John Thune, Immune from Fact

            Senator John Thune’s recent op-ed on CNN was an exemplary study in intellectual dishonesty. No stranger to the realm of the unreal, Thune has previously claimed Social Security “is headed for bankruptcy.” Social Security is fully solvent for over 25 years, rendering Thune’s claim analogous to the assertion that a precocious pre-schooler is headed for his or her doctorate. He’s also stated that the ACA would cause 800,000 job losses, rated ‘mostly false’ by Politifact.

Senator Thune (R-SD), member of the Senate Budget and Finance Committee, did take full advantage of the opportunity to lambaste President Obama on his economic stewardship. He remarks that Obama promised unemployment below 6% by April 2012, and remains above 8%. He bemoans Joe Biden’s claim that 250,000 to 500,000 jobs would be created per month.

In the interest of full disclosure, the private sector has created approximately 160, 000 jobs per month since the recovery began. Republican intransigence stifled the American Jobs Act and continues to hinder the economy. Paul Krugman suggests that if the public workforce grew at the same rate under Obama as Bush, unemployment would be near or under 7%.

Thune makes no mention of these mitigating circumstances. Undoubtedly, the recovery would be much more robust and in line with Biden’s projection if the Republicans did not embrace contractionary economic policy at the federal and state levels.

The senator has no problem laying the meager economy, in its entirety, at the feet of Barack Obama to demonstrate the focus-tested talking point: the President is an incompetent, ineffectual leader unable to keep his promises.

Thune confidently asserts that “It doesn't take an economist to realize the president's economic policies have spectacularly failed to make things better.” This claim is evidently an appeal to emotion – not reason. The need for stimulus deemed essential to growth in recessionary periods is derided by Thune as an explosion in debt. Absent from Thune’s op-ed is George W. Bush, who inherited a $236 billion surplus and left office with a deficit over $1 trillion.

Thune further alleges that regulations have crippled business confidence. Notwithstanding the easy answer – deregulation facilitated the most recent recession – here are my feelings on regulations:

The Left has a significant messaging shortfall when addressing this topic. Regulations ought be viewed as the inherent responsibility of capitalists to ensure the humane treatment of workers in regards to their health, safety, and economic needs. Product standards should reflect their responsibility towards the health, safety, and economic well-being of not only employees, but all current and future citizens. Thus, regulations are framed more effectively as a built-in code of decency and morality in the economy.

            Thune bravely suggests that it is time for Americans to try something new – presumably referring to the GOP. Unfortunately, Alexandra Franceschi, Specialty Media Press Secretary of the Republican National Committee recognized that the Republican platform are the Bush policies, merely updated. Mitt Romney’s proposed tax reform disproportionately benefits business owners, and the wealthy reduces the tax burden for business owners Try something new, indeed.

Shame on CNN – a pillar of the MSM – which should know better than to serve as a launching pad for the proliferation of opinions which lack a factual foundation. But besides that, Thune’s was an excellent piece, if one-sided arguments with little supporting evidence are your kind of thing.

Ben Bernanke: Evil, Space Cadet, or Shrewd?

            I’m as much of a fan of hyperbole as the next pundit, but some of the articles and comments on Ben Bernanke lately are a bit outlandish. In Eschaton blog, Bernanke is condemned as ‘evil’ for his apparent lack of economic stewardship as Chairman of the Federal Reserve. All of the comments are brimming with vitriol, though some are also mildly humorous. For instance, the commenter that suggested the Chairman change his last name to ‘Dover’ made me giggle.  On the heels of his testimony before the Joint Economic Committee, progressives feel betrayed by the inaction of Bernanke, who did not signal for more monetary stimulus to aid the stalling recovery.

Image via NYT

            Bernanke himself has written papers on the unprecedented measures that can be applied once central banks have reached the zero-bound. Some current recommendations include more attempts at quantitative easing and setting a higher future inflation target. The latter incentivizes people that hold money to spend it now with the expectation that their cash will be worth less in the future.

            Bernanke seems to be going out of his way to combat inflation and appears to be ignoring the other half of his mandate – unemployment. He even disregards advice he gave to Japan to avoid their ‘lost decade’, prompting economists such as Paul Krugman to ponder why Professor Bernanke is at such odds with Chairman Bernanke. 

            The reality is that the economies and their situations are not identical. Bernanke needs to ensure that he has not fully played his hand of monetary stimuli in the event that financial conditions in the Euro zone continue to worsen. The financial crisis of 2007 has passed, but the Euro zone crisis (of 2012? 2013? Ever?) looms on the horizon. The interconnectedness of financial systems ensures that American banks, investors, and the economy at large will suffer if that crisis fully materializes.

In addition, the short-term effects of abandoning the 2% implicit inflation target are potentially as perilous as persistent unemployment to the economy. A key to avoiding a financial Armageddon in American necessitates that US T-bills and T-bonds maintain their reputations as liquid, safe options. This allows for the government to continue accumulating debt as the economy’s actor of last resort, stimulating demand through expansionary fiscal policy.

        The ability to accumulate this seemingly insurmountable debt is rooted in strict observance of inflation targeting. Creditors hate inflation – it lowers the real burden of debt. US debt is so attractive that even after the S&P’s downgrade the yield on Treasury bonds actually went down. T-bills and T-bonds are the safe haven for institutional investors and nations alike, and an inherent liquidity preference in holding US bills (or financial instruments) exists, which artificially suppresses their yields.

Bernanke isn’t evil – he’s addressing America’s foremost economic concern and leaving himself a few bullets in the chamber in the event that Euro zone defaults threaten the stability of the US financial system.

Forecasting from Arizona

           Today, a special election in Arizona determines the fate of the House seat previously occupied by Gabby Giffords. The race pits Ron Barber (D) against Jesse Kelly (R), with a marginal third-party challenger on the left. Barber is a former aide to Giffords who was also injured in the shooting, and Jesse Kelly is an Iraqi War veteran and construction-industry businessman who failed in his bid for the House in 2010.

Aaron Blake has an informative synopsis which astutely observes that the same strategies are being employed by both parties that were used in the 2011 special elections in upstate New York and New York City. Despite this, Blake warns against “trying to draw broad conclusions based upon the results” of the special election. Public Policy Polling shows Barber leading Kelly by a 53 to 41 percent spread, yet also cites the limited relevance this election has to any other later in the year.

         Gabby Giffords’ favorability ratings (67%-24%), as well as those of Barber (54% to 38%), measure up quite well against Kelly’s (37% to 54%) and are cited as the key determinants of victory. Democrats represent just three of eight House seats from Arizona and neither of its two Senate seats. The state legislature is stoutly Republican, red before the 2010 midterms and currently distinctly crimson, as the GOP enjoys a 21 to 9 and 40 to 20 advantage in the State Senate and House, respectively.

         Because similar parallels exist, this race will give us a glimpse into November. Polls currently show Mitt Romney with a marginal net favorability rating (43% to 41%), while a recent Fox poll gives Obama a 52% to 42% spread. Thus, the presidential election mirrors the special election in this regard: it pits a personally well-liked candidate with a favorability advantage against an opponent who supports the Ryan budget and the destructive policies of the Bush era. This election is also emblematic of a larger theme for 2012 – how Democrats respond to the spread of the Tea Party, and the latter’s relevance in the future of national politics and policy.

Fearless Presidential prediction: the 8^th district will vote three to five points less for Obama in November that they do for Barber today. 

Mitt Romney's Tom Barrett Problem

            Last post, we discovered how an enthusiasm gap was instrumental to Tom Barrett’s defeat at the hands of Scott Walker. The recall election has caused many predictions about the landscape in November – notably Reince Priebus’ assertion that Wisconsin is now in play – yet the shared characteristic between Barrett and Romney receives little discussion.

            The GOP primaries have demonstrated beyond a shadow of a doubt the lack of enthusiasm for Willard. The Anyone-But-Romney movement saw Bachmann, Perry, Cain, and Gingrich all enjoy mass amounts of popular support amongst Republicans sympathetic to different elements of The Crazy. Granted, since becoming the presumptive nominee, there has been a coalescing around Mitt Romney, as indicated by his ability to out-fundraise Obama over the latest cycle. However, Romney’s assumed electability has been his saving grace to Republicans unsure whether he is really ‘severely conservative’ or, as feared, the ‘etch-a-sketch’ whose positions form to suit his audience.

            CNN exit polls from the Badger State show Obama likely to prevail in November despite Walker’s victory. It strikes this pundit as odd that a state that once again selected a Tea Party darling as governor would also support a so-called socialist for the presidency. This dichotomy illustrates a few (sad) truths about American politics.

            General public comprehension of policy must be close to non-existent. If this is an election primarily about the economy, how can one person possibly support Obama’s relatively centrist view of the economy and Walker’s approval of austerity? The nearly thirty percent of union members in Wisconsin voted against their own economic interests.  Illogical. 

           Maybe Scott Walker himself had the perfect answer. On CNN, he cited his willingness “to make the hard choices” as a key to his win; something that resonated with voters.  Perhaps  this qualification is a higher priority than policy for most of the electorate. In that case, Obama ought be seen as a man of action on several fronts (healthcare reform, evident progress in eradicating Al Qaeda, repeal of DADT). Can Romney make that same claim? Or is he the candidate who will faithfully rubber stamp his party’s legislation – and nothing more?

            By campaigning on the notion that November is a referendum on Obama the GOP is employing the same strategy that failed for Democrats in Wisconsin. They’ll rely on surfing a wake of anti-incumbency to the shores of the presidency by means of negative campaigning, while failing to emphasize and explain the particulars of their vision for the country. Thus, a Mitt Romney presidency means that the influence of the Tea Party has outstripped that of organized labor.

Short of the Mayans being correct, I fail to see a more disturbing conclusion that could be proved during 2012.

Why Walker Won

        There is a reflex reaction amongst left-leaning pundits to overstate the role money played in the Wisconsin recall. Admittedly, Scott Walker outspent Tom Barrett by a ratio of over 2.5 to 1, and about 80% of state legislative candidates with the monetary advantage won their election bids from 2002-2008. Rather than making a snap judgment on the causes of Barrett’s loss, it may be instructive to delve into the opinions of Wisconsin’s electorate to discern reasons for the Democratic defeat.

          CNN exit polls reveal a crippling enthusiasm gap for Mayor Barrett in relation to Governor Walker. A recall election, by its nature, necessitates a certain amount of anti-incumbency amongst the electorate, but the opponent also needs to inspire voter enthusiasm. As shown below, Barrett dominates amongst voters who disliked the other option, and his share of this group accounted for slightly over 21% of the total electorate. Among Wisconsinites who were primarily voting for their candidate, Barrett accumulated support from just 23% of the total electorate.

        In contrast, Scott Walker was the choice 67% of the voters who selected primarily for their candidate. This figure represents nearly 47% of the total electorate. That 67% is more than double Mayor Barrett’s support amongst that group, and that 47% is more than Mayor Barrett’s total percentage of votes. Simply put, more Wisconsinites enthusiastically voted for Walker than for Barrett and against Walker combined. 

        A few reasons can be given for this lack of enthusiasm for Bennett – especially the late Democratic primary – but one wonders about the wisdom of Wisconsin democrats in selecting a candidate who had already failed to defeat Walker. This is particularly relevant given the rarity of successful gubernatorial recalls.

       If money played a large role, one would expect to see that a barrage of robo-calls and ad buys in the days leading up to the election. This was the case in the Senate race where Joe Ricketts essentially bought the Nebraska Senate GOP primary for state Senator Deb Fischer.

         However, voters who decided in the past month were decidedly pro-Barrett. The mayor, it appears, was simply on the wrong side of a stark ideological divide. In addition, exit polls demonstrate resistance to the notion of a recall election amongst portions of the general electorate.

Thus, in the aftermath of the recall elections, we have a Case of the Pundits who Cried Big Money.

And Scott Walker still looms, big and bad, in the Wisconsin wolfpack.

Elements of the Elusive Establishment

         A recent piece in Washington Monthly’s “Ten Miles Square” blog by Jonathan Bernstein

decried the use of “Establishment” to describe elements or factions of the Republican Party.

However, careful scrutiny of the GOP identifies these perceived nameless faces, revealing their

effects and continued influence on the party.

        Several existing definitions of the elusive “Republican Establishment” have been

propagated. David Brooks professed the belief that it is “anyone who knows what Newt Gingrich

is really like.” Dan McLaughlin explains that the Establishment differs from the new, 

Tea Party-infused brand of conservatism in its willingness to preserve the status quo in regards to the size of government. Though partially instructive, these definitions fail to pinpoint the people and personalities that comprise and characterize the true Establishment: the Established Republicans, Moneybags, Media, Pseudo-Intellectuals and They-Who-Must-Not-Be-Named.

        The simplest way to define a party’s establishment is by recognizing its longest-serving and influential members of Congress. Orrin Hatch of Utah, who if re-elected will be the longest serving

current GOP senator, best exemplifies this brand. Consistently pro-military, this founder of the Federalist Society has often introduced a balanced budget amendment yet has also voted for 

numerous debt-ceiling increases. Chuck Grassley (IA), Jeff Sessions (AL) and 

Lindsey Graham (SC) are also stringent anti-environmentalists who promote national defense. Graham’s case is especially instructive of the modern GOP – he once supported climate change legislation but later flip-flopped in order to accommodate offshore drilling. Sessions, for his part, 

would like to see the Bush tax cuts become permanently enshrined in law.

        The Moneybags are a facet of the Establishment that facilitates the election of Republicans sympathetic to their causes by monetary means. Karl Rove is representative of this label but serves as the tactician to bring about the Moneybags’ agendas. This honorific title goes to gentlemen such as Edward Conrad, Louis Moore Bacon and Paul Edgerly, gurus in the world of finance. As well, the construction moguls such as H. Gary Morse, Howard Groff and Bob Perry – best known for his generous donation to Swift Boat Veterans for Truth – are longtime GOP donors. No list of Republican donors would be complete without energy-sector billionaires such as Robert Rowling and Harold Simmons, who built a radioactive dump for waste in Texas that cannot be filled due to existing regulations on nuclear waste.

          A number of prominent journalists and intellectuals play a role in formulating and

articulating expressions of the Establishment. George Will – who has infamously compared the

GOP Establishment to the Loch Ness monster – is undoubtedly a card-carrying member. In 2009,

Will misstated evidence from the University of Illinois’ Arctic Climate Research Center, claiming 

that global ice sea levels in 2009 were identical to those in 1979. This fabrication fits into the widespread denial of climate change that has festered in the modern GOP. In addition, the aforementioned Brooks has been referred to as neoconservative in Salon for his writing in support 

of the Afghanistan and Iraq wars.

        The Pseudo-Intellectuals differ slightly from the Media, consisting of well-educated

individuals who head advocacy and research organizations of a certain ideological slant. The

most prominent example is Harvard graduate Grover Norquist, president of Americans for Tax

Reform, whose Taxpayer Protection Pledge has handcuffed Republicans running for Congress to

the Bush tax cuts. Norquist, also a member of the Council on Foreign Relations, endeavored to

build a center-right coalition to pull out of Afghanistan, but only after public opinion had turned

against war.

        Finally, there exists a secret part of the Republican Establishment – the ones they hope

you don’t know about: They-Who-Must-Not-Be-Named. Bush, Cheney, Rumsfeld and Company.

This group implemented all essential elements of Establishment dogma and was held in contempt by a vast majority of Americans after doing so.

Why are they so ignored, even by members of the Republican Establishment?

     Because the Establishment is composed of old dogs with no new tricks who are relying on 

American amnesia in hopes that they can reinstitute their agenda once they regain the reins of power.

   

The GOP and the Gelding Of Paul

         Pundits believe that Mitt Romney, the presumptive Republican nominee, is the physical

embodiment of the GOP’s win-at-all-costs mentality. This handsome, successful businessman

and former Governor of Massachusetts appeared the safe choice and inevitable victor from the

commencement of the nomination process. However, the weathervane has fealty to certain core

conservative doctrines that are prioritized over victory in November. It is these principles that

will deprive the Republican Party of the candidate that provides the best chance of delivering the

Barackout blow.

Enter Ron Paul: the should-be GOP nominee.

         In the interest of full-disclosure, I am a Democrat – one who bleeds blue more than a

Kentucky Wildcat fan. I applaud Paul’s tenacity, perseverance, and consistency, but reject his

economic policy, which manages to be simultaneously naïve and archaic. However, that’s a

subject for another article. Back to the issue at hand.

           First, let’s examine a little-discussed phenomenon for the GOP in the presidential election:

its steady floor. The generic Republican who led Obama in late 2011 was indicative of not only

the President’s vulnerability but also proof of the high, reliable floor the party can expect this

election year. This phenomenon explains the 2010 midterms: the Tea Party movement served as a full-throated reaction against Barack Obama (and Big Government). Some nights, RNC

Chairman Reince Priebus must sleep easy. Bastions such as Alabama, Arizona, Georgia, and

Texas will remain securely Republican in 2012 regardless of the eventual nominee – as long as

he isn’t a Kenyan dog-eating socialist who happens to be black.

              Ron Paul has made headlines from Nevada to Massachusetts for his supporters’ aggressive accumulation of delegates. The crux of Paul’s strategy is that his supporters have managed to infiltrate state conventions disproportionately, act with a high degree of grassroots organization and discipline, and elect like-minded Paul backers as delegates. The composition of these delegates often does not reflect the results of the primary (dismissed by Paulites as the ‘beauty contest’). Nonetheless, exit polls from these contests prove Paul to be the ‘Barbie’ of the 18-29 demographic, with high levels of support amongst Independents, disaffected Democrats, and lower-income voters. Despite these efforts, Paul will not reach the number of required delegates (1, 144) by the GOP Convention. Lest we forget, tangible grassroots enthusiasm and youth voter turnout were two driving forces behind Obama’s historic election. Paul is able to effectively neutralize these advantages- a factor that amplifies his odds of

thwarting Obama’s quest for re-election.

        Abruptly, the terms of discussion change from the GOP’s floor to its ceiling. Beltway

knowledge (whose reliability falls between common sense and Bachmann blathering) holds that

Romney, the nominee-in-waiting, has a narrow path to the nomination and little room for error.

The Huffington Post, for example, currently predicts 257 Electoral College votes for Obama

compared to 181 for the Massachusetts moderate, leaving Romney with as much of a chance of

winning the presidency as, say, marrying Ric Grenell.

          The success of the Paulites, and in particular the states in which it has occurred, deserves

special consideration from the MSM as well as the RNC. Blue states such as Minnesota, Maine,

Washington, perennial toss-ups like Colorado, Iowa, and Nevada, and conservative stalwarts

Louisiana and North Dakota are all states where Paul has claimed or plans to gain a majority of

delegates in time for Tampa. Minnesota, with the exception of Nixon in ’72, has not gone to the

GOP nominee since Eisenhower. Maine is a historically red state that left for bluer pastures after

George H.W.’s first term. Nevada voted with Reagan as well as all successful Bush presidencies.

Historically, the Granite State has voted with the Grand Old Party, though went to the Democrats

in three of the past four presidential elections. Iowa, a true swing state, has been blue in the

recent past but is typically Republican. Paul’s ceiling lies within success in these states, while

Colorado, Florida, Ohio, Pennsylvania, and Wisconsin will remain toss-ups. Make no mistake:

Romney will not concurrently deliver youth turnout, disaffected Democrats, and Independents in

high enough quantities to peel off blue states.

          Thus far, the messaging strategy for the GOP is a straight-forward, simple approach. This

election is a referendum on Obama and his failed policies. The key question posed –Are you

better off than you were four years ago? – could be asked by any Republican. In the same manner

that Priebus is touting Romney’s managerial experience, he could be praising Paul as the

‘economic visionary who wants to restore freedom now – to the markets and to you as an

individual’. The GOP would have the high ground on the bailout, and Paul passes conservative

litmus tests on social issues like abortion. In addition, Paul meshes well with congressional

Republicans and their fanatical obsession with budget cuts and lowering taxes.

Ron Paul is in a unique position to both decry the military industrial complex like Dwight

D. Eisenhower and best represent Reagan’s nine most terrifying words. The ability to resurrect

the ideals of two Republican legends while appealing to large, diverse swaths of the electorate

that were critical to the incumbent’s victory should make Paul an establishment darling- but why

hasn’t it?

             The answer lies within Paul’s policies and GOP priorities. Throughout the nomination

process, only Paul has put forth non-interventionism as a foreign policy solution, and calls for

immediate withdrawal of our troops from Afghanistan and Iraq. These positions fly in the face of

the neocons and war hawks that still dominate the party even as a majority of Americans, in

hindsight, believe that we should have stayed out of Iraq.

             Paul’s catchphrase and 2009 book –“End the Fed” – also disqualifies him from the

Republican nomination. Economically, hard money can aid in lessening the magnification of

effects of the business cycle, but it reduces the flexibility of a nation’s monetary policy and

ability to respond to crises. That, however, is far from the minds of the GOP establishment. The

ideological issue with Paul’s position is that hard money inherently reduces the upper limit of

financial development and the profitability of that sector.

           In an election almost certain to be decided by turnout and enthusiasm among key

demographics, it makes no sense to avoid Ron Paul. He retains the Republican floor, gnaws

away at the support of key Democratic voting blocs, is no slouch in the fundraising department,

and has shown his proficiency in practicing retail politics in a bottom-up manner.

Sadly, the GOP nomination process has revealed who the ‘true conservative’ is and why:

Mitt Romney, for his loyalty to multinational corporations and financial institutions. Crony

capitalism emerges victorious once again.

More disappointingly – can anyone contend that the Democratic Party does not pander to these

groups as well?