Archive for October 2012

The Oceans Are Coming

October 31, 2012

Hurricane Sandy in addition to billions of dollars of destruction, sent both campaign tough questions.  Would  both campaigns need to curtail the appearances of their standard bearers?  Were Romney’s views on FEMA as well as the whole role of the Federal Government versus the private sector wise?  What did the flooding of New York City’s subways and tunnels mean?

FEMA and the overall role Government are both ideological and pragmatic subjects.  The right sees little need for government services since they require taxes to fund them.  The left sees government provided services as necessary since so many Americans could not afford to fund those services themselves.

Pragmatically, there is always room for examining any government service and deciding it might be accomplished more efficiently in some other way.  FEMA during Hurricane Katrina is certainly not a model to be praised.  We shall see whether FEMA during Hurricane Sandy is better.  It is simply hard to comprehend how Pennsylvania FEMA, New Jersey FEMA, New York FEMA, and Connecticut FEMA could afford to have each the reserves necessary for an emergency such as a hurricane.

The sleeping dog is New York’s flooding situation.  Ocean water overflowed the banks and entered subways and a number of tunnels.  The City is busy now trying to empty this water and then assess the extent of damage.  It could be huge in terms of cost to repair.  That is only part of the issue.

The Atlantic Ocean still lies at the edge of New York City.  The Hudson River still empties into the Atlantic Ocean at the edge of New York City.  Manhattan still is an island surrounded by water.  So what happens if the oceans continue to rise?

The Netherlands have thrived for years with much of its land below sea level.  A system of  sea walls, dykes, and locks protect the Netherlands from the North Sea.  What will protect New York City?

Global warming, of course, is the elephant in the room.  The GOP (and Mitt Romney) have taken strong positions and oppose both the theory that man is causing global warming, and even the proposition that global warming is occurring.  Progressives have said the opposite and proposed “cap and trade” legislation as a method to control carbon emissions.  The right has opposed “cap and trade” and has fought against such legislation.  In the heat of this battle, no one has considered whether ocean levels were rising, or what might happen if they did.

The subject highlights the futility of the current divided ideologic political debate.  Whether rising sea levels are caused by  US carbon emissions or not, is a secondary matter.  Carbon emissions in India and China will result in rising sea levels in New York too.

Higher sea levels are going to flood cities like New York unless some counter measures are taken.  Would dykes and locks will be enough?  How much will these measures cost?

What is clear is that arguing about whether global warming is connected to fossil fuels misses important points.

Pragmatically, fossil fuels will be necessary for years.  How can the developed world continue to use them and ask China and India (2 1/2 billion people) to restrict their use of fossil fuels in order to reduce global warming?

With $16 trillion is debt already, where is the money going to come from to build up New York City’s shore line?

Both parties have inadequate answers.  Romney and the GOP deny global warming.  President Obama and Democrats say global warming is real and “cap and trade” is a path forward.  Neither position appears to deals sufficiently with global warming consequences.

Will Hurricane Sandy be the wake up call?


The Calm After The Storm

October 30, 2012

In the wake of Hurricane Sandy, one is struck by how unforeseen events can take control of everyday life.  This event struck the northeast but just ask anyone living in Tornado Alley what nature can do.  For the Northeast, getting debris cleaned up and electricity restored is the first priority.  No time for politics.

Still, the clock is ticking.  Next Tuesday, one week from today, the nation officially votes for the next President.  For many, Tuesday will mark the end of senseless negative political ads and a return to equally senseless, but less irritating auto and medicine ads.  For others, the election outcome will either raise hopes or caste a spell of near despondency.

In this calm, will voters take this time to think the election issues through?

The election is not about the economy or jobs.   It is true that the political rhetoric says the election is about jobs and the economy.  Compared to other major countries, however, the US economy is growing faster and unemployment is lower.  Any thoughtful analysis would say the US is well on it way towards full employment.

The election is also not about foreign policy.  While some may argue that the US needs to exert its influence (read military power) in the Middle East, Africa and Southeast Asia also represent growing areas of concern.  In short, this is not the time for the US to be tied down with a land war anyplace.

This election is not about the poor, the health care uninsured, the elderly on fixed income, the newly graduated seeking employment, or our failing school systems.  The election is not about the political divide or dysfunctional Congress.

The election is really about all these issues… but in the context of a $1 trillion deficit projected as far as we can see.  The election is about how can the country improve each of these issues while on a path to regain control of both the deficit and the debt.

Neither party has caste the election in these terms.  Most likely the reason for silence is that the only path forward which will work will call for broad sacrifices.  The successful path forward will say good-by to the free lunch form of politics.

So, in the absence of either Mitt Romney or Barack Obama saying taxes must go up for everyone and that entitlements along with defense spending must be reduced, voters are left to decide with only half a deck of cards which candidate to select.

Maybe the Hippocratic Oath is more appropriate for this election.  Who will “do no harm”.

The Calm Before The Storm

October 29, 2012

Hurricane Sandy is heading towards land.  The huge storm estimated over 500 miles wide will put some 50 million Americans in danger.  Winds, rain, and rising water pose challenges to all residents in its path, regardless whether they are Republicans, Democrats, or Independents.


There is another huge storm scheduled to strike the entire US on November 6.   Pundits are busy speculating how Sandy will also impact the election.

National polls are suggesting that Mitt Romney is gaining.  More voters nationwide appear to be trending in favor of Romney.  Surprisingly, however, in the “battle ground” States it appears Romney’s surge following the first debate has stopped and may be receding.  Why?

There are probably many reasons but two jump out immediately.  (1) The voting population has a relatively short memory.  Combining this characteristic with the saturation bombing with political ads, it is not hard to see why images, even positive ones, can be fleeting.

(2) The second and even more compelling reason is that in battle ground States, a wider range of issues are important and in play for undecided voters.  Most everyone has opinions about jobs and the economy.  In battle ground States, other issues have resonance too.

The auto bailout really means something to Ohio residents.  Medicare costs and Social Security benefits are on top of the minds of Florida voters (as well as others across the country).  Women’s rights, full recognition of homosexuals, and comprehensive immigration reform have been lingering just below the surface for months.  Now in the calm before the storm, voters are taking the time to think broadly.

October 29 and 30 will be the time for Hurricane Sandy.  These days are also represent the calm before the November 6 election.  I wonder whether voters will ask themselves whether they can believe someone who was “severely conservative” in the primary season and now in the final weeks of the Presidential election is overtly tacking towards the center?

The election is going to be close.  The outcome remains uncertain.  Maybe this calm before the storm can help some undecided voters decide.  We shall see.

Political Theater

October 28, 2012

Most ads we see on television or in the newspapers, for soap, vitamins, and automobiles for example, must meet certain test of accuracy and relevance.  Have you ever heard, “Brand X can make you younger again.  Look around, everyone is getting older but if you buy Brand X, you will get younger”?

Probably not.

What you have heard would go like this.  “Brand X can make you look younger again.  Look around, everyone is getting older but if you buy Brand X, you will feel younger”.  Two words, big difference.

Advertising is all about what things appear to be (look) and what impressions (feel) they make upon us.  Advertisers know this and the create their commercials (ads) to capitalize on this.

Tom Smith is the GOP Senate candidate in Pennsylvania.  He has spent a boat load of money repeating the same story about Democrat candidate Bob Casey…  “Unemployment is high (the economy is too weak), the debt is increasing (government is spending too much), I (Tom Smith) am not a career politician, I’m a business man, and I know how to create jobs, and Bob Casey has done nothing to fix either”… or words to that effect.

These are all relatively true statements but taken together are completely irrelevant.  Unemployment peaked at 10.1% in 2009 following the onset of the financial crisis which occurred during the previous GOP administration.  Why should anyone believe Tom Smith would put in place policies that could dramatically reduce unemployment, especially since Smith offered no concrete examples?

It is also true the debt continues to rise.  The Bush tax cuts and rising entitlement expenditures account for over half of the yearly deficit (and therefore the additional debt).  Why doesn’t Tom Smith say, “if elected, I will raise taxes and cut Medicare, Medicaid, and Social Security”?

Smith’s last claims (I’m no politician, I’m a businessman) is what you want to make of it.  It is a true statement but there is no connection between being a businessman (who creates jobs in his own business) and being one vote in 100 and causing the creation of jobs across the country.  This statement’s irrelevance is even more dramatically illustrated when one learns that Tom Smith is a Tea Party favorite.  This GOP faction believes there is no roll for government in the economy.  So how exactly would Tom Smith create jobs?

The art of advertising is to avoid additional clarifying information while creating the illusion of providing truthful statements.  Political ads are about creating the appearance (like when someone on television is wearing a white lab coat and tells you Brand X is good for you).  This is an intentional design to entice you to feel you would be better off if you followed the advice.

Advertising is never about encouraging anyone to check on the truthfulness or the relevance of the ad.

Political theater today is not your mother’s theater.

Who’s A Moderate?

October 27, 2012

David Brooks, New York Times columnists, gave an endorsement for President Obama yesterday without giving an endorsement.  Brooks spoke of what he thought it means to be a “moderate”.  Brooks says moderation is not half way between the extremes of conservatism and progressiveness.  Rather it is an approach that is mainstream, nether futuristic nor tied to the past.

The recent voter rush, the polls are citing, to Mitt Romney is not based upon Romney being a moderate.  It is true he has changed his position on most issues and spoken in moderate tones.  It is true he has not repeated his pledges to be “severely conservative” nor has he said he would pursue policies where undocumented aliens would choose to “self deport”.  It is true also that Romney has assured the middle class that his 20% tax reduction which will surely benefit the wealthy will also not put a greater burden on the middle class.  This rush is based upon the hope Romney is a moderate.

Why is Romney not a moderate?

David Brooks description of being moderate was about representing a true position.  Romney probably has true positions but if you add up the primaries and the post convention speeches, it would be difficult to assign a specific position (center, right, far right) for any of the policies Romney has addressed.

Lowering taxes when the debt and deficit are as large as they are is an extreme position.   Reducing entitlements while proposing tax reductions, increases in defense spending, and lowering taxes is an extreme position.  Saying you will eliminate regulations when the country sank into its worse recession since the great depression due to too lenient regulatory action is an extreme position.

Romney may be speaking in the closing days of the campaign like a he thinks a moderate might speak.  Romney may want those still undecided to think of him as a moderate.  Romney, however, given what he has said in total, is no David Brooks moderate.

The Private Equity President?

October 26, 2012

Polls, with 10 days to go, are suggesting the possibility of a Romney popular vote victory and President Obama a Electoral College win.  While it is still too close to call and the polling process is highly suspect, the prospect of a split decision presents a question of legitimacy.

Mitch McConnell will claim this time that President Obama does not represent the will of the people.  Mitch’s mantra of a “one term President” won’t work this time.  Mitch will probably go to just ignoring the President.  Gridlock?  No bi-partisanship?

What type of a second term should the country expect?  Is that a reason for swing State voters to vote for Romney even though they were going to vote for President Obama?

The Country will survive with either Mitt Romney or Barack Obama as President.  That’s the good news.

Mitt Romney is a trained private equity executive.  He sees life through an investment (in sure things) set of eyes.  His goals have been about accumulating profit and nothing more. This is a fairly narrow perspective.

He knows the power of negotiations and how to strike a hard bargain.  He will press for the world and settle for much less.  He will be relentless until he reaches his targets.

Hmmm.  That doesn’t sound so bad.

The question we must continually ask is, first, what is it Romney wants, not whether he can achieve any goal.  Leadership is a much admired skill.  Leading the flock over a cliff represents a misplaced skill.  That is what we must be on the look out for… who will inform or advise Romney on choosing his goals.

  • Will foreign policy default to a neoconservative group like George W Bush allowed?
  • Will economic policy focus upon securing wealth at the top and allowing scraps to fall off (trickle down) the table?
  • Will his pick for the Supreme Court appease the evangelicals and ultra conservatives or someone conservative but more moderate?

During the primary season, Tea Party and ultraconservatives openly worried that Romney was a rudderless person.  He had no ideology and certainly not theirs.  They believed he would flip flop on issues and be far more at home with moderate positions.  When one is the President and not just a candidate, they reasoned, one can show their true colors, what ever they are.

President Obama is a much more known entity.  He has shown himself to be a weak negotiator to be sure.  He has, however, pointed the American ship of State in safe directions and has championed policies which will undoubtably be on the right side of history.  His views would appear to be:

  • Ground wars in pursuit of regime change or nation building do not work.
  • “Too big to fail” is real and must be put in the context of effective regulations.
  • Reducing the federal deficit must be done, and at a pace that does not stifle the economy and involves sacrifices by all Americans.
  • Healthcare access should be available to everyone in an affordable and dignified way.
  • Sexual orientation is not a reason to deny rights accorded other citizens.
  • Women’s rights, and in particular, women’s reproductive health options are not the subject for political debate

These are not positions fundamental to private equity.  Mitt Romney could hold these views but his training and experience does not provide any indications he holds any views.  Instead we must go by what candidate Romney has said, who his supporters are, and which advisors he surrounds himself with.  In this regard it is not encouraging.

A split decision, Romney winning the popular vote and Obama the electoral vote is not the best outcome.  It is, however, far more probable that the President we know will serve Americans better than a private equity President.


Second Versus First

October 25, 2012

Another way to view the 2012 Presidential election is which candidate will be more successful, a man finishing his second term or a man entering his first term (and almost certainly thirsting for a second term).  Who will work harder, who will produce the best results?

What will drive a President Obama?  Where in the spectrum of center to far right will a President Romney feel he needs to govern in order to win a second term?

There are two paths forward for both men.  “Kick the can” and “Take real action”.

“Kick the can” is a sure bet if Romney elects to follow the safest route for a second term.  He can claim the economy was much worse than he thought and so he needed to focus first on fixing that before fixing the deficit.  In that case, 2016 will look much like 2012, only with much larger debt.

“Take real action” for President Romney will be a direct assault upon entitlements.  There is no other way the math works.  Additionally, if a 20% marginal rate tax reduction is pursued, Romney will need significant entitlement changes which will increase the burden on the Middle Class.  There is also no other way with a tax reduction.

For a second term President Obama, “kicking the can” is also the safest approach.  This may be the best option to hold open the chance for another Democratic successor. The GOP will be labeled obstructionists and that will not be a hard case to sell.

To “take real action”, however, is the route for President Obama, if he wants to be remembered as a great and transformative President.  To do this, President Obama must ask all Americans to sacrifice for their country.  He must propose a balanced approach of new revenue (taxes and co-pays) along with some modifications to benefits.

There are other considerations beyond the deficit.  The economy, jobs, and social issues could be different too.  A Romney first term will rise and fall on whether the economy becomes sounder and whether jobs (especially good jobs) flourish.

Social issues are unlikely to be a Romney initiative but his problem will be the evangelical and ultra conservative wings of his party.  We have heard that the body naturally wards off conception during rape and most recently that it is part of god’s plan to create life even during rape.  Romney’s term will be difficult enough trying to deliver on his promises for him to turn his back on these peculiar thinkers.

President Obama will certainly not let women’s rights, homosexual recognition, and immigration reform fall backwards.  It is, however, problematic whether he will champion battles he can’t win in Congress, especially if he is fighting for some deficit reduction plan.

A second term for President Obama or a first term for Mitt Romney?  My vote is that President Obama will keep America closer to the center than a President Romney.

In a few days, we shall see.


What More Can Be Said?

October 23, 2012

The third and final 2012 Presidential debate was held last evening.  Naturally each side has claimed their candidate bested his opponent.  Most all pundits said, if there was a winner, it was only by the smallest of margins.  In other words, last evening is not likely to tilt the momentum one way or the other.  Hmmm.

Mitt Romney continued his move towards the center carefully avoiding any substantive fights with President Obama or his foreign policies.  What voters knew about Mitt Romney before the debate is about what they now know after it.  And this is for good reason.  Romney was careful to avoid talking foreign policy since he feared appearing too hawkish would scare off women voters.

Romney, however, did open himself for the “shallow thinking award”.  He repeated a line from one of his stump speeches and it back fired.  Romney said the Navy has less ships now than ever since 1916.  The implication being that President Obama was short shifting the military.

President responded that a lot of things were different from 1916.  For example the military has fewer horses and baronets as well.  The Navy has aircraft carriers and submarines too.  It’s about capability and not just numbers.

This exchange contrasts the two candidates exceptionally well.  Romney is full of assertions (from I know how to create jobs to I can lower taxes and get the debt under control without hurting the middle class to President Obama is not leading in world affairs).  His problem is that he offers no proof about either the President’s mistakes or how he (Romney) would do it differently.

Strangely at one point Romney said with emphasis, “Mr President, governments don’t create jobs, the private sector does.”  Hmmm.  Then what is Mitt Romney saying when he says the President’s policies have failed?

Lower taxes and less regulations were major contributors to the current mess of recession and debt.  Why should these strategies work with Romney?  But this has been said so many times before.

It looks like there is nothing more that can be said in the remaining 14 days.  Some voters may have seen through the Romney facade and recognized that his promises, in total, are impossible to meet.     The math says Romney will have to raise the burden on the middle class, or reduce the aid to the poor, or cut deeply into entitlements, or allow the deficit to grow if he is too cut marginal tax rates and increase defense spending.

Some voters may, on the other hand, have decided that Romney’s persona represents the image of someone who will help.  Gut intuition can provide surprising results.

On the other side of the ledger, President Obama has rested his case with a sound but weak case.  The President says things are getting better and will continue to do so.

The  President has assiduously avoided addressing the biggest issue facing America… how can we improve the economies and create jobs while at the same closing the deficit gap.  (This is exactly the position Romney has taken although Romney says he knows how to do it all.)

So what’s left is getting out the vote.  What ever either candidate can say in these waning days of the campaign, must be focused on getting their voters to vote.  Both candidates have had the chance to clearly answer these great problems.  Both in their own way have taken a pass.

Now its time for a gut check.


October 22, 2012

Yesterday marked the passing of an era.  George McGovern, former Senator, Representative, and candidate for President, died of natural causes at 90.  The South Dakota resident stood tall on the national stage, especially during the Vietnam War period.  He was a man of grace, wit, and courage.

The Vietnam War, in a strange way, has many parallels with today.  It was a war fought for reasons that were simply not true or at best naively misplaced.  There were no frontiers between US and South Vietnamese troops, and the Viet Cong.

There were also no limits that the US would not go to assure victory.  Battle field body count became a nightly news presentation.  Each evening Americans would be told how we were winning the war, and for emphasis, how many enemy soldiers had been killed that day.    If just another 20,000 troops were dispatched, we were told, the war could be quickly wound up.  Truth became a casualty along with some 58,000 Americans and countless Vietnamese.

George McGovern, however, saw through the clouds of war.  Against a sitting President of his own party, Lyndon Johnson, McGovern spoke out against the war before it became fashionable.  McGovern was no soft dove having been a decorate WWII pilot.  He was a realist who could tell when the king had no clothes.

Since 2000, the US has fought two unjustified wars (morphed into nation building projects), turned a blind eye to paying for what the country was spending, and is now contesting a Presidential election where one of the outcomes is to select a President who subscribes to the policies that came center stage following the 2000 Presidential election.

George may not have gotten every issue correct but when it came to the big ones, he could see, and more importantly, speak the truth.

I wish I could say the same for today’s leaders.

What Can They Say This Time?

October 21, 2012

The third Presidential debate will be held tomorrow.  As the third in the series of three (plus the Vice President candidates debate), what can the candidates say that they have not said in the first two?  A safe bet is neither one will tell Americans the extent of the quandary facing either man who becomes the next President.

The quandary is quite simple to state.  In a globalized world where manufacturing is diffused among a broad array of low wage countries, how can the US generate economic growth quickly, either at all, or without increasing the deficit (and debt) a great deal more?  Most all manufactured goods can be produced to the highest quality standards and at costs far lower than within the US.  How can the US afford to invest in creating workplace jobs with a $1 trillion deficit and a $16 trillion debt?

One could argue, although neither candidate is, that even with the current $16 trillion debt, the US could tolerate increasing the annual $1 trillion deficit, say to $1.5 trillion for a year or two, if that would generate growth.  Unfortunately, political wisdom is that the deficit and the debt must come down.

So here is the bind.

The current deficit is more than 50% tied to entitlements.  How can the country deal with the deficit and debt and not deal with Medicare/Medicaid and Social Security?  How can the country not also deal with tax policy if only on a fairness basis.

Mitt Romney says, I will cut taxes, not increase the deficit, and jobs will come as the economy grows.  President Obama says jobs are growing already and he will not allow steps that hurt the middle class as he deals with the deficit.

Romney’s proposals are unsupported by details and by simple logic seem destine to fail if they were ever implemented… What?  What is meant by “if they were ever implemented”?

Romney’s plan certainly involves lower taxes (and I believe he will try) and even more generous tax breaks for the already wealthy (and I believe this will be the center point).  Congressional passage might prove difficult, however.  Romney’s plan to lower taxes and not raise the deficit will surly run amok when reality sets in that demographics and the cost of health care will translate into higher Medicare and Medicaid costs.  If the predicted battle over taxes was not explosive enough, any action by the GOP to cut entitlements while trying to lower taxes, will be even more explosive.  What’s left?

You guessed it.  The deficit and debt will increase despite Romney’s words.

Should President Obama win, he might allow the Bush tax cuts to expire and then try and negotiate a grand bargain…  say lower middle class taxes coupled with some benefits for the rich and some changes to entitlements.   Political realities will just as surely come to the fore.  Chances are that no bargain can be struck, the President will be facing an extremely tough choice.

Should he allow the Bush tax cuts to expire for everyone, or allow them to remain in place for everyone?

Increasing taxes on everyone will produce political dynamite in 2014.  The GOP could then take control of Congress.  This is an outcome Democrats do not want.  So does that mean President Obama will cave on the Bush tax cuts?

If he does, then the domestic economy and deficit/debt will look much the same as with Romney’s plan and likely actions.

Sifting through all of this, a rational voter should realize the economy will most likely be the same regardless of which candidate wins.  The deficit and the debt will remain uncontrolled.

There could be differences, however, in the areas of foreign policy and the web of social issues.

From the George W Bush years, voters have recent evidence of what a neoconservative foreign policy is like and its consequences (two unfunded wars leading no place).  With respect to social issues, despite recognizing the strong opposition from certain groups, there should be no confusion on which side of history these issues stand.

Mainstreaming homosexual orientation, protection of all women’s rights, and accepting that no other solution to undocumented aliens exists other than a comprehensive plan which includes citizenship could be impacted by the next President.

I would not expect President Obama to be aggressive in any of these issues.  By the same token, he would not be expected to step in the way.  The GOP, on the other hand, with its Tea Party and Evangelical wings will be under continued pressure to delay efforts if not reverse the existing situations.

The veto and appointments to the Supreme Court (should they occur) are tools these candidates could use.  I wonder whether either will raise these clear differences and explain how they would use them?  That would be something new.