Moderates on the Warpath: A Case Study

Is anything more emblematic of the utter vacuousness of moderate Republicans than the deal struck with the Democrat majority by the three "centrists" in the Senate?   With high dudgeon, Collins, Snowe and Specter announce they smacked the majority party around and got $100 billion trimmed from a nearly $1 trillion stimulus plan.  However, word has it that this hard-won victory of Republican moderates will be short-lived as the Senate-House conference committee eliminates these cuts in the reconciliation of the Senate and House bills.    But don't worry.  Steely-eyed, Senator Collins made it plain that if these cuts are re-instated, that she ... will not vote for the reconciliation package.   Democrats in both chambers thereupon began trembling in fear.  Or perhaps from barely controlled laughter; it's rather hard to tell from this distance.   via email

The Jobbed Bill 2009

Congressional Republicans recently published the following about how our current 7%+ (and rising) unemployment is distributed through the various sectors of the economy (thanks to Mark Hemingway of The Corner)::   Agriculture and related private wage and salary workers - 18.7% Construction - 18.2%     Leisure and hospitality - 11.5%   Manufacturing - 10.9%     Professional and business services - 10.4%     Nonagricultural private wage and salary workers (total) - 9.0%     Wholesale and retail trade - 8.7%     Transportation and utilities - 8.4%   Information - 7.4%     Mining, quarrying, and oil and gas extraction - 7.0%   Self employed and unpaid family workers - 6.5%          Financial activities - 6.0%   Education and health services - 3.8%     Government workers - 3.0% So, given this, the vast bulk of employment relief in the Stimulus Bill goes to .... expanding government programs/jobs, where the rate of unemployment is as near zero as you can get?  "Of course," responds the Washington political class with a look of incredulity that we are even asking the question.   Here's wishing good luck to our friends working in the Agricultural and Construction sectors, who will continue to experience Great Depression levels of unemployment for years to come while Washington loudly celebrates its towering work in service of the people (using our money of course).   This is not a jobs bill, but a "we're being jobbed" bill.     via email

Bloviated Spending

Representative Barney Frank graced us with this response to a Republican on NBC's Meet The Press recently: "On the bloated spending, this comes from a man whose party controlled the federal government - House, Senate and White House - for six years. The spending that we have now was set by six years of Republican spending."

Well yes, like an acorn sets the growth of the oak tree. However, although connected at some base genetic level, both the kind and quantity of growth between the two are wildly disparate.

Through 2007, Bush's deficits never exceeded $415 billion in any given year, and averaged less than $280 billion (USA Today). Such profligacy is not admirable. But remember, the Democrats controlled the Congress (and the budget) for the full fiscal year of 2008, and through 2012 it has been projected that the highest single year deficit will be more than $1.1 trillion (a 287% increase), and budget shortfalls will average more than $621 billion (a 222% increase) (Congressional Budget Office).

These estimates of course are already being revised upwards, as Obama and the Democrats seem incapable of addressing any old or new problem in fiscal units of less than $1 trillion. I don't think Bush's deficits are a place Representative Frank wants to go. With such a clear demarcation between Republican and Democrat control of the machinery of government, highlighting past deficits only serves to show that in the spending game, Republicans are fiscal pikers compared to the shamelessly audacious spending of Democrats.

Talking Points and the Major Media

This Post continued from here and here.

Well, well, well, well. In some previous posts I stated that " ... the level of congruence b/t the editorial decisions of the Media and the Dems political strategies since 2000 can only be described as active coordination." I then went on to note that "I don't know exactly how the Dems and the Media communicate and coordinate their actions but I submit that if evidence is found about this relationship that it will be a scandal of major proportion. The Major Media are entitled to support any candidate they want, but to use their media power surreptitiously for a candidate while pretending to be a standard news outlet is at a minimum a violation of campaign contribution laws, and at the maximum a betrayal of a fundamental public trust." Apparently, we are now getting some information on how this Democrat Media coordination is done. At the end of January Politico published a story that ABC's George Stephanopoulos has had morning strategy chats with various Democrats for more than 10 years, including the President's current Chief of Staff, Rahm Emanuel. WorldNetDaily has a nice summary of the article and the controversy it has generated. Exhibiting the ability to compose under pressure a talking point coming to a media outlet near you, an ABC spokesman told WorldNetDaily that " ... George speaks to Rahm, but he speaks to plenty of conservatives and Republicans every single day – that's part of his job. The idea that there is some daily conference call that he hops on is just nonsense and not true." But talking points alone just won't do. As I said in my previous posts, it has been clear that active coordination has been going on between the Democrats and the Major Media for at least eight years and probably longer. The only question is how they do it, and the Politico has given us the evidence " ... of at least one major tributary of Washington politics." But only one such tributary. Georgie is only the tip of the iceberg. Where and how are the political consultants posing as reporters at CBS, NBC and MSNBC meeting and coordinating with their clients? And what about the print media; how deeply are they involved in all of this? The net of this scandal could get very large indeed. My previous thoughts were that such active coordination by the Media with a political party could possibly be serious breaches of federal campaign laws (haven't some people gone to jail for such things?). Brent Bozell of the Media Research Center thinks the issue is one of journalistic ethics. I can go either way; I just want the degenerating distortion of the American political culture by partisans masquerading as objective news reporters to stop. via email

News Flash! Graham Shocked by Obama's Behavior

Lindsey Graham, the estimable Senator from South Carolina, apparently has just experienced a Carteresque moment. As Jimmy Carter was surprised by the Soviet Union invasion of Afghanistan, so to was Lindsey shocked, shocked! that Obama would play mere politics with the Stimulus Bill. In his own words: "I was shocked. Because listen, we are opposing this bill for two reasons: It's too large in terms of what it needs to be, and it's unfocused. We agree that you need to do more than cut taxes. He's making arguments from the campaign that are not relevant to the debate. The McCain Amendment, which got every Republican vote, spent money as well as cut taxes. He's trying to convince the American people that they are wrong about this bill. He's trying to lay blame on the Republican party and convince people they're wrong about the bill...(emphasis mine)." This guy, along with McCain, has been shmoozing with Obama and the Democrats ever since McCain lost, trumpeting bi-partisanship wherever he might ingratiate himself with the national press. Did he not see how his collegial friends in the Senate savaged John McCain during the campaign, including demanding that he get out of town before (what was touted as) one of the most important votes in the history of the Senate (i.e. the first Bail Out Bill)? Did he not see how Nancy Pelosi harangued Republicans in the House for partisan electoral advantage just before a crucial House vote on this supposedly most important legislation to come up in our lifetime (i.e. the first Bail Out Bill)? At every turn, upon every crisis of the last six months, Democrats have uniformly taken advantage of the public's earnest attention to spin the moment as another Republican failure. But for Senator Graham, this was all "just politics" and no reason to worry about the mutual respect and friendship with his Senate colleagues. It all rolled off his back like water on an armadillo, an apt metaphor considering the social IQ points Senator Graham seems to lack. Senator Graham, these people are not your friends. They are political opponents who have an agenda, and care nothing about you personally. Senate courtesy is a good thing in itself, but Republicans are the only ones who understand this. To Democrats, Senatorial deference is just another way of manipulating their enemies for advantage. via email

Cheap Stimulus

President Obama tells us recently that "stimulus" = "spending," and that therefore any money spent by the government regardless of purpose will be a stimulus to the economy. For an alternative view, see "Rat Hole Stimulus Bill 2009" below. But assuming arguendo that the President is right, might it not be prudent to at least think about stimulus spending that, you know, doesn't cost so much? Let me give a few examples.

Mark to Market. This economic fiasco is, by all accounts, driven primarily by the collapse of the real estate and financial sectors of the economy. So why not a stimulus that not only would directly shore up the balance sheets of banks, but also encourage lending and ... will not cost a dime in federal money? I think it was Bill McGurn who wrote an excellent Wall Street Journal article last October or so, who said in effect that we don't know that suspending the mark to market accounting rules would help banks, but since we are contemplating spending $750 billion, why not just give it a try first? After all, suspending an accounting rule is cost-free; billion dollar bail-outs are expensive.

But that type of reasoning is too subtle for the political class. As an accounting disabled person, I don't know much. But I do know that whereas liquid markets are an excellent indicator of the current value of an investment, they are not the be-all of valuation. Markets can be wrong, and sometimes, it is the sellers who refuse to sell at low prices who are correct. If my house price goes down $100,000.00 (which would bring my palatial home down to approximately -$50,000.00), I can decide that the market is stupid and hold onto my investment until the market corrects itself. This kind of contrarian thinking happens all the time. The oldest rule in investing is "buy low, sell high." How is that possible if the market is always right?

But banks have a particular problem with market pricing of their assets. By law, banks have to maintain a minimum amount of capital. When they (perhaps stupidly) buy huge amounts of sub-prime mortgages and the market in those suddenly turns nasty, then mark to market rules require them to immediately recognize billions of dollars in lost capital. But those assets are not lost in reality (the banks still own the paper), but only because of an accounting rule, a theoretical construct. No one really knows what these assets are worth, and so why can't a bank decide they are worth more than the market thinks, and hold onto them until the market corrects itself?

Sure, savvy investors will have their own ideas as to what these assets are worth, and if they see Bank of America has valued them well above what they deem reasonable, they will pull up their handy calculator and conclude that BOFA is insolvent. And then sell short. BOFA's stock price will plummet (as it's doing now), but BOFA will not face an immediate capital crisis, and will thereby have time to work-out the problem and find out if the short-sellers are correct. This is how markets function, and mark to market short circuits this process to the detriment of banks, lending and our economy.

But again, suspending mark to market wouldn't cost a dime of taxpayer money. Why not get rid of an abstract accounting rule and see what happens?

To Be Continued ....

via email

Tax Cuts - The Magic is Gone

The Republican tax cut mantra has been a political boon for more than 25 years. However, it has run it's course, but only because the Republicans have used it as a talking point rather than as a specific case which exemplifies a greater truth. As such, tax cuts are now a stale, tepid, policy program designed to buy votes.

This was most apparent when our Prez hi-jacked the Republican tax cut issue in the Election run-up. Noted by many commentators as proof that this conservative issue was still potent among the voters, it actually proved the opposite. Obama's proposed tax cut was designed to be a welfare like give-away without the onus attached to entitlements. As such, it performed the same function as any other entitlement program, to shoot money directly to various voting blocks.

However, this deconstruction of the political phrase "tax cuts" was made possible by Republican misuse of the term for more than two decades. The original conception of tax cuts by Reagan (and Kemp) was grounded on at least three fundamental ideas: (1) taxes were a gross appropriation of the people's property (income), and should not be higher than necessary; (2) people were much better equipped to decide what to do with their money than Government, and (3) tax cuts were an effective fiscal policy that would benefit the economy as a whole.

These premises lead the conservatives of the 80's to adopt a policy of broad-based tax cuts, reduction of "progressivity" and simplification of the tax code. At the time, I remember being amused that the Democrats only response was the oft-repeated mantra that Republicans wanted "tax cuts for the rich." This was as lame a response to a huge reduction in all tax brackets as there could be, and I felt that this showed the bankruptcy of ideas in the liberal community.

Increasingly thereafter, however, Republicans let the Democrats back in the game. More and more, Republicans began playing the liberal game of buying constituencies, by larding up the tax code with Christmas tree ornaments of child care tax credits, education tax credits, larger personal exemptions, various home ownership goodies, and the like. No longer did they have an over-arching view of what and how taxation should be structured. As a result, more and more Americans at the low-end of the income scale were paying less and less and those at the upper-end of the income scale were paying more and more. Today, something like 35% of the electorate pay no taxes at all. Thus, largely under Republican leadership, the tax code has returned to it's demonic roots as a redistributional program aimed at various constituences. And more fundamentally, the tax code more and more increased the marginal cost of moving from poor to rich in direct contradiction to conservatives supply side tenets.

The macro-economic effects of this became obvious, and so the Republicans turned to targeted tax cuts for business and investment to counter the negative incentives of the tax code: accelerated depreciation, investment tax credits, capital gains tax reduction, etc. Policy wise, most of these are good for business and investment and therefore good for the economy - and the people - as whole. But politically, they are precisely what the Democrats have been complaining about: they are tax cuts for the rich. They are Christmas tree ornaments for the supposed constituency of the Republicans. Although not a huge John McCain fan, this was precisely what he was saying in the early 2000's about the Bush business tax cuts, and in this, he was correct.

So, tax cuts are not an expression of a larger idea of American freedom, but simply one more way government pays off constituencies. Obama promises tax cuts to the masses, Republicans promise tax cuts to the wealthy. Liberals will win this arguement every time, and that is why I say the Republican tax cut mantra has run it's course. Everytime I hear a conservative today extol the political effectiveness of a program of "middle class" tax cuts, I cough up my coffee. Democrats can do that too, and their Christmas tree ornaments are always more beautiful than ours. So long as conservatives focus simply on the benefits to different classes of people of tax cuts, they are playing the Democrats game, and will always lose.

Conservatives need to return to tax simplification and general across the board tax cuts. The flat tax is such a program, which probably will never be politically palatable in its ideal form. But we can get somewhere close to it, and it will blunt the Democrats charge that we are the party of the rich as welll as benefit the economy - and the people - as a whole.

via email

revised 2/6/09 for grammar and clarity

Rat Hole Stimulus Bill 2009

Under heavy criticism for proposing an emergency spending bill of almost $1 trillion to jump-start the US economy that will not be fully spent until 2011 and beyond, Congress today passed a bill that, no later than February 15, 2009, would deposit $819 billion in cold, hard cash into a rat hole - literally. Said Treasury secretary Martha Bundtz: "Considering the sheer quantity of dollar bills we will be distributing, it will probably take more than one rat hole to do the job. We are therefore requesting that the various states immediately forward the location of all rat holes within their respective jurisdictions, together with pictures, so we can begin coordinating this massive effort to save each and every American citizen from this terrible economic catastrophe." Martha Bundtz is the secretary to Steven Holmhemet, a 30-year career civil servant in the nickel counting division of the US Government.

Senate and House Majority leaders, Harry Reid and Nancy Pelosi, further announced what has been described as a "brilliant" scheme to fund the full stimulus package with the net proceeds from special zero-coupon Treasury Bonds that would not have to be paid back by any Americans alive today. That is because the Bonds would mature in 2099 well after everyone has died. Newly confirmed Treasury Secretary Timothy Geithner has already begun negotiating with foreign governments to purchase these Bonds. Senator Reid said he did not anticipate any problems in this regard, because "the Treasury Secretary demonstrated his truly remarkable sales abilities in his recent Senate confirmation hearings."

As soon as he completes this project, Senator Reid revealed that Secretary Geithner would apply his amazing selling techniques to the problem of our balance-of-trade deficit in the Middle East. The Secretary will aggressively market to the Arabs huge quantities of American sand. "And, as an added bonus" Senator Reid said, "any state providing sand to this enormously important endeavor would be rewarded with a 5% royalty on the proceeds." He went on to note that Nevada would get a 10% royalty because "we really like our sand; our sand has a special place in Nevada's heart, and we can't just give it away for nothing."

Asked about the possibility that the rats would simply save the money they receive rather than spend it, Speaker Pelosi remarked, "Whatever you may think of Congress in general, we are certainly able to out-smart a few rats. That is why we have explicit language in the Bill requiring all recipients of these funds to spend 100% of it on consumer goods."

She continued: "Additionally, oversight will be conducted by experienced rat hole inspectors who will be looking for such common practices as using the money to plug leaks in the rat tunnels or building nests for newborn rats. This is the human equivalent of stuffing this money into a mattress, and we will not stand for it."

Speaker Pelosi and Senator Reid then left the podium after referring further questions to one Dr. Jean Carlotti, who, they said, received her Masters in Cosmetics from Harvard, and has lectured extensively on the economy for more than 20 years in such high-profile TV forums as Bill Maher, Oprah, Martha Stewart and Comedy Central.

In response to some skepticism from a Fox News correspondent, Dr. Carlotti said, "We are all well aware that no matter how much the Bill requires the rats to spend this money that a significant number will no doubt try to evade their obligations. But, this is the normal functioning of the market; in any area of the economy there is always a high-percentage of buffoons and idiots doing things that they shouldn't, and that is why a large strong government is needed to regulate things.

"In this case, however, my calculations are that a solid 7% of the rats will in fact purchase cheese and other consumer goods. That will amount to more than $57 billion immediately going into the domestic economy, which will act as a powerful fuse to ignite the huge bomb of an economic recovery that is our destiny as Americans. Micro-economically speaking, a sudden increase in cheese-sales will enable Wisconsin almost certainly to achieve Utopia by the second quarter of 2010, followed by contiguous states in rapid succession each quarter thereafter until Wisconsin's remarkable achievement is duplicated domino-style throughout these United States.

"At this point, the influential Wisconsin Progressives of the early 20th Century will turn over in their graves en masse, smiling in approval of all that has transpired."As the stunned Fox News reporter struggled to come up with a follow up question, Dr. Carlotti breathlessly exited the stage, flinging her cape over her shoulder.

via email.

An Email to K-Lo of NRO/Corner

An acquaintance copied me on this email he sent to K-Lo of National Review Online. Although politics is not my thing, I thought it was quite good. Posted herewith in its entirety:

Subject: I Just Don't Get This Email

Kathryn (if I may call you that), the angst in that email is very understandable. Sarah Palin hit a home run tonight, and not because I am grading her on the curve, but because I have watched every debate since 1976, and I can't remember one in which I wasn't nervous until it ended. Ronald Reagan included, if not more so, because he was obviously the last and best hope we conservatives had. I thought McCain did well against Obama, and thought he won, because by the 75th minute I was able to relax. His performance was that good. But with Sarah Palin, I went into it nervous as a cat, and after 3 answers, I was able to not only calm down, but became eager to hear her answers to questions.

Yes, there were moments in the first half hour when I screamed at the TV: "He's done it. Biden has served up a nice hanging curve ball over the plate; hit it, Sarah." And she didn't. But after it was all over, I realized that she did what so many people are unable to do: she did not get caught up in the debate per se; she picked the things she would respond to; and the things she picked went to her strengths.

I had a friend in college who was a great high school athlete, and who attempted to walk on to an SEC football team as a linebacker. He was gifted; but he ultimately failed. Another friend was an assistant backfield coach for the team, and I asked him why Bill had not made the team. He said "He chicken fights." I asked him what that meant, and he said that Bill would hit the line and begin fighting with some opposing player, and then completely forget that ... he was supposed to be following the football. The ball would go right around him, and he would still fight away with whoever. He had heart, but no common sense. Sarah Palin did not chicken fight tonight over every point; she kept her eye on the ball and ran to where she needed to be.

Sarah Palin did not "win" the debate in any sense that Bill Buckley won debates at Yale. But Vice-Presidential debates are not scored that way. They are scored by who has the facility to overcome the over-arching tension of the moment and get the message across. Sarah Palin did that tonight, and she did it better than anyone I have ever seen in politics.

The emails you are getting are from people who probably don't consciously understand anything I have just said, but they viscerally understand. And for some odd reason, the Corner has not evidenced in the last few weeks any visceral understanding of Sarah Palin or why she appeals to us on-the-ground conservatives.

But don't worry, I (we) still love you all and the work you do.

(Name Withheld)

Posted by: Whit via email.

The Blame Game

With respect to the Republican House behavior, I don't know what's happened to the Corner and other conservative commentary we layman rely on. The Speaker's comments just before a critical, nervous, tight vote was not only "extremely unwise and irresponsible" but incredibly stupid and incompetent in its blatant partisanship. Especially since Ms. Pelosi needed Republican votes so she could shield her own committee heads from having to vote Yes to the legislation. To her, this important legislation was nothing more than a handy way to diss the Republicans and win more seats and the Presidency this November.

In politics, as in business and every other walk of life, the personal is important, and the Democrats have routinely savaged the Republicans for partisan gain ever since Paulsen proposed the bailout. And, as John McCain attempted to help (at the request of both Democrats and Paulson), they upped their rhetoric to stratispheric levels, even to the point of telling the sitting Senator from Arizona to get out of town! Has this ever happened before? Has any Senator ever been told to get out of town by the political leadership of the opposing party just prior to one of the most important votes facing the Republic in my lifetime?

Statesmanship is important, and Republicans have always had to carry this burden due to the Democrat's congenital lack of moral fiber. But the fact is, neither conservatives nor anyone else knows whether or not this legislation would even work. Under these circumstances the argument for statesmanship is decidedly weak. When Social Security went negative in the 80's, Ronald Reagan dumped his economic and political principals and signed off on a huge increase in Social Security taxes. That's statesmanship, but statesmanship in the service of something that, whatever its problems and ramifications, would at least fix for a time the central problem facing the Government and the American people. This Bill bore no such certainty of fixing anything - it was simply audaciously hopeful.

The Democrats have spent a week now trying to gain political advantage from this crisis, and the Republicans have spent a week trying to be statesmanlike and solve the problem. Nancy Pelosi's speech was just the latest salvo in the Democrats electoral partisanship and made it plain that Republicans are expected to take a knife in the gut in the supposed patriotic protection of their country, while Democrats reap great electoral rewards.

They have the majority; this is critical legislation; the Republican President is ready to sign what they put before him. It's time for the Democrats to show statesmanship, and if they don't, it's time for National Review and other conservatives to stick the blame where it belongs: with the Democrats. This outrage against Republicans has got to stop.

via email