Saturday, February 28, 2009

GOP's 'Obama' Falls Flat

It was ironic that during which a film set in India and partially created by Indians won the Academy Award for Best Picture while America's top Indian political figure fell flat on his face.

Louisiana Governor Bobby Jindal's response to the State of the Union is the most panned high-profile political speech in 20 years. Not since then-Governor Bill Clinton droned on and on at the 1988 Democratic National Convention has the political ground shaken harder and swallowed up a rising star of the party.

Everybody on both sides of the aisle had disparaging words for Jindal's sing-song performance. He reminded me of an Indian Woody from the children's film Toy Story.

I'm your favorite deputy, Mr Limbaugh!

The numbers genius from Nate Silver had the night's biggest zinger when he said, "If it sounds like Jindal is targeting his speech to a room full of fourth graders, that's because he is. They might be the next people to actually vote for Republicans again."

In retrospect, MSNBC's Chris Matthews was quite prescient in uttering his audible, "Oh God" just as Jindal appeared. He apologized the next day saying he was only referring to the "stagecraft" of the speech.

In the end, the Republican Party's "Obama" crashed and burned on the national stage, but the connection to Clinton's comparable fizzle in 1988 should be examined. Both are Southern governors and highly-skilled intellectual minds. Both were anointed up-and-coming stars in their parties and possibly presidential candidates. No matter what American mythology says, there are second acts in American political life. Clinton did the talk show circuit and allowed himself to be made fun of. Four years later, the guy known for talking too much became president.

The breadth of the criticism against Jindal has been shocking. So much so, that Rush Limbaugh felt compelled to evoke Reagan's 11th Commandment--though shall not talk ill of fellow Republicans. The incongruity of the response is so evident that it should allow Jindal the ability to brush himself off and continue to burnish his credentials for a run in 2012. He could one day be the guy who use to be the guy who looked childish and dorky on national television, only to rise again.

Friday, February 27, 2009

NYT Reporter Says U.S. Will Be In Afghanistan for 30-50 years

The United States could be enmeshed in Afghanistan and the Pakistani tribal areas for the next 30-50 years, according to The New York Times Chief Washington Correspondent David Sanger.

Click here to read my entire article from the Commonwealth Club of California and other postings.

Tuesday, February 24, 2009

Bankers Break It, Taxpayers Buy It

The Citibank web site has a curious marketing slogan atop its home page, "we never sleep." Presumably, the motto means customer's can do their banking anytime, but with nationalization of banks becoming more likely by the day, it could be an admission of many sleepless night to come.

The past week has seen more than a whisper campaign from some Democrats and few leading economists that the short-term remedy for the banking system is nationalization. Sen. Chris Dodd has said it may "unavoidable", which is nearly equivalent to saying, "Folks, get ready. It's happening." It's no wonder the stock market, although briefly rallied today, is beginning to see the reckoning a collapse of Citibank, Bank of America and Wells Fargo could mean to the economy and the administration is slowly setting the stage for nationalization. For the time being, though, President Obama and Fed Chairman Ben Bernanke say nationalization is not on the radar. Bernanke's comments today stoked Wall Street and that was his intent.

The Washington Post reports today the Obama administration tweaked the terms of government assistance by demanding common stock in lieu of cash. "The change paves a road toward nationalization for the most troubled large banks," according to the Post. A piece on goes further in calling nationalization inevitable.

Nationalizing the nation's top banks has its drawbacks. With taxpayers already shouldering a large burden of risk that is likely to increase in the future, backing the financial sector may be too much. Some economists even believe another stimulus bill of nearly the same sticker price will be needed within two years. On the other hand, taxpayers saw little in return in the form of consumer lending after the initial $350 billion bailout money passed late last year and news reports of lavish executive spending and multi-million dollar bonuses left a lingering distrust of banks to apply the aid judiciously.

How poor is the health of the nation's biggest financial institutions? The grand sage of the credit mess, New York University Professor Nouriel Roubini laid it out in this week's issue of Time, saying Citibank is "on the way to ICU," Bank of America should "prepare the transfusion" and surprisingly, Wells Fargo needs a "Defibrillator. Stat!"

The poor health of these once mighty institution is a reminder of how their bottom line's were nothing more than a house of cards. Just 16 months ago, Bank of America and Citigroup were quarterly flipping top positions for the title of world's largest bank. Today, they may be on the verge of being owned by the biggest economy in the world.

Saturday, February 21, 2009

Report: Iran Has Enough Uranium To Build At Least One Nuke

In David E. Sanger's new book, The Inheritance, the chief Washington correspondent for The New York Times writes, "the Iranians may be so close to a bomb -- a few screwdriver turns away -- that there is no hope of stopping the country from becoming nuclear capable."

In yesterday's Times, Sanger and William Broad reported the Iranians have created "more than a ton" of enriched uranium -- a third more than previously known, which the article cites as enough to build an atomic bomb. If the Iranians now have sufficient amount of enriched uranium, Sanger's assessment is proving quite prescient.

In the book, Sanger also writes Olli Heinonen, the International Atomic Energy Agency's chief inspector, saw 2008 as a "breakthrough year" for Iranian uranium enrichment capabilities.

The summer before, Heinonen had predicted that by the end of 2008 the Iranians would likely be running upward of 4,000 of the high-speed machines [centrifuges] -- enough to make a bomb's worth of uranium in a year's time if they choose to enrich to bomb-grade purity. His prediction proved just about right.

While the new Obama administration has indicated its willingness to talk to Iran, the increased likelihood of a nuclear Iran could change some opinions in Washington, possibly allowing some hawkish members of Congress to revert to the previous administration's stated intentions to disrupt at any costs -- through sanctions or military action -- Iranian designs on creating a nuclear bomb.

The Bush administration had contemplated military airstrikes against Iran publicly since 2006, but Sanger reports in his book that the consensus for success was lacking. "Military experts who have studied the options say an airstrike could be devastating," writes Sanger, but also that it would not be quick. He quotes a former head of intelligence for the Middle East and the Defense Intelligence Agency as saying, "You are talking about something in the neighborhood of a thousand strike sorties and it would take all kinds of stuff -- air, cruise missiles, multiple airstrikes -- to make sure you've got it all." Some estimates, according to Sanger, have such a campaign lasting a week or two and making U.S. interests in the region vulnerable to attack from Hamas and Hezbollah.

Iran may have the enough nuclear materials, but they do not yet have a bomb. It is quite possible that the mullahs and President Mahmoud Ahmadinejad may not seek the actually warhead but merely seek what Sanger calls "a virtual bomb".
In the Second Nuclear Age, countries don't need to compile huge stockpiles of the sort that the Americans and Soviets amassed during the Cold War. All they need is a "virtual bomb," a credible capacity to build one in a few months and credible willingness to do so.
It appears the Iranians have achieved both points. How will President Obama react to this new nuclear paradigm?

Is GM About To Lead The Nationalization of Medicine?

American economic monoliths tend to steer the wheels of commerce by their sheer size and influence. A state like California can enact sweeping environmental laws that leads other states to do the same, and when a company like McDonald's acquiesces to posting nutritional information, others follow. As General Motors and the United Auto Workers iron out a deal involving its vaunted health care challenges, will its decision change how others do business and the debate due to commence in Washington?

As a part of GM's vast restructuring plan, the automaker is negotiating with the UAW to change the terms of the 2007 agreement that created a $35 billion trust fund for employee health care. To justify additional government bailout dollars, GM must show Washington details for future plans. The New York Times noted, GM "has to address how a company that lost more than $20 billion last year can afford $5 billion a year in medical bills."

Matt Miller, whose book The Tyranny of Dead Ideas identifies the role of companies paying for employee health care benefits as one of those mortally-wounded ideas. Instead, he believes the government should carry the burden like every other nation in the industrialized world. In his book, Miller writes:
The second force — The Rush for the Exits — is corporate America's desire to stop providing health care and pensions to its employees. To be sure, these costs are soaring in ways that seem unsustainable, especially when competing firms in other nations bear fewer of them. Still, American business leaders act today as if their search for an "exit strategy" on benefits is the end of the conversation. What happens to the millions of workers who are left unprotected if companies simply walk away?
Miller told NPR last month that the government would need to raise taxes to foot the bill, but with Baby Boomers retiring, taxes will increase anyway. "We need to tax ourselves more smartly ... [by] cutting taxes on things like payrolls, which hurt lower-income workers and kill jobs, and raising taxes on dirty energy, which we want to cut back on because of our environmental goals," said Miller.
The Obama administration may be signaling a willingness to allow GM to tinker with health care, according to statements made by his adviser David Axelrod and the naming of Ron Bloom as a key adviser to the Treasury Department. Bloom, according to the Wall Street Journal, is known for forcing parties to make significant concessions.

If GM is able to restructure its health-care responsibilities under the eyes of the White House, health-care reform critics and proponents alike will be wondering whether it could be the harbinger of the wholesale transfer of health care from private industry to the public sphere in the future.

Tuesday, February 17, 2009

Psst..The Banks Are Insolvent; Please Don't Tell Wall Street

Here's the dirty, dark secret nobody with a stake in the economy wants you to dwell upon: the biggest financial institutions in the U.S. are insolvent.

Economists like Paul Krugman and people like Robert Reich have been saying this for awhile, but, they too, seem to bury the sentences in their prose. Everybody seems frightened to deal with the 800-pound elephant sitting in the corner for fear of causing the stock market to dive into a free fall of epic proportions. The rationale from a banker's perspective is sound if you account for the fact that the health of the industry is predicated on consumer confidence in banks. From a political and policy making standpoint, feigning it's importance through the lack of public discourse is dangerous.

On the heels of Tim Geithner's universally-panned debut in unveiling the administration's newest plan to bailout the banks, it should not shock observers that the same group of officials who oversaw the crumbling of Wall Street would find loopholes to further cover the backs of their brethren once they came into power. Nicholas Von Hoffman at The Nation crafts a scenario where the slavish nature of Washington to the banks mirrors the dreaded comparison to Japan's economic "lost decade" of the 1990s.

Try as the nation would, it could not return to prosperity. According to most everybody who has studied it, the reason Japan was unable to cure itself was its policy of propping up the country's major banks, which were largely insolvent.

As mentioned, the banks--Citigroup and Bank of America, notably--are insolvent. While hackneyed Congressmen skewer the executives of these banks for dubious spending habit while receiving government aid, the money in the first round of $350 billion in TARP aid did nothing to release the credit crunch. This phrase has been overused lately, but, the government is really spending good money after bad and it likely will not cease as long as former bankers in the administration continue to enable the industry.

The problem is we live in an era of politicians institutionally frightened to make the tough decisions. The American economy needs to take its bitter medicine. Von Hoffman writes bluntly: "Doubtless they are scared out of their wits at what that might do to the stock market. The market will take a big hit, but in due course it will bobble up again. That's what markets do."

It seems prolonging our current situation by sidestepping the problem is what politicians do.

Obama Makes Friends; GOP Still The Meanie

Now that President Obama signed the $787 billion stimulus package into law with a smidgen of bipartisan support, what's next on the "working with the other guys" front?

The New Yorker's Hendrik Hertzberg believes the President will not shelve his support of reaching out to Congressional Republicans. He even goes so far to compare his resolve to that of the Civil Rights leaders and even Ghandi.

Fifty years ago, the civil-rights movement understood that nonviolence can be an effective weapon even if—or especially if—the other side refuses to follow suit. Obama has a similarly tough-minded understanding of the political uses of bipartisanship, which, even if it fails as a tactic for compromise, can succeed as a tonal strategy: once the other side makes itself appear intransigently, destructively partisan, the game is half won. Obama is learning to throw the ball harder. But it’s not Rovian hardball he’s playing. More like Gandhian hardball.

If Obama continues this gambit in wooing Republicans without compromise he could seriously anger the left--a constituency that feels it was purposely denied access to government by the Bush administration for eight years. Will Obama spend energy on the GOP regarding health care or even the likely next confrontation over the Treasury's $2 billion overhaul of the banking industry? Unfortunately, if Obama sticks to his plan of attack, Washington may be on the verge of grinding to a halt in a wholly different way to when the Senate was virtually 50-50.

As noted last week and lampooned on Saturday Night Live, the GOP leadership has a plan for the next 18 months--obstructionism followed by the framing of the poor economy as solely Obama's baby.

Reverting back to ones childhood might be instructive. How many times do you attempt to play friendly with the kid who had all the cool toys, but did not allow you to partake in the fun? Once? Twice? By the third time you either found another friend or push the kid into the shrubs. If Republicans don't play nice, eventually Democrats are going to begin shoving conservatives into the icy Potomac.

Monday, February 16, 2009

GOP Plays CSI With Economy

The politics over the stimulus plan and its near-unanimous rejection by congressional Republicans is already taking center stage for the drama that will be the 2010 mid-term elections. Robert Reich wrote an interesting blog posting this week exploring the reasons why Republicans will not have a thing to do with the proposal.
Republicans don't want their fingerprints on the stimulus bill or the next bank bailout because they plan to make the midterm election of 2010 a national referendum on Barack Obama's handling of the economy. They know that by then the economy will still appear sufficiently weak that they can dub the entire Obama effort a failure -- even if the economy would have been far worse without it, even if the economy is beginning to turn around.
During two votes in the U.S. House of Representatives, no Republican backed either version of the stimulus. It took a few centrist-leaning Northeastern Republicans to win passage by a single vote in the Senate. A Reuters story yesterday implied that President Obama's rival Sen. John McCain was portraying the nascent administration as adverse to bipartisanship and characterized the plan by saying, "I think that the majority of people understand that this was generational theft." Democrats, conversely, begin to complain that the bill was too bipartisan -- even without GOP cooperation. In an interview with conservative newsweekly NewsMax, the leader of 1994's "Contract with America" Newt Gingrich said he "absolutely" sees a connection between when Republicans took over the House and 2010.

Irwin M. Stelzer imparts these talking points while writing in The Weekly Standard and illustrates this point by saying that Obama "now owns the recession." By pegging the troubled economy solely on Obama, these critics may believe that the president cannot possibly make in-roads in quite enough time for congressional elections next year.
He has asked to be judged by whether this bill and other measures he will propose create or "save" 3.5-to-4 million jobs, the number lost so far since unemployment turned up. Forget "save" -- if unemployment keeps rising, voters are not likely to rally around the slogan "It would be still worse if I hadn't spent your trillions." What the President has done is to promise what he certainly can't deliver in time for the congressional elections next year -- a reversal of job destruction, and millions of new jobs, said Stelzer.
When it's all said and done, it's still all about the economy, stupid, as Bill Clinton's campaign declared in 1992. How President Obama, congressional Democrats and the Republican opposition react to that in 2009 will be a tale we're likely to hear a lot about in 2010.

Stim Bill Isn't Sufficiently Super-Sized

President Obama will likely sign a stimulus bill this week roughly the same size he initially offered, but wholly different in composition. Some like Robert Reich and New York Times columnist Paul Krugman never thought it was large enough in the first place, and the watered down bill is furthering their anxiety. Krugman wrote last week:
And I don’t know about you, but I’ve got a sick feeling in the pit of my stomach — a feeling that America just isn’t rising to the greatest economic challenge in 70 years. The best may not lack all conviction, but they seem alarmingly willing to settle for half-measures. And the worst are, as ever, full of passionate intensity, oblivious to the grotesque failure of their doctrine in practice.
During a speech last month at The Commonwealth Club of California, former Labor Secretary Robert Reich reiterated his belief that the stimulus bill should be over $900 billion or more over the next two years. On his blog he wrote this week:

But what if the stimulus isn't big enough? (I fear it won't be, given the large and growing gap between what the economy can produce at near full-employment and the meager demand coming from consumers and businesses.) And what if the bailout doesn't quite work? (It may not, given that the banking system is collapsing and many banks are actually insolvent.) The economy in November of 2010 may be worse than it is now, with no turnaround in sight.

Reich also predicted during his Commonwealth Club address that President Obama might bargain with Republicans to win votes in a bipartisan fashion. This indeed occurred, and the nearly across-the-board rejection by Republicans of the plan has rankled many Democrats. Joan Walsh at Salon wrote today about President Obama, "He better have learned that Washington bipartisanship is dead." Even the president's chief of staff, Rahm Emanuel, admitted that working with congressional Republicans who were dead set against the bill was a mistake. Not surprisingly, the editors at the conservative National Review declared President Obama's economic plan already has a ring of "no-confidence" surrounding it.

This article and others can be read at the Commonwealth Club of California's blog,

Thursday, February 12, 2009

Another One Bites The Dust; Gregg Out

The trouble with dealing with Republicans in your cabinet is you never can trust them. Apparent neither party has much faith in Sen. Judd Gregg, either. Why even continue this fascination with reaching out to the GOP? It's not like Congressional Republicans have been so congenial and bipartisan thus far.

The Obama administration, though, continues to have problems vetting possible nominees. On Gregg's behalf, the stripping of the Commerce Department's oversight of the 2010 Census cannot be read as anything but a shot to the ribs. If the administration was so concerned with a Republican gerrymandering the process why did they choose Gregg?

So, now we are left with Kansas Governor Kathleen Sebelius possibly being named. Why wasn't she the first choice instead of Bill Richardson and Gregg in the first place?

Matthew Cooper also reports Gregg was getting the bum-rush from New Hampshire Republicans who were upset over his abstention from voting on the stimulus bill. Other reports have the Northeastern Senator not even running for his seat in 2010.

Change may be in the air, but political poison still composes a majority of the breathable air in Washington. Quit with this "Team of Rivals" hokum and pick a Democrat for Commerce.

Tuesday, February 10, 2009

Was Geithner Bailout Conflict A Ruse?

Presidential adviser David Axelrod is looking as weak as his pudgy chin after today's front page article the New York Times. "Geithner Said To Have Prevailed on the Bailout" says it all.

It's no surprise the banker who presided, maybe even coddled Wall Street as the President of the Federal Reserve of New York, would prescribe business as usual, but it is surprising he was able to convince the President during a time of populist revolt over the banking industry.

The Times piece said, "Mr. Geithner also expressed concern that too many government controls would discourage private investors from participating." It was unclear exactly what those restrictions would entail, though.

Former Time columnist Matthew Cooper reported on his blog for Talking Points Memo that few in the meetings with Geithner were in favor of the kind of punitive action many in the country would like to see.

My nugget to add to this is that no one on the economic team, so far as I can tell, was pushing for the kind of showy, punitive measures that might have made today's ugly roll out of the new bailout plan at least more appealing to those who want to see banks punished.

So which portrayal is accurate? Geithner continuing to enable Wall Street, Axelrod and other fighting with a populist sword or the cynical view: Axelrod's accounting of the dispute is a ruse.

He Bangs

President Obama hit his head yesterday on Marine One. Big news apparently and an opportunity to conjure up the antics of the former president.

The political blog at the Los Angeles Times offers a brief history presidential pratfalls including the tallest president (Abraham Lincoln) and the shortest (James Madison).

Saturday, February 07, 2009

Bronstein Gives Props On HuffPo

Phil Bronstein, the editor-at-large at the San Francisco Chronicle better known for being married to Sharon Stone and less so for being bitten by a Komodo dragon, linked one of my stories for the Commonwealth Club for his posting on The Huffington Post. Check it out here. The link is located below the photo.

While on the subject of the Chronicle, congratulations on a superb redesign of the paper. The pages are geometrically interesting and contain a combinations of strong and unique fronts. If you're going to redesign a paper (or website) I say go large and the Chron certainly did with huge benefits. The Bay Area deserves a well-put together daily and we finally have one.

GOP Still Doesn't Get It Or Give It

Patriotism and necessity aside, forging a bipartisan bill with Republicans this early in the Obama presidency was always going to be a tall order. It's a quite normal for the minority party in Washington to show its mettle, if puny in relation to Democrats, but the political gamesmanship on the part of the GOP only further displays their disconnect to the plight of Americans.

I have a friend who depends on a 40-hour work week and medical insurance to pay the rent and stay healthy. Last week, her employer slashed her hours and nixed her health coverage. Another was recently laid off to sit at home with her three children and wonder what the next few months has to offer. State workers in California received what amounts to a 10 percent pay cut to stay home from their jobs two days a month. That times are tough is no longer a throwaway catch phrase nowadays but reality. Things are getting worse. The numbers even show it and we feel it.

Democrats could have probably been pushed into a worse compromise than the one made yesterday with Senate Republicans, but the existence of more tax cuts is only a reminder that the GOP doesn't get it.

Why would Americans need $30 billion tax cuts to encourage the purchase of new homes and automobiles. Shockingly, new digs and a fully-loaded Buick is not high on the wish list when you are wondering about your next paycheck. Besides, would the tax credits offset the inability of regular Americans to receive a fair interest rate on a loan? It's not likely.

I think this point of c0ntinued economic inequity and political blindness on the part of the GOP is becoming more pervasive since the day President Obama announced an executive salary cap on firms who accept bailout funds. By shaming CEOs into accepting only $500k, he made the beleaguered Titans of finance look petty and greedy. How ridiculous did countless talking heads and lobbyists of executives seem when they pleaded across the board that such a low salary would make it difficult to attract "good talent". To which the country screamed, "Where was the good talent before we got into this mess?" I've never found the stuffed suits traipsing along every Financial District as nothing more than falsely stoked bubbles of testosterone and mythologized machismo. Really? Are these "banksters" nothing more than football coaches in fine tailored suits fitted with bluetooths instead of head phones?

At the very least, we must continue to veer away from principles and characters previously associated with this downturn in America's economy and morally specific predilection towards greed. This means straying away from Obama's main guys at the Treasury--Tim Geithner and Larry Summers--and economic recipes like tax cuts and laissez-faire government. Recovery is about stimulus. As the President said this week the stimulus is about spending and it needs to reach the state and local level for the mood of disheartened unemployed Americans rise hopeful again. In the meantime, the GOP continue to be nothing but an opposition party to Democrats and to the American people.