The War on Fox

Media Matters has announced that it has redefined itself. It will no longer pretend to be a general media watchdog exposing right-wing bias in the mainstream news media. Now it is devoted mainly to taking down Fox News. An early shot in their new guerrilla war on Fox is the release of a clip from a Fox executive admitting that he found speculation that Barrack Obama is a socialist "far fetched" but ran it anyway because of pressure from above. That was written up in a Washington Post piece here under the title "Another major blow to Fox's credibility".

This is a story where what you take away from it depends on what you bring to it. If you dismiss any notion that Obama is a socialist then this is confirmation that Fox's top brass was trying to twist the news.

Before we go any further, we need to ask if there was any reason to believe that Obama is a socialist. If there is no evidence then Fox was lying. If there is evidence then the executive in question was wrong and the Fox brass was right.

There is evidence that Obama had strong socialist tendencies and they come from an unimpeachable source - the President himself. His father was a communist and, even though he had no contact with Barry jr, the President looked to his father for his identity. His first book, "Dreams from my Father" is about Barry jr's search for his father and a black identity. Obama refers to Frank Marshall Davis as a mentor. Davis was a long-time member of the Communist Party USA and wrote for a communist paper. In fact, he was notorious enough that Obama did not list Davis's full name in his book. Obama describes his college days thus:

To avoid being mistaken for a sellout,I chose my friends carefully. The more politically active black students. The foreign students. The Chicanos.The Marxist Professors and the structural feminists and punk-rock performance poets.We smoked cigarettes and wore leather jackets. At night,in the dorms,we discussed neocolonialism, [the socialist, anti-colonialist revolutionary] Franz Fanon,Eurocentrism,and patriarchy. When we ground out our cigarettes in the hallway carpet or set our stereos so loud that the walls began to shake, we were resisting bourgeois society's stifling constraints. We weren't indifferent or careless or insecure. We were alienated.

He was a member of communist and socialist organizations in college.

Obama's time as a community organizer is well-known but most people are not aware that the whole concept of community organizers came from Saul Alinsky, another communist.

There is no question that Obama was a communist in his late teens and early 20s. This is all a matter of public record and the President's own words. It is also a matter of record that he soured on Alinsky and community organizing. The big question is how much of that ideology does he still retain?

During the campaign he made an analysis of the Bill of Rights where he called them incomplete because they did not allow for redistribution. His off-the-cuff remarks to "Joe the Plumber" also showed that he was in favor of redistributing wealth.

So when Fox carried speculation that Obama is a socialist, they had good reason to wonder. Media Matters is disseminating some fibs of their own by ignoring Obama's history.

As an opening shot against Fox, this one fell short of the mark. People who already hated Fox will see it as further justification for their feelings. Fox's supporters already know that it was and continues to be a valid question. Neither side is likely to be moved by this revelation.

President Obama and Libya

President Obama's address to the nation on Libya was, at best, disingenuous. He said some things that are questionable and other things that may be true now but are likely to change. For example, he claimed to be taking the middle course between people who did not want the US to be involved and ones who wanted an all-out invasion. I have no idea who the pro-invasion people are and I suspect that Obama made them up in order to make his own actions seem more moderate. Actually, most people who called for a no-fly zone, myself included, expected that it would be just that similar to the no-fly zone established by President Bush (41) in Iraq. The bombs and cruise missiles were a surprise.

Obama talked about turning operations over to NATO. This sounds like we have finished our part. In fact, we will continue to do the heavy lifting in the operation. Remember, we transferred operations in Afghanistan to NATO a decade ago.

The President promises that we will not have any boots on the ground. What will happen if Gadafi's government falls? Will we continue to hold back or will we start supplying peacekeeping forces? The Obama administration has already admitted that we will probably send thousands of troops into Libya to keep the peace and prevent a new Somalia.

The President left the impression that we could expect Gadafi to be overthrown soon. News reports make that seem unlikely. The rebels are literally an armed mob with no military structure. They have no chance against real troops.

So where does that leave us? Will we continue to shield the rebels? Will we broker a peace and get out, allowing the rebels to be slaughtered later? Will we begin arming and training the rebels? Are we sure that they are people we want to be involved with? The Taliban grew out of the Afghan rebels we armed and trained. Could this happen in Libya?

Remember back in the early 1990s we encouraged Saddam's people to rise against him. We implied that we would support them but failed to deliver until their rebellion had been crushed. That is when we established the no-fly zone which we maintained through the Clinton administration until Bush (43) invaded Iraq more than a decade later. Could our current actions in Libya eventually lead to this?

To use the President's favorite verbal tick, "make no mistake," Gadafi is a bad man. He has sponsored terrorism and ruled as a tyrant. Still, this was not enough for five different presidents to do more than drop a few bombs on him. We are only involved in Libya because Gadafi seems vulnerable.

One thing that bothers me. What would Candidate Obama have said if President Bush had taken the same measures under the same circumstances?

Why the Republicans Hate NPR

Last week Robert Creamer had a column in Huffington claiming to explain why Republicans hate NPR. He begins by telling how great NPR is and how many people listen to it (around 11% of the population). Then he lists the reasons that he believes that Republicans hate NPR:

First, they hate any successful public sector -- non-corporate venture. It flies in the face of radical conservative belief that the "private sector" always does things better.

{...} Second, the Republicans hate the idea that NPR is drawing listeners from stations owned by corporations like Clear Channel. They are all about "competition" until private corporations have to compete with public sector ventures that can provide superior services for less money and don't have to pay millions in profits to satisfy their corporate task masters.

{...} Third, Republicans want to kill NPR because it presents high quality, unbiased, factually accurate news. These qualities do not sit well with people who want the Rupert Murdoch's and Fox News's of the world to control what the public has the right to hear. They think unbiased news coverage is subversive.

{...} Fourth, the Republicans in the House wanted to attack NPR to throw some red meat to the Tea Party portion of its base.

I disagree with Creamer on most of these points. Note that he is not writing a dispassionate column, not when he tosses around terms loaded terms like "corporate task masters". The fact that he thinks that any news organization is unbiased let alone NPR shows his own biases. That is why the undercover video of NPR executives saying biased things is important.

This is the real reason that Republicans hate NPR. They hate seeing tax money being used to subsidize liberal viewpoints. This, in turn, is why Creamer loves NPR. He sees the world in terms of right and wrong (where Right = wrong). According to his bio, he is also an extreme progressive. His even borrows the term "corporate task masters" from the Marxists. So, from his point of view, is it the government's duty to fund radio stations that tell the "truth". He hates the existence of other points of view and is revolted by the prospect of having to compete with them.

There are better uses of taxpayer's money than subsidizing one set of viewpoints and the existence of these grant gives NPR a veneer of respectability that is unwarranted.

I will agree that this is throwing red meat to the Tea Party

Libya?

President Obama has managed to craft a policy on Libya that no one likes. Obviously the peace lobby hates it but criticism goes much deeper. Nearly everyone in Congress objects to the President launching an attack without first consulting Congressional leaders. Presidents Bush (41 & 43) and Clinton were careful to get Congressional approval before committing armed forces.

Worse, the Arab League and the African League both supported a no-fly zone but have backed off from Obama's use of cruse missiles.

Part of the problem is that the President did not make his case to the American People, or anyone else. He simply ordered the start of hostilities and left the country. This leaves several questions unanswered:

What is our mission? Are we trying to remove Gadhafi? What happens if we succeed and the country descends into chaos? Are we actually helping a pro-democracy movement or are we just inserting ourselves into a tribal conflict?

The Obama administration has talked about turning the operation over to NATO quickly. Will our involvement be reduced or will this just give political cover? Turkey is already balking at NATO exceeding its mandate. What happens if NATO fails to accept responsibility for the mission?

Why did we delay so long? The revolt has been going on for most of a month but Gadhafi's forces have been winning. If we had waited another few days there would have been no rebellion to aid. As it is, members of the Obama administration admit that Gadhafi may still be in office at the end of hostilities.

In 2007, candidate Obama said, "The President does not have power under the Constitution to unilaterally authorize a military attack in a situation that does not involve stopping an actual or imminent threat to the nation." Obviously he changed his mind since then. What changed it? How does he justify this change of heart? The President has cited a UN resolution as his justification. Does this mean that he believes that US resolutions trump Congress and the Constitution?

Why didn't the President cancel his South America tour? He canceled trips to Asia because health care reform was bogged down and because of the BP oil spill. Isn't an attack on Libya on par with those?

And finally, how many people who voted for Obama in 2008 thought that he would involve the nation in a third war after expanding operations in Afghanistan and continuing Bush's policies in Iraq?

Getting a Grip

Reactions to the Japanese nuclear reactor breakdowns are out of proportion and, in some cases, irrational. Just as the nuclear industry was getting organized again, this threatens to stop it. Eugene Robinson calls it a bargain with the devil. Anne Applebaum asks If the Japanese can't build a safe reactor, who can?

My answer to Robinson is that all of civilization is a bargain with the devil. The EPA just released a report claiming that emissions from coal-fired power plants cause 17,000 premature deaths a year and 11,000 heart attacks. Natural gas burns clean but there are allegations that fracking to release more gas causes earthquakes and contaminates drinking water. Ecologists want an end to undersea drilling after the Gulf Oil spill. Solar and wind generation required huge quantities of toxic rare earth metals. In countries without reliable electricity, wood-burning cook fires are a leading cause of death among women. We have to weigh our alternatives instead of rejecting one because of a well-publicized disaster.

Applebaum gives the Japanese more credit than they deserve. Yes, they have a long history of building earthquake-resistant buildings but these power plants were not designed for a 9.0 quake followed by a tsunami. They were designed 30 years ago to resist a much less powerful quake. This is a failure of imagination. Also, the Japanese are not infallible. The company operating these plants has a poor safety record.

So far, the nuclear disaster is serious but no one has been killed (except a worked who fell from a crane) and only a few injured. This is only a small part of a much larger disaster that killed tens of thousands, left tens of thousands more homeless, and interrupted services to Japan's most populous island. By the standards being applied to nuclear power, nothing should be rebuilt within miles of the coast.

In fact, after all of the attention lavished on New Orleans after Katrina and Haiti after its own earthquake, the news media is showing a surprising lack of compassion for the suffering of the Japanese. This has become a sidebar to the story about the reactors when the two should be reversed.

The Economics of Michael Moore

Michael Moore has been pushing the idea that we are not broke so we do not need to make government cuts on any level. His proofs are scatter-shot. He points to the cash reserves that businesses are accumulating and that fact that profits are up. He also points out that the 400 richest Americans are worth more than the bottom 50% combined. "The problem is that we are letting the rich keep too much of their money," he says. Let's take a closer look.

Corporate cash reserves are an interesting place to begin because they are easily misunderstood. Right now they are something over $2 trillion. That sounds like they are hoarding huge amounts of cash that other wise could be stimulating the economy. However, the way that cash reserves are calculated is misleading. Let's say that you have $2,000 in your pocket right now and call that your cash reserve. But, your rent is due and you have to make a car payment. Suddenly that cash reserve doesn't look so big. Corporate cash reserves work the same. Their cash on hand has to cover their payroll and other expenses. In addition, they are required by law to keep certain levels of cash on hand to meet emergencies. Subtract all of that and the corporate cash reserves drop by 75%. That still leaves them higher than normal but not high enough to provide a real stimulus.

What about the rich? If they control so much of the nation's wealth then we should take it away from them, right? Again, this is a lot more complicated.

First, why does the bottom half control so little wealth? Part of this is demographics. People under 30 tend to owe more than they own. When I was in my 20s we rented an apartment. We had two cars and some money in the bank and never missed a payment but, between car loans and student loans, we probably owed more than we were worth. We are a lot better off now. Not counting inheritance, we still have savings and a lot of equity in our house.

This is typical. Younger workers have not had time to accumulate much wealth and have a lot of debt. Even Bill Gates had a year or so when he had to live in his Microsoft office because he couldn't afford an apartment. People in the lower half may never reach the top 400 but most of them will cross into the top third at some point in their lives.

But let's assume that the top 400 have accumulated far too much wealth and we should take it away from them. Their total net worth is still less than the current deficit by around $200 billion and we still have next year's deficit to worry about and they year after that.

It gets trickier. Let's look at Bill Gates. He is currently worth around $56 billion. What if we decided that most of it was undeserved and seized $55 billion? What we would get is a pile of investments, mainly Microsoft stock. The government cannot spend stock so it would have to sell it off but it would not get anywhere $55 billion for it. That $55 billion is based on the current price but a massive sell-off would affect the price. When you dump that much stock it causes the price to drop and once it starts going down, it plunges rapidly. That's what caused housing prices to drop so much - too many people had to sell at any price.

Besides, who is going to buy Bill Gate's Microsoft stock if we also seize most of the assets of the other top 399? They will be selling their investments, also. The international markets would collapse.

Michael Moore insists that we do not need to cut government, we just need to soak the rich but $1.6 trillion is a lot of money. The rich don't have that much pocket change and trying to saddle them with the bill will end up hurting the rest of us. It might be indirect but it will happen. An example was the luxury tax levied on expensive yachts under George H. W. Bush. At the time this looked like a pittance on rich people's toys but most expensive boats are bought by the upper-middle class who take out a mortgage to do it. The tax doubled the required down payment and made these boast too expensive for most people. The boat-building industry saw an 80% drop in sales and the tax ended up reducing tax revenue by more than it raised. Eventually it was repealed.

Let's take one more look at Bill Gates and Moore's assertion that we are letting the rich keep too much of their own money. Gates founded Microsoft in the 1970s. Originally it consisted of three people and one product - a BASIC interpreter. After making a deal with IBM to provide an operating system, the company really took off. Most of Gates' wealth came from his stock in Microsoft. If we let him keep too much of his wealth then how would that have worked? Would we have required him to sell off portions of his holdings whenever they reached some limit? How would that have affected Microsoft? Would it have still grown?

None of that matters in the world of Michael Moore. He sees the world with a Marxist lens that says that wealth is bad and the rich are undeserving. I have no idea how he reconciles that with his own personal worth of $50 million. Would he still make movies if we capped his income at $100,000 per movie?

Some Thoughts on Public Service Unions

I have been a government worker for more than 30 years. When I first started I was covered by a union. Later I was promoted into a classification that the union did not cover. Because of some perceived management abuses, a new professional bargaining group was formed. It was not exactly a union but it acted as one. Even later I was promoted out of the classification this group covered.

All of this gives me some insight on public service unions from the inside and from the near-outside.

I don't see a lot of benefits derived from collective bargaining. The biggest advantages to working for the government - pension, civil service, job security - existed long before public service unions could collectively bargain. Public service unions were legalized in the Kennedy administration. OPERS, the pension plan I am under was founded 75 years ago. Civil Service protections go back to the 19th century.

Originally I was covered by AFSCME. This was at the tail end of the high-inflation years of the last-1970s. I remember that we got cost of living raises every few months, which was good, but that the raises were the same for everyone. I think that they were based on average salary which meant that people who made less than the average saw their income go up faster than inflation while people who made more than the average saw their buyign power decrease. That part was bad.

A few lessons I learned from that period was that unions were more concerned with their own members than with City workers as a whole. At one point the non-uniformed and fire unions had agreed to a wage freeze because of a budget crunch. Some money became available and the administration offered to use it to give everyone an increase. The police union was still negotiating and insisted that they get all of the money.

Later, after I was promoted out of the classifications covered by AFSCME, they were trying to justify something and used the argument that management could afford it because they had been giving "top management" the same benefits that AFSCME got. I got a real laugh out of being included in the term "top management". I supervised one or two people and spent at least 90% of my time doing the same work that they did. Since then management has never quite gotten the same benefits as union members. Thanks AFSCME.

One classification had a single pay rate rather than a range meaning that everyone was paid the same regardless of performance. Management wanted to change this so that high-performers could be rewarded. The union refused, insisting that the raises would only be used to reward management's friends.

Years later the City was in a budget crunch and raises of any kind were hard to come by. To save money, the City promoted a few people to a salaried position so that they would not be paid overtime. This caused them to organize the new group CMAGE which represented professional workers. Promises were made - CMAGE would always be an independent group and it would not require a "fair share" payment. Both of these promises were broken rather quickly. Co-workers still covered by CMAGE (which is now part of CWA) would love to take their vote back.

So my personal experience with unions has not been very positive.

On a different but related subject, teacher unions are warning about increased class size if cuts are made to education. I recently found a picture of my 6th grade class. The class size was 34. It did not feel huge and I never felt like the teacher was overwhelmed and had no time for me. In fact, numerous studies have shown that smaller class size does not help the student.

So why the push for smaller classes and the scare stories about larger classes? Because larger classes are more work for the teachers. It is as simple as that.

Remember that unions exist to benefit their members (and the union leaders, possibly not in that order). They do not exist to benefit the public at large. The largest unions use part of their dues to elect candidates that will support them over the general population. This almost exclusively benefits the Democrats.

Fox News North?

Robert F Kennedy jr wrote a column that has gotten a lot of coverage claiming that Fox news will not be moving into Canada because they have laws against lying on broadcast news.

This seemed strange when I read it so I did some research. It turns out that RFK jr is misrepresenting things. Fox News has been available in most of Canada for years. What he is really talking about is a totally new venture that has nothing to do with Fox or Rupert Murdoch. It is a new channel called Sun TV that is planned by Quebecor Media which, ironically, is the only cable provider that does not carry Fox.

It is hoping to duplicate Fox's success by carrying "straighttalking news". Because of this, Sun TV is being called "Fox News North". There is no connection with Fox although its founder did have lunch with the Canadian prime minister, Rupert Murdoch and Fox News president Roger Ailes. Sun will get its international programming from CNN instead of Fox.

Sun's premier has been pushed back from Jan. 1 to April 18 but I cannot find any news stories that indicate that this has anything to do with Canadian laws about lying on broadcast news.

UPDATE: The more I think about Kennedy's original column the more it bothers me. His thesis seems to be that it is impossible to have a conservative news channel without lying. The most charitable thing that can be said about is own column is that it gives a false impression yet he still has the nerve to accuse conservatives of lying.

Why Do Conservatives Hate Trains?

Slate's David Weigel asks Why do conservatives hate trains? While he makes an effort to quote both sides of the argument, he also laces his column with quotes like this one:

"You need to distinguish between Republicans and conservatives and libertarians when you look at this," says William Lind, the director of the American Conservative Center for Public Transportation. "It's the libertarians who push this crap."

The column makes little effort to follow up on exactly what the "crap" is.

A good chunk of the dispute is found in the fifth paragraph.

Libertarians, of course, have no problem with trains (see, e.g., Atlas Shrugged). They do have a problem with federal spending on transportation, as do many Republicans.

This is exactly right although it is incomplete. The full answer is that Libertarians are against trains because they are expensive luxuries that only exist through government subsidies and duplicate existing transportation. If trains were really superior then private companies would be building them and fares would pay for the service. Instead, the cost of building trains is passed on to the general population and non-riders have to subsidize the cost of tickets or else no one would ever take the train.

The liberal viewpoint is that riding a train is more pleasurable than driving and they are more prestigious than taking a plane or (god forbid) a bus so subsidies are justified. That sort of thinking is why the federal government could only pay for $1 out of every $1.40 spent last year.

The article makes some points about ridership but they are incomplete. Currently, ridership estimates for the various Obama administration high-speed train projects is over-estimated. If gas prices were to rise to $8/gallon then demand for trains would increase dramatically. Would trains break even? Probably not. None of the current rail projects can carry enough people to make a real difference in highway congestion. An huge increase in demand would probably require an expansion in rail capacity and we would eventually be back were we started with deficits and subsidies.

One factor that was never even eluded to in the column is the issue of peak capacity. Highway planners have to plan for peak capacity, otherwise known as rush hour. This means building extra lanes and bypasses. Allowing for peak capacity with trains is more complicated since there is are limits on how many people a train can carry at once. If you require some people to stand for an hour's train ride then they are going to reconsider driving. At some point you have to add more tracks which is very expensive on a per-rider basis. Adding highway lanes is also expensive but they are only needed where congestion is highest.

The biggest reason that peak capacity costs more for trains than for cars is obvious but nearly invisible. With trains, the government provides the entire package. With automotive transportation, the government only provides the roads. The drivers provide the cars and private business provides the refueling infrastructure. This is never figured in when comparing the cost of trains and cars but it explains the real divide between pro and and anti-train advocates.

People living in high-density cities are less likely to have a car and are used to having government-provided transportation take them from one place to another. To them it is only natural that the same service should be offered between cities. People who live in rural or suburban areas use their cars constantly. For any destination close enough for a train, it is easier to drive. They see trains as a drain of their tax money for someone else's use.

Right now the fight is similar to the fight over Obamacare. The goal is to commit so much money to trains that the states have no choice but to continue. Remember that there is a significant string attached to the current spending - a state that stops a rail project or shuts it down once it has been built will have to refund the federal money spent on it. Witht he feds picking up most of the building costs, the annual subsidies to run these lines will never be high enough to cover the funds that would have to be repaid if the line was closed. A few states have recognized this trap and rejected rail spending. California, on the other hand, is committing itself forever.


Update: According to National Review, "The more money California sponges from states that have rejected federal high-speed-rail dollars, the more local support, which is critical for additional funding, seems to be melting away."

Addicted to Big Government

The heck with oil addiction. We are addicted to big government. Like any addiction it has gone from something that we had control over to something that threatens to control us. It is ruining our finances.

A recent poll shows what I am talking about. People are worried about the deficit but they want programs that affect them preserved. They are only willing to cut services or raise taxes on other people.

The most popular: placing a surtax on federal income taxes for those who make more than $1 million per year (81 percent said that was acceptable), eliminating spending on earmarks (78 percent), eliminating funding for weapons systems the Defense Department says aren't necessary (76 percent) and eliminating tax credits for the oil and gas industries (74 percent).

The least popular: cutting funding for Medicaid, the federal government health-care program for the poor (32 percent said that was acceptable); cutting funding for Medicare, the federal government health-care program for seniors (23 percent); cutting funding for K-12 education (22 percent); and cutting funding for Social Security (22 percent).

The trouble is that the cuts that people are willing to make will not fix the problem. The things they want saved are the real causes for long-term budgetary problems.

How did we get here? In the late 19th and early 20th centuries the popular wisdom was that we could fix all of the world's ills through central planning. By using scientific methods, we could make everything work more efficiently. The ugliness of free markets would be tightly controlled by government and unions. Income would be redistributed from the undeserving rich to the deserving workers.

The ultimate expressions of this movement were communism, socialism, and fascism. The Progressive movement was closely involved with this movement, also which is why many of these themes are still part of the Obama administration. Of course, we never took the plunge into full-fledged centralized government. Instead we have made incremental steps.

One consistent tactic has been to create a limited program then make it grow. When it was established, Social Security only covered half the country. Medicare and Medicaid were much smaller when they were created. Many supporters of Obamacare were open about their goals. They were playing the long game. They are convinced that, once the public starts to receive the benefits of Obamacare it will be impossible to repeal.

At the same time, any time something bad happens there is a rush to "fix" it with new laws. After toys manufactured in China were found to contain toxic materials, Congress passed new laws to protect our children. They also essentially outlaw resell of children's clothes or small-scale domestic manufacture of toys because the required tests are too expensive. This happens constantly on all levels of business. The newest requirement for cars is likely to be a back-up camera which will add $100-$500 to the price of new cars, depending on whether the car already has a video screen or if one will have to be added.

Expanding government is easy. It is always someone else's money. The problem comes when "someone else" turns out to be future taxpayers and the bills come due. That time is rapidly approaching for Medicare, Medicaid, and Social Security. All of these have "trust funds" but these are nothing but bonds that have to be paid from the general fund.

So where do we go from here? People spent decades planning their future around government promises of pension and medical care in their old age. There isn't enough money to pay for these promises but it isn't right to renege on our promises, either.

Like any addiction, quitting will be painful and there are likely to be relapses. But the first step is admitting that we have a problem.

Oil and the Economy

It has been less than three years since we saw $4/gallon gas prices but people have already forgotten how this caused the Great Recession. This happened in three different ways.

First, rising oil prices started fears of inflation. People fixated on the cost of filling the gas tank and cut back on other purchases. Air fare also went up making all travel more expensive. The vacation industry was hit especially hard.

But that was minor compared to what happened next. In reaction to rising prices, the Fed raised interest rates. This was their normal response but things had changed since the last time they did this. The housing balloon had happened. This had several sub-components of its own. There was the sub-prime market - people with bad credit ratings who got a mortgage anyway. Most of these people had variable rate mortgages with little equity. The interest rates on their loans had been so low that even a minor increase in interest caused their monthly payments to rise beyond what they could afford. But this was not limited to the sub-prime market. People were treating their homes as ATMs, taking out loans based on the increase in housing values. They were hit just as hard by the rise in interest rates. Unlike previous decades when people had to put down substantial down payments, modern homeowners had very little of their own money tied up in their homes. There was a great incentive to walk away from mortgages that they could not afford. This caused a spike in the number of houses on the market which, in turn, caused a huge drop in house values.

The housing bubble would have burst at some point regardless but it was the rise in interest rates meant to counter inflation (which, in turn was caused by oil prices) that triggered it.

Finally there was the effect on automakers. For years they made their money by selling SUVs. These had low mileage and high profit margins. Chrysler had a line-up of almost nothing but SUVs, most of them getting less than 15 MPG. GM was not much better. Because the economy was beginning to contract, people were reluctant to buy cars and when they did, they bought the wrong cars. The government mandates fleet fuel efficiency. In order to meet this target, the car makers have to sell smaller, more efficient cars. The market does not want these cars so the car makers have to cut their profit margin in order to stimulate sales. In some cases the cars are being sold at a loss. All of this worked as long as they sold enough SUVs but when the market for SUVs evaporated they could not make enough money on the smaller cars. In a way it was only fair that the government had to bail out GM and Chrysler since government mileage requirements contributed to their problems. Regardless, rising gas prices hurt car makers which had a ripple effect through the economy.

When the world economy collapsed the price of oil dropped with it. Now the world economy is recovering and there is political unrest in many oil-producing areas. Oil is expensive again which could act as a brake on the world economy.

The Deficit

A recent New York Times editorial is rather breathtaking in it's dismissal of the deficit and its alarm over the Republicans' proposed cuts.

In defense of their bill to slash federal spending by $61 billion over the next seven months, House Republicans claim they are trying to make the economy grow and create jobs. In truth, such deep and sudden cuts could derail the recovery, without ever addressing the real sources of budget deficits — mainly explosive health care costs and incessant high-end tax cuts.

First, $61 billion is a big number but it is dwarfed by the size of the deficit. It will take a much deeper cuts than that to trim the deficit to manageable size.

More important is their explanation that the deficit is nothing but high-end tax cuts and health care costs. "High-end tax cuts" is another way of saying "tax cuts for the rich" which in turn reflects the idea that everyone who makes less than $250,000 deserves a tax cut but those making more deserve higher taxes. This boils down to "soak the rich". So, is our failure to soak the rich the root of the deficit? Of course not. The deficit through 2007 was a fraction of the current deficit but the tax cuts were in place long before then.

After a 14-month fight over Obamacare which was supposed to tame health care costs, the Times is now admitting (indirectly) that it failed completely. Regardless, this is not the cause of the deficit, either.

The real cause is simple mathematics. Deficits happen when the government spends more than it takes in. Revenue is down because of the recession and it is not likely to recover in the near future. Unemployment and underemployment are still sky-high which translates to people not being taxed as much. At the same time, government spending jumped. It started with Bush's bailouts but those were on-time expenditures and some, like the TARP, were repaid. The Stimulus was sort of a one-time jump except for the way that government works. Once you increase someone's budget, even as part of a one-time bump, and reduction counts as a cut. Many agencies saw a permanent increase in their budget because of the one-time stimulus.

While the government can justify running a big deficit during a recession, that officially ended nearly two years ago. The government has to adjust to new fiscal realities - it's revenues have been reduced on a long-term basis. We have to adjust to this by cutting services. It may sound cruel but there is no alternative that does not lead to financial collapse.

The Times must know this but it is fighting a holding action for big government. If cutting $61 billion is spending would hurt the economy, so would raising taxes by that much. But they want to perpetuate the fiction that the solution to the deficit is nothing more than taxing the rich. That way government can continue to grow.

This is only the opening skirmish. The real fight will come when entitlement reform is finally discussed.

Obama and Events

Remember the ad that Hillary Clinton ran during the primaries three years ago, the one where the phone is ringing in the White House? It is ringing for real on Libya and other parts of the world. The Obama administration seems content to let it go to voicemail.

In Libya, a dictator is using unacceptable force to try to quell a revolt. Things like this happened during the last three administrations. The usual response was a quick United Nations resolution establishing a no-fly zone enforced by the US. Why didn't that happen days ago?

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When George W. Bush made a signing statement the left acted as though the Constitution itself was in danger. Obama's announcement on support of the DOMA amounts to an after-the-fact signing statement. BTW, who remembers that this passed and was signed into law by Bill Clinton?

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A couple of days ago a wrote that Obama had become irrelevant because of the protests in Wisconsin. Later it came out that the White House and the Obama campaign organization Organizing for America were major organizers in these protests. They urged the unions to protest and the Wisconsin Democratic senators to flee the state. That means that he shot himself in the foot. The order of the headlines the last several days has put Libya first and Wisconsin second with other events following.

The government is on the verge of shutting down for want of a budget compromise and no one is watching. This was supposed to the the turning point in Obama's reelection but someone has to know it is happening before it can help him.

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What happened to the new civility and all of the condemnation of violent political rhetoric? The Wisconsin protesters are as vile (and white) as any protesters in recent history.

It's Official - Obama is not Transformative

Three years ago candidate Barack Obama openly speculated on which transformative president he would model himself on with FDR and Reagan at the top of the list. With Monday's column by E. J. Dionne, it became official - Obama is not a transformative president at all. Dionne admits:

No matter how much liberals may poke fun at them, Tea Party partisans can claim victory in fundamentally altering the country's dialogue.

President Obama was supposed to have altered the country's dialogue, tipping it from the days of Reagan-limited government and back to FDR-big government. As Dionne admits, that didn't happen. Instead the dialogue is where to cut government. Worse for Obama, the country's attention has moved from Washington, DC to Madison, WI and other states where budget crises are being met head-on. It is hard to be transformative when no one is paying any attention to you.

Obama brought this on himself by creating multiple budget crises in two different ways. The obvious one is the way he has "kicked the can" on the national deficit. Instead he increased spending and cut taxes. He continues to promise that the deficit will be addressed eventually. Speculation is that he will put it off until after the 2012 election. While Obama is content to ignore the deficit, a good part of the rest of the country is worried about the deficit, especially the Tea Party. That gives them the initiative.

Obama's other problem is more subtle, it is the states. Two years ago many states were experiencing budget shortfalls. They required hard choices. These were postponed by the stimulus which bailed out the states for two years. The bailouts have ended and several states changed from Democrat to Republican. In fact, Republicans control more statehouses than they have in decades. That means that they are controlling the dialogue at the state level (where the press's attention is). These governors have much more power to make sweeping changes than the President and Congress and they do not have the luxury of running deficits so they have opened a new dialogue on the relationship of government and public service unions.

Can Obama shift attention back to expanding government? Probably not. Republicans control the House of Representatives so no new big programs will come from there and Democrats in the Senate have a tiny majority and can no longer ignore the Republicans. All that Obama can do is try to put his own mark on current trends but his most recent budget failed that completely. His proposed cuts were so inconsequential that even his supporters complained.

Obama might salvage things if he wins reelection and the Democrats regain control of both houses of Congress. That would take an unprecedented number shift in seats. Without that, his best chance at a legacy rests on the constitutional challenge to Obamacare. If it is declared unconstitutional then a quarter of his first term will have been wasted.

So much for transforming America.

The Union Protests

Wisconsin is getting the biggest protests and most of the coverage but the same issues are being fought out in Ohio. The issue is complex but very little of the complexity is making the news.

The excuse for the bills reducing union rights is budget problems. This is a real issue. Wages, medical coverage, and pensions for unions are big expenses. There is also a measure of pay-back. Unions in general and public service unions in particular have been increasingly important in elections. In Ohio, attack ads against Kasich and paid for by public service unions started running in early Summer last year. The unions spent a lot of money and said some pretty nasty things about Kasich including that he only wanted to be governor so that he could outsource jobs. There is no love lost between the two.

One issue being addressed in Wisconsin is the withholding of union dues. Since millions in union dues have been spent on political campaigns, that means that the states are paying for ads for Democrats.

Former Governor Strickland has been making statements and getting a lot of coverage but no one is pointing out his conflicts of interest. While he was governor the unions had free reign. The Governor put a hold on new (non-unionized) charter schools. Non-union construction jobs were re-bid and Strickland had someone working full-time twisting arms to force local officials to use union workers. As I mentioned, unions spent millions trying to get Strickland reelected.

So, Strickland's statements on behalf of unions is a colossal conflict of interest. Despite having been vote out of office and this conflict, he is still being given face time on the news.

Listening to the protesters, you would think that working without a union was alien. In fact, only a small percentage of regular people are union members and they manage just fine.

Teachers may find themselves on the wrong side of public opinion as the schools are closed day after day. Also, the public perception of teachers as being underpaid is decades out of date. Teacher salaries being made public and, when combined with benefits, put teacher pay well above the median.

The Birther Trap

The press continues to ask prominent Republicans if President Obama was born in the US and if he is a Christian. This is a trap. No honest answer will be sufficient. On Meet the Press, Speaker Boehner was asked these questions. His answer on Obama's country of birth was: "The state of Hawaii has said that he was born there. That's good enough for me." That answer was not good enough for Slate's William Saletan who wrote "For me, lest anyone feel that the speaker was imposing his personal beliefs." Saletan went on to complain that Boehner had not stifled members of the Republican Caucus who have asked that the President instruct the State of Hawaii to release the long form of his birth certificate.

When asked about Obama's religion, Boehner said, "The president says he's a Christian," Boehner said. "I accept him at his word." That one set off Washington Post's Jonathan Capehart who said, "The obvious implication is that there's a possibility the president might be lying. This is offensive and an insult."

Obama's supporters have been using statements like this as a club for the last three years. During the primaries, Secretary of State Clinton received nationwide scorn after saying that Obama was a Christian "as far as I know."

The issue is what Capehart calls "weasel words." The various politicians add them because they don't want to be caught making a false statement about something that they have no direct knowledge of. That is why these questions are traps. The people being asked have no special knowledge. They are relying on others - the State of Hawaii or Obama himself - and they say so.

There are some outstanding questions. The President has released the short form of his birth certificate but not the long form. There is enough supporting evidence to show that the short form is a valid document but it is puzzling why Obama does not release the long form and silence the skeptics? The only difference is that the long form has the signatures of the mother, delivering physician, and witnesses. Can there be anything there that Obama does not want released? The only thing that I can think of is that his mother signed the form with her maiden name which would imply that he was born illegitimately. This is pure speculation and does not affect his qualifications to be president. The only other possibility that I can think of is that he sees this as a personal insult and refuses to release the form out of stubbornness.

Obama's religion is a trickier question. Boehner was not asked if Obama was a Muslim. He was asked if Obama is a Christian? Keep in mind that Obama was raised by an atheist and a lapsed Muslim. He was an adult before "finding Jesus" through the Reverend Wright. I'm a little hazy on the chronology. I don't know if Obama somehow had enough contact with Wright to convert him before joining Wright's church or if he joined the church first. That raises more questions. Did Obama actually have an adult conversion to Christianity or did he simply go through the motions for political reasons? In Chicago politics, being a member of a prominent church is almost a requisite.

Obama's knowledge of Christianity is poor, at best. He has misquoted the bible and confused the old and new testaments. Since dropping out of Wright's church he has not associated himself with a new church.

So there is a very good chance that the President is an agnostic or atheist who is just going through the motions. Speaker Boehner barely knows Obama so all he can do is take the President at his word. For him to go further would be a lie.

That is what makes the question, "Is President Obama a Christian?" such a sneaky trap. The person being asked does not know for certain but the slightest hint of uncertainty is taken as code for "Obama is a Muslim."

Saletan and Capehart manage whip themselves into a frenzy over what they see as insufficient responses but they overlook the real culprit - the reporters asking the questions. Why even ask unless there is some question about the truth? It does not matter how forceful the response, the question itself lingers. If Saletan and Capehart really worried about stopping these rumors they would condemn the reporters for keeping the issues alive. They do not because the questions give them a chance to hammer the Republicans.

Evils of the 20th Century

Slate has a column inspired by a new book on Hitler and Stalin. Part way through the column the author wonders why we remember Hitler's evil but overlook Stalin's? After all, Stalin killed several times as many people as Hitler (Stalin killed 100 million while Hitler killed 25 million). I can think of several factors.

It is important to remember that neither came from a vacuum. During the 1930s both had their supporters among American intellectuals. Fascism was promoted as the third way, half-way between communism and capitalism. Both Hitler and Stalin were providing direct support to their followers in the US. Hitler got support from unexpected sources. W.E.B. Dubois visited Nazi Germany and came away impressed with how efficiently the government was run (while shocked by their anti-Semitism). He was also a huge supporter of Imperial Japan.

Hitler's genocide was the dark side of the eugenics movement which was also popular among the intellectuals. Margaret Sanger, the founder of Planned Parenthood, was a believer in the softer side of eugenics - where Hitler wanted to eliminate the undesirables, she simply wanted to keep them from breeding.

The big difference is that we went to war with the fascists - a total war where most of the nation was mobilized and nearly everyone had friends and relatives in the fight. This discredited fascism. Once the bombs dropped on Pearl Harbor, no one wanted to be associated with it any longer. It went from mainstream to fringe overnight. Further, once we won the war we saw the concentration camps full of skeletal survivors and we got our hands on the records showing how many were gassed and incinerated. We were properly horrified.

This never happened with Stalin. He was an ally during WWII so the US government had an interest in suppressing stories about communist atrocities. The wars we had with communist countries were all smaller and never shocked the nation the way that WWII had. There was no mass conversion of communists the way that we had with fascists.

We never invaded the USSR and saw the results of Stalin's brutality with our own eyes. Stalin was good at suppressing information and there were plenty of communists and communist sympathizers in the US who were sure that nothing bad could possibly happen in the worker's paradise. They dismissed reports of mass starvation as propaganda.

Stalin was dead for decades before the truth came out. Even now there are apologists who say that Stalin was trying to accomplish a greater good so the deaths of 100 million were justified by his goals.

In the decades since Hitler's death, our image of him has changed. I have seen that over my lifetime. Our image of him has gone from being the worst of a crop of evil dictators to being the epitome of evil.

A few years ago some color movies of Hitler came to light. Some of them were taken by his wife. They show Hitler at ease, smiling and joking. There was real concern about showing these because they conflicted with our image of him as evil personified. Similar arguments have been raised about evaluating Stalin's evil. There are suggestions that this is really an attempt at rehabilitating Hitler.

There are important lessons to be learned here. The most important is that Hitler was not unique. Other leaders have risen to power and killed millions in the name of an ideology. A related lesson is that ideology does not excuse evil. Stalin killed tens of millions. Pol Pot "only" killed a million or two but it was still one out of every five in Cambodia. Deaths under Chairman Mao were somewhere between 20 and 70 million. All of these people were killed in the name of ideologies. If they died of starvation it is because the food was forcibly taken from them.

The final lesson is that many of the ideas that gave rise to these evils are still present in our culture today. They came about because the intellectuals of the early 20th century decided that they knew better ways of structuring society. If the were just given control they would solve the problems of the world. To paraphrase Mao, if half the country had to die to achieve these goals it would be worth it.

Inflation is Good?

Here is a sign that uncontrollable inflation is on the horizon - an article originally from the Guardian and picked up by Huffington insisting that inflation helps the common worker.

In other words, controlling inflation is about making sure that the wages of less-educated workers don't rise relative to the wages of more educated workers. And, the central banks have a license to push as hard as they like in this direction.

This is an incredible thing for someone with a doctorate in economics to say. Inflation hits the people at the bottom the worst. They have the least ability to handle rising prices in staples and the least ability to demand higher wages.

In the classic wage/price spiral, prices rise for whatever reason. Workers demand higher wages in order to stay even. This causes the cost of production to rise which leads to further price hikes which lead to higher wages, etc. Workers tend to come out behind on this because their request for wage increases are a reaction to inflation that has already happened. Worse, wage increases are usually, at best, annual. Trying to make up for a year's worth of inflation in a losing proposition.

At the same time, savings accounts are hit hardest. During periods of high inflation, banks never pay enough interest for accounts to stay even. The rich have alternatives, lots of them, and have no trouble staying ahead of inflation.

Anyone who was an adult in the late 1970s knows how hard inflation is on the lower-class. One reason that Reagan is so well-regarded is that he tamed it. Inflation it 13.5 percent in Carter's last year as president. That means that, for every dollar you made in 1979, you had to make $1.14 to try to stay even (the income tax was not indexed to inflation then so keeping up with inflation was not enough, you had to stay ahead of it in order to stay even). If you were lucky your bank might pay 6% interest so your savings would only decline by 7.5%.

By the end of Reagan's first term, inflation had dropped to 4.3 percent and the income tax was indexed to inflation.

During the 1970s, people gave up on savings accounts. People invested gold, collectibles, and real estate as hedges against inflation. Most of these were poor investments. Everyday people suddenly knew the current rate that money market certificates paid but those tied up your money for months at a time.

Times of high unemployment are the worst to have high inflation because it gives workers to little leverage in trying to negotiate pay raises.

Why would anyone want to bring those days back? I don't think that he does. I think that the left sees inflation increasing and is trying to convince us that it is a good thing.

Where Was Hillary?

It was obvious for the last several days that Egyptian President Mubarak's days in office were numbered. So why wasn't Secretary of State over there negotiating his resignation? Instead she was in Washington meeting with members of the House of Representatives who control the State Department's budget.

When protests erupted in the Philippines during the 1980s, President Reagan's administration was in the middle of it. They negotiated President Marcos's resignation and offered him asylum in the US in exchange for a quick and orderly transition. The US looked like heroes.

In Egypt we were reduced to spectators. The head of national security got his assessment of the situation from TV.

The Obama administration could have strong-armed its way in. We send a billion and a half dollars a year to Egypt and supply them with US arms. That gives us a lot of leverage. Why didn't we use it?

One possibility is President Obama's sensitivity to colonialism. He didn't want to be the big superpower forcing its will on an African country. But this was his chance to do good and to help put the US on the side of good. Instead he is on the sidelines and is unlikely to apply any leverage to the new Egyptian government.

Redistribution, Gays, Unions, and Trump

In a pre-Super Bowl interview, President Obama said that he is not trying to redistribute people's money and that he has not raised anyone's taxes and he has actually cut taxes.

How did anyone get the idea that he is a redistributionist in the first place? Maybe it came from an interview he gave before the election where he said that the Bill of Rights does not go far enough in allowing the government to redistribute wealth and that we need a second Bill of Rights. Or it could be from his answer to Joe the Plumber when he talked about taking more from the well-off in order to give others a leg up. Or it might be from his campaign promise to repeal the Bush tax cuts, but only for people making more than $200,000.

What about the other parts? Has he raised taxes? Yes. One of his first official acts was to sign into law an increase in cigarette taxes. More important, the President insisted that Obamacare would help cut the deficit. How? By raising taxes more than it raises spending. That's hundreds of billions of dollars of tax increases that the President forgot about.

Has he lowered taxes? Yes, a bit, temporarily. Part of the stimulus created a tax credit of up to $400 on individuals ($800 on couples). It phased out starting at incomes of $75,000 ($150,000 for couples) and it was only in effect for 2009 and 2010.

Also, the Bush tax cuts were extended for everyone. By Washington standards, not raising someone's taxes is a tax cut. Obama was against this, referring to the Republicans as "hostage-takers" for forcing the deal on him.

So, President Obama is a redistributionist but he is a very poor one.

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There is some debate about the inclusion of gays at this year's CPAC (conservative) convention. Conservatives need to pay more attention to Sarah Palin, Dick Cheney and Barbara Bush (George W. Bush's daughter). The country is becoming increasingly more accepting of gays. Democrats realized that being anti-gun cost them elections. The Republicans need to figure this out about gays. When the economy improves and social issues start becoming more important, being anti-gay could knock the Republicans back to minority status.

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In Ohio, John Kasich is promoting some anti-union legislation. Some of this is aimed at helping the state and cities balance their budgets. Some of it is probably pay-back for a nasty election campaign. The unions should not be surprised. They spent months running ads that claimed that Kasich only wanted to become governor so that he could outsource more jobs.

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Donald Trump is considering running for president as a Republican. Can we give him to the Democrats?

The Individual Mandate and the Constitution

Laurence Tribe has a new column spouting old ideas in the New York Times justifying ObamaCare in general and the individual mandate in particular. I've written about this before in general but he places his arguments in a nice row, just begging for them to be knocked down.

He starts his arguments with this rhetoric question: Does anyone doubt that the multitrillion-dollar health insurance industry is an interstate market that Congress has the power to regulate?

The answer is, of course, "no" but ObamaCare goes much further than just regulating the insurance industry as we can see in his next paragraph:

Many new provisions in the law, like the ban on discrimination based on pre-existing conditions, are also undeniably permissible. But they would be undermined if healthy or risk-prone individuals could opt out of insurance, which could lead to unacceptably high premiums for those remaining in the pool. For the system to work, all individuals — healthy and sick, risk-prone and risk-averse — must participate to the extent of their economic ability.

The logic here is that Congress has written regulations but the only way for them to work is to expand their authority in an unprecedented manner. This is quite a reach, probably an overreach which is where the whole argument comes from - can Congress regulate an industry in such a way as to extend its power in ways not directly permitted by the Constitution?

Tribes sidesteps this question. He points out that the Court upheld Social Security in 1982 but ignores the fact that this is a requirement to participate in a federal program, not a mandate to buy a commercial product. One of the great ironies of ObamaCare is that Canadian-style or British-style socialized medicine would be easier to reconcile with the Constitution but is politically unworkable.

He then offers this argument:

Individuals who don't purchase insurance they can afford have made a choice to take a free ride on the health care system. They know that if they need emergency-room care that they can't pay for, the public will pick up the tab. This conscious choice carries serious economic consequences for the national health care market, which makes it a proper subject for federal regulation.

This contradicts his earlier argument. The whole point of the individual mandate is to force people who are unlikely to need insurance to buy it anyway. With insurance premiums, even under Obamacare, running hundreds of dollars a month, the money that individuals in this group save by not belonging to ObamaCare will pay for quite a bit of emergency care. Hospitals are obligated to offer free emergency room care to the poor but we are not talking about them. We are talking about healthy people who are gainfully employed but do not have the level of coverage mandated by ObamaCare. If they need treatment then they will be billed. It is also possible that they are carrying catastrophic care insurance which would cover them in case of a major expense but is not considered sufficient for ObamaCare.

Tribe pulls out his trump card:

Even if the interstate commerce clause did not suffice to uphold mandatory insurance, the even broader power of Congress to impose taxes would surely do so. After all, the individual mandate is enforced through taxation, even if supporters have been reluctant to point that out.

Is ObamaCare a tax or isn't it? While it was being debated in Congress, supporters insisted that it was not. Now that it is law, they say that it is. Regardless, the tax argument has a few of its own problems. The Constitution gives Congress the right to impose taxes but states that "Duties, Imposts and Excises shall be uniform throughout the United States." Is a tax that is levied only on people who did not participate in a commercial transaction uniform? Just as with interstate commerce, this would be the first tax levied on people for inactivity.

Tribe goes on to dissect the individual justices and why he is sure that they will "do their constitutional duty". Most of this is wishful thinking. The only interesting part is the statement, "It would be asking a lot to expect conservative jurists to smuggle into the commerce clause an unenumerated federal "right" to opt out of the social contract."

Tribe is correct. It would be asking a lot. There is no reason to think that the justices would allow the law to stand but add in an exception. That is why the Florida judge ruled that the entire law is void.

Reagan's Mistakes

In the flurry of praise form both sides on the 100th anniversary of Ronald Reagan's birth, no one has reminded us that not everything went well. There were some huge blunders during the Reagan administration.

The illegal immigrant amnesty was one of them. It was supposed to be a package deal - we stop new illegal immigrants from coming in and we allow the ones already here to become citizens. Conceived as a one-shot deal, it has become the model for new amnesty proposals covering two or three times as many people as the original. In the meantime, increased border security never happened.

The Iran-Contra Affair was the biggest blemish on Reagan's administration although it had the least long-term affect. it was also extremely complicated. Around the time of Reagan's election, communists took control of Nicaragua. Reagan wanted to help the anti-communists (Contras) but many in Congress were afraid that it would turn into a new Viet Nam. Congress passed a law over Reagan's veto forbidding the US to aid the Contras. In addition, the communists had some sympathizers in the US. At the same time, Iran was in a terrible war with Iraq and six US businessmen had been taken hostage in Lebanon by Iran-funded Hezbollah. What happened was that we sold arms to Israel which sold them to Iran for a profit. The profit was sent to the Contras. This clearly flouted the law that Congress had passed. This was further complicated because there was considerable question about Congress's authority to dictate how the President conducts foreign affairs.

Oliver North who worked in the White House at the time took the blame for the operation and insisted that Reagan had no idea what had happened. Reagan told some outright lies about the scope of the arms sale. Later North admitted that Reagan had been part of the operation all along and went so far as to lecture Congress about his duty to protect the President.

The two mistakes that we are still paying for today both involve Islamic terrorism. The Soviet Union invaded Afghanistan during the Carter administration. Carter did very little in response to this. The Reagan administration armed the rebels with advanced weaponry and eventually the Soviets withdrew. Instead of staying and helping the Afghans to rebuild, the US also withdrew. This created a power vacuum that led to the creation of the Taliban. There are rumors that Osama bin Laudin was trained by the CIA while he was in Afghanistan but this is solely based on both having been in Afghanistan in the 1980s.

During the 1980s, the PLO took over part of Lebanon and began shelling Israel. Israel retaliated. The UN intervened and a peacekeeping force largely made up of Americans was sent to Lebanon to keep the two sides separated. In one of the first large suicide-bombings, a truck of explosives ran some roadblocks and blew up a building housing hundreds of Marines. 241 Marines were killed and the peacekeeping force was quietly withdrawn. This was one of the events that convinced Osama bin Lauden that it would be easy to drive the US out of the Mid-East (Viet Nam and Clinton's withdrawal from Somalia were the other two events.)

These last two contributed to the rise of Islamic terrorism. About the best thing that you can say for Reagan is that this was still over the horizon while communism was a current danger during his administration.

Reagan and Today's Republicans

For the last few years the Democrats have insisted that the Republican Party has drifted so far to the right that even Reagan would not be welcome. This is on the basis of two main issues - taxes and immigration. How true is this?

Reagan is well-known for his cuts in the income tax rate. One of the first pieces of legislation passed under his administration was a cut in the tax rates which was phased in over three years. In 1986 he presided over the biggest overhaul of the tax code in decades. The number of tax brackets was cut and the nominal tax rate was reduced for most people. This was also the basis for the charge that he raised taxes. What happened?

The big goal of the 1986 tax overhaul was to simplify the taxes. Many wealthy were able to use loopholes and escape paying taxes. These loopholes had been enacted over decades and the reason for most had long since passed. Reagan made it clear that the tax simplification was to reduce tax rates while being revenue neutral. That meant eliminating most loopholes. Depending on how you look at it, eliminating these loopholes amounted to one of the largest peace-time tax increases in history. Regardless, the overhaul was popular. The existence of the loopholes meant that people were not being taxed evenly and that was a source of discontent. So, some people saw their taxes go down and some people saw their loopholes eliminated. It all evened out.

Since 1986 many loopholes have been added back into the tax code and some Republicans are calling for a new overhaul comparable to the 1986 one rather than continuing to fight over the Bush tax cuts. These calls include Tea Party members. That places Reagan well within the current Republican values.

What about amnesty for illegal immigrants? Reagan championed it but since then it has shifted from a conservative position to a liberal one, one that President Obama refuses to take a position on.

It is harder to say what Reagan would do now. The deal during his administration was that amnesty would be accompanied with increased border control. The Mexicans already here could choose to stay but we would stop more from joining them.

In the decades since the Reagan amnesty, border patrol has become a joke. Simply building a big fence has been called cruel. Border agents have been pulled back from the border. Cities have become "sanctuary cities" with orders to the police to stop illegal aliens from being deported. Arizona is being boycotted because of a law calling for tough enforcement.

So, the deal under Reagan was a giant failure. The number of illegal immigrants currently in the country is several times the number under Reagan and there is no progress on controlling the border. For all intents and purposes, the Democrats are calling for an open border with Mexico. Reagan was against this so he would probably side with the current anti-amnesty forces.

So, Reagan would still be welcome in today's Republican Party. What about JFK? Kennedy cut taxes and was pro-military. Would he be welcome among the today's Democrats?

A Sputnik Moment?

In his State of the Union speech, President Obama said that we are having a Sputnik Moment. What does that mean?

For most people alive today, Sputnik is history. The launch happened before Obama was even born. I was about two and a half at the time so I certainly don't remember it. That means that it needs to be put in context.

America ended World War II feeling pretty good about itself. We defeated Germany and Japan. We were also the world's only nuclear power. That changed in 1949 when the Soviet Union exploded its first nuclear weapon. Still, we were convinced of our technological superiority.

When Sputnik was launched in 1957, it shocked the world for several reasons. One was that we assumed that our missile program was more advanced than the Soviets. During WWII, the Germans had the best rocket scientists and we had the best of them working for us.

Another shock was that it meant that the US was potentially in range of Soviet nuclear missiles. We had depended on a Fortress America where our distance from Europe would protect us from the brunt of any conflicts. This worked well in WWII. We escaped the devastating bombing that leveled Japan and most of Europe. But now we were vulnerable to weapons that were more powerful than anything used in WWII (by that time both sides had hydrogen bombs which were much more powerful than the atom bombs dropped on Japan).

The final shock was that we had not seen this coming. We had no idea that the Soviets were so advanced. What other secrets wre they hiding.

Remember, at that time we were in a state of low-level war with the USSR. This was fought through proxies such as Korea, Viet Nam, Cuba, and China but it was a real shooting war which threatened to turn into WWIII if the Soviets gained a significant advantage. The USSR had enough troops and tanks to overrun western Europe if they wanted. We had to show that we were their equal.

Sputnik launched the Space Race. This consisted of massive spending on both sides for both military and civilian uses. The military part was simple - to be able to survive a first strike and retain the capacity to annihilate the enemy. This lead to the concept of Mutually Assured Destruction (MAD) where each side knew that both would perish regardless of who started a nuclear exchange. While it sounds extreme, MAD kept the peace through the end of the USSR.

The civilian side of the space race was also important. It gave the nations a chance to show their capabilities without being belligerent. It also acted a public relations, showing what each side could accomplish.

But we were at a huge disadvantage. The Soviets were years ahead of us and they always knew how to build more powerful booster rockets than we did. President Kennedy knew that we could never catch up as long as the goals were low-earth orbit so he raised the stakes - we would go to the moon. Both sides needed new technologies for this so we started on an even footing.

The race to the moon was a real race. There was an urgency because we knew that if we did not do it, the Soviets would.

Obviously, we won. The Soviets gave up on the space race and we lost interest soon after that. The number of lunar mission was cut and both sides turned their eyes back on low-earth orbit.

So, our Sputnik Moment galvanized the nation into a 12-year effort that ended in a moon landing.

Contrast that with today. China has built more windmills than we have and they have the world's largest super computer. Neither accomplishment is significant. They signal a lack of will rather than a lack of ability on our part. Windmills are still a young technology and there is considerable question about the current generation's ability to generate more power than was used in making the windmills in the first place. Massively parallel supercomputers are easy to build (using technology developed in the US). A few years ago a group of volunteers built a supercomputer over a weekend using Linux notebooks and WiFi, just to prove how simple it is.

No country in the world has demonstrated that it is so advanced in a field that it will take most of a generation for the US to catch up. Similarly, we are not in a hostile competition with anyone. Relations with China are infinitely better than they were with the USSR during the Cold War. The closest thing to the Cold War today is the struggle against Muslim extremism and that is purely ideological.

The biggest thing about a Sputnik Moment is that no one needs to tell us that we have had one. In fact, if the President feels the need to tell us that one has happened then almost by definition it has not happened.

Reagan at 100

The Founding Fathers knew a government can't control the economy without controlling people. And they knew when a government sets out to do that, it must use force and coercion to achieve its purpose. So we have come to a time for choosing. (October 27, 1964)

I'm sure that President Obama would agree with this quote. The difference is that he sees nothing wrong in controlling people. That is what the progressive movement is still about. That is what the nanny state is all about, too. The people at the top are sure that they know what is best for people and they want everyone to conform. Obamacare makes sure that you have to carry a minimum amount of insurance. Trains control where you go and when. The EPA has issued orders that will force smaller cars and more expensive power.

Obama wants to raise taxes on the rich because he thinks that government can make better use of their money than they will.

Reagan understood that no single solution works for everyone and freedom includes the option to make the wrong choice. He also wanted an America that is strong enough to protect these freedoms.

When Reagan spoke these words we were in a decades-long competition with communism which tries to eliminate all choice. When Reagan became president he made it his goal to eliminate communism. He was successful. Much of the world lived under communist rule in 1980 and it was expanding across Africa and South America. The principle exporter of communism, the USSR collapsed a few years after Reagan's presidency ended and only a handful of true communist countries remain. China can no longer be called communist and even Cuba is loosening its grip on people.

Very few presidents leave such a mark on the world. President Obama does not have a chance of accomplishing as much for the simple reason that he does not have the vision for it. Neither did Clinton or either Bush. George W. Bush tried to with his democracy initiative but he failed on the follow-through.

People did remember Kennedy's inauguration speech on its 50th anniversary but the Kennedy administration actually amounted to very little. His biggest achievement was setting the goal of landing a man on the moon. Johnson's centennial came and went without note even though he gave us our modern welfare state. Nixon may be remembered but not in a good way. Ford was barely remembered at his death. People think of Clinton fondly now but by the end of his term he had turned his presidency into an SNL punch-line ("What did you expect? We're the Clintons.")

It is scary to think of how different this country would be if Jimmy Carter had won a second term or George H. W. Bush had won the primaries.

The Strange Justification for the Individual Mandate

Yesterday Federal Judge Roger Vinson ruled in a Florida court that the individual mandate in Obamacare is unconstitutional. His reasoning is the same as most critics of the law - that nearly any economic choice has economic consequences so this opens the door to unlimited Congressional power.

It would be a radical departure from existing case law to hold that Congress can regulate inactivity under the Commerce Clause. If it has the power to compel an otherwise passive individual into a commercial transaction with a third party merely by asserting -- as was done in the Act -- that compelling the actual transaction is itself 'commercial and economic in nature, and substantially affects interstate commerce,' it is not hyperbolizing to suggest that
Congress could do almost anything it wanted.

The response, which was echoed against yesterday, is interesting.

The justification says that the individual mandate is needed in order to assure enough new, healthy people to offset the cost of the other provisions, especially the prohibition against preexisting conditions. Without the influx of new insurance subscribers, the whole structure falls apart.

If you look carefully at this, the Commerce Clause is being invoked to assure that companies providing health insurance will be profitable at the expense of young, healthy people who would be justified in only carrying catastrophic care insurance. In exchange for this new influx of cash, the insurance companies will be required to carry everyone and will be subject to tight limits on their rate structure and the percentage of their income can be taken as profits.

The people defending the law never point out the role of insurance company profits but they are central to the argument.

In a way, this law was designed to be a back-door nationalization of health care. Instead of seizing the insurance companies and replacing premiums with taxes, the law keeps things in private hands. The result is the same except for the overhead that will go to the insurance companies.

But all of this dodges the question of Constitutional authority. Was Congress within its rights when passing this law? Proponents of the law sure as former Majority Leader Pelosi seemed to think that the result was so important that Constitutional issues should be brushed aside. Possibly they think that health care should be evaluated as a unique issue.

Is it unique? Are there any other situations where a goal for the common good might be subsidized by forcing people to subscribe? How about high speed trains? They are a goal of the Obama Administration but passenger train service in the US loses money. What if everyone was required to buy a train pass? Total ridership would climb some but revenue would increase more because trains do not meet most people's needs. How is this different from the individual mandate?

Of course, passenger rail is already tax-subsidized. It would make more sense to raise taxes in order to provide more subsidies. But that is the point. Congress could levy a tax on the population with credits for health policies already in place and use the revenue to subsidize coverage. Why didn't that take this approach? Because they could never sell it. Instead they disguised it.

Judge Vinson was the 4th judge to rule on health care and the second to rule against it but his ruling is the most important to date. His ruling was on the suit filed by 26 states so it affects the most people. Also, he struck down the entire law, although he delayed implementation pending appeal.

It seems that most laws include a small disclaimer that says that if part of the law is found to be unconstitutional, the remainder will remain in effect. That clause was included in early drafts of Obamacare but dropped from the final version. This makes it an all-or-nothing ruling. If any part of the law is found to be unconstitutional then the entire law is nullified.

How did this happen? I suspect that the insurance companies had it taken out. They have no intention of offering coverage on demand unless the individual mandate is in effect. That makes the fight over the mandate a very high-stakes battle.

That 1978 Feeling

President Carter was defeated in the 1980 election largely on the basis of one question posed by Ronald Reagan during a debate, "Are you better off now than in 1976?" People voted "no" because of the economy and because of international relations.

The economy during the 1970s was terrible. President Nixon tried a wage/price freeze to cool inflation. President Ford tried a WIN campaign ("Whip Inflation Now"). Neither worked. The economy seemed stuck in a 2-4 year cycle of recession and high inflation. They invented a new name for it - stagflation for stagnant economy with high inflation. This was made worse by oil shortages caused by Arab embargoes. Adjusted for inflation, gas prices were higher during the Carter years than in 2008 when it topped $4/gallon.

Internationally, Carter seemed completely lost. The USSR invaded Afghanistan and Carter's main responses were to cancel a sail of American grain to the USSR and to boycott their Olympics. Both of these hurt Americans more than the Soviets.

But this was nothing compared to Iran. When Carter came to office, Iran was a long-standing American ally in a region that was generally pro-Soviet. In 1978, the country was paralyzed by strikes and demonstrations against the Shah. In early 1979 the Shah left the country and was replaced by a democratically elected government that Carter's administration helped create. Two weeks later the Ayatollah Khomeini announced that he was returning to Iran. The government was going to block him but Carter urged them to allow Khomeini entrance. Almost immediately Khomeini's followers overthrew the interim government and established the current government based on strict Islamic values. Later that year Khomeini's government overran the US embassy and held the staff hostage for 444 days.

Carter seemed powerless to do anything about this. There was an attempted rescue attempt but it stretched what was technically possible and failed completely.

By the 1980 election the common image of President Carter was that he was a nice man who had gotten in over his head. Reagan promised to make the country strong again and to cure the economy through tax and budget cuts. The fact that he delivered on both promises is why President Obama looks to Reagan for a role model instead of Carter. But, two years into his administration he is facing many of the challenges that Carter faced.

Unemployment is high by any measure and the economy is not growing fast enough to reduce it appreciably by the 2012 election. economists have been warning that the measures the Obama administration used to promote a recovery were inflationary. While inflation was flat in 2010, there are signs that it is picking up. Food prices are rising. Some of this is hidden by smaller portions but eventually people will notice. Ethanol subsidies are further affecting the price of food as more and more crop land is being used for fuel. Gas prices are 20% higher than last year with $4-$5/gallon predicted by Summer. Demand from China for raw materials is raising the cost of production world-wide.

So far the economy is not as bad as in the Carter days but chances of a Reagan recovery are remote.

Internationally, Russia is looking more aggressive than it has since the days of the USSR. Worse for Obama, China ignores him on human rights and currency exchange issues.

The big wild-card is Egypt. The Egyptian government is important to the US but it sunk into a dictatorship with sham elections some time ago. Mubarak has led Egypt since Sadat was assassinated in 1981. President Bush (43) pressed for democratic reforms but the Obama administration dropped that initiative. In 2009, Secretary of State, Hillary Clinton referred to Mubarak as a friend of her family. As recently as last week she was still promising that his government was stable. As calls for Mubarak's resignation increase, the United States is increasingly being seen as supporting the dictator.

The problem is that none of the groups who are likely to replace Mubarak are desirable. All of them are sympathetic to radical Islam and Iran and hostile to the US. None of them are likely to support the peace treaty with Israel, either.

The best that can happen in Egypt is an orderly transition to Mubarak's picked successor who may turn into a new dictator. The worst that could happen would be a new radical Islamic government and a new war on Israel.

Events may clear up on their own but if they go the wrong way then the Obama administration will not be able to clean things up in time for the election. Both internally and externally, the future of the Obama administration depends on events which are outside of his control.

Obama and Reagan

According to the cover story on Time, President Obama is trying to emulate President Reagan. The appeal is obvious. Reagan guided the country through the only post-war recession comparable to the Great Recession. Two years later his popularity rebounded to the point that he won re-election by 49 states to 1. He changed the way that we think about the government. The Republican party still defines itself according to his principles. What president wouldn't want that legacy? But can Obama carry it off? I doubt it. Obama is not Reagan.

It is hard to think of two more different presidents. Beyond the obvious, that Obama's principle goal is to reverse Reagan's changes the two men have nothing in common.

Reagan was the oldest man inaugurated president. Obama was the 5th youngest. Reagan came across as a figure full of grandfatherly wisdom. Obama comes across as cold and aloof. Reagan's confidants say that he was the same man in private as public. Obama is rumoured to be short-tempered and touchy in private - a trait that sometimes slips out.

Reagan came to office after a long, public career. He was a two-term governor of California and ran for president in 1976 before winning the nomination in 1980. Obama went from undistinguished state senator to president in four years. Reagan ran on a well-defined short list of goals. Obama made hundreds of promises but really ran on an undefined platform of hope and change.

Reagan always had to deal with the opposition and knew how to court them. The Democrats controlled the House during his entire term and the Senate his last two years but he managed numerous legislative successes. General opinion is that Obama will not be able to get any further major legislation passed now that the Republicans control the House.

Even before his inauguration, Reagan spent time "stroking" congressmen. He knew who they were and what their pet causes were. Obama's attempts at stroking the opposition began and ended with inviting some of them to the White House to watch the Super Bowl. While Obama has had significant legislative successes, they were accomplished by partisan arm-twisting.

Reagan was a trained actor and motivational speaker who knew how to connect with his audience. Obama has given a few good speeches but he is limited by his reliance on his Teleprompter. When he has it he looks back and forth like a metronome. When he has to use notes then he looks right, down, left, down, etc.

The State Department's strategy for a summit between Reagan and the Soviet Premier was to send Reagan in without an agenda and let Reagan charm the Russian. It worked. That's where the START arms control treaty came from. Obama has tried personal appeals to foreign leaders several times, ranging from one-on-one talks with the Chinese premier to lobbying the Olympic committee on behalf of Chicago. None of these have been successful. After the event, foreign leaders have described Obama as arrogant, dictating terms rather than negotiating.

Reagan's secret weapon was that he was constantly underestimated. His enemies insisted that he was a half-wit who slept through meetings and agreed with whoever had the best slide show. In contrast, Obama's abilities are overestimated by the outside world and by himself. When he took office he was expected to be the reincarnation of Abraham Lincoln, FDR, and JFK rolled into one. He personally mused about which of these presidents he would be most like (along with Reagan). He has told staffers that his problem with appointing cabinet members is that he personally was the best candidate for most of their jobs.

Given all of this, there is no way that Obama can remake himself into a genial, self-effacing president and get the recovery rolling in time for the next election.

Playing with Trains

In his State of the Union Speech, President Obama called for a system of bullet trains built. His goal is for 80 percent of Americans to have access to bullet trains within 25 years. High speed and bullet trains have been a goal of his administration all along. The Stimulus included billions in train subsidies.

He promised that, for some trips, they would be faster than flying and without the pat-down.

The President is not the only one enamored with rail transportation. Democrats at all levels love the idea of trains from street cars through light rail, to bullet trains. This was a major subject of debate in Ohio over the last year with the outgoing governor and Secretary of Transportation Hood determined to make Ohio so committed to the project that there was no turning back. Since they were dealing with government, the Ohio project never got beyond the drawing board. The new governor, John Kasich, asked to be able to use the train money for other projects or to simply turn it back to the general fund. Neither was acceptable to Hood so the money went to California along with an even larger fund from Wisconsin.

So, what is the attraction? Why do 21st century politicians love a form of transportation that was dominant in the 19th century?

Trains do not have a lot to recommend them. There is nothing that a street car can do that a bus cannot. The Ohio 3C Railroad (Cincinnati, Columbus, Cleveland) would have been slower and more expensive than driving. Further, it had very limited hours making it unsuitable for business trips or attending pro sports. Even if it met ridership goals it would never break even. Its total capacity was too small to reduce congestion on the highways. Letters to the paper indicated that its supporters either had unrealistic expectations for it's affect on highway traffic or had visions of taking day-trips to other cities in subsidized-comfort at ticket prices that ordinary folks could never afford.

Obama's promises for the bullet train are similarly unrealistic. Bullet trains are most economical for trips under 500 miles which means that they should not be considered beyond the coasts. Current Japanese bullet trains run at 120-160 mph although there is one Chinese train that runs at 220 mph. This is faster than a car but slower than an airplane. A 737 cruises around 260 mph and a 747 exceeds 500 mph.

Possibly the President hoped that trains could shorten a trip by going directly from one location to another. Many plane flights include a trip to a hub and a flight from there. Some trips require two plane changes. Unfortunately, economics says that trains would have to work the same way. Tracks are the most expensive part of a train so few cities would have more than one set of tracks going through it. You would have to switch trains just as you do airplanes.

Trains are also inflexible. It takes years and a lot of money of dollars to build track. In contrast, adding a flight to a city takes a plane or two and space at an airport. Even airport expansions are easier.

California is a good example of this. The first segment of its high-speed train has been started. It will not be used when it is completed. It was chosen because it goes through lightly-populated farm land. Other portions of the line are held up in lawsuits and environmental studies. It is unknown if the current section will actually connect with the rest of the line or not but the stimulus specified that work had to start this year.

The cost of these trains can be considerable. Even Japan's trains which are the model the world looks to were ruinously expensive.

None of this answers the question about why politicians are attracted to projects like this. I can only offer some guesses.

A bit of it might be that it recalls the glory days of the Progressive movement in the early 20th century. Another aspect is emulating Europe which has been behind the US in automobile ownership and is more densely populated. Light rail has long been successful in major population centers, especially New York City. Some train-lovers hope that adding trains will make them more like these larger metropolises.

A bigger motivation for state government is the economy. It is tempting to take a federal outlay now and let future politicians worry about how to pay to finish the lines and subsidize operations. Most of the immediate jobs are in construction so the construction unions are lobbying in favor.

Possibly the biggest attraction is the level of control that trains give the government. They get to decide where and when the trains will run. They get to pick winners and losers. Cars let people decide for themselves where they want to go. Airlines follow demand. But trains make the decision for you. They make some destinations easy and other difficult. The placement of stations can be used to reward areas and hurt others.

Too many progressives expect everyone to share their lifestyle and tastes. Trains are a way of forcing these choices on people.

Assuming you can get people to ride them. If you can't then they are a big waste of money.