Handicapping Obama

There have been 11 presidents during my lifetime. Three of them were defeated when they ran for reelection. What does this mean for President Obama's reelection chances?

The three that were defeated were Gerald Ford, Jimmy Carter, and George H. W. Bush. There were significant differences between these presidents. Only Carter won the office on his own. Ford inherited the office from Nixon, and Bush was Reagan's chosen successor. Regardless, the parallels with these three presidents should be keeping the Obama team up nights.

Like Obama, all three had stratospheric approval ratings early in their presidency. Both Ford and Carter came to be seen as nice men who were in over their heads. Bush never seemed incompetent but he was seen as being out of touch. Most importantly, all three ran during economic downturns and seemed clueless about how to handle the economy.

Ford started his administration with a huge store of good-will. He was originally appointed to be vice-president when Agnew resigned over a scandal in 1973 and became president less than a year later when Nixon resigned so he was viewed as an outsider to the Nixon White House. He also came to office after American troops had withdrawn from Viet Nam so his presidency was seen as the start of a new era. Unfortunately he was unable to work with Congress and quickly became known for the number of bills he vetoed as well as the number of vetoes overridden. Most important, both unemployment and inflation topped 7%. Ford tried to control inflation with what amounted to a public relations campaign called WIN (Whip Inflation Now). It was a total failure. Ford's pardon of Nixon is often cited as the reason he lost the election and it was certainly a factor but if the economy had been solid then the fallout over the pardon would not have made a difference. Ford's foreign policy was also seen as weak. During Ford's administration North Viet Nam invaded South Viet Nam. Ford was unable to convince Congress to deliver military aid money promised by the Nixon administration. Consequently, many on the right, starting with Ronald Reagan, blamed Ford for losing Viet Nam.

Ford's weakness was shown when Ronald Reagan ran against him in the primaries. Ford won easily but Reagan gained national exposure and enthusiastic supporters.

Jimmy Carter seemed to come from nowhere and ran as a Washington outsider and as someone untouched by the Watergate scandal. He won in a very close election. Unfortunately for Carter, the economy did not improve. He had popularized the term "misery index", the inflation rate added to the unemployment rate, during his campaign but was unable to improve it. Instead it went from 12.72 to 19.72, the highest on record. On top of that, oil prices spiked because of an Arab oil embargo. All of this gave Ronald Reagan a major campaign point - "Are you better off now than you were four years ago?" Carter had little success working with Congress and was seen as weak overseas. During the Carter administration communism was seen as expanding into South America and Africa and the USSR invaded Afghanistan. Iran went from a friendly country to a hostile Islamic theocracy. The low point for Carter came when Iran invaded the US embassy and took the staff hostage for 444 days. The common perception of Carter was of a nice guy who wasn't up to being president. As with Ford, Carter's weakness was shown when he was challenged in the primaries, this time by Ted Kennedy. While Carter easily captured the nomination, he lost a close election to Ronald Reagan.

George H. W. Bush won the 1988 election on a promise to continue the Reagan Revolution. He lost a lot of support from conservatives over a tax increase and passage of major legislation such as a revised Clean Air Act and the Americans with Disabilities Act. His popularity spiked with the successful conclusion of the Gulf War but dropped because of concern over the economy, especially unemployment, the trade surplus with Japan, and the deficit. He was seen as out of touch. He openly admitted that foreign policy interested him more than domestic policy. Worse, a picture of him vomiting into the lap of the Japanese Prime Minister seemed to summarize trade relations. He lost a close election to Bill Clinton.

In all three cases, the president's reelection campaign never seemed to catch on. Carter and Bush had run near-perfect campaigns for their first terms but their reelection campaigns never really caught on. All three seem to have assumed that incumbency was everything and that a sitting president should be able to win easily. All three had problems running on their accomplishments or downplaying problems during their administrations.

Most important, all three ran during an economic downturn. As the Clinton campaign pointed out, "It's the economy, stupid". The voters want a candidate who will make the country more prosperous.

So, what does this mean for President Obama? The lessons here are do not favor him. First, his policies only produced a weak recovery which is constantly in danger of tipping back into recession. If that happens or if inflation continues to rise then he is in trouble. If both happen then he will loose. The misery index is already the 4th highest in post-war history. Unemployment is declining but the news media is full of stories about rising prices. A good bit of inflation can be linked to Obama's economic policies. The weak dollar was supposed to help the export business but it causes the price of imports to rise and his energy policy includes burning 40% of the nation's corn as fuel which affects food prices. The electorate is also worried about the deficit and the long-term solvency of Social Security and Medicare. Obama's signature accomplishment, Obamacare, is still hurting him as much as it helps him. A smart Republican challenger will concentrate on Obama's economic record and ignore Obamacare.

Like Carter and Bush, Obama will have to mount a completely different campaign for 2012 than his 2008 campaign. He can no longer run on "hope" and "change". Now he has to run on solid accomplishment or lack of it. He has not come to terms with this change. He has talked about trying to recapture the excitement of the 2008 campaign but that was a challenger's campaign. For reelection he will need something like Reagan's Morning in America campaign but that goes back to Obama's problem with the economy.

I've left the challenger for last. A weak challenger can help a president's reelection campaign. Mondale in 1984 and Dole in 1996 were deep establishment candidates who lacked any excitement at all. Mondale ran on a campaign of raising taxes.

Much has been written in the last few weeks about the weakness of the Republican field. It is wrong. This is too early in the cycle to have a clear front-runner. At the beginning of 1978 no one knew who Jimmy Carter was. Reagan was considered too radical to ever be elected. The Bush administration was openly cheering for Clinton, expecting that he had too many negatives to be electable.

Reagan and Clinton are instructive. Before Reagan, no one thought that a candidate who had been divorced and remarried was electable. Clinton had multiple affairs while governor and had used drugs while in college. Either of these should have disqualified him (not to mention Obama who openly admitted that he used cocaine in college). If a candidate's negatives are well-known ahead of time then he can still win.

Where does this leave President Obama? I have identified three factors that he needs to worry about and only one is under his control.

The challenger - Mondale and Dole were establishment candidates who got the nomination because their parties "owed" it to them. There is no Republican establishment candidate right now and if there was, the Tea Party would sink him. The best that Obama can hope for is someone prone to misstatement.

The economy - Obama has already had his shot at this. It will recover or it won't. The Fed has run out of options and any economic incentives will have to be acceptable to the Republicans.

The campaign - This is the only thing that Obama can control but he needs to change his message. No more complaining about the crappy phone or how the job is tougher than he expected. No more complaining about "hostage taking". No more "car in the ditch" analogies. No more blaming Bush. Absolutely no more talk about how much easier the head of China has it. He has to be seen as comfortable in the office and firmly in control. He has to talk about what he has done and why he should continue. He is the most powerful person in the world. In order to keep that position he has to be present himself as a strong leader. The election has to be about him, not the Republicans.

It is still too early to know how this will turn out but I place Obama's chances around 50/50 depending on the economy. If gas prices, inflation, or unemployment are top stories this time next year then Obama will likely be a one-term president.

Tax Policy Questions

I have several questions that I would love to ask President Obama on tax policy:

You have said that the rich need to pay their share and called for repealing the Bush tax cuts for people making over $250,000 per year. Does this mean that you consider the Clinton tax rates to be the optimum fair share?

Follow-up - if so then how did you arrive at those rates? The highest marginal rates have varied enormously over the last century. Why those rates? Does Bush-hatred figure into this calculation?

If you don't think that the Clinton rates are a true fair share then what do you consider fair and why aren't you starting with those figures?

You recently indicated that the way to stabilize Social Security is to raise the Social Security tax rate on the rich. How will this work? Currently Social Security taxes are only paid on the first $100,000. Will you raise taxes on people making between $100,000 and $250,000 or will you have a doughnut hole in the taxes? The current cap goes back to FDR's original compact that both the amount of income that can be taxed and the highest retirement rate are both capped. If you remove the cap on taxes will you also remove the cap on retirement income or are you planning on scrapping FDR's compact?

Do you intend to raise both income tax and Social Security taxes on the rich?

In your speech on the deficit you quoted a CBO report saying that in ten years seniors the Republican plan for Medicare would require seniors to pay over $6,000 per year for insurance to meet current coverage. The same report says that the current level of coverage cannot be continued for ten years without major changes. What changes are you planning to make the system solvent? Will this involve additional taxes on the rich?

Last year at a kick-off event for the "Recovery Summer" you talked about how money spent on a road project would generate future spending as workers spent their wages on other products. This effect also happens when the rich spend their money so, taxing the rich has negative economic consequences that offset the positive effects of government spending. Has your administration calculated the point where taxing the rich will cause more economic harm than is gained through government spending? If so, will your economists make these figures public?

Currently the US has the second-highest corporate tax rate in the developed world. At the same time, the tax code is riddled with tax breaks that allow some corporations to pay little or no tax. Tightening up on tax breaks and loopholes would allow the tax rate to be cut without losing revenue. Failing to do this gives the impression of crony capitalism where lobbyists and friends of the administration like GE can avoid paying taxes while smaller corporations have to pay the full rate. Will you consider revising the corporate tax code?

Which do you consider more important - for the tax code to promote economic growth or for it to promote income parity?

Should We Take Trump Seriously?

Quick answer - no.

Long answer - the election is so far away that any polls taken now have more to do with name recognition than preference. Most of the Republican candidates are governors who are not know outside their state. If Trump is still leading in the polls in ten months, then it is time to take him seriously.

Consider how far away the election is and how much can happen in that amount of time. Howard Dean finished 2003 with the largest campaign treasury and was considered a shoe-in for the candidacy. At this point in 2007 it was assumed that the election would be between Hillary Clinton and Rudy Giuliani. Even in 2008, the Super Tuesday primaries left Clinton ahead. at various points in 1992, Ross Perot was ahead in the polls.

Then there is Trump himself. He has been on all sides of the issues over the years. At times he has praised Obama and criticized Reagan. He was for universal coverage before he was against it. His views on abortion are still confused. There is the fear that the positions he holds now are ones that will impress conservative Republicans and do not represent his real views.

His personal life is a mess.

Many of Obama's problems come from his total lack of experience - he spent half of his four years in the Senate campaigning. Trump has no experience in government.

Obama's arrogance also causes him problems. He was reported to say how difficult it is filling such jobs as chief of staff and political adviser since no one could do these jobs as well as he could. Trump makes Obama seem shy and retiring.

The biggest argument in Trump's favor is that a businessman might handle running the government better than politicians. Ross Perot ran on this argument and lost. What is more, Perot had a better record of success than Trump. Several of Trump's projects turned out badly. His casinos have gone into Chapter 11 twice and at one point Trump was $900 million dollars in debt. He claims to be worth more than $2 billion but other sources have put the figure much lower. The most successful enterprises with Trump's name are ones that he was not involved with beyond licensing his name.

There is nothing in Trump's history to suggest that he would make a competent president and many of his statements on foreign policy are outright scary.

So why are we even talking about him? I am because the Washington Post ran multiple columns on him yesterday. The Post and other news outlets want an early start to election coverage because they think it will sell more papers.

Denying the Debt

The biggest obstacle to expanding the government is the size of the national debt. If we can't afford the government we have now, how can we afford a larger one? There have been various arguments from the left about how to solve this. President Obama's solution mainly boils down to taxing the rich. Others are into deep denial.

Writing in the Huffington Post, Bob Burnett gives an amazing example of denialism. Early on he says "If you and I owed $14,280,782,221,253+ we'd be stressed. But the US isn't an individual, or a corporation, and so there is an imperfect analogy." He then uses household finances as an analogy.

Burnett starts out with some sleight of hand to reduce the debt.

To complicate the analogy, only 67 percent of the US debt is debt held by the public, the other 33 percent is "Intragovernmental Holdings ...securities held by Government trust funds, revolving funds, and special funds," the most important of which is the Social Security Trust Fund -- in other words money we borrow from ourselves. Of course, families don't have "intragovernmental holdings" but many borrow from family members or friends. Suppose that you have a trust fund you can access only in an emergency; if we borrowed from it because I am unemployed that would be analogous to the circumstances that account for one-third of the US national debt.

There are several problems here. Yes, a third of the national debt is money that is owed by one branch of the government to another. It still has to be treated as real debt. In some ways it is worse than public debt. For public debt, the government only has to pay interest. It can keep accumulating debt. Up until recently the Social Security Trust Fund could be ignored because Social Security taxes brought in more revenue than was needed to cover payments. The balance has tipped and Social Security has begun drawing from the trust fund. The left keeps telling us that Social Security will be solvent for decades to come because of the trust fund but that means that our nation has to start honoring those intragovernmental loans. This will eventually convert intragovernmental holdings into public debt and the process has already begun.

Burnett then moves on to the history of the debt

That brings us to the present political situation where we are faced with two similar stark choices: Republicans want to cut back government in order to pay off the debt and Democrats want to invest more in government to increase employment and thereby raise tax revenues. Before we consider the merits of these alternatives -- debt reduction versus public investment -- let's ponder another consideration, how did this debt accumulate?

If you and I amass a debt of $62,000, entirely because I am unemployed for a lengthy period, we might consider selling our house. On the other hand, if much of our debt accumulated for other reasons -- such as paying the legal expenses for your deadbeat brother after he was arrested for a DUI -- then we might look at the debt in a different light.

It turns out that much of the US debt results from decisions made by our own version of the "deadbeat brother." When Bill Clinton left office, the public debt was $5.73 trillion. When George W. Bush left office, the debt was $10.7 trillion. Under Clinton the US ran yearly surpluses and paid down the debt; under Bush the US ran deficits and ran up the debt. [...]

The debt is all Bush's fault so we can ignore it. After all, Bush is gone so we won't be adding any more to the debt, right? Oh boy!

There is a lot of missing data here and it is important. The government has a web site that lets you see the national debt on a week by week basis from any period between 1993 to the present. For most of this period, only the total debt is available with no breakdown by public and private (intragovernmental) debt but I just finished explaining why private debt is important. Using this site we find that the total debt was $4.18 trillion when Clinton took office and $5.72 trillion when he left. While there were some dips in the debt they were never enough to get the debt below what it was when Clinton took office. In fact, the debt increased by just under 40% during Clinton's tenure. It went up by $100 billion just in Clinton's last month in office.

Under Bush, the debt went from $5.7 trillion to $10.6 trillion - an increase of 86%. This was a big increase over Clinton but nothing like Burnett would have you believe. Then there is the increase under Obama. Between January 20, 2009 and April 15, 2011 the debt went from $10.6 trillion to $14.3 trillion. That's an increase of 35% in a bit over two years. Burnett shrugs this off saying "Many Liberals believe that most of the $3.5T in US debt accumulated under President Obama is due to the financial legacy of the failed Bush presidency." My response is that many Conservatives believe that most of the $3.5T (actually $3.7T) debt was the result of overreach by the failed Obama presidency.

Regardless, both parties have racked up considerable debt. The debt accumulated during the Clinton and Obama years nearly matches the Bush debt so we cannot simply blame Bush and move on - which is exactly where Burnett is leading us:

Let's be clear: the US is not broke. The problems the Obama Administration faces are problems caused by the failed Bush presidency.

Sure, the debt is a problem. But it's not the number one problem facing us, which is how to get America back to work. ...

And how does Burnett want us to do this? He gives a clue early on:

That brings us to the present political situation where we are faced with two similar stark choices: Republicans want to cut back government in order to pay off the debt and Democrats want to invest more in government to increase employment and thereby raise tax revenues.

I love the way that he uses the term "invest more in government" as if prosperity depends on hoards of government employees.

If we do that (get America back to work) and return to a commonsense tax system, where corporations and the rich pay their fair share, then we will once again run annual surpluses and begin to pay down the debt.

It all seems so simple. We just soak the rich and use the money to hire more government workers and all our problems will be solved. Just how much is the corporate fair share? We already have one of the highest corporate tax rates in the world (even after figuring in tax breaks). How much is the corporate fair share? As for the rich, you can take all of their money and not have enough. Ever-expanding government is what got us this debt. The only time it declined was when the Republicans controlled Congress under Clinton and the resulting stalemate slowed the growth of government.

Government isn't an investment, it is an overhead. It diverts money from going elsewhere (like hiring more employees) and impedes growth. Burnett doesn't see this. His goal is an ever-expanding government and it blinds him to economic realities.

Potshots from the Post

A couple of the currently most popular columns on the Washington Post deserve comment.

First there is Fred Hiatt, the editorial page editor, conflating climate change and tax-cutting. On global warming, Hiatt says:

The climate change denialism is a newer part of the catechism. Just a few years ago, leading Republicans — John McCain, Sarah Palin, Mitt Romney, Newt Gingrich and Tim Pawlenty among them — not only accepted global warming as real but supported some kind of market-based mechanism to raise the cost of burning fossil fuels.

Climate science is complex, and much remains to be learned. But if you asked 1,000 scientists, 998 of them would say that climate change is real and that human activity — the burning of oil, gas and coal — is a significant contributor.

Here's the thing - peer review is the solver standard in science. The gold standard is falsifiability. You use your best model and make a prediction. If it comes true you proved your model. If it does not happen then you check your original hypothesis and try again. Climate science has been short of this sort of prediction but the UN made a big one in 2005. They said that within five years (that would be last year) the world would have 50 million climate refugees - people displaced from their homes because of warming-induced destruction. They even included a map of areas in danger. So how did this turn out? This article checked it. Guess what? The areas that were supposed to be ruined by global warming show population increases. So, how did climate scientists react? They tried to hide the original projection.

If Republicans are becoming more skeptical about global warming, maybe it is because the predictions are not happening. This is not denialism, it is reality.

Beyond that, Hiatt does a fairly good job of skewering both parties over deficiencies in their budget proposals.

On to the other column. This one is an example of a long line of liberal self-congratulation. Written by community-organizer Sally Kohn, it postulates that liberals are losing the budget battle because they are nice sweet people who value diversity and are being opposed by conservative fear-mongers who don't fight fair. Among other things, she claims that liberals don't hate anyone except people who need hating.

This is not to say that the brand of liberal tolerance that grew from the struggles for civil rights, women's rights and gay rights is to blame for this lack of progressive political bite. For all the mockery of hyper-tolerant political correctness, identity politics is anything but tolerant. It demands that society be more accepting and inclusive of those who are marginalized because of their race, gender or sexual orientation. But it does not go so far as to tolerate intolerance. Those who fight racism and sexism in society do so out of deep moral convictions. They would never say, "Oh, we can co-exist with Fred Phelps and the KKK and find a way to compromise." Creating a society that fully embraces gay people and people of color means creating a society that is intolerant of homophobia and racism.

Go look at a YouTube video of the Wisconsin union protestors and reconcile that with Kohn's rosy description of liberals. Better yet, look at the videos of liberals ringing cowbells and banging drums during this weekend's Tea Party rally. The Tea Party rally was no whiter than the union protests and in no way represented racism or homophobia but the left still wanted to drown them out.

In Kohn's world there is no looming crisis with the national debt. The only problem is that Obama is no longer committed to unrestrained spending.

Now, Obama has proposed reducing the federal debt by $4 trillion over the next 12 years, making "the tough cuts necessary to achieve these savings, including in programs that I care deeply about." But the reason he's even having this conversation is because the tea party handed him the scissors. Had liberals more fiercely fought for the role of government as the spender of last resort in a recession — and for the role of government in general for the past three decades — Congress would instead be debating how to invest public money in the new American economy.

Obama is not making deals with the Republicans out of misplaced tolerance for their positions. He is doing it because his party got thoroughly trounced in the last election and the Republicans now control the House. Also, no matter how much the left may wish otherwise, serious economists say that the deficit continues then within the next twenty years servicing the national debt and paying for entitlements will take up the entire budget. Not a penny will be left for the programs that Kohn loves.

But rather than face that unpleasant reality, she convinces herself that there is no problem, just partisan Republicans who want to steel from the poor and possibly eat their puppies.

Hypocrisy and Politics

So far both the President and the Senate Majority Leader have had to admit that they previously voted against raising the debt ceiling for political reasons and they hope that the Republicans will do the responsible thing and vote for raising the debt ceiling now. In essence their strategy has been to vote against the country's best interests for short-term political gain. At the same time they trusted in the Republicans to do the right thing even if it hurt them politically. Does this remind you of any other issues?

The Democrats have been putting off hard issues on the deficit and on entitlement programs for years. They have gone so far as to block the Republicans from trying to fix these problems. President Bush proposed a partial fix for Social Security only to have it blocked. President Obama went so far as to lie about the effects if it had passed, telling seniors that they wold have lost their investments even though Bush's plan would not have touched them.

This pattern of ignoring problems for political gain has been going on at multiple levels. The states are facing a budget crisis now because they were bailed out for two years as part of the stimulus. The stimulus money is gone leaving hard choices for newly-elected Republicans.

I suspect that this is a national strategy. The Democrats are allowing the Republicans to address festering problems then insisting that the problems either do not exist of that they can be easily solved by taxing someone else (the "rich"). The Democrats are willing to cause long-term national problems for short-term gain.

Budget Reform Postponed

Reporting last November, the President's National Commission on Fiscal Responsibility and Reform known as Simpson-Bowles turned in their report. It was a well-thought out blueprint containing spending cuts and tax reform. It should have been a starting point had the President given it his support. He did not.

That created an opening for the Republican plan. It is far more ambitious and several parts of it are politically unworkable. It would not actually balance the budget but it would keep it within historic limits. Parts such as corporate tax reform seem overdue. Not to be outdone, the Progressive Caucus also released their version. It boils down to soak the rich and ignore structural problems in Social Security, Medicare, and Medicaid.

Normally this would be a good time to address the deficit and long-term debt. The deficit is unsustainable, the national debt is approaching a historic high and interest on the debt threatens all other spending.

This is when the government usually passes controversial legislation. It is an off year for elections and Congress still has a fresh mandate.

But, President Obama made sure that nothing will happen. He has already launched his reelection campaign and yesterday's speech on the budget showed that he is already in campaign mode. He is more concerned with scoring political points than with solving problems. His solution consists largely of blaming everything on the Bush administration and reversing part (but not all) of Bush's tax cuts. He also proposed what might turn into death panels to control medical costs. His goal is to cut spending by $4 trillion over 12 years (that would be 10 years after the end of his current term). It would not actually balance the budget and would add trillions more debt than the Republican plan.

By turning the budget into an election issue more than a year and a half before the election, Obama has assured that no progress can be made until after the 2012 election. Possibly he did that on purpose. Maybe he thinks that he will enter 2013 with a more sympathetic Congress.

Neither side is being totally truthful with the public. The Republicans cannot cut enough to balance the budget and the Democrats will have to tax more than just the rich. Congress needs to make some hard choices quickly - something along the lines of Simpson-Bowles. They still have 2012 to mollify the public over unpopular choices. Instead Congress and the President will spend the next year and a half making political points instead of accomplishing anything.

Obama vs the Republicans

The New York Times has a side-by-side comparison of the Republican plan vs President Obama's. They are too generous so I simplified it a bit:

Medicare

Republicans

For people now under 55, the federal government would contribute a specified amount of money toward the premium for private health insurance, turning Medicare into a voucher program.

Obama

pass

Medicaid

Republicans

Medicaid would be transformed into a block grant, with a lump sum of federal money given to the states to care for low-income people. According the the proposal, federal spending would be $771 billion lower over the next decade, compared with current policy.

Obama

Punt to the governors

Social Security

Republicans

No changes to Social Security are specified, though the proposal would "force policymakers to come to the table and enact common-sense reforms."

Obama

Pass

Military spending

Republicans

Pass

Obama

Military spending would be cut $400 billion over the next 12 years.

Domestic discretionary spending

Republicans

Proposes cutting $1.6 trillion over 10 years.

Obama

Pass ($600 billion over 10 years)

Taxes

Republicans

For both corporations and individuals, the top tax rate would be lower, but tax breaks would be eliminated, offsetting these changes.

Obama

Soak the rich

The Liberal Glossary

You hear a common word or phrase being used and you think you know what it means. This is not the case with President Obama and the current crop of liberals and progressives. There are a few words and phrases that they have redefined. There is probably the making of a drinking game here.

The Rich: "the undeserving rich" except the middle word is silent. This group is defined based on an arbitrary annual income that is well below what is needed to actually live like a rich person. The term "rich" is only used by the left when discussing tax policy. The rich do not deserve to be rich and are not paying their fair share.

Fair Share: Taxes that someone else (the rich) should be paying. 

Give back: to take back, to tax. From the President's speech on deficit relief.

This is not because we begrudge those who've done well — we rightly celebrate their success. Rather, it is a basic reflection of our belief that those who have benefitted most from our way of life can afford to give a bit more back.

Income redistribution: to eliminate income redistribution. If a tax on the rich is eliminated then it is considered income redistribution from the poor to the rich. This relies on the assumptions that 1) The government has first claim on all of your income and 2) the "government" and the "poor" can be used interchangeably. Therefore, a tax cut that allows the rich to keep more of their money becomes an income redistribution from the poor to the rich.

Channeling tax money to support religion: A Supreme Court decision split 5-4 to allow a tax break for money donated to scholarship funds when some of the money might go to religious schools. The minority viewpoint was that this amounted to channeling tax money to support religion. Again, this depends on three assumptions. 1) The government has first claim on your money so any money so taking advantage of a tax break amounts to spending government money. 2) There is no difference between giving money to a school run by a church and directly to the church. 3) Allowing people to support the church of their choice amounts to government support for that church.

Saving Social Security/Medicare/Medicaid: Preventing any action to keep these programs solvent while vilifying anyone who points out that they are approaching insolvency.

Draconian Budget Cuts: Any cut. This can include cuts in prior year increase and reclaiming unspent money from prior years. A cut of 1% in the budget is always draconian.

Spending reductions in the tax code:  Tax breaks. From the President's deficit speech.

Kinetic Military Action: war

Why Progressives Keep on Losing

Writing in the Huffington Post, Richard Eskow asks Why Progressives Keep On Losing and the Right Keeps On Winning? His analysis is interesting in what it reveals about the progressive mindset.

Once again the unpopular views of a minority have been imposed on the majority. Others will rant and rave about the Democratic leadership, and in fact that process has already begun. But progressives in this country should be asking themselves a serious question: Why does the Tea Party seem to be so much more effective than the left as a movement?

Eskow comes up with five causes. The first one is money. The evil Koch brothers and the sinister US Chamber of Commerce spent so much money that the electorate became confused and voted for the evil party whose vision for America, according to Askow, is

one where the environment is despoiled, the poor go unfed, and the middle class faces a lifetime of financial insecurity following by an old age of sickness and penury

Wow! The party of evil must have really buried the Democrats under a mountain of money. How much does it take to sell this vision - 50% more? 100% more? Twice as much? Three times as much? Five times as much? And the Republicans won on every level taking a larger share of state and local government than they have held since the Depression.

Eskow does not supply any figures on donations. He can't because they immediately disprove his assertion. Unions such as the SEIU gave more than the Kochs and the Chamber of Commerce. Campaign spending in 2010 did not overwhelmingly favor Republicans.

If money is the only factor then Eskow does not need to worry. The Obama campaign is already talking about setting new spending records. They have tossed around the figure of $1 trillion dollars.

But if Eskow's assertions about campaign spending are questionable then it is hard to describe the remaining four. According to him, they are:

24-Hour Party People. This boils down to commitment to party over principals. When the Tea Party did this the Progressives said that they were dooming themselves by replacing candidates who would win easily with unelectable radicals. Emphasizing ideology over party is dangerous since it can doom a party to minority status. This may have cost the Republicans control of the Senate in 2010.

If the Democrats were losing because of disunity at the bottom this might be a valid concern.

Premature Exhilaration Eskow seems to think that the Progressives started doing their victory dance before their signature bills were passed. This just didn't happen. Instead of celebrating stalled bills, the Progressives spent their time worrying about why they hadn't passed. He does admit that both health care and financial reform are deeply flawed but is too quick to dismiss the political compromise that was needed to pass them. He does not seem to understand that without the flaws the bills would never have passed at all.

The "XFK" Phenomenon Eskow thinks that Progressives are sitting on their thumbs, waiting for the next JFK to lead them out of the wilderness.

Activists succeed when they stop following leaders and start acting for themselves. The Tea Party is seen as a leaderless movement. By having no alliance to a party or a politician, it holds a credible veto threat over the Republicans and their leadership. There's something to learn from that.

This is a convenient excuse. It is not the Progressive movement that has failed, it is their leaders who failed. It overlooks the fact that even the Tea Party has unofficial leaders.

2021 Vision Oh yes, the "vision thing". This is where Eskow presents his dystopian version of the Tea Party vision then challenges the left to come up with their own vision. He even starts off with his own version which boils down to "break all records on spending then increase".

What he calls vision is basically the party platform - what the party will do if elected. Platforms are easy when you are the party out of power. They get tougher when you are the party in power. Then you have to stop running on promises for the future and start running on your accomplishments.

The reality. The Progressives have been losing because they had their chance and they blew it. They controlled both houses of Congress starting with the 2006 election, They added the White House and increased their majorities in Congress in 2008. They still control the White House and half of Congress. So what is stopping them?

Eskow never questions his base assumptions - that Progressives are morally superior and that they represent the real will of the people. His example of a vision shows that he still does not understand fiscal realities.

The reason that Progressives lost so solidly in the 2010 election was that the voters rejected them. They were elected to create jobs and turn around the economy and end the wars. Instead, joblessness increased, the economy stagnated, and the wars continued. What we got instead were programs that even Eskow admits are deeply flawed and mountains of debt.

When voters rejected the Republicans, they examined themselves and changed their priorities. They cast off the big-government vision of George W. Bush in favor of fiscal responsibility and limited government.

Rather than engage in similar introspection, Eskow starts from the assumption that there is nothing wrong with their priorities. They just need better ways of selling them.

President Obama seems to have adjusted the new realities and has been able to deal with the Republicans, Tea Party and all. For this, Eskow has disowned him.

What GE Teaches Us About Taxes

GE made the news recently when it came out that the corporation did not owe any corporate taxes for 2010 even though it made a tidy profit. What can we learn from this?

First, GE did nothing wrong. They took advantage of legal tax breaks. Google does something similar. By using accounting maneuvers known as the "Double Irish" and the "Dutch Sandwich" they reduced their taxes by more than $3 billion. This too is legal.

Right now the US has the second highest corporate tax rate in the world with a combined rate of 39.2%. Number one, Japan, has a combined rate of 39.5%. They were scheduled to cut this by 5% as of April 1 but this might be delayed because of the earthquake. But the tax rate is only part of the story. The US tax code is riddled with tax breaks. By taking advantage of different tax breaks and loopholes, domestic corporations pay an average of 20% and multinationals pay 30%. This is known as the effective rate.

The effective rate is an average. Some companies, like GE, manage to reduce their taxes to zero but that means that others are paying more than the effective rate and some are paying the full statutory rate. Larger companies are more likely to be able to take advantage of the breaks than smaller companies. Their size and resources allow them the flexibility to do things like set up a shell company in Holland (the Dutch Sandwich). Moreover, these tax breaks made their way into the tax code in the first place because large corporation lobbied for them.

We are overdue for tax simplification. We need to reduce our statutory rates to be competitive with the rest of the world while eliminating the loopholes that help large corporations at the expense of the smaller ones. This is part of the Republicans' budget proposal and should be seriously considered rather than dismissed as tax cuts for the rich.

Republicans acting like Democrats

Note to the Republicans - stop acting like Democrats.

You guys were elected to solve twin problems: the economic slump and government overspending. Those are your top priorities and your chance to prove that you meant it when you said you changed.

That means that you have to put your agenda to one side. Attacking NPR and Planned Parenthood will not balance the budget. Abortion has become less popular over the years but outright attacks on it will likely reverse that trend.

Rather than nibbling away at individual programs with budgets smaller than a rounding error when compared to the budget as a whole, the Republicans need to make wider cuts. They need to push the idea of austerity and shared pain. The public can understand if everything is cut but making partisan cuts makes a mockery of the budget process.

This is exactly the sort of behavior that the Democrats engaged in. The country wanted to see the government focused on jobs and the economy. Instead Obama and the Democrats focused on health care.

On the state level, the attacks on unions are understandable. In many cases unions are providing most of the Democrats' campaign money. Also, states with pay-as-you-go union pension plans are in real financial trouble because of those pension. The Republicans need to make their case against union pensions. They are hobbled by the press. Less than 7% of the population belongs to a union but a lot of reporters are members of the CWA (Communication Workers of America). Some press coverage borders on union cheer-leading. The Republicans need to make their case against pensions without turning anti-union.

And the statehouse Republicans need to back off of abortion. That was not an issue they ran on and attempts to outlaw it will only hurt them.

We took a leap of faith in trusting the Republicans again. They need to show that this was justified.

Social Compacts

Social Security is a pay-as-you-go social compact. The compact says that I will pay taxes to pay retirement and medical expenses for current senior citizens and the next generation will pay for my benefits. There is nothing inherently wrong with this concept as long as the population demographics and costs are stable. If these factors change then you have a serious problem.

Think of it this way - when Social Security passed there were 11 people paying in to the system for every person drawing benefits. Now it is something like five people paying and demographics say that it will be two workers for every retired person in the foreseeable future. That changes the compact. The burden that I bear is less than I am asking the next generation to bear. Another factor - because of increases in longevity, many retirees will get far more out of the system than they put into it. That moves it from social compact to pyramid scheme.

Medicare has similar problems. Obamacare was supposed to address some of the problems by "bending the curve" down. Instead it bent it up.

So something needs to be done. So far the Republicans have made a proposal. Like it or not, they have at least admitted that there is a problem. The Democrats prefer to score political points by ignoring the problems and accusing Republicans of trying to undo a century of progress. This is irresponsible.

Social contracts are all well and good as long as they do not promise more than can be delivered. The President and the Democrats need to admit reality and offer their own solutions.

The Mess in Libya

The more I learn about Libya the less I like it. The New York Times has printed allegations that, far from being taken by surprise by the uprising, the CIA and British intelligence instigated it and that Muslim extremists including Al Qaeda are among the rebels.

It is increasingly clear that the rebels do not have the numbers or the training to overthrow Gadafi*. Our air strikes are not enough to make up for the rebels' shortcomings, even assuming that we really want them to win.

In an effort to isolate Gadafi, the US released the assets of a Libyan defector who is thought to have been behind numerous terrorist acts.

The Obama administration lied us into war on multiple levels. The UN Security Council only authorized a no-fly zone, not an attack on land targets.

Things get stickier in the US Senate. A few days ago the Obama administration announced that the Senate had already approved a resolution calling for a no-fly zone so no further authorization was needed. This came as a surprise to the Senate. What most senators thought had been passed was a non-binding resolution condemning the violence in Libya. This was passed as an after-hours motion without debate. It turns out that, at the last minute, a clause was inserted into the resolution calling for a no-fly zone. No notifications were sent out of the change. It was introduced at 5:30 and passed at 5:31 without debate. If President Bush had used such sleight-of-hand, we would be hearing impeachment talk by now.

Put all of this together and it is easy to understand why the President called Libya a "turd sandwich". It is hard to see any good outcome from the Libyan rebellion or our interference in it.

* There are numerous ways to spell Gadafi's name. I am using the shortest one.

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.