The Wisconsin Recall and The Predictable Spin

In Wisconsin's recall election, Democrats failed to unseat enough Republicans to retake the state legislature and turn back changes to collective bargaining rights that infuriated unionized state workers.
The predictable spin from the Republican Party is that this outcome represents a broad vindication of the GOP's agenda.

But it's not. A broad variety of recent polls shows that a majority of Americans do not stand with the conservatives on their hard line positions. This out come represents a narrow vindication of a GOP position,  one that happens to coincide with the views of a solid majority of Americans.:

 Regular everyday Americans DO resent sweetheart deals for unionized government workers where they exist.

It's not hard to understand:

• Where unionized government workers have very generous state pensions that will leave them WAY better off than most taxpayers footing that bill, they resent it.

• Where unionized government workers have much more highly subsidized health insurance than most taxpayers footing that bill, they resent it.

• Where unionized government workers have much better job security than most taxpayers footing that bill, they resent it.

And THAT, my friends, is what has been vindicated.

Creativity and Balls

The "why" behind the idea of avoiding tax increases harmful to economic growth basically says this:

Higher taxes divert to the government needed capital that would otherwise primarily become investment dollars. These investment dollars finance creative, sometimes risky, but ultimately economically beneficial new ventures. These new ventures create tomorrow's jobs.

And that's what we need, jobs. It's the only thing everyone seems to agree about. We're poised to suffer a 15 month debate over who is more in favor of jobs. And sadly, we're all going to get sucked into the false pretense that jobs are created by policy and politicians instead of by creativity and . . .wait for it . . . risk-taking. Also known as balls. 


 But in today's environment, where is the shortage of capital, of investment dollars? Interest rates are extraordinarily low. You can't even pace inflation with a savings account or a bond or a money market fund. There's no capital shortage. 


There's an excess of capital, in the hands of all the folks who have done very well. And it's all very risk averse. In that environment, it's hard to make a plausible argument that an upward tweak in the top bracket is going to kill job creation. There's almost no job creation to kill. What little exists is related directly to enterprises that can increase profits by adding labor. Investment capital is piling up, looking desperately for somewhere appealing to go. 


What we need is creativity and balls. Instead we're beset by rigid, simplistic, outdated ideology and fear.

Belching Clouds of Black Spew

I used to like Real Clear Politics. Along with the predictable rants, you'd get yhoughtful ideas from smart well-informed people. A smart independent could quickly and safely identify partisan cheerleading and skip it. In return,  one or two articles would provide real food for thought. Mental Nutrition. Insight. Cause to re-think or adjust my own ideas.

Used to be worth the trip from time to time. But not so much lately. Both parties in congress have been scared witless by the debt ceiling debate. Not to mention  their inability to spin positively from a debacle that the whole rest of the world can clearly see was of congress's own political manufacturing. As always, such fear has led to the usual sprint down into the basement, filled with the dirty coal of blame and old rhetoric. Each party's furnace has been rapidly filled to max and stoked. The twin smokestacks of half-truth are now belching forth vile clouds of black spew.

If RCP can't do any better than to collect and sort the simplistic bull crap that each party is trying to feed us, then their traffic deserves to dwindle. Now, that has always been part of its job, but there was always decent content to go with it. Right now, if you're an independent, there's nothing to see. Just move along. To the rise of the center or the daily beast or donklephant. Anywhere they're making some sense instead of fingerpointing.

The Cleanest Dirty Shirt

On the Tuesday after S+P downgraded US debt from AAA to AA+, the dominoes continue to fall. The national spectacle of the debt crisis debate is rippling in a way which will make it hard for anyone to claim that the embarrassing debt ceiling show was not a big deal. Maybe you can argue it shouldn't it have been, But guess what, it turns out that perception DOES matter. Oopsie! And the perception is that our nation simply doesn't have its shit together.

This is about our government's large and undiminishing gap between revenues and expenditures. As it relates to both our credit and our fiscal sustainability, no one outside the US really cares what pastiche of polices are used to close the gap. They just care that we close it. That means both liberal and conservative sacred cows (social security, medicare, no new taxes) need to go up on the block.  

The most noticeable trend in the immediate aftermath of the downgrade has been an increased flight to quality and security: to gold, and into the currencies (and bonds, probably, if there are any) of countries with sound balance sheets. For the time being, american treasury notes are still among the cleanest dirty shirts in the opinions of investors. But this downgrade has clearly made global investors substantially more committed to shopping for clean shirts. This is the end of the beginning of the realization that America needs to live within its means. 

Countries that produce more than they consume won't keep propping us up. We're clearly operating on borrowed time, no pun intended. I am deeply pessimistic that our current congress can come up with any solutions that amount to more than inadequate half measures coupled with WIMPY promises that they'll gladly pay us tuesday for a hamburger today.

What we all need to do as Americans is to let BOTH PARTIES know that they are sadly mistaken if they think we're going to just keep ping-ponging between their nitwit paddles. Republicans and democrats have never been more in the way than they are today.

What Does "A Failure of Leadership" Mean in August 2011?

In the aftermath of President Obama's capitulation to a debt ceiling deal that did not include tax hikes, he is being widely criticized for a failure of leadership. That makes me wonder what effective presidential leadership is supposed to look like when a divided congress disagrees fundamentally about the right approach on, well everything.

What does a solid independent middle bloc of Americans support when it comes to bringing our deficit under control?

• Reforming SS and medicare to include things like means testing? Yup.
• Closing corporate tax loopholes while lowering the rates, to broaden the tax base? Yup.
• Making serious attempts to cut discretionary spending broadly by level funding at federal agencies across the board?  Yup.
• Saving money on the big military budget by winding down our commitments in Afghanistan and Iraq while also making cuts and consolidations in all service branches? Yup?
• Ending the tax break for top bracket income earning and restoring the previous top bracket rate? Yup.

OK. Add up all those positions. Who has supported most of them. Congressional Republicans? Congressional Democrats? Or Obama? Noiw, if you believe that OBama has failed yo lead, describe to me the Oval Office Critter that could, in this climate, forge a legitmate consensus? because I can't envision it.

This is not a crisis of leadership. This is a crisis of inflexible, cowardly, politically self-interested followers. There are good reasons why there's no such thing as a successful cat herder. Obama tried anyway, because he is in the very small group of national politicians who BOTH has the entire nation's interests at heart and understands that politics is the art of the possible. Until we have a congress that gets the latter, the DC farce of 2011 will endure.

This Institution Needs An Enema

Standard and Poor's has just downgraded US credit from AAA to AA+. For the first time ever.. Let that sink in. For the first time ever. Ever.

We deserve it. Let's not waste time pretending we don't. After the sad spectacle of the last 6 weeks or so, the inadequacy of the outcome, plus our absymal deficit and debt, we deserve it. Let's skip the denial part. S + P isn't the only ratings agency that has taken this action, so shooting the messenger just doesn't work.

The United States credit rating has been downgraded because in the span of 11 years we have gone from a balanced budget to spending about $1.72 for every dollar we collect. The 2010 budget estimate figures show that we collected about 2.2 trillion dollars, and we spent 3.7. That's the problem, and the cause of this downgrade. The rest is static.

The soundbites in the immediate aftermath of the downgrade announcement should make it crystal clear to all Americans that the folks in congress are uncommitted to working together to address the issue. Or unable. The only thing either side seems eager to do is blame the other side for being unable to do the right thing. The debt council negotiations are certain to be a fiasco. I wish there was a way to bet money on it.

I'm convinced that the best way past this is for Americans to join together and sign our own pledges for the election of 2012. We should all promise to vote for every single non-incumbent congressional candidate (senate or house) that seems reasonable and promises to work outside the confines of partisan ideology to close the gap between government spending and government revenue by every means necessary.

Nothing will straighten up our alleged leaders better than an extremely loud shot across their bow. We need 60-70-80% turnover in the house and the ouster of most senators running for re-election. This institution needs an enema.

This Bears Repeating

Tyler Cowen over at Marginal Revolution cites a tidbit that is worth repeating. Over and over. Folks should IMHO be pounded over the head with this until the lightbulb goes on:

…what separated those with modest but significant predictive ability from the utterly hopeless was their style of thinking. Experts who had one big idea they were certain would reveal what was to come were handily beaten by those who used diverse information and analytical models, were comfortable with complexity and uncertainty and kept their confidence in check.

Cowen cites that from Tetlock and Gardner's Why Most Predictions Are So Bad, at Forbes. This shouldn't be a revelation to many folks, but apparently it is. It's a multivariate world, whether you we like it or not. Base your predictions on one variable, and you'll usually get it wrong.