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© 2008 – 2013 John T. Burke, Jr.

Crazy Time Returns

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It’s time once again from the politicians and other attention-seekers from the lunatic fringe to return to the spotlight.  Politicians who Wingnutintend on running for the Presidency in 2016 are already preparing to launch their primary campaigns.  Because 2014 is a “midterm” year, the only voters who can be expected to vote in November will be the political zealots.  Despite the fact that Congressional terms last only two years, the cretins in Congress are confident that the only people who will bother to vote in their gerrymandered districts will be the dependable hard core.

Unfortunately, we cannot assume that Americans will wise-up and respond to the recent plea from Dallas Federal Reserve President Richard Fisher, by going to their local polling places to address the problem.

Meanwhile those intent on becoming the Republican Party’s 2016 Presidential nominee are busy currying favor with the two men who dictate the party’s agenda:  Roger Ailes and Rush Limbaugh.  As a result, there is no such thing as too extreme in crafting a campaign message to voters.  With the midterms’ bringing increased attention to the lunatic fringe voters, politicians who are posturing themselves as Presidential candidates are busy preaching to the crazy choir.  This effort usually involves making personal appearances with the most polarizing, controversial individuals who haunt the airwaves with outrageous statements.  The logical consequence of this practice brought the Republicans their “Ted Nugent Moment” this past week.

In their desperation to find a “rock star” who could serve as a dependable spokesperson for Republican political candidates, somebody came up with the idea of appointing Ted Nugent to that role.  Nugent has “jammed” with fellow quasi-musician, Mike Huckabee and he has taken the stage with countless politicians from the far-right.

During the past week, a good deal of attention was focused on some choice remarks made by Nugent during a January 18 interview with guns.com.  During the course of the interview, Nugent infamously said:

I have obviously failed to galvanize and prod, if not shame enough Americans to be ever-vigilant not to let a Chicago communist-raised, communist-educated, communist-nurtured subhuman mongrel like the Acorn community organizer – gangster Barack Hussein Obama – to weasel his way into the top office of authority in the United States of America.

Given the fact that Nugent himself bears a rather close physical resemblance to our simian ancestors, there was more than a little irony here.

After a number of news outlets seized upon Nugent’s remarks, those Republicans who know that support from the lunatic fringe is no guaranteed ticket to the White House were quick to put some distance between themselves and Nugent.

Nevertheless, as I pointed out on October 16, because Roger Ailes has made it the mission of Fox News to promote the wingnuts of the GOP, is the party becoming marginalized?  Will we soon hear from Nugent apologists who believe that there are elections to be won by speaking out in favor of some patriot who was forced to apologize for speaking his mind?

On the other hand, will the Republican Party’s “Ted Nugent Moment” be the first in a series of such events which motivate would-be Republican Presidential candidates to distance themselves from extermists?

Meanwhile, the Democrats appear resigned to accepting Hillary Clinton as their 2016 Presidential nominee.  We can assume that Hillary’s sycophants in the news media will attempt to portray anyone who dares to oppose her as some sort of “extremist”.  The cult of people I referred to in 2008 as the Hillarologists – those who believe that Hillary Clinton offers them the only hope of  seeing a woman in the White House during their lifetimes – will be ready for a fight.

Will another women rise up to challenge Hillary for the Democratic nomination?  I hope so.



Talking To The Money

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By now, you’ve heard about it dozens of times.  Mitt Romney is taking heat for remarks he made at a private fundraiser in Boca about the 47 percent of Americans who won’t vote for him because they enjoy taking handouts from the government.  In response to the dustup, the Romney camp has focused on remarks made by Barack Obama during the 2008 campaign about people who “cling to their guns and religion”.  Obama’s discussion with “Joe the Plumber” about “spreading the wealth around” has been cited as another example of Obama’s favoritism of one population segment over another.  Nevertheless, as Brit Hume explained to Greta on Fox News, the Republicans’ focus on those remarks did not work during the 2008 campaign and there is no reason to believe that it will gain any more traction during the current election cycle.

Actually, there is a better example of Obama’s expression of contempt for a bloc of voters during a fundraiser, which is somewhat analogous the situation involving Romney in Boca.  During the mid-term election campaign in September of 2010, Obama managed to alienate a good number of his own supporters during an event at the home of the appropriately-named Rich Richman.  The event demonstrated how politicians – from either party – will speak more candidly and cynically about the “little people” when talking to their fat cat contributors.  Nevertheless, the Republicans will not likely exploit Obama’s remarks at the Rich-man event.  Of course, Obama supporters would be reminded that their candidate is not a significantly different alternative to Romney.  However, by the same token, Romney supporters would be reminded that their candidate does not offer a significantly distinct alternative to Obama.  As a result, the Republicans will never use it.

Let’s jump into the time machine and look back at how I discussed the Richman event on September 20, 2010:

President Obama recently spoke at a $30,000-per-plate fundraising event for the Democratic National Committee at the home of Richard and Ellen Richman.  (Think about that name for a second:  Rich Richman.)  Mr. Richman lives up to his surname and resides in the impressive Conyers Farm development in Greenwich, Connecticut.  Christopher Keating of the Capitolwatch blog at courant.com provided us with the President’s remarks, addressed to the well-heeled attendees:

.   .   .   Democrats, just congenitally, tend to get – to see the glass as half empty.   (Laughter.)  If we get an historic health care bill passed – oh, well, the public option wasn’t there.  If you get the financial reform bill passed –  then, well, I don’t know about this particularly derivatives rule, I’m not sure that I’m satisfied with that.  And gosh, we haven’t yet brought about world peace and – (laughter.)  I thought that was going to happen quicker.  (Laughter.) You know who you are.  (Laughter.)

The tactlessness of those remarks was not lost on Glenn Greenwald of Salon.com.  Mr. Greenwald transcended the perspective of an offended liberal to question what could possibly have been going on in the mind of the speaker:

What’s most striking about Obama’s comments is that there is no acceptance whatsoever of responsibility (I’ve failed in some critical areas; we could have/should have done better).  There’s not even any base-motivating vow to fight to fix these particular failures (we’ll keep fighting for a public option/to curb executive power abuses/to reduce lobbyist and corporate control of our political process).  Instead, he wants you to know that if you criticize him — or even question what he’s done (“well, I don’t know about this particular derivatives rule, I’m not sure that I’m satisfied with that”) – it’s your fault:  for being some sort of naive, fringe-leftist idiot who thought he would eliminate the Pentagon and bring about world peace in 18 months, and/or because you simply don’t sufficiently appreciate everything he’s done for you because you’re congenitally dissatisfied.

*    *    *

Sitting at a $30,000 per plate fundraising dinner and mocking liberal critics as irrational ingrates while wealthy Party donors laugh probably does wonders for bruised presidential egos, but it doesn’t seem to be a particularly effective way to motivate those who are so unmotivated.  Then again, Barack Obama isn’t actually up for election in November, so perhaps the former goal is more important to him than the latter.  It certainly seems that way from these comments.

Of course, liberals weren’t the only Obama supporters who felt betrayed by the President’s abandonment of his campaign promises.  In fact, Obama owed his 2008 victory to those independent voters who drank the “Hope and Change” Kool-Aid.

Glenn Greenwald devoted some space from his Salon piece to illustrate how President Obama seems to be continuing the agenda of President Bush.  I was reminded of the quote from former Attorney General John Ashcroft in an article written by Jane Mayer for The New Yorker.  When discussing how he expected the Obama Presidency would differ from the Presidency of his former boss, George W. Bush, Ashcroft said:

“How will he be different?  The main difference is going to be that he spells his name ‘O-b-a-m-a,’ not ‘B-u-s-h.’ ”

One important difference that Ashcroft failed to anticipate was that Bush knew better than to disparage his own base.

By the onset of the 2012 Presidential Campaign, many of Obama’s 2008 supporters had become ambivalent about their former hero.  As I pointed out on August 13, once Romney had named Paul “Marathon Man” Ryan as his running mate (rather than Ohio Senator Rob Portman), he provided Democrats with a bogeyman to portray a Romney Presidency as a threat  to middle-class Americans:

As the Democratic Party struggled to resurrect a fraction of the voter enthusiasm seen during the 2008 campaign, Mitt Romney came along and gave the Democrats exactly what they needed:  a bogeyman from the far-right wing of the Republican Party.  The 2012 campaign suddenly changed from a battle against an outsourcing, horse ballet elitist to a battle against a blue-eyed devil who wants to take away Medicare.  The Republican team of  White and Whiter had suddenly solved the problem of Democratic voter apathy.

Nevertheless, some degree of disillusionment experienced by Obama’s supporters continues.  Consider the final paragraph from a September 20 essay by Robert Reich:

And even if Obama is reelected, more hard work begins after Inauguration Day – when we must push him to be tougher on the Republicans than he was in his first term, and do what the nation needs.

In other words, it will be up to the voters  to make sure they aren’t betrayed by Obama as they were during his first term.

The Republican insistence on attempting to portray Obama as a “Socialist” rather than a disingenuous poseur has served no other purpose than to invite an eloquent smackdown from the namesake of the GOP’s Patron Saint.

Romney’s failure to win the Presidential Election will be more the result of ignored opportunities than the result of gaffes.


 

Wisconsin Bogeyman Will Help Obama

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Mitt Romney’s choice of Paul Ryan as his running mate will do more so solve President Obama’s voter apathy problem than it will do to boost the enthusiasm of Republican voters.  While the Tea Party branch of the Republican Party complains that “Massachusetts moderate” Romney is not a significant alternative to Barack Obama, the Democratic Party’s base complains the bank-centric Obama administration is indistinguishable from a Romney administration.  Criticism of the Obama administration’s domestic surveillance program comes from across the political spectrum.  One need look no further than the Business Insider to find disappointment resulting from the Obama administration’s efforts to turn America into a police state.

As the Democratic Party struggled to resurrect a fraction of the voter enthusiasm seen during the 2008 campaign, Mitt Romney came along and gave the Democrats exactly what they needed:  a bogeyman from the far-right wing of the Republican Party.  The 2012 campaign suddenly changed from a battle against an outsourcing, horse ballet elitist to a battle against a blue-eyed devil who wants to take away Medicare.  The Republican team of White and Whiter had suddenly solved the problem of Democratic voter apathy.

I recently expressed the opinion that the only logical candidate for Romney to select as his running mate would have been Ohio Senator Rob Portman.  In the wake of Romney’s selection of Paul Ryan, a number of commentators have emphasized that Portman would have been a smarter choice.  Polling wiz Nate Silver recently voiced a similar opinion:

Politics 101 suggests that you play toward the center of the electorate.  Although this rule has more frequently been violated when it comes to vice-presidential picks, there is evidence that presidential candidates who have more “extreme” ideologies (closer to the left wing or the right wing than the electoral center) underperform relative to the economic fundamentals.

Various statistical measures of Mr. Ryan peg him as being quite conservative.  Based on his Congressional voting record, for instance, the statistical system DW-Nominate evaluates him as being roughly as conservative as Representative Michele Bachmann of Minnesota.

*   *   *

Because of these factors, a recent analysis I performed placed Mr. Ryan 10th from among 14 potential vice-presidential picks in terms of his immediate impact on the Electoral College.  If Mr. Romney wanted to make the best pick by this criterion, he would have been better off to choose an alternative like Senator Rob Portman of Ohio, or Gov. Bob McDonnell of Virginia.

Nate Silver was not alone with his premise that Romney’s choice of Ryan was made out of desperation.  At the Right Condition blog, Arkady Kamenetsky not only emphasized that the Ryan candidacy will help galvanize Obama’s liberal base – he went a step further to demonstrate that the Ryan budget is a “smoke and mirrors” pretext for preserving the status quo.  After highlighting Ryan’s support of TARP, Medicare Part D and No Child Left Behind, Arkady Kamenetsky performed a detailed comparison of the Ryan budget with the Obama budget to demonstrate a relatively insignificant difference between the two.  Kamenetsky concluded the piece with these observations:

So this of course begs the question, why did Romney do this?  Why select a VP that will provide such easy ammunition for the Left with virtually no reward?  The answer is quite simple.  Romney and Ryan represent exactly the same problem even if one appears to be a moderate and the other appears to be an epic fiscal warrior.  The Republican party fights for and pushes through the status-quo.  The images you see up above and the Ryan record is the status-quo.  No doubt about it.

Yet Romney is counting on the ignorance of Republican base to run with the facade of Ryan’s conservatism.  If that illusion holds then Ryan’s image will invariably boost Romney’s own image as many will view Romney’s decision as courageous and bold despite Obama’s willingness to distort Ryan’s budget.  In other words, you are witnessing a most fantastic and glamorous circus.  A bad Hollywood movie, except that ending will be quite real and not something you can pause or turn off.

*   *   *
Romney and Ryan will lose in November and the image of the heartless Conservative killing granny will resonate with America, the tragedy of course is that neither Ryan or Romney are willing to actually cut anything!  The tragedy will become even more amusing as we will witness a nasty and partisan fight further dividing Americans as they fight and defend differing policies with the exact same results.

During the coming weeks, watch for efforts by the mainstream news media to portray this election as a close contest – in their own desperate attempts to retain an audience for what will probably turn out to be the least exciting Presidential campaign since Reagan vs. Carter.


Buddy Roemer Struggles to Become Visible

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His crusade against corruption in politics has made him the invisible Presidential candidate.  The mainstream news media have no interest in him.  His anti-status quo message is probably the reason why.  Andrew Kreig of Washington’s Blog reported that Buddy Roemer appeared with reformed ex-convict / former lobbyist Jack Abramoff before a cozy, standing-room-only audience of 120, convened on March 22 by the non-partisan Committee for the Republic.  For those unfamiliar with Buddy Roemer, Kreig provided this summary of the candidate’s background and political perspective:

“I don’t think the answer is the Republican Party,” said the former two-term governor of Louisiana, who became a Republican in 1991 and returned to politics last year after a 16-year absence.  Earlier, he served four terms as a Democratic congressman beginning in the 1980, running unopposed in his last three races.

“And,” he continued, “I don’t think the answer is the Democratic Party.”  He says both parties are controlled by special interests and political action committees (PACs), whose checks he has refused to take since his first race three decades ago.

*   *   *

The big knock on Roemer is that he lacks high poll numbers and name recognition, doubtless because GOP debate-organizers excluded him.  Yet he was doing better in certain key criteria than some other candidates invited repeatedly for nationally broadcast debates.  Roemer concluded that his basic problem was that GOP chieftains did not want him to describe his reform message.

Therefore, Roemer’s campaign is now focused on winning the Americans Elect nomination to be on the November ballot in all 50 states.  Then he wants 15% support in poll numbers so he will be included in debates with the Democratic and Republican nominees.

On December 12, I discussed some of the criticism directed at Americans Elect.  Most notably, Richard Hansen, a professor at the University of  California at Irvine Law School, wrote an essay for Politico, which was harshly critical of Americans Elect.  Professor Hansen concluded the piece with these observations:

But the biggest problem with Americans Elect is neither its secrecy nor the security of its election.  It is the problems with internal fairness and democracy.  To begin with, according to its draft rules, only those who can provide sufficient voter identification that will satisfy the organization – and, of course, who have Internet access – will be allowed to choose the candidate.  These will hardly be a cross section of American voters.

In addition, an unelected committee appointed by the board, the Candidates Certification Committee, will be able to veto a presidential/vice presidential ticket deemed not “balanced” – subject only to a two-thirds override by delegates.

It gets worse.  Under the group’s bylaws, that committee, along with the three other standing committees, serves at the pleasure of the board – and committee members can be removed without cause by the board.  The board members were not elected by delegates; they chose themselves in the organization’s articles of incorporation.

The bottom line:  If Americans Elect is successful, millions of people will have united to provide ballot access not for a candidate they necessarily believe in – like a Ross Perot or Ralph Nader – but for a candidate whose choice could be shaped largely by a handful of self-appointed leaders.

Despite the veneer of democracy created by having “delegates” choose a presidential candidate through a series of Internet votes, the unelected, unaccountable board of Americans Elect, funded by secret money, will control the process for choosing a presidential and vice presidential candidate – who could well appear on the ballot in all 50 states.

Roemer’s ability to survive this questionable nomination process is just the first hurdle.  Even if he wins that nomination, he will be confronted by critics of Americans Elect to defend that organization’s controversial nomination procedure.  Nevertheless, if none of his opponents from that nomination campaign step up to oppose the result, Roemer might just breeze through any questions concerning that issue.

One interesting way to get a look at Buddy Romer is to read his Twitter feed – (@BuddyRoemer).  Roemer’s staff members occasionally post tweets about such subjects as the candidate’s desire to restore the “Made in America” label so that consumers would have the choice to buy products from manufacturers who employ their neighbors.  Here are some of Buddy’s own tweets:

If Santorum and Gingrich don’t get the GOP nomination, will they return to lobbying?  Or keep their records clean for 2016?

“Few men have virtue to withstand the highest bidder.” – George Washington

RT “@maximosis:  The more people wake up from their tacit acceptance of the corporatocracy, the more apparent these abuses will become.”

“The people do not control America, the big checks do.”

From 1998-2010, the Financial, Insurance, Real Estate sectors spent $6.8 BILLION in lobbying & campaign donations.

Millions $$ in earmarks go to top Congressional campaign donors.  Here are some striking examples >>http://thelobbyisteffect.com/2012/02/28/earmarks-are-a-microcosm-of-how-government-works/ #corruption

At his campaign website, supporters are encouraged to post tweets to Romer’s Twitter feed in addition to making contributions within the self-imposed, $100 limit.  At the “Blog” section, there are links to videos of the candidate’s television appearances.  A visit to the “Issues” section of his website will reveal Roemer’s position on banking reform:

As a small business banker, Buddy Roemer is proud to have chosen smart investments that kept his bank on solid footing while others were taking bailouts from the government to remain solvent.  Banking is too important to be left to the bankers, but Buddy recognizes that regulation of the industry must be a fine balance between too much and too little.

That sure sounds better than Romney’s “regulations kill jobs” theme and Obama’s track record of giving the banks everything they want, with revolving doors connecting the West Wing to Citigroup and Goldman Sachs.

The big question will be whether (as the Americans Elect nominee) Romer could accumulate the support from 15% of poll respondents so that he could participate in the Presidential debates with Obama and Romney.  It sure would be interesting to see him on the stage with those two.  The public might actually take interest in the process.



 

Keeping The Megabank Controversy On Republican Radar

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It was almost a year ago when Lou Dolinar of the National Review encouraged Republicans to focus on the controversy surrounding the megabanks:

“Too Big to Fail” is an issue that Republicans shouldn’t duck in 2012.  President Obama is in bed with these guys.  I don’t know if breaking up the TBTFs is the solution, but Republicans need to shame the president and put daylight between themselves and the crony capitalists responsible for the financial meltdown.  They could start by promising not to stock Treasury and other major economic posts with these, if you pardon the phase, malefactors of great wealth.

One would expect that those too-big-to-fail banks would be low-hanging fruit for the acolytes in the Church of Ayn Rand.  After all, Simon Johnson, former Chief Economist for the International Monetary Fund (IMF), has not been the only authority to characterize the megabanks as intolerable parasites, infesting and infecting our free-market economy:

Too Big To Fail banks benefit from an unfair, nontransparent, and dangerous subsidy scheme.  This isn’t a market.  It’s a government-backed distortion of historic proportions.  And it should be eliminated.

Last summer, former Kansas City Fed-head, Thomas Hoenig discussed the problems created by what he called, “systemically important financial institutions” – or “SIFIs”:

… I suggest that the problem with SIFIs is they are fundamentally inconsistent with capitalism.  They are inherently destabilizing to global markets and detrimental to world growth.  So long as the concept of a SIFI exists, and there are institutions so powerful and considered so important that they require special support and different rules, the future of capitalism is at risk and our market economy is in peril.

So why aren’t the Republican Presidential candidates squawking up a storm about this subject during their debates?  Mike Konczal lamented the GOP’s failure to embrace a party-wide assault on the notion that banks could continue to fatten themselves to the extent that they pose a systemic risk:

When it comes to “ending Too Big To Fail” it actually punts on the conservative policy debates, which is a shame.  There’s a reference to “Explore reforms now being considered by the U.K. to make the unwinding of its biggest banks less risky for the broader economy” but it is sort of late in the game for this level of vagueness on what we mean by “unwinding.”  That unwinding part is a major part of the debate.  Especially if you say that you want to repeal Dodd-Frank and put into place a system for taking down large financial firms – well, “unwinding” the biggest financial firms is what a big chunk of Dodd-Frank does.

Nevertheless, there have been occasions when we would hear a solitary Republican voice in the wilderness.  Back in November,  Jonathan Easley of The Hill discussed the views of Richard Shelby (Ala.), the ranking Republican on the Senate Banking Committee:

“Dr. Volcker asked the other question – if they’re too big to fail, are they too big to exist?” Shelby said Wednesday on MSNBC’s “Morning Joe.”  “And that’s a good question.  And some of them obviously are, and some of them – if they don’t get their house in order – they might not exist.  They’re going to have to sell off parts to survive.”

*   *   *

“But the question I think we’ve got to ask – are we better off with the bigger banks than we were?  The [answer] is no.”

This past weekend, Timothy Haight wrote an inspiring piece for the pro-Republican Orange County Register, criticizing the failure of our government to address the systemic risk resulting from the “too big to fail” status of the megabanks:

The concentration of assets in a few institutions is greater today than at the height of the 2008 meltdown.  Taxpayers continue to be at risk as large financial institutions have forgotten the results of their earlier bets.  Legislation may have aided members of Congress during this election cycle, but it has done little to ward off the next crisis.

While I am a champion for free-market capitalism, I believe that, in some instances, proactive regulation is a necessity.  Financial institutions should be heavily regulated due to the basic fact that rewards are afforded to the financial institutions, while the taxpayers are saddled with the risk.  The moral hazard is alive and well.

So far, there has been only one Republican Presidential candidate to speak out against the ongoing TBTF status of a privileged few banks – Jon Huntsman.  It was nice to see that the Fox News website had published an opinion piece by the candidate – entitled, “Wall Street’s Big Banks Are the Real Threat to Our Economy”.  Huntsman described what has happened to those institutions since the days of the TARP bailouts:

Taxpayers were promised those bailouts would be a one-time, emergency measure.  Yet today, we can already see the outlines of the next financial crisis and bailouts.

The six largest financial institutions are significantly bigger than they were in 2008, having been encouraged to snap up Bear Stearns and other competitors at bargain prices.

These banks now have assets worth over 66% of gross domestic product – at least $9.4 trillion – up from 20% of GDP in the 1990s.

*   *   *

The Obama and Romney plan simply appears to be to cross our fingers and hope no Too-Big-To-Fail banks fail on their watch – a stunning lack of leadership on such a critical economic issue.

As president, I will break up the big banks, end future taxpayer bailouts, and restore capitalist principles – competition and creative destruction – to our financial sector.

As of this writing, Jon Huntsman has been the only Presidential candidate – including Obama – to discuss a proposal for ending the TBTF situation.  Huntsman has tactfully cast Mitt Romney in the role of the “Wall Street status quo” candidate with himself appearing as the populist.  Not even Ron Paul – with all of his “anti-bank” bluster, has dared approach the TBTF issue (probably because the solution would involve touching his own “third rail”:  regulation).  Simon Johnson had some fun discussing how Ron Paul was bold enough to write an anti-Federal Reserve book – End the Fed – yet too timid to tackle the megabanks:

There is much that is thoughtful in Mr. Paul’s book, including statements like this (p. 18):

“Just so that we are clear: the modern system of money and banking is not a free-market system.  It is a system that is half socialized – propped up by the government – and one that could never be sustained as it is in a clean market environment.”

*   *   *

There is nothing on Mr. Paul’s campaign website about breaking the size and power of the big banks that now predominate (http://www.ronpaul2012.com/the-issues/end-the-fed/).  End the Fed is also frustratingly evasive on this issue.

Mr. Paul should address this issue head-on, for example by confronting the very specific and credible proposals made by Jon Huntsman – who would force the biggest banks to break themselves up.  The only way to restore the market is to compel the most powerful players to become smaller.

Ending the Fed – even if that were possible or desirable – would not end the problem of Too Big To Fail banks.  There are still many ways in which they could be saved.

The only way to credibly threaten not to bail them out is to insist that even the largest bank is not big enough to bring down the financial system.

It’s time for those “fair weather free-marketers” in the Republican Party to show the courage and the conviction demonstrated by Jon Huntsman.  Although Rick Santorum claims to be the only candidate with true leadership qualities, his avoidance of this issue will ultimately place him in the rear – where he belongs.


 

More Favorable Reviews For Huntsman

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In my last posting, I focused on how Jon Huntsman has been the only Presidential candidate to present responsible ideas for regulating the financial industry (Obama included).  Since that time, I have read a number of similarly favorable reactions from respected authorities and commentators who reviewed Huntsman’s proposals .

Simon Johnson is the former Chief Economist for the International Monetary Fund (IMF) from 2007-2008.  He is currently the Ronald A. Kurtz Professor of Entrepreneurship at the MIT Sloan School of Management.  At his Baseline Scenario blog, Professor Johnson posted the following comments in reaction to Jon Huntsman’s policy page on financial reform and Huntsman’s October 19 opinion piece for The Wall Street Journal:

More bailouts and the reinforcement of moral hazard – protecting bankers and other creditors against the downside of their mistakes – is the last thing that the world’s financial system needs.   Yet this is also the main idea of the Obama administration.  Treasury Secretary Tim Geithner told the Fiscal Times this week that European leaders “are going to have to move more quickly to put in place a strong firewall to help protect countries that are undertaking reforms,” meaning more bailouts.  And this week we learned more about the underhand and undemocratic ways in which the Federal Reserve saved big banks last time around.  (You should read Ron Suskind’s book, Confidence Men: Wall Street, Washington, and the Education of a President, to understand Mr. Geithner’s philosophy of unconditional bailouts; remember that he was president of the New York Fed before become treasury secretary.)

Is there really no alternative to pouring good money after bad?

In a policy statement released this week, Governor Jon Huntsman articulates a coherent alternative approach to the financial sector, which begins with a diagnosis of our current problem:  Too Big To Fail banks,

“To protect taxpayers from future bailouts and stabilize America’s economic foundation, Jon Huntsman will end too-big-to-fail. Today we can already begin to see the outlines of the next financial crisis and bailouts. More than three years after the crisis and the accompanying bailouts, the six largest U.S. financial institutions are significantly bigger than they were before the crisis, having been encouraged by regulators to snap up Bear Stearns and other competitors at bargain prices”

Mr. Geithner feared the collapse of big banks in 2008-09 – but his policies have made them bigger.  This makes no sense.  Every opportunity should be taken to make the megabanks smaller and there are plenty of tools available, including hard size caps and a punitive tax on excessive size and leverage (with any proceeds from this tax being used to reduce the tax burden on the nonfinancial sector, which will otherwise be crushed by the big banks’ continued dangerous behavior).

The goal is simple, as Mr. Huntsman said in his recent Wall Street Journal opinion piece: make the banks small enough and simple enough to fail, “Hedge funds and private equity funds go out of business all the time when they make big mistakes, to the notice of few, because they are not too big to fail.  There is no reason why banks cannot live with the same reality.”

The quoted passage from Huntsman’s Wall Street Journal essay went on to say this:

These banks now have assets worth over 66% of gross domestic product—at least $9.4 trillion, up from 20% of GDP in the 1990s.  There is no evidence that institutions of this size add sufficient value to offset the systemic risk they pose.

The major banks’ too-big-to-fail status gives them a comparative advantage in borrowing over their competitors thanks to the federal bailout backstop.

Far be it from President Obama to make such an observation.

Huntsman’s policy page on financial reform included a discussion of repealing the Dodd-Frank law:

More specifically, real reform means repealing the 2010 Dodd-Frank law, which perpetuates too-big-to-fail and imposes costly and mostly useless regulations on innocent smaller banks without addressing the root causes of the crisis or anticipating future crises.  But the overregulation cannot be addressed without ending the bailout subsidies, so that is where reform must begin.

Beyond that, Huntsman’s Wall Street Journal piece gave us a chance to watch the candidate step in shit:

Once too-big-to-fail is fixed, we could then more easily repeal the law’s unguided regulatory missiles, such as the Consumer Financial Protection Bureau.  American banks provide advice and access to capital to the entrepreneurs and small business owners who have always been our economic center of gravity.  We need a banking sector that is able to serve that critical role again.

American banks also do a lot to screw their “personal banking” customers (the “little people”) and sleazy “payday loan”-type operations earn windfall profits exploiting those workers whose incomes aren’t enough for them to make it from paycheck-to-paycheck.  The American economy is 70 percent consumer-driven.  American consumers have always been “our economic center of gravity” and the CFPB was designed to protect them.  Huntsman would do well to jettison his anti-CFPB agenda if he wants to become President.

Mike Konczal of the Roosevelt Institute, exhibited a similarly “hot and cold” reaction to Huntsman’s proposals for financial reform.  What follows is a passage from a recent posting at his Rortybomb blog, entitled “Huntsman Wants to Repeal Dodd-Frank so he can Pass Title VII of Dodd-Frank”:

So we need to get serious about derivatives regulation by bringing transparency to the over-the-counter derivatives market, with serious collateral requirements.  This was turned into law as the Wall Street Transparency and Accountability Act of 2010, or Title VII of Dodd-Frank.

So we need to eliminate Dodd-Frank in order to pass Dodd-Frank’s resolution authority and derivative regulations – two of the biggest parts of the bill – but call it something else.

You can argue that Dodd-Frank’s derivative rules have too many loopholes with too much of the market exempted from the process and too much power staying with the largest banks.  But those are arguments that Dodd-Frank doesn’t go far enough, where Huntsman’s critique of Dodd-Frank is that it goes way too far.

Huntsman should be required to explain the issues here – is he against Dodd-Frank before being for it?  Is his Too Big To Fail policy and derivatives policy the same as Dodd-Frank, and if not how do they differ?  It isn’t clear from the materials he has provided so far how the policies would be different, and if it is a problem with the regulations in practice how he would get stronger ones through Congress.

I do applaud this from Huntsman:

RESTORING RULE OF LAW

President Huntsman’s administration will direct the Department of Justice to take the lead in investigating and brokering an agreement to resolve the widespread legal abuses such as the robo-signing scandal that unfolded in the aftermath of the housing bubble.  This is a basic question of rule of law; in this country no one is above the law. There are also serious issues involving potential violations of the securities laws, particularly with regard to fair and accurate disclosure of the underlying loan contracts and property titles in mortgage-backed securities that were sold.  If investors’ rights were abused, this needs to be addressed fully.  We need a comprehensive settlement that puts all these issues behind us, but any such settlement must include full redress of all legal violations.

*   *   *

And I will note that the dog-whistles hidden inside the proposal are towards strong reforms (things like derivatives reform “will also allow end-users to negotiate better terms with Wall Street and in turn lower trading costs” – implicitly arguing that the dealer banks have too much market power and it is the role of the government to create a fair playing field).  Someone knows what they are doing.  His part on bringing down the GSEs doesn’t mention the hobbyhorse of the Right that the CRA and the GSEs caused the crisis, which is refreshing to see.

If Republican voters are smart, they will vote for Jon Huntsman in their state primary elections.  As I said last time:  If Jon Huntsman wins the Republican nomination, there will be a serious possibility that the Democrats could lose control of the White House.


 

Here Comes Huntsman

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The bombastic non-Romney Republican Presidential hopeful, Herman Cain, has been providing us with a very entertaining meltdown.  He has attempted to silence the handful of women, who came forward to accuse him of sexual harassment, with threatened defamation suits.  Nevertheless, a woman who claimed to have been his paramour for thirteen years – Ginger White – possessed something the other women lacked:  documentation to back up her claim.  She has produced phone records, revealing that Cain was in contact with her at all hours of the day and night.  Cain’s humorously disingenuous response:  He was providing advice to Ms. White concerning her financial problems.  When I first heard about Ginger White’s allegations, I assumed that she was motivated to tell her story because she felt outraged that Cain had been trying to cheat on her by making inappropriate advances toward those other women.

The next non-Romney candidate to steal the Republican spotlight was Newt Gingrich.  Aside from the fact that Newt exudes less charisma than a cockroach, he has a “baggage” problem.  Maureen Dowd provided us with an entertaining analysis of the history professor’s own history.  The candidate and his backers must be counting on that famously short memory of the voting public.  The biggest problem for Gingrich is that even if he could win the Republican nomination, he will never get elected President.

Meanwhile, Romney’s fellow Mormon, Jon Huntsman, is gaining momentum in New Hampshire.  Huntsman has something the other Republicans lack:  the ability to win support from Independent and Democratic voters.  The unchallenged iron fists of Rush Limbaugh and Fox News, currently in control of the Republican party, have dictated to the masses that the very traits which give Huntsman a viable chance at the Presidency – are negative, undesirable characteristics.

Conservative commentator Ross Douthat of The New York Times, took a hard look at the mismanaged Huntsman campaign:

Huntsman is branded as the Republican field’s lonely moderate, of course, which is one reason why he’s currently languishing at around 3 percent in the polls.

*   *   *

Huntsman has none of Romney’s health care baggage, and unlike the former Massachusetts governor, he didn’t spend the last decade flip-flopping on gun rights, immigration and abortion.

*   *   *

At the same time, because Huntsman is perceived as less partisan than his rivals, he has better general election prospects.  The gears and tumblers of my colleague Nate Silver’s predictive models give Huntsman a 55 percent chance of knocking off the incumbent even if the economy grows at a robust 4 percent, compared to Romney’s 40 percent.

*   *   *

On issues ranging from foreign affairs to financial reform, Huntsman’s proposals have been an honorable exception to the pattern of gimmickry and timidity that has characterized the Republican field’s policy forays.

But his salesmanship has been staggeringly inept.  Huntsman’s campaign was always destined to be hobbled by the two years he spent as President Obama’s ambassador to China.  But he compounded the handicap by introducing himself to the Republican electorate with a series of symbolic jabs at the party’s base.

As Ross Douthat pointed out, New Hampshire will be Huntsman’s “make-or-break” state.  The candidate is currently polling at 11 percent in New Hampshire and he has momentum on his side.  Rachelle Cohen of the Boston Herald focused on Huntsman’s latest moves, which are providing his campaign with some traction:

Monday Huntsman introduced a financial plan aimed at cutting the nation’s biggest banks and financial institutions down to size so that they are no longer “too big to fail” and, therefore, would never again become a burden on the American taxpayer.

“There will be no more bailouts in this country,” he said, because taxpayers won’t put up with that kind of strategy again.  “I would impose a fee [on the banks] to protect the taxpayers until the banks right-size themselves.”

The strategy, of course, is likely to be music to the ears of anyone who despised not just the bailouts but those proposed Bank of America debit card fees.  And, of course, it gives Huntsman a good opening to make a punching bag of Mitt Romney.

“If you’re raising money from the big banks and financial institutions, you’re never going to get it done,” he said, adding, “Mitt Romney is in the hip pocket of Wall Street.”  Lest there be any doubt about his meaning.

That issue also happens to be the Achilles heel for President Obama.  Immediately after he was elected, Obama smugly assumed that Democratic voters would have to put up with his sellout to Wall Street because the Republican party would never offer an alternative.  Huntsman’s theme of cracking down on Wall Street will redefine the Huntsman candidacy and it could pose a serious threat to Obama’s reelection hopes.  Beyond that, as Ms. Cohen noted, Huntsman brings a unique skill set, which distinguishes him from his Republican competitors:

But it’s on foreign policy that Huntsman – who served not only in China and Singapore but as a deputy U.S. trade representative with a special role in Asia – excels, and not just because he’s fluent in Mandarin.

This is the guy anyone would feel comfortable having answer that proverbial 3 a.m. phone call Hillary Clinton once talked about.

If that phone call is coming from China – Huntsman won’t have to wake up an interpreter to conduct the conversation in Chinese.

Any other Republican candidate will serve as nothing more than a doormat for Obama.  On the other hand, if Jon Huntsman wins the Republican nomination, there will be a serious possibility that the Democrats could lose control of the White House.


 

Tempus Fugit

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If a Democrat wants to challenge Barack Obama for the Democratic Party’s Presidential nomination, time is quickly running out.  It takes a while to put a campaign together.  Aside from rounding-up enough money to challenge an incumbent – who is expected to have a $1 billion war chest – there are other logistic challenges.  For starters, a campaign team must be assembled, along with a network across the states.  Messaging strategy and a campaign theme must be established.  It’s a huge deal.  Nevertheless, if the Democrats believe that they can just sit back and watch Obama swagger his way to re-election – they’re going to be in for a big disappointment.

As I pointed out in my last posting, Obama’s problems have expanded beyond weak polling numbers.  The Solyndra scandal can be expected to receive at least as much television coverage as the Casey Anthony “Tot Mom” trial.  Ron Suskind’s new book about the President’s handling of the economy, Confidence Men, has provided us with an abundance of insights on Obama’s leadership failings.  Those observations will reverberate throughout the 2012 campaign until Election Day.

Obama’s mishandling of the economic crisis is useful only as evidence of the President’s ineptitude in the domestic policy arena.  Has Obama done any better with his foray into foreign policy?  Steve Clemons provided us with the answer to that question by way of an article which appeared in The Atlantic.  The essay is also available at his own blog, The Washington Note.  Mr. Clemons provided a great analysis of Obama’s influence on the Israel – Palestine peace process:

Obama continues to parrot the line that peace can only be achieved between the “two parties”, that only they can really bring this global ulcer to a close, when they decide to negotiate.  The fact is that the status quo of frozen negotiations is benefiting the dominant, settlement-expanding Israel — and the US, in promising to veto at the UN Security Council Palestine’s bid for official state recognition, is playing guarantor to one side, undermining the aspirations of others on the other side of the equation.  What if the US had said to Kosovo — no statehood, no recognition from the US until you resolve all of your ongoing issues with Russia?

*   *   *

Obama is assuring the further emasculation and perhaps final demise of Palestine’s moderates.  Obama is also treating the Israelis and Palestinians as if they are on equal footing, equally able to concede to each other’s demands.  What Obama doesn’t get is that a substantial portion of Israel’s population loves not having a deal and never wants one.  They are OK with a peace process to nowhere — but that is not acceptable for the less-endowed, less-powerful Palestinian side.  Hamas is in the rejectionist corner as well, seeing its fortunes rise as earnest efforts at peace go nowhere.

The world watched Barack Obama lose a battle in the last two years with Israel Prime Minister Benjamin Netanyahu over Israeli settlement expansion in contested and occupied territories.  This is like the Soviet Union having lost a war of wills at the height of its power with Cuba.

The client state trumped the President of the United States — telegraphing to many around the world that President Obama ultimately didn’t have the courage of his convictions and wasn’t able to deploy power and statecraft to achieve the outlines of what he called for in his lofty rhetoric.  Obama’s UN General Assembly speech has done nothing to reverse the impression that Netanyahu is the alpha dog in the relationship with President Obama — and this is truly tragic and geostrategically consequential.

Well, at least Obama is consistent  .  .  .  equally inept and spineless on foreign policy issues as he is when challenged with domestic policy matters.

Will any Democrat step up to prevent the Republican Party from taking over the White House (any more than it already has with Obama in there)?  The President’s apologists can no longer dismiss criticism of this administration by characterizing it as propaganda from Fox News.  Matt Taibbi’s recent remark about Obama exemplifies how an increasing number of Americans – from across the political spectrum – feel about our current President:

I just don’t believe this guy anymore, and it’s become almost painful to listen to him.

Wake up, Democrats!  Time is of the essence.


Obama Will Lose In 2012

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The criticisms voiced by many of us during President Obama’s first year in office are finally beginning to register with the general public.  Here’s an observation I made on December 14, 2009:

As we approach the conclusion of Obama’s first year in the White House, it has become apparent that the Disappointer-in-Chief has not only alienated the Democratic Party’s liberal base, but he has also let down a demographic he thought he could take for granted:  the African-American voters.  At this point, Obama has “transcended race” with his ability to dishearten loyal black voters just as deftly as he has chagrined loyal supporters from all ethnic groups.

On June 11 2010, Maureen Dowd gave us some insight as to what it was like on Obama’s campaign plane in 2008:

The press traveling with Obama on the campaign never had a lovey-dovey relationship with him.  He treated us with aloof correctness, and occasional spurts of irritation.  Like many Democrats, he thinks the press is supposed to be on his side.

The patrician George Bush senior was always gracious with reporters while conveying the sense that what we do for a living was rude.

The former constitutional lawyer now in the White House understands that the press has a role in the democracy.  But he is an elitist, too, as well as thin-skinned and controlling.  So he ends up regarding scribes as intrusive, conveying a distaste for what he sees as the fundamental unseriousness of a press driven by blog-around-the-clock deadlines.

The voting public is just beginning to digest the sordid facts of the Solyndra scandal.  Rest assured that the Republican Party will educate even the most intellectually challenged of those “low information voters” as to every detail of that rotten deal.  The timing of the Solyndra exposé couldn’t be worse for Team Obama.

On August 15, the Gallup Organization reported that during the week of August 8-14, Obama’s job approval rating dropped to 40% – the lowest it had been since he assumed office.  Another Gallup poll, conducted with USA Today during August 15-18 revealed that, for the first time, a majority of Americans – 53% – blame Obama for the nation’s economic problems.  Forty-seven percent still say he is “not much” (27%) or “not at all” (20%) to blame.

A new McClatchy-Marist poll, taken on September 14-15, revealed that Obama’s sinking popularity has placed him just 5 points ahead of non-candidate Sarah Palin (49-44 percent).  The Miami Herald noted that the poll results show the President just 2 points ahead of Mitt Romney (46-44):

Overall, the gains among Republicans “speak to Obama’s decline among independents generally, and how the middle is not his right now,” said Lee Miringoff, director of the Marist College Institute for Public Opinion, which conducted the national survey.

“This will require him to find ways to either win back the middle or energize his base in ways that hasn’t happened so far,” Miringoff said.

By a margin of 49 percent to 36 percent, voters said they definitely plan to vote against Obama, according to the poll.  Independents by 53 percent to 28 percent said they definitely plan to vote against him.

With that sentiment permeating the electorate a little more than a year before the general election, most Americans think Obama won’t win a second term.

By 52 percent to 38 percent, voters think he’ll lose to the Republican nominee, whoever that is.  Even among Democrats, 31 percent think the Republican nominee will win.

The most devastating development for Obama has been the public reaction to Ron Suskind’s new book about the President’s handling of the economy, Confidence Men.  Berkeley economics professor, Brad DeLong has been posting and discussing excerpts of the book at his own website, Grasping Reality With Both Hands.  On September 19, Professor DeLong posted a passage from Suskind’s book, which revealed Obama’s expressed belief (in November of 2009) that high unemployment was a result of productivity gains in the economy.  Both Larry Summers (Chair of the National Economic Council) and Christina Romer (Chair of the Council of Economic Advisers) were shocked and puzzled by Obama’s ignorance on this subject:

“What was driving unemployment was clearly deficient aggregate demand,” Romer said.  “We wondered where this could be coming from.  We both tried to convince him otherwise.  He wouldn’t budge.”

Because of Obama’s willful refusal to heed the advice of his own economic team, our nation’s unemployment problem has persisted at levels of 9% and above (with worse to come).  As Ron Suskind remarked in that passage:

The implications were significant.  If Obama felt that 10 percent unemployment was the product of sound, productivity-driven decisions by American business, then short-term government measures to spur hiring were not only futile but unwise.

There you have it.  Despite the efforts of Obama’s apologists to blame Larry Summers or others on the President’s economic team for persistent unemployment, it wasn’t simply a matter of “the buck stopping” on the President’s desk.  Obama himself has been the villain, hypocritically advocating a strategy of “trickle-down economics” – in breach of his campaign promise to do the exact opposite.

Reactions to the foregoing passage from Confidence Men – appearing as comments to Brad DeLong’s September 19 blog entry – provide a taste of how the majority of Obama’s former supporters will react when they learn the truth about this phony politician.  Here are a few samples:

moron said…

.  .  .   This disgraceful shill for global capital has destroyed the Democratic party for a generation.

kris said…

The President sure does come across as awfully arrogant, dogmatic and not very smart from this excerpt (and as someone who does not like to listen to his advisors- especially the female ones.).

mike said…

Wow. Romer was oh so right. And Obama was oh, so so wrong… What a pathetic display of arrogance and bad leadership.      .   .   .

Th said…

And I was always joking about Obama as the “Manchurian Candidate” from the U of Chicago. Productivity? Really?

Dave said…

I’ve lost any last shred of respect for Mr. O.

Now that Confidence Men and the Solyndra scandal are getting increased publicity, we can expect that large numbers of voters will be losing their “last shred of respect” for Mr. Obama.  It’s past time for the Democratic Party to face reality:  If they seriously want to retain control of the Executive branch – someone will have to ask Obama to step aside.  DNC Chair, Debbie Wasserman-Schultz is obviously not up to this task.


 

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.