Right in San Francisco

California's Train to Oblivion

I recently listened to a (perhaps disingenuous) pitch from my Congressperson, Nancy Pelosi, to the effect that budgets are important in that they reflect moral choices of society. I then listened to a group of California Democrats (and even a few Republicans) praising California's high speed rail project which will cost somewhere between $70 and 100 billion dollars in capital over the next two decades. How to reconcile the two?

A bit of background:

- In 2008 the state's voters approved a $10 billion bond measure to start a $40 billion project to build high speed rail (200+ mph) between Los Angeles and San Francisco by way of the Central Valley. By 2012 the cost had escalated to $100 billion; the federal Stimulus Plan had kicked in $ 3.3 billion; Governor Brown had been elected; and the project was downsized to a $70 billion connection between upgraded commuter rail systems in Los Angeles and the Bay Area. The long term vision remained the same, but it would be built in stages - the first being a non-electrified stretch roughly between Bakersfield and Fresno; a few billion would be spent upgrading the bookend commuter systems.

- At this point there are a few weak spots in the plan:

-- Passengers will have to change trains to make the full trip - but just until 2028;

-- The claim is that ridership fares ($ 81) will cover the operating costs, but similar systems in Japan and Europe require subsidies at twice the fare rates and higher ridership;

-- California has agreed to take $ 3.5 in Stimulus funding turned down by other states, and $10 billion in voter-approved state bond funding. The remaining $55 billion is to come from an unidentified mix of federal and state funds, diversion of funds to be taken from utilities and industry in the voter-approved "cap and trade"system to go into effect by 2020, and private investments. The presumption is that once started, the federal and state authorities will be unable to turn it off. (Implicitly, the Democrats will regain control of the US House and hold the presidency.)

- And the trade-offs that California's political class is making:

-- The current state budget has reduced the k-12 school year from 180 to 175 days; next year it could be reduced to 160.

-- Tuition in the state university system has doubled in the past five years. Next year state grants for high achieving, low income students will be reduced by a 18%.

-- The prison system is being realigned by pushing thousands from state facilities to county jails (without commensurate funding). Funding for the court system is down 24% in the past four years and will be cut another $544 million in the next budget.

-- The governor is proposing increasing the state sales tax to 7.5 % - the highest in the nation - and the top income tax rate to 13.3 %. Gas taxes are already the highest in the nation. California ranks 50th in business climate according to Chief Executive Magazine.

-- And the social safety net is being shredded - MediCal; job training; children services; everything.

So, why the train? And what lessons can be drawn by folks in other states?

1. Trains are cool. My grand-kids love Thomas. If they can run on electricity derived from solar and wind power they are uber ecological.

2. Politics are messy. "Free" seed money leads to addiction. Local politicians can be bought by a few construction contracts and the promise of a local station. Construction industry companies and unions are powerful everywhere. In a one party state, nobody crosses the machine.

3. Californians still dream of the era when they were national leaders. Prior generations - including the current governor's father - built roads, water systems, and airports. Current leaders want a legacy.

While others wait for June answers to the Supreme Court Obamacare decision, the Wisconsin recall outcome, and the euro Greek eviction notice, out here on the Left Coast we wait to see if the Democratic state senate and the Democratic state assembly are willing to cross the Democratic governor and go with the non-partisan Legislative Analyst's Office and effectively pull the plug.

 

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This week's video (provided by a vigilant reader) has two parts, a trailer for "2016", a political movie to be released this summer, and a speech at the Conservative Political Action Conference by writer Dinesh D'souza which explains President Obama's inner compass as pursuit of his father's anti-colonialism.

Mea Culpa - Foreign Policy

I have received quite a bit of blow-back for last week's suggestion that Hillary Clinton's foreign policy performance has made her a powerful Democratic choice for VP, and perhaps for president. My point was about her political position; the Obama foreign policy legacy is a longer (and sadder) story, but it might as well begin here.

The big picture:

1. After a doubling of our forces in Afghanistan (truly Obama's war), we are drawing down there, have exited Iraq (where America's influence is rapidly being eclipsed by Iran), and have had a very light footprint in places such as Libya, Somalia, and Yemen. Al Queda is decimated, but anti-Western Muslim fundamentalism lives; we just confront it in the way that Donald Rumsfeld advocated - with small special forces operations, the CIA, and the TSA. Most would agree that it is good to be ending the larger post-9/11 wars, and that the administration is "directionally correct."

2. To a large extent Obama tried to reach out to our adversaries - Iran; North Korea; Cuba - offering talks with no preconditions, while slighting many friends: Great Britain (removing Churchill's bust from the Capitol for example), Canada (the XL Pipeline for example); Mexico (Fast and Furious for example); Poland (missile defense agreements for example.) This got missile tests in Korea and the back of a hand from Iran and Castro. There have been few gestures of solidarity with other major allies - Japan (despite the potential to help after the tsunami), Germany (who seems to be alone in defending financial integrity in Europe), Israel (advocating a return to the '67 borders). The" re-set" of the relation with Russia is over, as evidenced by Putin's snub of the upcoming G-8 meeting in New York. Overall, it has been a naive rookie performance - more like Jimmy Carter than Nixon or Reagan.

3. For neo-isolationists on the Left and Right who think that the US should not get involved in other countries' affairs Obama has generally been good news. The Arab Spring has come and gone with little effort by the US to help bend it in the direction of western democracy - first in Iran in 2009, then in Egypt and Libya, and now in Syria, where an overthrow of Assad would be a blow to Iran. The Obama Doctrine was accurately described in the liberal New Yorker as "leading from behind".

4. Not much karma has been used in defending American companies around the world. Trade with China - including exchange rates, intellectual property protection, and Chinese import restrictions on things such as automotive products - is a big issue which Romney will emphasize. Brazil's criminal prosecution of US oil industry executives for a relatively small spill draws no response. And then, there is no administration response to having the world's highest corporate income tax rate.

In political terms, Obama's general retreat from the international stage may have been what people want - reflecting exhaustion from the Iraq and Afghan wars. The bad news is that the world is a dangerous place (particularly Iran, Pakistan, and Korea) while America's economic success is inevitably tied to our position as the world's economic, political, monetary, and military leader - and the result of electing a president whose inclinations are against business and the military has been predictable.

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This week we have two videos: one in France where the victorious Socialist, Francois Hollande, has promised a 75% tax on the French 1%; the other in Oakland where we may soon have a combined state/federal rate of over 60% with the proposals of President Obama and Governor Brown.

bill bowen - 5/18/2012

 

The SOTU In Perspective

The President's State of the Union speech provides a warning to conservatives: he remains a skilled orator; the mainstream media still loves him (see the New York Times' "fact check"); he does have some accomplishments to talk about - killing bin Laden, saving General Motors, ending the war in Iraq; he will have $1 billion to vilify those who would divide us; the economy is probably mending; and he moved from governing to campaigning several months ago. After three months of focus on Republican campaigns and primaries it is chilling to watch Obama deliver an hour's worth of applause lines.

As for the speech itself, three categories of thoughts:

1. The mood. Optimism and "fairness" sell. Much of the conservative storyline is cast in negative terms - the debt; the weight of regulations; protection of the fat cats. Mitch Daniels did a nice job of expressing Republican principles of liberty, opportunity, and American exceptionalism in his little-watched response. Any successful Republican (at any level) needs to get beyond defending himself and attacking Republicans and Obama, and instead become identified with a positive program that affects real people.

2. The errors. Moderate Factcheck.org, liberal Politifact, and others can handle the small stuff, but a few things stood out to me:

- Obama claims improved relations with our allies - camera pans to a beaming Hillary. That would be except Canada, the United Kingdom, Israel, Saudi Arabia, Pakistan, and Mexico which have been directly offended. Places like the European Union, Japan, China, India, Russia, and Brazil seem to be about the same. Who knows what is happening in Egypt, Libya, Yemen, and the rest of the Middle East. Maybe he is referring to Burma.

- His policies are creating jobs at a rapid pace - 3 million by his count. This will definitely be a second derivative argument - it's not about where we are (25 million unemployed, underemployed, or given up), or the direction (well short of the 200- 400,000 hires per month that we would have been seeing for the last year or two in a normal recovery); it is about the rate of change of the change - getting a bit better.

- We have put in place effective sanctions against Iran. Except that the European embargo does not begin for six months and Russia, China, India, and other Asian countries are not included.

3. The omissions. Something has to be cut out when you only have an hour to talk - or when you do polling on voter response.

- Health care - his "signature achievement" got hardly a mention.

- The $16 trillion debt or its cousin, the European debt crisis. That's the obsession of the nasty Republican obstructionists.

- Entitlements. Let the Republicans wander into that brier patch.

The note for Republican partisans is that the president has lots of opportunities to give speeches and he is good at it. Gingrich might be able to trounce him in a debate, but there will be only one or two of those even if Newt gets the banner. On the other hand, the comparison between the Obama approach of more government solutions to every problem and the conservative approach of small government, free enterprise, and personal responsibility could not be more stark. Let's find an optimist who believes in the wisdom of the people.

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This week's bonus is a "Green Papers" starter kit for readers who want to track the nominating process through the Republican convention in Tampa in late August.

bill bowen - 1/27/2012

Newt: Judge This

Hearing that Iowa has recently recalled three judges for approving same sex marriage, the Newtster has apparently decided that the civil libertarian caucus goers will vote for Ron Paul anyway and he should swing for the fences with the evangelicals who are on the warpath about the courts. His Waterloo.

The "historian" presidential candidate has determined that the Founding Fathers were wrong in establishing three co-equal branches of government, that U.S. Marshall's should be used to force federal judges to explain their rulings to Congress, and that President Gingrich would ignore Supreme Court decisions that he didn't like. Shades of "It Can't Happen Here."

Like many conservatives, I am conflicted when it comes to civil liberties in an age of terrorism and technology.

- The Patriot Act, passed shortly after 9/11, increased the government's ability to conduct secret searches of property, conduct wiretaps, access third party data bases, and trace internet communications. Maybe an understandable response in a time of war (after all, Gingrich argues, Lincoln suspended the right to a trial during the Civil War), but uncomfortable in a free society.

- In September Anwar al-Awlaki was killed by a drone-fired missile in Yemen, the first time since 9/11 that an American-born citizen was deliberately targeted and killed by American forces. OK by me as an act of war - assuming proper controls over identification and authorization.

- This very month Congress has passed and the president will sign a bill specifically authorizing indefinite detention of anyone (foreign or American; captured in the United States or abroad) who "substantially supports" groups such as Al Queda or "associated forces." No duration; no guaranteed trial.

- Medical record systems are being rapidly expanded to improve quality and reduce cost. Privacy controls are included, but ...

- Massive data bases, public and private, contain detailed purchase and banking records, internet viewing histories, e-mail histories, and on and on. Cameras on every corner in some cities. Amazon knows enough about you to recommend books; Apple can recommend music; Yelp can recommend restaurants. Good luck with privacy there.

So, who is going to protect a semblance of habeus corpus and the right to privacy if not the court system? Citibank? The CIA? Congress? President Gingrich? We all know that we'd be safe with him, but what about the next guy or gal?

I really don't know the answers to the privacy and civil liberties questions, but I do rely on an independent judiciary to help the country stay on track. And, as alarmist as it may sound, I do know that folks like Hitler, Stalin, and Mao have sounded the same notes that Newt is using on the courts.

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This week's video provides a bit of levity for those not particularly interested in Hanukkah, Quanza, or Muharram. Merry Christmas!!!

bill bowen - 12/23/11

Pelosi's Crony Socialism

    Solyndra; SunPower; California environmentalists; the Stimulus Plan. It is no accident that so much of this corruption is out here on the Left Coast. Lets connect the dots.

    First, the Pelosi Democrats were brilliant in adapting the trash collection model to the energy industry.  Politicians don't have to raise taxes to create pools of money; they can set the rates which you pay your local trash hauler or - the California adaptation - they can mandate that a portion of electric generation must come from uneconomic "renewable" sources and approve whatever rates that drives.  California's  mandate that a percentage of electricity used by the major utilities come from renewable sources began in 2002 and now sits at a 33% level by 2020. How to get from today's 15% without building any more dams or nuclear power plants?  And whose companies can get a piece of the action?

    Thank you American Investment and Recovery Act of 2009, a grab bag of pork designed by Ms Pelosi and her Congressional allies with $79 billion targeted for "renewable energy, energy efficiency, and green transportation".  The friendly press touted the boon to small companies and start-ups as well as the use of loan guarantees - tax credits don't help companies that are not making money.

    With California Republican Darrell Issa's House Oversight and Governmental Reform Committee on the case, the Solyndra (a Bay Area company) case is widely known - a $535 million loan guarantee to the company of a prominent Obama bundler; White House pressure in the face of OMB reservations; company leaders taking the 5th Amendment; a likely-illegal reworking of the guarantee to place the bundler ahead of the government in any recoveries. Next we find a $737 million loan guarantee for a Nevada solar farm connected to Pelosi's brother-in law. Then we find a $1.2 billion loan guarantee for SunPower which plans to build a large solar panel farm in San Luis Obispo and a new manufacturing facility in Mexico; the top lobbyist is the son of George Miller, a key Congressional ally of Pelosi, also from California.   Had enough? In the rush to beat a September deadline, the Energy department approved several other projects worth just a few billion of your dollars, some of which are being sold and resold within the energy industry.  

    The big point is the twin dangers of a government which makes decisions about which companies to support and a one party state like California where complaining voices are shut out and deals can easily go to political allies.  During the Dartmouth presidential debate there was a brief discussion about two funds in Texas - originated on Perry's watch -which have made some $750 million in loans, some to contributors. (In fairness, some 20 states have such funds to attract and grow companies.)  If Governor Perry remains a viable candidate, questions will come from the Left about crony capitalism and from the Right about the proper role of government.  As for California, nobody out here seems to care as long as it is federal money and it is green.   

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    This week's video is a brief explanation of the Lord's Resistance Army which has been terrorizing central Africa for two decades. Late on Friday, October 14, President Obama sent a letterto the President Pro Tem of the Senate and the Speaker of the House announcing that he was deploying 100 combat troops to support local armies pursuant to May, 2010 legislation to support these governments. With troops in Iraq and Afghanistan, participation in NATO's Libyan operations, and drones operating in Pakistan, Somalia, and Yemen it would seem to be time for a discussion of priorities and the need to involve Congress and the public in the process of going to war.

bill bowen - 10/21/2011 

The Military Budget: Thinking the Unthinkable

     Back in the Cold War days military planners were forced to "think the unthinkable" - produce dispassionate studies of various nuclear war scenarios. Here's hoping that they've turned their talents to looking at the defense budget.    

    The baseline: The military budget is now about $700 billion per year; 20% of federal spending; almost 5% of GDP. Taking out the Afghan and Iraq wars it is about $550 billion - slightly less in inflation adjusted terms than it was in the 80s when we were facing down the Soviet Union, China, and their global allies.  We are the world's policeman, protecting Europe, the flow of oil from the Middle East, our allies in the Far East, and our borders. Well, maybe not so much our borders.

    The problem: We're broke. Republican instincts would protect military budgets and hold taxes steady;  Democratic instincts would protect entitlements and raise taxes. So, this year's battles have been fought over the 35% of spending that is "discretionary"; or actually the 15% of the "discretionary" that is non-military. Yet we've got trillion dollar deficits. The Republican Ryan budget proposes a minimal defense reduction (beyond the wars); the Obama twelve year proposal is $400 billion; if the Deficit Reduction Committee can't resolve its differences there will be an additional automatic $600 billion. Mind boggling.

    The options: When facing big cuts it is often better to eliminate broad swaths instead of chiselling away to the point that nothing is workable. Beyond the wars, what is available?  For example, the Air Force budget includes $11 billion for 35 more Stealth fighters; the Navy budget includes $4 billion for two more nuclear submarines and a $1 billion down-payment on an additional aircraft carrier; the nuclear program projects $100 billion over the next decade to improve our 1550 long range nuclear weapons.  The New York Times and Obama will probably get their way with significant reductions in the health-care and pensions of military families and retirees. (Labor costs are about 25% of the military budget.)   

    A vignette: By chance I attended a class reunion at the Air Force Academy this past weekend and had a chance to reflect. The school has a top rated academic program, particularly in engineering; they field 27 intercollegiate athletic teams and offer a robust intramural program; they have done a good job integrating women into the cadet corps. Since my graduation in the pre-Cambrian age the corps has increased from 2500 to 4400; a light aircraft flight program has been added, as has a drone program; world class track, field house, and indoor athletic training facilities have been added. (Some with private contributions.)  Planning is underway for a stunning Leadership Center. In good times each Superintendant has been able to build upon the edifice of their predecessor. In the Ryan "nip and tuck" scenario there may be no more buildings and maybe the football team will not stay at an off site hotel for home football games. In the Obama scenario the student body might revert to 2500. In the Armageddon scenario somebody will ask why we spend $300,000 on each cadet's education rather than consolidating the military academies or relying on ROTC.

    It is not possible to achieve national fiscal sanity without significant cuts in military budgets - IMHO.  Robert Gates did a decent job restraining expensive weapons systems and Leon Paneta's understanding of Congress indicates that he might as well, but these are the preliminaries. One would hope that the next administration will have a clear foreign policy, evaluate the strengths and weaknesses of our adversaries, and preserve just the forces necessary to achieve our national security objectives. The selection of a Secretary of Defense will be as important as the Treasury Secretary.

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   This video of Mitt Romney on MSNBC's Morning Joe provides a glimpse of what a general election campaign would look like.  

bill bowen - 9/30/11

Deficits: Lessons (re-) Learned

From even the worst disasters we can learn lessons. Here are a few:

1. Successful negotiations require an understanding/acceptance of your opponent's bottom line, clarity about your own minimum objectives, a search for common ground between those boundaries, and an ability to deliver on your commitments.

- To the end the President did not accept the Republicans' "no tax" requirement. Boehner eventually understood that the Democrats were split, having three requirements - the Left insisted on no change to entitlement programs; some like Bernie Sanders insisted on the virtue of taxing the rich; and Obama primarily wanted to get past the next election with no problems.

- When President Obama was close to an agreement with Speaker Boehner on the big deal he could not deliver his Party - in part because he had excluded them; in part because he persuades by public speeches, not by private negotiation. Conversely, it is not clear that Boehner could have delivered on his tentative acceptance of $800 billion in "revenue increases" even if Obama had not "moved the goal post".

- An important rule of negotiation is the "Principle of Least Interest" - the party most willing to walk away has the most leverage. For principle rather than tactics, the Tea Party Republicans provided great leverage. They won on the "no new taxes" and "cuts exceeding limit increases" principles, even if the math is fuzzy. The direction of the national discussion has been shifted.

- In business it is rare for negotiators to highlight their opponent's shortcomings - your own stature is enhanced if the opponent is enhanced. Both President Obama and Majority Leader Cantor became personal while denigrating the other's supporters and motivations.

2. Politics is the art of the possible. Republicans will not accept tax increases; Democrats will not accept meaningful entitlement reforms. Without either (and with honest accounting) it is not possible to cut spending enough to get through 2012. We will muddle through the next election - quite likely with a rating downgrade and higher interest rates even before inflation takes off.

3. The real issue is a disagreement about the size of government. In the last decade we have increased from an historic 19-20% of GDP to 24-25%. Part of that was President Bush's agreements with Teddy Kennedy to increase federal education spending (No Child Left Behind) and a Medicare prescription drug benefit as well as the wars in Iraq and Afghanistan. The Democrats have brought a quantum increase from there with a disdain for any budgets. There is no middle ground.

4. Big changes take a couple of election cycles. The Pelosi-Reid-Obama tide had huge electoral successes in 2006 and 2008 and with that they could just barely muscle through their top priority - Obamacare. With 23 Democrats and 10 Republicans up for election in the Senate in 2012, it is likely that the Republicans' 2010 wave will be followed by a takeover of the Senate next year. With 9% unemployment it is likely that they will also take the presidency, allowing a rollback toward the 20% spending level.

5. It is easy to get distracted. As important as the deficit is long term, today's economic and political problem is jobs. With increased deficit spending off the table (tax cuts; another stimulus) there are few actionable employment ideas in Washington and no Democratic relenting on regulation - EPA; NLRB; financial sector; Obamacare. Recovery, if there is to be one before 2013, will be up to the private sector.

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This week's video is a concise but impactful explanation of the growing cost of interest on our national debt.

Please visit my new web site at www.BillBowenAuthor.com

The View From London

    What luck!!! We were in London visiting our daughter's family and President O'bama shows up; then we take a train to Oxford and Michelle is there. Nevertheless, I'll try to fight off my depression and provide a perspective on the world's events from across the pond.

    First, my sources: I am English/Welsh by family background and visit the UK often enough to have some feel for local issues and attitudes. When there I try to read The London Times, The Guardian, the Independent, and some free commuter papers, to watch some BBC, and to talk with family, friends, cab drivers and pub denizens. The sample is unscientific and subject to my biases - but it beats MSNBC.  

    In approximate order of importance:

    1. The capture of Public Enemy Number One. That would be Bosnian Serb General Ratko Mladic, the leader of the shelling of Sarajevo and the murder off 8000 defenseless Bosnian Muslim men and boys at Srebrenica in 1995 in the greatest European atrocities since World War II. For the pan-Europeans this moves the Continent a step closer to peaceful integration - probably bigger than bin Laden's demise in their perspective.

    2. The International Monetary Fund. After that unpleasantness with the French aristocrat and the maid in New York it is necessary to find a new leader of the IMF.  The IMF has always had a European head (the World Bank has a US head) and the developing countries want to break the monopoly by appointing somebody else; the Europeans need a sympathetic leader with the challenge to the euro currency given the debt problems in Greece, Ireland, Spain, and Portugal.  Fortunately the French have another aristocrat to offer up - if just the Chinese and the others will stay in their place for one more cycle.

    3. The Arab Spring. The UK would like to help move things along toward a democratic Middle East and is sending attack helicopters to escalate the "kinetic military activity" in Libya, but the pundits wonder who we are supporting in Libya,Tunisia, and Egypt; what Obama is trying to do in Israel/Palestine; what the objectives and strategies are in Afghanistan and Pakistan; why the inconsistencies in Syria, Bahrain, and Yemen; and how the UK can afford billions there when they are cutting everything at home. There is an obvious pining for the day when the US led and the Europeans followed.

    4. The Obama visit. The Brits were still basking in the aftermath of the royal wedding and willing to forgive Obama's earlier slights to Gordon Brown and the "special relationship" between our countries. (In a macro sense, they miss the empire and get their satisfaction from a uniquely close relationship with their "child", the globally dominant United States. But they recognize the decline of empires.)  The papers were full of articles gushing about Obama's oratory - wishing that the British leaders weren't mere mortals - but usually ending with a soft comment that words needed to be followed by actions.

    5. Politics of austerity. When the Conservative/Liberal Democrat coalition won the May 2010 elections, the new Prime Minister, David Cameron, announced a "Big Society" program in which government spending would be cut by 25 to 40%, with a major dismantling of the welfare state, and major tax increases. (It helps to be British to understand this coalition - all politics is local and much is personal. Labour had their 13 years under Tony Blair and Gordon Brown and the public understood that what they had built was not affordable.) Interestingly, the Brits seem to accept the changes and are carrying on with a stiff upper lip - except for a rejection of the plan for major changes to the National Health Service which would have required doctors to take on a major cost management role. Republicans beware.

    6. Popular issues. Truth be told, the guy on the street was probably more concerned with a scandal in the management of the world soccer governing body, a prominent Member of Parliament who had his penalty points for speeding assigned to his wife's driver's license, the return of Simon Cowell as head judge on "Britain's Got Talent", and the lottery for tickets to the 2012 London Olympics.  Oh, and the waves of ne'er do well immigrants from the old Commonwealth and the new European Union.

    So different, yet so much the same.

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    This week's video is Presidential Press Secretary Jay Carney explaining that President Obama has led on deficit reduction - shortly after his budget was defeated 97 - 0 in the Senate. "Leading from behind" I suppose.

bill bowen - 6/3/11

Paul Ryan's Leadership Lesson

     Paul Ryan has presented a vision of a fiscally sound America with the federal government consuming the historic 20% of Gross Domestic Product.  Barack Obama has presented a vision of an America where federal spending continues at his accelerated 25% of GDP and accumulated debt exceeds that of the weakest countries in Europe.  This is the beginning of a long negotiation - the Democrats will add increased taxes and mount a vigorous defense of Obamacare; the president will be challenged to add Social Security reform to the mix.

    Ryan has been preparing for this moment for a long time: he was the minority leader on the budget committee when Nancy Pelosi ran the House; he presented a "Roadmap for America"; he served on Obama's Budget Deficit Commission; he developed the controversial Medicare/Medicaid  portion of his budget proposal in conjunction with prominent Democrats including Alice Rivlin who was President Clinton's budget director.  He knows his numbers, believes in his policies, and presents them with passion and charm knowing that he will be vilified and distorted by Democrats and the media.

    Contrast that with Obama's demonstrated leadership failures just this week.

    1. He sent out Eric Holder to announce retreat on his "firm, principled commitment" to close Guantanamo and prevent trial of terrorists by military commissions. This had been the subject of much campaign rhetoric, but not much administrative or political effort by Obama at several opportunities over two years.

    2. Al Jazeera has attributed Obama's "ambiguous and half hearted" efforts in Libya to his aversion to anything resembling George Bush's push for democracy in the Middle East or Bill Clinton's ignoring the slaughter of 800,000 Tutsis in Rwanda.  Meanwhile Obama called for the removal of President Saleh in Yemen with no idea what that would do to the home of Al Queda in the Arabian Peninsula.  Saudi Arabia has made known its discomfort with Obama's tepid support. Most Americans do not know what our policy is or who we are protecting in Libya.

    3. Rep Louis Guiterrez (D - Ill) began a 20 city tour to protest Obama's abandonment of his immigration promises from the 2008 campaign.  Unable to appease the Hispanics who want comprehensive reform and organized labor which wants protection from a wave of low cost competition, he has given speeches but done nothing.

    4. Obama sycophant Ezra Klein of the Washington Post has criticized his messiah for "whiffing" on his 2012 budget and the State of the Union, allowing Ryan to set the budget conversation on his own.

    5.  After posturing about the need for everybody to do whatever it takes to get a 2011 budget agreement, Obama went off to political meetings in Philadelphia and New York - the Democratic calculation apparently being that the Republicans will suffer more from a government shut down.

    With Obama moving on to his reelection campaign and Ryan able to focus on the country's economic future, it is ironic that Ryan's success may actually be Obama's salvation. 

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    This week's video(s): a parody of the president's first reelection commercial which received more hits than the blah, blah, blah  real thing.  

bill bowen - 4/8/11

Reflections on Wisconsin

       With the New York Times celebrating the return of the absentee Wisconsin senators to victory celebrations in Madison, it is worth a few reflections on what has happened. There are two dimensions:

In Wisconsin

       Wisconsin public employees will be required to contribute 5.8% of their salaries to pensions and 12.6 % to health care plans (about an 8 % salary cut) toward closing a $137 million deficit that Governor Walker inherited in the current budget, avoiding 1500 layoffs.  Future labor negotiations will be limited to wages with increases restricted to the rate of inflation, and workers will have the right to not pay union dues. Over the next two years Wisconsin faces a $2.9 billion deficit, so the direct contribution is just a minor part of the solution.   

    The UW students have had their party, the teachers have had their public classroom, Jesse Jackson of PUSH and Richard Trumka of the AFL-CIO have had their megaphone, and the lawyers will now have their months of opportunity. But Governor Walker has done what he said he would do in the 2010 campaign and he can hope that his poll ratings will return once NBC and the Huffington Post move on to the next story and the students go off for Spring Break.

    The real impact in Wisconsin will occur at the department and local level as county executives and mayors are freed to manage their employee costs and, more importantly, go about consolidating departments and fixing work practices. (Similar steps by Governor Mitch Daniels of Indiana in 2005 were central to his successful efforts to balance the budget while reducing state workers from 25,000 to 20,000, reducing union participation from 66% to 7%, and earning the gratitude of his local officials for taking the heat.)

Nationally  

    Almost all states have budget problems which are making people like Democrat Andrew Cuomo of New York sound like Republican Chris Cristie  of New Jersey.  With stimulus money running out the next year or two will be brutal and the example of Wisconsin's give-backs will be repeated broadly. Similar union-reducing steps are being taken (interestingly with minimal fanfare) in Ohio and initial efforts are being made in Iowa , Michigan, and Missouri.

    But the bigger issue is the trillion dollars of unfunded retirement benefits in the states.  (That is assuming an average return of about 7-8% annually; something like 4-5% would be more reasonable.) There will undoubtedly be a  lot of two-tier systems with new employees having older retirement ages, lower benefits, a reduced ability to spike wages in their last years, and significant employee contributions - and more commonly a change from defined benefit plans to private sector-type defined contribution plans.  The lawyers will have a heyday as governors and mayors try to take back commitments made in the union era.

    Look to a broad challenge to return the the philosophy of  Franklin Roosevelt  who was opposed to public employee unions. And this challenge will not only come from conservatives - given limited money many liberals will look to reducing the cost of government so that their programs don't get starved.

    The battles will be fought state-by-state, but the AFL-CIO, the American Federation of State, County, and Municipal Employees, and the Service Employees International Union have made a strategic choice to draw the line in traditionally union-friendly/progressive Wisconsin. And, as President Obama would say, they have taken a shellacking.

                                                                  -----

    Between Libya and Japan we could all use a bit of non-partisan humor from the Capitol Steps.

                                                                    -----

    For an ongoing discussion of the aftermath in Wisconsin, follow Fred Dooley's blog at RealDebateWisconsin.

bill bowen - 3/18/11

Presidential Leadership

   President Obama's "What Me Worry?" State of the Union address brings into focus the question of leadership. For reference I look to John Kotter's Harvard Business School opus, Leading Change. Steps include: establishing a sense of urgency; creating a guiding coalition; developing a vision and strategy; communicating the change vision; and generating short term wins. Lets look beyond the speeches to Obama's first two years.

    Important subjects of potential bipartisan support:

         1. TARP. Began as $700 billion fund to buy or guarantee toxic assets (real estate derivatives.) Passed under Bush.  Restructured by Hank Paulson. Used creatively to save the auto and banking industries. Geithner/Obama didn't screw it up.

        2. Stimulus. Deferred to Nancy Pelosi who made it a $787 billion grab bag of pork and earmarks. Perhaps give a pass to the rookie president.

        3. Healthcare. Deferred to Nancy Pelosi and Harry Reid to design and pass.  Gave lots of speeches. Corruption of Reid's process to buy votes inflamed the Tea Party. A signature achievement of the administration.

        4. Afghanistan. Dithered for a year before deciding to get in and get out ... or not.

        5. Middle East. No pressure on Israel / Palestinians to settle the core problem. Let Hillary, Biden, and Gibbs comment on protests engulfing the Middle East. No support for allies; no statement of principles beyond 2009 Cairo speech which was less forceful than Condi Rice's 2005 Cairo speech.

    Important subjects to the Liberal base:

        1. Don't Ask, Don't Tell. Somehow got passed by the lame duck Senate. Obama AWOL.

        2. Cap and Trade. Passed by Pelosi; ignored by Reid. Guerrilla war being engaged by the EPA through regulations.

       3. Gun control. Golden opportunity after the Tuscon murders, the way that the Brady Bill was passed after Reagan assassination attempt.  Nary a word.

       4. Card Check. Abandonment of signature union objective to ease union organization.

       5. Closing Gitmo. Let Holder try to move cases to New York. Eventually moved back to Bush's military commissions. Indefinite detention in Cuba for the hard core.

      6.  Immigration. Let the DREAM Act languish in Congress. Attacked Arizona without proposing actionable alternative.

   And now the subject of primary national importance, getting finances in order.

      1. Not a peep when Pelosi's House doesnt' even propose a budget.

      2. Appoints a Deficit Reduction Commission with a promise that it is not just another Washington effort ot sweep a problem under the rug. Commission makes specific comprehensive recommendations. Obama ignores.

       3. Gives a State of the Union address which ignores $1.5 trillion deficit in current budget, $14 trillion debt, real 17% unemployment, and financial meltdowns in other countries. Notes "Sputnik moment"; calls for solar panels and trains. Bashes "earmarks" after approving thousands and Republicans commit that there will be no more.

       4. Waiting for Paul Ryan to present Republican budget, healthcare proposals, and propositions for reforming entitlement programs. Assumes that public will respond negatively to  "meanspirited" Republican attack on popular government programs.  Refocuses staff on 2012 election. Republicans decide to trust the good sense of the American people and carry the financial responsibility mantle.

     Scroll back up to the first paragraph to review Prof. Kotter's definition, and see if there is a single subject on which President Obama has exhibited leadership. Instead, the style is to let his wishes be known, then let the various forces driving action go their own ways. My favorite quotation is from Dr. Martin Luther King, Jr:

     "The ultimate measure of a man is not where he stands in times of comfort and convenience, but where he stands in times of challenge and controversy." How refreshing that would be.

                                                                 -----

    This week's video is an Egyptian television interpretation of a January 29 interview with Robert Gibbs. One can imagine being a pro-American leader of Yemen, Columbia, Jordan, or Poland and wondering about the implications of America's financial bankruptrcy, the Wikileaks-induced inability to have a confidential discussion with the US ambassador, and the likely support that you would get from President Obama in a crisis.  It would be nice if one believed that Obama were having conversations with a legion of our allies.

   

California Consolation Prizes

    It is obvious to all that California is losing the game in terms of budget deficits with the resultant impact on education and social services - and has been for a long time.  Sometimes it is not enough to play better, you have to change the game.  Some of that is happening out here.

    Jerry Brown's first task as governor is to set an honest budget without the gimmics that his predecessors used, within the boundaries of a legislature that is just short of being two-thirds Democrat, and with a set of past voter initiatives that directs significant chunks of state spending. By most accounts his proposals of this week for the next 18 months do that, cutting spending by $12 billion, seeking voter approval to extend "temporary" taxes (.25% on income; 1% on sales) for another $12.5 billion, and protecting only k-12 education. He is using a scalpel, eliminating some programs entirely (redevelopment agencies; enterprise zones), adding copays for Medicaid, cutting his staff by 25%, and cutting government cars and cell phones. A good start.

    Brown has two legacies from his "Governor Moonbeam" days that his Jesuit objective introspection will help him address:

        1. His granting of collective bargaining rights to public employee unions in the 70's opened the door and terrible labor practices by subsequent administrations resulted in a $500 billion (?) deficit in public employee pension plans. In July he proposed reform measures to include an increase in retirement ages, elimination of "spiking" of calculations, increased employee contributions, and more effective management of the fund administrators. All directionally correct.

    2. With the passage of Proposition 13 limiting local property taxes in 1978, Governor Brown used state funds to cover immediate shortfalls, accelerating the transfer of funding and control of local activities to Sacramento. Important, but less mentioned, in his budget proposal was the proposal to shift money and programs back to the local level for things such as mental health, foster care, some fire services, and court security. While Prop 13 is sacred state-wide, one could foresee a partial migration toward "local option" where San Francisco can make different decisions than Bakersfield.

    With the election of Mayor Gavin Newsom to Lieutenant Governor and the election of four Chinese Supervisors, San Francisco is undergoing its own shift toward the center. The headlines are about the selection of technocrat City Administrator Ed Lee as interim mayor until November and Police Chief George Gascon replacing the liberal Kamela Harris as District Attorney. (In the Democrats' clean sweep she replaced Jerry Brown as state AG.) But the real message is about  the home-owning, public school attending Chinese community, which makes up one third of the population displacing the ultra-liberal Democratic Party Central Committee establishment at the center of power. For those who like the detail, the key event was Board of Supervisors President David Chiu's decision to support Lee for mayor, abandoning the liberals. Behind the scenes, Newsom delayed moving to Sacramento until it happened, Willie Brown (a long time beneficiary of Chinese support) was a key intermediary, and king-maker Rose Pak of the Chinese Chamber of Commerce had her way.

    In a city and state with few Republicans, this is as good as it gets.

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    In light of the Left's mantra that we should all eliminate the vitriol practiced by Sarah Palin and the Tea Party, this week's video is a brief compilation of comments by one of MSNBC's stalwarts.

bill bowen - 1/14/11 

 

 

   

In Search of Leadership

    When Nancy hands John the keys to the House in January there is a real question as to where national leadership will come from. Like it or not, she has done the heavy lifting for much of what the Democrats have accomplished (inflicted?) with the specifics rarely coming from the White House - the Stimulus; Health Care; Cap and Trade (at least through the House); Ask/Tell; and much more. Her fund raising and political skills have made her an unusually powerful Speaker for the past four years, but that was then. While she will remain Minority leader, the "mandate of Heaven" has passed - but to whom?

    Logically, the President is the leader of the nation and the party and the loyalist press is pivoting from liberal criticism for his abandoning their causes to praise for his leadership in moving to the middle on taxes, getting a treaty with Russia, and the Senate repealing Don't Ask/Don't Tell. . But there is little reason to expect Obama to move beyond expressing his wishes to actually leading:

        - His 129 "present" votes in the Illinois Senate have long ago been forgotten, but they were a good measure of the man.

        -  Domestically, he has deferred to Pelosi and Reid to write the important legislation and do the arm twisting. Even with large majorities in both houses he has shied from confrontation on card check, immigration, and Guantanamo, leaving the feckless strategy for dealing with the trials of terrorists to Eric Holder. There is no plan to deal with the deficit and Ben Bernanke has been left to be the global spokesman for the economy. It is not that Obama hasn't generally made his wishes known, it is just that he hasn't had the leadership skills to make Congress care.

        -  Internationally it is worse. Campaign positioning against Bush's "war of choice" in Iraq has led him to drift through a non-committal commitment in Afghanistan; nobody cares what he thinks about Israel; North Korea is left to the Chinese; Eastern Europe to the Russians; and Iran to the Iranian mullahs. At least Obama's pronouncements on global warming (Copenhagen and Cancun) have been as ineffective as his efforts to attract the 2016 Olympics and the 2022 soccer World Cup.

    The Majority Leader of "the world's greatest deliberative body", Harry Reid has suffered from a set of rules that allow 40 votes to block most anything - although many liberals would like for him to make the Republicans actually mount filibusters and take unpopular votes. He'd rather focus on the camaraderie and decorum of the chamber so long as nobody talks about the nuclear waste site at Yucca Mountain. In the last few days fear among Democrats and Republicans about the pending rightward shift of the chamber has led to several middle ground compromises. But for Harry going forward, no votes for Time's "Man of the Year" here.

    So, with power abhoring a vacuum and the voices of 85 new Republican members (63 gain; 22 turnover) echoing in the halls John Boehner is the logical choice - but what does that mean?  The Republicans (including Boehner) will not tolerate a strong centralized style after the experience of Newt Gingerich, Denny Hastert, Tom Delay, and especially Nancy Pelosi. Boehner's history and pronouncements indicate that he will rely more heavily on his committee chairs, allow debate and amendments on the House floor, and be more willing to work across party lines than some of the new members may like. In an environment where leadership depends on the subject, and everybody agrees that the subject is jobs and debt, Paul Ryan as the chair of the Budget Committee may rise to the top rung.

    And in a more diffused world, look to some of the dozen new Republican governors who come with Tea Party backing, a perceived mandate to stop Obamacare, a need to deal forthrightly with budget deficits, and - in some cases - presidential aspirations. Both the House and the governors will want to reverse the flow of power to Washington.

    A confusing mix indeed for those who like order and predictability.  But we are at an inflection point where our financial realities will drive policy, a good argument can be made that the public spoke for austerity in the last election (after looking at Greece and their grand-children's debt), and neither the administration nor the Senate has shown any understanding of what needs to be done. The field is clear for the likes of Paul Ryan, New Jersey Governor Chris Cristie, and Virginia Governor Bob McDonnell.  Lets hope that their leadership proves equal to the challenge.

                                          -----  

    This week's video is a new take on a timely old story. Merry Christmas.

bill bowen - 12/24/10

    

         

       

The Year of the Child

    As I get older I fear sounding like Ebeneezer Scrooge - particularly at this time of year - but a number of recent events have made me look askance at the behavior of the children (with an apology to those under 20.)

    WikiLeaks. A definitive article by George Friedman in STRATFOR on the three rounds of disclosures points out that none have provided "new news" for those who have been paying attention, that the first two on the wars in Afghanistan and Iraq put some of those who have helped us at risk, and that the State Department cables reveal no duplicity or illegality.  One striking point ignored by the site's founder, the naive anarchists on the Berkeley City Council, and the Russian call for a Nobel Peace Prize is that conflicts between countries can be solved by armed conflicts or by diplomacy, and diplomacy requires frank discussions and exploration of alternatives with confidence that such conversations will be handled discreetly. The press focuses on the gossip and the anti-Americans have a brief high, but American diplomacy is the real casualty.

    The end of the party. Not to be confused with the $858 billion bill to extend tax rates, prolong unemployment insurance, and reduce Social Security tax rates (plus some help for ethanol and other stuff), on December 14 the Senate Democrats sprung a 1,924 page $1.1 trillion "omnibus spending bill" for 2011 (with over 6500 earmarks) which must be approved by December 18 to avert a government shutdown. (Concurrence with the House's proposition to punt to the new Congress had been expected.) Congress has been operating on "continuing resolutions" (spend at current levels) since the fiscal year began on October 1 rather than go through the messy hearings and trade-offs of doing a real budget and passing targeted appropriation bills. This last suck at the punch bowl may be defeated in the Senate or House, but many lame duck members are deaf and it may actually pass. (Update: After publication Senate Majority Leader Reid, recognizing unified Republican opposition, withdrew the bill while citing the legitimacy of earmarks and the independence of the Senate from the White House.)  Circle January 3 on your calendar for when the adults arrive.

    Playing with trains. Out here in California we are thankful to Secretary of Transportation Ray Lahood (and the newly elected governors of Ohio and Wisconsin who rejected the gift) for the recent $3.5 billion of Stimulus funds to lay track (without electrification or trains) between two small towns in the Central Valley. This is a bit hard to explain to folks east of the Sierras, but in 2008 we passed an initiative for a $40 to 50 billion high speed rail network, with a first $10 billion to pay for the consultants, lobbyists, designers, and prototype folks with the expectation that the feds (you) would pay for the rest. Meanwhile we are stalled on a $13 billion project to supply water for one fifth of our population, the farmers in the Central Valley, and the delta smelt ... oh, and we are broke. I have visions of the grandkids some day going to visit this quaint "short line" partially covered by sand dunes.  

    But that's not the way that Bob Cratchit would see it. Next week I'll try to find something in the spirit of the original Tiny Tim.    

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     Actually, regular reader Herb McClannan has submitted this video which strikingly shows the health and wealth progress of mankind over the past couple of centuries. Spectacular. Perhaps we just need a long enough perspective and a good statistician.

bill bowen - 12/17/2010

Why Repeal Obamacare: One Perspective

    With John Boehner touting "Repeal and Replace" of health-care legislation to be a top priority of the next Congress and President Obama holding a veto, it may be useful to think about how great the surgery needs to be. I've asked frequent commenter Bill McCormick for his thoughts from a small business perspective.

    First, what does McCormick know about small business? He has some academic credentials - a Harvard Business School graduate program for small business owners - but, more importantly he has a 40 year history of starting successful small businesses from management recruiting and business travel agencies to innovative Hallmark shops, to off site electronic data storage. His "top 25" management recruiting firm in particular gives him insight into the thinking of a broad range of businesses large and small.  

    Some of his thoughts:

        1. The political system caters to the large corporations. That is where money for political campaigns is more easily raised, lobbyists are employed, and large blocks of voters can be found.  And the companies like General Electric, Bank of America, and Boeing are politically agnostic - whoever will address their needs. Small business owners on the other hand have not been of much interest to the Democrats.   

      2. With large scale, low skill manufacturing migrating overseas, we are left with an economy in which 75% of our 107 million workforce is employed in businesses averaging 10 or so employees - flower shops, builders, computer services, landscaping, and professional practices. Some do make stuff. This is a turbulent environment where most businesses last just a few years with many of the successful ones being acquired by larger firms. In the section of the economy served by small businesses Return on Investment is often too low, complexity is too great, customer interaction is too demanding, and change is too rapid for large corporations. But this is where job creation must happen.

        3. The 2010 health-care reform did not change the basic premise of employers bearing the cost of insuring most of the populace and did not do much of anything to reduce the costs in the system. Government funding pays for some of the expanded coverage, but popular mandates like "preexisting conditions" and covering children to age 26 fall back on to the insurance companies and to the people paying their bill. McCormick's company rates had an average annual increase of 9% for Bush's last three years and 25% for Obama's first three. It is a sample of one, but representative.

        4. Many of the features of the current system and Obamacare are particularly burdensome to small businesses: small insured pools which cause single large claims to cause rate spikes (A. allow large pools across state lines); disproportionate effects of a catastrophic illness or disability (A. let the government handle truly catastrophic illnesses); provisions which prevent older workers from relying primarily on Medicare (A. allow workers over 65 to use Medicare with a company-paid supplement); higher risk that the small business insurer will go out of business, leaving the insurer on the hook (A. see larger pools above); and burdensome federal reporting (A. as a start, get rid of the Obamacare requirement for reporting all company payments over $600.) More broadly, get beyond insurance and go after the real cost reductions - tort reform; competitive pricing for pharmaceuticals and equipment; nurse practitioners; neighborhood clinics.   

         5. Many of the answers are simple if the administration were to listen to small business owners. Instead, if one were cynical, one might think that the intent was to drive small business owners to eliminate their coverage (incurring a modest fine) with the result that the majority of American workers would obtain expensive individual policies and create a demand for the government to take over the health insurance industry.

    There are other things that would greatly invigorate small businesses - expand Small Business Administration-type loans for proven small businesses and promising start-ups; prevent higher interest rates or lower lines of credit for business borrowers who are current on payments; provide certainty on taxes; avoid union bias in government contracting - but eliminating the disincentive to hiring caused by the health-care legislation would go a long way toward getting the economy going.  Correcting Obamacare is a legitimate top priority.

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    This week's video is an interview with Joe Lieberman about the WikiLeaks fiasco. (I had thought about an article on this subject, but am just too bummed out.)

bill bowen - 12/3/10

California's Parallel Universe

    A friend recently asked what San Francisco's bond rating getting downgraded had to do with Sharon Angle and Christine O'Donnell's losses in the last election. I will try to connect the dots.

    We're broke. The American public knows it. They turned over at least 63 House seats, 6 Senate seats,  a dozen governorships, 20 chambers of state legislatures, and untold mayors and dog catchers to Tea Party-led Republicans. Sometimes an election turns on a scandal, a major personality, an international crisis, or social issues. Not this time - the public rejected the liberal policies of the Democrats. Among the candidates propelled by the tide were some with great promise - Marco Rubio and Nikki Haley for example - and some that would not have achieved much attention or success in a normal year - Angle and O'Donnell among them. For the defeated Democrats it is much more comforting to talk about the few than the many.

    Out here in California the same factors exist. We've got among the highest unemployment rates, housing foreclosure rates, structural state budget deficits, unfunded public employee pension liabilities, and an evaporating tax base. But the political establishment and the voters have a different set of priorities. While the rest of the country is looking for adult supervision and jobs, Californians continue to oppose oil drilling and nuclear power, and instead reaffirmed the country's most stringent environmental regulations knowing that they will drive up utility costs and further reduce manufacturing and the tax base. And they turned the governorship from Republican to Democrat while keeping the Democrats'  large federal and state legislative majorities and almost all state offices.

    It really is the voters, not some diabolical plot of the media or corrupt politicians. Its not even that the Republicans didn't have decent candidates or enough money to spend. If there is no money for schools, water projects or roads, at least we are doing our part for global warming. The icing on the fiscal irresponsibility cake was in San Francisco where a proposition to put modest brakes on public employee pensions was easily defeated by the city's unions and their liberal allies. Two weeks later bond-rater Fitch provided a negative review, citing the City's "persistent and large budget deficits" and "post-employment benefits liabilities". Fitch may not have as much effect as the voters in Ohio, but they recognize that we are on the road to ruin.

    So what can change the game in California other than bankruptcy or an unlikely federal bailout?  I note with some interest that 37% fo the students at the University of California are now Asian and that a majorityof students in the statewide k-12 school system are now Hispanic. Their parents came here for economic opportunity and want their kids to have good educations. They are not environmental zealots and do not use the political establishment's pro-choice litmus test. I don't know how the political restructuring will come about, but it is my hope that the emerging majority will eventually demand government policies which support a prosperous economy.  Whether the Republicans can align with them or whether they will eventually change the Democratic Party remains to be seen.

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    This week's video explaining the Federal Reserve's "Quantitative Easing II" monetary policy is a bit long, but then the subject is complex. And the video is hilarious.

 bill bowen - 11/26/10

    And one final plug for The Target, as discussed on WGN in Chicago.

Competing Election Theories

    We have two competing "true believer" theories about the 2010 midterm elections.

    First, the Democratic theory, as articulated by President Obama and demonstrated by Speaker Pelosi. There was no repudiation of liberal policies, just the natural result of a terrible economy and an inability to explain their successes, particularly the benefits of the health care legislation. Before the 2012 elections the economy will improve, so what is important is to protect the landmark health care changes which will eventually be appreciated.

    Second, the (Tea Party) Republican theory, as articulated by John Boehner and Paul Ryan, that the public wants a dramatic return to smaller government, balanced budgets, and belief in American exceptionalism. It is not about communication or significantly about anger from having seen how sausage is made in Washington. It is about policy.

    Amid the cacophony, some good analysis will be presented. For three, I would suggest this Weekly Standard article which demonstrates that voter behavior correlated quite closely with attitudes on Obamacare (not just jobs), this American Thinker article which chronicles the demise of support for Paul Krugman's "deficits are good; huge deficits are better" mantra, and even Maureen Dowd channeling her conservative brother. People get the policy angle, and there are plenty of substantive spokespeople.

    But, what if the economy does improve and and in 2012 people are not so worried about 10% unemployment and 5 pending million foreclosures?  In the interim, it is important on the substance that Republicans really do have policies that drive the economy forward - clarity on a tax structure that encourages investment and hiring; a committed plan to get close to balancing the budget in a few years; courage to put Social Security on a sustainable path; an energy policy which fosters global competitiveness; and, yes, containment of health care costs. The Debt Reduction Commission offers a framework which should dominate discussion for the next couple of years.

    The stakes are not just who will win the next election - Pelosi seems dedicated to doing all that she can to help the Republicans on that. The task is to build a set of private sector economic policies to get us out of the ditch; policies which will be clearly more effective than the failed Obama/Reid/Pelosi public sector policies. Lets hope.

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    This week's hilarious video, courtesy of reader Themis Michos, conveys a German leader's response to the midterm elections.

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    And a thank you for those who have purchased my nuclear terrorism thriller, The Target. Please tell a friend and write a review on Amazon.

bill bowen - 11/12/10  

Hope and Change: The Mulligan

    One can dream. President Obama has an opportunity to give the greatest speech of his career when he returns from his visit to the Ganges with his entourage of 2000.

    "My fellow Americans, the strength of our democracy rests on the ability of the citizens to express their views as they select their leaders. As we turn from the recent campaign season to the task of governing, I would like to lay out my administration's priorities for the next two years:

    1. Jobs. The painfully high level of unemployment is unacceptable and requires a set of policies which embrace the people and institutions which create jobs. I will ask the Congress to immediately pass legislation which extends the current income, capital gains, and dividend tax rates through 2012, and that inheritance tax rates be set at 2009 levels (45% for estates over $3.5 million). We will extend the Research and Development tax credit through 2015. Regulatory changes affecting energy will be deferred until 2012. We will urge Congress to approve the pending free trade agreements with Columbia, Panama, and South Korea. Measures to increase lending to small businesses will be a priority.

    2. Budgets. I will work with the Congress to develop a plan to get the budget deficit to international standards (no greater than 3% of Gross Domestic Product) by 2015.  This will begin with a return of any unspent TARP and stimulus funding. We will incorporate many of the ideas of my Deficit Reduction Commission, and may well include a return of departmental budgets to pre-2008 levels, adjustments to Social Security (particularly for younger workers), and reductions in military spending.

    3. Healthcare. While retaining the expansion of coverage contained in the landmark 2009 legislation, we will turn our focus to cost reduction. This will include provisions such as buying insurance across state lines, negotiation of prices with pharmaceutical companies, tort reform, reduced payments for doctors and hospitals, and insurance pools for small businesses. Regulatory requirements will be streamlined.

    4. The Washington Climate. I have asked the Senate and House leaders of both parties to participate in a bi-weekly meeting at the White House on shared priorities, including any significant regulatory changes. The new leader of my Council of Economic Advisers will be a prominent business leader. I will call for the elimination of all earmarks.

    The American people have spoken. I encourage the leaders of both parties to join me in seeking common sense solutions which address their priorities. God bless America. Our best days lie ahead."  

    Why is it so easy?

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    This week's video is Mitch McConnell's  reaction to the election - he who was not invited to the White House for 18 months by the post-partisan president. He has commented that his primary objective is to be sure that Obama does not get reelected - matching Obama's primary objective of getting reelected. Not a great starting point for either.

                                     -----

   Here's the link to my nuclear terrorism novel, The Target.

bill bowen - 10/5/10

California : The Outlier

    Special Note: See the final item below for details of my October Midwest Book Tour for The Target.

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    I've been trying to figure out why Californians are largely immune to the conservative Tea Party movement that is washing over the rest of the country from Alaska to Florida. With the arrival in the mail of the voter pamphlets for the November 2, election, I've got some theories.

   First, the basis of the premise:

        -  Meg Whitman's millions blew out any opposition for governor within the Republican Party - OK, I get that. But in the Senate Republican primary, conservative Chuck Devore came in distant third to Carly Fiorina and Tom Campbell. Some of the Republicans for lesser offices are attractive - Damon Dunn for Secretary of State; Abel Moldonado for Lieutenant Governor; Steve Cooley for District Attorney - but none would call themselves a Tea Party candidate.

        -  With the Republicans looking to pick up 40 to 60 House seats nationally, California with 34 Democrat (and 19 Republican) seats to offer, may gain one and lose one. Gerrymandering is a part of it, but there is more to the inertia than that.  

    Premise # 1:  Californians got disgusted before the rest of the country did, and have given up. With the recall of Governor Gray Davis in 2003, The Governator took over and soon showed that he couldn't do much about the entrenched interests, the chronic budget deficits, and the dysfunctional legislature. If Arnold couldn't do anything, why get excited about another revolution?

    Premise # 2:  The saying that in a democracy, people get what they deserve is particularly true in California where democracy has run amok. In this election, San Francisco voters will be asked to evaluate and pass judgement on: 

        -  Thirteen state races: The Governor; The Lieutenant Governor; the Secretary of State; the Controller; the Treasurer; the Attorney General; the Insurance Commissioner; the Superintendent of Public Instruction; the Board of Equalization; the U.S. Senator; the U.S. House Representative; a state Senator; and a state Assembly member.  

        -  Twenty-two local races: Judges (12); The Board of Supervisors; the Assessor; the Public Defender; the Board of Education (3); the Community College Board (3); the Bay Area Transit Director. 

        -  Nine state initiatives: Including legalization of marijuana; deferral of a prior initiative to make California's air cleanliness requirements the most stringent in the country; and lots of tinkering with voting, budgeting, and taxing.

        -  Fifteen local initiatives: Including reducing the City's contribution to public employee retirement and health care plans; elimination of a requirement that city bus drivers have at least the second highest compensation in the country; allowing non-citizens (including illegals) to vote in school board elections; and lots of tinkering with voting, budgeting, and taxing.

     It is hard to be too mad at government when everything is put up for popular vote - and for the people to hold themselves accountable.

    Premise # 3: Whatever. Life's good. Let's go to the beach.

    When evaluating national polling numbers people should recognize that they would be much worse if they were not skewed by the 38 million Californians who think that the rest of the country is on the wrong track.

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  This week's video, 10-10,  is a series of ads by a British environmental group who would agree with Al Gore that scientific discussion of climate change needs to be over. (Warning: not for children or the squeamish.)

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    Readers interested in my nuclear terrorism thriller, The Target, can hear interviews on WUWM in Milwaukee (October 19 at 10 AM), and WGN in Chicago (November 14), or, for the locals, attend appearances at the Book Bin in Northbrook, Illinois (October 16), the Delafield Public Library (October 19), Books & Co. in Oconomowoc (October 21), Apple Blossom Books in Oshkosh (October 22), Fireside Books in West Bend (October 23), and Book World in Ripon (October 23). So far, so good.   

Parsing The Pledge

    A number of readers have asked my opinion about the House Republicans' "Pledge to America". Briefly, expectedly disappointing - it reflects the cautious Democrat-lite ethos of the Republican establishment rather than the passion of the Tea Party fiscal conservatives.

    First, what it does do in its 21 rambling pages:

        -   Gives a conceptual nod to the Tea Party movement - fiscal responsibility, national security, and good government without emphasis on social issues.

         -  Confronts the "Party of No" claim by including a thousand Republican positions on everything from taxes, to health care, to missile defense. (Drafted by a committee with 1000 inputs.)

        -  Provides the structure of a "Repeal and Replace" strategy for healthcare, changing the focus from benefit expansion to cost reduction.  (With a majority of the public favoring repeal, the prime issue of the next Congress will be Republican efforts to reshape the rube-Goldberg legislation in the face of Obama's inevitable veto.)

        -  Provides numerous ideas about how to better run the House (e.g. 3 days to read bills before voting on them) - from the perspective of the minority party which has been abused by Speaker Pelosi since 2006.

    More importantly, what it does not do:

        -  Provide a strategic vision of where we are going financially. It is good to rail against the Democrats exploding deficits and failure to even have a 2011 budget, but some Republican targets are necessary.

        -   Address in a meaningful way the largest budget problems (Medicare; Medicaid; Social Security; military spending), or the causes of the 2008 financial melt down (Fannie Mae/Freddie Mac; rating agencies; derivatives; hedge funds; "too big to fail").

        -  Provide a realistic tax strategy - critical since everything is currently up for grabs.  

        -  Signal a real commitment to legislative reform by banning earmarks.

    If trends continue and the Republicans gain control of the House and gain 6 to 8 Senate seats, there will be a real test of the GOP. It probably would have been too much to hope for to treat the American public as adults during an election campaign in which the president is leading a chorus such as the blatantly untrue fear mongering on any mention of Social Security. Such is democracy - the voters know what is needed, but do not want to be confronted with the specifics, and many partisans are predisposed to attack anything.

    But we do have Paul Ryan's Roadmap and John Boehner's suggestion that we roll back spending to 2008 levels to give us hope for change. The real battle will be in the House between traditional Republicans who see the public's mood as just a political opportunity, and the wave of true believers who will demand a return to fiscal sanity. And maybe that earmark omission was just an oversight.

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   This week's video is a trailer for "Waiting for Superman", a documentary about the failing state of (largely inner city) American schools, the struggles of reformers in Los Angeles, Harlem and Washington D.C., and the trauma of life-changing lotteries for selection to attend public charter schools.

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    And a thank you for the many favorable reviewers of my nuclear terrorism novel, The Target - available at Amazon.com (paperback or Kindle), and by order at most book stores.

bill bowen - 10/1/10

The Obama Economic Plan

   The most significant speech coming out of Washington this month was not Glenn Beck's rally, one of President Obama's political rants, or John Boenher's suggestion that we cut spending back to 2008 levels and freeze taxes. It was outgoing Chairman of the President's Council of Economic Advisors Christina Romer's "valedictory" at the National Press Club. Her main points:

     1. She had no idea how bad the economic collapse would be (thus Obama's famous 8% unemployment limit);

    2. She still doesn't understand exactly why it was so bad;

    3. The response to the collapse was inadequate;

    4. She doesn't have much of an idea about how to fix things.

   When Budget Director Peter Orszag resigned in July and later took issue with with Obama's tax policies, it suggested disagreement about details of the administration's plan. Romer makes it clear that - like Congress having no 2011 budget -THERE IS NO PLAN.

   To the layman, it seems as if a big piece of our financial problem is failure to distinguish between shorter term cyclical problems and longer term structural problems. All of the "sound and fury" coming out of the Democrats for the past two years (aside from health care) has dealt with the cyclical problem - often making the structural problem worse. If Washington listened a bit to The Public, they would realize that The Public understands and wants long term solutions.

    So, the cyclical problem: overbuilding in housing; excessive personal debt; irresponsible financial industry mismanagement; lax regulation. A few trillion dollars later we have deferred some of inevitable pain in housing, saved some banks and car companies, extended the dole for the unemployed, and funded every public works project that could be earmarked. Twenty or thirty years ago we could have afforded that and moved on - but there are bigger structural problems afoot in 2010 and THERE IS NO PLAN.

And a few thoughts on the long term problem:

-- We were living on debt for a couple of decades, consuming more than we produced as a society - we will not return to those levels of perceived wealth. Until we recognize that everybody isn't entitled to a McMansion, a place at the lake, and world travel, we cannot start to rebuild our foundation.

   --  The productivity of the information technology revolution has hit in full force - much as the automation of agriculture and manufacturing did in the past. (We are still the world's largest manufacturer and third largest agricultural producer despite low manpower requirements.) The question for government is what to do about the workers that we do not need. Some logical answers - keep people in school longer; retire earlier; limit immigration of unskilled workers; shorten the work week; move back toward single wage earner families; increase services.

    --  A balance of payments imbalance of 5 % of GDP is crazy. Fixing this - by establishing "ranges of appropriate balance" with our major trading partners - would help to fix the employment problem. The world knows that the balance of the past decade (not only with China) is not sustainable; our politicians favor short term gratification.

 Paul Krugman's bizarre attack on Paul Ryan's "Roadmap for America's Future" is reflective of not only an ideological disagreement with its provisions, but also of a desire to avoid any clarity with The Public about where we are going. Many bought the "Hope and Change" schtick once; this time a more adult America needs a leader willing to discuss a plan.

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   This week's video is an intriguing presentation on the status of social media. At least you read a blog.

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 And a reminder about my new nuclear terrorism thriller, The Target, available in paperback or Kindle formats at Amazon.com and by order from most book stores. Thanks to the readers and friends who are helping organize an October 16 to 24 bookstore/library/media tour in Illinois and Wisconsin - the home of many of The Target's characters.   

The New Republican Congress

Despite Tom DeLay's admonition against overconfidence, I will go with the polls showing a "generic" Republican preference of about 5%, and offer some conjecture about a Republican 2011 House of Representatives. (See the electoral map.)

We've been here before and screwed it up. Lesser lights were the worst offenders: Congressman Duke Cunningham - guilty of taking millions in bribes; lobbyist Jack Abramoff - guilty of defrauding Indian tribe clients and official corruption along with a dozen other White House and congressional aides; Rep Mark Foley - guilty of soliciting a young male page.  While not convicted of crimes, a considerable stink hung over leaders Newt Gingrich (reprimanded in 1997 and fined by the House for ethics violations), Tom Delay (charged in 2005 with violating state campaign finance laws and money laundering), and Dennis Hastert (shady real estate deals.)  Those looking for reasons why Democrats outnumber Republicans 4 to 3 while voters self-identify as conservative over liberal 2:1 should start with the Republican House's decade of corruption. 

This time it is high unemployment and generation-punishing budget deficits that are giving Republicans a chance, and they will be the focus of the 112th Congress.

-- John Boehner, was a junior reformer in the 90's, helped write the Contract with America in 1994, and became minority leader in 2006, following Tom DeLay's resignation. Under his leadership (and with Nancy Pelosi seeking no Republican input), he has been able to hold his caucus to a virtual 100% voting record. He promises to be a solid majority leader.

-- Paul Ryan of Road Map fame will presumably be the Chair of the House Budget Committee.  Wisdom and courage will be required.

--  Ryan is also on the Bowles/Simpson Deficit Reduction Commission which will report in December on recommendations to close the $1.4 trillion dollar budget deficit, giving the administration and the Congress a beginning point for negotiations. Democrat Bowles has indicated that he favors 3/4 spending cuts and 1/4 tax increases, rolling back the recent expansion of government spending from 21 to 24 % of GDP.  Options such as a Value Added Tax will probably not get the 14 of 18 votes necessary for recommendation, but they will receive attention none-the-less.

--  Fortunately, the new Congress should be encouraged by several recent examples of new leaders receiving early credit for slashing spending - Governor Chris Cristie in New Jersey; Governor Bob McDonnell in Virginia; Prime Minister David Cameron in the United Kingdom. Look for the House's "power of the purse" to run into the Community Organizer in Chief's desire to spread the wealth. Obama is smart enough to know - even after the resignations of Budget Director Peter Orszag and chief economic adviser Christine Romer - that wealth has to be created before it can be redistributed.

-- In the short run, voters favor job creation over deficit reduction, suggesting a series of Republican proposals to help the creators of jobs - extension of the Bush tax cuts; a shift of focus on health care from extension of coverage to cost reduction (repeal is not possible with Obama's veto); movement toward real energy independence; a challenge to regulatory expansion; and most importantly, a plan to return to budget sanity.   

--  One concern of the White House will be Darrell Issa, the Republicans' biggest investigator of the administration's alleged abuses, as chair of House Oversight and Government Reform Committee - with subpoena power. Move over Henry Waxman.

-- Finally, it will be interesting to see what happens to the Blue Dog Democrats - or what is left of them - once they are out from under the thumb of Ms Pelosi. With a liberal Democratic president and a Tea Party-energized Republican House, they will remain in "no man's land".

This all assumes that the Republicans' campaign message remains on track, not getting distracted by popular, but less important, issues such as immigration, Muslim mosques, and the corruption of Charlie Rangel. I believe that the Republican leaders get it.

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This week's video is a largely unreported welcome of returning soldiers by President George W. Bush at Dallas/Fort Worth. Whatever his other shortcomings, this is his element.

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And, a plug for my nuclear terrorism novel, The Target, available in paperback and Kindle at Amazon and by request at most book stores.

Obamacare Update

Many suffering with Obamacare fatigue have spent the past months watching the president's handling of the Gulf disaster (ugh!), the war in Afghanistan (ugh!), the lawsuit against Arizona (ugh!), and jobs creation (ugh!). Just to make your day, I'd like to bring you up to date on the health care front.

As a starting point, I'd note that the bill which Obama signed on March 23, met the primary objective of extending coverage to 32 million folks; contained a very confusing jumble of variously-timed taxes, mandates, subsidies, and government expansions; and did virtually nothing to reduce costs due to vote-buying compromises with the lawyers, pharma companies, doctors, medical device providers, insurers, and hospitals. There will have to be a "Plan B".

Some things on a macro level:

-  Some 60% of voters now believe that the legislation should be repealed, but only 41% believe that it will be. Pelosi's "build it and they will come" hope lies in the future.

-  In April, Obama promised that everything would be "on the table" for the Budget Deficit Reduction Commission, whose recommendations are due December 1. Hopefully, that will include Paul Ryan's recommendations on health care. In a bad sign, one of the commission's first acts was to request more funding for the commission.

-  Since the bill passed, the health care stock index has declined 12.2%, while the S&P 500 has declined 11.8%. Wall Street already got its way. 

And a bit more micro:

-  Some 20 states have joined in lawsuits to invalidate the law, particularly the provision requiring citizens to purchase health insurance. The relationship between required participation, pre-existing conditions, and rates is vital and there is some chance that the Supreme Court may favor individual liberty.

-  The insurance industry will have many companies stop some coverage as the requirement that 80% of premiums be paid in claims is defined by the bureaucrats. (So much for that "no cancellation" claim.)  Meanwhile, in California Blue Cross has withdrawn its proposed 39% increase due to "calculation errors" - after its announcement on the eve of the Senate's March vote sparked outrage (and helped obtain 30 million more mandated customers for the industry.)

- Early indications are that the $5 billion for interim "high risk pools" (for pre-existing conditions cases until coverage is mandated in 2014) will probably be inadequate - an early harbinger of the plan's real costs.

-  Conventional wisdom is now acknowledging that 16 million more Medicaid beneficiaries will mean more crowding in emergency rooms, and that the 10% increase in medical school enrollees between 2009 and 2014 will run into a bottleneck with little increase in residency positions. And, predictably, the currently-stalled "unemployment benefits bill" contains a 21% increase in payments to Medicare doctors- which had been left out of the CBO's cost estimate of Obamacare.

- Obama has used a recess appointment to bypass Congressional discussion of his leader for Medicare and Medicaid- a Harvard doctor who views health care as inherently redistributive, opposes private care providers, and acknowledges the need for rationing. See for yourself.

- And it is becoming harder for the media and politicians to ignore the Massachusetts experience - the highest premiums in the country, spreading price controls, and proposals to limit preventive examinations and physician private practice.

There will be a Plan B.

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And for the decreasing minority who still respect this administration, here's the head of the National Aeronautics and Space Administration telling al Jazeera that the foremost mission of NASA is improvement of relations with the Muslim world. Truly. 

bill bowen - 7/9/2010

America's Funk

For the first 225 years as a country we could do pretty much anything that we wanted. For the last decade we haven't been able to do much of anything. The liberal intelligentsia blames it on Bush and Obama's timidity; less than a third of the country thinks that we are on the "right track"; the political mood is "a pox on both their houses." What's up?

Well, it has become obvious that "Yes We Can" was a vacuous campaign slogan, particularly for somebody who had never done anything of note, and had never had the personnel and budget responsibilities of a governor or business owner. It is now obvious that he can't:

1. Provide the clarity that the private sector needs in order to get the economy and hiring going again - a long, muddled health care debate that turns the system upside down; a shorter, inconclusive energy debate that threatens huge costs to producers; a long financial regulation debate which does not deal with rating agencies, Fannie Mae/Freddie Mac, and (to a large extent) "too big to fail"; the impending (to be adjusted?) end of President Bush's tax cuts.  What he, Nancy, and Harry have delivered is a $787 billion omnibus stimulus grab bag that many economists would say has done little to stimulate the private sector.

 2. Exercise any financial constraint - compromising away any cost containment provisions in the health care legislation; proposing budgets that project unsustainable deficits for a decade; telling the G20 that he wants another round of spending before the party is over; watching our prime lender, China, call for the end of the dollar's reign as the world's reserve currency.

3. Provide for security - Iran and North Korea; the Mexican border; an objective-less Afghan War; meaningful interrogation of terrorists.  

4. Fix the gushing metaphor in the Gulf - or at least provide skimmers to gather up what cannot be prevented.

So, where can optimists who believe in America's "exceptionalism" look for hope?

1. The first Tuesday in November. It looks increasingly possible that Nancy Pelosi will be out of a job, and that the Democrats will have a narrow majority in the Senate. Hopefully, the Tea Party fiscal conservatives will have enough influence to prevent the Republicans from returning to their pattern of the last decade.

 2. The world's greatest economic engine. We are the unquestioned technology leader in a century which will be dominated by technology. Contrary to conventional wisdom, we are still the leader in manufacturing output, and the patent office granted twice as many patents in 2008 as in 1990. We have the world's most productive agriculture and the best universities. We sit on enough energy if we can get our act together. Ongoing productivity of 3% leads to profitable companies, structural unemployment of some 10%, and a social problem, but that is under our control if we choose. 

3. The political system is self-correcting - perhaps our greatest strength. Many states and communities are starting to require that public employees retirement ages, pensions, and health care contributions look more like the rest of us. Here in California we have taken redistricting away from the legislators and mandated open primaries to help centrist candidates. Now, if we can just do what the Canadians did in the 90's (see last week's posting), and demand that the politicians produce balanced budgets.

Many Democrats who prayed that President Bush would fail now criticize Republicans for wanting the same for President Obama. On many policies this is reasonable - suing Arizona; trying terrorists in civilian courts; spending to oblivion - but in the larger sense we should be hoping that, despite much evidence to the contrary,  he has learned something about management.

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And this week's You Tube - the Obama administration's plan to fix the "undocumented worker" problem in Arizona.

bill bowen - 7/2/10

Those Corporations

One of the major differences between the Tea Party folks and the establishment Republican Party is the perspective on corporations. Having been a corporate guy most of my career (VP Pabst Brewing Company and Kraft Foods), I find myself increasingly in the Tea Party camp, thinking that common sense and fiscal imperatives need to trump the corporate lobbyists.  (Perhaps I have been soured by the Supreme Court's recent decision that Unions and Corporations are people, and that limiting their political contributions would be unconstitutional.) 

For the past couple of years I have tried to distinguish between the evil bankers and real corporations that produce and sell stuff that people need - or at least want. Well, BP produces and sells stuff. From my experience, I can say with some certitude that the average leader at BP does not include the people and marine creatures of the Gulf among their real stakeholders - stockholders, yes; senior management, yes; employees, yes; customers, probably; suppliers, perhaps; pelicans, nah. Decisions about safety precautions normally consider the employees, but it should not be at all unexpected that the risk to the environment would fall way below the profit motive - perhaps explained in some strategy presentation as a high cost multiplied by a very low probability.  Even then, the calculation would be in terms of the PR costs, the lawsuit costs, and the legislative penalty costs. Effective regulations are necessary.

Back to the evil bankers for a minute, the Swiss legislature's tentative decision this week to allow bankers at UBS to divulge the names of American clients who avoid billions in taxes by hiding their money there raises the question - why do we let such companies do business in our very attractive market? One thing that the Obama administration started to do right a year ago - and which has since languished - was a crackdown on corporate and individual tax cheats. Maybe the Swiss legislature and the Deficit Reduction Commission will add some steam.

More broadly, the advisory and understaffed commission tasked with getting the country out of our deep financial pit needs to take a look at corporate taxes. Yes, we have the second highest corporate tax rate among the developed countries - it is just that the lobbyists have managed it that companies like ExxonMobil, Chevron, General Electric, and Bank of America pay next to nothing here. Some practical economists (Paul Ryan?) need to look at incentives to boost exports and R&D spending, but the rest of the goodies from subsidies for large farmers to oil depletion allowances need to go. 

Ironically, the political combination necessary to get regulations and corporate taxes in line is probably the Tea Party folks aligned with many folks from the Democratic Party.  That is not a comfortable alliance, but if the common sense fiscal conservatives can align with the Democrats on eliminating tax dodges and with the Republicans on spending, we may have a chance. 

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This week's video is a cute Song by Ray Stevens on immigration.

bill bowen - 6/18/10

Obama's Age of Aquarius

A number of my friends voted for Barack Obama anticipating the dawning of the Age of Aquarius  - some seeking friendlier inn operators during their annual vacation in Provence; others confusing being liked with having greater world influence. Lets see how that's going.

One good place to start in personal or geopolitical influence is with your friends. Some Obama examples:

-  Most obvious is Israel where the botched Gaza agitator/aid incident has received most publicity - and US condemnation. But a deeper statement of policy was acquiescence in the prior week's UN resolution condemning Israel's nuclear capability. This relationship has not been so strained in decades.

-  Second would be our "special relationship" with the United Kingdom. One can dismiss the administration's slighting of Gordon Brown in an early exchange of gifts and the removal of Winston Churchill's statue from the White House as newbie mistakes, or even the bashing of BP as necessary politics, but the recent lack of support on the UK's dispute with Argentina over the Falkland Islands was intentional and members of the new UK government now call the "special" relationship over. The UK has been, after all, our greatest supporter in Iraq and Afghanistan at great domestic political cost for the Labour Party. No need for any sensitivity.

The critical (and very difficult) efforts to marshall world opposition to the nuclear aspirations of North Korea and Iran has, thus far, been a failure.

-  Most recently, China has publicly rejected meeting with Secretary of Defense Gates, and has refused to condemn North Korea's sinking of a South Korean naval vessel. Almost unnoticed in the US, the prime minister of Japan (the world's second largest economy), put his country above himself and resigned rather than fulfill a campaign promise to evict a US Marine base from Okinawa. The locals understand how big a deal the North Korean problem is, and Obama is powerless to get Chinese help.

    -  Iran is worse. The UN has passed some weak resolutions, but Ahmadinijad apparently now has enough enriched uranium for two weapons. In a sign of the "new world order", Brazil and Turkey (a NATO member, recently spurned for European Union membership) have opposed any sanctions and offered their own nuclear fuel swap with Iran. (Add Turkey to that "friends" list.)

   Even the optimist has a hard time finding some positive result for Obama's different world view:

-  Leftist President Lula of Brazil has been gathering support for a Latin American Free Trade Area without the United States, while Obama and Congress will not sign Bush's free trade agreements with Colombia, Panama, and South Korea. 

-  The Ukraine's recent decision to withdraw its application to join NATO reflects a reevaluation of US and Russian influence in Eastern Europe.

    -  Obama's Cairo speech of 2009 reflected regional optimism that a US president with a Muslim father and step-father would be a favorable force. Recent polls show that the wars in Iraq and Afghanistan and Obama's apparent lack of interest in the Middle East (and Indonesia for that matter - with two canceled trips) have eroded whatever support there was.  

    -  Perhaps the Congressional Democrats' standing ovation for Mexican President Calderon's criticism of Arizona shows one example of closer agreement.

It is natural that a decline in American financial power will lead to a decline in military and political influence. However, the speed with which Obama is dissipating influence in Europe, the Middle East, Asia, and Latin America is shocking.   

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This week, a couple of related videos: Obama telling Michigan high school graduates not to play the blame game (while talking about the problems that he inherited), and looking for some "ass to kick" for George Bush's oil spill. The irony.

bill bowen - 6/11/2010

Obama's Katrina ?

Given the geography and the politics, there is an inevitable tendency to compare the Obama administration's handling of the Deepwater Horizon disaster with the Bush administration's handling of Hurrican Katrina in 2005.  While the advocates and apologists often line up Left/Right, the issue is not ideology - it is competence.   

Much of the critique of President Obama's handling of the ongoing crisis is about the communications strategy -whether he has been fully engaged (between fundraisers and vacations); whether he is adequately infuriated (in his detatched intellectual way); who speaks for the administration?  But, it is more meaningful to look at the substantive management issues - before the explosion, in efforts to plug the leak, and in efforts to protect the coast.

Prior actions:

1. Both settings had a history of corruption - the notorious Louisiana levee boards which had allowed the defenses of New Orleans to deteriorate; the Materials Management Service which had effectively abandoned its role in regulating drilling platforms.

2. Both administrations had appointed an unqualified supporter to lead a key agency - racing industry administrator "Brownie" at FEMA; Harvard lawyer/green activist Liz Birnbaum at the Materials Management Service. (Obama's press conference admission that he did not know how she had been fired is an eye-opener.)

Plugging the leak:

1. Particularly if there have not been prior exercises, chaos frequently accompanies disasters. Katrina had its flooding, its overwhelmed rescue facilities, and its abandoned hospitals.  Disaster preparations and decision making between BP, Transocean and the government were ineffectual at best - both before and immediately after. 

2. The root issue - the hurricane and stemming the oil flow - were uncontrollable. It would seem that the best minds are now engaged and that those in the industry are the most qualified to lead the shut down efforts. For the future, it would seem better to have an industry consortium with government oversight since the scope can be large, and there are less qualified operators than Transocean and BP.

3. Much as the daily videos of people stranded on rooftops in the 9th Ward fed the media appetite following Katrina, the real time video of gushing oil remains available 24/7 on BP's web site. I am not sure that we need either.

Protecting the coast:

1. Bush had to work through a Lousiana governor (since deposed) who refused to be woken up to address the problems and a New Orleans mayor (since deposed) who wanted his "chocolate city". While the federal/state/local issue was significant, it was clear that FEMA was in charge federally. Obama seems to be intimidated by a 1990 law which may give BP the lead responsibility for the environmental defense efforts. (One wonders how long it would take Congress to pass legislation temporarily giving authority to the federal government.) In the current disaster, somebody fired the head of the MMS, the Coast Guard on-scene coordinator has been changed, and  the leaders of Interior, Homeland Security, Justice, the EPA, and the White House Climate Change Czar have all been prominently involved.   

2. FEMA was slow to realize the magnitude of the hurricane, organize the response, and deliver housing and other supplies.  (Republican) Louisiana governor Bobby Jindal's request for sand berms to protect the coast were ignored for two weeks. A "do nothing" Army Corps of Engineers has been a problem in both events. And the MMS - Obama's FEMA - grants new drilling permits, then institutes a deep water moratorium, then extends the moratorium to shallow water, then seems to say that was a mistake.

3. The EPA apparently did a good job managing the subsequent health impact of Katrina. It is still unclear who - BP; the EPA - is making the decisions about the use of millions of gallons of chemical dispersants with their adverse impact on marine life.  

In the narrow sense, the Deepwater Horizon disaster has shown the incompetence of the "we'll keep our boot on BP's neck; criminal liability" Obama administration. (By the way, most of BP's 2008 contributions went to the Obama campaign.)  Taken together with Katrina, it raises further the public's skepticism about the government's ability to run the health care industry, car companies, insurance companies, mortgage finance companies, and whatever else may come down the pike.

But keep the faith, this will remain Obama's top priority - right up there with jobs, the Eurozone debt crisis, Israel's problems at the UN, Iran's nuclear weapon program, the Korean crisis, and everything else that is going so well for the leader of the Free World. 

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For the 46% of voters who still "somewhat approve" of Obama's performance, here is his nomination speech where he intones with "profound humility" that the rise of the oceans has begun to slow and that the planet has begun to heal. Oops.

For those readers in California, please remember to support Tom Campbell for Senate in the June 8 Republican primary. And for those in San Francisco, John Dennis for Congress.

bill bowen - 6/4/10 

The Greek Canary

What is perhaps most amazing is that it has taken over two years of global financial stress to cause Europe's disconnect between monetary policy (the common euro) and fiscal policy (national budgets) to come to light - questioning the viability of European economic union and providing a warning to America, if we will listen.

From Greece's perspective:

-  An economic shambles. Debt at 125 of GDP; a 12.4 % budget deficit; at least 30% tax cheats; phony government financial reporting; huge government unions; little going on in the private sector; because of the euro, unable to debase the currency to pay off debt or lower the cost of exports. With a long history of post-war communist and socialist governments, the outcome is fit for a Greek play, tragic flaws and all.   

- The 1992 Maastricht Treaty which established the euro-zone theoretically requires countries to hold deficits to 3% of GDP and accumulated debt to no more than 60% of GDP. (All participants have exemptions, but Greece is the worst.) Despite riot-inducing budget cuts, a draconian plan to increase the retirement age to 63, tax increases to include a 40% rate, and a temporary ability to borrow at European interest rates, most economists have a hard time seeing how Greece can grow out of its abyss.  

From Europe's perspective:

-  While Greece is but 2.5% of the euro-zone, the national debt of $375 billion greatly exceeds any prior International Monetary Fund bailout. There is every reason to fear contagion to include at least Spain, Portugal, and Ireland - and to the German, Swiss, and French banks which hold much of the debt. While Germany has caved in to the creation of a $640 billion fund and the IMF is putting up $320 billion, the Germans see this as a stop gap, worth perhaps three years.

-  More broadly, the common currency reflects the half-century dream of France and others for a united Europe - militarily, foreign policy, monetarily - capable of balancing the United States. Germany bought in due to European fears at the time of the integration of East and West Germany in 1990, and has prospered with their fiscal conservatism and productivity. But, the alliance is strained - Germans do not want a politicized European central bank buying Greek debt, and Angela Merkel's party is already paying a political price for bailing out the "too big to fail" Greeks. Many think that the solution is temporary.

  From America's perspective:  

- In the short term, the Greek impact is mostly one of financial markets, with a falling euro, concern about a stalled European financial recovery as countries move from stimulus to debt repayment, reduced demand for US exports, and reduced earnings from European divisions of US companies. The pressure that President Obama put on Merkel to go along with the bail out fund and the American contribution of some $50 billion to the IMF effort have received little attention.

- In the long run, it should be noted that the US budget deficit is 12.4% with no plan to get it into the 3% range, that the accumulated US debt is passing the European 60 % maximum, and that the credit default swaps markets are flashing a warning that California is now in the top 10 of likely governmental defaults (despite it being illegal.)  

 So, a daring prediction: efforts will shift to minimizing the damage from evicting the Greeks (and perhaps some other Club Med countries) from the euro zone - perhaps sooner than later. Global markets beware.  

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This week's video is one example of establishment-anointed Connecticut Democratic senatorial candidate Richard Blumenthal's false claim that he served in Vietnam when he, in fact, obtained 5 deferrals before joining a safe reserve unit. In an age of anti-establishment political rage, he will apparently face Republican Linda McMahon(CEO of World Wrestling Entertainment) in November - whose investigators found the story missed by the Hartford Courant, the New York Times, and all other media outlets over a period of years. Bring it on.

And my continuing endorsement of Tom Campbell for Senate in the June 8 California  Republican primary - the proven fiscal conservative.  

bill bowen - 5/21/10

Next week: Rand Paul  

Regulate This

The discussion of regulation is usually a debate between conservatives who want less (preferring free markets) and liberals who want more (preferring government.) Think about how much better it would be if the discussion were about making regulation more effective. Some recent examples:

1. Stock trading. Despite months of debate and thousands of pages of House and Senate bills on "Financial Reform", nobody apparently thought about the fact that computers can generate a trillion dollar market drop in minutes, in part because the different exchanges have their own rules about "circuit breakers" to slow trading in a rapid decline, and that orders can get unintentionally switched to an exchange where very low volume allows bottom feeders to clobber investors.  Regulators - public or private - need to think of the industry, and not just let individual exchanges write their own rules.  And how many other loopholes are there, not thought about by anybody except the guys with mansions out in the Hamptons. (Note to self: avoid "market orders" and "stop losses" which automatically trigger sales.)

2. Bernie Madoff. Bernie's $65 billion scam was not the result of inadequate regulations, just inadequate people enforcing them. Fortunately there was eventually a courageous whistle-blower. So, what's happened to those SEC guys who were asleep at the switch? A bit of public embarrassment; some shuffling of staff; congressional exhortations to do better; an apology.  

3. Allen Stanford. Stanford limited his decade-long scamto $8 billion, but used congressional leaders to avoid investigation of his Antigua-based operation.  Like Madoff, he'll get jail time and have to give up some of his gains, but the regulators... still there.  

4. The Gulf oil spill. Among other things we find that the Minerals Management Service (which is responsible for safety and collecting royalties) relies on the rig operators to police their own safety procedures, and that US deaths are four times that of other countries doing offshore drilling. The safety management program propagated by the American Petroleum Institute is not audited. Lacking in the Deepwater Horizon incident were a "blowout plan" when drilling was originally approved, and a number of back-up devices used in North Sea operations.  

5. The April 5 West Virginia coal mining accident which killed 29 miners. We find that the Mine Safety and Health Administration had thousands of  deficiency notices against Massey Energy, none of which resulted in closing the mine. In fact, a "pattern of violations" rule passed in 1977 has been used only once to shut a mine and thousands of violations go unaddressed.   

So, what lessons can we draw?

1. There needs to be some broad thinking and sharing of "best practices"  among agencies upon which we rely - the Food and Drug Administration; the Securities and Exchange Commission; the Nuclear Regulatory Commission; the Department of Transportation; the Department of Agriculture; the Occupational Safety and Health Administration; the Justice Department; and several others. When I was in the food business in the 80's there was a shift from quality control checks of the final product to Japanese-style thinking about managing the critical risk points in the production process. (This sounds simple, but the change is profound.) Some experts advocate a similar shift in regulatory thinking. It is logical for the regulations to be led by industry groups who have detailed understanding, but audits must be frequent and enforcement must be sure.  

2. There should be long "cooling off periods" during which senior regulators cannot seek employment in the industry being regulated.

3. Whistle blowers should be protected (and perhaps rewarded) and have access to Inspector General-types in the appropriate agencies.

4. Bums should be prosecuted.

We have had enough problems in enough agencies to recognize that this is a generic problem, and that results vary greatly across agencies. Hopefully the group regulating the nuclear industry has many of the answers - unlike coal and oil.  As more and more of our lives and economy are being controlled by the government, it would be nice to know that the public's interests mattered more than the industries being regulated, the employee unions of the government regulators, the careers of the managers, and the campaign funds of the politicians. That is a bipartisan wish.   

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   This week's You Tube is an ad that the Arizona governor is running relative to her state's illegal immigrant law. This is the very benign text for those who have only heard the talking heads rants.

And again, the top fiscal conservative in the 102d Congress, Tom Campbell for Barbara Boxer's senate seat.

bill bowen - 5/14/10

Channeling Anger

Why are so many people angry - Tea Party people, liberal and conservative media hosts, Senators, me - when, for most of us, life is good and we know that it makes us less fun to be with?  

First, fear is a rational emotion when faced with waves of incomprehensible change that Obama's acolytes may believe in, but most of us don't understand - joblessness (initially not his fault, but also not a priority), a scrambled health care system, pending inflation (destroying retirement plans), wild stock market fluctuations, and reduced liberty (due to terrorism and an expanded socialist government.) And that's before scrambling the energy system, the immigration system, and the tax system and moving on to nuclear disarmament and a more equitable world order.  

Fear plus powerlessness leads to anger. The ineptitude of the Republican Party has gotten us to the point where self-identified conservatives outnumber liberals two-to-one, but the liberals control the government. And a year of highly public congressional efforts at health care and financial reform have demonstrated that this is definitely not government "of the people, by the people, for the people."  Any health care cost containment gets shredded by deals to buy support for universal health care coverage; and the bipartisan power of Wall Street money...! 

So, should we just go out and work on our golf game as a psychiatrist friend of mine suggests?  Maybe after November, if the public cannot channel its anger into political change that we can believe in. First, lets find some candidates that we can vote for, not just against.   

 In sifting through California candidates, I've found a moderate Republican advocacy group that does not believe the Tea Party movement is real; a prominent Democratic state senator who doesn't care that his constituents are angry, just that he has low name recognition; a leading Republican gubernatorial candidate who is clearly from the privileged class and doesn't seem to understand what government "by the people" means; and a bunch of other undeserving riff-raff. I've enjoyed being with the people in the Tea Party movement, and have good regard for Republican/Libertarian John Dennis who is running for Nancy Pelosi's seat - but his odds are about like buying a lottery ticket. (Beyond matching San Francisco's warped  ideology, Pelosi delivers billions in earmarks.)   

So, what does one do to get away from the negative?  Thank you Tom Campbell. While Campbell's even-money chance of beating Barbara Boxer would be incentive enough, the larger point is that you couldn't design a better senator - five term Congressman from Silicon Valley (named the most fiscally responsible member of Congress by the National Taxpayer's Union); Harvard Law; University of Chicago Economics PhD (under Milton Friedman); dean of the Cal Berkeley Business School; social moderate - a broadly qualified Senate counterpart for the House's Paul Ryan.  Californians who want to channel their anger in a positive direction can take a big step by supporting Campbell in the June 8 Republican primary. (The Republican primary is also open to the 20% of voters registered "Decline-to-State".) For the rest of the country who would like to defeat Barbara Boxer, money is welcome.

The risk is that our attention span is short. Last week's financial hearings become this week's oil spill, Times Square bomber, and Greek riots. Note to self: Stay focused. November 2. 

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This week's video provides good perspective for those who have a hard time grasping Obama's budget.

Bill Bowen - 5/7/2010

Sounding Retreat

  The premise:  The military and political decline of empires often follows an economic decline as self-serving corruption eats at the center and rulers favor butter over guns. Chinese dynasties; Rome; Barney Frank and Charlie Rangel.   

The question: Faced with unsustainable deficits and a limited ability to raise taxes, what will be the response of Barry Obama-Soetoro - son of a disillusioned American ex-patriot mother and a politically displaced polygamist Kenyan father; step-son of a middle class Indonesian army geologist; student of Jeremiah Wright and Bill Ayers; patron of Van Jones and Eric Holder?

The setting: The U S of A has had an unprecedented run -with 5 % of the world's population enjoying 30 % of the economy; with the dollar being the global reserve currency buttressed by the International Monetary Fund, the World Bank, and the World Trade Organization; with pliant military and political alliances spanning Europe, south-central Asia, Southeast Asia, and Latin America; with a defense budget equal to 41% of the world's military spending; with the United Nations in New York and the greatest international universities spread across the land; with McDonalds, Hollywood, and Madonna raising global cultural standards. Ah, those were the days.

The upheaval: So what happens when Obama's trillion dollar deficits make us give up the deal: the hundred Army, Air Force, Marine, and Navy bases spread around the globe; the naval bases in the Indian Ocean which protect the flow of oil to Japan and Australia; the bases in South Korea and Japan which guarantee our friends against Kim Jong il's North Korea and Hu Jintao's China; the 80,000 troops in Europe for some forgotten reason. Oh, and things like the billion dollar bribe to Egypt to leave Israel alone.

The path forward: So, where does the pied piper (whose $3.83 trillion 2011 budget has a deficit of $1.27 trillion and "discretionary security" spending of $782 billion) want to take us if he ever gets serious on the spending side?

- An age with many fewer nuclear weapons - despite a big increase in the 2011 budget.  Probably a good idea. Probably will save some money in the long run.  

-  An age with less new military hardware - the $140 million per F-22 fighter jet; perhaps a carrier battle group or two; the moon exploration program. Secretary of Defense Gates should be able to wield a surgical knife. Will decrease some exports and spin-off civilian applications of the technologies. Bad for some of my stocks.

-  An age with a lesser commitment to our long time friends - England; Israel; Japan. Definitely a bad idea, but Hillary doesn't seem to have much of a policy voice. Nature won't like the vacuums.

-  An age with less global largess under the State Department's $56 billion umbrella: help for the globe's poor, hungry, sick, climate-challenged, and politically needy.

- An age of diminished expectations - for our kids and grandkids; for the kids growing up in Iran's neighborhood; for the Europeans who have long since forgotten how to protect themselves; for the 100 United Nations members who so much enjoy voting against us in the Security Council - and should start studying Chinese.  A very bad idea indeed.

Sometime after the election we will get the recommendations of Obama's commission on fiscal responsibility. One assumes that it will be at least 2000 pages long and that nobody in Congress will read it. But you can also assume that it will protect the expanding health care entitlements, contain enough taxes (probably VAT) to provide the butter, and enough military and foreign policy cuts to sound retreat for the empire. Barry's mother would be proud.

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This week's video is an ad being run by the Republican Governor's Association, Remember November. Much better than what the Republican National Committee is doing.

bill bowen - 4/30/10 

An urgent favorite: Tom Campbell who is running in a June 8 primary to face Barbara Boxer in November. Harvard Law; U of Chicago PhD in economics; 5 term congressman from Silicon Valley; twice named the most frugal member of Congress by the National Taxpayers Union Foundation; a fountain of fiscally conservative/socially moderate ideas.

The Second Shoe - VAT

When smart, informed people do things that make no sense on the surface, it is usually because there is another strategic step that has not yet been unveiled. Thus, when President Obama presented a 2011 budget projecting trillion dollar annual shortfalls for the next decade, it did not seem possible that he really was accepting public debt to the level of Greece. Enter the recent burbling by Paul Volker (to conservatives, the most credible administration financial adviser) about a Value Added Tax.

It has seemed that Obama was in a box: promises not to raise taxes on people making under $250,000 per year (broken, but not yet shattered); corporate tax rates among the highest in the industrial world; heavy political support among the 47% of households paying no federal income taxes; already factored-in heavy tax increases on "the rich" with the expiration of the Bush tax cuts at the end of the year; and all available revenue gimmicks used to support the new trillion dollar health care entitlement.

Having exerted all of his political resources to raise federal government spending from 19.4 % of GDP in 2008 to 25.1 % in 2011, Obama has three choices: reverse course and drastically reduce spending (military; farm subsidies; education; whatever); increase marginal tax rates on individuals to the 85% level while throwing out the tax work of all of those corporate lobbyists; or change the game.  

Enter the European-style Value Added Tax - a levy on sale prices minus component purchase prices at each step of manufacture - worth a hundred billion dollars for each per cent. (Europe ranges from 6 to 25%.) The VAT has several advantages - it is unseen by the consumer; it discourages consumption and encourages saving; it can be excluded from exports; it is an unknown to the public - and thus is easier to sell. The disadvantage is, of course, that a big tax increase is a big tax increase - and this will be an overlay, not a replacement.

So, the politics of it. With the Republicans gaining substantial numbers of seats (and potential control) in the House and Senate, who could possibly favor such a massive, economy crippling tax increase? Well, some answers:

1. People who are happy to see the federal government's share of the GDP grow to 25 or 30% (plus 10 to 15% state and local).

2. People who are unwilling to mortgage their grandchildren's future by running trillion dollar deficits and do not believe that enough spending can be cut.

3. The top tier tax payers who do not want all of the burden to fall on them.

4. Corporations who do not want all of the burden to fall on them. 

5. Advocates of a "flat tax" who want to move from a complex personal tax system to something simpler.

Count me among those who don't believe that Paul Volker just goes around talking off of the cuff, that Obama has another year of "change you can believe in" planned after the November elections and before his reelection campaign begins, and that Republicans will be happy to let Democrats take the heat for tax increases which are necessary to prevent financial Armageddon. Besides, it is a lot more fun for the politicians to argue about how to restructure the tax code (with some reductions here and there) than how to cut Medicare and Defense.  

I am reminded of a lesson from an old Purchasing course - the Principle of Least Interest. In any negotiation, the person least worried about the discussion collapsing has the most power. Who cares the least about trillion dollar deficits? So, those who care the most have a choice in the 2010 elections - either elect a lot of Congressmen and Senators who will roll back the huge growth of government, or be prepared for the new "painless" tax which will add 10% to the cost of all goods and services that you purchase. Unsustainable deficits are unsustainable.

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You know something is going on when liberal media "personalities" like Donny Deutsch start making racist comments about Florida Republican Senate candidate Marco Rubio. After all, isn't it is the Republicans who are racist - ground breakers Senator Ed Brooke, Secretary of State Colin Powell, National Security Adviser Condi Rice, Republican Party Chair Michael Steele, Attorney General Alberto Gonzales, Senator Mel Martinez, Supreme Court Justice Clarence Thomas and a whole bunch of others notwithstanding. Maybe Cubans are fair game if they don't know their place. 

bill bowen - 4/16/10  

The Test of Democracy

Joe Biden's claim that a successful conclusion of the Iraq War was one of the Obama administration's "greatest achievements", is a cause for concern - not because George Bush did the heavy lifting over the vociferous objections of Obama and Biden, but because it is not too late to screw it up.

The real test of democracy is not whether the public gets to vote on its rulers, it is whether those rulers are eventually willing to turn over power when those voters make a different choice. So, in Iraq we have President Maliki's party disqualifying opposition candidates and calling for a recount of a generally fair election, anti-American rabble rouser al-Sadr trying to find an opening for his pro-Iran faction, and the Sunni insurgents attempting a revived bombing campaign. Lets hope that Obama is still interested, and that there are some "facts of life" back room discussions going on - not "snatching defeat from the jaws of victory".

 In the US, we've had at least a couple of important lessons about power transfer.

- Many think that George Washington's greatest legacy is his retirement in in 1797, warning against the formation of political parties, foreign alliances, and public debt.  Many supporters wanted continued strong leadership in challenging times; others feared what John Adams might bring. Some 213 years later we can still thank him for the precedent.

-  When looking for the roots of the deep divisions in our current politics, one need go no further than Al Gore's 35-day challenge to the 2000 presidential election when, unlike Nixon in 1960, he put his substantial ego ahead of the country's need for a credible election. To this date, many of my Democratic friends will not acknowledge that Bush actually won - despite an objective recount of all of the Florida votes months later. In their minds, he was never their legitimate president.

It is both arrogant and naive to think that we can manage the process and result of elections in other countries - Iraq; Iran; Afghanistan; Pakistan.  When Obama jets off to Kabul to upbraid President Karzai, he should not be surprised to receive a rebuke that Afghans will manage Afghan elections (even corrupt ones) and if that is not OK, Karzai may even join the Taliban.  But, unlike Iraq, this is Obama's war and the credit or blame really does belong there.

The lessons for foreign policy - we need to understand our real core national interests and know who our friends are; we must understand our limits (including requirements for selecting leaders); and we need to have both friends and enemies understand the consequences of crossing us. Unfortunately the Administration's treatment of the UK, Israel, Germany and other traditional democratic allies makes these things very fuzzy in 2010.

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This week's video reflects a revision of my view on who Joe Biden has been trying to emulate. It is not comedian Steve Martin, but the last vice president from the Del-Mar-Va region - Spiro Agnew. (The juxtaposition with the Tea Partiers and past protesters is also interesting.)

bill bowen - 4/9/10

Health Care: A View From England

Well, the sun came up on the day after the great liberal health care victory and, at least over here in London where I am visiting, the birds are singing. The newspapers mix in a few columns about the vote numbers and the extension of coverage to 32 million uninsured (they don't seem to understand reconciliation and deeming) alongside the story about the most recent bombing in Pakistan and Angela Merkel's latest pronouncement on bailing out Greece.  Will the bill add cost, make companies less competitive, raise taxes on individuals, force people into inferior coverage, and reduce individual choice - of course. Will it be a major factor in the demise of America as a world power? Some reflections:

By chance, the United Kingdom is having a major election in May, and the ruling Labour party has published a new budget this week. So there are many snippets of information available about the state of things in this country which is probably closer to the United States than is any other European country - a reliable ally in Iraq and Afghanistan; the source of much of the philosophy in our Constitution; and a partner in what French President Sarkozy derisively calls "Anglo-Saxon capitalism".  

Some current factoids to show us how far we have to fall:

- The UK recently passed 50% of the Gross Domestic Product being in the public sector, as compared to 40% when Labour took over in 1997. We are about 41%.  

- The National Health Service is not only a universal public insurer, but it also runs the hospitals and employs the doctors.

- Some 3500 Sure Start centers for three and four year old children provide government child care and pre-school education.

- Most of the marvelous museums are free.

- Off hours bus transportation for Old Age Pensioners (above 60) is free. 

And, making the point that the masses will never be satiated, proposals in the Labour Party's manifesto for the May election:

-  A new network of publicly-owned People's Banks located in Post Offices to break the monopoly of the private system - and funnel deposits to local pork-barrel projects.  (Japan has been struggling for over a decade to privatize a similar system.) 

-  A $2 billion pound, government run venture capital fund to start small "green" businesses that are not of interest to the private sector.

-  A large increase in the $8.70 minimum wage.

-  Free school meals for all.

-  A reduction of the voting age to 16.

- Creation of a new force of public employees providing home health care.

- etc. etc. etc.

- And, oh yes, higher health care taxes, especially on the rich.  

I have long wondered where the money comes from, with the decline of manufacturing, mining, and agriculture. (Specifically, there is a 50% income tax, a Value Added Tax, and a local Council Tax, but the question is broader.) Perhaps it is cheaper to live in the buildings built by the Tudors and drive tiny cars; perhaps the upper class has well invested the spoils of the lost empire; perhaps the current leaders of the Commonwealth do their banking in London. But it is encouraging that  even at this point in the drift to socialism, things can work. In contrast, it is clear that - even with ObamaCare - the US has by far the most vibrant economy in the developed world, and we shouldn't get too despondent.    

So, my advice to my fellow Republicans: The American people are optimists; they look forward; and they have a short attention span. On the health care debate, turn the page. A focus on Repeal will lose elections, but that does not mean that this is the end. A 2010 congressional campaign season built around the Health Care Fiscal Responsibility and Fairness Act of 2011 would sweep the field. Lets get working on that. 

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Joe Biden is always good for a You Tube. Here we have an Israeli snub of the vice president, as US influence in the area approaches a low ebb.  

bill bowen - 3/26/10

  

Paul Ryan's Answers

    Harry Cat - a thoughtful, left-of-center reader from Maine - has asked for an opinion on the proposals by Paul Ryan, the ranking Republican on the House Budget Committee, for fixing the massive federal deficits. The boyish, geekish Wisconsinite gained national attention at the February health care summit by showing that the Republicans have plenty of ideas to reduce costs and that the Democrats' "budget neutral" claim for their proposed coverage expansion is a fraud. But, Ryan's "Roadmap for America's Future", delivered in late January as a counter to Obama's budget, covers the whole waterfront - using figures from the Congressional Budget Office, the conservative Heritage Foundation, and the liberal Brookings Institution to document the implications of current and projected unsustainable spending. He talks eloquently of a tipping point toward a culture of dependency and decline, and lays out a set of specific, quantified recommendations. 

    On Health care - use specific tax code and Medicare changes to move to a system where the individual (rather than the employer or government) has an account to contract for services as they see fit. (To me, this is the essence of the health care solution - an informed consumer making choices that he helps pay for.)

    On Social Security - establish partial personal investment accounts for people under 55; gradually extend the retirement age until 70. (Agree on the latter; some reservations about the first.)

    On tax policy - radically simplify the personal tax code with two levels and few deductions; eliminate the Alternative Minimum Tax, capital gains tax, and dividend taxes; change businesses to a "value added" form of taxation. (Agree, except that I would keep the capital gains and dividends taxes.)  

    On job training - consolidate government programs. (No opinion.)

    On the budget process - add meaningful focus on large entitlement programs; create a binding cap on total spending as a per cent of GDP; require a three-fifths House and Senate vote to increase taxes. (Agree that we need to build a national consensus on limits, and they are the only saving grace in California. However, acceptance is unlikely.) 

    This is "hope and change" with the specifics. Some (the job training section) seems like platitudes, some (binding budget constraints) is politically not possible, and Ryan avoids talk of realistic tax increases (such as extending the Social Security tax to all income). But he does add an intellectual, quantified, credible voice for restraint of government spending and growth to complement the populist man-on-the-street wisdom of the Tea Party crowd. And for Republican candidates looking for ideas to run on, he offers a banquet. 

    In a wide-open Republican party, Ryan is a breath of fresh air - kind of a Mitt Romney without the baggage (Massachusetts health care; tough venture capital background; Mormon religion). At 41 he lacks experience, and will undoubtedly be the target of a legion of private investigators - but some form of his ideas will be prominent in the country's efforts to recover from the Obama hangover.  

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    This week's video is a short clip of Congressman Ryan asking Secretary of the Treasury Tim Geithner why the president's budget includes unending trillion dollar deficits and punts the problem to a powerless Fiscal Commission. 

bill bowen - 3/19/2010  

    

Deliberate Waste

There is lots of discussion about what the government buys, but little about how they buy it. Stay with me on the mundane subject of buying stuff - there is an important message in the end.    

Back in the day, I led the purchasing function for a Fortune 50 company. Suppliers were selected on the basis of quality, cost, service, and (sometimes) technology leadership, but there were a few exceptions.  Since we sold food and beverages, it was important to forge alliances with minority groups such as the NAACP, the Urban League, and the League of United Latin American Citizens, and the company did this through advertising, sponsorships, and by spending about $100 million with minority suppliers. There was no compromise on quality, but we consciously paid a bit more for a limited period of time as small companies developed. It was the stockholders' money, and we were looking broadly to their long term benefit.

A few years later, I became familiar with San Francisco purchasing policies which, contrary to California law, required the granting of preferences to companies owned and controlled by women and minorities. (But then, San Francisco ignores state and federal law on medical marijuana, illegal immigrants, and whatever else doesn't fit the politics of the city.) My estimate is that this policy - based on the entirely undocumented assertion of underlying discrimination - costs the citizens of the city $25 to $50 million annually.

So, the federal government. It is common for congressmen to lobby for defense contractors and others in their districts, and a recent decision favoring Boeing versus a European consortium in bidding for a $35 billion air refueling tanker program shows a "buy American" bias. In these cases, costs may suffer - but tens of thousands of American jobs are at issue, as well as technological leadership.  

The Obama administration is now taking the next step - promoting a "High Road Procurement Policy", designed with the help of union officials over the objections of business leaders. By law, or perhaps by executive order, some $500 billion of government purchases will go to companies paying above prevailing wages and benefits.  Cafeteria workers; maintenance workers; construction workers; uniform providers; and on and on are to have their bids evaluated based on above-market compensation requirements in order to raise the standard of living of the "working poor" - and to eliminate the advantage of non-union shops.  Obama's off the cuff comment to Joe the Plumber that he wanted to "spread it around" was the most honest thing he said in the campaign. But then, with trillion dollar deficits, what's a few billion more?

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Thanks to Jack Davies for this clever video of "Obama at the Bat".

And for those tracking the House health care vote, here is the Republican National Campaign Committee's list of targeted Democrats and their likely votes. If you live in one of these districts, call their office today.

bill bowen - 3/12/10

  

Reversible Error

What Tom Brokaw called The Greatest Generation built much of America's infrastructure after World War II, laying the ground for unprecedented prosperity and world power. The Boomer Generation spent it - along with all that they could borrow from their children. In pondering the challenge left for the next generation, it is important to understand what is reversible and what they will be stuck with. I'll give it a try.

First, a premise: America's political system allows ebbs and flows, and the current liberal government will pass - perhaps in 2010, perhaps in 2012, perhaps in 2016, but almost certainly not much longer. Much of what the Obama administration is doing offends conservatives and independents, but the focus should be on what cannot eventually be reversed.

    On national security:

-  The defense establishment is fine with Bob Gates' leadership. Reduction of nukes is a good idea, if the Russians can be brought along. Congressionally-mandated weapons systems are being cut back. The balance between conventional and special forces seems to be about right.

-  Eric Holder's attack on the intelligence community - prosecuting interrogators; taking terrorists out of the military/intelligence system -  will make us less safe for awhile, but not permanently;

-  In Iraq/Afghanistan/Pakistan things are getting better under Generals Petreus and McChrystal. Inability to deal with Iran will probably leave the greatest permanent damage. Obama's weakness does not help, but perhaps nothing short of an additional war would.

On Economics:

-  The risk of a government take-over of the insurance industry (single payer; public option) seems to have been averted. Obama's continuing objective of creating a trillion dollar entitlement (bigger even than Bush's unfunded prescription drug entitlement) could probably not be reversed if passed. The other health care stuff is comparatively tactical and can be fixed, and look for the "Health Care Fairness Act of 2011" to correct most of the corruption that Obama and Harry Reid have put into their ugly legislation.  

-  Trillion dollar budget shortfalls (11% of GDP compared to a "sustainable" 3%) with the cumulative deficit rapidly approaching 100% of GDP is the 1000 pound gorilla. Whatever spending cuts can be made, the pending tax increases (income tax rates; capital gains; dividends; businesses; inheritance) are just the leading edge. It is hard to see how the growth of government can be reversed - and it must eventually be fed.

-  With "Cap and Trade" a non-starter now, the EPA can do what it will to punish CO2 generation, but what can be done by executive department edict can be undone the same way.  

- The next president will have a marvelous opportunity at privatization - General Motors; Chrysler; GMAC; AIG; major bank positions; Fannie Mae/Freddie Mac; the student loan system; and whatever else the Democrats grab in the next few years.  

On Social Issues:

-  Immigration is perhaps the next big battle. With 10 to 15 million Democratic-leaning illegal immigrant voters available, Obama will undoubtedly seek an irreversible change to the political balance. With 10% unemployment and a rebellious middle class, this battle may be as big as the health care fight. 

-  The impending overturning of "Don't Ask, Don't Tell" will be irreversible and  forgotten before long.

Net, net - our kids will need to deal with a new round of Iran-inspired nuclear proliferation and significantly less discretionary (after tax) personal income. With the Democrats digging as fast as they can, November cannot come soon enough.  

And for our kids - thanks for the ride.

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This week's You Tube is a short segment of Wisconsin's Representative Paul Ryan (R) at the health care summit, demonstrating his control of the facts and the philosophy.

bill bowen - 3/5/10 

Healthcare Advice for Republicans

President Obama's call for a bipartisan discussion of health care ideas represents the first opportunity to have a real dialog - if both parties are willing. My advice to the Republicans would be to move away from the combative tone of the February 8 letter from John Boehner and Eric Canter and to proceed about as follows:

1. Have a leader so that President Obama doesn't preside over the meeting alone. Logically, it should be Senate leader Mitch McConnell or House leader Boehner - or both. Demand equal time with the Democrats.  Face time should be given to members who can articulate a clear position - Paul Ryan, Olympia Snowe, and a few others. Newt Gingrich's suggestion of a governor or two would favorably change the dynamic.

2. Emphasize your understanding that the public wants reform that reduces cost and extends coverage to most of the currently uninsured. Disavow the current unpopular House and Senate bills as the logical starting point. If this is resisted, have available a list of the most objectionable provisions.

3. Lead with some simple principles: all states should be treated equally; individuals should not be treated differently if they belong to unions or not, and if they work for the private or public sector; we should move toward a system where the individual is in charge; rely on free markets; reward individuals for good health practices.    

4. Demonstrate that Republicans have been offering recommendations for a year, but that despite Obama's promises of March, they were totally excluded from the House process and from Obama and Reid's secret negotiations with the special interests. Give some specifics on the dates that suggestions were made.

 5. Provide summaries (and Congressional Budget Office financial estimates where available) for the top five or ten ideas - perhaps divided into "do it now", and "do it once we have figured out how to make it affordable":

a. Do it now (cost reduction):

- Lawyers - Tort reform. Obama promised that this would be on the table, but has since deferred to the trial lawyers;

-  Pharma - allow government price negotiation; allow re-importation where prices for US drugs are cheaper overseas; accelerate approval of generics, particularly biotech;

-  Insurers - allow purchase across state lines; eliminate insurance industry anti-trust exemptions; eliminate inclusions of specific treatments in policies; require that a standard "bare bones" policy be offered;

-  Insurance purchasing - allow insurance pools for individuals and small businesses; equalize tax treatment for employer-purchased and individual-purchased policies;

-  Medical facilities - reacquire adoption of information technology; prohibit doctors owning testing facilities; aggressively support "best practices"; require transparency of billing information;

-  Individuals - make policies portable; require significant co-pays and deductibles in any government policies.

   b. Prepare to do as costs come down (cost increases):

-  Reform insurance regulations to prohibit denial for pre-existing conditions and lifetime caps.  Include an independent estimate of the cost increases to be expected in insurance company premiums;

-  Establish a minimum government-subsidized policy for all legal residents;

- Create a bipartisan commission to make recommendations on ways to return entitlement programs to solvency - Medicare; Medicaid; Social Security;

6. Be prepared to respond to Democratic proposals or other contentious items - mandatory purchase of insurance; illegal immigrants; government support for abortion; public option; single payer. (All losers for the Democrats.)

7. Recommend a process for going forward toward legislation.

It would seem that President Obama is out of ideas on how to get his program through Congress, and that this is something of a "Hail Mary". If it does not result in something that allows him to peel off a few Republicans in the Senate, then he can campaign in November as having sought a bipartisan approach, despite a year to the contrary.

   Based on recent polls, the public wants reform, but is increasingly opposed to what the Democrats have offered. An offer to start over on legislation with the above elements would clearly identify the Republicans as the party of responsible ideas.  

-----

  And speaking of "common ground", here is Joe Biden calling Iraq one of the great achievements of the Obama administration. Kind of like the TARP program, begun by George Bush and Hank Paulson. Beyond that, what is there?

   And for my Air Force Academy friends, this video was shown on the Brigham Young University stadium screen shortly before the football game against Air Force. (BYU won 38-21.)

   bill bowen - 2/12/10

The Truth Deficit

There is good reason that the Soviet Union's newspaper was called Pravda (Truth), that George Orwell's 1984 had a Ministry of Truth, and that military academies have honor codes. Leadership requires that followers trust the leaders. Barack Obama beware.

When Obama was first discovered by the main stream media and the masses, he was given a pass. Tony Rezko was just a guy next door with whom he did a small real estate deal; for twenty years he didn't pay much attention to his "crazy uncle", the Reverend Wright; the bomb-throwing Bill Ayers was "just a guy in the neighborhood". His personal history - without transcripts, a birth certificate, or sources of support - should be taken as he wrote it. OK for round one - he was a charming guy with a charming story.

Phase II can be forgiven as political rhetoric. Of course nobody thinks that we can actually provide health care for 30 million people without anybody paying for it; of course you couldn't really expect him to eliminate lobbyists, earmarks, and back room deals; of course the stimulus plan couldn't really have been expected to get the economy going; of course we'll be fiscally responsible once we spend our way out of Bush's recession.  We can fix the problems once we get the big bills through.

Then came Congressman Joe Wilson and Justice Sam Alito with the message that the emperor has no clothes.  When Wilson cried out "you lie!" during an address to Congress, he was improper and factually wrong. He reacted to Obama's claim that health care coverage would not be extended to illegal immigrants. That is not in the House and Senate bills - a gap left to be fixed by immigration reform.

But when Supreme Court Justice Alito mouthed "not true" during the State of the Union, it is Obama who was improper and factually wrong. Obama must have known that he was on the edge of propriety in criticizing a Supreme Court decision in this forum, and that the "free speech" decision did not apply to foreign corporations as Obama claimed. It was a good applause line and he has a base to energize, but he did knowingly lie.  

But one's reputation for honesty is a precious commodity - particularly in a large country where most people do not know the president personally -  and Obama has lost it. A recent Rasmussen poll shows that a strong majority of voters do not believe Obama's claims that he has cut taxes for 95% of Americans, that he has started the economy growing, and that he has put 2,000,000 people to work. And he is asking these people to ignore the Congressional Budget Office and believe that his financial plans will somehow lead to fiscal stability. Fool me once, shame on you - fool me twice, shame on me. While the speech gave a bump to Obama's approval with his base, the "strongly disapprove" among independents moved from 42% to 50%.

Another resource squandered.

-----

This week's You Tube is an interview with Douglas Elmendorf, the geekish and honest Director of the Congressional Budget Office, discussing the 2010 federal budget projections for the next decade. The key question (at minute 2:00) from the Bloomberg reporters - is there any plan to do anything to fix it? Nope. 

Next week we'll try to make some sense out of the prospect for a jobs recovery - short term and long term. I'm trying hard to conjure up some optimism.

If you have any comments or suggestions, please make them directly on the blog or send an e-mail to bbowen7@comcast.net. I send a weekly reminder to a list of readers, and would be glad to add others to the distribution. Just let me know.  (No tweets at this point.)

bill bowen - 2/5/10 

The State of the Speech

It is interesting how many of the critiques of President Obama's State of the Union speech were written before he gave it - "Obama Pivots to Jobs"; "Obama Bids for Rebound"; "Message to Democrats: Stay the Course". I'll try to be objective, and use the test of whether the speech reflected a change of direction or added impetus to any major initiatives. And, it is important to recognize that a speech is just a speech unless it results in specific legislative proposals or executive orders.

First the credits:

-  In discussing energy, Obama seemed to advocate offshore drilling for oil and a significant expansion of nuclear power (a la McCain.) In promoting exports, he seemed to advocate for passage of the long-delayed free trade agreements with South Korea, Columbia, and Panama (a la McCain.) He claims a desire for bipartisanship, and has agreed to participate in House Republican Conference later this week. He sought Republican ideas on health care - and can find them at Gop.gov.

-  And he gave credit to George W. Bush (well, he didn't exactly phrase it that way) for the plan to successfully phase down American military presence in Iraq, and the TARP's rescue of the financial system.

- On the economy, he advocated using $30 billion of remaining TARP money for loans to small businesses through community banks. Better late than never.

-  While some would disagree, I would put the rescinding of "Don't Ask; Don't Tell" in this "credits" category. (To me, President Truman's 1948 executive order integrating the military provides encouragement.)

Then the debits:

-  Obama obviously doesn't get it on fiscal responsibility. A "spending freeze" on discretionary spending - to begin next year on budget items which have increased 70% in a decade and does not include "stimulus money" - satisfies nobody. And a toothless "bipartisan fiscal commission" to recommend spending and tax changes after the next election provides political cover for the Democrats who control everything budgetary. He couldn't even resist new spending programs - college loan foregiveness and subsidies for elder care.

-  He clearly understands the need to do something on jobs, but has no idea what. He included much of the Chamber of Commerce's wish list on tax cuts (ala McCain) - rejected a year ago in favor of the pork-laden Stimulus Bill, and this will do some good, but not soon enough to save his Democratic Congress.

- And national security really is a blank. False claims of moral leadership (abandonment of Iran's opposition movement), progress on control of nuclear weapons (except Iran and North Korea), and a comprehensive (unsigned and stalled) treaty with Russia should be challenged. And the silence about criminal trials for terrorists was deafening.

And the pivot?:

-  Health care. We still need Congress to pass comprehensive reform, now that we are so close. C'mon Harry.

-  Cap and Trade. Still a priority. Ignore the "deniers".  

-  Financial regulation reform. Maybe Tim Geithner will get out ahead of this if he survives.

-  And "Good government". There was acknowledgment of the people's disgust with Harry Reid's health care deals (with or without C-Span), credit for starting to rein in earmarks (ala McCain; well, there have been just a few thousand), a false "lobbyist-free" claim, and an inappropriate criticism of the Supreme Court decision on free speech by corporations and unions - with a clearly wrong and inflamatory claim that it applied to foreign corporations.  

   And finally, on style:

-  The pundits still refer to his great oratory - despite his finger wagging and 96 references to "I".  Over-exposure for sure.

-  And most irritating was the requirement to spend an hour watching Joe Biden and Nancy Pelosi in the background, particularly as she jumped to her feet to applaud at the mention of earmarks.

So, did it change any significant directions or add impetus?  It might edge his approval ratings back toward 50% for a few weeks, but otherwise I doubt it.

-----  

This week's You tube is a hilarious riff by John Stewart about the Scott Brown election, the event which showed that the emperor had no clothes. And for those questioning the Daily Show's general bias, here's a year-old interview with Stewart's 10 (all male) writers expressing their love for Obama.

bill bowen - 1/29/10

Beyond Massachusetts

I will leave it to others to talk about the causes and effects of the miraculous election for the bluest of blue Senate seats. I'd rather reflect on the fact that governing is difficult, and competence cannot be assumed.

Pundits debate about the fact that people like Obama as a person, but resent that that he is governing as a liberal in a center-right country. No doubt, but a second big source of "buyers' remorse" may well be related to competence. Where to start?

People who have led change in large institutions would tell you that you need to do the following: create a sense of urgency; create a vision for the future; lay out a set of steps to get there; hire key, committed people; establish a manageable financial plan; set up measurements, and a feedback mechanism (for bad news as well as good); focus on a small set of priorities. So, how are Barack and his folks doing?

Perhaps the first real clue - aside from a total lack of managerial experience - was in the personnel field. Getting started was slow, to the extent that the administration has not yet filled many key positions, including the director of the Transport Security Administration. Vetting failed to identify tax cheats (Tim Geithner and at last five others), self-proclaimed communist revolutionaries (Van Jones); vocal Mao admirers (Anita Dunn), and a gay pedophile "safe school czar" (Kevin Jennings). Absent? -anybody with business experience.

Second came a style of deferring to Nancy Pelosi and Harry Reid and their subordinates for the crafting of key legislation - the pork-laden stimulus plan; cap and trade; financial regulation; and finally health care reform. It should be painfully clear to all but Keith Olberman and Air America that this process has resulted in double-ugly legislation, highly visible corruption, and in three of these four, no progress despite overwhelming congressional majorities.

Obama's indecisiveness has come to the fore on national security where he dithered for three months on an Afghanistan decision, is clueless about closing Guantanamo (close it and move the prisoners to Illinois if you must), and (if you can believe Attorney General Holder) he has totally deferred on the decision to try terrorists in civilian courts.  

Health care speaks for itself. Harry Reid lacks Pelosi's leadership skills (and procedural rules), and Obama had to share with him a highly public series of terrible compromises and bribes. A first principle of marketing is that it is easier to ask the customers what they want and figure out how to deliver it, than to talk them into buying what you want to sell. The current conventional Democratic wisdom is that any bill, even if forced against the will of the public, is better than nothing.

And, more importantly, who believes that Obama has spent his first year focusing on the right things when we have 10% unemployment, still-anemic credit markets, and a deficit equal to 10 % of the Gross Domestic Product?

So, what is the public's confidence that Obama will suddenly understand the requirements for private sector job creation and develop the backbone to rein in trillion dollar deficits?  We could be surprised, but don't bet on it.   

----- 

    This week's You Tube is from a Senate hearing on the handling of the Christmas bomber. Strikingly, neither the director of National Intelligence, the director of the FBI,  nor the Secretary of Homeland Security was consulted on the decision to assign a lawyer and to try the case in civilian court, and the the newly-constituted High Value Detainee Interrogation Group was not utilized. Incidentally, the only place that I could find a video of the hearing was on Fox.

-----

The Massachusetts election helped get me reacquainted with several good research sites:

Washington-based pollster/analysts - Stu Rothenberg; Charlie Cook.

Political news aggregators: RealClearPolitics.com; DrudgeReport.com

Truthfulness of claims - FactCheck.org; Snopes.org.

Sources of political funding - OpenSecrets.Org.

Betting on political outcomes (and much more) - Intrade.com

bill bowen - 1/22/10

Lessons from California

With the New York Times, George Will, and the Washington Post all writing about the failure of California, it may be useful to take a look at root causes as well as effects. I'll try.  

First, some data points for those who don't understand (or acknowledge) how bad things are:

- The Golden State has an unemployment rate at 12.5%, and one of the nation's highest home foreclosure rates.  A recent Business Week survey of best 25 cities for employment growth in 2010 had none in California. We are about $6 billion short on the current budget cycle, expect to be about $15 billion short for the year starting in July, and the Governator has unsuccessfully gone to Washington begging for the same treatment that Louisiana and Nebraska are receiving.  

- As a result of budget squeezes in the last several years, California now ranks near the bottom of the pack in terms of quality of public education, and business climate. We have the lowest credit rating in the nation - about equal to Kazakhstan and Greece. 

Not a pretty sight. But those are results; lets talk about the causes.

As for the state budget deficits, a root cause is the decline of the tax base. Reliance on the more volatile income and sales taxes rather than property taxes (due to Prop 13 limits) hurts revenues in down cycles, but the problem is more fundamental.

- With the closing of a joint GM/Toyota factory in March, we will lose the last auto assembly plant on the Left Coast and about 30,000 good jobs - there has been some mourning, but no introspection. With personal tax rates of up to 9.55%, there has been an exodus of hundreds of thousands of high income payers who can choose where to live and manage their businesses. Yet we have new mandates to increase "sustainable" (non-nuclear) power generation to 33% in 10 years, our own "cap and trade" system, and the country's first "green building code", all with no thought to the economic consequences of further increasing our country-leading utility rates. Out here, environmentalism still trumps jobs every time.   

- Nationally, I would applaud the saving of the automotive segment of American manufacturing (to be privatized by a future conservative president), and President Obama's extension of President Bush's "No Child Left Behind" with his "Race to the Top" with its emphasis on accountability and parent choice. (Over union objections, the California legislature has decided to apply for the grants.) On the other hand, The EPA decisions to further restrict CO2 and ozone, and the impact of health care legislation on businesses look much like anti-business California. And while individuals cannot realistically emigrate, their money can, and funding by foreigners of our trillion dollar deficits will become increasingly expensive.

And as for California's political problems, the root cause is the insatiable appetite of government and the people.

-  Virtually everyone agrees that California's governmental system is broken, and there is a growing call for a constitutional convention to start over. Much of the impetus from the Left is to make it easier to raise taxes - repeal Prop 13, and repeal the two-thirds legislative vote requirement to raise income and sales taxes. But the problem is bigger - as Pogo says, "we have met the enemy and it is us" - direct democracy in the form of the initiative. After 9/11 the public loved the police and firefighters, so we gave hugely generous pensions which bankrupted cities; we love nurses, so we voted in mandatory low nurse-patient ratios to no effect; in the worst of times we supported the first $10 billion installment on a fast train between the Bay Area and Los Angeles. (To put this amount into perspective, the voters will soon be asked to approve an $11 billion bond to resolve a decades-long survival dispute between cities, farmers, and salmon.) And on and on. In their wisdom, the Founding Fathers designed a Republic with responsible elected officials making decisions which required prioritization and connected the policy with the financing. In California, "we, the people" decide on what feels good at the moment.  

- Insatiability is a national problem as well. Some improvements can be made by just being smarter - drastically reducing the prison population in California, for example - but in the end there have to be limits and trade-offs. This is sometimes described as a choice between the "nice to have's" and the "must have's". A better prism for the coming more difficult times is a choice between consumption (such as health care) or investment (such as education or infrastructure). This also becomes a generational question - the country will be much better off if it takes quality k-12 education over free health care for the Boomers.

Maybe the protesting students in Berkeley will eventually connect the dots.

-----   

This week's "bonus" is an excellent article from Britain's Mail in which several prominent scientists discuss the global cold period of up to 20 or 30 years which will result from deep ocean temperature patterns. Lets see how many grants they get to support their work.

And a brief mention of the election for "Ted Kennedy's seat" is in order. If you live in Massachusetts, please vote; if you have friends or relatives there, please contact them. The best discussion is in the reader comments to a blathering op-ed in the leftist Boston Globe - all favoring Scott Brown. (Forget the propaganda, click on the comments.)  

bill bowen - 1/15/10 

    

Crushing Coal - The Great Climate Debate

    While we have been watching the Great Health Care Debate, the Great Climate Debate has been quietly moving along in the background. As important as the government's trillion dollar program to take over health care is, the trillion dollar program to crush the energy and manufacturing industries will be more burdensome to American prosperity. It begins with global warming, and goes way off track.  

    With the next international convocation on global warming scheduled for December in Copenhagen, and the House and Senate going forward with bills to place major financial penalties on utilities and manufacturers, the the post-partisan President is calling anybody who argues the facts or has alternative solutions "cynical deniers".  With the zealots making it impossible to have a rational discussion about data that doesn't fit their model, American public belief in strong scientific support for global warming has dropped from a 2006 high of 77% to 57%.  What gives? 

   The logic process on global warming should be straightforward: Are temperatures rising?; If so, why?; and, what are the most practical and effective things to do about it?  Not in Washington.

   Question 1 - Are temperatures rising?  Over eons the Earth has seen cyclical Ice Ages with the last major version about 11,500 years ago, interspersed with warm periods (the last with "grapes in Greenland" about 900 to 1300 AD), and smaller cold periods (the last in the 1700s.) Reliable information shows an increase of about .4 degree Centigrade between 1880 and 1970, and an accelerated .17 degree per decade since.  The result has been a sea-level rise of about 7 inches over the past century with a projected acceleration of the trend. Like a Rorschach test, statisticians argue about the more recent data which shows the last decade to be somewhat below the high point of 1998. 

    Question 2 - Why?  This is more complex, with many things going on:

-  The amount of CO2 (the largest greenhouse gas) in the atmosphere, has increased 30% over the past 150 years as a result of industrialization, exacerbated by deforestation. The evidence is compelling, and few deny that this is a major factor and that it is increasing with China's rise.   

-  The Sun goes through an 11 year cycle of activity which results in varying levels of sun spots and radiation emissions which have an effect on the Earth's atmosphere. We are at the low end of this predictable cycle. Similarly, the el Nino warming of waters in the south-central Pacific has been at a low point, resulting in lower temperatures over a broad area. If voices can be lowered, these factors may help to explain the more benign data of the past decade.

-  There are a number of other causes with relatively minor effects in this time frame: The Earth's orbit and orientation to the Sun vary slightly over long cycles, affecting radiation absorption; there are relatively minor impacts of geothermal activity; animal methane contributes (truly); and radiation from space affects the upper atmosphere. The first is a major factor in the Ice Age cycle.

  Question 3 - what should be done?  The "Al Gore/Barbara Boxer" answer" is the developing legislation which would call for reducing greenhouse gas emissions 20% below 2005 levels by 2020, selling permits to industry to emit greenhouse gases, and extending the Environmental Protection Agency to be the "climate cop". The debate is largely about how steep the reduction should be, how much the charge for the permits should be, how they should be distributed, and how much bureaucracy is needed to monitor industry and individuals.  The partisan differences are predictable.  

  Rather than again being the "Party of No", Republicans should focus on some principles:

   - Global problems require global solutions. We are right to be major participants in the global discussion - and to have refused to be bound by the Kyoto Protocols which specifically excluded China, India, and (effectively), Russia.  Righteous self destruction makes no sense.

  - Solutions will require the best technology available. The refusal of the Left to accept nuclear energy is a sign of either fuzzy thinking or bad faith. The recent decision to fund  an agency in the Department of Energy to foster research (established under President Bush) is a good step.

    -  There is a transportation dimension, and a power generation dimension.  The first (electric automobiles; quantum greater efficiency) also serves to improve our unsustainable trade deficit. Power generation becomes even more important as cars become electric. (With our power generation being 50% coal, 20% nuclear, 2 % wind/solar, and the rest "other", it is hard to imagine a solution which does not include "clean coal" - although that technology needs some breakthroughs.)

  -  Politics matter.  Senator Boxer's shrug that her bill "averages just $100 per family per year", may work in the Bay Area, but not where incomes are lower, coal is the primary fuel, and massive mining and industrial job losses will follow. (It would also be nice to have the Congressional Budget Office put a cost on the bill before it is voted on.) The international battle will be between the high-emitting developed countries and the emerging economies who want a free pass while they catch up economically. Hopefully President Obama will place America's interests ahead of his international popularity.   

    There must be an open discussion of how much benefit there will be for how much pain. This is a challenge for the Right as well as the Left. Absent that, the government's flailing will be more dangerous than the Afghanistan dithering.

   For those interested in readings from the major advocates and skeptics:

    - The most authoritative group of American climate change advocates - The Union of Concerned Scientists.

   - The global mechanism for developing policies - the United Nations Framework Convention on Climate Change.

  - Facts that don't fit the model -  Harris-Mann Climatology.

  ----- 

This week's You Tube is a snippet of an interview with General McChrystal in Afghanistan, reflecting a bit of his personality. For perspective, he was the head of special operations in Iraq, runs five miles per day, sleeps three to five hours a night, and eats one meal per day to avoid sluggishness. He's standing by the phone.

bill bowen - 10/30/2009

The Olympic Metaphor

    He came, he saw, he gave a speech.  (My apologies to Julius Caesar.) The international community liked him personally. He departed and left not a ripple. Is this a "teachable moment?" 

   Much more broadly, the question more frequently addressed in the British press than the American is "what is the role of the United States in the 21st century?" While we have been fixated on Islamic terrorists and health care, the world order established after World War II is rapidly changing - and we are being quietly taken along for the ride. Some examples:

    1. Our current and future deficits have led to calls for replacement of the US dollar as the international reserve currency, most recently by the UN and perhaps by the oil producing countries.  In the future, countries with excess funds will not by default invest them in US dollars, and a periodic "flight to safety" will not mean buying US assets. Borrowing to cover out deficits will be much more difficult. Estimates vary on the timetable, with many believing that this will formally occur within a few years. 

2. The Group of Seven Industrialized Nations (G-7) has been formally expanded to include major developing countries in the form of the G-20. This is currently unfolding, but it appears as if the International Monetary Fund is to become the administrative arm of the G-20 - something of a global "central bank".  It should be no surprise that the 2016 Olympics went to one of the BRIC countries (Brazil, Russia, India, China), rather than the "old regime" United States.

3. Low level calls continue for reform of the United Nations - particularly the Security Council where the WW II victors have a dominant position to the exclusion of Germany, Japan, India, and a majority of the world's population. While such a change may be logical, it would not seem to make international peace keeping any easier.

4. Within the past week, our government has given up its contract with ICANN, the governing body for the US - developed internet, with the intent that it come under the guidance of an international organization. Among the implications are a reduction in the preeminence of English in deference to Mandarin, Arabic, and other languages and potentially a greater degree of censorship and government control.

5. With Ireland's vote for the "Lisbon Treaty" to strengthen the European Union, Europe has taken a large step toward having a president and a common foreign policy. Japan has voted for a center-left government for the first time in 50 years with unknown results. In a short time, we may not recognize our major allies.  

   There is no question that the period of American unchallenged dominance after the collapse of the Soviet Union in 1991 is an aberration in global history, and that we will play a different role in the more pluralistic 21st Century world. But what is that role?  And how much influence will we have in shaping it? Much will depend on the vision, interests, and managerial competence of President Obama.

   What is the vision of the young man with a father from Kenya, a step-father from Indonesia, and a long-term ex-patriot mother?  He does not share the thousand little stories from history, literature, the arts, religion, and sports that make up the American mosaic - Washington's cherry tree; the "good Samaritan"; the landing at Normandy.  One must hope that the alternate stories offered by Jeremiah Wright and Bill Ayers did not take root. It is unlikely that either John McCain or Sarah Palin - who shared the roots of most of us - could articulate a clear 21st Century vision. They do understand, however, (as do most of the "Town Hall folks") that the Unites States of America is the greatest country on earth in terms of economic, political, and military power; democracy; ethnic, cultural, and religious diversity; generosity; and individual liberty and opportunity. One can only hope that Obama sees this as the basis for defining our world role going forward.  

  And the managerial competence? Hopefully the Olympic experience will help Obama understand that it isn't all about him (see George Will's column) , and that there is a large difference between popularity and leadership.

    -----

This week's You Tubeis a humorous, if premature, dirge for ObamaCare.

bill bowen - 10/9/09

Favorites: 
    1. Mitt Romney's "Free and Strong America" PAC web site. 
    2. Tom Campbell's California governor campaign web site.

A Health Care Mulligan?

  It is probably wishful thinking (for both sides) that we could get a re-do of the health care debate. After all of the rancor, the liberals will apparently not get what they want with the Baucus Bill, and the conservatives will oppose it en masse. This effort's predictable lack of vision comes from the rushed political process without presidential leadership. There is no master plan to move from an employer-based system to one based on either the individual or the government. There is no strategy to move from a payment system based on specific treatments to one based on keeping people well. Sometimes it is best that a compromise satisfies neither party; not this time.

   Most Americans are satisfied with their own health care coverage. They would agree however, on three problems - it is too costly individually and for the country; there are too many people who do not have coverage; and the administration is too complex. Most voters now oppose the bill, feeling that the current proposals will deal with the second problem, but at the expense of the first.

  Much of the debate has centered on the "public option", which is portrayed as a way of dealing with the cost issue since it will bring more competition to the insurance industry. Many of the "public option" advocates would really like a "single payer" system where the federal government manages all health care insurance, but recognize that they do not have the political support for that proposition, and hope, like Obama and Barney Frank,  that it is a step in their direction.  There are three general arguments against the "public option" and it's extension to "single payer":

    1. As a basic consideration, conservatives prefer that services be provided by the private sector, believing that market forces drive innovation, customer service, and cost containment. The point was made unintentionally by Obama who, in arguing that the "public option" wouldn't drive out private insurers, spoke of UPS and Fed Ex as doing just fine while competing with the  Post Office which has "all of the problems". We have all sat in a DMV office.   

    2. Political forces make it impossible for a government provider to control costs by limiting benefits.  On a national basis, this has been demonstrated by Medicare (loved by doctors and patients, but going broke within eight years), and by the experience in Massachusetts where there remains considerable pressure to increase state subsidies, despite government costs being substantially above projections,and insurance rates - already the highest in the country - increasing at double digit rates. There is no limit to what can be required - dental; mental health; Viagra. And there is no stomach to give the recipients of government programs less than "the rich".  It is also a cruel fact that requiring equal coverage and premiums for everybody, regardless of "preconditions" and life style decisions does raise the cost which must be covered somehow. (That is the error of Olympia Snowe's "trigger option - rates will go up substantially, as they did in Massachusetts, and the "public option would be imposed.)

   3. While the government is not capable of rationing health care - the emotional "death panel" discussion; Medicare and Medicaid - individuals can, by determining what structure of insurance plan to purchase, and what non-covered expenses they choose to incur.  The only real solution to costs is to align the benefit recipient with the payment. That does not make us all equal in terms of health care, but society could only afford that at the lowest common denominator.  

    What is disappointing is that the Republican Party has largely been the "Party of No", without offering coherent alternatives.  Those should fall into two categories politically:

  1. Those that most everybody would agree with - ability to buy insurance across state lines (and thus escape the lobbyist-induced policy requirements); tort reform to reduce the cost of lawsuits, doctors' insurance, and preventive medicine; ability of the government to negotiate prices with pharmaceutical companies and equipment providers; a large investment in information technology; greater use of nurse practitioners and clinics; and elimination of a financial interest for doctors to order tests.   

  2. Those that would appeal to most Republicans and independents - a basic catastrophic insurance plan for all legal residents, subsidized for the truly poor; a few standard templates to facilitate shopping among companies for the rest of us;  restrictions on expenditures by medical providers for lobbying and advertising; and Medicare reform. Perhaps most important would be a gradual shift away from employer-based policies to private "health care accounts", a move that would help restore business' competitive global advantage, and reflect the current mobile work force. Couple that with a personal responsibility for "wellness", and you would have a winner.

   Aside from the government run insurance plans, most of the rest of what is being discussed can be reversed in the inevitable Phase II.  But a more open and reasoned approach would surely have saved a lot of national anguish.

   -----

This week's You Tube, which captures the optimism of the tea parties and town hall meetings, comes from a friend in Massachusetts.

bill bowen - 9/30/09

Favorites: 
    1. Mitt Romney's "Free and Strong America" PAC web site. 
    2. Tom Campbell's California governor campaign web site.

Obama's Gergen

   A diverse group of presidents - Nixon, Ford, Reagan, Clinton - relied on the advice of David Gergen.  While he had something to say on substance from his broad background in academia and journalism, his real value was that he could say "Mr. President, I believe that there is a perspective that you have not considered."  It is a shame for Obama and the country that the inner circle of Biden, Axelrod, Emanuel, Jarrett, and Michelle does not seem to have room for such a voice.

   As great an orator as Obama is, he missed the class on leadership where they talked about the wisdom of seeking advice which conflicts with your own preconceptions. One result has been the tin ear of the staff sycophants with ideas such as gathering e-mails from opponents of Obama's health care policies, distributing lesson plans for students to write how they could help the president, and plans for a National Endowment of the Arts search for projects to praise the president. Dear Leader , indeed!!  Another has been the appointment process which initially was tone deaf relative to tax cheats, and later with such bomb-throwers as Van Jones. On health care, it would have helped greatly if somebody had told him that the public wouldn't buy the Big Lie - that we can insure 45 million people and pay for it by taking "waste and fraud" out of Medicare/Medicaid, his model for the ultimate "single payer" system.  And with the government owning General Motors, Chrysler, AIG, Fannie Mae, Freddie Mac, and a bunch of bank warrants, it would be great if somebody were whispering in his ear who had actually worked in the private sector. The central problem - from Management 401 - is thinking that you are smart enough to understand not just the facts, but also the point of view that drives conflicting opinions.   

   President Obama began his recent speech to the Wall Street leaders about the need for regulatory reform with the notion that the economy has been stabilized, thanks to the leadership of Tim Geithner, Larry Summers, and Christina Romer, and, after a pause to insert something not in the prepared text, "and others".  Someone should have suggested that he slip into his credits the three people who were most responsible for pulling us back from the brink - Hank Paulson, Ben Bernanke, and Sheila Bair - the latter two Republican carry-overs from the Bush administration.  That would have been credible statesmanship rather than the traditional Washington gamesmanship which he so frequently derides.  If the objective is progress, he should have been reminded of the old saw that it is amazing how much a group can get done when it doesn't matter who gets the credit.  Not if he hasn't transitioned from the candidate of the Democrats to the president of all of the people.  

   Going forward, there are big issues on which Obama would benefit from listening to contrary views - nuclear energy if we really want to be green; a Pakistan-centric view of South Asia if we wish to manage the priority threats; a real effort to curb deficits as we emerge from the recession.  If he is not as arrogant as he often appears, he will learn a lesson from the aggressive public push back on health care, and recognize that public opinion, basic economics, or world events will eventually punish him for allowing only Nancy Pelosi and his Leftist political inner circle to shape his policies before he gives his lecture to the masses.  And he will realize that the people know that Joe Wilson was right.

   David Gergen is still available.

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This week's You Tube is presented with apologies to Tennessee Ernie Ford.

bill bowen - 9/18/09

Favorites: 
    1. Mitt Romney's "Free and Strong America" PAC web site. 
    2. Tom Campbell's California governor campaign web site.

Walking Stickly

    Eon's ago, back when I worked at the Pentagon and the dinosaurs roamed the earth, there was a major who worked in the Office of the Joint Chiefs of Staff who had a sign on his desk, "The Nixon Doctrine: Walk Stickly and Carry a Big Soft."  I thought him to be a bit of a hawk, but the twist on Teddy Roosevelt's slogan has stayed with me.

   The central thrust of Barack Obama's foreign policy seems to be a push to be better liked around the world, with the assumption that other countries will then act in a way that is more in line with our view of what is good in the international community. Unfortunately, there is plenty of developing evidence that the leading country in the world needs to have the stick in evidence. (Also, with school starting, it is good to reflect on the wisdom that teachers should not start the year by trying to be friends with the students.)  Some examples:

1. North Korea. It is nice to have Al Gore's reporters back home; however, all evidence points to a continuation of efforts to develop and potentially export nuclear weapons, with no US response.

2. Iran. The voices for democratic reform have been silenced with no US response, the campaign offer to "meet without preconditions" has been rejected, and the nuclear program continues apace.

3. Israel/Palestine. The  Israeli government has re-invigorated the expansion of settlements in Palestinian territories - a blocking move for any peace process - with no US response.

4. China. China continues its call to establish an international reserve currency to replace the dollar - and now a United Nations Conference has echoed the call, with no US response.   (That is, no US response other than expanding trillion dollar deficits as we lose our global financial leadership.) 

5. Scotland. With the fig leaf of Scottish independence, the UK government has released a convicted Lockerbie bomber in exchange for commercial considerations, with no US response.

7. Pakistan. The Pakistani government has released nuclear proliferator AQ Khan, with no US response. 

8. Afghanistan. For whatever reasons Obama has chosen to make this his war; the only country to offer meaningful military support is the United Kingdom.  In the absence of US leadership, France, Germany, and the UK have called for an international conference as a step toward an exit strategy - bypassing the US and NATO.  

   I am sure that there is a positive benefit of the "charm offensive", but I cannot help but reflect back on Major Reynolds' desk top slogan.  Internationally the Community Organizer in Chief has yet to identify any "must succeed" objectives (other than the impossible Afghanistan adventure), and demand the cooperation of our allies.

   A year ago, Fareed Zakaria wrote a thoughtful essay in Foreign Affairs titled "Is America in Decline?", which concluded that the US could continue its world leadership role, "but only if it can overcome its political dysfunction and reorient US policy for a world defined by the rise of other powers."  That will not happen if being liked takes precedence over being respected.

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   This week's You Tube is a portion of a speech by a Congresswoman from Los Angeles which explains why the vetting process did not exclude Van Jones from the Obama administration. He has company.

Also, a contribution by a loyal reader in Massachusetts.

Bill Bowen - 9/11/09

Favorites: 
    1. Mitt Romney's "Free and Strong America" PAC web site. 
    2. Tom Campbell's California governor campaign web site.

National (In)Security

   It's not that I have anything against Laura Ling, or Euna Lee, or any of Al Gore's other acolytes for that matter. It's just that I hate to use up our few points of influence with Kim Jung-Il to avoid 12 year prison sentences for reporters who stupidly and illegally entered the territory of a frightening adversary. So, Bill Clinton has had his moment in the sun, KJI has had his photo-op with the American president coming to pay him homage, and - as the New York Times reports - the Obama administration is quietly moving from the Bush-era policy of using six-party talks and sanctions to make North Korea give up their nuclear program, to a more enlightened and realistic policy of "containment" in which the objective becomes to prevent North Korea from exporting the technology to countries such as Syria and Burma. We await the pronouncement from mouthpiece Robert Gibbs.

    And it's not that I object to Obama deferring to his Attorney General who wants to override candidate Obama's pledge to not prosecute CIA operatives for aggressive interrogation techniques which helped to kill or capture senior al Queda leaders shortly after 9/11.  (What will be interesting is whether the "show trials" make their way up the food chain to the Bush-era lawyers who tried to define the boundaries of allowable interrogation techniques.) After all, when we close Guantanamo, these prisoners will have to go somewhere, and they will be telling the world about how they were abused. Besides, the CIA is obviously filled with rogue officers (like that stupid cop in Cambridge) and they must be brought back in line. It wasn't the Attorney General's pledge anyway; the president is just deferring to the experts. 

   And it's not that I want to obsess over the real time figures at www.debtclock.org which track the national debt and underlying accounts - now at over $11 trillion and projected to be up over $1.8 trillion this fiscal year.  I am hopeful that there are some principles of economics that I missed in my pre-Obama/Pelosi/Reid education, that a couple trillion dollars of debt to China won't really matter, and that this is a great time to add a few hundred billion dollars per year to our health care spending. Our grand kids will be able to handle this one.

        The real problem - thanks for Nancy Pelosi and Steny Hoyer for pointing it out - is these "un-American" protesters on health care.  Never mind that Obama's assurances are patently false - taxing employers WILL cause citizens to lose their coverage as their companies drop out; he HAS openly advocated for a single-payer system; government panels WILL determine allowable coverage; and he HASN'T READ the 1000 page House and Senate drafts of the bill which doesn't yet exist.  It is obviously time for all of us to chill out, and appreciate that "elections have consequences".  

    The broader context for the Town Hall meeting disruptions is the hope that many Americans still believe in security built on fiscal responsibility, military strength, an effective intelligence service, and an informed electorate - even if the White House does want them to be reported so that their "misinformation" can be countered.  Hope and Change indeed!!!!

    

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    This week's You Tube is an AARP meeting called to discuss health care with members who would have none of it. A few days later, Obama claimed that AARP had endorsed his plan - a claim that the organization promptly refuted.   

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Next week: Obama's Business Cycle

bill bowen - 8-14-09

     Favorites: 
    1. Mitt Romney's "Free and Strong America" PAC web site. 
    2. Tom Campbell's California governor campaign web site.

Healthcare - Our Choice

       Make no mistake, there will be health care legislation by the end of the year. The politicians will need something to claim victory. Whether it is beneficial (curtails costs; covers some of the uninsured) or whether it breaks the bank will be decided by the House "blue dogs" and the Republicans and moderate Democrats in the Senate. Please use this list to contact your legislator in the House or Senate if they represent a swing vote.  

    A very smart and very liberal ex-doctor friend of mine in San Francisco puts the complexity into three questions. (The structure is his; the content is mine.)

        1. Who is to be covered? The famous 47 million can be divided into the truly poor or out of work (half), the young invincibles who don't want to pay for the coverage (a third), and "non-citizens" (a fifth). The left would subsidize coverage of all - some by coercion. The debate about the "non-citizens" has too much risk to both sides, and they will just be in the final bill or they won't.

        2. Is there a government option? For the next few years, there is no chance for a "single-payer" Medicare-like government program, but the Left, including Obama, clearly sees a government option as a first step toward displacing private insurance companies. (The White House is now spinning this as mis-quotes, but he couldn't have been more clear during the campaign.) The best argument "for" is that private companies reflect unnecessary overhead in terms of executive salaries, advertising, lobbying, administration, and stockholder profits. The best argument against is the lack of cost control (somebody has to say "no") demonstrated by Medicare where the trust fund will go broke within 10 years - all participants like it because there is no financial discipline. Philosophically, it really is socialism versus free enterprise.

      On the politics, this is probably a deal breaker for either side. One risk is that the Democrats in the Senate will use procedural rules about budget items to by-pass a filibuster. (The House will do what Obama wants.)  One possible compromise being discussed in Max Baucus' Senate Finance Committee is that that there be "cooperatives" to offer coverage to individuals and very small companies.  (This is the only Congressional committee where the Democrats are interested in Republican health care opinions.)

        3. How are we going to pay for this? Three thoughts:

            a. The courageous Director of the nonpartisan Congressional Budget Office, Douglas Elmendorf,  has slowed the Senate's rush by declaring that the various proposals would cost $1 trillion over a decade. With annual US healthcare costs of $2.5 trillion just about everybody agrees that at 16% of Gross Domestic Product our costs are too high and increasing too fast.

            b. There are potential cost reductions that will emerge: greater use of generic drugs; ability of the government to negotiate prices with drug companies (perhaps not if a backroom deal with Obama holds up); restrictions on expensive Medicare HMOs; greater use of nurse practitioners and neighborhood clinics; greater use of Information Technology. But there are other expensive targets that will probably be off-limits: limitations on malpractice lawsuit; vested interest by doctors in entities doing testing; differentiated coverage or rates for pre-existing conditions; smokers; overweight; etc.) 

            c. Taxes will go up.  Their will be some sleight of hand to preserve candidate Obama's pledge to not raise taxes on the middle class - or maybe not if recent off-message comments by Tim Geithner and Larry Summers are to be believed. For sure, there will be increases of 5 to 10 % on the top two or three percent of payers.  Other "pass through" taxes will hit employers providing insurance, insurance companies, Medicare contribution rates, and the like.  And isn't inflation a tax?

    Most likely is the answer that we won't pay for it. Our kids and grandkids coming into the world today have $37,000 in debt, and the Democrats are about to double down. We are likely to squeeze out competing requirements for education, national security, and industrial investment as Congress flushes America's vitality down the rabbit hole of Obamacare. Please contact your Congressperson.

                                                                    ------ 

    This week's You Tube is dedicated to those who believe that insurance rates should not be affected by "risk factors".

bill bowen - 8/7/09 

So, What Can be Done?

    With the seating of what Senator Dan Inhofe (R-Okla) called "the clown from Minnesota" giving the Democrats 60 seats in the Senate, it would appear as if the Republicans have hit bottom. Perhaps, like alcoholics or drug addicts, this was necessary before Republicans could start to recover.  At least we had six months to see it coming.

    As a baseline, we should understand that while voters prefer generic Democrats for Congress by 40% to 35%, voters also have been consistent for decades in self-identifying as conservative (32%) rather than liberal (23%).  And while Obama has a 59% approval rating, Congress' approval is just 35%, and "Wrong Track" for the country beats "Right Track" by 51% to 42%. What we have is a superb liberal politician, and a Republican Party with a severe (and earned) branding problem.

    My advice for the Republican National Committee:

        1. Focus on economic and national security issues where Obama's liberalism is out of the mainstream and is scary to the "wrong track" majority. Attack Pelosi and Reid rather than Obama. 

        2. Center the message on capitalism versus socialism, and personal responsibility versus the "nanny state".  Make privatization of the auto industry and a comprehensive energy policy (including nuclear and oil drilling) a priority.

        3. Select and support candidates who will be loyal to the Party on key issues. For example, the eight Republicans who voted for Obama's "cap and trade" energy bill in the House should be questioned - these are districts where a Republican can win, and in most cases a more reliable one can probably be found.

    My advice for my friends and readers:

        1. Keep the faith. The United States is the greatest country on earth in terms of economic and military strength, personal opportunity, innovation, diversity, and liberty. Obama's deficits, energy policies, and international weakness may signal decline, but we've got a lot to work with.

        2. Support candidates who have strong financial credibility. I like Mitt Romney nationally and Tom Campbell in California - stories for another day. Work in their campaigns; advocate; and, yes, contribute.

        3. Be informed and participate in the dialog. I enjoy and appreciate responses to RightinSanFrancisco, and would encourage you to be heard in forums for moderate voters. There are some good threads on financial subjects at SeekingAlpha.com, and it is occasionally fun to throw in a comment at the Huffington Post. It is too hard to be heard at the Wall Street Journal or the New York Times.

        4. Get involved in local government. There is no point in running for office in San Francisco where the Green vote outnumbers the Republican vote, but there are school boards and city councils all over the country where minds are open to reasoned discussion, help is needed, and you can build from the bottom up.

                                                                        -----

          This week's You Tube provides hope that some of the Washington media may be getting tired of just accepting the messiah's press releases.  

bill bowen - 7/3/09