Miscellany: 7/12/12

Quote of the Day 
Love will find a way. 
Indifference will find an excuse.
Author unknown

Hell Freezes Over: A Democrat Gets It Right

Calling deficits "a cancer" Bowles says the country must work to improve its fiscal health. "If you take last year 100 percent of the revenue that came into the country, every nickel, every single dollar that came into the country last year was spent on our mandatory spending and interest on the debt," Bowles says. 

 "Mandatory spending is principally the entitlement programs — Medicare, Medicaid, and Social Security. What that means is every single dollar that we spent last year on these two wars, national defense, homeland security, education, infrastructure, high value-added research, every single dollar was borrowed and half of it was borrowed from foreign countries," Bowles adds. "That is crazy. It's a formula for failure in any organization."

We again have political analysis paralysis which can probably only be fixed by voters this fall turning control of the Congress and Presidency to the GOP. I'm not saying this as a GOP shill; I think the voters understand that they have effectively given the Democrats de facto control of the government over the past 4 years, and they thrown every spending and regulatory weapon they have at the economy, not to mention an accommodating Federal Reserve with near-zero interest rates, and we have the weakest, most jobless recovery since the Depression. Is the electorate really going to sustain the current leadership? I think they have to make the change. I don't care what the polls say today; besides, I think it's far more likely that news until the election will tend to be bad, not good, for Obama. I see voters dissatisfied with the direction of the country, at least two pollsters indicating an edge for the GOP in generic ballots, Obama's approval ratings seem to face resistance near 50%, bouncing down to the mid-40's. For weeks now, Romney has been essentially deadlocked in the polls with Obama, far better than Reagan was doing in the summer of 1980. The political sites are buzzing about prominent Democrats skipping the Dem national convention, and few Democratic politicians in purple/red states want to be seen with Obama on the campaign trail. The likelihood that Obama will have coattails and drag several Democrats into Congress with him seems at best remote.

The latest dance involves Bush Tax Cut Showdown II, a repeat of the lame duck politics in 2010. The Dems will try to make the class warfare argument an election issue, but I've already seen a poll indicating that at least three-quarters of American voters aren't bothered by Romney's business fortune. This is ideological; it has little to do with closing the deficit: there aren't enough rich people to do that. Whereas the Democrats demagogue, pointing out the GOP Presidential hopefuls, mindful of what happened to Reagan and GHW Bush agreeing to tax hikes but then the Dems backing out of spending cuts, are wary about committing to any tax hike regardless of spending cuts, the Republicans definitely are not Charlie Brown naively believing that Lucy will hold the football for him a third time. Obama has not put a credible offer of spending cuts on the table. (I could see a compromise where the Republicans might accept some limits to tax credits or deductions in exchange for some things the GOP wants (e.g., a variety of program cuts, Keystone Pipeline approval, etc.), but the fact of life is that they hold a stronger hand than in 2010; the chance that the House will agree to a class warfare tax is zero.) I think the President is posturing in a rather transparent bid to rally his troops to the polls.

There are a number of Dem Senators on the bubble, in tough reelection fights (e.g., Manchin, Tester, McCaskill, etc.), and Lieberman has said that he wants more of a grand bargain on taxes and spending than either of the parties' competing proposals.

I am a pragmatist; I have outlined a number of my preferences in past posts, but just a few items on the top of my wishlist: (1) inflation adjustment to capital gains income and elimination of double taxation on distributed income; (2) a more balanced federal revenue in the form of a VAT-style/consumption tax; (3) flattening of business and individual income tax rates, substituting tax credits for deductions and means-based caps on any federal subsidies. I think we need to streamline various misguided federal incentives and take a serious look at eliminating or at least capping mortgage interest and employee benefit deductions. I believe that we need to find a way of delivering federal senior entitlements, with deregulated, delegated (e.g., state-administered), or (preferably) privatized alternatives; one step is to flatten benefits and cap monthly and lifetime benefits in federal transfer payments for financially able beneficiaries.

Sunday Talk Soup: John Boehner and ObamaCare

I'm catching up on my podcast backlog, and I'm annoyed at the one-sided questioning by program moderators, and unchecked (at least for progressive politicians) interviewee political spin. So I'll probably do an ongoing series of interview markups, starting with excerpts from a Face the Nation interview that occurred during my power outage, between substitute moderator Norah O'Donnell and the Speaker of the House, occurring in the wake of the ill-considered John Roberts' decision on ObamaCare:

NORAH O'DONNELL: Good morning again. The big news came this week when the Supreme Court decided to uphold the President's signature achievement, his Affordable Care Act, including its most controversial element, the individual mandate, which requires people to buy health insurance or pay a penalty.

Already O'Donnell is wrong on her framing of the issue. John Roberts joined the 4 dissenting judges in saying  that the Commerce Clause doesn't apply, i.e., a penalty for NOT engaging in market transactions. What he said was that the Congress could use its broad tax authority. In other words, ObamaCare is an optional tax you can pay in lieu of participating in the perverse rigged insurance market under federal oversight. Roberts also said that this tax is bounded in magnitude,i.e., the tax-and-spend Democrats are forbidden from raising  the tax to the extent the person is paying the equivalent of premiums under their rigged system.

There are other parts of the tax penalty which others, like O'Donnell, fail to point out. The fact is that the federal government already heavily subsidizes employer-based health benefits by not taxing the relevant income used to purchase it. Others have to pay it outside the employer system. If we look at health insurance at the policyholder's tax rate (at various levels, payroll, federal ,state, local), the tax subsidy can amount to almost half the cost of insurance. The status quo is unfair since the tax subsidy depends on working for a relevant employer and the tax benefit is regressive in nature (i.e., higher-income workers with company-sponsored health get more tax relief applied against policy price).

To many people, paying the tax/penalty is much cheaper than buying insurance. It really doesn't address the actuarial reasons behind a mandate, since the uninsured person is still guaranteed health care.

What is obvious, and O'Donnell fails to acknowledge, is that government is the problem, not part of the solution. What we really need to do restore the free market to health care--get away with subsidies, price fixing, rules and regulations, etc., distorting the marketplace.

NORAH O'DONNELL: The House has already voted some thirty times to repeal or defund this law. What's one more time going to do?

REPRESENTATIVE JOHN BOEHNER: It's-- we want to show people we are resolved to get rid of this.

This is a stupid question, and the Speaker points out the obvious: this is all about posturing for this fall's election, because the Senate and the White House are still held by the same people whom passed ObamaCare. A better response, in my judgment, would have been: "ObamaCare has been been in the courts since its passage. Until SCOTUS ruled, we didn't know what, if any, parts of the law would survive. Circumstances have changed: SCOTUS has decided that ObamaCare is based on tax authority, and all tax legislation by the Constitution starts in the House."

REPRESENTATIVE JOHN BOEHNER: Well, because that's what elections are for. NORAH O'DONNELL: But the truth is you say Mitt Romney would work to repeal this he says on day one. But don't you need a Republican Senate with a supermajority in order to get rid of it?
REPRESENTATIVE JOHN BOEHNER: We-- we-- we will not flinch from our resolve to get-- make sure this law is repealed in its entirety.

In fact, O'Donnell is making a point I've already made: I've repeatedly pointed out in the blog that if and when Romney beats Obama, and the party control of the Senate flips, the Senate will almost certainly retain a minority with the ability to filibuster. What I didn't discuss is the unspoken truth of how the Democrats worked around Scott Brown's filibuster-sustaining vote in the Senate: through the Byrd rule and the budget reconciliation process: the same process can seriously cripple ObamaCare if and of itself. Second, the nature of the election will influence what Romney and Boehner can do: a number of vulnerable Democratic Senate seats (e.g., Alaska and Virginia) are on the table in 2014. Third, the responses of the states, now freed to waive the federal Medicaid eligibility increases and/or refuse to set up exchanges, will greatly influence the future of ObamaCare. 

I suspect that Romney and new Senate Majority Leader McConnell will attempt to broker some face-saving compromise deal with enough vulnerable Senate Democrats to get a filibuster-proof coalition. I can only speculate what that might consist of: my suggestions have been to focus on some policy mix of catastrophic health insurance, deregulated interstate insurance pools (including hedged self-insurance), and state/regional high risk pools, with federal funding (Medicaid-like cost sharing?) of subsidies by some broad-based consumption tax.

NORAH O'DONNELL: Is there anything good in this law?

Loaded rhetorical question. How does CBS News train its reporters? With "DailyKos for Dummies"? In the whole interview, I find nothing original and interesting, just a rehash of predictable progressive media and Obama Administration talking points and gotcha questions.

You mean besides the fact that existing federal meddling with the free market system is exacerbating the inflation-bound sector and the Democrats' kaleidoscope accounting vastly underestimates the program's costs at a time we already have unsustainable federal spending? No, the oxymoronic "Affordable Care Act" is a state of denial that pretends that bureaucrats can suddenly manage what they haven't been able to manage in four decades of federal mismanagement of Medicaid and Medicare, both of which are largely subsidized by the unsustainable shrinking private sector of health insurance. If the government still has problems with the banking industry after centuries of regulation, and if the government can't even manage its own budget, never mind any other sector, by what hubris does it believe it can swallow the health care sector, faced with an aging population and their intrinsically higher health costs?

NORAH O'DONNELL: I asked ask you if there's anything good in it because I want to ask you about some of the specific provisions in the bill. Since you are going to be repealing it, are you willing to roll back the provisions that would provide free mammograms under Medicare?

REPRESENTATIVE JOHN BOEHNER: Listen, there are a lot of provisions that can be replaced. Remember, I said, we want to take a common-sense, step-by-step approach to replacing Obamacare.

Expletive deleted. The only thing as bad a delusional progressive actually believing that you can get something for free is a conservative not calling her on it. What makes it even worse is that the Speaker doesn't even address the perversity of using insurance to cover out of pocket expenses. The Speaker, for instance here, doesn't point out that there are issues with false positives and there are good reasons to believe it is only necessary every other year after a certain age, but here's one estimate I grabbed out of a brief Internet search:

Mammogram prices can vary widely depending on the exact test, number of views, your location and whether you choose to go to an outpatient facility or a hospital. Our research shows an average cost of about $100 for a mammogram study with prices ranging from $75 to over $200

This amounts to the equivalent of about a movie ticket or a pizza every month. In the context of an insurance premium that amounts to hundreds or even thousands a month. Lab equipment for doing mammograms is not free, and certainly the provider pays money for the time of medical personnel involved with the procedure. Costs are like squeezing a balloon (spreading the cost elsewhere). A "free" procedure is simply redistributed  through provider charges in a less obvious manner. This is actually a perverse piece of economics because women who do not need the procedure, at least on an annual basis, may use it because they've been told it's "free". In reality, it exacerbates inflationary pressures in a stealth manner! We can go on down the list of "closed doughnut holes" in prescription drug benefits, maintaining adult children on policies: does anyone really believe that adult children are "free"? If adult children are "free", why not add other friends and family? Those costs are subsidized by all the policyholders.

I longed to hear Boehner distance himself from dysfunctional public sector regulation of the health care sector. I want to hear something different than "our federal intervention is better than their federal intervention": we need to return to the basics of the free market. Health care, education, etc., are not "special cases" exempt from the laws of economics: the Invisible Hand that Adam Smith saw handles ALL markets equally well.

Milos Forman, "Obama the Socialist? Not Even Close":
Thumbs DOWN!

Before proceeding my commentary on this (you can find other libertarian takes here and here), this is a question I specifically addressed almost 4 years ago in the blog:

Obama isn't a socialist (or Marxist); for example, he's not calling for nationalizing health care (but working with existing company-sponosored health insurance), and he's talking about capital gains cuts for small business. However, he is a social liberal; social liberalism differs from classical liberalism by its focus on collectivism vs. individualism.

Thus, I believe that the Czech-born Oscar-winning movie director is quite correct in rebuking the media conservatives:

 I hear the word “socialist” being tossed around by the likes of Rick Perry, Newt Gingrich, Rick Santorum, Sean Hannity, Rush Limbaugh and others. President Obama, they warn, is a socialist. 

But I think he's attacking a straw man here:

They falsely equate Western European-style socialism, and its government provision of social insurance and health care, with Marxist-Leninist totalitarianism. 

Since Forman is making an issue of media conservative language, let us for a moment look at Forman's own consistency here: he concedes the existence of a "Western European-style socialism", but when GOP or media conservatives say Obama is a socialist, Forman seems to think they are obviously referring not to Western European-style socialism but Iron Curtain-style totalitarianism. (In fact, the media conservatives explicitly refer to nationalized health care in Canada, Britain and Western Europe, versus the health care systems in the former USSR and Red China.) Forman probably meant to say European-style social liberalism or social democrats, not socialism.

So is Forman suggesting that he's upset at media conservatives comparing Obama to a Western European politician? Clearly not. The majority of his opinion is trying to tell us that we don't know how good we have it compared to the perverted implementation of socialism that existed behind the Iron Curtain during the Cold War.

I have consistently criticized media conservatives in this blog for their use of language, but I do think they are onto something but just using the wrong terminology. Obama and his cronies don't need to directly own businesses if they can intimidate business in a centrally planned economy. In a past post, I referenced Austrian School economist Thomas J. DiLorenzo's outstanding essay "Economic Fascism". So even though Obama is very good at soft-selling his policies, exploiting the hidden nature of his stealth expansion in expanding government scope into everyday life, all we are doing (using today's jargon of user interfaces) is changing the skin (or appearance) of federal intervention into the economy.

Perhaps Forman doesn't realize that the very same Nobel Peace Prize Laureate Barack Obama he's implicitly exonerating (in the process of condemning Obama's critics) has had no problem with expanding drone/bombing runs over nations with which we don't have a declared war or of killing American-born clerics without due process, if he suspects that they are aiding and abetting alleged terrorists; he signed into law a Patriot Act which is in essence an expansion of central authority at the expense of individual liberty. The same Obama is hiring an army of IRS agents to enforce his ObamaCare monstrosity; do you think any American citizen is not apprehensive over being scrutinized by the IRS? You have FDA SWAT teams invading dairy farms trying to sell safe raw milk products, other SWAT (DEA) teams forcing their way into the wrong house, causing extensive property damage and terrorizing innocent families.

Yes, there is no doubt that "kinder, gentler" Barack Obama does not employ the same tactics of a brutal repressive regime like those of Hitler, Stalin, Pol Pot, or Saddam Hussein. Perhaps some authoritarians try to mask their personal agenda by presenting a pseudo-ideological cover for their actions. Maybe Obama is a true believer in his professed political ideology.

It doesn't matter what you call Barack Obama or his political cronies: I call him a social liberal. I get annoyed by people whom use the term "socialism" without doing due diligence on the subject of political ideologies. But I'm looking beyond the surface of the words people use; I'm looking at what is motivating them to call him a socialist. Obama comes from a party that has called for nationalizing health care or at least providing a "public option". (Such a fair fight: competing against a private-sector company which faces constraints that the federal government doesn't have to do, like living within a budget and not being able to print money.)

I think that Mr. Forman needs to direct a new picture, of how the Greeks ended the Trojan War, i.e., via a Trojan horse. For example, Barack Obama gifted the nation with ObamaCare. And Pelosi gave us a subtle hint when she said that we had to pass the bill to find out what's in it....

The House Votes to Repeal ObamaCare: 244-185: 
Thumbs UP!

The House repeal was bipartisan (as was the original House vote against ObamaCare), although as I mentioned in an earlier post and above, this is mostly a symbolic move because the President would veto the measure even if the Democratic majority which passed the Democratic Party Healthcare Bill ObamaCare in the first place had second thoughts.

The Democratic shills have absurdly attempted to suggest that the opposition to ObamaCare has dissipated in the aftermath of the bizarre SCOTUS ruling. This is wishful thinking. I looked carefully at polls following the ruling, and John Roberts' idiosyncratic opinion doesn't convince anyone on the bubble: the SCOTUS decision basically expands federal authority at the expense of individual liberty. Opposition to ObamaCare has remained constant, and even if there was a SCOTUS bump, it's temporary. Some are rationalizing it in different ways, e.g., people are dissatisfied because they want an even stronger bill, etc. This is pure fantasy. Right now about 85% of people are covered by some insurance plan, and they haven't really seen the impact of ObamaCare. Just wait until some companies decide that it's cheaper to simply pay the "taxes" than provide the benefit, and employees find themselves buying coverage in this rigged exchange. The real costs really won't come to surface for a few years; just imagine voters whom discover that this sales pitch of  the government managing health care better than the private sector wasn't worth the paper their voting ballot was printed on, and they bought into the health care cost bubble. Just imagine 1001 birth control type issue kerfuffles escalating over the years ahead.

Those of us committed to liberty say, "We have just begun to fight".  This atrocity and  its enabling by a dysfunctional, split Supreme Court WILL NOT STAND. We will divert traffic away from the progressive march down the road to serfdom.

Musical Interlude: My Favorite Groups

The Who, "Pinball Wizard". With all due respect, I prefer Elton John's remake: he proved himself to be among the finest rock vocalists ever with his performance here.

Miscellany: 6/05/12

Quote of the Day

The higher type of man clings to virtue,
 the lower type of man clings to material comfort. 
 The higher type of man cherishes justice, 
the lower type of man cherishes the hope of favors to be received.
Confucius

Gov. Scott Walker (R-WI) Wins Recall Election (53.4%)

I never really thought Scott Walker was in serious trouble of losing the recall: his approval rating last year ranged from 47-49% and has touched just above that range so far in 2012. A net plurality of Wisconsin voters opposed the recall election, and of the more recent Walker/Barrett polls registered at RCP  Walker had not lost a poll against Barrett since February.

There is the usual hypocritical protest by progressives regarding election financing, e.g.,

 As of late last month, about $45.6 million had been spent on behalf of Mr. Walker, compared with about $17.9 million for Mr. Barrett, according to data from the Wisconsin Democracy Campaign, a nonpartisan group that tracks spending.

“What it shows is the peril of corporate dollars in an election and the dangers of Citizens United,” said Dennis Van Roekel, president of the National Education Association, a school workers’ union, referring to the 2010 Supreme Court decision that barred the federal government from restricting political expenditures from corporations, unions and other groups.

First of all, this was not a regular election, but a recall election against a governor with better approval numbers than Barack Obama. Second, the recall was purely a single-issue political vendetta by an interest group against a governor whom was doing something he had promised to do. Whatever the political fundraising, the fact is that major polls showed Walker turning back Dem challengers around the time the recall election was approved. Third, the characterization of Citizens United by the New York Times and the hypocritical unions (benefiting from the decision)  is grossly distorted and polemical in nature; the issue had to do with an unconstitutional double standard in free speech where certain parties were arbitrarily denied freedom of expression in political manners. Dollar caps have to do with earlier SCOTUS rulings.

The recall election results show that Wisconsin taxpayers understand the vested interests of the few attempting to extort the scarce revenues of the many. Thumbs UP!

Texas Star (Cordell Walker) Beats Hollywood Star (Bill Clinton)


"The Brave 38": Building on Bowles-Simpson

The House passes a partisan budget; the Senate passes none at all. I didn't find a good description of the Brave 38's tax increases. Earlier the 38 thought they had 100 on their side. Paul Ryan hates the bill because it pays ObamaCare's early costs; Democrat Chris Van Hollen hates the fact that there are no class warfare tax hikes. I'm not crazy about (unspecified) tax increases but we must "get real" about unfunded entitlement liabilities. The "Brave 38" are mounting a politically courageous battle: serious reforms are needed sooner not later: the CBO just reported in 25 years we will double the national debt unless things change. (Rep Dold (R-IL) won Sen Mark Kirk's old Congressional district (in which I lived a decade ago) and he's one of the Brave 38.)

Classical Liberalism: Dr. Ashford's Series #7 Conclusion

Good summary of the prior 6 lectures. Where do I stand? Let me start with an analogy of the Catholic Church. I see in the gospels how Christ preached simplicity, against hairsplitting. He taught marriage was forever, but the Church in the centuries that followed oversaw the development of casuistry and granted ludicrous annulments in order to retain the ideal of indissoluble marriage (e.g., the late Ted Kennedy). In a way, the Church lost sight of the spirit and intent of Christ's teachings.

In a likewise consideration, I see an America today as having lost the spirit and intent of the Founding Fathers. In the land of the free, we have morphed into a nation of busybodies consumed with controlling the behavior and property of other people. We have obsolete regulations on the books, "temporary" taxes still being collected, we pass thousands of pages of pushing-on-a-string, dubious value rules and regulations, not to mention unaccountable boards. We have a judicial system struggling to cope with out of control litigation, with the overpopulated, internationally disproportionate  rent-seeking, unproductive legal profession hiring away some of the best minds away from the real economy. We also have a disproportionately large jailed population, involving not just (rightly so) violations of life and property, but participation in the underground economy (e.g., victimless crimes). We have an increasingly assertive and unfettered (e.g., warrantless) government invading our privacy (including communications and modesty (the TSA)).

I know that the future of the country requires downsizing of the government. I remember earlier in my IT career seeing voluminous printouts hundreds of pages long being dumped off at various manager officers, knowing nobody ever read these things, maybe looking at a few aggregate lines. I remember my first MIS professor mocking people whom bought $3000 PC's to computerize their recipe collection when a 99-cent recipe box would do.

I do not underestimate the difficulty of necessary change given interest groups vested in the status quo; in the case of Scott Walker (above), we've seen pushback from union interests on long-overdue public sector reform. The first step is to starve the beast; conservatives have tried to do that by limiting taxes, but the current administration has had no problem with running up publicly-held debt. I'll outline a fuller response in future posts.



Musical Interlude: My Favorite Groups

The Kinks, "A Well-Respected Man"

And the 2010 Man of the Year Is....

Erskine Bowles and Alan Simpson

Our Winners: 

Erskine Bowles, Former Clinton Chief of Staff 

Alan Simpson, Former Senator (R-WY)

My third co-recipients (following John McCain in 2008 and Rick Santelli in 2009) get no stipend or trophy, just a few bytes in cyberspace and sincere acknowledgment and appreciation.

I usually try to tap into a bigger picture in my selections, which I think have been fairly unique. Take, for instance, the more obvious choice, Barack Obama in 2008. First, there had been a buzz building about his potential candidacy since his keynote address at the 2004 Democratic National Convention. I do think the way he was able to outmaneuver Hillary Clinton, the heavy favorite, by capturing most caucus votes (not awarded on a proportional basis) and holding his own in primary states, with proportional assignments, his ability to distinguish himself from the other senators because (as a state, not US senator) he had opposed the liberation of Iraq (a huge issue with the party base), and his innovative use of high technology and appeal to a coalition of new/younger voters was remarkable. But let's temper the enthusiasm: the only two successful Democratic Presidential nominees since 1964 had been centrist Southern governors (Carter and Clinton). None of the major Democratic candidates had any credible administrative experience, Obama's chief competitor was only barely into her second term as a US senator, and for all practical purposes, all the major candidates had the same progressive voting record. There was no true diversity of views in the field: you had candidates trying to assert which candidate was more ideologically pure on the same issues. (I think the centrist voters gravitated towards Hillary, ignoring her liberal voting record, because they considered her a proxy for her husband and his record in office.) Barack Obama beat, in my opinion, a very weak field for the nomination.

The election was not that remarkable; it was a change election year when the outgoing incumbent President had one of the lowest approval ratings on record; Obama had a campaign war chest multiple times larger than the cash-strapped McCain campaign; Obama had a limited track record and the advantage of youth; and the economic tsunami and ensuing economic uncertainty favored the safety-net Democrats. McCain found himself on shakier ground as the public shifted its attention from the improving picture in Iraq to the economy, where McCain admitted just a few years earlier he needed "to be educated". McCain made two devastating mistakes that led many independents and moderates to question his judgment: the selection of Sarah Palin as his running mate and the temporary suspension of his campaign over TARP legislation.

I'm not going to repeat my many criticisms of Sarah Palin here; some of my pre-selection posts discussed her as a potential candidate, but I had dismissed it because of the ongoing Troopergate investigation due to be released near the election. I thought it would have been unwise for McCain to risk an adverse finding. I'm personally convinced McCain loved the fact that he swerved the press and opposition with a choice nobody expected. But many people, including myself (although I deliberately low-keyed my criticisms of McCain during the campaign), thought he had undermined his experience argument against Obama with the selection of a first-term governor, not even halfway through her first term.

McCain abysmally handled the TARP situation from a tactical and strategic campaign standpoint. The Obama campaign had been trying to define a McCain Presidency as a Bush third term. The American public was largely against the bailout. Obama was backed into a corner: the Democratic-controlled Congress had to act. McCain could have used the situation to tap into public discontent and to distance himself from Bush. By unilaterally suspending his campaign without getting his ducks in a row, i.e., postponement of the first Presidential debate and an Obama agreement to do the same, McCain came across as rash or desperate, and Obama came across as more calm, cool, and collected, in effect turning the table on the basic advantages of an older candidate.

So then, why did I choose McCain as my man of the year? The interested reader can read the post, but let me point out McCain's 2007 campaign collapse and his subsequent cash-strapped campaign comeback from single-digit support status is one of the most remarkable stories in American political history. What made it even more stunning is the fact he had to fight off the attacks from media conservatives, whom loathed his initial Bush tax cut votes, his support for campaign reform, and (of course) immigration. But I also think that his election night concession speech is one of the most remarkable, elegant, honorable ones I've ever heard. If and when Obama is defeated for reelection, I will always believe that the beginning of the end was Obama's "elections-have-consequences" attitude, spurning McCain's open invitation for bipartisan cooperation, to use huge Congressional majorities to ram a minority progressive agenda down the nation's throat. When Obama chose to bypass McCain, one of the truly bipartisan leaders during his multiple terms in office, he all but killed bipartisan cooperation: Obama only seems to compromise when he doesn't have the numbers and he needs votes for his own key political self-interests (e.g., the middle-class tax cut extensions); the fact that he did not have a bipartisan mandate on health care, financial reform, or the stimulus didn't stop him at all, only conceding photo op opportunities, which really really aimed at manipulating the American people into believing single appearances of discussions on health care (where, in fact, he constantly interrupted Republican legislators, disagreeing with them) or to a House Republican retreat constituted his idea of post-partisan politics.

My choice last year, Rick Santelli, reflected the country's backlash against a spendthrift Congress and President, whom used their new clout not to focus on pro-economic growth policies, but to act on pent-up demands for progressive legislative priorities (including climate change and health care, which, if anything, increased economic uncertainty), all but ignoring the recession after a massive stimulus bill and associated morally hazardous or counterproductive legislation, e.g., mortgage assistance, auto company and state/local bailouts, cash for clunkers (what better way to help struggling lower/middle-class people looking for affordable vehicles than to withdraw the supply from the market, essentially driving up used auto prices?), etc. Instead of letting various markets find their bottom, all Barack Obama did was postpone the day of reckoning (e.g., the auto company bankruptcies); the Dems initially fought the auto bankruptcies tooth and nail, arguing nobody would ever buy a car from a company which had filed for bankruptcy; and then all of a sudden they decided spread-the-assets-around bankruptcies (that screwed over higher-standing bondholders in favor of Dem special-interest union interests) were in the country's best interests. It just wasn't that the progressives were enacting mostly ineffectual, counterproductive laws, but they were willing to spend whatever they could, running up the next generation's credit card while at the same time unfunded liabilities (social security and Medicare) were due to escalate as the baby boomer generation started to retire in 2007. Businesses and local or state governments have to cut back (after all, they have to balance their budgets), but Pelosi and company were in a state of denial: why, every dollar the federal government spends, after all, is a "stimulus". Hire someone to dig a hole and fill it up again? No problem--the worker's pay gooses the economy, no matter how intrinsically unproductive his task.

I have to admit this year's selection of Bowles and Simpson was not based on initial high expectations. As an academic and former business school professor, I'm skeptical of anything significant coming from task forces and commissions, and any business professional probably has probably rued the amount of time spent in meetings (like "that's one hour of my life I won't get back"). Second, like the GOP Congressional leadership, I was naturally suspicious of a commission to reduce the deficit; there are fundamentally two ways to close a budget gap: increase revenues or decrease spending--and the latter almost never happens, at least in Washington DC. With strident liberals like Jan Schakowsky and Dick Durbin (never mind strong conservatives like Paul Ryan), it seemed unlikely anything meaningful could come out of a commission that among other things had to wrestle with a 75% vote necessary to compel bringing it up to a vote in Congress.

Along the way, Alan Simpson, who always had a way with words, angered the liberal elite, making reference to 310 million tits on the federal government's social security cash cow. But the co-chair's plan, which I discussed at length in my Nov. 14 post, was a serious attempt at bipartisan compromise: instead of the typical class-warfare rhetoric from progressives like outgoing Speaker Pelosi, it seriously looked at the fact that the social security program never got the kind of revenues necessary to accommodate longer payment cycles (i.e., the actuarial "inconvenient truth" reflecting longer lifespans) with retaining the same retirement age. Progressives are in an unbelievable state of denial: do they honestly believe confiscating the transfer payments of 2% of retirees is going to resolve an increasingly insolvent entitlement program? Never mind the fact that higher income people are unlikely to break even on their/their employers' contributions... Some have even suggested that the 15-plus% of higher-earning worker payroll taxes should be considered an an "insurance policy", never mind the fact that the current social security system  is already a redistributionist system. But the Bowles-Simpson compromise takes on gimmicky annual adjustments (which typically have outpaced increases in the cost of living) and deferred eligibility.

Bowles and Simpson also did the politically courageous step of tax reform (simpler, fewer, lower income tax bands rooting out special-interest exceptions and even an American sacred cow of politics, the mortgage interest deduction), advocated deep cuts in both domestic and military programs, and set tough targets on the deficit and debt relative to GDP.

The majority of the committee accepted the compromise 11-7, not enough to make the 75% criterion necessary to bring the proposal to a vote. (Most of the adverse votes came from the House, including a couple of conservative Republicans worried that revising the tax-free exemption of health care may result in companies dumping their health care coverage under ObamaCare.)

What is amazing is that notoriously fickle senators, with one exception, accepted the general framework. This becomes particularly important in the upcoming mixed government with the GOP heading the House, and the Dems controlling the Senate and White House. Despite the deal on tax cut extensions, there is every indication that the Obama hyper-political mindset has not changed. He has insisted "triangulation"--Clinton's policy of trying to meld the partisan extremes during the last 6 years of the Clinton Administration--will not be his approach going forward. I suspect, like the Clinton-Gingrich budget confrontation, that the White House will attempt to maneuver the House into a politically unpopular position, figuring to draft off the Congress' low approval ratings.

Obama is in a state of denial; just like he couldn't understand people clinging to their guns and religion, just like he couldn't get his point across on health care, Obama is underestimating the unpopularity of his class-warfare politics. I think John Boehner is shrewd and will not overplay his hand. Everybody realizes that a $13.8T national debt is unsustainable. Like it or not, the Bowles-Simpson framework has provided a starting point with legitimate bipartisan credibility:

ERSKINE BOWLES: Yes. Well, Paul Ryan, who is head of the Budget Committee in the House, has already said 85 percent of what we recommend will be in his budget. And, as you know, the head of the Senate Budget Committee and the ranking member voted for it today. I think we have made enormous progress. I think the era of these deficit denials is over.

Miscellany: 11/14/10

Quote of the Day  
Expect to have hope rekindled. 
Expect your prayers to be answered in wondrous ways. 
The dry seasons in life do not last. 
The spring rains will come again.
Sarah Ban Breathnach

Bowles-Simpson Deficit Reduction Plan: 
A GOOD START: THUMBS UP!

I have to admit I shared Minority Leader Senator McConnell's skepticism of the Presidential commission--I want to hear more about spending cuts. But I have been an advocate of many of these ideas by the commission co-chair in prior posts:

• a simpler, broad-based tax structure for both individuals and businesses, including fewer/lower tax brackets, eliminating the AMT and many deductions and tax credits (including the popular home mortgage interest deduction)
• gradual increased retirement age increases and lowering the benefit rate increase to more of a COLA versus wage growth factor and Medicare/Medicaid cost savings
• reining in federal payroll compensation (a 3-year freeze) and a quarter million contractors (not so great news for me) and retirement costs, farm subsidies
• across-the-board spending cuts starting with $100B-plus cuts in both domestic and defense spending,  a 15% haircut for White House and Congressional overhead, and a long-overdue clampdown on travel
• aggressive targets on the deficit and debt relative to GDP
• higher certain excise taxes, e.g., gasoline tax

Simpson joked that Bowles and he would have to go into a witness protection program...

I've purposely waited to comment on this so I could see or hear the reactions to the co-chairs of the committee; many of the perspectives were highly predictable. Paul Krugman on ABC This Week sees this from a progressive standpoint, complaining that the brunt of savings essentially involves a transfer from the middle class to the upper class. Jan Schakowsky (D-IL, ACU lifetime rating 1.55%), a commission member, made it clear that the entitlement provisions are a non-starter with her. (This is an issue in the sense that the eventual committee proposal requires a vote of 14 out of 18 commission members to carry.)

On the media conservative side, anything remotely looking like a tax increase, including excise taxes like gasoline taxes or implicit tax increases, e.g., elimination of various deductions and credits, draws a knee-jerk reaction. I heard Sean Hannity slam discussion of the mortgage interest deduction, which he described in Draconian terms as effectively the death blow to real estate sector recovery. Let me make myself clear on the Hannity point: first of all, the very fact of mortgage interest deductions is a violation of free enterprise principles. (In fact, I was rather surprised to hear conservative populist Bill O'Reilly point out the facts I already knew that Canada not only doesn't do the same, but they actually have a higher percentage of home ownership.) The government shouldn't be subsidizing consumer purchases. Hannity seems to understand this in terms of last year's morally hazardous mortgage assistance legislation (which resulted in Rick Santelli's famous rant which sparked the Tea Party), and perhaps he understands that government stimuli are a signature policy option in Keynesian economics. Of course, I do understand that consumer spending constitutes two-thirds of the economy, and certainly taking away the stimulus will have some effect at the margins; however, keep in mind Bowles and Simpson are talking about shallower tax rates which offsets some of the drag of losing the deduction, and I would argue that government subsidies muddies the view for business managers as to true supply and demand, and that taking the punch bowl away from the housing market is just as important of cutting the GSE's (Fannie Mae and Freddie Mac) off the federal teat.

My quick take:

• Like Debra Saunders, I find the treatment of Medicare is confused; the whole idea of the "automatic cuts" to doctors and hospitals hasn't worked for several years, with the Congress inevitably passing "doc fixes". The argument is that "doc fixes" should not be paid with fresh debt (spot on), but instead of the usual pay-as-you-go (i.e., cuts elsewhere in the budget), the chairs vaguely suggests they need to cost-share with providers. We need to flesh that out some; I suspect they think that a doctor may have more incentive to limit costs if, say, they pare down unnecessary costs (e.g., generic drug prescriptions, unnecessary medical tests, etc.), so a flat cost per patient versus piecemeal approach. But will the government find providers willing to accept a flat cost (for ordinary patients), and will it sufficiently offset the revenues from automatic payment cuts? At minimum, I think we fundamentally need to get patients involved in cost containment by giving them a vested interest in cost containment, e.g., more of a legitimate insurance concept versus all-inclusive rates, minimizing unnecessary visits to doctors, etc. But I don't think that process reforms will compensate adequately for an aging population.
• I think progressives are intent in socializing social security and will not be honest brokers. We already have an inflation factor raising the wage ceiling for mandatory payroll taxes. Clearly the revenues raised are insufficient. Conservatives should hold firm: it's time to increase both age eligibility criteria and to phase them in. The fact that  the age limits are phased in but still get knee-jerk rejections from Pelosi and Schakowsky show they aren't committed to reform, and it's time to marginalize these demagogues. Lifting the ceiling essentially makes social security a de facto tax increase (over and beyond the soon-to-be-reinstituted (versus the typical progressive disingenuous spin of  "can't afford tax cuts for the risk"--we are talking about tax hikes after the last 7 years) Clinton tax hikes). We have to ask--where do we get the revenues on a shared sacrifice basis? I think a modest payroll increase may be necessary in exchange for  pushing out age eligibility.
• Overall, this does a good job of setting specific goals, it is the first real attempt at spending reform (the current earmark kerfuffle is a trivial percentage of the overall budget), but I think fundamentally we need a more balanced tax system, including a consumption tax.

Barack Obama: Clueless in India

Barack Obama, not satisfied with trying to give education loan giveaways, not to students choosing employment in the private sector but to the public sector (once again, counterproductively picking winners and losers), already overcompensated, not to mention essentially government service tenure, with better salary and benefits than most in the private sector, decided that too many Indians are choosing private sector jobs and gave the same lecture to Indian young people about pursuing a civil service career. In fact, for years, professional ambitions were to win a coveted spot in the Indian government bureaucracy for life. What Barack Obama is doing is little better than giving an alcoholic a bottle of whiskey.... START PREACHING FREE ENTERPRISE, MR. OBAMA.

Political Humor

A few originals:

• Sarah Palin is unhappy about the fact Alaska GOP Senate candidate Joe Miller dodged questions about her potential Presidential candidacy in 2012. There's a rumor going around that she showed up at her general election precinct with "Mercowsky" written on the palm of her hand.
• I'm not saying the Miller legal team is grasping at straws in the Alaska Senate write-in count, but there's a rumor that that they're challenging the votes cast by people whom brought and used their own #2 pencils to the voting booth instead of using the special indelible pencils supplied in the voting booths. 
• I'm not saying that the Miller team is grasping at straws in the Alaska Senate write-in count, but there's a rumor that they are challenging the write-in votes of southpaws like me with a "hook" writing style (which usually results in smudged writing and hands), writing with supplied pencils that aren't lefty-friendly.
• Dick Cheney and his hunting buddy seem to be in a better mood. They managed to hit nearly 70 ducks before Congress convenes tomorrow to serve out the remainder of their terms in office.

Musical Interlude: Instrumentals/One-Hit Wonders

BW Stevenson, "My Maria". How can a native Texan fail to mention BW Stevenson? My favorite yodel chorus song. [There was a remake of this song by some country duo years later.] I remember liking another track he released later while I was at UT ("Down to the Station" [not inspirational: a guy fed up with his relationship]), but I haven't located a relevant clip.

Miscellany: 9/02/10

Quote of the Day
It is only by following your deepest instinct 
that you can lead a rich life, 
and if you let your fear of consequence prevent you 
from following your deepest instinct, 
then your life will be safe, expedient and thin.
Katharine Butler Hathaway


More Reflections on Obama's Iraq Address

As I have said, there were patriots who supported this war, and patriots who opposed it.

This moral equivalence of philosophically opposed points of view is disingenuous and incredibly self-serving, given Obama's basis as the only major Democratic candidate for President whom opposed the war from the get-go. Let me make myself clear: I believe that some of the criticisms of President Bush were legitimate: he really didn't seem to be aware of (or if he was, he didn't particularly care) a strong international opposition to the liberation of Iraq. Certainly, the anti-war zealots were entitled to their point of view and I think they did believe they were acting in the best interests of the US. But a key element of the definition of a patriot is a person whom strongly defends his or her country. There is a qualitative difference between a young person putting his life and health at risk in supporting the nation's mission in Iraq and someone opposing the war on primarily ideological grounds and openly hostile to American policy (e.g., the Dixie Chicks). There were other ways of making his point in a less controversial way, e.g., people on both sides of the issue whom spoke out as a matter of conscience.

And no challenge is more essential to our security than our fight against Al Qaeda.

Let me get this straight: a small group of radicals with limited resources, disorganized, and on the run is more than a challenge than, say, China which has the second largest economy, a growing military, and nuclear weapons? I don't believe that it is prudent  to assign undue importance to Al Qaeda. There are a number of other (non-Islamic) terrorist groups as well.

Now, it is time to turn the page.

Well, yes and no. The uncivil practice of shouting past each other needs to stop. I do think there's the need for a sober post-audit: what did we do right, what we did wrong, and how can we learn from our experience in Iraq. I think we need better national intelligence,  to avoid the practice of nation building, and  to be more assertive in our relationship with the military chiefs, with a shorter leash.

Alan Simpson Just Can't Help Himself

The former Republican senator and a co-chair of the debt commission is now in trouble with liberal vet groups for daring to suggest that everyone will need to make sacrifices in closing the national debt--including sacred cows, like vet and older American groups. So yet another case in terms of progressives attempting to intimidate a conservative voice for daring to challenge a sacred cow in American politics. However provocative Alan Simpson's views are, a far worse situation is progressive groups attempting to intimidate the former senator into silence.

Political Humor

"I guess they had a pretty cordial conversation. President Bush said for the last 19 months, he's been relaxing and playing golf. President Obama said, 'You too?'" –Jay Leno

[My turn, Jay: During their recent phone call, President Bush said he had heard that President Obama was a fellow golfer and asked Obama what his handicap is. Obama said, "Joe Biden..."]

David Letterman's "Top Ten Things Never Before Said In An Oval Office Address"
10. "Gotta keep this short because I'm going on another vacation"
7. "Tonight's Oval Office address has been brought to you by Jimmy Dean Pure Pork Sausages"
2. "Just back from a pleasure trip — took my mother-in-law to the airport. Hiyo!"
1. "Just like most of America, I'd rather be watching 'Glee'"

[My turn, Dave:
10. "I need another vacation. Do you know how hard it is to find the place to sign in a 2000-page bill?"
9. "Do I have enough time to finish my cheeseburger before we go on? Next time keep Bill Clinton away from my fries!"
8. "Can you hear me now?"
7. "Congressional pork: now being served in all 435 districts. We progressives know it's good for you!"
6. "Welcome to the USA telethon. We need to raise money to make this month's payment to China or we'll be charged a late fee and it will go on our credit report."
5. "If you can hear me, raise your hand. There you have it, Madam Speaker: 218 votes..."
4. "There was a priest, a rabbi, and an iman...."
3. "And now, without further ado, let me bring out my first guest from the Fox News Channel: Glenn Beck!"
2. "You think that 10-year-old opera singer Jackie Evancho is something? Wait until you hear my hip hop versions of Puccini!"
1. "I was wrong, I didn't know better, I'm sorry, and I take full responsibility for my mistakes."]

Musical Interlude: The American Songbook Series

Alice Faye*, "You'll Never Know"



(* My collection featured a different artist)