Economy

Christie, Economy

What Does It Mean

Posted on by christian

Mindless Protest…or Something More

What to make of the “occupy” protests?

Is it the fad of the moment; the “trust fund” demographic playing at protest against the consumer and corporate culture they quietly and passionately embrace? It can be hard to be credible as part of the 99% while sipping a double macchiato from Starbucks and resist the autumn breeze in your Patagonia fleece.

On the other hand, it’s hard to warm to a Treasury Secretary in a Democratic administration who hasn’t always paid his taxes and seems intent on insulating Wall Street from real scrutiny and real reform. Beyond sullying parks from New York to Portland, we must credit the 99% with raising the issue of income disparity to the national conversation.

But what to make of a “movement” with no goals and no leader? Maybe it’s just mindless anger addressed toward a political and business culture that seems more and more remote from the daily existence of many Americans or it may just be – may just be – the vanguard of a new progressive movement; the type of which has always come in our history on the heels of capitalism behaving badly.

Three examples, all in the news in the last two weeks, that should take even the cozy and comfortable down to the occupied zone.

Former New Jersey Senator and Gov. Jon Corzine’s political afterlife found him settling in at a “futures brokerage firm” that recently declared bankruptcy after it was disclosed that $633 million of the firm’s client’s money had gone missing. I can understand accidentally dropping a $20 bill, but $633 million? More than 1,000 employees of MF Global were cut loose on Friday. Corzine, a Democrat who once ran Goldman Sachs, obviously knows both the ways of Wall Street and Capitol Hill. He may soon know the ways of a federal crossbar hotel.

As Robert Mintz reported in The Guardian, the MF Global meltdown is most likely another example of an inadequate regulatory system that failed to assess the risks that greed will run.

“One of the hallmarks of the financial crisis was the degree to which firms became so highly leveraged that a run on the bank became almost inevitable,” Mintz wrote. “The level that MF Global was permitted to leverage itself should have raised red flags, but didn’t.”

Greed has also been batting clean-up in the epic demise of the one-time blue chip franchise that used to be the Los Angeles Dodgers. Like the Corzine caper, Frank McCourt’s looting of the Dodgers has yet to be fully documented, but it seems pretty clear he turned the team’s cash drawer into a personal slush fund. McCourt will eventually lose his team, Dodger fans will undoubtedly lose another season and the sleazy owner will walk. Being greedy is rarely a crime, apparently.

That brings us to Nancy Pelosi. The House minority leader and former Speaker of the House has some explaining to do today after a truly devastating piece last night on the CBS broadcast 60 Minutes. Correspondent Steve Kroft, reminding us of the old Mike Wallace, asked Pelosi how she could justify having what is in effect insider stock information that allowed her and her husband to benefit handsomely on an initial public offering. Kroft’s report also examined the benefits of insider information in the hands of current Speaker John Boehner and House Financial Service Chairman Spencer Bachus.

None of the lawmakers, of course, sat for an interview to explain themselves, but the bumbling answer Pelosi gave when Kroft confronted her during a news conference was a classic of the “I don’t know what you’re talking about, but you must be wrong” variety. The lawmaker’s ultimate defense, again of course, is that the insider information members of Congress have access to, and can trade upon, is not illegal. It’s just wrong.

It can be difficult to see a popular uprising as it unfolds. It took us a while to catch on to the Arab Spring. When the end came, the Soviet Union collapsed much faster than anyone could have predicted. The backlash against the greed and excess of the Gilded Age of the 1890’s unfolded over more than a decade through the administrations of three presidents – Theodore Roosevelt, Taft and Wilson. The raw speculation and lack of regulation in the 1920’s ushered in the regulatory reforms of the New Deal.

We’re still sorting out – and will be for a long time – the real consequences of the financial and housing meltdown of 2008. I’m not sure I completely agree with those, like Columbia economist Jeffrey Sachs, who contend we are on the cusp of a new progressive era that will, as Sachs wrote Sunday in the New York Times, will usher in an age of renewal.

I also don’t know if the Occupy crowd watches 60 Minutes or cares a fig about the future of the Dodgers, and I don’t have a clue as to whether they have any substance to offer to the national debate, but they do seem to have identified simple and time-honored truths – greed is not good and a modern representative democracy will not function well when those in positions of real power behave so very badly.

In another context, I’m reminded of the famous words of the lawyer who finally put Sen. Joe McCarthy in his place. Joseph Welch, with guts and eloquence, glared at McCarthy during the famous televised hearings and asked, “Senator. You’ve done enough. Have you no sense of decency, sir? At long last, have you left no sense of decency?”

A good question for Corzine, McCourt, Pelosi, et al. Indeed, they have no sense of decency.

 

2012 Election, Christie, Economy, Minnick

Lost Generation

Posted on by christian

The Fall of the American Dream

While Herman Cain talks about his “9-9-9” plan to restore the economy and Mitt Romney touts a 59 point plan to do the same, while President Obama’s most recent plan can’t even command enough respect to get a vote in the Senate, the glass half empty crowd wonders if we’ll capable of solving any problem – economic or political.

Case in point: new research from the Washington Post and Bloomberg News paints the American mindset in gloomy colors. As Chris Cilliza notes in the Post, Forty four percent of the folks surveyed “said that it wouldn’t make much difference for their family’s financial situation if President Obama won a second term or if a Republican was elected. Among independents, nearly six in ten (58 percent) said no matter what happens in the 2012 there would likely be little change in their own financial situation.”

Put another way, many, many Americans say we’re doomed to endless political deadlock and prolonged economic stagnation. Welcome to America in the 21st Century.

In a sober piece in last Sunday’s New York Times, David Leonhardt offered the assessment that the current economic – and I would add political – turmoil may be even worse than it seems. In Leonhardt’s view, even during the Great Depression, Americans were inventing, innovating, building things. Not so much now.

“Even before the financial crisis began, the American economy was not healthy,” Leonhardt wrote. “Job growth was so weak during the economic expansion from 2001 to 2007 that employment failed to keep pace with the growing population, and the share of working adults declined. For the average person with a job, income growth barely exceeded inflation.”

Flat wages, not enough jobs, rapidly growing income disparity, a troubled education system, aging infrastructure, debt and default – the litany of American decline, but does it have to be?

Ask those folks in the Post and Bloomberg poll what the problems are and they know – no one has the answer, its all politics. As Cizilla wrote: “The wild swings in the electorate are directly attributable to a belief that neither party really knows what it’s doing and so once one side is given a chance for two years and nothing changes, voters — especially independents — are more than willing to give the other side a try. And then when that side produces few results, the cycle repeats itself.”

We are slipping into a year of political campaigning that, based upon what we’ve seen so far, is likely to produce a mostly irrelevant and depressing debate about the country’s real problems and what the real solutions might be.

A little over a year from now someone will be elected. Someone always is. But the current level of debate – and the almost total inability of our politics to engage on what is really important – brought to mind a piece I read years ago in the Wall Street Journal. The Journal’s Dorothy Rabinowitz won a Pulitzer Prize for commentary for a column she wrote in 2001 entitled “The Campaign Speech You’ll Never Hear.”

Here’s a key sentence, Rabinowitz quoting a politician who, sadly, doesn’t exist on the presidential campaign trail today.

“I would say they’ve lowered the bar a lot for the highest office in the land, and I’m terrified to think how much, when I let myself think about it at all. My opponent and I — this is the best America can do? One of us is going to stand up and be sworn in as the new president of the United States? I suppose others in my shoes have had the same feeling, so maybe it’ll all work out.”

Maybe. The glass seems half empty.

 

2012 Election, American Presidents, Andrus, Baseball, Biden, Britain, Christie, Economy, FDR, Lincoln, Minnick, Obama, Politics, Reagan

Trying Times

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Leadership? Not So Much

At pivotal moments in American history it has often been the case that the right leader somehow emerged from the chaos of the moment and the nation was able to pass through trying times and set course for a better future.

Presidents Franklin Pierce and James Buchanan lacked the vision and courage to head off the steady drift in the direction of sectional strife in the 1850’s and, while there is a good argument to be made that Abraham Lincoln’s election in 1860 was the tipping point toward civil war, there is hardly any disputing that Lincoln brought to the presidency the powers of leadership that ultimately saved the country.

Likewise Franklin D. Roosevelt proved to be the right leader at the worse time in the 20th Century. FDR restored confidence and, I’m convinced, reformed American capitalism enough to save it. He was a leader made for his times.

There are a handful of other examples in our history. Andrew Jackson, with all his flaws, may qualify for a leadership award. More recently Ronald Reagan, invoked by every current GOP candidate for president as the leadership gold standard, had some of the FDR in him. He was a confidence builder when the nation needed a big dose. Washington stands, of course, in a special class of right leader at a trying time.

It’s hard to escape the reality that the nation is at another such crossroads and our politics and politicians hardly seem up to the task. The litany of problems is almost too big to fathom: stagnant economy, double-dip recession looming, crippling unemployment, increasing poverty and income gap, a national and international debt crisis, declining quality of public education, the need for entitlement reform, the European fiscal crisis, the uncertainty and unpredictability of the Arab Spring, climate change, terrorism, even the Red Sox have melted down.

The thinking man’s conservative, David Brooks, identified the heart of the problem in his New York Times column yesterday: “the ideologues who dominate the political conversation are unable to think in holistic, emergent ways. They pick out the one factor that best conforms to their preformed prejudices and, like blind men grabbing a piece of the elephant, they persuade themselves they understand the whole thing.”

The Democrats are all about tax increases on the most wealthy and increased spending to stimulate consumer demand. The Republicans can’t shake the gospel of tax cuts, controlling the deficit and whacking at regulation. What both sides miss is that we need to do all of that and more.

It may well be recorded at the supreme moment of missed opportunity in the Obama Administration was the president’s failure to grasp and champion the most important political and policy work to come out of Washington in a long, long time – the recommendations of Simpson-Bowles Commission. In the end, the discarding of the work of the former Wyoming Senator, Alan Simpson, and the Clinton-era White House Chief of Staff, Erskine Bowles, will be recorded as a failure of leadership. The bi-partisan commission called for doing it all – tax and entitlement reform, spending cuts, deficit reduction. The Commission prescribed exactly what every thinking American knows in their partisan heart must be done. Obama punted and Congressional Republicans did as well.

And meanwhile the country is hungry – desperate even – for real leadership. Many Republicans salivate over the prospect that New Jersey Gov. Chris Christie will turn his consistent “no” into an announcement that he’ll enter the GOP battle and it’s easy to see why. Christie delivered an inspirational speech last night at Republican hallowed ground, the Reagan Library in Simi Valley. His indictment of Washington leadership will surely resonate with Democrats and Republicans who long for leadership from someone.

“In Washington,” Christie said, “we have watched as we drift from conflict to conflict, with little or no resolution.

“We watch a president who once talked about the courage of his convictions, but still has yet to find the courage to lead.

“We watch a Congress at war with itself because they are unwilling to leave campaign style politics at the Capitol’s door.  The result is a debt ceiling limitation debate that made our democracy appear as if we could no longer effectively govern ourselves.”

Christie specifically jabbed President Obama for failing to embrace the Simpson-Bowles work noting pointedly that it was “a report the president asked for himself.”

I’m not at all convinced Chris Christie is the Lincoln or FDR we need, but I am convinced that genuinely honest talk about the enormous problems facing the country, with an unstinting focus on big solutions to big problems rather than what David Brooks calls “proposals that are incommensurate with the problem at hand,” would be the beginning of the leadership the country needs and hungers for.

The electorate is deeply unsettled. The evidence floats about everywhere you look. A new CNN survey says only 15% of Americans have confidence in their government; an all-time low. The Coca-Cola chief says China is a better business bet than the USA. There is an unmistakable sense that American power and influence is in decline.

Is anyone up to the task? Can anyone see beyond the next election? I’m betting if someone could look that far ahead – see ahead to real leadership – it would be the best possible strategy to win.

 

American Presidents, Andrus, Baseball, Christie, Economy, FDR, Obama, Politics

Confidence

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When Its Lost Can it be Found Again?

I’ve had a good deal of fun over the last few weeks teaching a college-level political science course at Boise State University.

The course is built around the politics and policy of the New Deal period in the 1930’s and we focus a good deal on the leadership of Franklin D. Roosevelt (and others) as well as the lasting impact of those challenging and dramatic days on life here in the American West.

For a young adult in college today the 1930’s might as well be the 1730’s. It is ancient history, but considering the economic and political challenges we face today, I continue to be struck by the parallels between the political and policy discussion that took place in the 1930’s and the on-going debate we’re having in the country right now.

To prepare for a recent class, I went back and read and then listened to the very first Fireside Chat Franklin Roosevelt delivered in March of 1933. FDR, inaugurated eight days earlier, had closed the nation’s banks and gotten Congress to pass emergency banking legislation to facilitate the orderly re-opening of the nation’s financial institutions. He talked to the nation by radio on Sunday evening, March 12. The historic speech was a model of clarity, description and, most importantly, confidence building. If you have never read or heard the speech, it is worth your time. The brief talk stands the test of time as an example of the power and importance of effective political rhetoric.

Roosevelt patiently explained during his talk how banks work, why some banks had failed and why some Americans had made a run on banks to convert their deposits to currency or gold. He then explained what he had done and why and that Congress had supported his bold efforts to stabilize the banking system. He then explained how banks would begin to re-open.

Here is one of the more memorable sections of the speech:

“I hope you can see, my friends, from this essential recital of what your Government is doing that there is nothing complex, nothing radical in the process.

“We have had a bad banking situation. Some of our bankers had shown themselves either incompetent or dishonest in their handling of the people’s funds. They had used money entrusted to them in speculations and unwise loans. This was, of course, not true of the vast majority of our banks, but it was true in enough of them to shock the people of the United States, for a time, into a sense of insecurity and to put them into a frame of mind where they did not differentiate, but seemed to assume that the acts of a comparative few had tainted them all. And so it became the Government’s job to straighten out this situation and do it as quickly as possible. And that job is being performed.”

I thought of Roosevelt’s simple, elegant words as I listened to Barack Obama speak to Congress this week. In a fundamentally important way, Obama has the same challenge FDR faced during that banking crisis in 1933. He needs to begin to restore confidence – in himself, the government and in the country’s ability to move ahead.

It’s not at all clear he made much headway.

Obama did use his speech to educate, the approach FDR mastered. At one point, for example, he said in speaking of the reality of cutting spending:

“So here’s the truth.  Around two-thirds of our budget is spent on Medicare, Medicaid, Social Security, and national security.  Programs like unemployment insurance, student loans, veterans’ benefits, and tax credits for working families take up another 20%.  What’s left, after interest on the debt, is just 12 percent for everything else. That’s 12 percent for all of our other national priorities like education and clean energy; medical research and transportation; food safety and keeping our air and water clean.”

A good approach, I think, but maybe too late to be effective. I kept feeling that the President should have given this speech two years ago, or at the beginning of the mostly senseless recent debate over the debt ceiling. The words Obama spoke seem more directed at the Congress than at the American public and that comes as most Republicans, as the Washington Post’s Dana Milbank points out, no longer take Obama seriously. As for the public, the polls say they are losing or have lost confidence.

Credibility, confidence and competence are the Big Three of politics. Once the notion settles with voters that a politician lacks one or more of the Big Three, it’s pretty close to impossible for that person to get back in command. Just ask Jimmy Carter or Lyndon Johnson or George W. Bush during his last two years.

The brilliance of Franklin Roosevelt was contained in his ability to connect and explain and the abiding sense that he had confidence so the country could have confidence, too. He never lost the confidence of a sizable majority of the American people, so never had to try to regain it. Maybe that is the true measure of greatness in politics.

 

Baseball, Biomass, Christie, Climate Change, Economy, Energy, Kennan, Nebraska, North Dakota, Politics

Oil and Water

Posted on by christian

Very Strange Bedfellows

I don’t normally pay a great deal of attention to the political opinions of Hollywood personalities. So I confess I missed the initial news reports that the actress Daryl Hannah, perhaps best known for playing the mermaid in Ron Howard’s movie Splash, was arrested a few days back for protesting the proposed Keystone XL Pipeline from Canada to the Gulf of Mexico.

The lovely Ms. Hannah, talented too, for all I know, isn’t the real story here, however. The politics of jobs is at work. in this international pipeline.

The pipeline project is designed to carry oil recovered from the Alberta tar sands to refineries in Oklahoma and Texas and the pipeline, its purpose and route, has been increasingly in the news lately. The U.S. State Department recently released an environmental impact statement that said, in essence, the project could be completed without major environmental problems. Needless to say, not everyone, including Ms. Hannah, agrees.

Most major environmental groups have expressed disappointment that the Obama Administration seems on the verge of approving the pipeline. The President’s mostly natural allies in the environmental movement are also torqued that the administration recently and abruptly dropped new Environmental Protection Agency (EPA) rules related to smog. These two events, separate and linked at the same time, really constitute Exhibit A that the political imperative to grow the economy and create jobs, particularly during a period of prolonged economic turmoil, eventually trump most every other consideration.

My old boss former Idaho Gov. and Interior Secretary Cecil Andrus, no slouch when it comes to possessing an environmental ethic, used to say: “First, you must making a living and then you must have a living that is worthwhile.” That is just another way of saying that without a job you don’t have much time or ability to enjoy the great outdoors, clean air and water. Needless to say not everyone in public life agrees about the political priority of jobs first. For some being “pure” on the environment is simply a higher calling that transcends all else, including finding some way to jump start a stumbling economy.

Put former Vice President Al Gore in this category. Gore recently, and perhaps entirely predictably,  came out in opposition to the Canada to the Gulf pipeline. The motivations of the Republican Governor of Nebraska Dave Heineman, who says he also opposes the pipeline because of its route through Nebraksa, appear more interesting. Republicans don’t normally oppose pipelines.

Daryl Hannah may look better getting arrested, but Republican Heineman and Democrat Gore as an anti-pipeline dance team may have a lot more impact on this increasingly complex and contentious environmental issue.

Development of Canada’s oil sands resource has long be contentious. Gore, never bashful about hyperpole, calls it the dirtest energy on the planet. Heineman says his opposition is based on the pipeline’s threat to the huge Ogallala aquifer that lies deep below Nebraska and several other states. The route through Nebraska’s special Sand Hills country, where my grandfather homesteaded more than a hundred years ago, is also problematic according to Gov. Heineman.

In Idaho and Montana recently the long public debate and substantial opposition to huge shipments of oilfield gear from the Port of Lewiston to the Canadian fields has been much less about the articulated reasons of shipment opponents – safety, disruption of traffic, etc – than about the mostly unspoken reasons, a strategic desire by environmental groups to prevent, or at least delay, further tar sands development.

As is most often the case, the debate over the pipeline from the Great North is waged with soundbites from all sides that simplify the discussion to the point of distortion.  There is plenty of substance here on all sides, but we never hear much that isn’t the rhetorical equivilent to Daryl Hannah getting arrested in front of the White House.

For example, how many Americans know that we already import more oil from Canada than any other country, in fact, nearly twice as much as we import from Saudi Arabia and four times as much as we ship in from Iraq. What happens without the pipeline? What happens with it? Good luck getting those answers.

The pipeline debate, the fight over the smog rules and the future of nuclear power, just to name three energy issues of the moment, are all symptoms of a failure of national political leadership to confront the fundamentals of how we use energy and where it comes from.

Many on the left of our politics can hardly fathom a serious debate about how we actually might alter the nation’s energy consumption and mix of resources because they know – heck everyone knows – that it can’t be done overnight or without real pain and dislocation. These folks are increasingly locked into a short-term, tactical mindset that creates a environmental emergency about this pipeline or that power plant. Vast expansion of wind energy production in the American West is now seeing the predictable pushback from many of these folks. Real debate and establishment of priorities goes begging with such short-term thinking.

At the same time, the hard right of our political flank pays a premium to someone like Texas Gov. Rick Perry who rejects the notion, now the overwhelming consensus of the world’s scientic community, that climate charge is a real and urgent fact. Or, closer to home, the short-sighted bemoan the public subsidies “lavished” on public transportation, while completely ignoring that the American system of air service is built on truly vast public subsides for airports, facilities, personnel and equipment.

It’s increasingly hard to have a sensible discussion about public priorities in the United States because we can’t often agree on a common set of facts and assumptions. Is a pipeline from Canada to the Gulf an environmental disaster in the making or a critical piece of infrastructure that keeps the oil following from a nearby neighbor that we haven’t recently had a war with?

Is the delay of $90 billion in smog rules a cave in to the dirty air crowd or a prudent, temporary move that my help the economy get back on its feet?  Jobs versus the environment is a long-term reality of American political life – just not a very constructive debate.

I have this naive notion that the American public is really capable of grappling with the complexity and nuance of these kinds of issues. It’s just been so long since anyone talked to us about complexity and trade-offs that we are out of practice.

Maybe Daryl Hannah can explain.

American Presidents, Andrus, Baseball, Christie, Economy, FDR, Obama, Politics

Missing the Signs

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What Not to Do to a Fragile Economy

It is not really true, as is often said, that history repeats. No historical analogy is ever 100 percent correct. What history does offer, if we’re smart enough to seek it, is a certain context for how decisions made long ago played out and that we might learn from those musty old facts.

As historian David M. Kennedy recounts in his masterful, Pulitzer Prize-winning book, Freedom from Fear, at the start of his second term in 1937, Franklin Roosevelt made a series of decisions about the fragile U.S. economy that with perfect hindsight – it was 74 years ago – look as though they could have been made in the frightfully dysfunctional Washington, D.C. of the summer of 2011. In the Roosevelt era, the result was “the Roosevelt Recession” or the “recession within the depression.”

As Kennedy points out, on the same day in the fall of 1937, Roosevelt told his advisors in the afternoon that, in light of a continuing slump in private investment and the lack of job creation, government stimulus spending must be maintained, and then later than night in a speech to a group of business leaders he said that the federal budget must be balanced.

The federal budget was a fraction in 1937 of what it is today, but FDR’s New Deal programs, aimed primarily at reducing unemployment, had overspent tax receipts by $4 billion, a sum nearly equal to the entire federal budget when Roosevelt became president. Sound familiar?

Still, even with all the accumulating red ink, then-Federal Reserve Board Chairman Marriner S. Eccles was astounded that the President had “assented to two contradictory policies” and he wondered if Roosevelt really “knew what the New Deal was.”

Roosevelt proceeded to dither for months while his administration tried to settle on a strategy of spending or cutting. In the end FDR did some of both, sending decidedly mixed signals to the markets, the public and, as the great Utahan who headed the Fed makes clear, his own advisers.

Only in 1938 did Roosevelt agree again to a relatively small stimulus effort that started to bring jobless rates back down, but even with those modest steps it wasn’t until 1941, with war production ramping up dramatically, that employment rates got back to where they had been in 1937.

Historian Kennedy offers the best explanation for FDR’s “weak and contradictory instruments of economic policy” when he says that Roosevelt may have “simply succumbed to the politician’s natural urge to do a little something for everybody.”

Fast forward to the summer of 2011. With the U.S. and global economy threatening to tank in 2008 fashion, with job creation, home construction and economic investment virtually flat, the Congress and the President have been locked in a protracted battle to cut spending as if the awful federal debt – and it is awful – was the pre-eminent economic concern. It’s not.

Like 1937, putting Americans to work is the real crisis confronting the country. Without a much higher percentage of Americans pulling down a paycheck, the country will limp along indefinitely in this wounded state of non-recovery. Yet, no one believes that there is any chance for more real spending to stimulate job creation. Major businesses meanwhile sit on huge piles of cash afraid to jump into a hiring mode for fear that the economy will get weaker before it gets better.

For his part, President Obama seems to send many of the conflicting messages FDR sent in the late 1930’s: control spending, increase jobs, make investments, raise taxes. No wonder the markets, not to mention voters, can’t make heads or tails of the direction.

Congressional Republicans, responding to the continual rightward drift of their party, have so far defined the economic problem as spending that has brought on the record deficits. Obama, meanwhile, has failed to offer his own compelling narrative for what happened to get the country – and the world – in this mess and, better yet, how to get us all out of the ditch.

Kennedy notes that FDR in 1938, thanks to high unemployment, his contradictory economy policies and a stumbling economy, was “a badly weakened leader, unable to summon the imagination or to secure the political strength to cure his own country’s apparently endless economic crisis.”

That, too, sounds familiar.

 

Baseball, Christie, Economy, Federal Budget, Immigration, Politics

The Deal

Posted on by christian

The System Worked…Barely

I predicted a week ago that the “sensible center” would ultimately behave like adults and avoid a federal government default, but by last weekend I’d revised my personal odds to 50-50 and raised my blood pressure to “unhealthy.” I just didn’t think they’d get so close to messing it all up.

The more sensible member of my household flatly predicted a deal at 8:30 pm (EDT) on Sunday. She was right, missing the President’s announcement of a bipartisan cease fire by an insignificant 10 minutes. So, disaster averted, but now what?

With the deal passed, signed and delivered, the post mortems are rolling in and it’s not very pretty. Wall Street turned on a dime once the deal was done and decided the underlying economy is still a mess. Those nations with decent economies, the countries that once quaked at the thought of American economic power, now shake their heads in disbelief that our political system came so close to going over the cliff of disaster. The political left labels “the socialist” president a sellout. Needing Tea Party support many Republicans now head home to, most likely, face more venom from those who think we can fix a decade of fiscal foolishness in one hot summer in Washington.

Utah’s Orrin Hatch, having it both ways and facing a primary challenge back home, praised the deal and then voted against it. Just for good measure virtually all the GOP presidential candidates now oppose the deal proving, as always, that the safest territory in politics is to be opposed to something while standing on the sidelines without responsibility.

Already the pundits predict a second major political meltdown when the Gang of 12 fails in their task to recommend the next major steps just as the holiday season descends on battle weary Americans who don’t seem to trust anyone on anything, especially when it comes to the economy and fiscal policy.

A new CNN/Opinion Research Corporation survey finds broad support – as in 77 percent support – for the notion that Washington’s leaders “acted like spoiled children” in reaching the deal on debt and deficits.

Trying to explain American politics to a British audience, historian Robert Dallek writes in the Daily Telegraph that, “something is at work here that makes you wonder if rational discourse is beyond the capacity of many American voters to understand.”

Dallek accurately describes a Democratic Party increasingly unhappy with Barack Obama, a Republican Party in the death grip of what that old curmudgeon John McCain calls “the hobbits” of the Tea Party movement and a media environment that simplifies and sensationalizes to the point of anger.

“The public,” Dallek writes, “is deeply cynical about politics and politicians. The Congress holds only a 17 percent approval rating and the President now has the approval of less than 50 percent of the public. Moreover, the latest polls show little enthusiasm for any of the potential Republican challengers. Neither Mitt Romney nor Tim Pawlenty nor Newt Gingrich nor Michelle Bachman nor any of the lesser-known names in the mix generate much excitement.”

So, other than that Mrs. Lincoln, how did we like this play? The best that can be said is that we dodged a big one, but in the dodging we displayed all the dysfunction, distrust and denial that got us into this mess in the first place.

Makes one wonder what will happen next time.

 

Baseball, Cold War, Economy, Egan, Idaho Politics, Nixon, Otter, Politics

What Goes Around

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A Communist Under Every Bed

It is often said in politics that “what goes around comes around.” This is such a story.

In the 1940’s and 1950’s Arthur Dean was a pillar of the old East Coast Republican establishment, a leading corporate lawyer, chairman of the white shoe New York firm Sullivan & Cromwell and law partner and friend of John Foster Dulles, the Secretary of State under Dwight Eisenhower.

Dulles pressed his friend into service in the early 1950’s to negotiate an end to the Korean War. Ambassador Dean, unfortunately for him, agreed to take on that assignment where he ran headlong into the McCarthy era, and particularly Joe McCarthy’s Senate acolyte, Republican Herman Welker of Idaho.

Welker was a small-town Payette, Idaho lawyer and Idaho State Senator when he won a U.S. Senate seat in 1950. Welker arrived in the Senate at the dawn of McCarthy’s national political power and he devoted his one, six-year term to carrying McCarthy’s water, including suggesting that Arthur Dean, the very respectable and very Republican Wall Street lawyer, was “a pro-Red China” apologist.

Dean’s transgression, in the view of Herman Welker, was to suggest that the United States just might consider a more enlightened policy toward Communist China at a time when right wing, virulent anti-Communists in Congress were making almost daily headlines by demanding to know why the United States  “had lost” China to Mao Zedong.

During an interview with a Providence, Rhode Island newspaper reporter, Dean said this: “I think there is a possibility the Chinese Communists are more interested in developing themselves in China than they are in international Communism. If we could use that as a decisive method of putting a wedge between the Chinese Communists and the Soviet Union, I think we might try…”

In essence, Ambassador Dean, a Republican serving under a Republican president, was suggesting what Richard Nixon began to accomplish nearly 20 years later – a more nuanced, mature relationship with Communist China. But such talk in 1954, with Joe McCarthy identifying a Commie under ever bed and in every office at the State Department, was not only un-American, but dangerously close to displaying Communist sympathies. Welker pounced on Arthur Dean.

Dean was channeling, in Welker’s view, the views of pro-Communist elements in the U.S. State Department. As to the contention that the Chinese might be more focused on their own internal development than imposing Communism on the rest of the world, Welker dismissed the thought out of hand. “I can’t believe anything can be farther from the truth,” the Idaho Senator said.

Welker’s assault on Dean caused some weeks of discomfort for the Ambassador. He had to repeatedly deny any Communist leanings and justify what many at the time, and most today, would simply consider smart diplomacy. In short, Dean’s loyalty was questioned at a time when your blindly anti-Communist bonafides were the only litmus test for service to the American government.

The myths about “losing China” are deeply embedded in the DNA of American politics. The tangled belief that un-American activities at the highest levels of the United States government had conspired to abandon China to the Communists was the sort of political hot air that powered much of McCarthy’s demagoguery. Idaho’s Welker sang from the same song book.

But it has been Ambassador Dean’s view that has stood the test of time. With the Chinese now threatening U.S. economic leadership worldwide, China owning a huge chunk of our debt and manufacturing ship loads of the consumer goods exported to America, its very clear that the diplomat had a much better crystal ball than the Red Baiting Senator from Idaho.

It turns out the Chinese really were “more interested in developing themselves” in order to compete with us than in advancing world-wide Communism. The proof is all around. The numbers crunchers in Beijing must be sharpening their pencils in anticipation of the failure of our dysfunctional political system to find a solution to debt, spending and revenue so that they can take another great leap forward in cornering a bigger share of the world economy.

Herman Welker, McCarthy’s Senate friend and fellow Commie hunter, is mostly forgotten now; his one Senate term distinctive for nothing more than being on the wrong side of history. Welker’s attacks in the early 1950’s on Idaho Democrats like Frank Church and Glen Taylor for their alleged “radical” and “pink” politics read now like ancient, misguided history, yet some of the old myths and fears about the Communist Chinese continue even as the descendants of Mao eat our economic lunch.

Were Senators Church and Taylor still with us – both died in 1984 – they would no doubt appreciate the irony of the Idaho Republican Central Committee recently demanding an accounting of the state’s political and economic ties with China from Idaho’s Republican Gov. Butch Otter.

The Lewiston Tribune reports that the Idaho GOP resolution reads: “the stability of our form of government is being undermined by strategies used by the Chinese state-government-controlled entities through investments, corporate takeovers, intelligence operations and rare-Earth monopolization.”

Most members of the state central committee weren’t born when Herman Welker represented the state in the Senate, put they are channeling Joe McCarthy’s buddy all the same. What goes around.

The United States has rarely had a sane and sober policy when it comes to China. For years we maintained the fiction that Chiang Kai-shek and the government he established in Taiwan after losing a civil war constituted the real government of China. We squandered years on the fiction that State Department bureaucrats had “lost” China. We fought a senseless war in Southeast Asia, in part, to head off Chinese domination of Vietnam, countries that maintain an historic rivalry and have rarely made common cause.

So, perhaps the Red Chinese Scare of Joe McCarthy’s and Herman Welker’s day really is alive and well in Idaho. The only thing different now is that Republicans are questioning other Republicans about providing aid and comfort to the Communists.

By the way, Arthur Dean’s reputation has survived in substantially better shape than those of the men who blindly questioned his motives and loyalty in the 1950’s. Dean went on to served under both Republican and Democratic presidents, helped persuade Lyndon Johnson to end the bombing of North Vietnam in 1968, and donated a ton of money to Cornell University where he and his wife financed the acquisition of a remarkable collection of papers related to Lafayette and the American Revolution.

Senator Welker’s papers consist of a few large scrapbooks housed at the Idaho Historical Society and the University of Idaho. Most of the pages are covered with newspaper clippings of Welker’s 1950’s assault on Americans who had the audacity to think differently than he did about the world and its future. Some things never change.

 

Baseball, Christie, Economy, Politics

No Crimes

Posted on by christian

The Vertiginous Tangle

As St. John’s University law professor Michael Perino explains in his superb book on the 1933 congressional investigation into the stock market crash and the following Great Depression; that highly charged and much publicized probe was essential to making sense of the country’s worst financial meltdown.

Without that investigation of earlier day Wall Street greed and corruption – the investigation pinpointed the lack of effective oversight and regulation of the economy – we might never have had an accounting of what went wrong and who was to blame. We also may not have seen the creation of the Securities and Exchange Commission, federal deposit insurance and banking regulation.

The hero of Perino’s book is a short, stocky, blunt spoken, cigar smoking Italian-American named Ferdinand Pecora. Dubbed The Hellhound of Wall Street – also the title of Perino’s book – for his tenacious pursuit of the truth about the events that precipitated the Great Depression, Pecora is the kind of investigator that has been unfortunately missing in the aftermath of the most recent economic meltdown.

The feisty little lawyer preferred simple, blunt questions and wouldn’t let witnesses retreat into the fog of insider language. He focused on right and wrong and making certain the public understood what the “respected” Wall Street figures had been up to in the pursuit of greed.

With no updated version of the tough, demanding investigation Pecora led during the Depression we may never have a complete accounting of what brought the U.S. economy to its knees in late 2008.

As Perino told NPR’s Robert Siegel last October, Pecora uncovered the scandalous practices of Wall Street bankers like Charles Mitchell, president of National City Bank, a financial institution we now know as Citibank.

Mitchell, in the wild pursuit of money for himself and profits for his bank, pushed ever riskier investments in the late 1920’s. Eventually Mitchell’s financial house of cards came tumbling down. Here’s part of the exchange between Perino and Siegel:

SIEGEL: You write in the book, that the officers of Citibank – this was how Pecora saw it – were paid potentially enormous amounts, only if they were able to sell vast amounts of securities. And since they did not bear the cost of securities that went down in value, they had incentives to sell as many securities as possible.

This sounds awfully familiar.

Prof. PERINO: It does sound awfully familiar. And if you read those hearing transcripts from 75 years ago, there’s an eerie ring to all of them.

Mitchell had built up a huge network for selling to middle-class securities. But with a huge network came a huge overhead. And he was constantly cajoling and berating his salesmen to make more securities. He actually said that the bank manufactured securities. And with Mitchell constantly at their backs, and the prospects for good securities sort of waning as time went by, they went and sold more and more shoddy securities; the bonds of sketchy South American countries and various other enterprises that were almost bound to fail.

SIEGEL: Very reminiscent of what happened in the mortgage market in recent years.

Prof. PERINO: Extremely reminiscent. I mean we have fancier terms for it now. We call them Collateralized Debt Obligations and other things, but basically it boils down to the same thing.

So…where is the Ferdinand Pecora of the 2008 meltdown? Why are most of the Wall Street banking titans who were on the job when the economy was, by many accounts, within hours of total collapse still on the job? Why have none of the speculators who helped create and profit from the “housing bubble” become the kind of notorious household name that Charles Mitchell became in 1933?

New York Times columnist David Brooks suggested a reason in a recent column. “Washington is home to a vertiginous tangle of industry associations, activist groups, think tanks and communications shops,” Brooks wrote. “These forces have overwhelmed the government that was originally conceived by the founders.

“The final message is that members of the leadership class have done nothing to police themselves. The Wall Street-Industry-Regulator-Lobbyist tangle is even more deeply enmeshed.”

Pulitzer Prize-winning reporter Gretchen Morgenson and financial analyst Joshua Rosner are even more pointed in their scathing indictment of the people behind the mortgage crisis. The American economy, they write in their book Reckless Endangerment, was “almost wrecked by a crowd of self-interested, politically influential and arrogant people who have not been held accountable for their actions.”

Meanwhile, as the Times recently reported, the banking regulation that was passed in the wake of the meltdown is mired in controversy with many rules required to implement the enormously complicated and, by many accounts, less-than-effective Dodd-Frank legislation still in limbo. The consumer protection agency created by that legislation remains leaderless.

Rather than chastened by the role the biggest of the big banks played in driving the economy into a ditch, celebrity bankers like JPMorgan Chase’s Jamie Dimon seem emboldened. Dimon recently got into a very public spat with Federal Reserve Board chairman Ben Bernacke when the Wall Street banker suggested that efforts to regulate big bank practices have gone too far. Dimon said because of the new regulations banks are reluctant to lend money and that may actually be hurting the economic recovery.

That sounds like the guy who killed his parents and seeks mercy from the court because he’s suddenly an orphan. Still, Dimon is, by most accounts, among the best, most ethical of the really big bank operators. And maybe he’s worth every penny of his compensation – nearly $21 million last year – but while the economy continues to struggle, he and the elite .01 percent of the U.S. economy continue to wallow along in the style in which they have become accustom.

At times it seems we haven’t learned anything at all from those wild days in late 2008 when John McCain was suspending his presidential campaign to deal with the financial crisis and then-Treasury Sec. Hank Paulson was getting down on one knee to beg Nancy Pelosi to pass bailout legislation. Paulson was so stressed about the fate of the economy during this period that he had to excuse himself from meetings to dry heave.

All that was less than three years ago, but eons in Beltway time and with distractions like Anthony Weiner and Sarah Palin why worry about really complicated, important stuff like the cause of the worst economic crisis since Charles Mitchell was scamming folks in the 1920’s?

Ferdinand Pecora took names and people went to jail as a result of his investigation in 1933. Most Washington politicians now couldn’t tell us what went wrong in ’08. They’re too balled up in the vertiginous tangle.

But, understandably perhaps, the ultra-rich Wall Street crowd needs a little diversion as the New York Times reported Sunday in a Style section piece on the latest, most exclusive Big Apple private club – The Core.

As Guy Trebay wrote, the club “is open to all — or at least, in an essential way, to all those in the top 1 percent of United States households: families with earnings the Tax Policy Center estimates will be $3,061,546 on average this year for a family of four, as well as those from an even more-elevated category that the nonpartisan, nonprofit group calls the ‘ultra rich.’

“The estimated income this year for households occupying that particular niche — a mere 0.1 percent of all United States households — will be $13,719,746, according to the Tax Policy Center.

“’The fat-cat hedge fund guys love the place,” said Richard David Story, the editor of Departures, the glossy travel magazine distributed to holders of American Express Platinum and Centurion cards. ‘These guys take their heartbeats per minute as seriously as they take their investment portfolios.’ As putative fat cats, the club’s members, of which there are now 1,500, are presumably undaunted by the club’s $50,000 initiation and $15,000 annual fees.”

When Ferdinand Pecora laid bare the abuses of Wall Street in the early 1930’s, the U.S. Senate paid him the princely sum of $255 a month for his efforts. His efforts brought down the men who broought down the U.S. economy and ushered in sensible regulation. What a wise investment that was.

As Perino notes in the conclusion of his book on the investigator and his investigation: “Nearly eighty years ago, in the depths of the worst economic crisis in the country’s history, Ferdinand Pecora showed what a well-run and well-researched Washington investigation could accomplish, and although congressional hearings often descend into bluster and posturing, the Pecora hearings remain a model to which future investigations can aspire. All they need is a Hellhound.”

 The similarities between the two financial meltdowns 80 years apart are striking. The contrast in how the political and economic elites have handled the two events is just as striking.  It’s almost enough to give you the dry heaves.

 

Baseball, Economy, Film, Otter, Politics, Schweitzer

The Veto

Posted on by christian

The Final Vote

The presidential or gubernatorial veto may be the single biggest political club our nation’s executives can swing. The House and the Senate at the federal and state level can consider, debate and pass legislation, but it still must come to the executive for the final vote. The way this considerable power has been wielded in Montana and Idaho lately is a real study in contrasting political styles.

Montana Gov. Brian Schweitzer, he of the bolo tie, has been swinging the decisive veto club with abandon over the last few days. As of a couple of days ago Schweitzer, a Democrat, had vetoed more than 50 bills approved by the Republican controlled Montana Legislature. Schweitzer has generated many headlines for vetoing, among others, legislation dealing with concealed weapons, medical marijuana, abortion, federal health care, mining with cyanide and employment taxation. Schweitzer, a clever and confident politician if ever there was one, seems to revel in casting the final vote and he has used ever occasion to bash the legislature.

Across the Bitterroots in Idaho meanwhile, Republican Gov. C.L. “Butch” Otter, with an overwhelmingly GOP legislature, drew headlines for his one and only veto of the just completed session. Otter spread red ink on a bill dealing with state efforts to establish exchanges under the federal health insurance reform legislation, but he immediately issued an executive order restoring much of what had been in the vetoed bill. Few Republicans, publicly at least, said anything about the governor’s actions and the House Democratic leader actually praised the governor’s approach.

Otter administered his one veto of the 2011 session quietly and moved instantly to placate supporters with his executive order. while Schweitzer has been known to use a branding iron in front of the television cameras to mark up bills he doesn’t like. No kidding.

As CBS reported, Schweitzer recently “stood in front of the state capitol” in Helena, “and put the bills, one by one, on display. He then used a hot brand on each one, lighting the paper on fire and burning the word “VETO” into the wooden plank behind the bill.”

If the guv considered the bill frivolous, he used a “calf brand.”

George Washington, generally not the flamboyant type, issued the first presidential veto in 1792. George W. Bush made modern presidential history by not vetoing anything during his first five years in office. Bill Clinton, by contrast left office have used the veto 37 times. Barack Obama has issued two vetoes.

Franklin Roosevelt is the all-time champion vetoer at the federal level. He issued 635 during his three-plus terms. Grover Cleveland was no slouch, either. He killed a total of 584 bills in two terms. Thomas Jefferson, by contrast, never vetoed a bill in eight years.

Governors and presidents, as a general rule, hate to have vetoes overridden. It’s seen as a mark of political weakness. But even the powerful FDR was overridden nine times, while the lowly Andrew Johnson holds the all-time record for having the Congress reject his veto. Congress did it 15 times to Andy.

The veto can be both a blunt instrument and a subtle tool used to punish, reward, make a political statement or chart a policy course. Often it is all of the above.

There could hardly be more contrast between the approach Schweitzer has taken and the line Otter had walked. Is one approach more politically or publicly effective than the other? The verdict on that may have to wait for another legislative session for as much as governors and presidents hate to be overridden, legislators hate to see their handiwork vetoed.

Most of the time, however, the final vote is the final vote whether its done quietly or with a smokin’ hot branding iron.