Tuesday, January 26, 2010

The Republicans' Dilemma

The Republicans are rising in the polls. A Republican won a Senate seat in Massachusetts that had been in Democratic hands for a century. Things are looking up for the Republicans. The only thing is, they didn't have anything to do with this rise.

The Republicans lost favor four years ago because of several factors. A big one was President George W. Bush. By his sixth year, Bush was a drag on the ticket. The war in Iraq also hurt them. The public was sick of it. They were spending like Democrats (you know that the Republican Party has lost its way when Nancy Pelosi can run as a fiscal conservative with a straight face). What hurt them the most, though, was corruption and scandal. Multiple scandals gave the impression that the whole party was corrupt.

This not only influenced independents, it also dispirited the Republican base and drive a wedge between Republicans and their natural allies, the Libertarians. Many high-profile Libertarians voted for Obama as a protest vote against McCain's record as a big government Republican. This is nothing new. Bush was far more centrist than he is given credit for and the conservative purists never forgave him for it. Similarly, Gore lost a lot of votes because of Clinton's centrism.

The Republicans have not redeemed themselves in the last four years. Rather, the Democrats have torn themselves down.

A year ago the Democrats announced their "wave" strategy. They would bring their entire agenda to a vote as quickly as possible starting with small pieces. As the legislation passed and the public saw progress, the Democrats' agenda would gain popularity forcing Republicans to either start voting with the Democrats or put themselves on record as being against popular reforms.

Obviously the wave didn't work. The Democrats thought that their success in 2006 and 2008 meant that the country had moved to the left. They were wrong. Much of the country was against their agenda. The rest was amazed at the Democrats' tone-deafness. Unemployment and the economy were the top two priorities for nearly everyone not in the Democratic Caucus. The more the Democrats focused on their agenda the more out-of-touch they seemed.

On top of that, the Democrats' execution of their wave strategy was flawed. The idea was to build on successes but they ended up tripping over themselves in the news cycles. They would pass something and move on. By the time Obama signed it into law, they had begun something new. Newcasts prefer the drama of open debate over Presidential signing ceremonies. It was easy for the successes to get lost in the noise. And none of the successes were pure. Credit card reform should have been popular but the Democrats gave the banks major concessions including six months to implement the new rules. The result is that most people saw their credit card rates go up because of Congress. The Stimulus was supposed to be "pork free" but simply hid it better than most bills. Nearly a year later, most people think that it was a failure.

While the Democrats were tearing themselves down, the Republicans stayed on the sidelines, voting against Obama. This is a tactic, not a strategy.

Come November, the Republicans are going to have to stand for something more than a "no" vote. Right now the Tea Party movement is the most vocal in the country and they have not forgiven the Republicans for their spending excesses durng the Bush years. The Republicans are going to have to come to terms with the Tea Party if they want to win. They are also going to have to exercise some discipline if they want to stay in power once they regain it. 

Monday, January 25, 2010

Democrats' Dilemma

A year ago, in the wake of the inauguration of Barack Obama, Democrats told themselves that they were the wave of the future - that the Republicans were doomed to be an increasingly regional party representing a single, shrinking ethnic group (white men). When the Tea Party protests started, they told themselves that this was nothing but racist whites protesting a black president. The first couple of special elections went the Democrats' way, bolstering their opinions. When polls showed that their popularity in general and their agenda in specific were unpopular they ignored it.

In the November elections the Democrats lost two governorships but gained a house seat in an unusual special election. Democrats pointed out that those states usually elected a governor from the party not in the White House and insisted that the special election was more important.

With last week's special election for Ted Kennedy's seat, Democrats finally have to face reality. They and their policies are deeply unpopular. The question is if they can rebuild the party's image in nine months?

There are significant obstacles. In 2006 they ran promising to end the war, balance the budget, and, possibly, impeach Bush. None of that happened. Bush was too powerful, they said. They had to have their own man in the White House in order to effect change.

In 2008 they ran on a platform of ending the war, balancing the budget, universal health care, and general change. They won the White House and the biggest majorities in both houses seen in generations. This time they can no longer run on promises. They have to run on results and things don't look good for them.

Last week, President Obama said that the same voter discontent that swept him into office also swept Brown into the Senate. On the face of it, this is a strange remark but I think that he has a point. Fiscal conservatives were unhappy during most of Bush's administration. He took a surplus and turned it into a deficit. Granted, he had an economic downturn and a couple of wars that were not included in the projections he inherited from Clinton, but spending under Bush went way up. This was a source of irritation rather than a cause until 2008 but the Democrats included it in their campaigns, anyway. It worked. Many Libertarians voted for Obama, figuring that he would spend less than McCain.

Things changed in the Fall of 2008. Between bailouts and the TARP, voters were suddenly shocked by the sums being thrown around. Obama continued and expanded this. The Democrats held off passing the 2009 budget until Obama was in office because it was so bloated that Bush would never have signed it but Obama never batted an eye. Leading economic authorities including some on Obama's team had previously said that government stimulus spending had never worked because it was never spent in the right place at the right time. Obama and the Democrats ignored history and passed a huge stimulus.

Then their is the health care bill which is in limbo right now. Obama called it a significant deficit reduction tool but anyone who has been paying attention knows that it employs budgeting tricks and future, unnamed cuts. In reality, it will increase the deficit.

So, right now, the most motivated group of voters is the Tea Party. These are people who are outraged by the growth of government and debt. By themselves, this group would be more of an annoyance than a threat. That's where the Democrats' record hurts them. They made a lot of promises in the last few years and delivered on very few. Even if health care passes, it is so far from what the Democrats' base expected that most are calling it useless. Obama's other major initiative, green energy, seems doomed to the same fate. Plus the war in Iraq is winding down on Bush's terms and the war in Afghanistan has escalated. None of this is going to energize the Progressive left to turn out and vote.

Finally, there is the great mass of voters who are not committed to specific ideals. Their biggest priority is unemployment and has been all year. Obama ignored this. All these people have heard from Washington since July has been the push for health care reform (and it's been confusing and ugly). Even when the House passed a massive jobs bill, the news was overshadowed by the Senate health care debate and hardly anyone knows about it.

Obama is trying to recalibrate himself against bankers and big business and for the middle class. His record is going to hurt him here. His first year was typified by bailouts and deals.

To further complicate things, anything that Obama does to mollify the Tea Party will outrage the Progressives and vice versa. Tax credits for child care are all well and good, if they actually pass, but they will not bring the unemployment rate down.

Obama is talking about a commission to find ways to balance the budget but it will not meet until after the election. It may end up being more smoke and mirrors when Obama needs some popular successes.

Thursday, January 21, 2010

The Case of the non-Disappearing Glaciers

The IPCC's 2007 report said that the Himalayan glaciers would completely melt by 2035. It even gave this a high degree of confidence (90%). Recently, they had to backtrack on this claim. What happened should cast doubt on the IPCC as a whole.

The Himalaya claim originally came from an article in New Scientist which is not peer reviewed. It quoted an Indian scientist named Jawaharlal Nehru who had mentioned that the glaciers would melt in 30 years in a phone interview. It turns out that Nehru had not done any actual studies to back this claim. He was exaggerating to make a point. What is more, he was only talking about a small part of the Himalayan glaciers.

It's bad enough that this claim made its way into an IPCC report but the route that it took is the real scandal. The author of the offending chapter took his figures from a campaign report put out by the World Wildlife Fund. It turns out that the person writing the chapter did not have any expertise on glaciers and, rather than research peer-reviewed literature, he turned to a summary produced by an advocacy group. The WWF obviously cherry-picked their data since they were relying on publications that were not peer-reviewed.

Despite the sloppy science behind the claim, the IPCC still gave it a 90% confidence rating. When the utter impossibility of the claim was brought up, Rajendra Pachauri, the head of the IPCC dismissed the challenges as "voodoo science".

For years we have been told that the IPCC was made up of disinterested scientists who were the best experts on climate. If anyone dared express skepticism, he was branded a Climate Change Denier. This recent article dismisses TV skeptical meteorologists as deniers who get their information from right-wing talk shows instead of from real scientists.

This whole episode shows that the IPCC reports are written by people who are no better informed and who quote left-wing sources. Granted this is one small example but there is no guarantee that the rest of the IPCC report represents any better science. Former members of the IPCC have complained for years that the reports are written by ideologues who reject valid challenges to their interpretation of the data.

UPDATE: It gets worse. The scientist in question knew that he was including unverified data but stuck it in anyway in order to apply political pressure.
The scientist behind the bogus claim in a Nobel Prize-winning UN report that Himalayan glaciers will have melted by 2035 last night admitted it was included purely to put political pressure on world leaders.
Dr Murari Lal also said he was well aware the statement, in the 2007 report by the Intergovernmental Panel on Climate Change (IPCC), did not rest on peer-reviewed scientific research.

What's the Matter With Massachusetts?

After the 2004 election a book was published called What's the Matter With Kansas? It was later turned into a movie. It's premise is that the Democrats actually represent the best interests of the people of Kansas but the Republicans kept exploiting wedge issues that didn't actually matter to most people to win elections. This was very comforting to Democrats since its message was that there was nothing wrong with their basic values. They just needed to package them better. Barack Obama was a big believer in this book.

Now the same sort of reasoning is being applied to Massachusetts. The vote wasn't really a rejection of health care so Democrats don't need to adjust their plans. An example of this reasoning is How Romneycare killed Obamacare by Timothy Noah in Slate.

First, a little background - Massachusetts already has a form of universal health care. It served as a model for the legislation being considered nationally. So, the fact that the people of Massachusetts have personal experience with the system and elected someone who promised to stop it on a national level should be proof that it is a bad idea, right? Not to Noah.

Noah quotes some exit polls which show that health care was the most important issue to voters. 56% placed it as their top concern, well ahead of the 25% who put the economy first. Noah then quotes a different poll that puts the number of voters who are against Obamacare at 52%. Not an overwhelming majority, but a percentage that matches Brown's share of the vote.

So far, so good. A majority of Massachusetts don't like universal health care.

Noah doesn't stop there (he can't or he wouldn't have a point). He goes on to quote some statistics on Romneycare. 60% supported it when it passed. This grew to 69% in 2008. These polls are meaningless to the current debate. Noah just threw them in to make Romneycare seem more popular than it currently is. He eventually admits that support has been declining. It was down to 59% in September, 2009 and 54% last week. That's quite a drop - 15% in less than two years. Noah attributes this drop to the economy and concern about rising premium costs. I am less charitable and I think that the drop is because the longer they live with it, the less the people of Massachusetts like it.

Noah also tells us what percentage of doctors like Romneycare which is irrelevant to the election. He just wants us to know how great the program is.

The rest of the article is Noah's attempt to reconcile support for Romneycare with rejection of Obamacare. His conclusion is to think the worst of the people of Massachusetts, that they are selfish.

In the absence of any other logical explanation, I conclude that Massachusetts voters cast their vote for Scott Brown in the parochial spirit that Miller describes. Bay Staters saw no reason to vote for health care reform because they already had health care reform. Without Romney, that calculation wouldn't have been possible.

Actually, there is nothing to reconcile. Noah throws out poll data as if they all came from the same source and covered the same people. They do not. Consider - 54% of the total population of Massachusetts still favor Romneycare but 52% of the people who voted are against Obamacare. Keep in mind that the actual voter turnout was a subset of the total population. No one asked the actual voters if they approved of Romneycare and a significant percentage of Brown's voters (48%) based their vote solely on health care.

I think that Noah has it all wrong. 48% of the people of Massachusetts dislike Romneycare. Elections are not decided by an even distribution of the electorate. They are decided by the people who are motivated to turn out and vote. The people who are happy with Romneycare or feel that Obamacare would not affect them were less likely to turn out. The people who want Romneycare eliminated saw this election as their chance to show their discontent with their system and keep it from spreading.

That's a much more charitable view of the people of Massachusetts. Noah might have had a case if support for Romneycare was still high but with it running nearly even, voter motivation was more likely to be the deciding factor.

Of course this isn't very comforting to the Democrats. They can't shake their heads at the selfish people of Massachusetts who are unwilling to share their great health care system with the rest of the world. Instead they have to recognize that a majority of the people who actually turn out to vote in a very liberal state would rather vote for a Republican than see Obamacare passed.

Wednesday, January 20, 2010

Hope and Change a Year Later

So, where does President Obama stand a year after his inauguration? He has had some successes and some notable failures. Ideologically, his administration has been a mixed bag, giving ammunition to his many critics. He included people who are part of the 9/11 Truth movement and admirers of Chairman Mao, Wall Street insiders, and veterans of the Chicago political machine.

Progressives will hate me for pointing it out but Obama's biggest successes have been extensions of Bush policies. Iraq continues to improve and most of Obama's policies to stabilize the economy were continuations of Bush's. Bush was already shifting troops into Afghanistan before Obama ordered further buildups.

Obama's most spectacular failure was his promise to eliminate partisan politics. If anything, things have gotten worse. Bush never had more than 50 votes in the Senate but managed to establish a working majority. Obama needs 60 votes to pass anything. Part of this is because Obama is pushing a much more partisan agenda than Bush did and part is sheer arrogance. With clear majorities in both houses, Obama and the Democratic leadership felt that they didn't need the Republicans so there was no outreach to them as a group.

Obama invented the phrase "Wall Street and Main Street" but his administration is often seen as putting Wall Street ahead of Main Street. The various versions of health care reform have major concessions to Wall Street and the credit card reform gave banks several months to raise interest rates before it went into effect.

Probably Obama's biggest mistake was giving health care such priority. His first budget projections showed that the White House expected the recession to end in early Summer followed by a robust recovery. Accordingly, he and the Democrats passed a huge stimulus which was packed with pork. This energized the Tea Party movement. Obama expected the economy to have improved on its own by now, allowing him to claim credit. Instead the recovery started months later than expected and has been very weak. There is a very real chance that the economy will slip into a "double dip" recession. Unemployment figures only stabilized because of the huge number of people who have stopped looking for work. The real jobless rate has continued to climb and is at a post-WWII high.

Americans want to see the President focusing on their top priority - jobs. Instead, the only subject that Washington has concentrated on since July has been health care. This tone-deaf approach and the prospects of a new massive spending program has alienated independents and made the Tea Party stronger.

Overseas, Obama is popular with most of the world but has no standing with world leaders. He has strained relations with traditional allies like the UK and Turkey. His overtures to Russia and Iran have been rebuffed. Despite his promises about the effectiveness of "intensive diplomacy", Iran and North Korea have accelerated their nuclear weapons programs.

A recent poll showed that most of the country still approves of Obama personally but opposes his policies. He runs a real risk of becoming the next Jimmy Carter who was considered a nice guy who was in over his head.

Obama has expressed his desire to be the next Ronald Reagan - a president who changed the relationship between the country and its inhabitants. There are two lessons that he should learn from Reagan. First - Reagan had major Congressional losses in his mid-term elections. Obama can expect to lose most of his majorities in Congress and it is not out of the question for the Republicans to gain control of one or both houses. Second, Reagan was able to pass his agenda despite never controlling the House and losing control of the Senate in 1986. Like Reagan and Bill Clinton, Obama has to learn how to get along with the Republicans if he wants to salvage his presidency.

Tuesday, January 19, 2010

Kill the Bill

Congress should kill the Health Care bill immediately. There is no good argument for passing it. It does not meet its original intent of "bending the curve down." Instead it will bend it up. Any long-term savings will come through the draconian practice of limiting coverage so that people will be less likely to seek care. It will not be deficit-neutral. Any pretense that it would reduce the deficit (through future cuts in benefits) were abandoned with the compromise with the unions. It imposes an economic burden on young, healthy people who do not have the minimum coverage the bill requires.

There is no mandate for this bill. While it is true that Barack Obama included health care reform in his platform, this bill is at odds with Obama's promises:

  • Obama promised to allow importation of cheap Canadian drugs. That was dropped in an early round of deal-making.
  • Hillary Clinton included an individual mandate in her health care proposal. Obama ridiculed this in a debate and ran campaign ads against it.
  • John McCain suggested taxing current benefits to pay for his health care proposal. Again, Obama campaigned against this.
The most recent compromise is one of the most outrageous. Non-union and private industry workers will have their benefits capped but government union workers will not. To show how this works, my benefits are likely to be taxed (I work for local government but am not in a job class covered by a union) but the people I supervise will not be taxed. I should add that pay and job responsibilities have nothing to do with it. I am a working supervisor. Most of my time is spent doing the same job as the people I supervise. Further, two of the six make more than I do. On a national scale, Nebraska is exempt from extra costs that the other 49 states will have to pay because of back room deals. So much for equal protection under the law.

At this point the election result in Massachusetts is still unknown. The fact that it was ever close shows what a bad idea the health care bill is. In a state where Democrats outnumber Republicans three to one and every state office is held by a Democrat, the special election to fill Ted Kennedy's seat should be a forgone conclusion. If a traditionally liberal state has turned against the bill then imagine how the rest of the country feels about it.

No one can say with a straight face that this is a good bill. The hope that the public will come to love it once it comes into effect (well after the 2012 presidential election) is baseless. Instead this has become a contest of wills. Obama and the congressional leaders are fixated on passing something and no longer care about the actual outcome. Vanity and stubbornness are poor reasons for taking over a sixth of the nation's economy.

Friday, January 15, 2010

Haiti and Katrina

A common thread in stories about the mobilization of US aid for Haiti is that the Obama administration is "determined not to repeat the mistakes of Katrina". Katrina started Bush's long slide into the least popular president in recent history.

Most of the common knowledge about Katrina is false. News anchors rushed stories on air without bothering to verify them and outright misrepresented many facts. The public at large thought that the Superdome was full of people were were trapped for days because of government inaction. In fact, the Superdome was a staging area. The people who were in the Superdome when the flooding started were taken out fairly promptly. They were quickly replaced by people rescued from their roofs who were taken out and replaced, etc. One network showed the unused medical facilities on an air craft carrier without mentioning that the doctors had set up emergency centers on the mainland in order to be closer to the refugees. The networks reported that people were shooting at rescue helicopters but later investigations could not find any proof.

A lot of things worked as well as they could, given the problems on the ground. Popular Mechanics took a close look at the myths of Katrina.

Much of the anger against Bush was whipped up by the anti-Bush crowd. As the water was still rising, they were sure that Bush had caused Katrina itself by not approving the Kyoto Protocols or had cut funds that would have shored up the levees to pay for the Iraq war. Governor White of Louisianan also slowed things down. The government could not begin providing aid until she officially asked for it and she took an extra day before signing the request over partisan bickering.

Bush didn't help things. Air Force One did a fly-over of the damage making Bush look more like a spectator than a hands-on leader. Bush explained later that he wanted to spare local law enforcement the burden of a Presidential visit. He should have given this explanation before Air Force One landed in DC.

If didn't help that the point person for relief efforts didn't seem to be taking the job seriously or that his resume was pretty thin.

The logistics in Haiti was terrible. The port is closed and the airport is already overloaded. If this disaster had happened during Bush's watch, the left would already be calling for his head (again).

So far, the Obama administration has done everything it could but there is no easy way to rescue a city of two million with that much damage. I hope that Obama's critics show more class than Bush's and concentrate their efforts on aiding the Haitians instead of attacking the President.

Wednesday, January 13, 2010

Is Obama Weakening the Dollar?

Are Obama's policies hurting the dollar? Daniel Gross of Slate and Newsweek says no but he doesn't tell the whole story.

Gross lets you know where he stands from the beginning.
It's an article of faith among many analysts that the U.S. dollar is in trouble. The response to the financial crisis, they say, has debased the currency. The culprits are the Federal Reserve, which slashed interest rates to zero, printed money, and vastly expanded its balance sheet, and the Obama administration, which has run up huge deficits by embracing Keynesian efforts to stimulate the economy.

The words "article of faith" imply that this is an opinion, possibly based on partisan politics. In fact, this is a core economic belief - that you can't debase your currency without reducing its value. Obama has printed trillions of dollars of new money. A year ago there was a real fear of deflation so applying some inflationary practices could be seen as a good thing but this has to be reigned in or it will have long-term consequences.

Gross ignores these consequences which undermines his column completely. A very real possibility is that the US government will get so deeply in debt that it cannot meet day-to-day costs while meeting payments on the national debt. This has not happened yet but it will unless Obama changes course. China knows this as do most other countries. This is where the long-term threat to the dollar comes from. Gross makes his point by ignoring future trends and only looking at the last decade.

But like so much of what conservatives have been saying recently about the economy and economic policy, this weak-dollar argument ignores current data and recent history.

Gross does some ignoring of his own about recent history. He presents this chart as proof that the dollar has not been hurt by Obama. It shows the dollar gaining value between 1995 and 2002 then entering a steady decline. There is a sudden rise in late 2008 through early 2009 followed by a steep decline.

What Gross is not mentioning is that the Bush administration had a "weak dollar" policy. Bush wanted the dollar to lose value in order to ease the trade deficit. His administration weakened the dollar through low interest rates and high deficit spending. The main change that Obama made to this policy is to speed it up.

If Bush weakened the dollar between 2002 and 2008 through borrowing and spending then how can Gross argue that the same actions under Obama will not do the same thing?

What about that spike in 2008? That happened when banks and financial institutions world-wide seemed on the verge of collapse. Many investors felt that the US was better positioned to survive the fallout of the collapse than other countries. As soon as the crisis was over the dollar resumed its long slide.

An uncomfortable true for both conservatives and progressives is that many of Obama's policies are continuations of Bush's policies. This is an example.

Monday, January 11, 2010

The Cold Winter

The temperature has been a top story all year. Ok, it's only January 10th but that's still a long time for weather to dominate the news. This is not a local story, either. The entire Norther Hemisphere is in a cold wave the like of which has not been seen since the 1970s. The obvious question is where that leaves global warming?

On one hand, it should be pointed out that this is a weather event. Weather happens and you cannot draw too many conclusions from it. This has not stopped warming alarmists from pointing to events as evidence of global warming. A number of people claimed that Australia's recent wildfires were caused by global warming.

On the other hand, events like this aren't supposed to happen any more. Global warming was supposed to show up first in milder winters. According to the experts, the world has never been as warm as it is now. The words "catastrophic warming" have been use numerous times. We are counting down the months left to act before we reach a tipping point an the world has warmed so much that all life is doomed. You would think that with all that warming going on we wouldn't be setting record cold winters.

I guess that the world has not warmed all that much after all.

Monday, January 04, 2010


Once again, Paul Krugman is arguing that, despite encouraging signs, the economy is not recovering and will not recover without more government stimulus spending.

First, according to accepted standards, we are out of recession. What Krugman is worried about is a "double dip" recession where the recovery is cut short by a second recession. He never says this, though. He is too busy making parallels with 1937. According to Krugman, the government cut back on spending in 1937 and that lead to a recession which prolonged the Great Depression. Other economists have pointed out that economics in 1937 were much more complicated than Krugman's version so I will dispense with the 1937 parallels. The real question is if the government can spend its way into prosperity?

The current recession is so bad because so much of the economy was debt-driven during the last decade. Housing values, stock prices, and financial assets were valued too high and everyone involved was borrowing against the paper value of these assets. When prices fell, people started defaulting on loans and stopped buying in general.

The easiest way to get things moving again is to get everyone to act like the crash never happened and go back to spending. That isn't going to happen. People are being a lot more cautious with their money and are paying their debts down. In the long-term, this has to happen for a healthy economy. In the short-term, it slows the recovery to a crawl.

What Krugman is proposing is for the government to mimic what individuals were doing and spend without regard for consequences. The hope is that people will start spending again and the economy will heat up enough to stand on its own without the need for government support.

The paradox here is that FDR did just that for years. He spent like crazy and only slacked off when it looked like the economy was finally recovering on its own. If several years of government spending was not enough to restart the economy in 1937, then how much does Krugman think would have been enough (the quick answer is the amount spent during WWII but I addressed that fallacy weeks ago)? Also, how do we know when we have spent enough and can scale back? Krugman does not address this. He doesn't know how much is needed, he just knows that we are not spending anywhere near enough.

Krugman also ignores the biggest issue - by engaging in massive debt-backed spending, the government is creating its own bubble. This may restore the bubble-based economy but it is still a bubble and cannot be sustained. Following Krugman's advice will eventually cause a new bubble-induced recession as deep as the current one but with a government too cash-strapped to help.