But if it's not love that you need
Then I'll try my best to make everything succeed

Tell me, what is my life without your love
Tell me, who am I without you, by my side
Oh tell me, what is my life without your love
Tell me, who am I without you, by my side

What is my life without your love
Tell me, who am I without you, by my side

(fade:)
Oh tell me, what is my life without your love
Tell me who am I without you by my side

Miscellany: 1/26/10

Chemical Ali Dead

Saddam Hussein's cousin Ali Hassan al-Majid was executed yesterday. Better known as 'Chemical Ali', he was particularly notorious for his role in the use of poison gas in a pogrom against the Kurds (up to 180,000 people killed by some estimates) back in 1988. Hussein's role in terror killings against civilians (including the related use of WMD and payments to survivors of Palestinian suicide bombers targeting Israeli civilians) was a significant factor in George W. Bush's decision to seek regime change in Iraq.

James Carville Thinks Obama Needs to Bash Bush and the GOP More

The Clinton era rabid Democratic partisan guru wrote a recent Financial Times commentary, arguing that the  Coakley Massachusetts Senate loss finger-pointing is misguided, that Obama has been too nice a guy, and the Democrats needs to bash Bush and the GOP in Congress more. Carville is wrong.

Obama has been ubiquitous; he's given over 100 interviews and issued hundreds of statements and other messages to a fawning liberal mass media. It's not a question of whether the opposition GOP could stop it given a near-filibuster proof majority in the Senate. Obama has been bashing Bush, the Congressional Republicans and "special interests" almost nonstop for 3 years running. The motivational  "yes, we can" Presidential candidate in the winter of 2007-2008 and bringing Washington together in a new post-partisan era spent the first several weeks of his administrtion talking the economy down to sell a huge so-called stimulus bill. Bush-bashing was a principal strategy used in the unsuccessful Virginia and New Jersey gubernatorial campaigns and last week's Coakley loss.

The fact is that Obama, far from bringing America together, has been the most polarizing first-term President ever, according to Gallup. The average job approval by Democrats is 88% vs. 23% for Republicans--a difference of 65. That is 20 points greater than the highest gap by Republican Presidents (Reagan and GW Bush shared the highest, 45). (Clinton scored a 52 point gap.)

As for the Coakley loss for the Massachusetts Senate seat, after an early 31-point lead over Scott Brown, I don't think it was motivated by Coakley's tactical errors; a key difference was a strong showing by independents heavily supporting Brown. I personally believe they liked the fact that Scott Brown was offering a reasoned, problem-solving approach (not ideological) and to a large extent reacting to the high costs and corrupt deal making of the Democratic Party Health Care Bill in the Senate (i.e., the Louisiana Purchase, the Cornhusker kickback, and various union deferments and exclusions). Indeed, a recent CNN poll recently revealed that 70% of Americans feel that the Dems losing their filibuster-proof of 60 seats in the Senate is a good thing.

Political Cartoon

Lisa Benson remind us of the latest, current bubble in the economy: the federal government bubble.

Musical Interlude Segment: Favorite Beatle Remakes


Interestingly, both of my selections (group and solo) feature John Lennon, whom I think still ranks among the finest rock lead vocalists. (In terms of the songwriting collaboration where Lennon and McCartney notoriously shared credit on all their Beatles' songs, I tend to prefer McCartney's genius at melody writing, although Lennon wrote some of my favorites, e.g., "Help!", "A Hard Day's Night" and "In My Life".)


"Twist and Shout"



John Lennon, "Stand By Me"

Miscellany: 1/25/10

More on Scientists Pursuing a Political Agenda on Climate


One of the fear mongering predictions in a Nobel Prize-winning 2007 UN report was a claim that the Himalayan glaciers will have melted by 2035; it had been lifted from a 2005 WWF article (largely based on a couple of 1999 interviews with glaciologist Syed Hasnain), which had not been reviewed by scientists (and contained a significant arithmetic mistake). Canadian Professor Graham Cogley, a glacier expert, recently challenged the assertion, which he believed misstated observed glacier melt rates by a factor of 25.

The IPCC (intergovernmental Panel on Climate Change) states, among its key principles: "to assess on a comprehensive, objective, open and transparent basis, scientific, technical and socio-economic information – IPCC reports should be neutral with respect to policy". What did Dr. Murari Lal say, about inclusion of the disputed claim in the report (NOTE: the Himalayan claim has now been withdrawn):

[Dr Murari Lal, the co-ordinating lead author of the report’s chapter on Asia] last night admitted [the bogus Himilayan glacier claim] was included purely to put political pressure on world leaders [and] did not rest on peer-reviewed scientific research. In an interview with The [British Daily] Mail on Sunday, Dr Lal said: ‘It related to several countries in this region and their water sources. We thought that if we can highlight it, it will impact policy-makers and politicians and encourage them to take some concrete action...It had importance for the region, so we thought we should put it in.’

The fact that the IPCC explicitly violated its own principles of policy neutrality and failed to vet a clearly sensational and dubious prediction needs no further comment. Scientists need to make a better, more responsive effort policing fellow professionals and debunking unfounded scientific claims; recusals or disclosures of public policy positions must be made as a matter of professional ethics. Letting public policy be made on the basis of fraudulent claims undermines the credibility of both public policy and science; as we say in information technology, GIGO--garbage-in, garbage-out.

Obama: Will He Embrace a Mid-Course Correction?

After the 1994 election swept Republicans into power, President Clinton announced the era of Big Government was over and by 1996 signed a welfare reform measure he had previously opposed. Listening to Democratic and other pundits this past weekend, I heard what appears to be a plurality consensus that the Republicans may do very well this fall but that Obama would play off GOP missteps in asserting a stronger hand (e.g., the Gingrich-Clinton game of chicken on the budget) to put him into the driver's seat for an easy reelection. I disagree.

I do agree there is one thing we can expect: Obama will attempt to co-opt or pay lip service to the Republican talking points on the deficit and the economy, and certain bipartisan proposals with little chance of adoption. (Remember earmarks on the omnibus budget deal? Olympia Snowe's trigger plan on a public option? Or recently announced support for a bipartisan committee to tackle the deficit, allowing a single up-or-down vote (adopting a process similar to domestic military base closures).) However, the re-emergence of political advisor David Plouffe seems to signal a philosophy that the best defense is a good offense; he seems to believe that Obama can discredit the Republican message on deficits and limited government by pointing out their prior record in power. I've also seen an uptick in Obama's playing the populist card, just like he was a johnny-come-lately on the AIG bonus issue; he is using the bully pulpit to bash banks and other "special interests", even as banks are already restructuring compensation packages by increasing stock (which must be held for a period of time) and raising salary in lieu of lump-sum year-end bonuses. It doesn't look like they are backing off their progressive agenda; in fact, many of them seem convinced that the Dems will pay a stiff price for not passing something on health care.

I do think that the biggest issue for Republicans is combat the Democrats' attempt to define them as obstructionist, without a constructive agenda. They need to emphasize they are willing to negotiate in good faith without preconditions and acknowledge lessons learned from 1995 to 2006.


Political Cartoon


Gary Varvel  shows Obama, dreaming of passing the Democratic Party Health Care Bill, getting a rude awakening from the voters in reliable blue state Massachusetts.

Musical Interlude: Best Lennon/McCartney Song 

Originally Performed by Others

Peter & Gordon, "World Without Love"

On April 4, 1964, the Beatles had the top 5 singles; by the next week, they had an additional 9 songs on the Hot 100 and held the top 2 album positions as well, an unprecedented feat and one likely that will never be broken; they had at least one #1 hit each year through their final album, including their last 3 released singles in 1970.

It is in this context that McCartney decided that one of his tunes, "World Without Love", wasn't good enough for the Beatles and gave it (along with other singles) to Peter & Gordon (McCartney at the time was dating Peter Asher's sister Jane); the song hit #1.

Miscellany: 1/24/10

Obama Tries to Co-Opt Scott P. Brown's Election


Poor arugula-eating Obama; he was baffled during the Democratic Presidential campaign as to why midwest voters clung to their guns and Bibles allegedly against their own economic interests: after all, he was promising to cut taxes or issue checks for 95% of households while significantly increasing government outlays and programs and promising to reduce the deficit! (I will rephrase G.H.W. Bush and call this "radically voodoo economics".) How could they possibly prefer a politician with a proven record of accomplishments and bipartisan efforts,  more extensive administrative or federal government experience, and expertise in defense and foreign policy? Ah, but during his Coakley rally, Barack Obama decided to ridicule Massachusetts Senator-elect Scott P. Brown's GMC truck, seeming to suggest Scott Brown's first post-election stop would be to drive his truck to George W. Bush's ranch for political advice and direction. (To be fair, Brown bought his truck before Obama decided to bail out and reorganize Government Motors.) Mocking Chevy truck owners? What's next? Is Obama going to insult Scott Brown's mom or her apple pie? A number of patriotic Americans love their trucks; as for Obama's driving analogy, Brown drives on the right side of the divider line, while Obama is on the left side of the road, arguing with oncoming traffic they are driving in the wrong direction.

I reviewed Obama's post-Brown election interview transcript with ABC's George Stephanopoulos

STEPHANOPOULOS: So you saw [the Scott Brown upset victory for the US Senate in Massachusetts] coming by then?

OBAMA: By that time, we did. And here's my assessment of not just the vote in Massachusetts, but the mood around the country.

The same thing that swept Scott Brown into office swept me into office.

People are angry, and they're frustrated. Not just because of what's happened in the last year or two years, but what's happened over the last [sic previous] eight years.

Watching Obama is like watching an inexperienced boxer fight; he's been trained against his old bad habits, like dropping his gloves and telegraphing his punches, but as soon as the more experienced boxer tags him, it's like the novice boxer forgets all his training, leaving gaps in his defense, and the other fighter puts him away. Obama keeps going back to the political stump speech he's been doing since 2007 (if not earlier).

Obama's attempt to co-opt Brown's victory is intentionally disingenuous. Obama knows that the primary issue that Massachusetts voters named was the partisan health care bill that the Democrats were trying to jam down the nation's throat; Scott Brown was openly running as senator #41 (i.e., to filibuster the corrupt health care bill, with its special interest deals), the progressive agenda and priorities and the spending. How does he explain Coakley's loss, despite his active support with a campaign appearance and commercial spots?

In a narrow sense, the President's remarks are correct; in 2008, people were tired of the bipartisan bickering, and they were worried about the economy. They wanted change in Washington--but it was not a change in ideology. The polls continue to show for every progressive or liberal, there are two Americans whom consider themselves conservative. Obama campaigned in the general campaign as a moderate, not as a progressive. I think what happened was when the Democrats suddenly discovered the American people, in the aftermath of an economic tsunami, had handed them super-majorities in both houses of Congress, and the progressive leadership probably realized that they would never have a better opportunity to permanently expand the government footprint.

Brown positioned himself, not as ideological but as a problem solver and an independent thinker. He is skeptical of Nanny State solutions which substitute for versus reform the private sector; he wants more of a pro-business growth perspective, more transparency and an emphasis on controlling the federal deficit.

Obama, however, is very much the conventional progressive; he's in a state of denial. He reads a mandate into a progressive agenda that doesn't exist. The American people are not stupid. The health care bill routinely  rates below 40% public approval across a number of polls.  They wonder how the federal government which can't even pay its own bills has the credibility to take on controlling costs in 16% of the economy. There are things they can agree with: the government should spread the costs of catastrophic health care, there should be more private-sector competition, there should be a bolstering of existing mechanisms (e.g., high risk pools) for high-risk people to obtain more affordable insurance, and people who purchase health insurance with after-tax dollars should have equal protection in terms of tax-advantaged savings.

Progressives love to talk about "educating" the people (meaning for others to capitulate to their talking points). We see Obama in that frame of mind; he seems to think is that the resistance isn't one of substance but of style. Never mind that Obama has already spoken or released statements over 400 times, many of them dealing with health care. It's not how he's saying it: it's what he's saying. Nobody is disagreeing with basic issues of affordable health care insurance for individuals and small businesses, viable alternatives for high-risk individuals, and catastrophic health costs.

The basic issue is how you achieve those goals. Conservatives believe that, for instance, expensive state mandates would not be sustainable if the Congress allowed interstate competition. They believe that health insurance today is a perversion of the concept of insurance, with many consumers having no vested interest in holding down the costs of their treatment, and an unwillingness by progressives to embrace medical malpractice tort reform raises defensive medicine costs and also impacts costs by adversely affecting the number of available physicians. Conservatives also believe that the current reform bill, by increasing the number of insured in an already inflationary system with limited availability of existing doctors and hospitals will not lower costs but raise them significantly.

I don't necessarily speak for all Americans here, but I'm getting tired of Obama scapegoating businesses and Republicans in defending his mediocre record over the past year. As a voter, I'm not interested in Obama's lack of due diligence and intellectual integrity in analyzing the issues underlying the economic tsunami. It's fairly easy to take populist shots at fat cat bankers (but notice that Obama doesn't attack fat cat professional athletes). [I'm waiting for some banker to have the chutzpah to step to the microphone and say, "Yeah, Mr. President. I made money last year, but you lost nearly $2T. Who had the better year?"] How about Obama giving us a lessons learned and policy alternatives for dealing with AIG, the auto makers (GM and Chrysler) or the GSE's (Fannie Mae and Freddie Mac)?

Bernanke: A Reluctant Endorsement of Reappointment

To be honest, I want a Fed Reserve chairman whom is an inflation hawk and is willing to jawbone the President on irresponsible spending; however, I think it's highly unlikely that we could expect Obama to nominate someone from the Chicago School, and given an investment climate already saturated with uncertainty due to Obama's counterproductive spending and regulatory policies (including his misguided populist attacks on banks), a rejection of Bernanke would almost certainly extend last week's correction in the stock market. I am not confident that Bernanke anticipated the economic tsunami and addressed key issues of easy money and asset bubbles; I do give him credit for some innovative tactics (after already pushing interest rates to near zero) with respect to problematic mortgage-backed securities and stress tests. I would like to see more transparency of Federal Reserve activities and Bernanke's tackling issues of risk assessment and financial services transaction and balance sheet transparency.

I generally don't like to interfere with financial industry compensation practices, but I think the industry and companies should look at reforming "compensation bubble" industry practices before the politicians force upon them more Draconian measures. I think compensation structures should be flatter within organizations, with an emphasis more evenly distributed income, with explicit consideration of corporate risk analysis, more emphasis on evenly-distributed salary packages and deferred compensation with a staggered multi-year vesting schedule to encourage consideration of more long-term goals.

Catholic Relief Services Haiti Update

Despite enormous logistical challenges, one week after the devastating earthquake CRS staff has unloaded 120 containers (2100 metric tons) of vegetable oil and grains from the U.S. government onto the only operating wharf in Port-au-Prince. We are in the process right now of arranging for secure transport to our warehouse, where it will be distributed to the growing number of camps.

CRS has been asked by the United Nations to lead the response at one of the first formally organized camps, located at a golf course, where as many as 50,000 people are sleeping every night. CRS has arranged to supply the camp with water, food, and plastic sheeting for shelter, which continue to be trucked in from CRS warehouses in the neighboring Dominican Republic, where volunteers are working continuously to keep additional relief supplies coming.

CRS has formed six medical teams to provide health care at shelters and area hospitals and CRS teams have already distributed medical supplies and drugs. In addition, Project C.U.R.E. has donated 3000 pounds of additional medical supplies that are en route.

Three operating rooms at St. Francois de Sales Hospital—which withstood the quake — are now running, and surgeries are being performed on the most critically injured patients. Food, water and medical supplies have also been provided to the hospital. An AIDSRelief site, this is one of Haiti's oldest hospitals and one that CRS helped build. Its mission is to provide free care and treatment for the poor.

CRS is extremely grateful for the outpouring of support we have received in response to this calamity. But we can't stress enough how significant the damage is and how many of our brothers and sisters are affected. We are asking you to please support our efforts to help the millions of earthquake victims in Haiti. Your help is urgently needed. Please donate now.

Hope for Haiti Now

Last Friday night, there was a live nationally-telecast telethon, hosted by actor George Clooney, with proceeds going to Clinton Bush Haiti Fund, Oxfam America, Partners in Health, Red Cross, UNICEF, United Nations World Food Programme and Yele Haiti Foundation. A number of prominent pop singers and musicians were featured, including Mary J. Blige, Bruce Springsteen, U2's Bono, Stevie Wonder, Madonna, Beyoncé, and others. You can download a 20-track album for $7.99 (alternately, individual song performances can also be downloaded at a nominal cost) or the TV special for $2.99 from Apple.com iTunes or Amazon.com MP3. For more information, check the MTV Networks.

Political Cartoon

John Deering wonders just how long are Obama's coattails....

Musical Interlude: My Favorite Ringo Hit: "Photograph"

I continue my Beatles retrospective by featuring my favorite of drummer Ringo Starr's post-Beatles hits.