Right in San Francisco

Current Scandals in Perspective

    Let's not over-state the significance of this week's emerging scandals in Washington.

    The history of Western civilization is a story of the rise of the standing of the individual against the coercive power of the state. From Socrates' poison hemlock, to the Magna Carta, to the French Revolution, to the American Constitutional Convention "we the people" gained ascendency. More recently the power of the state under Soviet and Maoist communism failed to subjugate the people despite killing millions in trying. The next to fail, Insha'Allah, will be Barack Obama.

    Until now the behavior of the Obama administration has been met by a shrug by the media and most of the public.

        -- Money has always had an influence in government. Wall Street donates millions to the campaigns of Obama, Shumer, and other Democrats. The banks don't get broken up. Hedge fund managers have their incomes taxed at capital gains rates. Jon Corzine steals million from his depositors with impunity. That's bad, but that's the way it has always been.

        -- Politically connected people have always benefited from government contracts. Obama's "green energy" constituents have seen their donations followed by contracts and favorable treatment such as Solyndra. It is not unusual that Diane Feinstein's husband would get the contract to sell surplus Post Office facilities and the contract for building California's High Speed Rail. That's worse than normal, but that's the way that it has always been.

        -- The people really don't need to bother themselves with the details of what we are doing abroad. Reckless behavior by the State Department in Benghazi; no response during the attack; lies about what happened; a desultory investigation. That's worse than normal, but that's the way it has always been.

    But, as they say on Wall Street (at least my broker does), this time it is different.

        -- The supposedly independent, non-political Internal Revenue Service - which is to be the primary enforcer of Obamacare's mandates - has been caught red-handed singling out conservatives for illegally intrusive audits, passing tax return information to liberal groups to use in attacking a Republican presidential candidate, and lying to Congress about their behavior. Eric Erickson has an excellent post describing the connection between the encouragements of a ruler and the misdeeds of subordinates. This is not the way it has always been - maybe similar to some Nixonian transgressions, but never this pervasive.

        -- The Justice Department has finally riled up the pliant main stream media by secretly collecting months of phone data from 100 Associated Press journalists and managers to find a leak. After years of accepting a White House press secretary whose main virtue is a plausible ability to plead ignorance, an avalanche of media groups - even Rachel Maddow - are crying foul. This is not the way it has always been - the 'Plumbers" of Watergate fame were formed to plug National Security Council leaks, but generally reporters have been off limits for such intimidation.    

    For the paranoid Constitutional small government advocates on the Right, their time has come. The federal take-over of one sixth of the economy in Obamacare, or at least the IRS' role in it, is back in play. And the 2014 elections promise to be a repeat of the 2010 tsunami with the righteous wrath of the Tea Party energized. Up with the individual; down with the coercion of the state. Let the march of history resume.

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    This week's video is an assessment of ObamaCare's implementation by Senator Max Baucus of Montana, the chair of the Senate Finance Committee and one of the original major sponsors of the bill, shortly before he announced that he was not running for reelection in 2014.

bill bowen - 5/17/13               

Trusting Government

    One of my favorite writers, Erick Erickson, recently referred to "a time (when) distrust of government is commonly held sentiment." Trusting government has three dimentions: are they trying to do the right things?; are they competent to do them?; and, are they corrupt? Most of the political energy goes into the first question - and reasonable people can reasonably disagree on the particulars - but small government conservatives point to the second and third questions as perhaps equally important.

    First some Gallup Poll perspective on today's attitudes (November 2012) relative to the past few decades. In answer to the question "How much of the time do you think you can trust government in Washington to do what is right" the recent reading is 19% for "just about always or most of the time" - about on a par with the Clinton years and half to a third of the George W Bush years. That breaks down to 67% for the judiciary, 56% for the executive, and 34% for Congress (House and Senate). The whole is less than the sum of the parts.

    There are a number of examples which are seeping into the consciousness of the public who want things from government, but are increasingly doubtful about the ability of the public sector to deliver:

    - Obamacare. Despite explicit and repeated promises, people are seeing double digit increases in their insurance costs and millions are being forced to fend for themselves as employers don't hire or drop insurance coverage for their employees.   

    - Budgets. For years the Democrats have been opposed to even the concept of budgets, and with sequestration the administration has threatened to veto any legislation which would allow judgement about what costs should be cut.

    - Benghazi. In the capstone of the Arab Spring, the administration put State Department personnel in an unnecessarily dangerous position, did not take action when they came under attack, deliberately deceived the public about the nature of the attack, and has been totally unsuccessful in pursuing the perpetrators.

   - Bridges. For a bit of local flavor, we have the $6.4 billion, two and a half decades in development, Bay Bridge which has been re-built with 1200 large bolts which violate industry technical standards and are failing prior to a planned Fall grand opening. And the same gang is starting on a doomed $68 billion High Speed Rail project.

    It is fairly easy to make the case that the gusher of money in the Stimulus Plan contributed to the most federal corruption since Warren Harding.  A few examples:

    - Solyndra. In the poster child for the Obama administration's favoritism for large contributors and bad business judgement, the Department of Energy lost over $400 million on this solar panel company, and then illegally allowed a restructure of debt which made the contributor whole.

    -  MF Global. Former Goldman Sachs chairman, Democratic governor of New Jersey, and US Senator Jon Corzine illegally used over $1 billion in customer account funds to cover his bad company bets on European bonds. While some of the money has been recovered, no criminal charges are being considered.

    - Farmer Reparations. In a program with few controls and rife with fraud, the Department of Agriculture has given over $3 billion in "reparations for discrimination between 1981 and 1999" to African American, Hispanic, American Indian, and women farmers. Verification requirements are like the previous "no income/no assets/no job" mortgage requirements that let to the housing collapse.

    - The Attorney General. Google "Eric Holder/corruption" to read about Fast and Furious, the New Black Panther Party, and the rebirth of ACORN, as well as his warm-up tour in the Clinton administration.

    The public's political attitudes swing in long arcs. One benefit of President Obama's re-election is that people will have a full eight years to recalibrate on what government can really do - regardless of what they might want it to do.

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    This week's audio clip is an interview in which Senator Harry Reid agrees with the above point - he likes Obamacare, but, like Senator Max Baucus, sees it headed for a trainwreck.   

 

bill bowen - 5/3/13  

 

The Lame Duck

    Barack Obama has never seemed to be interested in or good at governing - sometimes to the detriment of the nation, and sometimes to our benefit. The paramount question four months into his second term is who will guide the ship of state through 2016. A few points in evidence:

    - Exhibit number one is the failed effort to do something - anything - after the Newtown Connecticut school shootings. First he outsourced the effort to Joe Biden; then the NRA (perhaps the most vilified lobbying group in Washington) called for no compromise and armed guards in schools; then Senator Feinstein took the lead in the Senate; then the options peeled off one by one - no registry; no assault weapons ban; no size limit on ammunition clips; and finally, no background checks for gun show or Internet sales. Obama's contribution - a campaign-style tour with parents of kids who were killed. His result - even four Democrats voted against him on the key vote in the Senate, fearing Wayne LaPierre of the NRA more than the president.

    - Exhibit number two is the immigration reform initiative. Republicans are poised to accept the inevitable, hoping to make the path to citizenship longer than the political careers of the legislators. Leadership rests with a bipartisan group of eight Senators. Having defaulted on his commitments to Latino leaders in Term One, he gives an occasional speech about how important it is to solve the problem of 11 million "undocumented immigrants" (the new politically correct term) but few know or care what he thinks about the details - or what anybody in his cabinet thinks. As a result, the Republicans will get more secure borders, a more "what's in it for business and farmers" criteria for visas, and the ability to take this political pox off of the table.

    - Exhibit number three is the implementation of Obamacare. Having loudly declared that "nobody will have to give up their insurance plan or their doctor", we now see that he missed by a few million folks as employers drop their insurance plans, reduce work hours, or limit the number of employees to avoid the federally-required gold-plated plans. And lamenting the refusal of many Republican governors to set up "insurance exchanges" where companies and individuals can buy insurance, the feds will now need to manage half of the states and HHS Secretary Sebelius  is requesting $1 billion for an education campaign and has delayed to 2015 the availability of options for small companies due to "operational difficulties."  There was no mention of Obamacare in the president's budget speech.

    - Exhibit number four is the ongoing budget / debt limit / sequestration theater. Most agree that Obama overplayed his hand with his impending doom description of the impact of 2% budget cuts, and misjudged the Republicans' willingness to accept the defense component. So he now has a budget proposal which accepts some entitlement reductions, but asks for another large tax increase. Too little, too late; nobody expects this to be the structure of an agreement. When the next debt limit discussion comes around this summer, look to John Boehner to set the agenda.

   In domestic terms, this is probably as good as Republicans could have hoped for, having lost the presidency and the Senate. In foreign policy terms the abandonment of Benghazi and the disaster in Syria show the downside of not having a president who can lead. But that is a subject for another day.

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    This week's video is Barney Frank's use of the Boston bombing to call for greater government spending and blame the sequester. The Democrats' answer to Todd "legitimate rape" Akin.

bill bowen - 4/19/2013

 

Education: The Positive Republican Issue

    Enough of being the "Party of No". Republicans have had a tough few years trying to be the responsible parent, insisting on financial discipline and limited government. While most voters understand the need to balance their household budgets and wouldn't want to leave their kids with a mountain of personal debt, the Democrats have benefited politically by emphasizing the specific and tangible while the Republicans have been stuck with the abstraction of trillions. Enough!!!

    Maybe, just maybe, the sequestration exercise has demonstrated that we can cut 2% off of a 16 trillion budget without the sky falling, and we can move on to a subject which is in the Republican wheelhouse of Opportunity, Liberty, and Personal Responsibility; one where we are on the side of the angels.  

    The set-up: Much data shows that there is a growing gap between the well off and lower economic classes as a result of globalization, technological advance, and the growth of single parent/wage-earner families. The central strategy of the Obama administration - increase taxes on the successful to fund extended unemployment benefits, egregious expansion of disability benefits, free healthcare, and a host of safety-net programs. The best strategy - improve education to allow those with the most talent and work ethic to prosper and raise society in the process. This is a civil rights issue.

    Some thoughts for the "big picture" folks:

    -  Since the creation of the federal Department of Education in 1980, our relative performance in the developed world has dropped to "average" despite being the leader in spending.  Something isn't working.

    -  In his recent short book, "Obama's Education Takeover", Lance Izumi explains how the Obama Administration's press for national standards, curriculum, and testing would move America away from local control and parental involvement.

    -  Obama's recent call for "universal preschool" would not only cost many billions of dollars, but it would expand Head Start to middle class families and drive out private secular and church options with questionable demonstration of lasting results from existing public programs.   

    And in terms of "act local", Republicans have several winning issues:

    -  School accountability. The National Education Association and the American Federation of Teachers may oppose any objective evaluation of teacher performance, but there 10X as many parents as teachers - and many if not most teachers are upset with the protection of incompetents. There could be no better bete noir than Randi Weingarten of the American Federation of Teachers.

    - School choice . A third of the states now offer some form of voucher or subsidized school savings account.  Parents do know what is best for their kids - whether it be traditional public schools, charter schools, secular private schools, or religious schools.   

   - Liberal overreach extends to such things as eliminating the pledge of allegiance to the flag,  challenging Junior ROTC programs, and continuation of school assignment policies which contain vestiges of social engineering long after the courts have declared busing unnecessary.    

    For those Republican presidential aspirants looking to 2016, "candidates make the issues". Marco Rubio has the inside track on today's consensus "must fix" immigration reform, but that should be off of the table within a year. The name Republican with a deep history in the education wars is the former governor of Florida with his Foundation for Excellence in Education.  Memorabilia collectors should hang on to their Bush-Clinton stuff.

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    In the spirit of the season, here's the Senate Majority Leader explaining that the American income tax is voluntary.

bill bowen - 3/29/13

 

We Are All Cypriots

    Back in the 60's when Berlin was surrounded by 20 Soviet Army divisions in East Germany, President Kennedy, acting as the leader of the Free World (a quaint anachronism in itself) famously declared "Ich bin ein Berliner" - "I Am a Berliner". For the moment, the front line for our Western system of individual rights rests in Cyprus. Ironically, the attack comes from the European governments and the strongest defenders are the Russians.

    Quickly, how did we get here?

        - This is Act XXV of the Eurozone drama. Since 2008 one country after another has needed bailouts for their financial institutions which are inextricably tied up with excessive government spending. To many this seems like an inevitable outcome of trying to combine a common currency with separate national budgetary authorities. That's a subject for another day, better covered by more knowledgeable writers not named Krugman.  

        -  Tiny (1,200,000 population; $18 billion GDP) Cyprus saw the opportunity to expand their financial industry by applying low taxes and loose oversight to become a conduit for businesses, government officials, and gangsters in Russia and the former Soviet republics to get their money into the Eurozone, with much being recycled back into Russia to buy companies and real estate there. (Russian deposits in Cypriot banks total about $30 billion; about $14 billion of annual direct investment in Russia comes from Cyprus.)

        - Like Ireland, Spain, Portugal, Greece, and Italy, Cyprus spent beyond its means, benefiting from low borrowing rates of the German-backed Eurozone with loans from its own banks, banks throughout the zone, the European Central Bank, and the International Monetary Fund. Cyprus also borrowed $3 billion from Russia.

        - The bill has come due. Cyprus needs a $13 billion bailout from the internatonal banking system who - in the form of the Europeran Central Bank, major country financial ministers, and the International Monetary Fund (e.g. the U.S.) - are demanding that Cyprus come up with $7.5 billion, which they can only do by confiscating a portion of the $90 billion in deposits in the banks. Traditional rules would have the bank owners wiped out first, bank bond holders second, and uninsured deposits third. To get to the $7.5 billion, the European Union czars jumped right to the depositors, insured or not, and totally ignored any consideration of the account holder's total wealth or income.  

        -  From there, the question was how new center-right government of Cyprus would allocate the confiscation between large depositors (like the Russians) and the small depositors (like the voters.)  In any case it would be a confiscation, which Russian Prime Minister Dmitri Medvedev likens to the behavior of the Soviet era. The long battle for the security of the individual from arbitrary, after the fact assaults by the government has taken a significant step backward.

        - At this point the resolution is unclear. The Cypriot parliament has rejected the plan, ostensibly foregoing any further European loans and resulting in a hard bankruptcy, but creative minds are looking at other options - closing one bank; selling rights to drill for natural gas off of the coast; a loan from Russia; anything.  

    And let's provide a little American context:

        -  We have not fixed the fundamental flaws in our banking system that led to the crisis in 2008, and our government continues with fiscal policies driving Greek-style debt. We will not be as powerless as Cyprus, but the debtor does not get to set the rules.

        -  During the 2008 crisis there was attention to insurance for small bank deposits, and the arguments were about allocation of risk among the bank owners and bond holders, with the government throwing money at the industry, not confiscating deposits. Even the MF Global fiasco, which represented a politically-connected crook getting away with stealing customer deposits, did not involve government seizing deposits.

    A year or two ago nobody would have thought it possible in the Western financial system - from Europe, to North America, to Japan - for the government to confiscate bank deposits. But most in America would not have thought that the federal government could force a citizen to purchase a service like health insurance that they didn't want or that the federal government could force a church (or any person of conscience) to directly or indirectly pay for contraceptives and morning after pills. But they can, and they do.

    Ich bin ein Cypriot.

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   This week's video bonus, from a reader in Virginia, is a libertarian take on ordering a pizza in a data-intensive world.

bill bowen - 3/22/13  

Rand Paul's Filibuster: A Perspective

    A president has to trust the common sense of the American people. On the small stuff the people, wanting  to have faith in the president, will give him wide berth. (Let him flit around on Air Force One while shutting down White House tours.) On the middle stuff he can fool most of the people enough of the time. (Of course he will address spending just as soon as he gets the fat cats to pay their fair share in taxes.) But on the big stuff he can't believe that, as Jack Nicholson's Col Jessup yells in A Few Good Men, "You can't handle the truth." Rand Paul believes that we can.

    The conflict between national security and individual liberty in a post-911 world  is complicated. People of good will on the left and on the right will disagree on much, but the zealots of Code Pink agree with the zealots of the libertarian movement that we need to discuss the limits of government power. John McCain (R-AZ) and Lindsay Graham (R-SC) don't want the discussion; Ron Wyden (D-OR), Ted Cruz (R-TX), and Mike Lee (R-UT) do.  

    Unfortunately, Barack Obama is with McCain - perhaps because he is tangled up ideologically; perhaps because he enjoys having few limits on his power; perhaps because he doesn't think in terms of how the Constitution set up the government in the first place. Twelve years after the attacks in New York and Washington, we have:

        - A president who led the criticism of his predecessor's use of "enhanced interrogation technques" refusing to share with the Senate Intelligence Committee the legal rationale supporting the killing of Americans;

        - An administration which insists on calling the murder of 13 people at Fort Hood by Major Hassan an "act of workplace violence";

        - An administration which is told that it cannot close the detention facility at Guantanamo, and doesn't seem to understand (or accept) the difference between civilian and military judicial systems;  

        -  A security establishment which continues to blur the distinction between the role of the CIA and the role of the military in fighting foreign wars;

        -  A Nobel Peace Prize winning president who maintains a central personal role in deciding what targets to approve for drone strikes, without a public discussion of criteria or any judicial review;

        -  The establishment of a cybersecurity mission at the Pentagon with vast powers to monitor civilian travel, purchasing, reading, and assembly patterns with hardly a peep from the folks who went ballistic about Dick Cheney's purported interest in library records.

        -  The New York Times finally reporting on the killing of not only American-born  Al Queda leader Anwar al Awlaki, but also his 16 year old son and another American whose offense was purely in the propaganda realm.  

    Out on the right are the conspiracy theorists who are still incited by the government's ham-handed assaults on a white separatist family at  Ruby Ridge, Idaho in 1992 and the Branch Davidian compound in Waco in 1993, and the Second Amendment advocates who see a need for militias to protect ourselves from King George III.  That thread is not healthy for democracy, but it is fed by Obama's leftist policies and his refusal to acknowledge any limits on government power.   

   Eric Holder's answer to the question before Paul's filibuster - does the president have the authority to kill Americans on American soil without due process and in the absence of an imminent threat?: "It is possible, I suppose, to imagine an extraordinary circumstance in which it would be necessary and appropriate under the Constitution and applicable laws of the United States for the President to authorize the military to use lethal force within the territory of the United States."  And after the filibuster, a petulant Holder wrote "The answer to that question is no."

    A small victory for liberty. Thank you Senator Paul.

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  This week's video is a brief year-old exchange about the killing of Americans between Jake Tapper of CNN and President Obama's deliberate know nothing press secretary.

bill bowen - 3/15/2013

 

The Willful Ignorance of Bubbles

    As in finance, political bubbles are characterized by willful ignorance followed by excess, a painful burst, and broad recognition that we should have seen it coming. (We pundits often claim that we did, but in doing so, it is hard to not sound like one of Sprio Agnew's "nattering nabobs of negativity". ) The real estate burst of the 00's is a classic example - everybody gained by believing that you could bundle thousands of junk mortgages together to create gold - until you couldn't. Sometimes, but not always, the financial and political are intertwined. Let's briefly take federal, state, and local examples.

    The Federal. Who really believes that trillions of dollars of budget deficits and unfunded entitlement commitments don't matter? Barack Obama may actually believe, with his Svengali, Paul Krugman, yelling in his ear, that he can repeal the laws of economics. The public may choose to ignore Paul Ryan and the clamor of the populist Tea Party types. The dollar's "reserve currency" status, backed by the immense power of the American economy, may allow us to ignore the problem for a very long time. The politics of ethnic, gender, class, and age divide may allow a gifted public speaker to focus the public's attention elsewhere. The only question is whether the politics will change before or after the pain associated with the inevitable bursting of the bubble.

    The State of California. Happy times are here again. The people have found a governor who is fiscally responsible on the small stuff and given him the highest tax rates in the country - a top 13.3% personal income tax rate; a 7.5% sales tax (plus up to 1.5% locally); a combined 68.9 cents per gallon gas tax; an 8.84 % corporate tax (9th in the nation); and $1,458 per capita property taxes (15th in the nation, kept down by Proposition 13). With total control of the state the Democrats can do as they wish, pension reform is not on the agenda, and the outflow of high tax payers will accelerate a bit. Out here the equivalent of Wall Street's "mortgage backed securities" is the high speed rail project.

    The basic premise is Too Big To Fail. If we begin with the $10 billion dollars approved by California voters in 2008, and add in $3.6 billion federal dollars approved by the Pelosi Congress, we will be so far along that nobody will be willing to pull the plug. Never mind that nobody believes that the current $68 billion price tag is realistic, that the requirement that there will be no operating subsidies will be met, or that the path won't be impeded by numerous politically-required intermediate stops between Los Angeles and San Francisco.

    Funding is predicated on the assumption that there will be tens of billions of additional federal money (read Democratic control of the House, Senate, and Presidency - and a "thank you" shout out to you readers outside of California) and there will be a "public-private" partnership with wealthy corporations who are not interested in making money. So, what will really happen? For decades the priority for transportation spending in California will be High Speed Rail for the wealthy business people and tourists who do not want to fly between Los Angeles and San Francisco. Forget the millions of blue collar workers who need buses to get from one side of town to the other for their jobs; forget the millions of middle class commuters who need their cars or light rail to get into the city to work. Eventually the voters will notice that the "all in" emotionally satisfying smaller carbon footprint of the few wipes out the good of the many.     

    The City of San Francisco. Happy times are here too. Financial constraint is unnecessary as Silicon Valley is booming (the banks are here, and the nightlife is better so the kids reverse commute), and the strength of the Chinese economy ripples onto our coast, so our politicians are geniuses. But one party rule breeds excess which is most evident at City College of San Francisco.

    Picture a system with nine main campuses and some 90,000 students in a city of 812,000 people. Add a voter population which believes in the mission of providing an affordable feeder system for California's four year colleges and training for careers such as nursing, culinary work, and information technology.  How could this be a Too Big To Fail bubble? Well, add a school board comprised of Democratic machine politicians; turn over management decisions to a council dominated by the administrator, teacher, and student unions; expand the mission so that a large part of funding goes to free  "community enrichment" courses such as memoir writing and cultural self discovery; provide socially fair staff compensation such as full health care and retirement benefits for part time teachers; eliminate any effort to measure costs of the various facilities; and on and on. Eventually, even in California, the state may well pull the school's accreditation - after eight years of warnings, after a stern "this time we really mean it" ultimatum, after the imposition of temporary outside chief administrators. Maybe.    

    So, the quandry for good hearted people who want to work for a better world, and who do not want to be part of the willful ignorance: do you try to provide a warning? do you wait for the bubbles to burst? or do you just try to help the homeless guy on the corner? Illigitimi non carborundum.

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   This week's video , compliments of a friend from Connecticut, captures a poignant moment in New York after 9/11/01.

bill bowen - 2/15/2013  

 

Building From the Bottom

    This week's post is offered amid the ongoing pall of disappointment (find a stronger word - ed.) with the election and the fiscal cliff. Foremost: think globally; act locally.

    Some friends ask "What can be done to revitalize the Republican Party in San Francisco?"  More ask "Why bother to try?" In the spirit of a New Year, with a new Central Committee embarking on a four year term, here are some thoughts:

    San Francisco is to California as California is to the rest of the country - more Democratic; more liberal; a political establishment less tolerant of deviation from the accepted ideological orthodoxy. Republicans will not win many elections in San Francisco in my lifetime - the last Republican mayor was George Christopher (1956 - 1964) - but the manageable perspective is about setting reasonable objectives, branding, and strategy.

    First, lets acknowledge reality: Registration is 56% Democratic, 31% "no party preference", and 9% Republican; in the 2012 elections, with 365,000 ballots cast (a high 72% turnout) Mitt Romney got 13% of the City vote, Jerry Brown's proposal to further increase the country's highest taxes got 77% of the vote, and the local Republican Party candidates (all very legitimate, if under-funded) got 12 to 17%. Losing comes easily to the Chicago Cubs and San Francisco Republicans. But, viewed differently:

        -  There are important state-wide elections - governor; senator; ballot initiatives - where a few hundred thousand votes can make a difference, and there should be more loose votes lying around for Republicans to pick up in the Bay Area than in the Central Valley and Southern California where more people already vote Republican. With apologies to the political correctness police, it is kind of like the shoe salesman having a great opportunity in central Africa.

        -  There are non-partisan local elections and ballot initiatives involving common-sense good government concepts where special interests prevent the Democrats from siding with the voters - public employee pensions; school accountability; vagrancy; rights of property owners. A responsible Republican voice is needed.

        -  Much of the real government of the City is managed by boards and commissions - Police; Fire; Planning; Port; Airport. The public supports checks and balances to ensure integrity, and politicians will appoint Republicans if they see the Party as a potential factor in their elections.

    So, what can be done?   There are no quick fixes, but the groundwork can be laid now for 2014 and beyond:

    -  Promote a platform which stresses the issues that are important to the people of San Francisco.

    -  Figure out who our allies are - particularly in business - and establish or solidify relationships.

    -  Develop a media strategy which uses all of the tools available - newsletters; social media; presentations; interviews.  

    -  Cultivate a fundraising base to support a fiscally conservative/socially moderate Party infrastructure.

    -  Recruit - Committee members; candidates; registered voters; donors.  

    -  Plan the work; work the plan.

    Sometimes keeping on requires a combination of hubris and naive belief in our fellow citizens. A majority must believe in individual liberty, personal responsibility, educational opportunity, support for job creators, and families. Even in San Francisco. We just need to speak clearly and loudly.                                

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No video this week. Instead, please read this chilling David Brooks NY Times op-ed on the significance of the nomination of Chuck Hagel to downsize the military.

bill bowen - 1/11/13  

Fiscal Nausea

    When future historians write about the Great Obama Inflation their milestones will include the $800 billion stimulus plan, Obamacare, and the Fiscal Cliff - the compilation of all of the GOPs futile efforts to limit taxes and spending. Obama would have none of it and the Republicans in Congress whiffed.

    The Emotion.

        -  The Congressional Republicans are Linus to Obama's Lucy van Pelt. The President really does want to be financially responsible, we just have to give on the taxes now in exchange for future spending constraints. Trust him. Again.

        -  The populist beat the aristocrat in the election. Obama has had little to offer other than "tax the rich".  When Congress members talk to their constituents, lo and behold, they like the idea of having somebody else pay the bill. And what's the big deal if 2% of the people have their marginal tax rate go from 35% to 39.6%? Petty change.

        -  The big deal is that the quid was negotiated away for no quo. And trillion dollar deficits are a big deal. And at least half of the people do know that.

        -  It must be OK; the stock market likes it. A bit less uncertainty is good - for the moment.

        -  It is not as painful as the election, but it hurts to see folks like Paul Krugman, Nancy Pelosi, and Joe Biden taking victory laps. 

    The Facts.

        - So, what's in it?

            --  Lots of tax increases: rates  for families making over $450,000; higher rates for dividends and capital gains for wealthier households; personal exemptions phased out for families over $250,000; higher estate taxes; expiration of the 2% payroll tax holiday.

            --  Lots of cost increases: an extension of the Medicare "doc fix"; a farm bill extension; tax credits for working families and favored businesses; a year's extension of unemployment insurance; indexing of the Alternative Minimum Tax.

            -- Cost reductions? Well, a congressional pay freeze. In the immortal words of Porky Pig, "That's All Folks".   

        - The Senate voted 89 to 8 in favor. Tom Coburn, Pat Toomey and a few others voted no, but it was token and nobody tried to filibuster. Capitulation.

        - The House voted 257 to 167 in favor, with 85 Republicans joining 172 Democrats in support. The Republicans were pleased to be allowed to vote however their constituents wanted, and promptly re-elected John Boehner Speaker of the new House. Capitulation.

    The Future.  

        Sequestration ($1.2 trillion of automatic cuts over 10 years to defense and discretionary spending) was deferred until March 1, about the time that gimmics to put off the $16.4 trillion debt ceiling breach will reach their limit. Having won the battle and taken the measure of the Republicans, Obama has declared that he will not negotiate spending cuts in exchange for increasing the debt ceiling. Prior offers to fix the inflation calculation in Social Security or increase the eligibility age have been withdrawn.  Nyet! Nyet!

     The Republicans are off to lick their wounds at a strategy session, but will probably determine that the inertia of automatic tax increases was heavily to Obama's advantage, and the inertia of automatic spending reductions is to theirs if they can find a backbone.  And maybe the tone will change when people realize that Obama's victory solved about 10% of the problem. The debt limit? Up she goes.  

                                                    -----

    This week's video is an assessment of President Obama's objectives by Bill O'Reilly. Pretty depressing, Miss van Pelt, but in a democracy people get what they want.  

bill bowen - 1/4/13

 

The Fiscal Cliff: Negotiating Lessons

    Several years ago, along life's wonderous journey, I had the responsibility for buying stuff - bottles, flour, spices, filling equipment, transportation services, and the like -for a couple of large corporations.  In the process I learned some universal truths about negotiation- some obvious; some not  - and tried to pass on some of the difficult lessons to my junior purchasing agents. In politics some is different, but most is not. Would that John Boehner had been in the class.

Lesson Number One: You have to be sure that the guy you are negotiation with has the capability and inclination to deliver on an agreement.

         -  Boehner gets this. By sending a letter signed by Eric Cantor and Paul Ryan outlining his demands, he has the House on record that increased tax revenues are OK, not only with him (as per his 2011 effort), but also with the fiscal hawks. 

        -  Obama is less clear. By sending lame duck Treasury Secretary Tim Geithner to deliver his absurd opening position ($1.6 trillion tax increase; another round of stimulus spending; elimination of the concept of a debt ceiling) he missed the chance to empower a credible deal maker. Last time Obama walked away from an agreed deal - presumably after getting push back from other Democrats. Somewhere it would be good to get a signal that Obama will deliver the Pelosi/ Reid cohort this time.  

Lesson Number Two: You have to know what is most important to your adversary.

        -  For Boehner it is comprehensive agreements that will rein in budget deficits and make entitlement programs sustainable. Comprehensive revision of the tax code is important, primarily to make it more efficient. The end of the year matters less than the entire package.

        -  Obama is simpler. He wants higher tax rates for the rich as a legacy. Forget that the same result could be obtained by limiting deductions.  He has been campaigning for a year on a platform of taxing the rich (and not much else), and needs to nail that pelt to the wall with symbolic rates, not just eliminated deductions. Forget the other 90% of the budget problem - that is all negotiable as long as you don't touch the heart of Obamacare.  

Lesson Number Three: You have to be clear with yourself about who you need to please.

        - In the corporate world it is the boss, the users of the supply or service you are buying, and the top finance guy. Here's where politics is a bit different.

        -  Boehner has the more serious calculation. On the one hand he has a lot of members in his caucus who really believe (and have constituents who really believe) that trillion dollar deficits and insolvent entitlement programs are a big problem. Republicans also lost a presidential election because of their steadfast support for the 2% of the voters who already pay most of the bill and create most of the jobs. Boehner understands that Romney and company made the case and lost. Grover Norquist, who Democrats love to demonize, is not to be feared. Conservatives have been purged from key House committees.  Deficit hawks matter; tax hawks not so much.

        -  Obama would like to please his father, his early mentors, and his friends on the Left by leveling the field. Nobody knows how to deal with the root causes of growing inequality - globalization and technology - but taxes are pretty easy to understand - and popular with the 98% who are not being asked to pay more. Yet.  

Lesson Number Four: You need a flexible plan, including clear objectives, a timetable, priorities, and a communication strategy. Recognize that in America "fairness" generally results in meeting about half way.

        -  Both sides recognize that this is a multi-step process. A comprehensive agreement on taxes, entitlements, budget cuts, and the debt limit will require the buy-in of many constituencies and will not happen in 2012, but a year-end patch is necessary to head off pre-ordained calamity. One hopes that the staffs are working behind the scenes on the patch.  

        -  By agreeing to a revenue increase on the day after the election and offering a comprehensive plan starting about where the last negotiations broke off in 2011, Boehner ceded much ground for nothing in return. That may sound fair to the media and the public, but it adds pressure on House Republicans to not give much more.

        - By being so focused on a tax rate increase, Obama leaves much to give on entitlements and budget cuts- once he realizes that Boehner's first offer is serious and near his limit. (It is, isn't it? We'll know if Boehner cedes tax rates or a large debt ceiling increase as part of the year end patch.)        

Lesson Number Five: You have to be willing to walk away. Alternatively stated, it is "the principle of least interest" - the party who cares less about reaching an agreement has the most leverage.

        - For Boehner there is the ghost of Newt Gingrich who shut down the government in 1995, thus helping to drive Bill Clinton's budget surpluses and a public residue of ill-will toward Republicans. Boehner has to be ready to take the lion's share of the blame from Democrats, the pliant media, and even some Republicans if everybody's tax rates go up and everybody's favorite government program gets cut - even if temporarily. 

        -  Obama? In four years the "leading from behind" president has rarely done the hard work of governing. By nature or calculation he has rarely taken a courageous position on contentious issues (immigration reform and gay marriage as well as the Arab Spring and budget deficits) and is unlikely to risk a recession which he cannot blame on Bush if he gets his tax rate for the rich. And it is just possible that he does not want to be remembered for a second four year term with the lowest growth and highest unemployment since the 30s - and realizes that Boehner can help him avoid this distinction.   

       By agreeing to revenue increases and the framework of the Simpson-Bowles proposals Boehner has made a strong case for putting the blame for failure at the feet of Obama. The irony will be if - after a year-end patch and comprehensive 2013 negotiations - Boehner stands strong (but throws in a small rate increase as a deal clincher), our financial deficits start to heal, and the credit goes to the incumbent. That wouldn't be all bad.     

                                                -----

    This week's video reminds us that there are more important things than getting a political win.   

bill bowen - 12/7/12

Reince Priebus' "To Do" List

    Republican National Committee Chair Reince Priebus' luster has diminished a bit from his halcyon days as chair of the Wisconsin Republican Party (capturing virtually everything in a period of a few years), so I invoke his name in reference to the Republican party elders. With 10 days' reflection, here is the "to do" list:

Short Term (week 1) (retrieved from the trash outside RNC Headquarters)

1. Call the DC suicide hot line. Tell them to be on the watch for Dick Morris and Karl Rove.

2. Send congrats note to Bob McDonnell at the Republican Governors' Association on expanding the number of Republican governors to 30. Grass roots; dealing with education and jobs creation; national thought leaders; deep, diverse bench; yadda, yadda, yadda.  

3. Call John Boehner to offer help and stiffen his backbone. Let him know that you have also talked to Paul Ryan and Eric Cantor.

4. Take Chris and Tagg  off speed dial.  

4. Send apology note to Charles and David Koch. Invite to the Holiday party at Sheldon's place in Macau.

Mid Term (weeks 2 to 4)

 Get Congressional leadership right.

    -  Talk to John about Cathy McMorris Rogers for the # 4 House leadership position. No need to worry about committee chairs- Ileana Ros-Lehtinen is doing fine at Foreign Affairs and one out of 20 isn't bad.   Re-elect solid African American Tim Scott as the leader of the Class of 2010.

    -  Light a candle for Nancy Pelosi. Nothin' like good old Nancy to keep our ranks solid and help with our fundraising.

    - Get John Cornyn out of the Senate Campaign Committee Chair. Losing three of our 10 seats while picking up one of the Democrats' 23 doesn't make it. Let's try him as Mitch McConnell's # 2. We've got the same 23 to 10 chance in 2014, so a bit more should be expected. It might even be a good idea for the chair to work with Jim DeMint to avoid primary fights and any more Todd Akins or Richard Mourdocks.   

Longer Term (before the next tropical retreat)

1. Let's dust off the Bush/McCain immigration reform proposals that the junior senator from Illinois helped torpedo back in 2007. Emphasis - long term green cards.

2. Let's find an alternative to Planned Parenthood that deals with women's health issues without the abortion piece.

3. Ditto AARP. Help Hannity push AMAC.

4. Get the geeks together. Our voters may be less into all this social media stuff, but lets get real. We can't keep getting trounced on GOTV.

5. Karl didn't go from being a genius to being an idiot overnight. We've got to figure out how to use the PACs to build party infrastructure. Ads are good, but there is a diminishing return and a few million bucks in field offices got Obama a lot.

6. Forget Texas secession - work on California.

7. Keep perspective. Take that Zen class.

                                                -----

  This week's video is from a press conference by Senators McCain, Graham, and Ayotte calling for a Joint Select Committee of Intelligence, Foreign Affairs, and Armed Services to investigate the Benghazi fiasco. One can only wish that the media and the public would care about security and the cover-up as much as about Petreus' affair.  

bill bowen - 11/16/2012 

Predicting the Senate

    With America's most despised politician Nancy Pelosi speaking inanely about Romney's NAACP appearance and exploited Jewish Republicans, there is virtually no chance that the voters in the 435 Congressional districts will make her speaker again. It would be nice if some of her magic could rub off on the Senate.    

     The current Senate has 51 Democrats, 47 Republicans, and 2 independents who caucus with the Democrats. The Vice President breaks ties, so if Romney wins, the Republicans need to gain three seats; if Obama it is four. Of the 33 seats up for election, 10 are held by Republicans, 22 by Democrats and one by retiring independent Joe Lieberman. The math seems easy, but for sooth it is not so.

    The two most reliable pollsters on Congressional elections, Charlie Cook (leans Democrat) and Stu Rothenberg (leans Republican) paint similar pictures.  About half of the seats are "safe", the Republicans will likely gain Nebraska and lose Maine. Beyond that Republicans have a good chance of pick-ups in Missouri and North Dakata and a lesser chance of losing Massachusetts. That leaves a likely net plus one or two with the other required two or three coming from Montana where they enjoy a small lead, and Virginia and Wisconsin which are real toss-ups. Net plus one to five. As a wild card, Democrats are advertising for weaker Republicans in upcoming primaries in Wisconsin and Missouri, as Harry Reid did successfully in Nevada in 2010.  And another wild card -  in Maine Angus King  is heavily favored  to replace Republican Olympia Snowe - he is running as an independent and is expected to caucus with the Democrats, but if the stars align he may feel that he could accomplish more by giving the Senate to the Republicans.

     The flood of money in 2012 politics is obvious in the Senate.  Noteworthy is Massachusetts liberal  Elizabeth Warren's $6.9 million take in the first quarter - twice anybody else. Beyond the individual candidates, the Senate Democratic Campaign committee has raised some $78 million while the Republican counterpart has raised $69 million.  And then there are the Democratic and Republican Super PACs with millions to spend in the contested races. It is nice to live in "ad free" California where there is no contested election.  

    Like the 2010 cycle when S.C. Senator Jim DeMint led efforts in primaries to elevate conservative candidates such as Rand Paul (KY), Marco Rubio (FL), Mike Lee (UT), and Pat Toomey (PA),  his $8 million Senate Conservatives Fund has targeted inadequately conservative party favorites - successfully promoting Richard Mourdock (IN) and Ted Cruz (TX) while losing in the primaries to more moderate conservatives in Nebraska (Deb Fisher won), and Utah (Orrin Hatch won). In any case, the Senate Republicans will move a bit further to the right, and there is plenty of evidence that the Tea Party lives.

    Not yet burbling is the future of Mitch McConnell who has teamed with Harry Reid to make the Senate the place where all good House bills go to die without embarrasing the President. One can imagine Jim DeMint's demand that (perhaps with a different Republican leader) supermajority Senate rules not be allowed to block House legislation headed for the desk of President Romney. But that's getting a bit ahead of events.

                                                                      ----- 

   This week's video is of Mitt Romney receiving the endorsement of Polish freedom leader Lech Walesa, two weeks after Barack Obama nabbed the endorsement of Venezuelan Socialist dictator Hugo Chavez. No contrast on foreign policy?   

bill bowen - 8/3/2012

RomneyCare 3.0

   Well, I've spent a week away from sharp objects, reading as much about John Roberts' decision as I could, and listening to as many opinions as I could stand. Here's mine.

    We are less free, less prosperous, and probably more equal. Liberals like that trade-off; conservatives not so much.

    Reagan was right: "Freedom is never more than one generation away from extinction. We didn't pass it to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same." Freedom is also not secure in the Constitution if the federal government can punish inaction and force employers to purchase insurance for their employees with provisions which they find morally offensive. It really doesn't matter whether it is the Commerce Clause or taxing power. The Supreme Court has said that it is OK, and it is up to the people to protect themselves. Message received.

    The first line of attack for repeal is the one that appeals to libertarians. My sadness is not so much with Justice Roberts as it is with the American people who, it would seem, are well down the road to accepting government power over the details of their lives in exchange for a promise that everybody will be taken care of, regardless of personal responsibility. Even in the Bay Area - a haven for liberals, but also the center of anti-government convulsions of the 60s - there is not a word about the loss of freedom. This decision will eliminate any question of whether the 2010 election was a "one-time wave" by galvanizing the Tea Party and the lingering Ron Paul supporters, but that won't win Ohio.

   The central line of attack must merge ObamaCare  and the ongoing economic malaise - and it is easy to do. Despite the wasteful trillion dollar stimulus and unprecedented Federal Reserve activism, we remain with high unemployment three years after the "Bush Recession" officially ended. The difference from past recoveries?  Obamacare's crushing trillion cost and uncertainty for business. The economic issue isn't the relatively modest "individual mandate tax" or even the trillion dollars of other taxes on the public; the larger problem is the smothering regulations and costs imposed on employers. Who would think that we could insure 30 million people without addressing the major cost drivers in our healthcare system and place the burden on employers without substantial economic damage?

    But repeal alone won't win Ohio. Fortunately Governor Romney has a good start on the "Replace" content, even if the presentation needs improvement.  From his website and many speeches:

    1. Restore state leadership and flexibility: "block grant" Medicaid; limit "one size fits all" federal standards for insurance coverage requirements; foster exchanges and high risk pools.

   2. Promote free markets: cap medical malpractice suits; promote purchasing pools for individuals and small businesses; protect people with pre-existing conditions who have had continuous coverage; facilitate IT.

  3. Empower consumer choice: allow purchase across state lines; allow consumers to purchase insurance with pre-tax dollars (move away from the employer - dominated model); explore alternatives to the "fee for service" model; expand "Consumer Reports"-type ratings to inform consumers.  

    Romney will not get much media help in explaining that he has a plan, but he will have a billion dollars to speak directly to the voters and he starts with a strong majority of voters still favoring repeal. He will need some tweaks - if people want insurance plans that keep their kids on until age 26, insurance companies can amortize that - but he knows this territory. The only challenge is to be sure that the voters understand that this isn't separate from the message on the economy. It is at the heart of the economic problem.

    Despite Obama's outlandish claims, the people can be trusted to understand.

                                                           -----

   For those looking for something simpler and more important than Chief Justice Roberts' finding, here is a simple discussion of the Higgs boson, whose recent discovery at CERN is sure to lead to a few Nobel prizes in theoretical physics, as well as a complete explanation of the universe.  

bill bowen - 7/5/12

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.

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

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    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.

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    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.

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    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.

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   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