Free Markets, Free People

Daily Archives: February 9, 2010

Quote Of The Day

The QOTD for today actually comes to us from a NY Times editorial in 2005 which clearly states their understanding of the job of an opposition party:

Mr. Bush has reacted by railing against Democrats for obstruction — as if Democrats are duty-bound to breathe life into his agenda and, even sillier, as if opposing a plan that the people do not want is an illegitimate tactic for an opposition party.

Why I believe that is exactly the point the right is now arguing.  As witnessed by the editorial, the Democrats, lefty blogs and much of the media thought it was fair play in 2005.  Take heed, Republicans and don’t end up breathing life into a corpse.  The Democrats didn’t apologize for killing Social Security reform.  And it obviously didn’t hurt them electorally.

Question: did killing SS reform in 2005 make America “ungovernable?”

More importantly, did that mean the NY Times wanted the Bush agenda to “fail”?

Heh … Archives are a bitch, aren’t they?

~McQ

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Destroying The “Ungovernable” Canard

Jay Cost at the Real Clear Politics blog takes on the emerging liberal canard about America suddenly becoming “ungovernable”:

Recently, some analysts have suggested that the lack of major policy breakthroughs in the last year is due to the fact that America has become ungovernable. Ezra Klein argued that it was time to reform the filibuster because the government cannot function with it intact anymore. Tom Friedman suggested that America’s “political instability” was making people abroad nervous. And Michael Cohen of Newsweek blamed “obstructionist Republicans,” “spineless Democrats,” and an “incoherent public” for the problem.

Nonsense. America is not ungovernable. Her President has simply not been up to the job.

Cost goes on to lay out, in some pretty good detail why he claims Obama hasn’t been up to the job. And I think he does a pretty thorough job. Be sure to read it all.

He also mentions something in there that I think is lost on the left and sometimes the right. While for many of us, we’ve seen government grow well beyond what we find acceptable or prudent, we actually could be worse off. And one of the reasons we’re not is the inherent design of the system of government we have. The same design many on the left now find frustrating and obstructive.

Let’s acknowledge that governing the United States of America is an extremely difficult task. Intentionally so. When designing our system, the Founders were faced with a dilemma. How to empower a vigorous government without endangering liberty or true republicanism? On the one hand, George III’s government was effective at satisfying the will of the sovereign, but that will had become tyrannical. On the other hand, the Articles of Confederation acknowledged the rights of the states, but so much so that the federal government was incapable of solving basic problems.

The solution the country ultimately settled on had five important features: checks and balances so that the branches would police one another; a large republic so that majority sentiment was fleeting and not intensely felt; a Senate where the states would be equal; enumerated congressional powers to limit the scope of governmental authority; and the Bill of Rights to offer extra protection against the government.

The end result was a government that is powerful, but not infinitely so. Additionally, it is schizophrenic. It can do great things when it is of a single mind – but quite often it is not of one mind. So, to govern, our leaders need to build a broad consensus. When there is no such consensus, the most likely outcome is that the government will do nothing.

The President’s two major initiatives – cap-and-trade and health care – have failed because there was not a broad consensus to enact them. Our system is heavily biased against such proposals. That’s a good thing.

So, as Cost points out, governing America is hard. But that’s a feature not a bug. It is intentionally hard because within that system is a means for the minority to be heard. That’s a critical feature. Because of that feature, the majority isn’t able to ram through legislation that isn’t acceptable to a broad base of the voting constituency. Health care reform and cap-and-trade represent legislation that has been found wanting in that regard. So the left, who used it like a Stradivarius when they were in the minority, now want that check eliminated in the Senate (kill the filibuster) and pine for the good old days of elite rule when, they claim, ramming through major legislation was so much easier.

No real surprise there.

Which brings me to Richard Fernandez’s take on this subject. He agrees with 99% of what Cost says, but says there is 1% where he’d differ:

The Left doesn’t want to govern, it wants to rule given the chance. It is as always willing to leave its own Big Tent behind at the decisive moment. The continual calls from the Democrat Left for Obama to ‘grow a spine’ are really coded calls to say that the moment is now; that the President must ‘’seize the day, seize the hour”. It’s not as Cost imagines, a call to compromise. It’s a call to say that the time for compromise is over. They can drop the mask; they can hoist the Jolly Roger.

I think Fernandez is right. Remember “I won” soon after Obama’s assumption of power? That bit of gloating was a moment the mask dropped.

The left would much rather rule than govern. It is certainly easier. And it tends to agree more with their authoritarian bent.

Governing is a messy and hard business in which they must listen and react to constituents. It means they actually are servants to the public. On the other hand, ruling means the elite choose what the constituency should live with since it is believed by them that the elite know best what that should be. Those they represent exist only to justify the presence of their rulers. The only difference between our left wing and that which founded the USSR is ours haven’t ever had the chance to effect the change those in Soviet Russia did. To this point, our system has mostly prevented it. But redistribution of income, more government intrusiveness and more government control are certainly the obvious desired results of most of the left’s agenda.

And, much to the frustration of the left, the system is preventing it again (with the stipulation that the GOP doesn’t find a way to cave and pass the unpopular bills cited above).

I’m not sure what Barack Obama thought he’d be able to do in terms of “ruling” instead of “governing”, but I’m sure that those who supported his “hope and change” agenda weren’t looking for a ruler. However it is clear, per Cost’s article, they’ve not gotten someone who can govern either (back to the leadership problem again). And, somewhat surprisingly, Obama doesn’t seem to understand the situation he’s put himself in as he doubles down on the leftist agenda he’s allowed liberal Congressional Democrats to craft. He, like so many deluded politicians, is convinced the problem with lack of popular support for the agenda is to be found with the message’s delivery, not with the message itself.

Cost concludes with an answer that I think fairly well destroys the “ungovernable” canard:

This remains a divided country, which creates complications in a system such as ours. The President should have recognized this, and governed with a view to building a broad coalition. But he has not.

America is not ungovernable. Barack Obama has so far failed to govern it.

Here’s to further frustration to the left and their agenda by the “ungovernable” among us.

~McQ

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Musings, Rants and Links over the 18th Fairway:02/09/2010

We finally got a mixed bag on the employment front this month, a welcome change from the purely awful. However, with everyone focused on “creating” jobs I think this quick synopsis attacking the unrealistic expectations of when and where jobs will come from is well worth reading. This chart gives you an idea of how bad it really has been (click image for larger version)

PercentJobLossesJan2010

Yves Smith looks at the problem of how to handle the prospect of the financially weaker members of the European Union possibly defaulting. neither the PIIGS nor their colleague states want to take the steps they may need to take. Markets however are sending a clear message, “Do Something!” The risk goes beyond the direct damage from the potential losses from holding these countries debts. European banks are already shaky, with shaky assets and still a lot more leverage than is safe. I believe Europe’s bear market is likely back on.

European banks are shaky? How provincial of me not to mention our own banks. The coming wave of defaults in the Alt-A and Prime mortgage space are not getting enough attention, Yves helps out there as well. Not only are the losses coming (pretending loans are good only works until they actually default) but the banks are in for some serious lawsuits from all kinds of parties that bought the toxic loans. First in line are Freddie and Fannie. They will still lose at least 400 billion, but they’ll take a good chunk out of the banks hide on the way down.

the phrase “credit specialists at Citi” is not exactly the kind of thing which instills enormous confidence in analysts and investors these days

I think that is an understatement. They want to sell another fancy derivative designed to remove all risk if there is a systemic crisis when, of course, those supposed to pay up will certainly have the money to do so….Right?

Please imagine me banging my head against the keyboard. And no, the response of the Citi Spokesman doesn’t make me feel any different, in fact, it makes me feel worse.

The term liquidity is the pixie dust the financial commentariat uses to obscure what is really going on. I maintain, and have throughout the last few years, that our difficulties have not been a liquidity crisis (though many who had no business exposing themselves individually to liquidity drying up for them certain had a liquidity crisis) but a solvency crisis. David Merkel points out that liquidity always exists, it just goes where the marginal credit buyer has gone. Where insolvency risk seems to be increasing, the marginal buyer can become very scarce and will provide it to areas seemingly exposed to less risk. At the end of the day it is solvency that is our problem, and until we solve that liquidity will go to those perceived to be least at risk. Right now that is the government and those they are backing. Hence a credit crunch for much of the economy.

Speaking of credit, consumer credit has now declined for 11 straight months. A record, and by a long shot. (Click image for a larger version.)

ConsumerCreditDec2009

In the “no big surprise department,” and paralleling the argument I made at the time, it has now been shown that the ban on short selling during the crisis did not help support prices and damaged stock market liquidity. In the no surprise at all department the biggest complainers turned out to have fundamental problems that short sellers were pointing out accurately (much better than our regulators.) The loudest complainer of all, Overstock.com and their bizarre CEO, Patrick Byrne. The upshot, they have been cooking their books for years, just like the short sellers were claiming.

Cross posted at The View from the Bluff

“Bi-Partisan Health Care Summit” Or Political Theater? (Update)

The GOP has every reason to be wary of and, in fact, refuse to participate in the televised “bi-partisan” health care reform summit the President is calling for on NPR unless a number of preconditions are met. The reasons are many, but perhaps the primary one has to do with the fact that this isn’t a summit proposed to begin bi-partisan talks on reforming health care, but instead, an attempt to shame Republicans into supporting the present Senate bill passed. The president refuses to abandon it and reset the health care reform debate at the beginning.

After months of behind closed door negotiations, it’s suddenly “sunshine” time. Why in the world wouldn’t Republicans be suspicious?  It’s hard not to conclude (especially after the results of the televised meeting at the GOP retreat) that this is nothing but political theater designed to show the Republicans as “obstructionists” and the “party of no”.

What the televised “summit” will likely consist of is Obama and the Democrats pushing for acceptance of the same bill now pending and the Republicans saying “no”. The desired outcome is to have them say it right there in the open on TV.  Of course they’d love to have enough Republicans submit to the pressure and commit to passage as an outcome. That’s most likely not going to happen. The most likely scenario has the Republicans say “no” and Democrats claim “see we tried to include them, but they refuse” and use that as a justification for reconciliation. As Democrats see it, it would be a win-win for them with a chance to make the GOP look bad.

The House Republican leadership has sent a letter to the President in which they question all of this. You can read it here. My favorite part of the letter comes after a series of very pointed questions are put to him:

Your answers to these critical questions will help determine whether this will be a truly open, bipartisan discussion or merely an intramural exercise before Democrats attempt to jam through a job-killing health care bill that the American people can’t afford and don’t support. ‘Bipartisanship’ is not writing proposals of your own behind closed doors, then unveiling them and demanding Republican support. Bipartisan ends require bipartisan means.These questions are also designed to try and make sense of the widening gap between the President’s rhetoric on bipartisanship and the reality. We cannot help but notice that each of the President’s recent bipartisan overtures has been coupled with harsh, misleading partisan attacks. For instance, the President decries Republican ‘obstruction’ when it was Republicans who first proposed bipartisan health care talks last May.

The questions mentioned address reconciliation, starting over and other important ones. It’s a letter that makes it clear that the House GOP leadership is very suspicious of the intent of the so-called summit – and rightfully so.

Of course that doesn’t mean they won’t end up playing along. The possibility that the summit would turn into a “bash the GOP” event is something they just won’t be able to stand and will show up in an attempt to avoid that.  Instead, they’ll just play into Democratic hands.  If I were them, I’d instead issue a statement saying that the GOP has concluded there is no good faith attempt on the behalf of the administration or the Democrats toward bi-partisanship in the summit citing their refusal to reset the debate and include the GOP from the beginning. As a consequence the Republicans see no utility in trying to make a silk purse out of the sow’s ear of legislation they already universally oppose.

I don’t know about you but I’d respect them much more if they did that than if they show up and play along in a bit of political theater that is designed primarily to cast them in a bad light for the benefit of the opposition.

UPDATE: White House (non)response to the GOP’s letter.

~McQ

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