Tuesday, June 29, 2010

Obama and the World

Remember when electing Barrack Obama as President would restore America to it's natural place as a world leader? we did our part. Now, someone needs to remind the rest of the world to do theirs. Obama seems to be isolating us more than ever.

Prior to the G20 conference, President Obama sent the members a letter urging them to do more stimulus spending and leave deficit-cutting until later. They ignored him and pledged to cut their deficits in half in the next couple of years. Trying to save face, Obama remembered that he had projected a deficit reduction so he announced that they had an agreement, even if it was the opposite of the agreement he wanted.

Last week's foreign relations triumph was the official resetting of relations with Russia. In order to reach that point, the Obama Administration turned on allies like Poland and Turkey and gave up completely on human rights abuses. A few days later the FBI arrested ten Americans for spying on behalf of the Russians.

Our standing in the world is diminishing even as we watch. George W. Bush was able to put together coalitions with dozens of members to invade Afghanistan and Iraq. Does anyone think that Obama could put together a similar coalition?

One of President Bush's foreign accomplishments was increased ties with India. Most of Tony Blair's government personally disliked Bush but relations with Britain remained close during the Bush years. France changed governments and became a US supporter (at least for them).

Obama has pushed India and Britain away. He has been lectured on economics and foreign relations by the French.

Israel, closely supported by the Bush Administration, has almost been cut loose.

I've been complaining for years that the Progressives think that they are the smartest people who ever lived. This tendency is showing in foreign relations. Obama has abandoned successful policies, sure that he knows better. All of Europe has told him that defects matter and that stimulus packages don't work but he does not believe them.

A frequent charge about Bush was that he was incurious and arrogant. If that described Bush then how do we describe Obama?

Thursday, June 24, 2010


Last week, President Obama met with BP executives. After the meeting, he announced that they were setting aside a $2 billion dollar fund to compensate victims. The next day, Representative Joe Barton apologized to BP executives for being subjected to a Chicago-style shakedown. He was immediately pressured by Republican leaders to reverse himself. Despite the retraction and the fact that no Republican leaders agreed with him, the Democrats plan on using this as a major campaign point and tarring all conservatives with it. This column by NYT columnist Eugene Robinson is typical of what we can expect:

Just to review: A group constituting roughly two-thirds of all Republicans in the House takes the position that President Obama was wrong to demand that BP set aside money to guarantee that those whose livelihoods are being ruined by the oil spill will be compensated. In other words, it's more important to kneel at the altar of radical conservative ideology than to feel any sense of compassion for one's fellow Americans. This, ladies and gentlemen, is how today's GOP rolls.

Two things should be made clear. The first is that no one is saying that BP should not pay. They are complaining about Obama's actions. The second is that the radical conservative ideology that Robinson complains about is the Constitution and the rule of law. The President cut a backroom deal - BP would put up a large fund but would be protected from future claims. Obama got a PR boost when he needed it. The fact that the President did not have the authority to do this didn't slow him down.

Normally I might complain about the precedent that this sets but Obama does this sort of stuff all the time. He used TARP money to and ignored bankruptcy laws to bail out GM and Chrysler. He has proposed using repaid TARP funds for other uses even though the law says that they will be repaid into the treasury. He set new mileage standards for cars and trucks by going through the EPA rather than waiting for Congress to amend the CAFE standards. He made the pharmaceuticals pay millions in ads supporting health care reform in exchange for not being included in the reform legislation. Two days ago a judge ruled that Obama exceeded his authority when he placed a six month freeze on deep water drilling.

Robinson sees this as a matter of helping people in need and it might be... this time. What about next time? Like most politicians, Obama has difficulty distinguishing between actions that help the country and ones that help him politically. Even his shake-down of BP helped his image.

I admit that the rule of law sometimes gets in the way of compassion. It can take years for things to work their way through the courts but there are reasons for this. The courts are supposed to act as a counter to corruption or mob rule. It is satisfying to take a suspect out and lynch him but it is not right. We are supposed to be better than that. We are supposed to be a nation of laws, not one ruled by a populist strongman.

Just to review, A group of liberals/progressives led by the President of the United States thinks that it is better to have the President force immediate action fro BP than to wait for the legal system. In other words, it is more important to kneel at the altar of progressive ideology than to follow the law and the Constitution. This, ladies and gentlemen is how today's Democrats roll.

UPDATE: After I posted it I realized that upholding the Constitution and the rule of law is no longer a priority for many progressives. Robinson's fellow NYT columnist Thomas Friedman has openly wished that our government could be like the Chinese government and just do things. Others such as auteur, Woody Allen, have openly wished that Obama would go ahead and become a dictator long enough to solve all of the world's problems.

Wednesday, June 23, 2010

Troops In Harm's Way

American policy about putting troops in harm's way has undergone a major policy shift over the years.

For all his hawkishness, Reagan seldom deployed troops. The two most notable instanced were Grenada and Lebanon. Grenada fell quickly. Lebanon, on the other hand, was a disaster. Suicide bombers ran a checkpoint and exploded two trucks filled with explosives, killing 299 American and French troops who were there as peacekeepers. The country quickly lost its appetite for peacekeeping and the peacekeepers were withdrawn.

The Gulf War (Operation Desert Freedom) under George H. W. Bush was the first example of the Powell Doctrine. The part that is relevant here was to attack with enough overwhelming force to keep casualties to a minimum.

Clinton learned his own lessons about troop casualties. Shortly before leaving office, Bush ordered troops into Somalia to stabilize the region. Under Clinton, the mission changed to nation-building. This soured after the events depicted in Black Hawk Down. The result was footage of dead soldiers being dragged through the streets. Clinton withdrew the troops shortly after that.

Clinton's take-away message from Somalia was that the American people would not support any action that involved the death of American servicemen (women were kept well away from combat). When the US intervened in Kosovo, the operation was designed to keep American's safe. The operation was conducted almost exclusively by high-altitude bombing. There were some complaints when bombs missed their targets and a general feeling that it was "unsporting" for Americans to bomb from untouchable heights.

September 11th changed everything. George W. Bush invaded Afghanistan. That operations was quick and nearly bloodless. Bush followed up with an invasion of Iraq which was also fairly quick but did have some casualties. Support for the war remained fairly high for the first year or so but the MSM (mainstream media) started playing up each casualty as the insurgency became organized. The constant drip, drip of bad news turned public opinion against the war. Eventually, Bush had to convince not only the American people, but Congress and his own generals, that the war was winnable at an acceptable cost. The cost was a sharp upswing in troop deaths as the Surge progressed. This was followed by a stunning drop in troop deaths and an admission that the Surge worked.

Obama came to office with a stabilized Iraq but an unstable Afghanistan. Bush had never pushed the new government's influence across the entire country and the Taliban was known to be taking refuge in Pakistan. Obama had campaigned on winning Afghanistan. He implemented his own version of the Surge. This included new rules of engagement. Under Bush, the rules of engagement had been tightened to minimize civilian casualties. This was tightened even more under Obama. The result has been a complete reversal of the Clinton-era priorities. Under Clinton, civilian casualties were acceptable if it kept the troops safe. Now, air  and artillery strikes that could save troops are only allowed if there is no chance of civilian casualties.

While this is a defensible counter-insurgency strategy, it is affecting troop moral and causing troops to question the wisdom of their leaders.

Tuesday, June 22, 2010

1937 or 1930?

Economists continue to debate the lessons of the Great Depression. This is important because, if they get it wrong, our economy will suffer for years. We could easily repeat Japan's "lost decade", which is also being debated.

The two economic theories come down to the role of the government. One side says that government spending is the only thing keeping us from falling over the abyss. The other side says that the government is interfering with the natural economic recovery and making it worse.

The pro-government spending side it championed by Paul Krugman and endorsed by President Obama. They believe in a simplified version of Keynes. There are several core beliefs that the neo-Keynesians have:

  1. During economic downturns, the government has to increase spending in order to make up for the decreased private spending.
  2. All spending is good. The usual example is to hire one person to dig holes and a second one to fill in the holes.
  3. Government spending is more efficient than tax cuts or rebates since taxpayers might save some of the money or use it to pay down debt. Government spending can be targeted to do the most good and none of it will be "wasted".
  4. There is a multiplier effect where a portion of each dollar spent is re-spent. President Obama expressed this at the ground-breaking for the 10,000th project when he said that lunch workers would benefit from the money spent by the road workers.
  5. We should not worry about short term debt. The time to worry about the debt is after the crisis has passed.
  6. The economy was recovering from the Great Depression until 1937 when FDR decided to do something about the growing national debt. The resulting cutbacks caused a new recession.
There are problems with many of these points. The biggest one is that it assumes that employers are stupid and will make long-term hiring decisions based on short-term stimulus projects. Take the example that President Obama gave of the lunch worker. If you owned a lunch counter near a construction site and your business increased because of the construction, would you assume that the increase was permanent and expand your facility or would you add temporary workers and assume that business will return to normal when the construction project ends?

Obama's example of the lunch counter worker has an additional problem - it assumes that the construction worker would not eat lunch without the stimulus. In this example, the stimulus moved where the lunch is eaten and may have increased the amount spent. There are better examples but real life intrudes. If the government gives a rebate to a worker, he may spend it or he may bank it. Having the government hire the same worker to dig holes is supposedly more efficient but that same worker may bank his hole-digging wages.

There is some evidence that government spending crowds out private spending rather that stimulating it. The money for this spending has to come from somewhere - either borrowing, new taxes, or high inflation.  Currently businesses are holding huge reserve funds. Collectively they worry that there will either be a double-dip downturn or that the government debt will affect them. Either way, this is affecting their spending.

The idea that government spending is targeted sounds good in principle but the actual stimulus bill that was passed had more to do with politics than efficiency. Spending was not targeted at areas with high unemployment. It was closer to old-fashioned pork-barrel spending except names were removed to make it harder to identify earmarks.

The idea of spend today, save tomorrow sounds good on paper but tomorrow never comes. Government spending increases in the bad times. When the good times come, the pressure to deal with the debt and the size of government is off. No one wants to make hard economic choices when times are good and economists like Krugman insist that it is harmful to cut when times are bad. The result is ever-expanding government and government debt. At some point the debt becomes so burdensome that it strangles the government. Greece is already at that point. Spain is making major cutbacks to avoid the same fate. Krugman thinks that their problems would be solved if they could devalue their currencies but that would raise the future cost of borrowing.

The opponents of the neo-Keynesians point out that the economy was recovering from the crash of 1929 until the government involved itself in 1930. That's when unemployment skyrocketed. There was a similar crash in the 1980s. The government did nothing and the stock market recovered without pulling the economy into a decade-long depression. The fear is that we will repeat the mistakes of the 1930s instead of the lessons learned in the 1980s.

The effects of government stimulus are debatable. Obama's economic advisers made their reputations saying that stimulus spending never worked (once they went to work for Obama then insisted that "This time is different"). There have even been studies that show that cutting government spending can cause an economic boost.

The neo-Keynesians, at heart, believe that the government knows better than the people how things should work. It is no coincidence that a president who took over health care believes that the economy cannot mend itself without government aid.

The impulse to help is deeply ingrained. Back when children grew up on farms they were taught not to help a hatching chick. If you helped it you inevitably injured it but a chick that hatched on its own was healthier. The same applies to an economy but the ivy-league lawyers running the government cannot believe this.

Friday, June 18, 2010

Why Aren't the Democrats Fired Up?

This piece echos one by E. J. Dionne in asking why Democrats aren't fired up and ready to go? It lists their accomplishments but fails to recognize an important point - their accomplishments are not popular. In fact, Obama was in Columbus today trying to convince people that his economic stimulus worked. A majority of the country dislikes health care. When the man at the top is still trying to sell his signature accomplishments, the people further down are in trouble.

Then there are other factors. The economic recovery is slowing. Unemployment is still the highest it has been in a generation with no sign of dropping in the next several years. The deficit is unsustainable. Everyone knows it but no one will admit to a plan to do something about it. The various bail-outs may have saved the economy but they gave the impression of rewarding bad behavior. The coming financial reform bill reinforces that impression.

Voters are in an anti-incumbent mood. Some long-time incumbents couldn't even make it past the primaries. Long-time Democratic allies (unions) have turned on moderate Democrats. Without Obama at the top of the ticket, Democrats from traditionally conservative districts can expect a tough fight which many will loose.

Given all of this, I can't imagine many Democrats looking forward to the coming election. How can they get fired up when they are already on the defensive?

Thursday, June 17, 2010

What Kind of Capitalist is Obama

New York Times columnist, David Brooks, recently wrote a column about the two types of capitalism seen today.

On the one side are those who believe in democratic capitalism — ranging from the United States to Denmark to Japan. People in this camp generally believe that businesses are there to create wealth and raise living standards while governments are there to regulate when necessary and enforce a level playing field. Both government officials like President Obama and the private sector workers like the BP executives fall neatly into this camp.

On the other side are those that reject democratic capitalism, believing it leads to chaos, bubbles, exploitations and crashes. Instead, they embrace state capitalism. People in this camp run Russia, China, Saudi Arabia, Iran, Venezuela and many other countries.

My question is if President Obama falls as neatly into the first camp as Brooks thinks.

As president of the world's leading democratic capitalist nation, Obama is in that camp by definition but is that where his heart lies? After all, Brooks has mistaken Obama's motives before, projecting his own onto the President.

Obama has made several speeches against the current economy with its boom and bust cycles. He has vowed to make fundimental changes to eliminate these cycles. He and his fellow Democrats have blamed the Bush administration for allowing bubbles.

Progressives in general and Obama in particular are in favor of redistributionist policies. They are more concerned with the disparity between the rich and the poor than with rising living standards for everyone. Their view of the government goes far beyond ensuring a level paying field.

Quoting Ian Bremmer, Brooks continues:

Bremmer points out that under state capitalism, authoritarian governments use markets "to create wealth that can be directed as political officials see fit." The ultimate motive, he continues, "is not economic (maximizing growth) but political (maximizing the state's power and the leadership's chances of survival)." Under state capitalism, market enterprises exist to earn money to finance the ruling class.

That's pretty close to the Chicago way of politics - use of political power to reward supporters. There is a reason that Wall Street gives more to the Democrats than to the Republicans even though the Republicans are supposed to be their natural allies.

Brooks goes on to talk about large national energy companies. We do not have anything like that but we could. There has been a lot of pressure for Obama to seize BP. Obama has resisted that but he did take over GM last year, bypassing bankruptcy laws and splitting ownership between unions (heavy Obama supporters) and the government. He also let the banks know that he owned them for taking TARP funds, even if it was forced on them.

While Obama is a long was from exercising the type of control that Brooks describes, many of his supporters would be thrilled to see this happen. On several occasions, Thomas Friedman has openly wished that our government had the same power as China to implement policies. Woody Allen joined him in wishing that Obama could become a dictator long enough to solve our problems.

Countries like these look better from the outside than the inside. Outsiders see things happen and assume that it is all for the common good. Those on the inside see favoritism and corruption. One lesson from the Gulf oil spill is that the closer regulators get to the industry that they are supposed to monitor the less likely they will do their job properly.

Obama's Speech and the limits of the Presidency

Last Tuesday, President Obama gave his first Oval Office speech. While the subject was the Gulf oil spill, the real reason for the speech was to try to save his presidency. This effort was doomed from the start.

Obama's problem is that the country suffers from heightened expectations for what the government in general and the President in particular can do. The oil spill has been called Obama's Katrina but, in a way, he is a victim of Bush's Katrina.

After Hurricane Katrina, the federal government did as much as was possible as fast as it could be done. This wasn't enough for most people. Day after day the news anchors stood in front of flooded houses and reminded the country that New Orleans had not been fixed yet. Many people on the left spent enormous effort blaming the disaster on Bush - either because he allowed Global Warming which caused the hurricane or because he didn't spend enough money on the levees. Bush added to the expectations on his own. His White House never pointed out that they were not meant to be first responders or that the rescues began almost immediately after the storm ended.

Like Bush, Obama is a great believer in the power of government. Neither man would ever quote Reagan's joke about the scariest phrase in the English language, "I'm from the government and I'm here to help."

But there are some things that the government cannot do. It does not have the technology to stop an oil leak a mile underwater (not that BP's technology is doing such a great job). At the same time, there are things that the government could do. A 1990 law allows it to take over the clean-up effort but the Obama administration failed to do that. In fact, there have been several holes in the government's response. Obama's speech did not address any of those. He did not announce any new policy changes. His administration continues to outsource everything to BP while demonizing it and implying that it is not doing everything in its power to stop the oil.

That's why Obama's speech will be judged as a failure. It didn't change anything. The country still wants the leak stopped and that is still weeks in the future. Obama got BP to pledge $20 billion. That made today's headlines but it will be forgotten long before the oil stops leaking. Obama called for an energy bill - any bill - without giving any specifics. All of the pundits called him on his lack of anything concrete.

Without lowering expectations, Obama will continue to face the same problem daily for weeks - the oil continues to gush and the President has not done anything to stop it. A single speech cannot change that.

Tuesday, June 15, 2010

The Wrong People in the Wrong Place at the Wrong Time

I have come to the conclusion that President Obama and the Democratic congressional leadership are exactly the wrong people to be in charge of the country at this time. The country is in a long-term economic slump with a real possibility of a double dip recession but the people in charge have no idea of how economics work. Worse, they are offended by basic fundamentals of economics like profits.

During the 2008 election, Obama let it slip to Joe the Plumber that he is in favor of redistributing wealth. During a recent graduation speech he told graduates to stop worrying about making money and to do other things with their lives. While that sounds good, it does not create jobs.

The Democratic response to the economy in general has been contradictory but guided by the overriding conviction that only they know what is best.

Look at the outrage they express when banks that previously received TARP funds paid legally mandated bonuses or simply made a profit. After taking over GM, the President suspended long-established rules for paying off debt under bankruptcy in favor of unions (which coincidentally were major campaign contributors).

Obama's signature achievement was his health care reform but it will act as a drag on the economy.

The latest are the actions surrounding the BP oil spill. Members of Congress talked about requiring BP to suspend paying dividends (on earning from the quarter before the oil spill) and even stopping them from advertising until all cleanup costs have been paid. This would amount to seizing a foreign corporation without bothering to go through legal proceedings.

The oil spill is hurting Obama's popularity but his reactions are having international repercussions. By stressing their old name, "British Petroleum" instead of their current name, "BP", he is alienating an entire nation. Treating BP as a faceless, possibly evil, entity ignores the fact that a lot of its dividends go to regular people. Retirees in England face major cuts in their pensions because of Obama's actions.

While most of the above problems are shared between the President and the Congressional leadership, Obama has put his personal mark on international relations. Even before the BP incident he went out of his way to insult the British Prime Minister. Many people think that this stems from a personal dislike that Obama has for the British stemming from their colonial control of his father's native Nigeria. Since Obama's withdrawal strategies for Iraw and Afghanistan hinged on European countries taking over peace-keeping duties, it is irrational to spurn our strongest supporter in those theaters.

Other countries such as India, Poland, and Turkey have seen a cooling in relations. No explanation has been offered but speculation is that they are being punished for their good relations with the Bush administration. Israel has seen a major shift with relations being at their lowest point in a half century.

At the same time, outreach to hostile countries has failed miserably. Obama was supposed to heal relations with the world but instead he has isolated us further.

A year and a half into his administration and it is difficult to think of a policy that has actually succeeded.

Friday, June 11, 2010

Party Polarization

There is no doubt that the Tea Party movement is meant to pull the Republican party to the right into territory normally ceded to Libertarians. While they dislike President Obama and his progressive policies, they are also upset with free-spending Republicans often called RINOs (Republicans In Name Only). It is a matter faith among the left that this will ultimately doom the Republicans' expected gains this November. They are sure that the Tea Party is unattractive to most voters and that candidates that the Tea Party approves of will be too far from the mainstream to win. Robert Creamer, writing at Huffington, calls the Tea Party "an extremist cancer in the Republican Party".

What is interesting is that the same thing is happening in the Democratic party but is largely overlooked. The best example was the attempted challenge to Arkansas Senator Blanche Lincoln. The difference is that this was conducted by party insiders - unions and MoveOn. Lincoln is an example of the type of Democrat that was recruited in 2006 to take back Congress, the so-called Blue Dog Democrats. She is a moderate Democrat from a conservative state.

Lincoln's sin was to come out against "card check". This would allow union organizers to bypass secret elections if they could get a majority of workers to sign pledge cards. Considering the leg-breaking tactics that the supporters of card check have been using elsewhere (1), it is likely that undue pressure would be applied to workers to get them to sign the cards. The unions want the Democrats kept in line so they spent $10 million in an effort to unseat Lincoln. While they failed, Creamer points out that the effort was still intimidating to politicians. The Democrats are now on notice that they may face a rough primary instead of running unopposed if they deviate from the unions' agenda.

Two points here - the White House and the unions made it clear that they disagreed on this. The White House pointed out that this was $10 million that could have been used on other races. The unions replied that they are not a subsidiary of the Democratic party. The implication is that they are more interested in keeping Democrats in line than in getting them elected in the first place. This attitude is almost identical to the Tea Party.

Strangely, Creamer, who thinks that this is a cancer when coming from the right, applauds the same thing when coming from the left.

Polls continue to show that we are a center/right country. Most people support free enterprise and dislike unions. The progressives are way to the left of this. They have convinced themselves that the elections of 2006 and 2008 mean that the country moved to the left and that they can abandon the centrist candidates that let them regain power.

Republicans have a similar view. After eight years of Bush centrism, they think that their party no longer stands for anything and want a return to the days of Reagan when government was the problem instead of the solution.

The result of all this is that the parties are polarizing along the proper role of government in daily life. The Democrats want more involvement in everything. The Republicans think that the government is already too intrusive. The next couple of elections will decide what course the country will take. Two more years of Democrat control will put the country on a course that will be almost impossible to change. A Republican victory will bring the Obama agenda to a screeching halt.

(1) - SEIU members have attacked people associated with the Tea Party on multiple occasions. More recently, a group hundreds of protesters showed up on the lawn of a bank officer on a Sunday demanding changes to the bank's policies.

Thursday, June 10, 2010

Our Kick-Ass President

A couple of days ago, President Obama said that his first trip to the Gulf after the oil spill began was so that he could find out whose ass to kick.

That trip was a month ago and the leak continues. Has he kicked anyone's ass yet? If so then why didn't it work? It not then what is he waiting for?

Also, why is he willing to travel to the Gulf to talk with smart guys but can't even pick up a phone to talk to the head of BP? I know that Obama is averse to corporate executives but refusing to even consider talking to the guy in charge seems childish. Is this the same man who would talk to the enemies of the US without precondition?

Maybe he just hates the British accent?

Tuesday, June 08, 2010

The Many Problems of Mr. Obama

Sometimes it sucks to be president. Look at everything on President Obama's plate:

Health Care - the promise was that once it passed the public would accept and embrace it. Instead it is becoming even less popular. Obama is launching a new campaign to convince the country that we wanted this legislation. Congressional Democrats are avoiding town hall meetings for fear of a repeat of last year's meetings when opponents of health care outnumbered supporters. What should have been Obama's biggest triumph threatens to become a millstone.

The Gulf Oil Spill - Obama is still trying to find the right tone. Today he is talking about firing the head of BP and kicking the right asses. Tough talk only goes so far while the spill continues. This may hurt the Democrats in November. In the meantime, it is a constant distraction.

The Economy - For the last few months the Obama administration is taking credit for saving the economy. The real economic news is not good for them. The White House had originally predicted a sharp recovery, comparable to the recovery under Reagan. This is not happening. At its best, the Obama economy was holding unemployment stable rather than reducing it. The May figures show that even this has stopped. Except a big jump in the unemployed when the temporary census worker positions end. Hopes for a V-shaped recession have failed. Now the talk is of a double-dip recession where we drop back into a recession before recovering from the last one. This is the Democrats' worst nightmare. For the last two years they have insisted that the recession was caused by insufficient government control and spending. A double-dip recession would repudiate them and their advisers.

Afghanistan - Obama came to office insisting that this was the real war and that he would win it. A year after his version of a surge, things are not going particularly well. The US-supported government is viewed as corrupt. The Taliban is entrenched. Training of native soldiers and police is behind schedule and may never produce the desired results. The war has moved into Pakistan which is becoming increasingly touchy. About the only piece of luck that Obama has here is that the anti-war movement died down, at least for now.

Mid-East Peace - It's all bad news here.

Iran and North Korea - So much for smart diplomacy. Nothing Obama is willing to do has had any effect on Iran's nuclear ambitions. North Korea is worse, going so far as to torpedo a South Korea ship. What happens if either country starts a war after creating a nuclear stockpile?

Progressives - While Obama is the most radical left president in decades, he and the Democrats are still not keeping the Progressives happy. This group has the potential to do to the Democrats what the Tea Party is doing to the Republicans - replace safe, moderate candidates with fire-breathing radicals. Much of the country is already uncomfortable with how far left the country has drifted so the Democrats will have to choose between appealing to the centrists or their most active supporters.

Mid-term Elections - It all comes down to this. It is a given the the Republicans will pick up seats. Without George Bush to drag the Republicans down and without Obama at the top of the ticket to help the Democrats, seats in normally conservative districts will shift back to Republican hands. The economy and a general anti-incumbent feeling will also hurt the Democrats. Their only hope is to mobilize the huge number of first-time voters from 2008. This is a poor strategy since most of those people cared more about voting for the black man at the top of the ticket than about politics in general. The Republicans have a shot at regaining control of the House and making gains in the Senate. At the least, this election will take the edge off of Obama's most radical proposals.

Monday, June 07, 2010

Helen Thomas and the Jews

Helen Thomas, the nearly 90-year-old columnist and White House correspondent, stirred up a lot of trouble after some statements she made at a Jewish Heritage Celebration. Thomas complained that the Jews are occupying Palestine and should go back where they came from. She clarified this to mean Germany, Poland, and the US.

Thomas issued her regrets over the weekend but this was too little and she announced her immediate retirement today. Good ridance.

There are still several disturbing things about this. Thomas is old enough to remember first-hand the persecution of the Jews in Hitler's Germany. She should be very aware of why the Jews felt the need for a defensible homeland and why it had to be Israel. As a member of the White House press core, you would think that she would know that "Palestine" was part of Turkey when she was born and became a British possession after WWI.

The matter of fact way that she said this shows that her statements were part of a long-held belief. This echoes statements by the rulers of Iran that the Jews' homeland should be in Europe instead of the middle-east.

Thomas's statement shows that she does not believe that modern Jews are related to the biblical Jews and that Israel does not have a right to exist. Since she didn't think twice about blurting this out, she is either senile or is so used to being among like-thinking friends that it didn't even occur to her that she said anything wrong (or possibly both).

Ironically, a new genetic study of the Jews shows that they are what they have always claimed to be - the biblical Jews, forced to scatter by the Romans more than 2,000 years ago but still a distinct people.

Friday, June 04, 2010

Did Free Markets cause the BP Disaster?

Bob Cesca has a column on Huffington blaming free markets for allowing BP enough freedom for the Gulf Oil Disaster to occur. He then urges the government to act on Robert Reich's plan for the government to seize BP. Cesca and Reich are convinced that BP is not making every effort to stop the oil flow and that nothing short of full government control will fix this.

I will not argue that BP has been negligent - even their CEO has admitted this. The question is what the government's involvement should be?

Reich thinks that BP should be placed into receivership until the crisis is solved then cut free again. Cesca claims that he is for capitalism, just not libertarianism but fails to make specific recommendations. I think that his desired result would be to shut down BP (but not until they fix the oil leak).

So, that's a couple of votes for strong, direct government oversight of the oil business.

Rather that speculate how that works, let's look at some real world examples. Lots of countries have nationalized all or parts of their energy producers.

Let's start with China. I admit that I don't know much about Chinese oil industry but the Chinese coal industry makes the news fairly often. It is a disaster. Being a coal miner in China is one of the world's most hazardous jobs.

How about a couple of countries that do control their oil companies - Iran and Iraq under Saddam? Sitting on some of the world's biggest oil reserves and controlled by the government, they must have been models of safety and efficiency, right? Stop laughing. Iraq's oil industry was a model of corruption. Iran's is so poorly run that they cannot power their own country. For years they claimed that the only reason they were building nuclear reactors was so supplement their declining oil production.

Ok, all three examples are third-world countries. What about the USSR during its glory days? That's where things get really instructive. The reports that came out of Russia and the former satellite countries was that they were environmental disaster areas. Look at Chernobyl. It lacked most of the safety features that were standard in US reactors. Somehow, profit-minded US companies were able to build safe nuclear reactors and countries run by and for the people were not.

That's what happens when government and business get too close or government takes over business. Corruption settles in. Safety is forgotten. Politics become the order of the day.

We already saw that happen with the Gulf Disaster. This week we were told that the nuclear option was off the table. While a strong list of good reasons were given, the list included Obama's desire for total nuclear disarmament. What would Cesca or Reich say if they found out that BP passed on an option because it would make them look bad?

Obama's Perpetual Motion Machine

The employment news for May sounded good at first - 431,000 jobs were created. The fine print tells a different story - most of those jobs were government jobs. Only 41,000 jobs were in private industry. Worse, the biggest share of the nearly 400,000 government jobs was for temporary jobs as census workers.

Remember how stimulus money was supposed to work? It is supposed to get extra bang for the buck. For every dollar spent, some of that is supposed to lead to additional economic activity which leads to more economic activity, etc. Before you know it, the economy has so much activity going that it doesn't need any further help from the government.

There is considerable question if this ever worked anywhere but it certainly did not work this time.

In a way, economic stimulus is like a perpetual motion machine. It sounds simple and elegant but it just doesn't work in real life. You cannot tax or borrow money to create stimulus and expect it to keep running.

Tuesday, June 01, 2010

Obama's Katrina

We've been hearing it for weeks - the oil spill will be President Obama's Katrina. What exactly does that mean?

Hurricane Katrina marked the beginning of a long slide in President Bush's popularity. Let's quickly review what happened. The Bush administration suffered from internal failures, problems beyond its control, and from bad press.

The internal failures came early. Bush was partying in Arizona at McCain's birthday when the levees broke. The next day the White House released pictures of Bush looking at the damage through the windows of Air Force One from a high altitude. He had good reasons for not landing and inspecting the damage first-hand but he didn't share them until years later. To make things worse, he publicly praised the head of FEMA while press reports indicated that he was giving the effort less than his full attention.

A lot of problems were beyond the White House's control but they were blamed for them, anyway. FEMA was never meant to be a first-responder but people expected it to be on the ground hours after the storm cleared. The governor of Louisiana lost time in requesting the National Guard because of disputed over jurisdiction. The guard had to clear its way into the state through blocked roads. The Guard and FEMA arrived about as soon as possible but, to a nation glued to the TV, this was days too late.

The extreme Bush-haters wet on to blame Bush for every aspect of the disaster. He was blamed for the hurricane itself (if only Kyoto had been ratified then global warming would have already been solved) and for underfunding levee repair. Some insisted that he had ordered the levees dynamited in order to get rid of the minorities.

On top of all that, the press coverage failed to shine. Rumors were breathlessly repeated without any attempt at verification. TV anchors mislead their audience. For days they showed the Superdome and the convention center full of people waiting to be taken elsewhere. They failed to mention that these were holding areas for people who had been rescued from their flooded houses and that they were being transported out almost as fast as they came in.

Obama has not had to deal with bad press but the story is hurting his credibility in many ways. Like Bush, he is a victim of unrealistic expectations.

Technically the federal government is not responsible for fixing the leak. According to a law passed during the Clinton administration, BP is responsible for stopping the leak and cleaning up the oil. The government's job is to sit on the sidelines and supervise. Further, as poor a job as BP has done, I doubt that the government could have done any better.

The American people do not want to hear this. With the exception of a few on the right, people want the problem solved and they don't understand why Obama has not fixed it. After all, he stopped the economy form crashing, he saved GM and Chrysler, he took over health care and he is regulating Wall Street. The letter of the law didn't stop him when he gave GM TARP funds or when he rewrote bankruptcy laws on their behalf.

The Obama Administration talks tough. The President talks about arresting anyone who broke any laws and changing the law if need be (one hopes that he understands that he cannot make something retroactively illegal) but his administration still has to defer to BP.

When the oil spill is the top story night after night, there is no way to stay aloof from it.

Obama himself is in a difficult position. He talks like someone who hates capitalism but his took more oil dollars than anyone ever had before and he had announced a plan to allow new off-shore drilling just days before the disaster. Taken together with the Wall Street bail-outs and Obama's actions some across as pro-big business regardless of what he says.

There is speculation that oil will continue to erupt until August. This would hurt any president but Obama is uniquely vulnerable. He came into office claiming to be the one who would fix the world's ills. Now the spill shows that he is mortal, after all.