Fiscal Battle: More of a truce than peace

I watched enough Saturday morning cartoons to know that it could be done.  Time and time again some hapless cartoon character finds himself running off the edge of a cliff only to start back peddling midair and return again to terra firma and wipe the sweat from his brow.  ”Whew.”

That describes where we are today, does it not?  You can draw your own conclusions, but cartoon reality is as sophisticated as anything going on in Washington today and, hey! trust what you just witnessed!

I believe an opportunity for real tax reform — or at least a practical discussion of it — might have been missed, however.  It seems to me that the White House had an opportunity to propose a tax reform plan as a part of the Fiscal Cliff negotiations.  Tell the GOP congress, for example, that they can either consider at reform now as a part of a long-term solution or let the Bush tax cuts expire on schedule.  Let the chips fall where they may.  There might have been some power in that position.

Most Americans would have placed the blame exactly where it belongs:  Squarely on the shoulders of the GOP.  And until we get out of cycles driven by failed conservative principles, we cannot expect to enact the larger reforms necessary to restore vitality to the American economy.

In time, it would seem that we need to restore taxes to levels more in line with the Clinton years anyway, but the problem is we really cannot afford to implement tax increases on middle-income earners now.  These are the people who spend the majority of their earnings out of necessity.  That spending is crucial to economic recovery.  Reducing that spending power is a mistake in the current economic situation.

Prior to the Bush tax cuts, funding was adequate.  The Bush tax cuts were part of an overall “starve the beast” strategy implemented in an era when the beast was allowed to grow on healthy diet of deficits.  The so-called spending problem was matched by a funding problem, especially as it involved unfunded programs like a few poorly conceived wars, expansion of the national security, and those tax cuts.

Eventually the formerly robust state of macroeconomic and fiscal harmony should be the ultimate goal of government policy makers, but it is hard to see how we will get there with a country so dismally misinformed and divided about tax policy and economics.  Rather than return to the pre-1930s America, we should be looking to restore the more principled policies of the 1990s.

The White House had an opportunity to roll that out.  Of course it would have to have been a long term plan — which is all but impossible in politically divided and impatient America today — but it would have been nice to see ideas reach beyond a time horizon measured in weeks for a change.

Unfortunately, those of use nostalgic for the civil pragmatism of the past, might have to settle for cartoon antics over political ones.

Related articles

• Fiscal cliff reveals how dysfunctional Republican nihilism makes US politics | Michael Cohen (guardian.co.uk)
• Part 1 of the Fiscal Cliff is Over. Now Gird Yourself for Part 2. (motherjones.com)
• The Long Game, Revisited (andrewsullivan.thedailybeast.com)
• The Bush Era Tax Cuts Didn’t Create The Wealth They Were Supposed To (businessinsider.com)

Unqualified Romney

Let’s presume Mitt Romney’s statements about national and public events are sincere, that he isn’t being deceptive and rhetorically bombastic.  Is this a guy you want for President?

Take his comments yesterday about the Federal Reserve pledge to launch a third phase of quantitative easing.  Romney argues that this proves that Obama’s strategies are not working.  If he is being honest, Romney’s statement is stunning for its simple-minded grasp of the situation.  Six-month old puppies understand facts and consequences better.  I’m not sure a man with the reasoning intellect of a puppy is the man you want in the White House.

Or near our foreign policy and military.  But let’s stick to Romney’s Federal Reserve faux pas.

First off, President Barak Obama is not telling everyone that the work on the economy is finished.  Obama hasn’t put his feet up on the desk and popped a bottle of Champagne (French of course) and he hasn’t hung a Mission Accomplished banner on the White House.  Just the opposite.  Obama — along with the Democrats — has consistently argued that more time, work, and smart policy is needed to assist the economic recovery.

Second, the Federal Reserve said essentially the same thing in its announcement yesterday.  The economy is improving, but not improving at a satisfactory rate.  The economy still lacks demand that would give the private sector reason to increase capacity.  The “job creators” are sitting on record cash reserves.  Keeping interest rates low is intended to spur spending to increase demand which would then incent the private sector to get off its cash.

All of this is a process, something Republicans seem to be inherently unable to understand.  Out of sight, out of mind with them.  Is that the sort of intellect you want leading a great nation?  Of course it isn’t.  And one has to wonder how sincere Mitt Romney really is…about anything.

Anyone who can so skillfully enrich himself with other people’s money must have some capacity for seeing beyond the moment.  He has to be smarter than a dog.  But Romney presumes that the American people are not.  Shame on Mitt Romney for this, but shame on the American people who buy these short-sighted and misleading assessments.  With smarter voters — people voting for their own bests interests (where is Ayn Rand when you need her?) — we would not have today’s Republican Party.  We certainly would not have a Ryan/Romney ticket.

We are indeed better off today than we were four years ago, much better.  And to criticize Obama for all the faults lingering today is nonsense.  Generally you can not take all the credit for the success, too, but the Republicans have made it a matter of policy to block Obama at every opportunity.  It is hard to see how Republicans have contributed anything but blame to the current political discourse.  Again, is that what you want for leadership?  Whiners are not leaders.

It should be easy to defeat Republicans.  They have no record to stand on, they have no solutions, and they show either a basic lack of intellect or an overwhelming display of deceit.  These are horrible qualities for leadership.  But Americans are not paying attention.  Sometimes things are black and white.

 

Related articles

• Polls Show Obama Builds Modest Lead Over Romney (voanews.com)
• From Jack Ryan to Mitt Romney: Obama’s foes tend to self-destruct (thegrio.com)
• Romney returns to criticizing Obama on economy (cnsnews.com)
• Obama Responds to Romney Statement (politicalwire.com)
• Barney Frank Bashes Republican Fed Complaints (huffingtonpost.com)

How Change Happens in David Brooks’ World

David Brooks

David Brooks published a hum-dinger of a defense of private equity firm capitalism yesterday in the New York Times, rallying for Mitt Romney in the process.   Very quickly, consider a couple points.

First, it is true that companies like Romney’s Bain Capital seek distressed business and many of those would not survive at all if private equity interests did not come to “save the day.”  You could argue that saving 20% of jobs is better than losing 100%, for example.

But these private equity firms have little at risk and plenty to gain.  In the process of saving a company they harvest profits through the liquidation of remaining assets and retain the profitable remainders.  The laws favor this sort of “risk taking” because it is supposed invigorate and reward local investment.  But “investors” like Bain take enormous profits through a process of capital redistribution that often leads to investments in other economies.  We can’t win a labor cost war in this country simply by downsizing employees and right-sizing management.

When Brooks and others talk about increased productivity, for example, they are not off the mark.  These companies do become economically more productive and efficient, but that happens at the expense of worker compensations, investments in other markets were costs are lower, increased use of technology, and other factors of production that often have little positive impact on people and communities that once thrived  in a previous economic era.

The answers here are difficult because we cannot go back to a 1950s post-WWII economy.  We are in a global economy.  But it is absurdly disingenuous for politicians and pundits to make the claim that increased efficiency and productivity is inherently good for the local economy.  Ransacking dying industries and saving a few thousand jobs isn’t really a forward-thinking way of revitalizing the economy for the long term.

And this notion that someone like Mitt Romney could bring his private equity investment experience to government is absurd, if not dangerous.  Government is not a business.  Public goods are not private goods.  Government and business have different goals and economic roles.  In fact it seems to me that having a so-called business ethic and experience in government is the last thing we want if we look at the current record.

Mitt Romney, a hero for the American worker, being swell at one of his presidential campaign rallies. 

Let’s face it, business will turn to government when it suits business.  There is a reason why business invests billions lobbying government.  It isn’t all there just to cut regulation.  They want to save tax cuts and subsidies, too.  They want a contract that for $17,000 oil pans.

Republicans in Congress are not streamlining government favors for business, are they?  They’re streamlining public goods.  These people favor “job creators”, whoever they are, at the expense of the people.  Isn’t government a “for the people” institution?  By all means, put a business first president in the White House.

Finally, Brooks appears to lament the idea that Obama might be trying to resurrect campaigns from the “ancient past.”  By that I presume he means FDR?  Maybe Kennedy?  The truth is we could use more of this ancient past in our future.  When we entered the era of modern conservativism, things started to turn badly.

Under conservative leadership today we don’t need experts, we have no time for cooperation, and we seem to pay only lip service to the concerns of the people.  Unless you hold a golden ticket, you’re getting less and less.  Yes, you know that productivity Brooks talks about is true.  Worker output is at record levels.  What about worker compensation?  Not so good, is it?

The problem is a systematic one.  It is one that has everything to do with our place in a global economy and little to with false heroics staged by streamlining struggling old American industries.  As long as companies like Bain see low hanging fruit, we cannot expect them to invest in the immediate needs of our country.  Our competitive edge in labor is gone, likely forever in our historic core economies of industry and technology.  We need to invest in processes and infrastructure that will educate and attract a new economic advantage.  We compete global for both markets and talent.  Outsourcing our resources and investments to other economies hardly seems like the way to rebuild America.

Corporations weathered the economic recession relatively well.  Productivity is at record highs (along with executive compensation) and they are sitting on piles of assets.  When you see how they got there then you have to ask if that is the best model for running a government.  Ask again, what do governments do and what do businesses do?  Businesses are beholden to investors.  Governments serve people.

Related articles

• David Brooks Gets Private Equity Wrong for the Team (businessinsider.com)
• Bain Capital: 9 toughest attack – Politico (politico.com)
• Obama: Romney’s Bain Record Is No Distraction (wnyc.org)
• David Brooks, Self-Doubt and Self-Confidence (businessinsider.com)

Why Sarah Palin Won’t Run

In today’s New York Times (August 24, 2011) and elsewhere there is talk once again that Sarah Palin might join the Republican race for the party’s presidential nomination.  Perhaps she see’s what the rest of us see, an ensemble of embarrassing partisan extremists and intellectual light weights.  This would seem to suit Palin well.

As much fun as it would be to see Palin add yet another layer of absurdity to the race, it isn’t likely to happen.

First of all, I believe Palin is smart enough about her best interests to steer clear of this year’s race.  She has more to lose than gain.  Her popularity is already waning.  More exposure, especially in the “lame-stream” press, will only highlight her ineptness and flaws.  More public scrutiny would only further tarnish the Palin brand.

Palin sucks up trends and profits from them more than she establishes a lead role.  Her rhetoric distills a mix of angry conservative soundbites and complaints without offering much in the way of ideas and solutions.  And this has proven to be very profitable financially for Palin.  It has made her a political celebrity.  She enjoys this.  Real politics?  Probably not so much…she quit her most important political job midstream, as everyone remembers.

Palin will avoid a serious political race simply because it is what it is:  A lot of risk and a lot of hard work.  This one-time short-term governor isn’t up to the task.  Sarah is a better whiner and complainer than campaigner.  She does not enjoy the fight.  She struggles with interviews, slips up with facts, stands glassy-eyed in debates…and does none of it with any hint of polish as her Tea Party twin, Bachmann, seems to do.  Sarah Palin wants things her way and on her schedule.  That’s it.  A race for the Republican nomination won’t cater to her comfort well.

Plus the GOP already has a whole lot of out-of-touch crazy in the race.  Backwardness is the GOP theme in recent years and with people sharing Palin’s credentials like Perry and Bachmann already enjoying a headstart…well, it just wouldn’t be that much fun for Sarah.  She might get the spotlight for a few days, but couldn’t count on much more after that.  That is not the Palin way.  She expects and demands to win popularity contests.  She prefers to choose where she will be most popular.

And don’t forget the money.  Palin’s got all she can expect with Fox News, speaking fees, and book deals.  It is hard to see her giving up that golden goose even for a short time.

The realities of a campaign for the GOP nomination won’t cater to Palin’s needs.  She’ll need to compete and — even more importantly — she’ll need to compete with competence and success.  Again, Palin isn’t up to the task.

Perhaps the most obvious reason Palin won’t go after the GOP nomination is a reason Palin understands well enough instinctively.  Very simply, she isn’t qualified to be the nominee, let alone occupy the White House.  People like Palin — e.g., Bachmann, Perry, et al — have personalities and propensities that should make anyone looking for serious leadership look elsewhere.  These are not leaders, these are self-serving opportunists.  When it comes to an intelligent grasp of serious ideas and debate, these people are flat and shallow.  Few people represent this shortcoming as well as Sarah Palin and she might be just smart enough to understand this.

Finally, if Palin were planning to run, we’d probably see more of her now.  I think we would certainly hear more about her now.  There’s no talk of a campaign staff being organized, for example.  Nothing is happening and worse for Sarah fewer people are talking about her; as her party searches for a strong and popular candidate, Chris Christie was the guy GOP leaders wanted, not Palin.

In short, a presidential race is way over Sarah Palin’s head and her abilities.  She would not stand up to the scrutiny that comes with a campaign.  Personally this would cut into her profitable personal enterprise of being Sarah Palin.  Moreover, her party doesn’t want her anyway.  Sarah won’t run.

Why not just nominate Romney and be done with it?  The debates are too predictable anyway.

Related articles

• 5 Reasons Sarah Palin Needs to Join 2012 GOP Race Now (usnews.com)
• Sarah Palin Shall Not Be Shackled [Video] (gawker.com)
• Time to bring in Sarah Palin (thehill.com)
• Sarah Palin, second-tier candidate (telegraph.co.uk)