The Gasps of the GOP

Over at Mother Jones, Kevin Drums writes that voter id laws are the last gasp of a fading GOP strategy. While I think Kevin's analysis is largely right, I would caution that there is nothing in theory to prevent further restrictions in suffrage nor to employ other tactics that aim at maintaining power. The GOP is at a crucible but it is one of their own making. There has always been a paranoid fringe prone to believe in bizarre conspiracy theories richly spiced with anti-government rhetoric, a fear of some impending catastrophe that actually never materializes, a distrust of the alien and foreign coupled with calls for a nativist redoubt , a sense of betrayal by the powers be thus reinforcing the notion that they and they alone are the keepers of the flames of freedom in American politics beginning with some of the anti-Federalists in 1780s. Patrick Henry was certainly a firebrand and outspoken but one can think of him as the Founding Father of the paranoid set. He declined to attend the Constitutional Convention suggesting that there was a dark movement afoot to establish a monarchy going as far as to demand an investigation.

But this paranoid conspiracy-minded anti-government portion of the American political spectrum has largely been a fringe though in the Vermont of 1830s and 1840s, the anti-Masonic party did capture the state government. And the nativist consumed with alleged Papist plots American Republic Party, better known as the Know Nothing Party, for a brief period in the 1850s won important mayoral contests across the country from Boston to San Francisco while also twice claiming the California governorship. From then in the mid-1850s until the Tea Party of today, the paranoid, conspiracy driven elements remained largely a fringe with minimal electoral success.

The problem for the GOP elite is that in their zeal to win elections in the post New Deal America, they have courted some of the most vitriolic, xenophobic and conspiracy minded elements of the American political landscape. But today's date becomes tomorrow's long-term spouse. In building their electoral coalition, the GOP brought in groups that largely came from the most conservative elements in the South and West. And as they came to rely more and more on this portion of the electorate, the effect was to mainstream the fringe giving clout and providing a electoral vehicle to the delusional.

Over the past half century that has remade the GOP from a national party with a pro-business agenda that accepted the social contract of the New Deal into a party that is increasingly dominant in the more rural regions of the country but moribund in the more urban area. That pro-business agenda is now one steroids and the party now aims to reverse not only the New Deal social contract but the Progressive Era regulatory structure that most Americans take for granted.  Since 1960 with only one exception, the GOP after a defeat in a presidential election has nominated an even more conservative candidate in the subsequent election. Only Nixon in 1968 after the Goldwater defeat in 1964 was more to the center. For the GOP, electoral defeat implies a circling of the wagons but as you close that circle you are pushing people out. Hence figures like Bruce Barlett, Jim Jeffords, William Weld, Lincoln Chafee, Loretta Sánchez and Charlie Crist are no longer Republicans. Even among some still nominal Republicans like David Frum and Christine Todd Whitman, there are repeated cries of angst as they see their party self-immolate in the fires of conservative doctrinal purity. But I will quibble with this point that Kevin makes: "They'll also have more and more money on their side, but that's not enough either. After all, there are only so many ad spots available to buy."

Wisconsin, I think, suggests that it is enough. The Tea Party backed Walker outspent his opponent Democratic opponent Tom Barnett by over 8 to 1. According to the Center for Public Integrity, more than $63.5 million had been spent by candidates and independent groups, the overwhelming majority underwritten by out-of-state sources. Another point is that while there are only so many ad spots to buy that implies that those with more money to spend will outbid those with less for available spots. And as they win elections, the GOP will attempt to solidify their control of government by codifying an electoral result into permanent law and hard to undo anti-democratic practices. For the record, we have had in recent memory, Tom Delay's Texas redistricting, the attack on public sector and these voter suppression efforts. It is a coup in steps. Think that can't happen? Look at Hungary now or the fall of the Second French Republic and then get back to me. The belief that the United States is immune to how oligarchic systems operate is to indulge in willful ignorance.

 

 

The S&P Downgrade

Yesterday, the credit rating agency Standard & Poor's put US debt on a credit watch by lowering its outlook for US securities. In essence, Standard & Poor's is warning US policy makers and global investors that the United States risks losing its AAA credit rating unless policy makers agree on a plan by 2013 to reduce budget deficits and the national debt.

“If an agreement is not reached and meaningful implementation does not begin by then, this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer ‘AAA’ sovereigns,” New York-based S&P said today in a report that maintained its top rating on U.S. long-term debt while lowering the outlook to “negative” for the first time.

University of California economist Brad Delong writes in the FinancialTimes:

A spokesperson for Standard & Poor’s said on Monday that there was an “at least a one-in-three likelihood” that the rating agency “could lower” its long-term view on the US within two years. US equities quickly dropped by more than 1.5 per cent. Importantly, however, the dollar did not weaken and US Treasury interest rates did not rise. The reason for this unexpected pattern is simple: the markets think this move is important not because it signals something fundamental about the economy, but because of the political impact it will have in Washington.

So what is going on? A sovereign-debt downgrade is supposed to mean that a government’s finances have become shakier. This means that the likelihood of internal price inflation is higher, the future value of the nominal exchange rate is likely to be lower, and the possibility that creditors might not get their money back in the form and at the time they had contracted for had gone up.

But if this were true the value of the dollar should have fallen on Monday. At the same time nominal interest rates on US debt should also have risen. The value of equities, meanwhile, could have gone either way: macroeconomic chaos would diminish future profits, but stocks have always been and remain a hedge against inflation.

But that is not what happened here. Instead equities fell, the dollar rose and nominal Treasury interest rates were unchanged. Given this, there are two things to bear in mind. First, you can go insane trying to over-interpret short-term market movements. Second, news comes in flavours: new news, old news, no news and political news. And it is important to understand which type this was.

If S&P’s announcement were genuine “new news” to the market, we would have expected to see the standard pattern: equities down, dollar down, rates up.

Meanwhile, if the announcement were old news, we would have expected to see no price movements at all – the smart money would already have taken up their positions. Equally, if it were no news – if the market as a whole simply thought that S&P was irrelevant – then we would have expected to see no price movements at all. But this did not happen: we did see price movements, both in equities, and in the dollar.

Instead what we saw just what might have been expected to see if S&P’s announcement is seen not as a piece of information produced by a financial analyst studying the situation, but instead as a move by a political actor trying to nudge a government toward its preferred policies.

I think DeLong is right. While Standard & Poor's said there’s a one-in-three chance that the rating might be cut within two years, the credit agency also noted its “baseline assumption” is that Congress and the Obama Administration will come to terms on a plan to reduce record deficits. And Standard & Poor's is playing its card hoping that such an agreement is more on the GOP side of the proposal. But this isn't new news. 

Here is Clive Crook on the matter in The Atlantic:

"S&P adduces no new information that I can see. Competent ratings of opaque instruments such as, oh, mortgage-backed securities would be very useful to investors (not that ratings agencies troubled to provide competent ratings in that case, obviously). But why should anybody need that kind of help in judging the soundness of US government bonds? S&P knows nothing about them that you or I don't know."

What is new in Washington is that you have a large contingent in one political party of a rightist persuasion to begin with who thinks that a work of fiction by a third tiered Russian exile is an economic treatise.

"In Love with the Idea of Obama"

I received an email this morning from the Progressive Change Campaign Committee (PCCC) urging me to sign the following pledge:

"President Obama: If you cut Medicare and Medicaid benefits for me, my parents, my grandparents, or families like mine, don't ask for a penny of my money or an hour of my time in 2012. I'm going to focus on electing bold progressive candidates -- not Democrats who help Republicans make harmful cuts."

You can sign the pledge, if you so wish, here.

In its email, the PCCC included some of the reactions of Obama supporters and donors in the 2008 campaign to the fear that the President in his speech today will embrace the recommendations of the Simpson-Bowles deficit cutting commission which envisions deep cuts to New Deal and Great Society entitlement programs. Here are those comments because they are well worth the read: 

Susan Carpenter, Obama volunteer from Ohio:

"Like many volunteers on his campaign, I was in love with the idea of Obama. I haven't given up on him quite yet, but I'm mustering the energy to work on the resistance. He needs to know who we are." 

John Rotolo, Obama volunteer from Florida:

"I'm almost too heartsick to comment...I'm at a loss."

Barbara Louise Jean, Obama volunteer from Nevada:

"It's ludicrous to cut Medicare for seniors when Wall Street created this mess without being held accountable. At 69, I'll be in financial trouble if Medicare benefits are lowered."

Joelle Barnes, Obama volunteer from Pennsylvania:  

"This is like a knife through my heart! This is a Republican thing!" 

Suzanne Fair, Obama volunteer from Maryland:

"I know he has to compromise sometimes, but it seems that he is caving to the Republicans far too often. We elected him for real change and I would like to see him stand strong against the corporate rich."

Margaret Copi, Obama donor from California:  

"I contributed more to Obama's campaign than I have to anything else in my life, but no more dollars from me and definitely not a moment of volunteer time, unless he makes huge shifts and starts to fight for the peoples' interest." 

Frankie Perdue, Obama volunteer from Colorado:

"I do not think that Medicare/Medicaid and Social Security should be on the negotiating table at all. Have the corporations pay their fair share of taxes."

Deborah Finn, Obama volunteer from North Carolina:  

"This is wrong! We did not elect Obama to have him make cuts in valuable, important programs. He needs to stand up to the Republicans. And he needs to speak to the American people about why it is morally wrong to cut the programs."

Michaele Bonenberger, Obama volunteer from South Dakota:  

"This does not sound at all like the Barak Obama that I worked so hard to get elected in 2008." 

Dotty Hopkins, Obama volunteer from California:  

"It makes it hard to gin up enthusiasm for 2012. More like hold your nose and vote again! As a former Obama volunteer, I'm already worrying about my lack of desire to do any campaigning and I'm on our County Central Committee for heaven's sake."

I do think that tonight's speech from the George Washington University is a break or make moment for President Obama vis-à-vis for many in his liberal base that worked so passionately to elect him in 2008. But I'm not sure that the President's campaign team feels that Obama needs all of them this time around given the campaign is a battle for the political center and that center clearly wants, if polls are to be believed, movement on reducing the deficit. To a certain degree, Obama's campaign strategists believes that many liberals have no place to go and that when push comes to shove they will back the President. In this, they are probably right. 

Going back to the notes above, I was most struck by Susan Carpenter's statement. An Obama volunteer from Ohio, one of the three most crucial battleground states in every Presidential election since 1960, Ms. Carpenter confesses that she "was in love with the idea of Obama." I think that pretty much sums what befell the progressive left in 2008. We fell in love with an idea and ignored the substance. Unfortunately for us, we now have to face up to and live with the substance of Obama and desperately need to come up with an idea for 2016.

Roger Simon of Politico yesterday wrote that he doesn't think that "Barack Obama will have a hard time defeating his Republican opponent in 2012, barring a financial meltdown or a major foreign crisis" but rather that Obama should worry about a Democratic opponent from the left. Simon, a staunch old school conservative, goes on to tout the possibilities of Howard Dean, Hillary Clinton and Dennis Kucinich.

None of these at any point in the last two years have ever even suggested that they are interested in challenging President Obama and they are not likely to do so now. Hillary Clinton is really the only one who could mount an effective challenge given her name recognition but she has repeatedly forsworn any interest in any elective office once she retires as Secretary of State. Moreover, she still hasn't even paid off her 2008 campaign debt to Mark Penn as yet. 

The reality is that President Obama is gearing up to raise $1 billion dollars for his run. In an America where money has become the determinant factor in our politics, that is a hefty obstacle to overcome. Barring some unforeseen crisis, Barack Obama will be re-elected President simply because his talents as a fundraiser are unsurpassed. For the progressive left, I believe it would serve us better to focus on electing true progressives to Congress so that we might draw the political center leftward because right now the political center in Congress is of all people, John Boehner. The imperative of recapturing the House could not be clearer.

Larry Summers: ARRA Was Too Small

Reporting from the Institute for New Economic Thinking's weekend conference in Bretton Woods, New Hampshire, Robert Kuttner of the American Prospect offers this tidbit:

Larry Summers, now back at Harvard, was the after-dinner entertainment, interviewed by the prodigious Martin Wolf of the Financial Times, the world’s most respected financial journalist.

Summers was terrific, acknowledging that the stimulus of February 2009 was too small, that the idea of deflating our way to recovery is insane, that de-regulation had been excessive, and that much of the economics profession missed the developing crisis because its infatuation with self-correcting markets.

If only this man had been Obama’s chief economic adviser!

It reminded me a bit of Eisenhower’s farewell address, warning of a military-industrial complex, or Citizen Jimmy Carter’s sublime post-presidency. Why do these people find their consciences and souls after they give up power?

If Larry Summers was the after-dinner entertainment, let's hope the guests found Alka-Seltzer tablets instead of mints on their pillows when they returned to their hotel rooms for the night. I suppose we should be relieved that Summers has found his Keynesian religion, but it wasn't as if his $787 billion fiscal stimulus number wasn't criticized at the time for being too small. 

Certainly, economists such as Joseph Stiglitz, Paul Krugman and Dean Baker all thought the number too small. So did Congressman David Obey who first put together a $1.4 trillion package and then a $1.2 billion package only to be told to pare the numbers further. And inside the White House, Christina Romer argued for a bigger fiscal stimulus making the case that long-term unemployment posed a threat to the economy. They were all outweighed by a political calculus.

Ultimately Barack Obama, and not Larry Summers, bears responsibility for that decision. And it's a lesson, he still doesn't seem to quite mastered as yet. Back on February 9, 2009, Paul Krugman wrote this in his New York Times column:

I blame President Obama’s belief that he can transcend the partisan divide — a belief that warped his economic strategy.

After all, many people expected Mr. Obama to come out with a really strong stimulus plan, reflecting both the economy’s dire straits and his own electoral mandate.

Instead, however, he offered a plan that was clearly both too small and too heavily reliant on tax cuts. Why? Because he wanted the plan to have broad bipartisan support, and believed that it would. Not long ago administration strategists were talking about getting 80 or more votes in the Senate.

Mr. Obama’s postpartisan yearnings may also explain why he didn’t do something crucially important: speak forcefully about how government spending can help support the economy. Instead, he let conservatives define the debate, waiting until late last week before finally saying what needed to be said — that increasing spending is the whole point of the plan.

And Mr. Obama got nothing in return for his bipartisan outreach. Not one Republican voted for the House version of the stimulus plan, which was, by the way, better focused than the original administration proposal.

In the Senate, Republicans inveighed against “pork” — although the wasteful spending they claimed to have identified (much of it was fully justified) was a trivial share of the bill’s total. And they decried the bill’s cost — even as 36 out of 41 Republican senators voted to replace the Obama plan with $3 trillion, that’s right, $3 trillion in tax cuts over 10 years.

So Mr. Obama was reduced to bargaining for the votes of those centrists. And the centrists, predictably, extracted a pound of flesh — not, as far as anyone can tell, based on any coherent economic argument, but simply to demonstrate their centrist mojo. They probably would have demanded that $100 billion or so be cut from anything Mr. Obama proposed; by coming in with such a low initial bid, the president guaranteed that the final deal would be much too small.

Such are the perils of negotiating with yourself.

There's more...

A Preview of Things to Come

Our Country Deserves Better Committee, a conservative political action committee that's also the parent organization of the Tea Party Express, has released a one minute spot this weekend running the ad in Nevada. The spot is entitled titled "Barack Obama's Legacy of Failure."

Joe Wierzbecki, the executive director of the organization, told CNN that air time was being purchased in ad time being purchased in Michigan and Wisconsin, two states where the group has been running ads in support of their union-busting governors. Wierzbecki says his plan is to eventually also run the commercial in Colorado, Missouri and Ohio. The group is currently fundraising to pay for the ad buy.

According to Sourcewatch, officers of the Our Country Deserves Better PAC overlap extensively with current and former leaders of the pro-war organization Move America Forward (MAF) based in California. These include MAF co-founder and former chair Howard Kaloogian, who chairs the PAC; PR executive Sal Russo, who serves as chief strategist for both MAF and the PAC; Russo Marsh & Rogers principal Joe Wierzbicki, who serves as grassroots coordinator for MAF and coordinates the PAC; and Marine mom Deborah Johns, who is MAF's director of military relations and the PAC's spokesperson.

The group was formed in 2008 as Obama's candidacy gained steam. Our Country Deserves Better PAC launched the Tea Party Express national bus tour on August 28th, 2009 to rally "Americans to oppose the out-of-control spending, higher taxes, bailouts, and growth in the size and power of government."

In 2009, the group ran an ad comparing President Obama to Hitler and Iran's Mahmoud Ahmadinejad while indulging in just about every right wing conspiracy that there is. Right Wing Watch has more on the group and its activities.

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