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Trouble Ahead For Congressional Democrats

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September 2, 2010

Quite a number of commentators have expressed shock in reaction to a recent Gallup Poll pitting a “generic Democrat” against a “generic Republican” for Congress.  As of August 30, the Democrat was trailing by a huge, 10-point margin (51% to 41%).  Gallup described it as “the largest in Gallup’s history of tracking the midterm generic ballot for Congress”.  An examination of the graph reveals that the hypothetical Democrat’s 49-43 lead in mid-July was lost approximately one week later.

There has been widespread speculation as to the cause of this reversal of fortune.  Byron York wrote a piece for The Washington Examiner, which considered a more recent Gallup Poll, pinpointing the particular issues where the Republican position was more popular.  Mr. York then provided his own opinions as to why and how the “generic Democrat” was faltering on some of these issues.  With respect to the economy, York said this:

In October 2006, Democrats held a 53 to 37 lead over Republicans on the issue.  Now, after Democrats passed an $862 billion stimulus bill and touted 2010 as the “summer of recovery,” Republicans hold a 49 to 38 lead.  Democrats have gone from having a 16 point lead to being 11 points behind.

As for the problem of corruption in government, York gave this interpretation of the polling results:

Back in ’06, a large majority — 51 percent to 28 percent — trusted Democrats more than Republicans to deal with the issue.  Now, with Democrats facing high-profile ethics proceedings in Congress, Republicans hold a 38 to 35 lead.

The subject of terrorism was another area where Mr. York offered his opinion on the public’s renewed preference for Republican stewardship:

Just before the ’06 elections, Democrats held a 47 to 42 lead on protecting against terrorism.  Now, after Ft. Hood, Detroit, and the Times Square bombing attempt, Republicans hold a 55 to 31 lead.

I have a different perspective on what has been motivating the voters to favor a “generic Republican” candidate.  Given the format of the poll, I believe the responses are rooted in archetypal motivations rather than the positions and actions of individual candidates on particular issues.  For example, consider the timing:  Late July was when President Obama was taking his umpteenth vacation and playing golf for the zillionth time.  Democrats from the Senate (more so than Congressional Dems) had just sold out to Wall Street by completely eviscerating the so-called, financial “reform” bill, making it as much of a farce as their healthcare “reform” artifice.  The two “reform” shams were widely perceived as a betrayal of the Democratic Party “base” by both houses of Congress as well as the Obama administration.  The aggregate impact of those two legislative hoaxes impacted the public’s understanding of the extent to which corruption and economic irresponsibility were apparent in their Democratic leaders.  I don’t believe it’s so much a problem with excessive spending (i.e. stimulus efforts) as it is with plain-old sleaziness.  “Countrywide Chris” Dodd’s skullduggery is more likely seen as a serious problem than the antics of Charlie Rangel and company.

President Obama’s inability to take a decisive position on anything – his constant attempts to travel up the fork in the road – are recognized as weak leadership, which is then reinforced as a trait of all Democrats.  The constant golfing and vacationing during this crucial period have helped augment the image of a dilettante — as well as an ineffective and/or unconcerned official.  As a result, voters are less confident that these leaders can protect them from terrorism.  When a terrorist succeeds, that event magnifies the perceived weakness, regardless of whether and how many other attempted terrorist schemes may have been thwarted under the current administration.

Meanwhile, pollster Nate Silver has come along to tell us that we’re all reading too much into those recent Gallup Polls.  In an article for The New York Times, Mr. Silver benefited the rest of us with his unique Brainiac perspective:

The reasons for the Democrats’ decline are, as we say in the business, overdetermined.  That is, there are no lack of hypotheses to explain it:  lots of causes for this one effect.  The economy?  Sure.  Unpopular legislation like health care?  Yep.  Some “bad luck” events like the Gulf Oil spill?  Mmm-hmm.  The new energy breathed into conservatives by the Tea Party movement?  Uh-huh.

And this hardly exhausts the theories.  An inexperienced White House that has sometimes been surprisingly inept at coping with the 24/7 news media cycle?  The poor optics associated with Democrats having had a filibuster-proof majority in theory, but not always in practice?  All of the above.

These causes can’t be so easily untangled on the basis of polling evidence; there’s really no basis on which to evaluate the competing hypotheses.  This is particularly so given that different types of political events aren’t isolated from one another — health care reform might have been unpopular, for instance, but the reason for its unpopularity may ultimately have been the economy.

For this reason, we can be skeptical of two types of analysis: claiming that Factor X definitely isn’t contributing to the Democrats’ troubles, and asserting that it definitely is.

Regardless of the cause, the Democrats are headed for serious trouble in November.  As far as I’m concerned:  It serves them right.




Not Getting It Done

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August 9, 2010

Are the Democrats trying to lose their majorities in both the Senate and the House in November?  Their two biggest accomplishments, the healthcare “reform” bill and the financial “reform” bill haven’t really impressed the electorate.  According to a Gallup Poll, voter reaction to the passage of the “Affordable Healthcare Act” is 49 percent contending that the bill is a “good thing” as opposed to 46 percent who believe it is a “bad thing”, with 5 percent undecided.  Criticism of the “Wall Street Reform and Consumer Protection Act of 2010” has been widespread, as I have previously discussed here, here and here.  The latest critique of the bill came from Professor Thomas F. Cooley, of the Stern School of Business at NYU.  His Forbes article entitled, “The Politics Of Regulatory Reform”, was based on this theme:

The awareness of how close we came to paralyzing the financial system created an opportunity to do something truly significant to make the system safer and more in tune with the needs of our economy.  Sadly, because all things in Washington are political, we fumbled the ball.

Rahm Emanuel’s infamous doctrine, “You never want a serious crisis to go to waste” is apparently being disregarded by Rahm Emanuel and company at The White House.  Of course, the entire economic catastrophe has provided the Obama administration with a boatload of crises – most of which have already gone to waste.  For example, consider this fiasco-in-progress:  The “small business” sector plays such an important role in keeping Americans employed, a bill to facilitate lending to small businesses has been sponsored by Senator Mary Landrieu (D-Louisiana).  An August 7 report by Sharon Bernstein of the Los Angeles Times provided this update on the status of the measure:

The small business loan assistance ran into trouble in the Senate when members from both parties began attaching amendments to support their favored causes.

The ineffective efforts of Senate Democrats are unfairly souring public opinion on their more unified counterparts in the House.  In attempt to redeem the image of Congressional Dems, House Speaker Nancy Pelosi scheduled a special session of Congress for Tuesday, August 10, (an interruption of their August recess) to pass a $26-billion bill to avert public employee layoffs.

With the passing of time, it has become more obvious that President Obama’s biggest mistake since taking office was his weak leadership in promoting the economic stimulus effort.  Many commentators have expressed the opinion that Christina Romer’s resignation as chair of the President’s Council of Economic Advisors was based on her frustration with the under-funded stimulus program.

I recently wrote an “I told you so” piece, referencing my July, 2009 prediction that it would eventually become necessary for President Obama to introduce a second stimulus bill because the $787 billion proposal would prove inadequate.  At his blog, liberal economist Paul Krugman similarly reminded readers of his prediction about the consequences for failing to pass an effective stimulus bill:

So here’s the picture that scares me:  It’s September 2009, the unemployment rate has passed 9 percent, and despite the early round of stimulus spending it’s still headed up.  Mr. Obama finally concedes that a bigger stimulus is needed.

But he can’t get his new plan through Congress because approval for his economic policies has plummeted, partly because his policies are seen to have failed, partly because job-creation policies are conflated in the public mind with deeply unpopular bank bailouts.  And as a result, the recession rages on, unchecked.

The reality has turned out even worse than Krugman’s prediction because we are now approaching September 2010 – an election year – and the unemployment rate is being understated at 9.5 percent.  The conflation Krugman discussed has manifested itself in the narrative of the Tea Party movement.  In September of 2009, I discussed why Obama should have been listening to Australian economist Steve Keen, who – by that point – was saying basically the same thing:

So giving the stimulus to the debtors is a more potent way of reducing the impact of a credit crunch — the opposite of the advice given to Obama by his neoclassical advisers.

Economist Joseph Stiglitz recently provided us with this update about how the global financial crisis is affecting Australia in August of 2010:

Kevin Rudd, who was prime minister when the crisis struck, put in place one of the best-designed Keynesian stimulus packages of any country in the world.  He realized that it was important to act early, with money that would be spent quickly, but that there was a risk that the crisis would not be over soon.  So the first part of the stimulus was cash grants, followed by investments, which would take longer to put into place.

Rudd’s stimulus worked:  Australia had the shortest and shallowest of recessions of the advanced industrial countries.

Meanwhile, President Obama and the Democrats have decided to utilize a mid-term campaign strategy of assessing all of the blame for our current financial chaos on President George W. Bush.  Criticism of this approach has been voiced by people outside of the Republican camp.  Frank Rich of The New York Times lamented the lack of message control exercised by the Democrats and their ill-advised focus on the Bush era:

But rather than wait for miracles or pray that Bushphobia will save the day, Democrats might instead start playing the hand they’ve been dealt.  Elections, the cliché goes, are about the future, not the past.  At the very least they’re about the present.

At this point in American history, it’s becoming more obvious that the two-party system has served no other purpose than to perpetuate the careers of blundering grafters.  The voting public must accept the reality that the only way it will be honestly and effectively represented in Washington is by independent candidates.  The laws that keep those independents off the ballots must be changed.




Simon Johnson In The Spotlight

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October 12, 2009

An ever-increasing number of people are paying close attention to a gentleman named Simon Johnson.  Mr. Johnson, a former chief economist at the International Monetary Fund, now works at MIT as Professor of Entrepreneurship at the Sloan School of Management.  His Baseline Scenario website is focused on the financial and economic crises.  At the Washington Post website, he runs a blog with James Kwak called The Hearing.  Last spring, Johnson turned more than a few heads with his article from the May 2009 issue of The Atlantic, “The Quiet Coup”, in which he explained that what happened in America during last year’s financial crisis and what is currently happening with our economic predicament is “shockingly reminiscent” of events experienced during financial crises in emerging market nations (i.e. banana republics and proto-capitalist regimes).

On October 9, Joe Nocera of The New York Times began his column by asking Professor Johnson what he thought the Wall Street banks owed America after receiving trillions of dollars in bailouts.  Johnson’s response turned to Wednesday’s upcoming fight before the House Financial Services Committee concerning the financial reforms proposed by the Obama administration:

“They can’t pay what they owe!” he began angrily.  Then he paused, collected his thoughts and started over:  “Tim Geithner saved them on terms extremely favorable to the banks.  They should support all of his proposed reforms.”

Mr. Johnson continued, “What gets me is that the banks have continued to oppose consumer protection.  How can they be opposed to consumer protection as defined by a man who is the most favorable Treasury Secretary they have had in a generation?  If he has decided that this is what they need, what moral right do they have to oppose it?  It is unconscionable.”

This week’s battle over financial reform has been brewing for quite a while.  Back on May 31, Gretchen Morgenson and Dan Van Natta wrote a piece for The New York Times entitled, “In Crisis, Banks Dig In for Fight Against Rules”:

Hotly contested legislative wars are traditional fare in Washington, of course, and bills are often shaped by the push and pull of lobbyists — representing a cornucopia of special interests — working with politicians and government agencies.

What makes this fight different, say Wall Street critics and legislative leaders, is that financiers are aggressively seeking to fend off regulation of the very products and practices that directly contributed to the worst economic crisis since the Great Depression.  In contrast, after the savings-and-loan debacle of the 1980s, the clout of the financial lobby diminished significantly.

In case you might be looking for a handy scorecard to see which members of Congress are being “lobbied” by the financial industry and to what extent those palms are being greased, The Wall Street Journal was kind enough to provide us with an interactive chart.  Just slide the cursor next to the name of any member of the House Financial Services Committee and you will be able to see how much generosity that member received just during the first quarter of 2009 from an entity to be affected by this legislation.  The bars next to the committee members’ names are color-coded, with different colors used to identify specific sources, whose names are displayed as you pass over that section of the bar.  This thing is a wonderful invention.  I call it “The Graft Graph”.

On October 9, Simon Johnson appeared with Representative Marcy Kaptur (D – Ohio) on the PBS program, Bill Moyers Journal.  At one point during the interview, Professor Johnson expressed grave doubts about our government’s ability to implement financial reform:

And yet, the opportunity for real reform has already passed. And there is not going to be — not only is there not going to be change, but I’ll go further.  I’ll say it’s going to be worse, what comes out of this, in terms of the financial system, its power, and what it can get away with.

*  *   *

BILL MOYERS:  Why have we not had the reform that we all knew was being — was needed and being demanded a year ago?

SIMON JOHNSON:  I think the opportunity — the short term opportunity was missed.  There was an opportunity that the Obama Administration had.  President Obama campaigned on a message of change.  I voted for him.  I supported him.  And I believed in this message.  And I thought that the time for change, for the financial sector, was absolutely upon us.  This was abundantly apparent by the inauguration in January of this year.

SIMON JOHNSON:  And Rahm Emanuel, the President’s Chief of Staff has a saying.  He’s widely known for saying, ‘Never let a good crisis go to waste’.  Well, the crisis is over, Bill.  The crisis in the financial sector, not for people who own homes, but the crisis for the big banks is substantially over.  And it was completely wasted.  The Administration refused to break the power of the big banks, when they had the opportunity, earlier this year.  And the regulatory reforms they are now pursuing will turn out to be, in my opinion, and I do follow this day to day, you know.  These reforms will turn out to be essentially meaningless.

Sound familiar?  If you change the topic to healthcare reform, you end up with the same bottom line:  “These reforms will turn out to be essentially meaningless.”  The inevitable watering down of both legislative efforts can be blamed on weak, compromised leadership.  It’s one thing to make grand promises on the campaign trail — yet quite another to look a lobbyist in the eye and say:  “Thanks, but no thanks.”  Toward the end of the televised interview, Bill Moyers had this exchange with Representative Kaptur:

BILL MOYERS:   How do we get Congress back?  How do we get Congress to do what it’s supposed to do?  Oversight.  Real reform.  Challenge the powers that be.

MARCY KAPTUR:  We have to take the money out.  We have to get rid of the constant fundraising that happens inside the Congress.  Before political parties used to raise money; now individual members are raising money through the DCCC and the RCCC.  It is absolutely corrupt.

As we all know, our system of legalized graft goes beyond the halls of Congress.  During his Presidential campaign, Barack Obama received nearly $995,000 in contributions from the people at Goldman Sachs.  The gang at 85 Broad Street is obviously getting its money’s worth.



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