Carnival of Divided Government Triginta Duodêvîgintî (XXXVIII) Special Post Holiday Edition

Image ripped from Mike Sinclair

Welcome to the 38th edition of the Carnival of Divided Government - The Special Post-Independence Day Holiday Resolution To Really Get My Act Together With This Blog Edition.

Whatever

Yeah, I've done nothing on this blog for months and, yeah - I completely blew off the last edition of the Carnival. Moreover, I've run out of excuses. In the past I've blamed procrastination, too much fun, travel, even invoking the Hot Tub Libertarian Syndrome for my slovenly blogging habits. My only new excuse is a recent obsession with a local San Francisco political issue that has consumed a lot of blogging cycles on my other blog. What is it we so often hear the politicians say? - "Let us not be mired in the past. It is time to look forward."

Indeed. An important election is fast approaching. The 2010 election is easily as important as the 2006 mid-terms, and like the 2006 mid-terms, restoring divided government will be an important electoral consideration. It is time to step up my game with this blog. No. Really. I mean it this time.

Carnival of Divided Government

As explained in earlier editions, we have adopted Latin ordinal numeration to impart a patina of gravitas reflecting the historical importance of the series. In this the Carnival of Divided Government Triginta Duodêvîgintî (XXXVIII), as in all of the CODGOV editions, we select volunteers and draftees from the blogosphere and main stream media writing on the single topic of government divided between the major parties (leaving it to the reader to sort out volunteers from draftees). Consistent with this topic, the primary criteria for acceptance in the carnival is to explicitly use the words and/or concept of "divided government" in submitted posts. A criteria that, to our endless befuddlement, is ignored by many of the bloggers submitting posts, which sadly results in DWSUWF reluctantly ignoring their fine submissions.

First up, Morton Kondracke of CQ Politics takes a look at a number of recent polls and finds a conundrum - "Voters Are Unhappy but Optimistic - Why?":

"Congress’ approval rating is 22 percent, almost as low as the 20 percent that preceded the Democrats’ takeover in 2006 and the 33 percent that presaged the GOP takeover of 1994. Indeed, voters now marginally prefer that Republicans run the next Congress, by 45 percent to 43 percent. But asked about the parties, voters give a 9-point net negative rating to the Democrats, 35 percent to 44 percent, and a 12-point net negative to the GOP, 30 percent to 42 percent.The bottom line seems to be that an unhappy public is hoping that divided government will put the country back on the right track. But given the inability of Republicans and Democrats to agree on almost anything, there’s more reason to be pessimistic about the long term as well as the short."

Morton misses an important point. The inability of Republicans to agree with the Democratic agenda of the last two years, coupled with the prospect of divided government, is a reason for real optimism. As acrimonious as the debate may be, we get better legislation when everyone has a seat at the table. Sometimes it is best to trust the common sense instincts of the voters. Pundits don't get it, but voters do - divided government will put us back on the right track.

Amy Walter is also looking at polls and focus groups for the National Journal Hotline On Call and wondering about the impact of "Independents Souring On Obama":

"The Resurgent memo notes that these indies have "an equal dislike for both political parties," and some believe that "divided government would only lead to more bickering." But, notes van Lohuizen, while these voters may be persuaded to come back to Obama in '12, they are "pretty well lost" to the Democrats for this fall."

Of course divided government will lead to more bickering. That's a good thing. The advantage of divided government is that all voices are heard and have an impact on the legislation. When everyone has real power, the bickering leads to better and more fiscally responsible legislation - unlike the impotent bickering of the minority party during the Stimulus and Healthcare debates, resulting in fiscally irresponsible legislative hairballs. And if the GOP does manage to take one legislative house or the other in 2010 - this is one independent blogger who will indeed be coming back to Barack Obama in 2012. This blogger is no more interested in returning to One Party Republican Rule than he he is of continuing the current disastrous One Party Democratic Rule.

Digby at Hullabaloo is quoting Michael Tomsky and engages in some world class hand-wringing over the prospect of divided government in "It Will Never End":

"The real import of this story is this: If the Reps capture the House of Representatives this fall, they will have basically limitless power to keep these things churning forever, turning political horse-trading into potential crimes. They'll hold hearings, issue subpoenas, you name it." - Thomas

"Those who extol the virtues of divided government take heed. There won't just be legislative gridlock. There will be chaos. " - Digby

"Chaos" apparently now being defined by Digby as a state when the legislative branch does their job. Oversight of the executive branch is the job of the legislative branch in our system of constitutional checks and balances. It is a job that has been completely abrogated by this lap-dog Democratic Congress, just as it was abrogated by the lap-dog Republican Congress during the first six years of the Bush administration. As I recall, Digby was much less concerned about the "chaos" that might result from Congress doing their job in the run-up to the 2006 mid-terms. Funny that.

Metavirus blogging at Library Grape has a question: "Would Someone Who Loves Divided Government Vote for a Monkey?":

"I was pondering today the phenomenon of people who fetishize "divided government" ... I was pondering this because some of the otherwise smart people I know who are like this (you know who you are), are seriously saying that they will vote for a generic Republican this fall, simply in order to try to get us into "divided government". This is even the case where the person believes the GOP is generally bankrupt in terms of ethics, ideas, policy prescriptions, etc. At the end of all this pondering, I was left with a question. If the merits of the people you are voting for in order to make obeisance to the Gods of Divided Government are so unimportant, would you consider voting for party of trained monkeys?"

Whenever a partisan brings out a double barreled blast of full-on snark, sarcasm and derision when describing the divided government voting heuristic ("people who fetishize divided government..." "obeisance to the Gods of Divided Government...") it fills me with hope. It means the meme is getting traction and they feel compelled to (paraphrasing a recent unfortunate soundbite) launch nukes to kill ants. Pretty early for this kind of rhetoric. At the end of the post Metavirus asks for "enlightenment" about the divided government voting rationale. I'd oblige with my "Voting By Objective" post, except the tone of the post indicates a decided lack of sincerity. I think Metavirus' question is best answered with another question of equivalent intellectual heft - Would a partisan who believes the "GOP is generally bankrupt in terms of ethics, ideas, policy prescriptions, etc" vote for a Democratic Party Monkey?

Joseph Lazzaro is speculating at the Daily Finance about the impact of a potential divided government on investors in "Job Creation: Democrats Have Run Out of Time WithVoters.":

" ...independent voters represent the "swing" vote, depending on whether the party in power is doing a good job and is solving problems. And, as noted, due to the lack of progress at creating jobs, most independents will be voting for a Republican/Tea Party candidate in November. Other issues will play a role, but the lack of jobs and concern about their own job security will be foremost on Independents' minds.... Further, if enough Independents vote for Republicans, the GOP will regain control of Congress, creating a divided government. Some investors argue that divided government is good for the markets and the economy, as it can 'prevent Washington from doing anything' -- which some Americans view as a good thing. The reality, however, is that given the ideological canyon between today's polarized political parties, it's a prescription for gridlock."

Of course we'll get gridlock. But gridlock on needed legislation eventually ends, as it always does. And out of that gridlock we will get better, more fiscally responsible legislation than we are seeing now under One Party Democratic rule. And that is a good thing.

To Joseph's larger point, I am reluctant to link longer term market behavior to any policy or partisan mix in Washington. I've not seen any studies that show a believable, statistically significant correlation between long term market direction and Republican, Democratic, or divided governments. That said - in the short term it is less important whether there really is a correlation so much as whether investors believe there is a correlation. My sense is that most investors believe the stock market will benefit from Republicans taking control of either the House or Senate in the fall. With that expectation, rising market could very well be a self-fulfilling prophecy.

Richard Lehman, writing at Forbes, makes exactly this point suggesting we "Sell Into Rallies And Thank Politicians":,

"Markets will also benefit from any perception that the Democrats will lose control of at least the House of Representatives. Markets like divided government because it means fewer surprises and fewer policy changes. Use any stock rallies in the next five months to raise some cash since opportunities always come along when market conditions are uncertain."

Probably good advice. But if the GOP begins to look like it has a realistic chance of taking control of one house, those opportunities may come along sooner rather than later.

Ron Replogle is a self-described "perplexed liberal" blogging at One Foot Outside of the Tent, writing a book, quoting Peggy Noonan, and speculating on whether Barack Obama would benefit from a GOP Congress while ruminating on "Liberalism and Limits":

"Even when it enjoys the support of an ideologically congenial congressional majority, a liberal administration lacks the institutional capacity to impose intelligent limits on its own redistributive aspirations. Having to reach an accommodation with an ideologically hostile opponent, as Clinton did with the Gingrich-led House, not only obliged, but enabled, him visibly to define his priorities. That doesn’t mean that what emerges from a divided government will necessarily be sensible public policy. But it will give a liberal administration the “full shape and meaning” that Noonan's looking for."

True - policy emerging from divided government will not necessarily be sensible public policy. It will also not necessarily be bad public policy. However, I do believe it will necessarily be better public policy than what we get out of either One Party Democratic Rule or One Party Republican Rule. In general I like what Ron is saying here and will be looking forward to his book when he gets it out. In the meantime, I will be supporting Republican candidates in the hope that a divided government will limit Barack Obama's liberalism. And if the GOP takes either legislative house, I will support Obama's re-election in 2012 to limit GOP social conservative ideology.

Matt Mazewski, blogging at the Conscience of a Centrist, worries that Obama is driving the opposition to an ideological extreme in "Moderate Conservatism Goes Mainstream":

"During the 1990's, the nation experienced a time of unprecedented peace and prosperity, largely as a result of divided government. Bill Clinton was forced to abandon some of his more ambitious liberal goals with the election of a Republican Congress in 1994, but so too were the Republicans compelled to lay aside their more ideologically-driven aspirations. Clinton vetoed welfare reform several times before signing a version he approved of, and deals were struck that, while far from perfect, represented true sacrifice in the name of bipartisanship. "

I think Matt is missing a key point in his thoughtful post. One does not need to put all the weight in the center to wind up with a balanced center. Consider the dumbbell - heavily weighted on the right and left, with almost no weight in the center, it nevertheless is balanced in the center. Think Clinton/Gingrich. Think Obama/McConnell instead of Obama/Reid -or- Obama/Boehner instead of Obama/Pelosi.

It is not often that one comes across an optimistic libertarian blog post. The tsunami of statism that engulfs us tends to drown out the most hopeful limited government advocates. Bonzai finds the silver lining in "Libertarian Evolution":

"There's a slowly evolving public recognition that government has to be limited, and that individual rights have to be protected -- thus the growth of true independents, people who are distrustful of, and unrepresented by, both parties... If my guess is right, voter turnout will be historically high this year and in 2012. We'll probably have a divided government going into 2011, and if I'm correct, there'll be pressure for government to govern in a more limited fashion because of the unconsciously-libertarian influence coming from the independents. I predict this will be the beginning of a change in direction and the beginning of the end for statism. America became lazy, too trusting of government, and too apathetic because of a sense of powerlessness, but the internet and protest movements have given the public confidence in its ability to create change."

That is a real double dose of optimism, prediciting a divided government in 2011 and the beginning of the end of corporate statism in America. Perhaps the key phrase here is the notion of the "unconsciously-libertarian independents". Predictable voting blocks are the difference in impotent ideas and political power. As I've outlined before, if the unconscious libertarian independent vote becomes self-aware and embraces an organizing principle that manifests some real political clout, perhap Bonzai's optimism is justified. As long as the bulk of the electorate remain polarized and balanced, even a small percentage of libertarian swing vote organized around a divided government voting heuristic will be enough for libertarians to display the biggest swinging political "hammer" in town.

Rojas at The Crossed Pond is feeling nostalgic for the Clinton/Gingrich divided government era in "Your Democratic Congress in Action":

"From a civil liberties perspective, unified government under the Democrats is every bit as bad as unified government under the Republicans. The difference now lies exclusively in the arena of federal involvement in the marketplace. I am becoming increasingly interested in replicating the late Clinton-era split: maybe we can have the Obama administration’s adult approach to foreign policy and willingness to check demented right-wing “compassionate conservatism” in combination with a Republican Congress that will laugh every time the administration pushes for a massive new entitlement."

Rojos is a friend of the blog and a member in good standing of of the 2008 Coalition of the Divided. With this post he has punched his ticket to the 2010 COD Club, which I will be posting Real Soon Now. It is astounding (and depressing) that after the hue and cry from the left about the power grab of the Bush/Cheney administration redefining the Unitary Executive, we have nothing but a deafening silence as the Obama administration continues to defend in the courts, push the boundaries, and increase the reach of executive branch power. I cannot think of a single example where this Democratic congress or administration has rolled back any of the executive branch overreach of the Bush /Cheney era since Obama came into office. The only hope for a more constitutionally circumscribed executive may be that Obama will nominate judges who will declare his actions unconstitutional.

Miscellany

Traditionally, we conclude this Carnival by including one "off-topic" submission, as a grudging acknowledgment and proxy for the many off-topic submissions received. Off-topic in this context meaning - no mentions of "divided government" or gridlock.

For this edition we offer Madeleine Begun Kane (who practically owns this spot) as she presents Oily Obstruction posted at Mad Kane's Political Madness:

Oily Obstruction (Limerick)
By Madeleine Begun Kane

Liability caps for a spill
Would be raised by the Democrats’ bill.
But Sen. Lisa says “No!”
She’s protecting each co
That drills oil, despite all that they kill.

They’d be hurt by such law, she maintains.
Such indifference to other folks’ pains!
Who will cover the bills
For the victims of spills?
It seems oil cos have Lisa in chains.

Although always amusing I don't often agree with Madeleine's liberal poetic stylings, but this gem is an exception. There is a difference between fiscal conservatism and corporate statism. The absurdly low liability cap provided by our government to this corporate giant is exactly what enabled BP's criminal negligence in the gulf oil disaster.

With that, we''ll wrap up this edition. Thanks for stopping by, and thanks for all of the submissions (on-topic or not).

We intend (road to hell notwithstanding) to pick up the Carnival pace in this election year as divided government content is on the increase. However, I am beginning to think that the Carnival form has seen its day as I am relying more on draftees than volunteers in these compilations. I suspect the blog will better serve the cause by posting these divided government links and comments individually as they occur on a more timely basis. For the time being, we'll try both, so look for the next edition of The Carnival of Divided Government Triginta Undêvîgintî (XXXIX)- Special Dog Days of Summer on or about 8-15-2010. Submit your blog article at carnival of divided government using our carnival submission form.

Divided and Balanced.™
Now that is fair.

If Ignorance is Bliss, William Greider is Ecstatic...

...and he insists on sharing his joy with us in The Nation.

Goodbye Keynes, Hello Hoover

The first fundamental failure of Keynesian economics occurred forty years ago during the Vietnam War when the economy was overheating but the political system failed to take the corrective steps that would restrain price inflation—that is, raise taxes and reduce federal spending. The decade of economic stagnation that followed became a central factor in discrediting both liberalism and the Democratic Party.

Wrong. Despite popular mythology, Keynesian economics actually first failed during Keynes' own lifetime, back in the Great Depression. More accurately, the rather selectively-interpreted and extremely cherry-picked tactics scalpeled out of Keynes' theoretical work failed, in large part because of that selective interpretation and cherry-picking. And among the first to say so was Keynes himself, who noted that his prescription was for short-term ameliorative action, not long-term doctrine. But I digress...back to Greider:

We are now witnessing a second great failure of the doctrine John Maynard Keynes devised for managing a healthy economy. This time, Washington faces the opposite problem—a starkly underperforming economy in which 10 percent of the workforce are without jobs and income. Yet the President and Democratic Congress, spooked by the swollen federal deficits, are unwilling to do what Keynes prescribed in these circumstances—pump up federal spending enormously and run even larger budget deficits in order to force-feed a stronger recovery.

One can gain a solid grasp of Greider's own political stance simply by noting what he (along with most other liberals) leaves out of the classic Keynesian prescription for recession -- cutting taxes. Yet Greider and his ideological cohorts have no problem whatsoever remembering the "raise taxes" part of the Keynesian price inflation prescription.

Keynesian theory has many empirically demonstrable flaws and it's not my intent to begin a long dissection of them*. My point here is highlighting the willful selective ignorance of those socialist/statist ideologues who want more government and more more spending and (at root) more more MORE state control over individuals with the concomittant loss of freedom that implies, and use Keynes as their crutch. Even dedicated Keynesian Paul Krugman (who really is a brilliant economist when he's not being a complete political-media whore for "progressivism") has had some things to say about Greider's utter lack of critical-thinking skills, at least in the field of economics.

So when you hear ideologues tossing derogatory sneers at "Keynesianism" and "Monetarism" and "Libertarianism" and such, keep in mind that the overwhelming majority of them, like Greider, haven't got the intellectual foundation to know WTF they're talking about. Or even the ability to grasp that they don't have that foundation.

[*--For a much more balanced and empirical rather than ideological view of the current state of our economic situation and the failed applications of Keynesian theory thereto, N. Gregory Mankiw's recent article in National Affairs provides an excellent start for the intelligent layperson. Pay particular attention to his thoughts on the disparities between theoretical models and observed reality -- they have major applications in other areas, such as climate "science."]

How's That Stimulus Coming?

About as I predicted.

Stimulus aside, we're not seeing increase in jobs

The economy will kick into gear again when the private sector begins adding jobs. Investors were spooked Friday because it isn't doing that yet. Of the 413,000 jobs added in May, just 41,000 of them were in the private sector, barely a fifth of what economists expected, and many of those jobs were temporary ones. Speaking of which, virtually all the public-sector job increases were the result of temporary workers hired by the U.S. Census Bureau...

...The Keynesians who advocate for bigger stimulus spending to avoid a double-dip recession are beginning to bump up against the limits of their argument that deficit spending can lead the economy back to a growth cycle. The stimulus spending has to show some private-sector results. We can't keep pointing to the census workers, teachers and other public-sector jobs that have been "kept" thanks to stimulus money.

This really isn't rocket science or brain surgery. The "stimulus" bill was, as I repeatedly said, mostly aimed at shoring up government and union (and public-sector union) jobs, NOT at "stimulating" the private economy that actually generates the wealth that pays for all that government. While private-sector employment crumbled, government employment barely budged at state and local levels, and actually grew at the federal level.

Shoring up government at the expense of the private sector is not stimulus. It's an attempt to permanently expand government. And it won't boost the economy. Quite the opposite. It suppresses growth, as we're seeing. When we do begin to see positive recovery in the private sector, it won't be because of government "stimulus," but in spite of it.

A Mad Tea Party

There is an undeniable "Alice in Wonderland" quality to Democratic spin on the meaning and nature of the Tea Party movement.

"This piece of rudeness was more than Alice could bear: she got up in great disgust, and walked off; the Dormouse fell asleep instantly, and neither of the others took the least notice of her going, though she looked back once or twice, half hoping that they would call after her...`At any rate I'll never go there again!' said Alice as she picked her way through the wood. `It's the stupidest tea-party I ever was at in all my life!'
- Lewis Carroll - Alice's Adventures in Wonderland

It is very very important to Alice Democrats that the Tea Party not make sense and be of no consequence. As long as the Tea Party is of no consequence, it is perfectly reasonable to just turn their back and walk away. But... why do they keep looking over their shoulder? Perhaps the nagging fear of what it means to Democrats if - just if - it is a legitimate movement. Best not to think of that.

So we are treated to endless and increasingly creative efforts to demonize and characterize the Tea Party movement in a negative light. The left framing of the Tea Party has the distinct smell of "lets throw everything at the wall and see what sticks" desperation. We are simultaneously lectured on why the movement is both extremely dangerous and completely unimportant. The framing runs the gamut of "phony populists" (ably deconstructed by Tully in a recent post), Fox News controlled puppets, neo-Nazi radicals, a privileged country club set, rednecks, terrorists, a side show, stupid people, racists, affluent educated elitists, an over-hyped media construct, bullies, fear-mongers, illegitimate, animals, unimportant, dangerous, kooks, seditious, disconnected from reality, fascists, closet Arizonans and worst of all - Republicans. No matter that many of these labels are mutually exclusive and impossible to be true at the same time. Democrats have taken the White Queen's advice to heart:

Alice laughed. "There's no use trying," she said. "One can't believe impossible things."

"I dare say you haven't had much practice," said the queen. "When I was your age, I always did it for half an hour a day. Why, sometimes I've believed as many as six impossible things before breakfast."

I'm not saying that libertarians, conservatives and Republicans are any less self-serving or better at articulating exactly what the Tea Party movement is about, but at least they are not aggressively and childishly insulting. I mean, is it possible that the tiresome epithet "teabagger" can still be considered edgy and amusing among the cognoscenti in the progressive echo chamber? Apparently so - watch Chris Matthews split a gut laughing at Bill Maher's comedic "teabagger" genius:


Would the GOP love to co-opt the movement? Yes, certainly. But - just guessing here - I suspect that being wooed by Republicans feels better to Tea Partiers than being spit in the face by Democrats.

Frankly, I don't think the hodge-podge of interests that make up the Tea Party movement is all that hard to figure out. It is a group that self-selects by prioritizing one issue above all others - federal spending and the deficit. Get past that issue, and there is little policy agreement among the Tea Party factions. But that does not really matter, because in 2010 they agree one issue trumps all others - It's the spending, stupid.

In contrast to the disparagement from the left, the Tea Party is getting a lot of advice from the right. Some of it is pretty good.

Richard Viguerie - a self-described old-school conservative has this "advice for the tea party":

• Be independent
• Go on a policy offensive.
• Pressure institutions to change.
• Get involved, then stay involved.
• Avoid the third-party trap.

"Most important, tea partiers must remain distinct from both political parties. The GOP would like nothing better than to co-opt the movement and control the independent conservatives who are its members. But we must keep in mind that perhaps the single biggest mistake of the conservative movement was becoming an appendage of the Republican Party."

John Samples, author of the "The Struggle to Limit Government" put his "advice to tea partiers" in a video:


Ed Morrissey distills Sample's advice, and dissents:

• Republicans aren’t always your friends.
• Some tea partiers like big government.
• Democrats aren’t always your enemies.
• Smaller government demands restraint abroad.
• Leave social issues to the states

"Democrats may not always be opponents to Tea Party instincts, but their current leadership is completely antithetical to those values. That is why endorsing Democrats for Congress in this cycle, even conservative Democrats like Walt Minnick in Idaho, is probably a bad idea. If Democrats keep their majority in November, Nancy Pelosi and her leadership team will keep control of the committee chairs and the agenda in the House. The only way to get rid of that leadership is to elect people other than Democrats to Congress this year, and that means Republicans."

Sample replies to Morrissey:

"I said in the video that Tea Party people should recognize that “Democrats are not always the enemy.” Morrissey rightly says I should not talk about enemies in domestic politics. He adds that the current House Democratic caucus does not deserve support because its leaders favor expanding government. He’s right. Divided government is what we need now. However, I had in mind the more centrist Democrats that supported the tax and spending cuts of 1981 and the tax reform of 1986. I am urging Tea Party people to avoid becoming too partisan. Perhaps some of them will still be in Congress in 2011."

Sample is right. So is Morrisey and Viguerie. The Tea Party must be independent of both political parties, and they need to vote straight Republican in the 2010 mid-terms.

The Tea Party will never be a majority and, at best, can hope to field a 6%-12% general election swing vote in a largely polarized partisan electorate. But that is enough to shape the political landscape if the movement can organize into a predictable voting block. To do that, they need an organizing principle. I have a suggestion - voting consistently for divided government. This is a voting heuristic that speaks directly to the Tea Party's signature issue - out of control federal spending. Divided government has been shown by economists, political scientists, and historians to limit the growth of spending. and the growth of the state.

My advice to the Tea Party, is the same widely ignored advice I proffered to politically impotent libertarians as a prescription for their embarrassing electile dysfunction. Paraphrasing from that post:

What is needed, is an organizing principle that is so obvious, so logical, and so clear-cut, that no leadership is needed, no parties are needed, no candidates are needed, and no infrastructure is needed. Ideally it is this easy: You think about the principle, and you know how to vote. That organizing principle exists. It is voting for Divided Government. It is absolutely clear-cut and easy to understand. Divided Government is documented by Niskanen et.al. to work in a practical real-world manner to restrain the growth of the state. As a voting strategy it can be implemented immediately. More importantly, it can collectively be implemented individually regardless of Tea Party faction and independent of major political party leadership.

Whatever the percentage of the electorate that the Tea Party represents, whether it is 9% or 20%, if they vote as a block for divided government, they immediately become the brokers of an evenly split partisan electorate. They arguably become the single most potent voting block in the country, specifically because they are willing to vote either Democratic or Republican as a block. Specifically because they are not fused to one party or the other.

The divided government vote in 2010 is a straight Republican vote for the Senate and House of Representatives. If the Republican Party succeeds in retaking the majority in either legislative branch, the divided government vote in 2012 is to re-elect Barack Obama. Will the Tea Party take my advice? Go ask Alice:

"One day Alice came to a fork in the road and saw a Cheshire cat in a tree. Which road do I take?" she asked. "Where do you want to go?" was his response. "I don't know," Alice answered. "Then," said the cat, "it doesn't matter." - Lewis Carroll - Alice's adventures in Wonderland

Divided and Balanced.™
Now that is fair.

GM pays back $6.7B in government loans using $13.4B of government money parked in an escrow account in order to secure $10B in new government loans.

UPDATED: 01-May-10
All week I've watched GM CEO Ed Whitacre walking down a factory floor in a GM advertisement, crowing about repaying government loans while saying he could respect the opinion of those who did not want to give GM a "second chance". It is good to know that Ed can respect my opinion of the bailout. He might be interested to know that my current opinion is that his claim that GM repaid the loan from the US Government in full and ahead of schedule is complete horseshit. I hope Ed still respects me.

Shikha Dalmia at Forbes goes beyond opinion and actually does the homework:

GM CEO Ed Whitacre announced in a Wall Street Journal column Wednesday that his company has paid back its government bailout loan "in full, with interest, years ahead of schedule." He is even running TV ads on all major networks to that effect--a needless expense given that a credulous media is only too happy to parrot his claims for free. Detroit Free Press' Mike Thompson, for example, advises bailout proponents to start "warming up their vocal chords" to jeer their opponents with chants of "I told you so."

I wonder - Does Mike Thompson really believe that anyone beside himself would uncritically take the GM PR, advertising, and administration spin at face value and say "I told you so!" C'mon, Mike. Who would do that?

But I digress. Shika explains how the shell game worked:

"...the Obama administration handed GM only $6.7 billion as a pure loan... The vast bulk of the bailout money [$49.5B] was transferred to GM through the purchase of 60.8% equity stake in the company--arguably an even worse deal for taxpayers than the loan, given that the equity position requires them to bear the risk of the investment without any guaranteed return."

"...the Obama administration put $13.4 billion of the aid money as "working capital" in an escrow account when the company was in bankruptcy. The company is using this escrow money--government money--to pay back the government loan."

"...the company has applied to the Department of Energy for $10 billion in low (5%) interest loan to retool its plants to meet the government's tougher new CAFÉ (Corporate Average Fuel Economy) standards. However, giving GM more taxpayer money on top of the existing bailout would have been a political disaster for the Obama administration and a PR debacle for the company. Paying back the small bailout loan makes the new--and bigger--DOE loan much more feasible."

I said this was like a carny shell game, but that is not fair - to the shell game. In a shell game a bean is presumed to be placed under one of three cups, and the mark is fooled by quick manipulation of the cups into guessing and betting incorrectly where it might be found.

In GM's case, the administration just keeps stuffing more and more of our money into the company's pockets, the company moves some of the money from one pocket to another, gives a little back, and finally both the company and administration that gave them our money misrepresent what is taking place. When all is said and done, GM winds up owing us more money than before they "repaid" the loan.

But, no worries. We'll get the money all back. Someday. Over the rainbow. Just as soon as the 72.5% of GM company stock that US and Canadian taxpayers own is worth as much as they are owed and can be safely sold to repay it. The GAO suggests this may happen just as soon as....

" It concluded in a December report (which a more recent April report has said nothing to contradict, despite media spin to the contrary) that: "The Treasury is unlikely to recover the entirety of its investment in Chrysler or GM, given that the companies' values would have to grow substantially more than they have in the past."

... hell freezes over.

Hat tip to McQ at Questions and Observations who sums it up with this depressing observation:

"...it's actually worse than first imagined."

In the meantime, as taxpayers, we can take comfort in the knowledge that our money is being used to prop up a failed competitor and make life harder for the Ford Corporation. Ford is a well run American company that took the hard management decisions necessary to survive in a tough environment and made the right management decisions to earn the respect of all Americans. Ford continues to innovate and build new products out of their own capital and profits, not requiring or requesting any government handouts. And we are all paying to subsidize their competitors.

We can all sleep better knowing that our tax dollars are being used to undermine a great American company that did the right thing by reanimating their zombie competitors.

I guess I'll just have to be satisfied with the knowledge that since GM and Chrysler took my money against my will, they'll never get a dollar from me willingly to buy one of their cars. It's something.

UPDATE: 01-May-10
Nick Gillespie at Reason TV distills the scam into an easily digestible 90 second video:




H/T to Fausta, who also weighed in with a post explaining how "GM Paid Nothing". The real question, for me, is why does the media for the most part simply regurgitate such a transparent misrepresentation of the facts?

Divided and Balanced.™
Now that is fair.

The Carnival of Divided Government Triginta Septendecim (XXXVII) Special 4 Year Blogiversary Edition

Welcome to the 37th edition of the Carnival of Divided Government - The Special Four Year Blogiversary Edition.

Happy Birthday to me!

Four years ago, I started this blog by asking the question "Is this blog for you?", then offering the answer "Probably not." Well, I got that part right. 380 posts and 400,000 words later, uncountable throngs of blog readers reached the same conclusion and have flocked from this blog. In the meantime, the country has moved from disastrous Single Party Republican Rule to disastrous Single Party Democratic Rule. I think the country has a a collective learning disability. Nevertheless, we shoulder on - pushing that divided government rock up the mountain every election cycle.

A blogiversary is a time for reflection. Looking back on my first three posts from April, 2006 I take a certain perverse pride in offering a coherent and consistent thematic content from then until now. Then, we were advocating a straight Democratic vote in the 2006 mid-terms in order to break the hegemony and consequent bad governance of Single Party Republican Rule. Four years and two elections later, it's deja vu all over again. Now we are advocating a straight Republican vote in the 2010 mid-terms to break the hegemony and consequent bad governance of Single Party Democratic Rule. With a little luck, we'll have a similar result in 2010.

A blogiversary is also a time for presents. We like presents. It has been a while since we've spruced the place up. Since Blogger is finally getting around to updating their templates, we are giving ourselves a blog makeover for our birthday. Look for changes over the next few days or weeks. We've also giving ourself Twitter and Facebook accounts. We will be introducing them into our blogging process, just as soon a we figure out WTF to do with them. Everybody tells us we need then, so we must need them, but we really don't know why. For right now, we are content to see how many twitter followers we can accumulate without ever sending a single tweet.

In the meantime, the concept of and prospect for divided government is ramping up into the election season, so without further ado...
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It's the spending stupid.

BankruptingAmerica.org

Let me net this out:

Long term - I don't have an answer. But I do know that right now we don't particularly need a plan to build a hospital for our critically ill federal budget patient. What we need right now is a tourniquet to stop the bleeding.

Short term - Neither party can be trusted on spending. Divided government has been shown as a historical fact to restrain the growth of spending (as well as deliver other benefits) by scholars, political scientists, economists, historians, and constitutional lawyers. There is exactly one voting booth imperative for anyone concerned about spending - voting for divided government. This means voting straight Republican for federal office in 2010, and if they take Congress, then voting to re-elect Obama in 2012.

Republican vs. Democrat is a false choice.

Divided Government vs One Party Rule is the real choice facing voters.

Divided and Balanced.™
Now that is fair.

Poor Carpentry

Peter Beinart of The Daily Beast indulges in some Lakoffian framing to "explain" how the Tea Party movement isn't "populist." All he has to do to get there is redefine populism and by implication recast the federal government under the current administration as being the little guy. Seriously! Here, let's watch him stack the deck...

In American history, populism has a specific meaning: It’s our non-Marxist way of talking about class. Being a populist means standing up for the little guy against ruling elites.

Such vague claptrap is what Beinart deploys as a definition of populism for exclusionary purposes. And it fails on the face of it. In modern poli-sci terms populism is best defined as "an ideology which pits a virtuous and homogeneous people against a set of elites and dangerous ‘others’ who are together depicted as depriving (or attempting to deprive) the sovereign people of their rights, values, prosperity, identity and voice." [1]

This is a clear definition of populism that fits well the assorted populist movements in American history, including the current Tea Party movement. Beinart doesn't want to employ it because it specifically negates the rhetorical pretzel logic he has conspicuously constructed to steer the definition back into the fallacious trap of using "populism" as a mere sneering pejorative when describing any popular non-leftist movement. In Beinart's world, ONLY leftist movements employing identity politics can truly be "populist."

Beinart has substituted "little guy" into the equation to exclude anyone falling outside the heroic leftist totem of "the oppressed" from being capable of being "populist." In Beinart's world, only "the oppressed" can be "populists," and in leftist terms that automatically excludes anyone not favored by, well, leftists. It's simply a new polish on the old "victimhood" routine, one intended to deny victim status to anyone not of Beinart's tribe. One is either a victim or an oppressor, and by defining populism in terms of class struggle (while claiming he's being "non-Marxist" in doing so) Beinart seeks to automatically and categorically label the Tea Party people as elitist oppresssors. Thus anyone they are opposed to must categorically be the oppressed.

Now let's watch the second part of the framing attempt, in which Beinart casts the Obama administration in the role of the oppressed, since those opposed to the oppressed by Beinart's definition cannot be populists:

The Tea Partiers aren’t standing up for the little guy; they’re standing up to the little guy. We’ve long known that their leaders, like Sarah Palin, opposed against real regulation of Wall Street. Now we learn that what the Tea Partiers dislike about Barack Obama’s economic policies is that they don’t do enough for the rich. According to the Times, Tea Partiers are more likely than other Americans to think Barack Obama’s policies favor the poor, and they’re mad as heck about it.

Yeah, right. This is merely an attempt by Beinart to cast anyone opposed to the actions of the administration as being part of a privileged racist/elitist mob. Beinart is asserting here that being opposed to the massive growth of federal government and economy-crushing spending by same somehow automatically makes Tea Party people privileged elitists oppressing the "little guy." The "little guy" in this case being the federal government as personified by Barack Obama! (Try oppressing the IRS next time you're summoned for an audit. You'll quickly find out who the "little guy" really is.)

Pretty disingenuous stuff coming from a left-wing elitist Ivy League product of exclusive private schools, Yale, and Oxford. Perhaps Mr. Beinart has mistaken his own wealth of elitist privilege as being an acceptable substitute for intelligence, when even the most cursory examination of his premises makes clear that his ham-handed rhetorical framing is pretty poor carpentry indeed.

As George Orwell once famously remarked, "One has to belong to the intelligentsia to believe things like that; no ordinary man could be such a fool."

UPDATE: Right on cue, here comes reliable tool and left-wing elitist Ivy League product of exclusive private schools, Harvard, and Oxford E.J.Dionne promoting the narrative. Why, you'd almost think it was a coordinated effort on the part of left-wing elitist Ivy League products of exclusive private schools, Harvard/Yale, and Oxford to shape the narrative. Is having had a Rhodes scholarship one of the required credentials for this club? Elsewhere, Glenn Reynolds notes his own powers of prognostication.

UPDATE AGAIN: James Taranto at WSJ's Best of the Web takes notice with "Populism of the Privileged." Heh. Remember that we were there first.

[1] Albertazzi, Daniele and Duncan McDonnell, 2008, Twenty-First Century Populism: The Spectre of Western European Democracy, New York and London: Palgrave Macmillan, p.3

Econ 301: Data and Doubt

If like me you have a solid background in advanced real-world empirical economics, you're probably getting rather annoyed by now with the creatively optimistic interpretations of every stat release that comes out. This is generally a manifestation of confirmation bias, the tendency on the part of somewhat naive ideologues to see everything as evidence of their own wishes manifesting rather than as data points for objective assessment in a coherent empirical framework. Pointing out to same that they don't really know what they're talking about is somewhat futile -- ideologues follow pre-dispositions, not evidence and objective analysis, and the attempt will probably just get you called names. Especially as they tend to be certain they ARE being objective, despite the contrary evidence and their own lack of expertise in the field.

For those more interested in what's actually going on than in simply cheerleading their own fantasy scenarios, David Rosenberg of Gluskin-Sheff has a handy and concise list of some of the most mis-represented stats currently being used to cheerlead (and claim admin credit for) a "recovery" that at best looks to be somewhat slow and anemic at this point. A sample:

The ISM index came out before the payroll numbers did and injected a big round of enthusiasm into the pro-cyclical camp. The index did shoot up in March, to 59.6 from 56.5, and while many of the components were up, the prime reason for the increase was the eight-point surge in the inventory component, to 55.3. Moreover, the orders-to-inventories ratio slid to a level suggesting that we could be in for a big pullback in the next few months. Meanwhile, very little attention has been made to the construction spending data, which sagged 1.3% MoM in February with broad-based declines across sectors — and January’s 0.6% drop was revised to -1.4% (the fourth slippage in a row).

Go read the whole thing at the link. It's a good quick-and-dirty capsule check on why the institutional investors are not nearly as sanguine about the current condition of the national economy as the administration mouthpieces and partisan cheerleaders are.

UPDATE: Some related thoughts on the unemployment figures.

Why We Don't Trust Congress

Since mw is off having a good time again, I'm going to cross-post whatever comes to hand until he gets back and realizes what a horrible mistake he made in letting me have the blog keys ...



Georgia's 4th Congressional District must be so proud of him! I admire the admiral's forbearance. The really scary thing is that Johnson is a major improvement over the previous member to hold that seat. Even scarier, while he's not the sharpest knife in the drawer, the odds are excellent that he's not the dullest either.