President Narcissus

The months before I took the oath of office were a chaotic time.  We knew our economy was in trouble, our fellow Americans were in pain, but we wouldn't know until later just how breathtaking the financial crisis had been, and still over those two and a half months in the midst of that crisis, President Bush, his cabinet, his staff, many of you who are here today, went out of your ways, George, you went out of your way to make sure that the transition to a new administration was as seamless as possible.

President Barack Obama

This constitutes part of the remarks made by President Obama on the occasion of unveiling the portrait of President George W. Bush.  The subtext - in case you missed that hammer blow to the head - is that the current economy is still Bush's fault.  Yes, after three and a half years in office, Obama is still blaming his predecessor.  That's nothing new.  That he would do it in a typically non-partisan ceremony does not reflect well on him.  President Bush has remained silent in Texas while Obama has repeatedly attacked him long after Obama should have taken ownership of the economy.  That is impressive restraint and Obama should thank him for it.  Instead, he once again blames Bush.

If that wasn't enough, Obama segued from President Bush standing on the rubble of the Twin Towers to the killing of Osama bin Laden.  Gee, are we getting in a plug for killing bin Laden again?  The ceremony is supposed to be about President Bush and yet Obama can't stop plugging himself.  It is almost as if the unveiling is about Obama.

A few weeks ago, it was reported that almost every presidential profile on the White House website had been updated to include something about Obama.  It is also of note that reporters count the use of the pronoun 'I' in his speeches; he uses it vastly more than any president since Nixon.  A few weeks ago, he commented that the troops were fighting for him.  Not the country but for him.

Back at the unveiling, Bush gave Obama a bit of advice, perhaps in response to Obama's comments:

I am also pleased, Mr. President, that when you are wandering these halls as you wrestle with tough decisions, you will now be able to gaze at this portrait and ask, "What would George do?"

Regardless of one's feelings about President Bush, he wasn't blaming Clinton 3 and a half years into his presidency.

Dope and Change

Penn Gillette, he of Penn and Teller fame, is an outspoken Libertarian and atheist.  He recently ranted on the fact that President Obama openly admitted to smoking marijuana and even doing cocaine.  Gillette wonders where Obama would be today if he had been arrested during that time and suffered the penalties for drug use that he supports as President.  Basically, if President Obama had caught teenage Obama smoking weed, that teenager would have been screwed.  Young Barack would probably not have gone to Columbia or Harvard.  It is very unlikely he would have been elected Senator or President with a criminal record.  Luckily, teenage Obama got away with his 'crime.'  Here is a clear case of It's only wrong if you get caught.

Remember back during the 2000 campaign when, the weekend before the election, it was revealed that George W. Bush had spent a night in jail for drunk driving?  That was presented as a reason why he should not be president.  Interestingly, Obama admits to driving drunk in one of his two autobiographies and yet there was nothing about that in 2008.  Remember how much effort was put into the story that Bush did cocaine and that was a big deal?  There was no proof but there were rumors.  The implication was that a man who did cocaine shouldn't be president.  And yet, Obama admitted to cocaine use in his autobiography.  No big deal.

I am not saying that Obama's drug use should be used against him at this late date.  He's been in the job so the issue should now be performance rather than youthful indiscretions.  Clearly, he managed to pull himself together and accomplish a great deal.  Everyone does stupid things when they are young but most of us eventually mature.  Eight years ago, Obama called for decriminalization of marijuana.  Today, silence.  It is one thing to call for decriminalization when you are a state senator and another thing to call for it as President.  It takes leadership and courage to do it as President.

Libertarians are too often painted as potheads on this issue which is why they would be better off avoiding it in most cases.  But with a president who was a self-identified member of the Choom Gang, it bares discussion.  If the state of Kansas or Vermont wants to make weed illegal, I have no qualms.  States have broad authority.  The federal government has a very limited scope and the legality of dope is outside of it.  As I said in a previous post, in order to outlaw alcohol, it required an amendment to the constitution.  Where is the amendment for marijuana?

Catch a Dragon by the Tail

The US is back in space.  SpaceX, a private space agency, launched the Dragon capsule this week on a Falcon rocket.  Today, the capsule intercepted the International Space Station (ISS) and docked.  Less than a year after the Shuttle was retired, NASA has an alternative route to space.  Dragon is not expected to transport crew until 2016, so it is just an unmanned resupply vessel for the time being. Thus, US Astronauts must still use the Soyuz at $63 million a flight thanks to the Russian monopoly on manned spaceflight.

Pleased as I am, this is low earth orbit (LEO) stuff but it doesn't touch what we were doing 40 years ago.  SpaceX can be a great competitor for the Russian Soyuz but it's not Apollo.  The Constellation program was supposed to get us back to the moon and beyond but that has been scrapped.  Yes, money is tight but retiring the shuttle (very expensive each launch) and using a private contractor for ISS resupply (much cheaper) should allow for the restart of Constellation.

The entire space program from 1959 to 1973 cost $109 billion (adjusted for inflation for 2010 dollars), roughly an eighth of the 2009 Stimulus.  NASA's current budget is $18 billion a year (0.5% of the federal budget), which is less than the Department of Energy.  DOE has done a great job, tossing taxpayer dollars into wonderful 'investments' like Solyndra (bankrupt), NRG Energy (Bankrupt), and Abound Solar (laying off workers).  Or how about the Department of Homeland Security, which has a $55 billion budget.  I would be fine with abolishing that department altogether - especially TSA.  Use half the cash for deficit reduction and the rest for NASA, provided NASA returns to space exploration and drops the Muslim outreach.

Venture Capitalist says "Tax the Rich"

Nick Hanauer, a venture capitalist from Seattle, recently spoke at a Technology, Entertainment & Design (TED) forum but his talk was not initially made available by TED.  TED explained that his Tax the Rich speech was too political and came down clearly in one party's camp.  TED seeks to be non-partisan.  However, the speech has now been posted.  Mr. Hanauer makes several points:

1. Jobs are created when there is demand for products.  Demand comes from the middle class, not from a wealthy handful.  Therefore, jobs are created by the middle class having the funds to spend.

2. The tax cuts that the wealthy have enjoyed over the past three decades has improved their standing but not that of the middle class.

3. Taxing the rich to make investments that expand and enrich the middle class is a no-brainer.

He definitely makes some interesting points but he fails to follow through with his taxing plan.  Why is taxing the rich the solution to our problem?  What investments (i.e. government spending) does he propose with these tax dollars?  How does that work?  He never explains.  And his audience didn't seem to notice his failure.  One could infer that he wanted to transfer that money to the middle class to spur consumption.  Sounds like the old 'Spread the wealth around' comment from Obama.

As his success attests, Mr. Hanauer is a good businessman, but he is no economist.  He thought the idea of 'job creators' was upside down, thus his first point that consumers create jobs.  But consumers can't buy a product or service that isn't first offered.  Steve Jobs had to make the iPhone before the consumers could buy it.  Ford had to make the Model T before there could be any demand for it.  These are the great successes for job creators.  By the same token, few people bought John DeLorean's car though he certainly created jobs before he discovered the complete lack of demand for his stainless steel sports car.  So, the rich really do create jobs but it is the middle class who determine whether they are temporary or permanent.  As for demand, he seems to think that the rich who might have 1000 times the funds as a middle class person don't consume 1000 times as much.  See, it would be better if that money were in the hands of consumers.  This from a VENTURE CAPITALIST.  Is he hiding his money under a mattress or did he invest it in a variety of companies that became successful?

One can argue about the appropriate level of taxation on high earners but the notion of government 'investing' in the middle class is nonsense.  Government spends.  It will spend every dime it collects and then borrow a nickel to invest.  The government needs to stop investing before we become Greece.

Why No Budget?

Today, the Senate voted down 5 budgets.  President Obama's proposed budget went down to a 0-99 defeat.  The other four budgets, proposed by various Republican senators, were also defeated but none so badly as this.  Only Rand Paul's budget came close to matching Obama's crushing defeat though his got 16 votes in favor.

The Constitution requires Congress to pass a budget.  The House passed a budget last year and passed one this year.  The Senate has gone more than 1000 days without passing a budget.  The House is controlled by Republicans and the Senate by Democrats.  Of note, it only takes 51 votes to pass a budget, so the Democrats could pass a budget without a single Republican vote.  Moreover, as it is a budget, it is not subject to filibuster.  Reconciliation is how the Bush Tax Cuts were passed even though the Republicans didn't have a supermajority.

One wonders why the Democrats have failed to pass a budget.  The Republicans can't stop them from passing a budget.  Once a budget is passed, the House and Senate would reconcile their differing budgets through horse trading, which is how it has happened for more than 2 centuries.  Why not now?  We've had divided government before.  This should be nothing new.  And yet we are moving into 3 years without a budget.  There must be a reason.

Failure to pass a budget means that the only options on the table are to continue current spending levels via a continuing resolution or a government shutdown.  Republicans were burned badly the last time they tried the government shutdown (1995) and won't dare to do it again.  That leaves the continuing resolution.  What budget is thus extended?  The 2009 budget, which dramatically expanded government spending through the stimulus package.  Thus we have our answer.

If the Senate passes a budget and then goes into conference committee with the House, it is a certainty that budget priorities will change.  The Democrats will not get a budget as much to their liking as the 2009 budget that was passed by a Democratic House, Senate, and President.  Better to forever extend a budget they like than to pass a new budget that they dislike.  All the complaints that the Republicans are intransigent is nonsense but it plays well in the media.

The Money Illusion

Some months ago, I heard Scott Sumner (PhD Economist) on a Podcast I follow (EconTalk with Russ Roberts) and was intrigued.  He kept arguing for growth in Nominal Gross Domestic Product (NGDP), which is denominated in current dollars which may be less valuable than last year's dollars.  Thus, NGDP can be different from Real GDP.  One can have nominal growth simply by printing more currency even in an economy with RGDP of zero.  This seems somehow wrong to me.  It's like he wants to trick the economy into thinking there is growth even when there isn't.  Nonetheless, I found his blog and have followed it since then.  He says the darnedest things and makes a surprisingly good case.

Sumner holds that the Federal Reserve should have a targeted NGDP, assuring that the economy is constantly expanding.  I have long thought that money was supposed to be a reliable store of value but Sumner is proposing to forever decrease its value through this constant rate of inflation.  I was long a supporter of the gold standard but that is unrealistic since the supply of gold is not growing at a rate equal to the growth of world economies.  As such, the gold standard would effectively shrink the money supply.  Likewise, it is difficult to target fiat money to the actual growth rate and that might, in recessions, prove to be a problem by again shrinking the money suppy (as happened in the Great Depression).  So, I find myself in agreement with much of what he has to say but still find the idea of constant, planned inflation disagreeable.

Some other things Sumner has declared have also grated on me.  For instance, he proclaims that we have a very tight money supply, which seems impossible with all the Quantitative Easing.  How can you pour cash into a stagnant economy and not have inflation?  He has explained but that bit has yet to make sense for me.  Still, he keeps me coming back and has surely changed some of my thinking.  He may yet win me over to his NGDP targeting and I don't think I will forgive him if he does.

Check out his blog here:

http://www.themoneyillusion.com/

The Iron Lady

This biopic of the conservative titan, Margaret Thatcher, spends most of its time on her struggles with Alzheimer's.  Thus, her political triumphs of the past are merely interruptions in her imaginary conversations with her dead husband.  Here is a movie about a crazy lady who lives alone.  All that is missing is a dozen cats.

It takes at least 15 minutes before the movie starts looking at her career.  Instead, she is shown wandering her house, confused and bewildered.  She has conversations with her dead husband, listens to her staff whisper about how she's lost her mind, and otherwise paints Mrs. Thatcher as a tragic and unhappy figure.  See, this is what you get for being a conservative.

Finally, the movie looks back at her roots.  Her father was a grocer and a mayor, who thought people should support themselves.  Margaret is looked down upon by the uppercrust for having been a grocer's daughter.  She married businessman Dennis Thatcher after her unsuccessful bid for Parliament in 1950.  They had twins before she finally won a seat in 1959.  Her climb within the conservative party is glossed over, simply showing her as Minister of Education before jumping to leader of the party and finally Prime Minister.  Her nearly 12 years as PM are told in flashes, pausing for her fight against Trade Unions, IRA bombings, the Falkland War, and her resignation after being challenged for leadership.  Those who don't know much about her might have trouble understanding what the big deal is.  Why does she deserve a biopic?

When Dennis proposed to her, she warned him that she was not going to be some stay at home wife who ended her days by washing teacups.  We had early seen her mother doing exactly that.  No, she was going to make a difference.  But, when the film concludes, Mrs. Thatcher washes her teacup at the sink before wandering the halls of her empty house, shuffling aimlessly.  See, all her efforts were worthless.  She still washed the teacup in the end.  Ha!  Take that, you old bat!

Meryl Streep does an outstanding job of portraying Thatcher but the script is a travesty.  A few good lines from Thatcher are included to assuage her supporters but mostly we see a confused old lady.  Maybe she was confused all along is the subtext.  Here is the most significant woman politician of the 20th century in a film directed by a woman and yet she gets torpedoed like an Argentinian cruiser.

President comes out of the Closet

“I favor legalizing same-sex marriages, and would fight efforts to prohibit such marriages.”

Barack Obama, 1996

It is interesting how this quote has suddenly arisen.  Where was it in 2008 when Senator Obama was declaring his belief that marriage was between one man and one woman?  Clearly, he has always been in favor of gay marriage but he didn't think it would play well on the national stage.  Best to keep that under his golf hat and instead offer his gay supporters the bone of repealing Don't Ask, Don't Tell.  Of course, as most lobbies do, they agreed that was great but then asked what have you done for us lately?  Campaign cash was being log-jammed by his failure to come out and reassert his 1996 position.

Thus, the President evolved back (devolved?) to a previously held position.  And suddenly the cash started flowing.  Hmm.  I recall the constant complaints that Bush and Cheney were in the pockets of Big Oil.  Does the same apply to Obama?  This seems like a pretty clear quid pro quo.

Politically, I am curious about the decision.  Blacks are probably the most unsympathetic group to gay marriage and they are also Obama's most loyal voting block.  Though I doubt it will impact the percentage of this voting block he wins, I suspect he has just suppressed the turnout.  Secondly, the day after North Carolina adopts an amendment defining marriage as one man one woman, Obama comes out for the other side.  Why not announce a few days earlier and perhaps alter an outcome he clearly opposes?  Third, Obama can't wait to consolidate more and more power in Washington DC, but on this one issue, he is a Federalist.  Yes, he thinks states should decide.  Perhaps he read my recent blog on Federalism.

Let's look at the states.  Every state that has put the vote to the people has failed to adopt gay marriage.  Where it has succeeded is in State Supreme Courts like Massachusetts; the justices there discovered that John Adams had provided for Gay Marriage when he penned the state constitution in 1780.  No judicial activism there.  More than 30 states have amended their constitutions to ban same-sex marriage and thus constrain such judicial shenanigans.  42 states define marriage as one man one woman.  Federalism has been hard on Obama's evolved position.

This was about getting campaign cash in exchange for words that are not backed by action.  However, Obama better be wary.  In a few months, his backers might declare that his coming out for gay marriage was great but what have you done for us lately?

Senator for Life

Richard Lugar, Senator from Indiana, lost in the primary tonight.  Though I know little of his opponent, I am pleased by this.  I distrust career politicians; it is my big beef with my governor.  Lugar was first elected to the Senate when I was 9 years old.  If his successor were to last as long, I'd be in my 80s.  As it happens, Lugar is 80 and wanted to serve until he was 86.  Must everyone try to be a Strom Thurmond (47 years), Ted Kennedy (46 years), Robert Byrd (51 years), or Daniel Inouye (49 years and counting)?

Too many of these politicians, be they Republican or Democrat, treat their offices as a title of nobility.  Though they may say they are our representatives, they soon come to view themselves as our rulers.  Few people choose to become servants if there are other options.  However, public servant attracts a lot of "selfless" people.  It is amazing how wealthy these folks get by lowering themselves to be our servants.  This is just another word game.  Few of them serve us, and those who do are generally freshmen who have yet to be corrupted.  It is funny how President for Life is correctly viewed as undemocratic and bad but Senator for Life or Representative for Life is considered normal and even good (seniority, don't you know).

My first option to fix this problem in the Senate would be to repeal the 17th Amendment.  My second option, which could fix things in the house as well, would be to propose a 12 year limit in elective office in the Federal Government.  Doesn't matter the combination of posts but a limit of 12.  Of course, that would require an amendment to the Constitution.  Or, perhaps we could find a judge who would simply rule such; that's how we amend the Living Document these days.

France in Denial

The French have voted out Sarkozy and voted in a socialist.  The citizens of France didn't like the 'austerity' of Sarkozy.  He had caused a wave of protests over his changing the retirement age from 60 to 62.  Along with Angela Merkel of Germany, he had pressed for fiscal sanity within the European Union.  Clearly, Europe is not keen on sanity.  Even the economic powerhouses of France and Germany have more serious debt problems than we have in the US; these are the stable ones.

Whereas the US just broke the 100% mark in GDP to Debt, European nations are much worse:

• Italy 160%
• Germany 204%
• Greece 220%
• Spain 228%
• France 271%
• England 485%
• Ireland 1242%

These are dire numbers, all the more so because the US is, for the first time in more than half a century, not in a position to help.  These countries have all embraced generous social programs and pensions that cannot be sustained.  Austerity is required.  But the citizens have become so accustomed to their government goodies that they view them as rights that must not be infringed.  They have been weaned off of fiscal responsibility and taught to rely on government rather than themselves.  So, collapse is the alternative that has been chosen.

Hollande, the socialist, proposes to raise taxes and restore spending.  Amazingly, many wealthy French are looking to leave France.  Capital can flee a country.  Things will not get better.  Europe is trying to ignore reality.  Good luck.

Misleading Employment Numbers

President Obama is hyping the drop of the unemployment rate down to 8.1%.  This is important since no incumbent president since FDR has managed to get re-elected with an unemployment rate above 8% and he seems on track to squeeze under that dread number.  The economy is recovering, right?  No.

The unemployment rate is determined by dividing the number of people unemployed (U) by the number of people in the job market, called the Labor Force (LF).  Currently, we have 12.5 million unemployed out of a Labor Force of 154 million people, which works out to 8.1%.  Cut and dry, right?  Yes, but that's not the whole story.

The Labor Force is only a portion of the population who fall between the ages of 15 and 64.  In 2008, 66% of the people in that range were in the Labor Force; this is called the Participation Rate.  Today, only 63.6% are in the labor force.  Though that may seem a small change, it adds up to millions of people.  Those not in the labor force has grown from 79.5 million in 2008 to 88.4 million today.

If the participation rate were still at 66%, the unemployment rate would be over 11%.  A shrinking participation rate has lowered the unemployment rate.  When the economy really starts to recover, the unemployment rate will go up as the chronically unemployed returned to the labor force.  The current drop just means more people are throwing up their hands and dropping out of the labor force.

Occupy Cleveland Terrorists

Remember when Congresswoman Giffords was shot by a crazy man and President Obama strongly implied that this had happened because of the hate speech of Republicans like Sarah Palin?  It turned out that the crazy was in no way associated with Conservatives, Republicans, or the Tea Party.  No, he was just a nut.  By the time it was determined he was just a nut, the story had already spread far and wide that it was Republican hate speech that led him to shoot a Democrat Congresswoman.  Nevermind the Republican judge who was killed.  Corrections were not spread as far or wide.

Last year, several men came into contact with each other during their time at the Occupy Wall Street rallies held in Cleveland.  This small band of brothers who took to the street to decry the greed of Wall Street and the One Percent went on to plot mayhem.  Their plot evolved from vandalism to something more grand: they would demolish a 4-lane bridge with C-4 explosives.  Luckily for the citizens of Cleveland, the perpetrators were less than bright.  One could even make the argument that the FBI informant within the group nudged them toward a more destructive plot.

These fellows have clear ties to the OWS movement and yet I have not heard the President denounce OWS rhetoric for producing them.  An Occupy spokesman said the five had attended events but weren't affiliated with OWS.  And that ends the story?  I recall a lot of Republicans and Conservatives saying the Tucson shooter was in no way affiliated with them but he was continually linked to Sarah Palin's "Targeting" of Ms. Gifford's district.  Yet there really was NO link.  Here there is a definite link but it shouldn't reflect badly on OWS.

From the slant on these events, it would appear that violent crazies are assumed to be right-wingers.  But, as soon as it is discovered that they are not right-wingers - as inevitably happens, the story is dropped.  Because everyone knows that violence cannot be inspired by what leftists say.  The demonization of the 'One Percenters' or 'Big Oil' or Wall Street doesn't inspire actions like the Cleveland Five.  Encouraging class warfare is not hate speech.  Democrats are all about peace and love.  We should coexist, except for the Republicans who - according to President Obama - need to sit in the back and not do any talking.