The 2010 election

There is every reason for Republican optimism and Democratic caution. Realistically Democrats have a two-year window to enact their programs and to modernize America. Two years to bring the economy out of its doldrums, or at least make the country feel that success in just around the corner. If they do not come into the 2010 Congressional election with the country feeling great confidence in the incumbents, they may want a change and a Republican landslide is possible.

But even if Obama is as popular as he is now, or even more so, and even if Democrats keep all the trends that have favored them in the last two years, they will be facing severe obstacles in holding their gains, not to speak of adding to them.

It must be understood that Democratic successes have depended on certain demographic groups who have turned out in large numbers for them, particularly in the last election. These groups are the young, African-Americans, Hispanics, and the poor, who have not historically voted in large numbers. It is safe to assume that in an off-year election they will be voting in lesser numbers, and Republicans and their allies are doing all they can to suppress this vote. Since these are the primary, or at least a crucial component of the Democratic coalition, their voting in lesser number represents a significant danger to Democratic successes.

In addition Democratic successes in past elections pose their own dangers, for as they won in swing states and in swing districts, it became the Democrats who became more vulnerable to losses in close elections. In addition, there is less and less low hanging fruit to be picked up, since the districts most likely to swing Democratic, are already in their column.

Finally, Democrats will be up against a historical pattern. Almost invariably the Presidents party loses seats in the election immediately following the Presidents ascension, and this appears to be true even when the President is popular, his popularity affecting only the degree of the losses. Thus following Eisenhower’s victory in 1952, and with Eisenhower having a popularity rating of 59%, Republicans lost 18 House seats in 1954. Kennedy was elected in 1960, had a popularity rating of 68% and Democrats lost two House seats in the following election. After Johnson’s victory in 1964, and with a low standing in popularity of 46%, Democrats lost a whopping 47 seats. Following Nixon’s election, Republicans, two years later, lost 12 seats. After Carter’s election, Democrats lost 15 seats, and following Reagan’s election his party lost 27 seats, though at that point Reagan’s popularity was down to 43%. Two years after the first Bush was elected, in 1990 Republicans lost 8 seats, but after Clinton’s victory in 1992, Democrats two years later, in 1994, not only lost 54 House seats, but lost control of both Houses of Congress, leaving them in the minority until 2006. George W. Bush was the first President since FDR to see his party gain seats during the first mid-term election following his own election two years earlier, but this was after 9/11 and with his popularity at 62%.

This is graphically summarized in a graph courtesy of the National Committee for an Effective Congress:



Thus if history is a guide, and it might not be, Obama only has two years to enact his long range programs, before loss of Congress, or at least reduced majorities make overcoming determined filibusters, all but impossible.

There is therefore great urgency in enacting the Presidents program, and even now with not quite enough votes to overcome a filibuster against a united and determined Republican minority, the obstacles are obvious, if not entirely insurmountable.

There are striking and worrisome parallels between 1994 and 2010. In 1994 Democrats controlled the Presidency and both Houses of Congress. Presidential coattails enabled Democrats to win seats in historically Republican districts. Similarly, Democrats have far fewer election targets in 2010 than Republicans, much as they did in 1994. An analysis shows that there are as many as 60 potentially vulnerable Democrats in the House in 2010. With the present lineup being 255 Democrats and 178 Republicans, a 60 vote swing would give Republicans 238 seats and Democrats 195 ceding control to Republicans. Of course vulnerable doesn’t mean a lost seat and if we assume a loss of half of the vulnerable seats, Dems would have 225 seats and Republicans 208, keeping a reduced but still workable majority for the Democrats.

REASON FOR DEMOCRATIC OPTIMISM

The 1994 parallel is far from full proof, as not every electoral indicator favors the Republicans. First, in 1994, 22 of the seats gained by Republicans stemmed from Democratic retirements in competitive districts. So far in this cycle, only one Democrat from a competitive district, New Hampshire's Congressman Paul Hodes has indicated that he will vacate his seat in 2010. Hodes is seeking the Senate seat in New Hampshire. However, it is too early in the cycle to draw any conclusions about future retirements. Conversely, speculation suggests that several Republican incumbents, frustrated by minority status, could retire between now and Election Day.

Second, Barack Obama is off to a far more auspicious beginning than Bill Clinton was in 1993. That assumption must be tempered by the unclear economic climate. A slip in Obama's approval rating due to the continued problems in the economy could raise the likelihood of the Democrats losing a significant number of seats. As I have pointed out, the incumbent President's approval rating going into a midterm election can have a huge effect on his party's fortunes. If President Obama can maintain an approval rating above 60 percent, he can help mitigate some of the potential losses and maybe turn them into gains.

Third, regional dynamics that are no longer in place today helped produce the Republican take over in 1994. For example, about half the districts lost by Democrats in 1994 were located in the South, in Border States, or in the rural West. Republican success in these regions continued through the 2004 election, but those trends have waned and partially reversed since 2006. Presently there are far fewer Democratic targets in those regions for the Republicans to unseat.

Conversely, from a regional standpoint, the Republicans have sustained a meltdown in the East, with no immediate end in sight. With the loss of Chris Shays seat in Connecticut in 2008, the Republicans have zero seats in all of New England. They have also sustained further losses in the West, which is sure to gain seats after the next census. Evidence of a potential Republican comeback will be scrutinized in 2009 gubernatorial contests both New Jersey and Virginia. Previously, these off year elections have been useful indicators for the mood of the electorate heading into the midterm campaign. In 2005 Democrats won the gubernatorial races in both of these states, which served as a precursor to the huge gains seen by Democrats in 2006. No Republican has won a gubernatorial election in either state in the 21st century.

In the Senate, and this could change quickly, it looks promising, and since this is where filibusters must be overcome, doing well is particularly important. Based on available polls a reasonable outlook would give Democrats a net gain of three seats, more than enough to prevent filibusters. This assumes pickups of five seats and two losses, with the pickups projected in the following four states: Florida, Missouri New Hampshire and Pennsylvania and one from the following two states: North Carolina or Ohio. Pennsylvania may have been considered doubtful, but with Sen. Specter defection to the Democratic Party, it is safe to assume he will win re-election as a Democrat. Here it is interesting to note that North Carolina is listed in the doubtful column despite the fact that according to Newsweek’s April 27, 2009 issue, incumbent Republican Senator Jim Bunning has an approval rating of 28%.

Losses are expected in Delaware and in one of the following two states: Colorado or Connecticut.

It appears that the outlook for Democrats is cloudy, with the sun peeking from behind the clouds.

Debating in My Local Paper

Every once in a while I find one of the rants by people who have a knee-jerk Right wing reaction to whatever goes on too provocative to resist answering. This is particularly true when they reflexively use the standard talking points of their brethren. The latest of the Right talking point appears to be to to hold Communist China as the model we should emulate.

Thus on March 20, 2009 there appeared in my local newspaper, the Fort Lee Suburbanite, the following Letter to the Editor:

"The Chinese communist government has it right. As a result of the global economic slowdown, they have reduced individual taxes and cut wasteful spending. There is no tax on the net profits of private businesses.

The government even cut taxes in half on small cars and that act resulted in a sales gain of 25 percent in its first four months of operation. Cutting taxes in the appropriate manner generates economic growth. JFK advocated the same program before his assassination and it worked. He even wanted to abolish the Federal Reserve System because he felt it was detrimental to the economy of the country.

"The present stimulus package does nothing to stimulate the private sector to generate jobs for the unemployed. In fact, it only enables government to expand and government expansion always means a greater tax burden for those who are employed.

"What ever happened to that old philosophy concerning teaching someone to fish rather than giving them fish as charity? There is nothing in this stimulus legislation concerning re-training those who have lost jobs for the future employment. New technology demands trained workers.

"The first stimulus bill, when President Bush was in office, provided families with money but did little to stimulate business. Most of the recipients paid bills with their newfound cash and there was little demand for increased supply. How easily we forget.

"Giving money to the states diminishes the responsibility of state governments as well as their relationship with the federal government.

"There were states, then called colonies, before there was a federal government. Our country is composed of "United States.” The Constitution guarantees certain states rights. If state governments would have had balanced budgets, they would not need any assistance from the federal government. If the voters of a state enable it to overspend then they must suffer the consequences.

"Congress has long forgotten their role as delineated by the Constitution of these United States. They have abused the "general welfare" clause year after year. That clause enables Congress to spend money for the "general welfare" of the country ... not for particular pork items that concern a state, a city, a municipality, and a pet project. Congress has also encroached on the domain of the President and the Supreme Court by passing laws that on their face violate the U.S. Constitution. Congress has limited power, as does each of the three branches of the federal government. Throughout our country's history, Congress has enacted legislation that clearly should have been vetoed by various Presidents, but because of party affiliation, were signed into law.

"It is also amazing that those in power today want to limit the salaries of those who generate jobs in various industries, but are silent regarding the ridiculous salaries paid to professional sports figures.

"How do we, as a society, pay a ballplayer 10 million dollars a year and a teacher under 50 thousand dollars a year? Who has the greater influence on our youth? We have lost our values as a society!

"The current stimulus bill stimulates government and little else. It illustrates that Congress has lost its way and that this President is no improvement over the previous one regarding the economy. By the way, who is financing all of the president's czars and committees and the results of his Presidential orders? I thought Congress controlled the purse strings of the federal treasury ... by law!"

I did not respond until April 4 because there were other topics I wanted to address. But on this date my letter in response was published, which took the writer to task as follows:

"Mr. Haas (Letter to the Editor of March 20) denounces President Obama's stimulus package, but he is so unacquainted with the facts, or worse has so little regard for them, that for him to spread such misinformation is a disservice to your readers. Mr. Haas holds up Communist China as the example we should be following as a country that passed no stimulus, somehow failing to tell us that China, in fact, passed a massive stimulus package. According to Forbes of November 9, 2008, "Four trillion yuan ($586 billion) will be spent (by the Chinese government) on upgrading infrastructure, particularly roads, railways, airports and the power grid; on raising rural incomes via land reform; and on social welfare projects such as affordable housing and environmental protection."

"As for cutting taxes, Mr. Haas forgets to mention that 1/3 of the Obama stimulus bill is directed to tax cuts, while China only lowered transaction taxes, reducing down payments and lowering mortgage rates and it is cutting the tax on little cars, hardly comparable to the much more extensive tax cuts in the Democratic stimulus package, Mr. Haas decries. As for the vaunted Kennedy tax cut, it was similar to the Obama tax cut and was intended to stimulate demand. It was not, as he and his Right wing cohorts would have us believe, a supply side tax cut.

"Mr. Haas than brings out a commonly spread lie, (actually usually spread by the far left as part of the assassination conspiracy theory) that JFK wanted to abolish the Federal Reserve System, for which there is no evidence, and which would have been a disaster in any case, the Fed being a major bulwark in preventing the complete collapse of the US and world economies. This distortion had its genesis in Kennedy’s Executive Order 11,110, which did not (as is usually suggested) create new authority to issue additional silver certificates. In fact, its intention was to ease the process for their removal, so that small denomination Federal Reserve Notes could replace them in accordance with a law Kennedy himself signed. If Kennedy had really sought to reduce Federal Reserve power, then why did he sign a bill that gave the Fed still more power?
"Mr. Haas then goes on to claim that; "the stimulus package does nothing to stimulate the private sector to generate private jobs for the unemployed.” What nonsense! When consumers have money and spend it, they obviously create demand for goods produced by the private sector, which creates jobs in that sector, and when the money is giving to those who have the least, they are the most likely to spend it quickly rather than save it, because their need for food, shelter and the necessities of life are pressing.

"Mr. Hass' admiration for China is instructive, for China has no safety net, no unemployment insurance, no Social Security, no old age pensions and the average Chinese worker in the textile and agricultural industries earns less than 20,000 yuan per annum (2,849 U.S. dollars).

"Finally Mr. Haas rants about States over-spending, choosing to ignore that the crisis extends to all states, whether Republican or Democratic, and is caused by the failure of tax receipts caused by the recession.

"He complains about teachers being underpaid, a sentiment I share, but forgets that paying teachers more would increase state and local expenditures, something he rants against.

"As for excessive salaries paid to professional sports figures, he forgets, or ignores, that this is the private sector, which he extols, and where he and I should be able to agree that it should not be subject to government interference.

"Neither accuracy nor consistency, are Mr. Haas' hallmark, which is why I rarely respond to his diatribes."

Unfortunately, I think for him, my adversary did not know enough to leave well enough alone and wrote this rather whiny letter.

"I do not know Mr. Scheller. I do not know anything about him other than what he writes in his letters to the editor. I do know that he hopes I do not respond to his left-wing professions of "facts:' On April 15, the people will have demonstrated their feelings about the President's stimulus package.

"Since when does $586 billion equal over $3 trillion? Has he been to China lately to see the rapidity of the upgrading of the infrastructure? How do you generate the greatest debt in American history and promise tax cuts? President Kennedy's tax cuts worked. As for the Federal Reserve, Mr. Scheller is in error. President Kennedy signed an executive order abolishing that board because he deemed it not in the best interests of the citizens of our country.

"If Mr. Scheller would read about the founding of that Board and its negative impact on our economic foundations, he would join hundreds of economists who echo my sentiments. Do we Americans want our money supply run by people who are not accountable to anyone but themselves?

"Mr. Scheller ignores the growing number of unemployed and their dependence on government funds. The "consumers" have no money until they have jobs. Government generated jobs cost taxpayers. What President Obama wants to do is take money from the producers and give it to the consumers. That will create demand by the consumers, but omits the fact that if the producers now lack adequate funds, how do they produce? Is the government now going to be in the production business?

"State governments are responsible for their own problems. They overspent in the "good times" way before our present economic crisis. Those states who have extended citizen's rights to illegal immigrants are suffering the most. The recession has added to the negativity of their situation.

"Teachers are underpaid. Professional athletes are overpaid. Somewhere we, as a society, have lost our sense of values. It is interesting that Mr. Scheller states that professional sport figures are the result of the private sector and teachers' salaries depend on the government sector. That disparity illustrates that the private sector generates more income than the government sector and that greater income increases greater consumption, which increases the need for more jobs. That greater income also increases the taxes paid to city, state, and federal governments.

"I am consistent in my belief in the capitalistic society. I am consistent in my belief that Congress has and is violating its constitutional obligations. Pork-barrel spending does not have a constitutional basis. The clause of the Constitution for "good and welfare" mentions for ALL the people. Spending on particular city or particular state projects is not for the benefit of ALL the people of the United States!

"I am consistent in my belief that both political parties are lead by those who do not truly represent the desires of the citizens of this country. I am consistent in my belief that changing the name of someone or of some action or some entity does not change the person, or the act, or the entity.

"I am consistent with the fact that I am, despite Mr. Scheller's opinion, consistent with the facts."

Too Much Too Soon?

“Too much too soon” is increasingly the cry of those who like the status quo, and they have succeeded in raising doubts in the minds of some who don’t necessarily like the status quo, but who have been impressed with the argument that dealing with the economy should be first, foremost and the sole concern, and are frightened by the projected deficits.

Their concern is understandable but misplaced. First of all there is a basic principle here and it applies not only to government debt, but to private and business debt as well, and that is that borrowing to meet daily expenses over time, is a recipe for disaster. But borrowing for capital expenditure is not only wise but a necessary part of assuring the future. A business that does not borrow in order to be able to purchase more efficient equipment is doomed to fail in the the competition of the market place. The US is now in a position of such a business. It must modernize, and borrowing for that purpose is a legitimate and necessary exercise. Investing in an efficient health care system, in education and in stopping the inexorable advance of global warming by reducing noxious particles in the atmosphere, which incidentally also effect health, are investments that will pay dividends may times over. They are investments. they are not expenses.

Dealing with the economy requires action on many fronts, from dealing with the banking crisis, to regulatory reform. But a large part of it is to stimulate the economy by way of injecting government funds to grease its gears.

There are many ways to do this. We can give tax cuts to those who are fortunate enough to still have an income, in the hope that they will spend the money, thereby creating demand, which has fallen drastically in this recession. The enacted Stimulus Bill does this. However, this may or may not be effective, because past experience has shown that in a time of anxiety people spend as little as possible, and if they unexpectedly have an increase in their income, they tend to save it or pay of debts. Nevertheless, it is part of the package.

Spending, however, in ways that create or save jobs is far more effective because that puts money in pockets that might not have enough for the necessities of life, and when the means to meet basic needs becomes available, it will be spent. But this can be accomplished even without creating jobs, for we can pay extended unemployment insurance, and the bill provides for this, or we can create useless jobs which is better than simply distributing cash, if for no other reason than that people have far more self-respect when they are “gainfully” employed.

But as I set forth in my essay entitled The Stimulus Bill, we can get the greatest gain for the buck when we employ people to do useful work, because here we have a huge multiplier effect. I cited how even doing something as mundane as reseeding the Capitol lawn can have a very good multiplier effect.

But even better then seeding a lawn, are things that have a really long lasting benefit, such as repairing our infrastructure and improving it. The highway system built by the Eisenhower Administration has served the nation well for all these years, but it is now antiquated and in desperate need of repair. When bridges are falling down, it is obvious that something needs to be done, even if the stimulus were not needed.
But we can no longer depend entirely on highways and airplanes to meet our transportation needs. Most of our competitors in the industrialized world are well ahead of us in having high-speed rail. Our need for this is way overdue and the stimulus bill provides funds for getting a start on this. Unfortunately, like everything else that meets the needs of the Nation, the naysayer targeted this for denunciation, describing it as a boondoggle, for a train between Disney-Land and Las Vegas, and then going so far as to describe it as a train going to a brothel in Las Vegas. A look at the proposed train routes published by the Department of Transportation shows no such plans.

But this is not the only example of stimulating the economy and getting long-range benefits. We can get a start on Health Care Reform by immediately investing in computerizing our health records and in other aspects of Health Care Reform, which can be funded quickly. Other reforms, which may not be possible until later years, will make sense in one of two ways. If the economy has not yet recovered, the spending on such reforms will act as a needed continuing stimulus. If the economy has recovered, tax receipts will have increased and the money for such reforms will be available. But say its critics, even if the economy is on the mend, it is likely that the amount expended will not equal tax receipts, and the deficit may as a result endanger the soundness of the dollar. This is a legitimate concern, particularly if the deficit turns out to be as large as is projected by the CBO (Congressional Budget Office) rather than by the OBM (Office of Budget and Management). But what are the alternatives, to leave the present system, which is bankrupting the country in place? I am reminded of the Harry and Louise ads, which warned of dire consequences if the Clinton Health Insurance plan were adopted. All the consequences of which these ads warned, in fact happened because no health plan was adopted. As a result of the status quo our choice of providers has drastically declined, as many Insurance Companies require that we go only to in-network providers. Not only have more and more Americans become uninsured (nearly 46 million Americans, or 18 percent of the population under the age of 65, were without health insurance in 2007, according to the latest government data available, but even the insured often find that they are refused coverage when major expenses arise, with the insurance companies claiming pre-existing conditions. According to the journal Health Affairs, medical bankruptcies affected about 2 million Americans annually, -- counting debtors and their dependents, including about 700,000 children, as of 2001, and things have gotten much worse since then. “Surprisingly, most of those bankrupted by illness had health insurance. More than three-quarters were insured at the start of the bankrupting illness. However, 38 percent had lost coverage at least temporarily by the time they filed for bankruptcy.” The result is not only individual tragedies, but the cost borne by our whole economy, since far too many cases are handled in emergency rooms, which is far more expensive to society, as is the lack of preventive care. Corporations, who have until now borne the cost of health insurance for most working Americans, can no longer afford it. In other words doing nothing or even delaying is not an option. It is a recipe for disaster. Whatever the risks of moving forward may be, the failure to act is not a risk. It is a prescription for guaranteed disaster.

This applies to an even greater degree when it comes to global warming. Ice caps are melting at a faster rate than anyone predicted. If nothing is done much of Florida and other areas of the US will be under water and the total land mass wiped out will cause a refugee problem that would make today’s migration seem puny by comparison.

But even without the threat of global warming the way we generate energy today, with reliance on coal and other fossil fuels, is inefficient and a threat to our national security. If we are to be competitive in the world economy, we must be in the vanguard of this development. We will be the innovators, or others will be. We will be exporting this technology or we will be importing it. We will create jobs in developing, building, and using this technology, or we will ship jobs to other countries, which have overtaken us.

Ditto for education. We have been the successful economic powerhouse, which we have been, because we have had one of the most educated workforces in the world. If we fall behind, and we have already fallen behind, we will not be able to compete on the world stage, and in a globalized economy we must, more than ever, compete.

So the question is not, can we afford to do these things? The question is can we afford not to do them? The clock is ticking! We cannot fail to act. We dare not delay. There are risks in acting. There are certain disasters if we fail to!

Corporate Accountability

In my commentary entitled, "Economic Dilemmas", I talked about the A.I. G. bonuses but asserted that they were the tip of the iceberg (a mere distraction) and that the problem of excessive compensation in corporate America was systemic, and was the result of shareholders having very little say in the governance of corporations. I urge you to reread it. I said in part:

"These abuses occur not because competition of the market requires it, but because of a system where neither the public nor even shareholders have any say, and when execs destroy a company it is the shareholders and innocent employees who bear the burden. Unfortunately, it is not shareholders who decide on compensation. It is the Board of Directors! And who chooses the Board of Directors? Usually the CEOs. To be sure Shareholders get a chance to vote at shareholder meetings for the Board, and whatever issues are placed before them, but the only choices they really have is to vote yes or no on whatever the management chooses to let them vote on. And increasingly, shareholder meetings are held at out of the way places so as to discourage shareholders from attending. God forbid, they might ask embarrassing questions. They are asked to send in their proxies to confirm what has already been decided. The Chinese communist voting system is not much different."

I now revert to this subject because not only do I believe it to be of paramount importance, but also because to my surprise nine days after I published my piece, on March 28, 2009, the NY Times awoke to the problem, with Carl Icahn, the well known investor, writing an OP-ED piece, in which he wrote that one silver lining from the A.I.G. debacle:

"is that it will finally alert Washington to the lamentable state of corporate governance in America. Our legislators will find — as I have as a shareholder who has waged many battles to get on corporate boards — that the rights of the shareholders are quite circumscribed.

"... typically even a large shareholder must conduct an expensive proxy contest to elect its nominees — that is, he needs to solicit enough votes from other shareholders. This is accomplished by mailing a statement describing the shareholder’s positions, and a card on which to vote. At a large public company, mailing, printing and other costs can run into the millions of dollars."

The article also points out that the law that applies in the governance of corporations is the one in which they choose to be incorporated, which is usually Delaware, where more than 50 percent of publicly traded American companies are incorporated. Under Delaware law, a shareholder vote is merely advisory. This means that the board is legally entitled to ignore shareholder wishes regarding compensation of corporate executives.

Some additional research reveals that the problem has been addressed earlier in academic papers but so far has gotten little attention from our legislators. I have not seen the Obama Administration address this vital problem, though in its defense its plate is more than full.

But a blog named the "Accountable Strategies blog", referring to an article written at Harvard law School in 2007 quotes the author as saying "the number of challenges mounted by shareholders to replace boards of directors between 1996 and 2006 was very low: There were only 118 challenges mounted of incumbent board members during the 1996–2005 decade, or an average of about 12 per year. The number of challenges was even less for the largest corporations. What’s more, those challenges were successful in only 45 cases in the entire decade."

"... Looking at the matter purely from the point of view of the shareholders and directors, Bebchuk notes that under the rules of corporate law, the power to run corporations is vested in the boards of directors, under whose direction the business and affairs of the corporations are supposed to be managed.

"The importance of having directors held accountable to the shareholders is enhanced because directors are largely insulated from legal liability for their decisions. Yet, Bebchuk notes that the mailing, legal and other costs of mounting shareholder challenges to boards of directors is very high. Moreover, challengers cannot seek reimbursement for those costs if they lose a challenge, whereas incumbent board members can charge the company for their expenses regardless of the outcome. ...Bebchuk proposes that companies hold elections for the entire board every two to three years; that shareholders be allowed to select directors via secret ballots and majority votes; and that those candidates that receive at least one third of the votes cast would be able to get their campaign expenses reimbursed."

There are more and greater problems in our Capitalist system than is generally appreciated. Major reform is way overdue.

Right Wing Voices Speak

One of the things I strongly believe in is keeping apprised of what the radical Right is saying and evaluating whether they are making sense, are telling the truth, etc.

In this connection I recently read a column by Charles Krauthammer writing in the Washington Post of March 20 where he treats the flap over the AIG bonuses as the distraction that it was. As most will appreciate, I do not often agree with Mr. Krauthammer, but in some respects he expresses the same disdain for this relatively unimportant event that I did in my column of March 19 entitled “Economic Dilemmas," though he expresses no concern about what I view as a systemic problem. Nevertheless, I found it sufficiently interesting to want to share the portions of the column that reflect my own views.

“A $14 trillion economy hangs by a thread composed of (a) a comically cynical, pitchfork-wielding Congress, … (c) $165 million.

“That's $165 million in bonus money handed out to AIG debt manipulators who may be the only ones who know how to defuse the bomb they themselves built. Now, in the scheme of things, $165 million is a rounding error. It amounts to less than 1/18,500 of the $3.1 trillion federal budget. It's less than one-tenth of 1 percent of the bailout money given to AIG alone. For this we are going to poison the well for any further financial rescues, face the prospect of letting AIG go under (which would make the Lehman Brothers collapse look trivial) and risk a run on the entire world financial system?

“And there is such a thing as law. The way to break a contract legally is Chapter 11. Short of that, a contract is a contract. The AIG bonuses were agreed to before the government takeover and are perfectly legal. Is the rule now that when public anger is kindled, Congress will summarily cancel contracts?

“Even worse are the clever schemes being cooked up in Congress to retrieve the money by means of some retroactive confiscatory tax. The common law is pretty clear about the impermissibility of ex post facto legislation and bills of attainder. They also happen to be specifically prohibited by the Constitution. We're going to overturn that for $165 million?

“Geithner has been particularly maladroit in handling this issue. But the reason he didn't give the bonuses much attention is because he's got far better things to do -- namely, work out a rescue plan for a dysfunctional credit system that is holding back any chance of recovery.

“It is time for the president to state the obvious: This recession is not caused by excessive executive compensation in government-controlled companies. The economy has been sinking because of a lack of credit, stemming from a general lack of confidence, stemming from the lack of a plan to detoxify the major lending institutions, mainly the banks, which, to paraphrase Willie Sutton, is where the money used to be.

“That bill, we now discover, contains, among other depth charges, a Teamster-supported provision inserted by Sen. Byron Dorgan that terminates a Bush-era demonstration project to allow some Mexican trucks onto American highways, as required under NAFTA.

“If you thought the AIG hysteria was a display of populist cynicism directed at a relative triviality, consider this: There are more than 6.5 million trucks in the United States. The program Congress terminated allowed 97 Mexican trucks to roam among them. Ninety-seven! Shutting them out not only undermines NAFTA. It caused Mexico to retaliate with tariffs on 90 goods affecting $2.4 billion in U.S. trade coming out of 40 states.

“The very last thing we need now is American protectionism. It is guaranteed to start a world trade war. A deeply wounded world economy needs two things to recover: (1) vigorous U.S. government action to loosen credit by detoxifying the zombie banks and insolvent insurers, and (2) avoidance of a trade war.

“Free trade is the one area where the world indisputably turns to Washington for leadership. What does it see? Grandstanding, parochialism, petty payoffs to truckers and a rush to mindless populism. Over what? Over 97 Mexican trucks -- and bonus money that comes to what the Yankees are paying for CC Sabathia's left arm.”

On the other hand I found another column by that other spokesperson of the Right, George Will, writing in the Washington Post of March 24, 2009, which I thought was so unfair and so misleading that I want to quote it in order to respond to it. For that purpose I will set forth each paragraph of Will’s piece and immediately following set forth my rebuttel in italics:
Will writes:

“With the braying of 328 yahoos -- members of the House of Representatives who voted for retroactive and punitive use of the tax code to confiscate the legal earnings of a small, unpopular group -- still reverberating, the Obama administration yesterday invited private-sector investors to become business partners with the capricious and increasingly anti-constitutional government. This latest plan to unfreeze the financial system came almost half a year after Congress shoveled $700 billion into the Troubled Assets Relief Program, $325 billion of which has been spent without purchasing any toxic assets.”

Aside from the rather indecorous language, of “braying of 328 yahoos” this is clearly intended as an attack on Democrats, but neglects to mention that Republicans voted for it in numbers which fell only two votes short of a majority. Compare that to their unanimous vote against the stimulus bill, which was actually likely to jump-start the economy. Similarly, the $325 billion, which has been spent without purchasing any toxic assets, was spent by the Bush Administration.

"TARP funds have, however, semi-purchased, among many other things, two automobile companies (and, last week, some of their parts suppliers), which must amaze Sweden. That unlikely tutor of America regarding capitalist common sense has said, through a Cabinet minister, that the ailing Saab automobile company is on its own: "The Swedish state is not prepared to own car factories."

Semi purchased is a strange term. If Mr. Will means to say that a relatively small amount of money has been used to keep the American Auto industry afloat, while an evaluation is made as whether they can sustain themselves in the long run, he should say so, and what Sweden or any other country does to meet its own exigencies is rather besides the point.

“Another embarrassing auditor of American misgovernment is China, whose premier has rightly noted the unsustainable trajectory of America's high-consumption, low-savings economy. He has also decorously but clearly expressed sensible fears that his country's $1 trillion-plus of dollar-denominated assets might be devalued by America choosing, as banana republics have done, to use inflation for partial repudiation of improvidently incurred debts.”

The admiration that is suddenly being heaped on communist China is amazing. China is playing a little game of one-upmanship, knowing full well that inflation is not a threat in the US now or for the foreseeable future. Rather there is a liquidity crisis and the Fed, which is independent of the Administration, is pumping money into the economy to offset what has become a shortage of money. In the meantime China is continuing to invest in American dollars.

“From Mexico, America is receiving needed instruction about fundamental rights and the rule of law. A leading Democrat trying to abolish the right of workers to secret ballots in unionization elections is California's Rep. George Miller who, with 15 other Democrats, in 2001 admonished Mexico: "The secret ballot is absolutely necessary in order to ensure that workers are not intimidated into voting for a union they might not otherwise choose." Last year, Mexico's highest court unanimously affirmed for Mexicans the right that Democrats want to strip from Americans.”

A forced parallel between the Mexican anti-union stance, and an American bill intended to make it easier to unionize. While I personally have doubts about the wisdom of this bill, it provides for a union only if a majority of workers choose to join a union. The purpose of the bill is to keep workers from being intimidated into voting against a union.

“Congress, with the approval of a president who has waxed censorious about his predecessor's imperious unilateralism in dealing with other nations, has shredded the North American Free Trade Agreement. Congress used the omnibus spending bill to abolish a program that was created as part of a protracted U.S. stall regarding compliance with its obligation to allow Mexican long-haul trucks on U.S. roads. The program, testing the safety of Mexican trucking, became an embarrassment because it found Mexican trucking at least as safe as U.S. trucking. Mexico has resorted to protectionism -- tariffs on many U.S. goods -- in retaliation for Democrats' protection of the Teamsters union.”

As I have indicated that is an unfortunate instance of Congress caving in to union protectionist sentiment but to claim that it was done with the approval of the President is stretching the truth to say the least.

“NAFTA, like all treaties, is the "supreme law of the land." So says the Constitution. It is, however, a cobweb constraint on a Congress that, ignoring the document's unambiguous stipulations that the House shall be composed of members chosen "by the people of the several states," is voting to pretend that the District of Columbia is a state. Hence it supposedly can have a Democratic member of the House and, down the descending road, two Democratic senators. Congress rationalizes this anti-constitutional willfulness by citing the Constitution's language that each house shall be the judge of the "qualifications" of its members and that Congress can "exercise exclusive legislation" over the District. What, then, prevents Congress from giving House and Senate seats to Yellowstone National Park, over which Congress exercises exclusive legislation? Only Congress's capacity for embarrassment. So, not much.”

Mr. Will conveniently forgets to mention that this bill also gives an extra vote to Utah, which if it is entitled to another seat in the House aught to be done by apportionment, but apparently, since this would be a Republican seat Will fails to criticize it. Personally, it seems to me that Congress is going about this the wrong way. Under Art. 4, Sect. 3, Par. 1. of the Constitution, new States may be admitted by the Congress into the Union. This it would seem would not encounter constitutional obstacles, and would give the District exactly what Will fears, i.e. 2 Senators and a Representative in the House. Sounds good to me!

“The Federal Reserve, by long practice rather than law, has been insulated from politics in performing its fundamental function of preserving the currency as a store of value -- preventing inflation. Now, however, by undertaking hitherto uncontemplated functions, it has become an appendage of the executive branch. The coming costs, in political manipulation of the money supply, of this forfeiture of independence could be steep. Jefferson warned that "great innovations should not be forced on slender majorities." But Democrats, who trace their party's pedigree to Jefferson, are contemplating using "reconciliation" -- a legislative maneuver abused by both parties to severely truncate debate and limit the minority's right to resist -- to impose vast and controversial changes on the 17 percent of the economy that is health care. When the Congressional Budget Office announced that the president's budget underestimates by $2.3 trillion the likely deficits over the next decade, his budget director, Peter Orszag, said: All long-range budget forecasts are notoriously unreliable -- so rely on ours. This is but a partial list of recent lawlessness, situational constitutionalism and institutional derangement. Such political malfeasance is pertinent to the financial meltdown as the administration, desperately seeking confidence, tries to stabilize the economy by vastly enlarging government's role in it.”

What an incredible catchall filled with nonsense. The Fed is independent of the Administration not by practice but by law. The Chairman is appointed by the President for a fixed term and the present Chairman Bernanke, was appointed by George W. Bush. To the extent that the Fed is cooperating with the Treasury, it is because they feel that this is what is required by the present emergency.

As for the rest Mr. Will is outraged that his Republican friends may not be able to filibuster and obstruct all action to right the economy. They want the President to fail, and they will do whatever they can to make that happen and the American people be damned.

Has Mr. Will and his Republican cohorts already forgotten their cry before Democrats got the majority, “We want an up or down vote” and their threat to use the "nuclear option" to abolish the filibuster when it suited them. I would urge Democrats to keep the "nuclear option" in reserve. What is good for the goose is good for the gander and the times are too serious to allow a minority to block all legislative action that they don't like. Majority rule is fundamental to the functioning of a Democracy!!.
As for the budget being out of balance, something I didn’t hear about from Mr. Will or any Republicans during eight years of Republican misrule and ever increasing deficits, without investments in our future, I will address that in a future separate commentary.