Photo by Neil T

I had no idea. I thought that runaway spending was a bad thing. I know that in business as well as in our personal lives when we borrow and spend far beyond the amount of money we take in, trouble comes calling. How did I get it so mixed up?

What did I do? I spoke up along with my Tea Party brethren. I should have kept my mouth shut. After all, John Kerry said so, and John Kerry went to Harvard. This is what he said,

On NBC’s “Meet the Press” Sunday, the Massachusetts Democrat called Standard & Poor’s lowering of the nation’s credit rating from AAA to AA+ as “without question, tea party downgrade.”

“A minority of people in the House of Representative countered even the will of many Republicans in the United States Senate, who were prepared to do a bigger deal,” he said.

Kerry defended President Barack Obama’s repeated efforts to put a grand bargain deal on the table, which would have cut upwards of $4 trillion from the deficit over a decade, rather than the final debt ceiling deal that cuts between $2.1 to $2.4 trillion.

It makes perfect sense. John Kerry was for out of control spending before he was against it. He makes it crystal clear. The Tea Party which sprang up like the grass roots movement that it is, after TARP and the stimulus spending passed the Democrat controlled Congress and was signed by the Democrat President Barack Obama, spoke out against the spending and made it a front and center issue and then demanded a smaller amount of spending cuts? How could that be? (Hint: John Kerry likes taxes; lots of them).

Since becoming a Tea Party activist, I have visited Washington several times. It looks like a normal city. I guess you have to live there or work there a long time before you realize that up is down and down is up. It takes a lot of imagination to grasp that spending a little more money than spending a lot more money is a cut in spending, even though you are spending more. We rubes who don’t live in Washington don’t get it and the politicians keep rolling their eyes to let us know they are tired of explaining it to someone who didn’t go to Harvard. The real estate market in Washington is doing fine, but the real estate market in the rest of the country is in the tank. How does that happen? (Hint: all those additional federal government workers have to live somewhere).

How could I be so foolish? I guess I needed another lecture from David Axelrod to ‘splain it to me. And, hey, here he is:

“If we had defaulted on our debt, the consequences would have been dramatic and lasting,” Axelrod said. “It was the wrong thing to do to push the country to that point. It was something that should never have happened that clearly is on the backs of those who were willing the see the country default, those very strident voices in the tea party.”

I need to work on lowering my strident voice. I should have shut my mouth so that the debt limit could have been raised without a peep and the spending binge could have continued. I didn’t realize that I was jeopardizing Barack Obama’s chances for a second term. How could I possibly expect the dear man to fix “the mess” he inherited in less than eight years? After all, Roosevelt couldn’t get us out of the Great Depression in eight years until he hired all of those unemployed men into the Army, Navy and Marines. Obama is following Roosevelt’s playbook and it is not working today either. If Roosevelt could get elected four times, why not Obama? (We’ll get around to that Constitutional Amendment problem later).

Defaulting on our debt means not paying the interest or principle on our debt not on the failure to subsidize ethanol or Chevy Volt cars. As President Obama holds the checkbook, he could always make those payments on time with the tax revenue coming in, but somehow default, default, default is all we heard. I guess the “devil would make him do it,” the Tea Party being said devil.

The Tea Party supported strong fiscal conservatives in the 2010 election. How dare we?! Those we elected put together a budget in the House of Representatives shortly after taking control. How reckless! The Senate hasn’t passed a budget in over 800 days. John Kerry ,call your office. The Republicans in the House of Representatives passed a plan called Cut, Cap, and Balance that would actually bring down the spending and toward a balanced budget. When that bill arrived in the Senate, it was immediately stuffed in a drawer. John? Rand Paul, a freshman member of the Senate who has not yet breathed enough of the rarefied air there to understand that spending is cutting, put together his own plan to cut $500 billion from the deficit immediately and balance the budget in four years. Does John Kerry know who Rand Paul is?  John, look him up, you can probably find him easily enough on the floor of the Senate when you are not out wind surfing or figuring out how not to pay sales tax on your multimillion dollar yacht.

So, I apologize for causing the downgrade of America’s debt. I didn’t mean to cause so much trouble for the ruling class. After all, they are very busy meeting at the Harvard Club deciding how to run our lives, so that we don’t screw that job up, with all that Life, Liberty, and Pursuit of Happiness crap. I will try very hard to mind my peas and cues, or is it, mind my cues and eat my peas? Whatever. I will try very hard…but don’t bet the ranch on it.

That’s my opinion; I’d like to know yours. Please comment below.

“I always use the word extreme, that’s what the caucus instructed me to do the other week, extreme cuts and all these riders, and Boehner’s in a box but if he supports the Tea Party, there’s inevitably [be] a shutdown.  – Senator Charles Schumer (D-NY)

In an article in the Wall Street Journal yesterday, Senator Marco Rubio said:

Every generation has had to confront and solve serious challenges and, because they did, each has left the next better off. Until now.

It brought to mind the movie Generation Zero, that chronicles the origins of the great financial meltdown that we have experienced. In that movie they point to one of the contributing factors the transition in power from those who lived through the Great Depression and World War II to the Baby Boomers, who knew little deprivation in their lives. Now as these boomers, of which I am one, took the reins of power, caution was thrown to the wind.

We are in the midst of a grave situation of out of control spending. Getting it back under control will be hard and it will be painful, but not as hard and painful as it will be if we do nothing. So the Republicans have been battling between cutting a modest amount and a seriously large amount.

The Democrats have been battling to cut nothing. They have no plan. In the last Congress they didn’t even bother to pass a budget. Their plan now is to play partisan politics, and try to demonize the Republicans who are playing the adults in the room. The Democrats are trying to find the right word they can use to extract the most ire from the public against the Republicans. New York Senator and the Democratic Caucus think they have found the word: extreme.

Who is Chuck Schumer

Chuck Schumer is a career politician. He had a very successful high school academic career, he scored a perfect 1600 on the SATs, went to Harvard and then on to Harvard Law School. He has never practiced law. He has never worked in private industry since graduating college.

After graduation, he ran and was elected to the New York State Assembly at the age of 23, becoming the youngest member of that body since Theodore Roosevelt. He served three terms and then ran for the vacated Congressional seat of Elizabeth Holtzman in 1980. He remained a Congressman for eighteen years until deciding to run for the Senate in 1998. He won that election in 1998 and was reelected twice, most recently this past November.

So Chuck Schumer knows how you should live your life, right? He has been living off the tax dollars of his constituents for thirty-seven years and writing the rules for how to live their lives during that time. What happens if Congress does not stop spending? Does Chuck Shumer’s business go bankrupt? No, but yours might. Does Chuck Shumer, get laid off? No, but you might. Does Chuck Schumer feel an impact to his lifestyle? No, but you will. He has made sure that all of the special interests who have helped reelect him are well taken care of and they will surely be there again in 2016.

But you, my fellow Americans, are extreme because we want a government to live within its means, just like the rest of us do. What we need are extreme spending cuts, and if that means Chuck Schumer has to live in the private sector rather than just pander to it, so be it.

That’s my opinion; I’d like to know yours.  Please comment below.

The Federal Communications Commission (FCC) made a power grab to control the Internet and there is a raging debate on both sides.  Rather than take a position to rollback the FCC action or let it stand, I offer a third alternative.  Shutdown the FCC.

The FCC should follow its sister agencies, the Interstate Commerce Commission (ICC) and the Civil Aeronautics Board (CAB) into the dustbin of history.  The very technology it is trying to regulate is, or perhaps has, made it irrelevant.

History

Regulation of telecommunications in the U.S. started with the Radio Act of 1912.  This was in direct response to the sinking of the Titanic, based on a lack of distribution of coherent radio signals along the east coast of the United States, preventing the ship’s distress signals from reaching the maritime safety officials.  It was through this act that Congress seized control of the electromagnetic spectrum for the first time.

The Communication Act of 1934 created the FCC.  The FCC, since then, has controlled the radio spectrum, television, telephones, cable, satellite and microwave communications, wireless communications, digital broadcasting and personal communications systems.  It also gave us the Fairness Doctrine, the Corporation for Public Broadcasting, and National Public Radio (NPR).  But the technology has advanced at such an incredible pace, this is an area where the free market is ready to show its strength over government regulation.

Technology

The key to a successful free market is competition and a free flow of information.  Of the distinct technologies above, notice how they have changed and increased competition.  I spent most of my technology career as a witness to these changes working in voice and data communications.  Telephone is nothing like it was in 1934.  The old circuit switched telephone network has been collapsed onto the data network.  You no longer have voice and data.  Now you have voice as data.

In the internet world, what moves around are data packets.  The data packets consist of a header and a payload.  As analogy think of a piece of mail.  What is inside the envelope is the payload.  What is written on the envelope is the header.  The header basically includes some address information and some information about options on how to handle the packet, or the envelope to continue our post office analogy.  Today, inside the envelope can be part of: an e-mail, a voice conversation, a web page, video, a data file, virtually anything you can digitize.  The header contains information on how to get it from one end of the network to the other.

The “Reason” for the FCC’s Action

The FCC has perceived that it is possible for a large company to exert power over smaller competitors or customers, to gain an advantage.  Therefore we need the government to be ready to step in and stop it if it happens or put rules in place to prevent it from happening.  They call this Net Neutrality.  This is a solution in search of a problem.  If we have learned anything from the 2008 financial disaster, it is the concept of crony capitalism, where the government joins with a few large corporations and cuts deals to cement and protect the dominance of the big boys.  It happened with the ICC and CAB; what makes us think it won’t happen here?  What we want is real capitalism, unfettered.

The players who make up the Internet tend not to have any interest in content.  One reason is that it takes time and computing power to “open the envelope and look inside” to determine what the content is and then make a decision what to do with it.  The second reason is that they want to move the data across their network as fast as possible and to do so, they want to spend as little time as possible reading the packet before moving it on.  To use our postal analogy, if they can look only at the Zip code to decide how to handle it that would be better than reading the entire address; if they can look only at the five digit Zip code rather than nine digits, that would be better; if they can look at only the first or second digit of the Zip code to make the routing decision, better yet.  The less time a packet is held to examine it, the less capital has to be invested in the infrastructure to move it and make up for lost time.

Competition

Back when the Communications act of 1934 was passed there was not a lot of competition, although there were a lot of individual providers they seemed to have their own niches, like radio stations.  The competition was for the airwaves.  But when you look at it today there is a lot of competition and more coming.  For example, I have my phone service, television service and Internet service all through my cable company.  It seems like once a week I get a solicitation from the local phone company offering to run fiber optics to my house and provide phone service, television and internet to replace my cable company.  Everyone in my house has an iPhone and when a call comes into the house phone we generally ignore it, as it is probably a solicitation.  If it’s important we’ll get a message and call back.  We have even considered eliminating the house phone altogether.  The next generation of wireless, 4G, is starting to roll out with a significant increase in bandwidth and that might be the death knell to wires to the house.

My cable company offers three levels of internet service.  The basic service is $29.95 per month and it provides 15 Mbps downstream and 2 Mbps upstream.  This is fine for my needs.  If not, for another $9.95 per month I can get 30 Mbps downstream and 5 Mbps upstream.  Need more?  For $55 per month over the basic, I can get 101 Mbps downstream and 15 Mbps upstream.  For the internet, all that really matters is bandwidth.  Everything else can be provided at the endpoints.  It should be like water or electricity.  It shouldn’t matter what I plan to use the water or electricity for, just get me as much as I need when I need it.

Regulation vs. Free Markets

An example that actually happened concerns Comcast and a product called BitTorrent.  BitTorrent is a peer-to-peer file sharing service.  Comcast is a cable based provider designed for fast downloads and slower uploads similar to the services provided by my cable company I mentioned above.  Some people use BitTorrent to share movies and music and use both the downstream and upstream equally.  This caused congestion problems for Comcast because the downstream and upstream had different capacities.   Comcast dealt with this during times of congestion by sending a signal to the BitTorrent service telling it to drop the connection.  This process not only affected the heavy file sharing users, but also affected other BitTorrent customers.  This was quickly picked up by the media.  Comcast couldn’t explain itself out of the jam it created.  Verizon jumped in and offered Comcast’s customers alternative service with more bandwidth if they switched over.  At the same time, tech wizards were figuring out ways to avoid the “hang up” message Comcast had been sending out.

Comcast backed away from its policy, negotiated an arrangement with BitTorrent to help make BitTorrent more efficient and Comcast promised to implement a traffic shaping regime by the end of 2008.  “By the time the FCC released a ruling on Comcast’s behavior in July, the issue had already been rendered a moot point by technological and market developments.”  To paraphrase a popular saying, “The Free Market will be half way around the world before the FCC gets its boots on.”

A Fond Farewell

With voice merging into data, with cable and telephone companies competing for customers, with wireless gaining ground on land lines in terms of speed and satellite adding to the mix, there is plenty of competition to keep each provider on its toes.  It is standard practice on the business side to connect to two or more Internet Service Providers (ISP).  The competition is there.  The other piece of the free market puzzle is to make sure that information about what is going on and who is providing what flows freely and the need for a government overseer goes away. News and information travels freely and very fast.

No matter what problem occurs, I have more faith in a Silicon Valley tech head to figure it out than a Harvard lawyer at the FCC.  In addition, the tech head can formulate a solution, test it, run a beta trial and roll it out before the FCC has figured out who to call as expert witnesses.  The Internet has provided tremendous innovation, throwing cold regulatory water on it is a very bad idea.

On the more sinister side of it we have the likes of Al Sharpton trying to get the FCC to start censoring Rush Limbaugh.  The free market laughed at what liberal Air America had to offer and so the progressives want the government to impose what they are incapable of achieving through free speech.  Also any expansion of government power is likely to lead to crony capitalism.  The progressives will tell you all day long they are doing it to protect the little guy, but in the end the fat cats, give boatloads of money to the politicians, then carve up the pie and the little guy either gets the bill or goes out of business.

To enjoy the riches of technological innovation that benefits us all, we should stand back and let the free market work its magic.  To our friends at the FCC, thank you for your service, your country is grateful to you.  Don’t forget to turn out the lights on your way out.

That’s my opinion; I’d like to know yours.  Please comment below.

The imagery in my mind was triggered by an editorial in the Wall Street Journal by John Fund, when he described Obama in a “political tailspin.” Close your eyes and picture the pilot Barack Obama screaming, “I’ve never flown a plane before!!!” as he furiously toggles switches and twists dials.  Biden in the co-pilot seat is flipping through a copy of Piloting for Dummies, shouting back, “Neither have I.  I always sat in the back!!!”  At the same time, Jimmy Carter is trying to calm Obama down and talk him through pulling plane out of its deadly dive while muttering as an aside, “It’s all Fox News fault.”  Then together they all scream, “WE’RE ALL GONNA DIE!!!!”

Such is the political landscape this bright Wednesday morning.  The sky is clear here in New York, but politically it is anything but that.  The news came out yesterday that the recession ended eighteen months after is started in December 2007.  That means it was about five months after Obama took office and just three months after the massive stimulus package passed, which means the economy recovered on its own, without the stimulus.

Since this administration has of late been fond of automobile analogies, let me offer up this one.  All the while the Obama administration thought it was stepping on the gas while in reality it was standing on the brake.  The pall of uncertainty hanging over the market has kept businesses from hiring until they know the cost of all of Mr. Obama’s plans, which as Nancy Pelosi made clear with her famous, “we have to pass it to know what is in it,” that they have no clue what they are doing, or what laws they are passing.  So we wait and the unemployment rate waits at 9.6%.

When the smoke clears perhaps business will start hiring, or if the bill is too large, perhaps they will cut more jobs.  If there is a demarcation point between a small business and a large business where small businesses are exempt from some of the more onerous regulations, don’t be surprised to see businesses cut back to get under that threshold.

Obama’s economic team is peeling away.  Larry Summers announced he is going back to Harvard before he loses tenure.  Could there be a more fitting reason to leave a job for the architects of the nanny state?  Summers is going back under the protective umbrella of tenure where he can’t be held accountable there either.

The electorate is angry.  They don’t like their leaders thumbing their noses at the voters on issue after issue and saying, we don’t care what you think, we are passing this.  But don’t worry; once you get to know it you will like it. It’s not happening.

The latest desperate spin is to call out Republicans and say that they are holding middle class tax cuts hostage.  But the reality is that there are no tax cuts on the table.  What the Republicans are demanding is that the status quo, the tax rates currently in effect, continue.  What Obama wants is a massive tax increase of $700 billion.  Hey, let’s jump on the brake with both feet!

The Democrats followed Obama, Pelosi, and Reid onto this plane and now they have no escape.  Their message changes daily and is getting no traction.  They are desperately trying to gin up an issue by attaching “Don’t ask, don’t tell” and the Dream Act to a defense bill, cynically trying to get voters sensitive to those issues to answer their Mayday call.  I have one message for the pilot, his crew and passengers.

“Brace for impact.”

Two disparate news items this weekend got me thinking.  The main stream media is all abuzz with Chelsea Clinton’s wedding, even to the point of throwing the term royalty around.  It is estimated that the wedding will cost $3-$5 million, although Sally Quinn of the Washington post puts the bill at closer to $1 million.  The comparison was then made to the cost of Jenna Bush’s wedding, a mere $100,000.  This became fodder for The Joy Behar Show.  Comedian Judy Gold leaped at the opportunity to take a shot at Bush, “Yeah, well, if he could have found a way for us to pay for Jenna`s wedding, he would have done that, okay, he likes to spend other people`s money.”  An interesting perspective on other people’s money that I will return to later.

The other news items was an article in The New York Times, by Bob Herbert titled “A Sin and a Shame,” lamenting that corporations are hording cash and not hiring people and it is all so unfair, in fact, sinful.  This is while this government is spending huge amounts of money that someone will have to pay back, massive new programs like ObamaCare that we are still uncovering what that will cost, and enormous tax increases about to kick in on January 1 when the Bush tax cuts expire.  Perhaps they are hording cash for a reason?  Perhaps they are not hiring because they don’t know what any new employees will cost under these new programs, or for that matter what their existing employees are going to cost?  Perhaps it is because the latest economic reports show GDP shrinking and if that continues why would you start hiring if your business is going to slow down with the rest of the economy?

We have two very divergent views of the economy today.  One view is held by those who actually work in the private economy and the other view is held by those in the ivory towers of government, which brings me back to the weddings.  I really don’t care what the Clintons or the Bushes spend on their daughter’s weddings.  It’s their money.  But perhaps it is instructive to look at where that money came from.

George Herbert Walker Bush, Jenna’s grandfather, was born into a successful family.  His father was a banker and a Senator.  But after getting out of the Army after WWII he went to Yale and upon graduation, moved away from that family and settled in Texas to start an oil company.  He went into private business and put his own money at risk.  What that means, to those who never took that chance, is you may be successful and make a lot of money, you may be successful and make a little money, you may fail and lose your money.  Chances are greater that you will lose than win, but that is the American Dream.  If you lose, you have to start over by trying to earn and save up what you lost to try again, if you have the guts and drive.  Bush succeeded in forming Bush-Overby and later with Zapata Petroleum.  He became President of Zapata for ten years and then Chairman for another two, before going into politics.  By then he was a millionaire in his own right.

George Walker Bush, Jenna’s dad, attended public school in Midland, Texas, where his parents had settled.  He went to private school after the family moved to Houston.  He later attended Yale University and became the only president to get an MBA which he did, from Harvard.  Like his father, he went into the oil business starting several independent oil exploration companies.  He later bought a stake in the Texas Rangers baseball team for $800,000 and was instrumental in building the team’s attendance.  He later sold his stake for $15 million.  Then he went into politics.

The two Bushes know risk, know about taking chances and became millionaires on their own before going into politics.  They also learned lessons about spending money and doing so prudently. 

Bill Clinton went into politics almost immediately after getting his law degree.  He was Attorney General and then Governor of Arkansas.  As governor he had a governor’s mansion.  He ran for president and upon winning traded in his governor’s mansion for the Executive Mansion, aka the White House.  He had been on the government payroll and living in government provided housing almost his entire working life.  The sweat of the people in who paid their taxes paid him.  After leaving office, Mr. Clinton was able to write books about his experience and make speeches commanding six figures a pop.  His wife did pretty much the same.  They lived off the people and ended up very rich.  They didn’t create a product or service, they didn’t create jobs, and they didn’t meet a payroll. 

I can hear the screams from the left right now, “What do you mean he didn’t create a job or meet a payroll?”  Try this test.  If Bill Clinton’s opponent was elected rather than Bill Clinton, would there still be a government payroll and government jobs?  If yes, Bill Clinton didn’t create them.  If either of the Bushes didn’t create their companies would there be jobs at those companies or payrolls?  No.

What about some other famous politicians who tell us what to do?  Let’s look at Al Gore.  Here is another individual that spent the bulk of his career in government.  He was a member of Congress, a United States Senator, Vice President and presidential candidate.  Today he is very rich.  It is said he may become the first “green billionaire”.  If he went into his current endeavors before a life in government, would the story be the same?  Or is it because of his name, reputation, and connections that he made at the public trough, that he is wallowing in riches, and telling the rest of us to reduce our carbon footprint while his mansions consume ten times the energy of his neighbors?

Charlie Rangel spent most of his life in government.  He rose through the ranks and now has a waterfront condominium in the Dominican Republic, writes the tax laws but does not observe them, and is a wealthy man.  Conservatives don’t believe in rent control or rent stabilized apartments, but Charlie does.  After all, how can poor and middle income people afford to live in places like Manhattan if greedy landlords have their way.  So Charlie Rangel who makes $174,000 per year, plus his chairmanship pay, has not one, not two, not three, but four rent controlled apartments.  Is he poor or middle class?  No, he is the political class.  He took three adjoining rent controlled apartments and had them joined together, while the fourth apartment served, illegally, as his campaign headquarters.  What about the poor and blue collar workers who could live in Manhattan if three of your four rent controlled apartments weren’t being horded by you?  Let them eat cake.

John Kerry is in the news for trying to avoid $500,000 in taxes on his new yacht.  Here is another individual who spent his entire working life in government.  He can tell the rest of us to pay more taxes while he garners favors spending our money. He is the richest man in the Senate but with prenuptial agreements with his wife he only lists personal assets of between $400,000 and $1.8 million and joint assets with his wife of $300,000 – $600,000.  So how does he buy a $7 million yacht?  I am not suggesting anything nefarious, it’s obvious his wife paid for it, but do you think he is in touch with someone trying to make a payroll in the private sector?  You pay taxes; John Kerry has advisors to figure out how to avoid them.

So those evil corporations started by those evil men like George Herbert Walker Bush and George Walker Bush, know the value of a dollar.  They know we are not out of the woods yet and so to protect the jobs that their companies still have they are not hiring but are building their rainy day funds.  Perhaps Bob Herbert should ask why his employer is shedding jobs left and right.  Perhaps this is his safe way of doing so, but on the other hand the New York Times is hardly hording cash.  Its circulation is crashing because people like Bob Herbert are so out of touch with the rest of America; no one wants to read his rants any longer.

So perhaps Bill Clinton spends millions on Chelsea’s wedding because he didn’t learn the value of a dollar.  He lived of the government for many years and then just held out a basket and it was miraculously filled with more money than he can count.  George Bush spent $100,000 on a wedding because he knows how hard it is to earn a dollar.  What we need is less of the political class telling us what to do, and then handing us the bill and more entrepreneurial Americans who risk their own money, watch it like hawks, create jobs and generate wealth that they then reinvest in America.

Best wishes to Chelsea and Marc.

This week we saw President Obama come out swinging to that old class warfare tune.  Lashing out at Republicans in Congress for not adding to the deficit by extending unemployment benefits, he implied they were heartless and cruel.  The president used the same tired prop of the straw man, that is, accusing “the same people” without naming any of those people.  He uses this tactic because if he actually named the people he was accusing he would have to produce facts to back up the charges and Obama, as usual, doesn’t have any.

But here’s what he does have.  He has a record of focusing his energy on passing ObamaCare instead of focusing on growing the economy.  He is layering on more uncertainty of huge government programs and impending taxes that are scaring most small businesses from any hiring until the dust settles and they can tally up the bill.  He has Republicans who are ready to go along with the extension in benefits, if and only if, they are paid for.  With only about half of the $787 billion stimulus bill money spent, which is working fabulously by the way, taking the needed $30 billion from that kitty should be obvious. 

President Obama also has a chief economic advisor named Larry Summers.  Mr. Summers wrote an article on unemployment for the Concise Encyclopedia of Economics while at Harvard and in it he raised the following points:

• Government assistance programs contribute to long-term unemployment is by providing an incentive, and the means, not to work.
• Unemployment insurance also extends the time a person stays off the job. [Colleague Kim] Clark and I estimated that the existence of unemployment insurance almost doubles the number of unemployment spells lasting more than three months.
• If unemployment insurance were eliminated, the unemployment rate would drop by more than half a percentage point, which means that the number of unemployed people would fall by about 750,000.
• Another cause of long-term unemployment is unionization. High union wages that exceed the competitive market rate are likely to cause job losses in the unionized sector of the economy. Also, those who lose high-wage union jobs are often reluctant to accept alternative low-wage employment.

It seems as if President Obama has painted himself into a corner.  The stubbornly high unemployment numbers are poised to ravage the Democrats in the mid-term elections.  But if his advisor, Mr. Summers, is to be believed, the unemployment benefits he is trying to use as a campaign issue against the Republicans is probably propping up the unemployment numbers.

The American people have reached their limit on deficit spending and want it reined in.  The Democrats put in place something called Paygo, which means pay as you go.  If you want something, you have to pay for it.  However, the Democrats are bypassing their own rule at every turn.  You can’t have it both ways, ceremoniously pass a Paygo rule for the purpose of the photo op and to look responsible, and then spend recklessly once the klieg lights go dark.

What prompted this president to conduct his Rose Garden show with three unemployed Americans used as props?  Could it be that Nancy Pelosi is hopping mad that this president has not been helping Democrats to get reelected in the fall?  If so, perhaps that was the point of the Rose Garden performance, nothing but election year politics.  And you wonder why the American people are becoming increasingly cynical about their government?

Daniel Henninger wrote in the Wall Street Journal:

Senate Majority Leader Harry Reid tells of congratulating freshman Sen. Obama on a phenomenal speech. Without a hint of conceit, Mr. Obama replied, “Harry, I have a gift.”

In the article he also describes this observation:

Harvard Law Prof. Charles Ogletree told how Mr. Obama spoke on one contentious issue at the law school, and each side thought he was endorsing their view. Mr. Ogletree said: “Everyone was nodding, Oh, he agrees with me.”

That’s essentially how he got elected.  With a heaping helping hand from the popular media, many people saw Obama as a blank screen upon which they could project their own views and see those as Obama’s own.  He’s our man!  He listens.  He cares deeply.  For a politician it is a phenomenal gift.  For a legislator it is an extremely valuable gift.  For an executive it is poison.

Pulling the Trigger

As a politician or a legislator you are in the role of persuader; somebody else makes the decision to vote for you or vote with you, respectively.  As an executive you are in the role of the decider.  You must make a decision and every decision, especially the tough ones are going to make a good many people unhappy.  Perhaps that explains why, in the Illinois Senate, Obama voted “Present” so many times.  Voting “Present” rather than “Yea” or “Nay” allowed him to hold that special place where everyone felt he agreed with them.  Too many decisions one way or another would have tarnished “the gift”.  So why is “the gift” poison for an executive?  If you don’t have “the gift” and you make a decision your opponents may disagree with you, but they are not surprised.  If you have “the gift” and you make a decision, those on the short side feel betrayed and angry, because they thought you agreed with them and then “sold out” and decided the other way.

Obama is in a tight spot where he has to make decisions and decisions have consequences.  When you make a decision it is very hard to make it seem like everyone got their way.  His complete lack of executive experience is telling.  If he had some executive experience, such as a mayor or a governor, he might have had enough practice learning how to make his decisions appear to satisfy everyone, as his campaign speeches did.  But that’s the thing about decisions.  If everyone supports them, they’re not much of a decision, like deciding to pardon a turkey on Thanksgiving.  Everyone enjoys the decision, but it’s really not what we elect presidents for.

I’ll Have the Waffles, Please

If you watch closely, you can see that Obama is struggling to preserve “the gift”.  He said he is for closing Guantanamo, but not yet.  He is for pulling out of Iraq, but no timetable.  The general he put in charge of Afghanistan, McChrystal, said he needed 40,000 more troops, but Obama could not bring himself to say yes or no.  He had to ponder, think, consult, weigh alternatives, and three months later, he gave McChrystal what he asked for.  Those on the left complained that he was not pulling out.  Those on the right complained that he wasted precious time while our troops were on the battlefield.  His backers tried to give him the fig leaf of showing gravitas.   He can’t seem to find the magic formula where everyone applauds him.  From “the gift” he has gone to “the anti-gift”.  Instead of satisfying everyone, he is finding that he is satisfying no one.

Move On

It’s time for Obama to “Move On”.  He should put “the gift” in his trophy case right next to his Nobel Peace Prize.  It got him to the White House.  How much more can he ask of such a thing?  So drop the pretense.  We all know he is a hard left guy, so he should just be who he is.  He may suddenly face a more hostile press, or they may love him more, although that would be hard to believe.  But when he makes a decision he will at least please his base, and then his opponents can fight his statist goals without being branded as racists.  As a hard left guy he will probably not get re-elected because America is not a hard left country, on the contrary the majority of Americans describe themselves as conservative.  But by choosing he can try to do what he can within one term.  It will be a battle. Obama’s poll ratings have dropped steadily since his inauguration and the Democrats are likely to lose seats in Congress this fall.  As an old acquaintance once said to me, “It’s like standing in the middle of the road.  Choose left or choose right, but choose; otherwise you get hit by traffic coming in both directions.”

The New York Times had some, what was to me, shocking news today.  The article said that there was now consensus that the Obama stimulus plan was working.  Is this the same kind of consensus that man-made global warming was settled science, despite the glaring evidence that carbon dioxide emissions continue to grow while the globe stopped warming ten years ago?  This is also close on the heels of breaking stories of extraordinary misinformation if not outright deceit on how the $787 billion is being spent.

Smoke and Mirrors

Early on in the article we have this gem:

“The legislation, a variety of economists say, is helping an economy in free fall a year ago to grow again and shed fewer jobs than it otherwise would. Mr. Obama’s promise to “save or create” about 3.5 million jobs by the end of 2010 is roughly on track, though far more jobs are being saved than created, especially among states and cities using their money to avoid cutting teachers, police officers and other workers.”

There is no mechanism that exists to measure a job saved. None.  So how do they do it?  It goes something like this:

“Here, Mr. Stimulus Funds applicant, I have this check for you for $642,000.  No can you tell me, if I give this to you, how many jobs would you create or save?”

“Create? Er, none.”

“Hmmm,” the bureaucrat mutters, staring down at the check in his hand, “what about jobs you would save?  You know, if I don’t give you this nice, rather large check, how many of your people would you be forced to lay off?”

“Oh, I get it,” the potential recipient says with a wink and a smile, “probably all of them!”

The bureaucrat scribbles down a number, and hands over the check, walking away shaking his head.

That’s about how it’s done.  The government surveys the people getting the money and asks them what would have happened if they didn’t get the stimulus.  And what would you expect them to say?  Keep the check?

Revenue Starved States

What a concept, “Revenue Starved States.”  The article complains that not enough money was provided to “Revenue Starved States.” Does he mean states like California and New York?  I believe the correct term is states where spending is out of control.  It means states where taxes are so high that people are moving out in droves, and among them the “wealthy” people they love to tax to the eyeballs, meaning a dramatically shrinking revenue base.  After all, if one of the wealthiest people in the state, who is part of the group that pays 70% of the taxes, moves out of the state or (out of the country when it gets bad enough), that means a lot of people are going to see their taxes raised to make up for it.  So the statists seem to think a stimulus package that keeps these bloated bureaucracies fat, dumb and happy is the way to go, until when exactly?

The Multiplier Fallacy

The other great fraud being foisted on us is the multiplier effect, where for each dollar of stimulus money spent more than a dollar of economic activity results:

That sort of impact is what makes federal aid to state governments rank high in economists’ reckoning of the stimulus value of various proposals. Every dollar of additional infrastructure spending means $1.57 in economic activity, according to Moody’s, and general aid to states carries a $1.41 “bang” for each federal buck.

Even more effective are increases for food stamps ($1.74) and unemployment checks ($1.61), because recipients quickly spend their benefits on goods and services.

Okay, then how is this for a solution.  Let’s spend $10 trillion on infrastructure, food stamps and unemployment checks, since they will result in $15 trillion or so in economic activity, because of the multiplier, right?  For that matter, let’s have the government spend $100 trillion and we’ll really be rocking.

Where’s the So Called Consensus

From what I read in the article, there was only one economist that could be called a conservative, Martin Feldstein, that they were willing or able to quote, and this was his take on the stimulus.

While some conservatives remain as skeptical as ever that big increases in government spending give the economy a jolt that is worth the cost, Martin Feldstein, a conservative Harvard economist who served in the Reagan administration, said the problem with the package was that some of its tax cuts and spending programs were of a variety that did little to spur the economy.

“There should have been more direct federal spending that would have added to aggregate demand,” he said. “Temporary tax cuts and one-time transfers to seniors were largely saved and didn’t stimulate spending.”

That’s it?  That’s the consensus?  It seems to me that he is pointing out what was wrong with the package rather than what was right.  He was in the Reagan administration and he knows what works: permanent cuts in marginal tax rates. Those dreaded tax cuts for the “rich.”  The thing is that when the people above the subsistence level get to keep more of what they earn, yes it does belong to them and not to the government, they tend to invest it, which means the provide capital to businesses that grow and create jobs.  Yes, capitalism.  What the stimulus does is take money away from these people, or borrows it and steals it from future generations, and gives that money, as in the example above, to highway projects, food stamps and unemployment checks.  The first of these may create jobs until the road project is completed, but the latter two only increase the dependency of those recipients on the government.  So how exactly does the stimulus plan that puts money into a highway project and unemployment benefits, help a banker who got laid off?  How does it help the unemployed executive from United Technologies?  It doesn’t.  It’s like a drug fix.  You may feel good for a while, but then it wears off and you need another fix.

The Genius of Government

You would think that with all the examples of government planning lying on the waste heap of history, the statists will finally catch on that they can’t successfully pick the winners and losers in an economy.  Government has to get out of the way and let the market work.

Government must be drastically cut down to size.  Think of the popular TV show “The Biggest Loser.” Picture the governments of the United States, California, New York, New Jersey, Rhode Island, Michigan, Nevada, for starters, as contestants.  Let’s see who can lose the most weight.  Ready? Go.

I read the article with great concern and disbelief, that yes, Christopher Buckley, son of William F. Buckley, Jr., was going over to the Obama camp.  His father was the man who founded National Review at a time when socialism was advancing unchecked.  In the mission statement for the new magazine he wrote, “It stands athwart history, yelling STOP, at a time no one is inclined to do so, or to have much patience with those who so urge it.”

The younger Mr. Buckley reiterated that he remains a conservative, so there must be a strongly compelling argument for his decision.  I braced myself to be knocked down by a wave of reason and swept out to sea, only to be fished out of the water by a passing Obama skiff, and hustled off to the voting booth where, I too, would vote for change I could believe in.  What happened next was anticlimactic. 

 Mr. Buckley begins by throwing Sarah Palin over the side, dismissing her as an error in judgment by McCain.  He’s entitled to that opinion, but this election has been chock full of misjudgments by all parties.  What about the top of the ticket?  Buckley goes on to extol the virtues of Senator McCain, and he speaks as someone with first hand knowledge.  However, all of his praises are in the past tense.  He says the campaign has made John McCain “snarly.”  As the final thrust of the argument he quotes McCain as saying, “We came to Washington to change it, and it changed us.”  Et tu, Christo?

Buckley thus made a plausible argument to stay home on Election Day, but I was waiting to learn what pushed the needle all the way to the other side.  The main points of the pro-Obama case were that Obama has a “first class temperament,” that he is intelligent and he writes his own books.  With these attributes, Buckley reasons, he will soon discover that liberalism won’t work; he’ll change his ideas and we will once again live in Camelot, saying that if he doesn’t, “he will almost certainly reap a whirlwind that will make Katrina look like a balmy summer zephyr.” 

It seems that Mr. Buckley is willing to go “all in” on that bet.  I’m not.  In the 20^th century only one President came right out of the Senate, with no executive experience.  That was John F. Kennedy, to whom Barack Obama is often compared.  Shortly after Kennedy took office we had the Bay of Pigs fiasco, a major embarrassment to the Kennedy administration.  Later that year, Kennedy met with Khruschev, without preconditions, by the way.  Does that sound familiar?  Kruschev mopped up the floor with him for two days, prompting Kennedy to say, “He just beat the hell out of me.  I’ve got a terrible problem if he thinks I’m inexperienced and have no guts.  Until we remove those ideas we won’t get anywhere with him.”  Two months later the construction of the Berlin Wall began, and the following year brought the Cuban Missile Crisis, where we came closer to nuclear annihilation than ever; after that began our greater involvement in Viet Nam.  Hope, Change, Charm, Temperament, Intellect, Harvard.  I’ll pass.  If for the first time in nearly fifty years we have no choice but to elect someone from the Senate with no executive experience, I’d rather have someone whose been around the block a couple of times, no matter how surly the old salt is.