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GOP Unable To Wash Away Santorum

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After his disappointing loss to Michele Bachmann in the Iowa Straw Poll, Former Minnesota Governor Tim Pawlenty officially withdrew from the 2012 Presidential campaign.  Pawlenty finished third with 14% of the votes.  Bachmann picked up 28% and Congressman Ron Paul was right behind her with 27%.  Despite the fact that Rick Santorum finished fourth with a paltry 9.8%, the Pennsylvanian has not discussed abandoning his own Presidential bid.

Santorum has not held public office since his humiliating defeat in the 2006 election, at which point he lost his Senate seat to Democrat Bob Casey, Jr. by a 59%-41% margin – the worst defeat for an incumbent Senator since 1980.  One might assume that such a bidetory washout would forever purge Santorum from that zone within the Beltway.  Nevertheless, Santorum apparently believes he will have greater success with a national campaign in post-Tea Party America.

Strangely enough, Santorum’s fourth-place finish in the Ames Straw Poll is being spun as a victory.  Dan Hirschhorn reported for Politico that Santorum’s fourth-place showing helped grease the candidate’s fundraising efforts:

Still underfunded, the campaign enjoyed its strongest overnight online money haul in the hours after the straw poll, and is planning to step up its fundraising efforts in Pennsylvania, his financial home base after two Senate terms.

Nevertheless, as Daniel Larison discussed in The American Conservative, Santorum’s fourth-place finish was solely a result of the candidate’s persistent, lingering presence in Iowa:

The reality is that Santorum has been living and campaigning full-time in Iowa for weeks, he ought to be rallying social conservatives to him in much larger numbers than he does, and his fourth-place finish out of a field of six direct competitors is confirmation that his campaign is going nowhere.  Beating out Herman Cain and Thad McCotter on the ground does not mean much at all.  His presidential bid has always seemed to be a vain effort to re-fight the battles of his failed 2006 re-election campaign.

Michael Falcone of ABC News observed that Santorum “has been languishing near the bottom of national polls”.  The question remains as to whether a candidate, whose agenda is so tightly focused on conservative “values voters” could gain momentum in a campaign dominated by financial issues.  As George Will pointed out, Santorum has repeatedly emphasized that “… America’s debt crisis is, at bottom, symptomatic of a failure of self-control  …”

Dan Hirschhorn noted at the conclusion of his Politico report, that Santorum’s “end game” remains a mystery.  I suspect that Santorum’s true objective could be to secure the number two place on the Republican ticket as the GOP’s Vice-Presidential candidate.

It’s reasonable to assume that the presence of Santorum on the back end of the Republican ticket could provide their campaign with a frothy mixture of enthusiasm, including support from social conservatives who would not otherwise vote for a less-polarizing Presidential nominee.

Meanwhile, Santorum continues to swim upstream, while jumping down the throat of the hard right’s newest rising star, Texas Governor Rick Perry, who refused to advocate a relativistic interpretation of the Tenth Amendment.  Governor Perry provided this response to Santorum’s blast:

“You either have to believe in the 10th Amendment or you don’t,” Perry told reporters after a bill signing in Houston Wednesday.  “You can’t believe in the 10th Amendment for a few issues and then [for] something that doesn’t suit you say, ‘We’d rather not have states decide that.’”

You can probably see the problem exposed by this dust-up.  If the Republican Party can’t wash out Santorum, the remaining GOP Presidential hopefuls will begin to appear liberal.


 

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Morgenson Watch Continues

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I was recently reminded of the late Tanta (a/k/a Doris Dungey) of the Calculated Risk blog, who wrote the recurring “Morgenson Watch” for that site.

As soon as I saw the title of Gretchen Morgenson’s most recent article at the top of the Sunday link list at Real Clear Politics, I suspected there would be trouble:  “U.S. Has Binged.  Soon It’ll Be Time to Pay the Tab.”  After reading as far as the first sentence of the second paragraph, my concern was validated.  Here’s how the piece began:

SAY this about all the bickering over the federal debt ceiling:  at least people are talking openly about our nation’s growing debt load.  This $14.3 trillion issue is front and center – exactly where it should be.

Into the fray comes a thoughtful new paper by Joseph E. Gagnon, a senior fellow at the Peterson Institute for International Economics, which studies economic policy.

The Peterson Institute was formerly the Institute for International Economics, founded by C. Fred Bergsten.  It was subsequently taken over by the Peter G. Peterson Foundation, a foundation established and managed by Richard Nixon’s former Commerce Secretary (and co-founder of Blackstone Group), Pete Peterson.  The Peterson Institute is a “think tank” (i.e. propaganda mill) most recognized for its advocacy of “economic austerity” (which usually involves protecting the interests of the wealthy at the expense of the middle class and the impoverished).

Yves Smith of Naked Capitalism, is always quick to rebut the pronouncements of those economists, acting as “hired guns” to spread the gospel of the Peterson Institute.  Needless to say, once Gretchen Morgenson began to parrot the Peterson Institute dogma in her aforementioned article, Yves Smith didn’t hesitate to pounce:

I’m generally a Gretchen Morgenson fan, since she’s one of the few writers with a decent bully pulpit who regularly ferrets out misconduct in the corporate and finance arenas. But when she wanders off her regular terrain, the results are mixed, and her current piece is a prime example. She also sometimes pens articles based on a single source, which creates the risk of serving as a mouthpiece for a particular point of view.

(As an aside, a good example of this process has been Ms. Morgenson’s continuing fixation on “mortgage mania” as a cause of the financial crisis after having been upbraided by Barry Ritholtztwice – for “pushing the Fannie-Freddie CRA meme”.)

After pointing out Morgenson’s uncritical acceptance of the economic model used in the Peterson Institute report (by Gagnon and Hinterschweiger) Yves Smith directed our attention to the very large elephant in the room:  the proven fact that au-scare-ity doesn’t work in our post-financial crisis, anemic-growth milieu.  Ms. Smith focused on this aspect of the Peterson Institute report:

It also stunningly shows the howler of the Eurozone showing improvements in debt to GDP ratios as a result of the austerity programs being implemented. The examples of Latvia and Ireland have demonstrated that austerity measures have worsened debt to GDP ratios, dramatically in both cases, and the same deflationary dynamics look to be kicking in for Spain.

The article repeats the hoary cliche that deficit cuts must be made to “reassure the markets” as in appease the Bond Gods. Gee, how is that working out in Europe, the Peterson Institute’s obedient student?

Ms. Smith supported her argument with this report, which appeared in Bloomberg News on May 27:

European confidence in the economic outlook weakened for a third straight month in May as the region’s worsening debt crisis and surging commodity costs clouded growth prospects.

An index of executive and consumer sentiment in the 17- member euro region slipped to 105.5 from 106.1 in April, the European Commission in Brussels said today. Economists had forecast a drop to 105.7, the median of 27 estimates in a Bloomberg survey showed. The euro-area economy is showing signs of a slowdown as governments toughen austerity measures to lower budget gaps as investors grow increasingly concerned that Greece may default, while oil-driven inflation squeezes household incomes. European manufacturing growth slowed this month….

Be sure to read Yves Smith’s entire essay, which addressed the tired canard about those phantom “bond vigilantes”, etc.  Ms. Smith’s closing paragraph deserves repetition:

But the idea of government spending has become anathema in the US, despite plenty of targets (start with our crumbing infrastructure).  The banks got first dibs on the “fix the economy” money in the crisis, and continue to balk at measures that would shrink a bloated and highly leveraged banking sector down to a more reasonable size.  Evidence already shows the size of the banking sector is constraining growth, yet a full bore campaign is on to gut social spending out of a concern that sometime down the road the size of the government sector will serve as a drag on the economy.  In addition, the banksters need to preserve their ability to go back to the well the next time they crash the markets for fun and profit.  So the attack on deficits is financial services industry ideology, packaged to make it look like it’s good for the little guy. We have too many people who should know better like Morgenson enabling it.

The reader comments to Ms. Smith’s essay were quite interesting.  Many of the readers who have been outraged by Smith’s ongoing rebuttals to the Peterson Institute gospel and other Austerian dogma would do well to familiarize themselves with this bit of legalese:

EXCLUSION OF SOCIAL SECURITY FROM ALL BUDGETS Pub. L. 101-508, title XIII, Sec. 13301(a), Nov. 5, 1990, 104 Stat. 1388-623, provided that:  Notwithstanding any other provision of law, the receipts and disbursements of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund shall not be counted as new budget authority, outlays, receipts, or deficit or surplus for purposes of – (1) the budget of the United States Government as submitted by the President, (2) the congressional budget, or (3) the Balanced Budget and Emergency Deficit Control Act of 1985.

I include myself among those who are “generally” Gretchen Morgenson fans.  Nevertheless, it has become obvious that with Tanta gone, the spirit of “Morgenson Watch” shall endure for as long as the frailties of being a New York Times pundit continue to manifest themselves.


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Formula For Failure

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The Democratic Party is suffering from a case of terminal smugness. Democrats ignored the warning back in 2006, when the South Park television series ran the episode, “Smug Alert”.

I recently came across a dangerous manifestation of  “The Smug” in a recent article written by Ed Kilgore for The New Republic, in which Mr. Kilgore complacently explained “why Obama won’t face a primary challenge”.  We are supposed to forget about the “shellacking” taken by Democrats in the mid-term elections.  We are to ignore the fact that “mischief-making pundits have seized on a couple of polls to burnish their narrative”.  In an act exemplifying what my late father described as “tempting fate”, Mr. Kilgore proceeded to belittle the most serious criticisms of the President, while daring lightening to strike:

Above all, primary challenges to incumbent presidents require a galvanizing issue.  It’s very doubtful that the grab-bag of complaints floated by the Democratic electorate — Obama’s legislative strategy during the health care fight; his relative friendliness to Wall Street; gay rights; human rights; his refusal to prosecute Bush administration figures for war crimes or privacy violations — would be enough to spur a serious challenge.  And while Afghanistan is an increasing source of Democratic discontent, it’s hardly Vietnam, and Obama has promised to reduce troop levels sharply by 2012.

The timing of Kilgore’s supercilious disregard of a challenge to Obama’s presence atop the 2012 ticket could not have been worse.  Thanks to the efforts of the late Mark Pittman, a Freedom of Information Act lawsuit filed by Bloomberg News has forced the Federal Reserve to disclose the details of its bailouts to those business entities benefiting from the Fed’s eleven emergency lending programs initiated as a result of the 2008 financial crisis. The Fed’s massive document dump on December 1 (occurring right on the heels of the WikiLeaks publication of indiscretions by Obama’s Secretary of State — Hillary Clinton) has refocused criticism of what Kilgore described as the President’s “relative friendliness to Wall Street”.  Although Mr. Obama had not yet assumed office in the fall of 2008, after moving into the White House, the new President re-empowered the same cast of characters responsible for the financial crisis and the worst of the bailouts.  The architect of Maiden Lane III (which included a $13 billion gift to Goldman Sachs) “Turbo” Tim Geithner, was elevated from president of the New York Fed to Treasury Secretary.  Ben Bernanke was re-nominated by Obama (over strenuous bipartisan objection) to serve another term as Federal Reserve Chairman.

In the 2008 Democratic Primary elections, voters chose “change” rather than another Clinton administration.  Nevertheless, what the voters got was another Clinton administration.  After establishing an economic advisory team consisting of retreads from the Clinton White House, President Obama has persisted in approaching the 2010 economy as though it were the 1996 economy.  Obama’s creation of a bipartisan deficit commission has been widely criticized as an inept fallback to the obsolete Bill Clinton playbook.  Robert Reich, Labor Secretary for the original Clinton administration recently upbraided President Obama for this wrongheaded approach:

Bill Clinton had a rapidly expanding economy to fall back on, so his appeasement of Republicans didn’t legitimize the Republican world view.  Obama doesn’t have that luxury.  The American public is still hurting and they want to know why.

The Pragmatic Capitalist criticized President Obama’s habitual reliance on members of the Clinton administration as futile attempts to bring about the same results obtained fifteen years ago.  Obama’s appointment of Erskine Bowles (Clinton’s former Chief of Staff) as co-chair of the deficit commission was denounced as a recent example.  Bowles’ platitudinous insistence that it’s time for an “adult conversation about the dangers of this debt” drew this blistering retort:

Yes.  America has a debt problem. We have a very serious household, municipality and state debt crisis that is in many ways similar to what is going on in Europe.   What we absolutely don’t have is a federal government debt problem.  After all, a nation with monopoly supply of currency in a floating exchange rate system never really has “debt” unless that debt is denominated in a foreign currency.  He says this conversation is the:

“exact same conversation every family, every single business, every single state and every single municipality has been having these last few years.”

There is only one problem with this remark.  The federal government is NOTHING like a household, state or municipality.   These entities are all revenue constrained.  The Federal government has no such constraint. We don’t need China to lend us money.  We don’t need to raise taxes to spend money.  When the US government wants to spend money it sends men and women into a room where they mark up accounts in a computer system.   They don’t call China first or check their tax revenues.   They just spend the money.

*   *   *
Mr. Bowles finished his press conference by saying that the American people get it:

“There is one thing I am absolutely sure of.  If nothing else, I know deep down the American people get it.   They know this is the moment of truth”

The American people most certainly don’t get it.  And how can you blame them?  When a supposed financial expert like Mr. Bowles can’t grasp these concepts how could we ever expect the average American to understand it?  It’s time for an adult conversation to begin before this misguided conversation regarding the future bankruptcy of America sends us towards our own “moment of truth” – a 1937 moment.

I hope it doesn’t take “a 1937 moment” for the Democrats to appreciate the very serious risk that the Palin family could be living in the White House in 2013.


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