Friday, October 10, 2008

To Vote or Not To Vote: What If You Are Not Allowed?

On October 8th the New York Times ran an article that was the result of an investigation it had done regarding voter registration rolls (The article can be found by clicking on the title of this post). The article states that "tens of thousands of eligible voters in at least six swing states have been removed from the rolls or have been blocked from registering in ways that appear to violate federal law, according to a review of state records and Social Security data by The New York Times." The states in question are Colorado, Indiana, Ohio, Michigan, Nevada, and North Carolina and are all states in which Obama's performance is due in large part to the large advantage his campaign has had in registration new voters for this election. 

Before people start crying that partisan politics, cheating state election officials, and political operatives are to blame, it is important to note that the New York Times found that "the actions do not seem to be coordinated by one party or the the other, nor do they appear to be the result of election officials intentionally breaking rules, but are apparently the result of mistakes in the handling of the registrations and voter files as the the states tried to comply with a 2002 federal law, indented to overhaul the way elections are run." The 2002 federal law in question is the ironically named Help America Vote Act of 2002, which was designed to provide federal money to help states modernize their voting systems. However, buried in the bill was a relatively innocuous and highly vague subsection that required that if states received Federal money under this program they would also have to ensure that their registered voter rolls were accurate and modern and that states create statewide voter rolls. Previously, these voter lists were kept on a local level. It is the combining these local rolls up to the state level that is probably causing all the problems since it is a huge process and removes the local factor of knowing who lives in the area, who has similar names, etc.

In the past, state voter resignation rolls are notoriously out of date. In fact the organizations that have the most up to date valid voter registration lists are of course the two major parties. They use these lists to contact likely voters of their party to make sure they have ways to get to the polls, know who the party would like them to vote for, etc. and since they use these lists on a regular basis to figure out their parties position in a state, they regularly update them when they find people have moved out of the state, died, or been convicted of a felony. While only the state election rolls are valid in determining who can and cannot vote on election day, state election officials have none of the incentives that parties do to make sure that their voter registration rolls are up to date. As a result, in the past, registered voter rolls would regularly have voters listed who had moved out of the state or died. 

In 2002, the republicans were on a mission to end what they conceived as nation wide voting fraud. As a result, between 2002-2005 we saw lots of new voter identification laws crop up in many republican controlled states and as we have already said at the Federal level we had the Help America Vote Act of 2002. The key aspect of all of this is that with a few exceptions states are free to conduct elections and register voters how ever they want. So, when the conditions of the Help America Vote Act of 2002 are put into play, they have a slightly different effect in each state, based on how that states existing election law is set up. In some states it may require updating of lists in others that have electronic record keeping it may require no action. The net result is that since the Help America Vote Act of 2002 is so vague as to what exactly states have to do to their voter registration rolls to qualify for Federal aid, that many states have taken actions that are not required and in fact my actual violate existing federal election law by incorrectly disenfranchising  qualified voters. 

I will refer you to the New York Times article for details about what states are exactly doing that is illegal, but the key result is that the New York Times found that for every voter that has been added in some of these swing states, two have been removed from the rolls. Now, it is important to point out that such a ratio could reflect how out of date the rolls are and that there really are a large number of people who have left or have died and thus shouldn't be on the rolls. However, considering the advantage Obama has had in registering new voters, even if the purging was random of qualified voters, its effect is likely not to be since there are now so many newly registered democrats. The actions taken by these states has to be of concern and warrants an investigation by the FEC and state officials to ensure that all qualified voters are able to vote on Nov 4th. 

Beyond this election, even though I am a strong supporter of federalism as an important check on Federal power, we must consider nationalizing our election systems so that we have a common set of rules and procedures for how we vote in this nation. As long as we have 50 different systems with little oversight and transparency the risk for disenfranchising legal voters is too high. 

Wednesday, October 8, 2008

Debate Part II: Rumble in Tennessee

Last night featured the second debate between Obama and McCain and although there has been a recent sharpening of attacks in the last few days between these candidates, last night was quite civil. Overall, we saw a repeating of a lot of the same positions and attacks that we saw in the first debate. However, there were several things that I think are important to note as we evaluate this debate. 

First, McCain clearly was doing well early on. The first two questions he hit out of the park. Even though his idea of having the government buy and renegotiate mortgages is already in the current bailout plan that passed last week, his presentation of it was well timed and delivered well. Also, it is interesting that if you had asked an alien to pick which party McCain was from based on those comments, I don't think you would have heard republican in response. This is important because it implies to win, McCain has to, in essence, have anti-republican proposals. 

However, that is where the good performance stopped for McCain. For the rest of the debate Obama consistently provided better answers to questions and rebuttals to attacks. The basic problem McCain faces is that even though he is not your typical republican, he is still tied to that party which, rightly or wrongly, is at the moment being held responsible for causing the current recession. 

Beyond what they said, McCain did three things during last night's debate that struck me as odd, and will probably be what most people will remember from this debate. First, when McCain was speaking Obama sat on his chair and appeared to be listening intently to what McCain had to say. He showed him respect and courtesy. But when Obama was speaking, McCain was walking around and was almost never facing Obama when he was speaking. His moving around was constantly picked up by the cameras. While I do not think McCain intended to be seen, his moving around appeared disrespectful. The tacit feeling that came across was that Obama was someone who listened to ideas, even ones he doesn't agree with, while McCain is only interested in giving his opinion and not what others have to say. I don't think this is actually true, but their nonspeaking actions seemed to communicate this last night.

Second, during Obama's follow up to McCain's attack of him on Afghanistan, McCain interrupted him to say "thanks" in response to a nice comment Obama was making about McCain, but this backfired in two ways. First, Obama was making a serious comment while McCain's interruption looked like he was looking for a laugh. His interruption made Obama look presidential since Obama ignored the interruption and continued in the same tone. Second, Obama was doing a very normal debate technique where you turn a complement into an attack. The result here was that McCain actually said "thanks" right as Obama was delivering the attack. So beyond the fact that McCain appeared rude for interrupting Obama, the timing of the events made it appear as if McCain was saying thanks and agreeing with Obama's attack. 

Third, during one of McCain's attacks on Obama he said that voters should just compare their records in deciding who to vote for. McCain said you have me or (and, then pointing at Obama) "that one". I am not sure what he was going for here, but that was about as close to a gaff as we we had last night. It was a very derisive attack that did not play well with voters in the room and probably not at home either. If you watch the playback of the debate when McCain makes that comment you seen some very uncomfortable shifting and body language by many of the voters in the town hall room. 

Overall, last night was a pretty clear victory for Obama in terms of both the information he spoke as well as how he carried himself throughout the debate. As a final example of how McCain misfired last night was after the debate. Typically at town hall debate candidates go around and talk to the uncommitted votes there, pose for pictures, etc. McCain did this for about 5 min and then left the room. Obama continued to chat with voters and pose for pictures. All of this was captured on TV before the commentators started their analysis. McCain yield a room of uncommitted voters to Obama and the public got to watch how they all responded to Obama, while McCain was no where to be found. This was the icing on the cake and spoke volumes regarding how the campaign is going.  

Friday, October 3, 2008

Why a Credit Market Bailout (Now a "Rescue") is Needed

Many Americans are furious at the prospect of spending nearly a trillion taxpayer dollars to help bailout the mistakes and greed of Wall Street firms and other financial institutions.  Their ire is justified, and I count myself as someone who is furious at the excess and greed that has taken place, but I also understand the necessity of assisting the credit markets. 

Years of minimal accountability allowed those on Wall Street to profit from risky investments, while a lack of regulation and clever financial schemes hid the true folly of this system.  Now this arrogance and greed has led to a meltdown that has consumed many Wall Street firms, some of which had existed for over a century.  A person’s first instinct is likely to be to let them suffer for the mess they created (read this article for a look at how this situation exposes a natural desire for retribution in humans) to teach them, and those in charge of such institutions in the future, a lesson. 

But this desire for retribution will likely not serve the average American very well if it blocks a bailout package (now its a "rescue" package).  There will be time for tackling the excess and greed on Wall Street and the financial industry, but at the moment their screw-ups have placed our entire economy in jeopardy.  Americans have only started to realize this in the wake of the failed first attempt to pass a bailout in the House of Representatives. 

While the securities backed by mortgages (sub-prime or not) seem like bad debt, most of them are not; it is just that the market cannot value them right now.  No investor wants to touch them and these financial institutions cannot unload them, and so they appear as giant anchors on balance sheets because under accounting rules, some sort of present value has to be assigned to them.  The problem is that when no one wants to touch them, their value has no where to go but down.  These institutions now either have trouble both giving loans and getting them, and this difficulty has spread into the rest of the credit market around the globe as everyone starts to tighten their lending practices and none of the mortgage backed securities can be offloaded quickly.   Additionally, companies need to get rid of the securities soon because their inability to get loans and the unwillingness of others to give them in the immediate future is at the core of this crisis. 

To be sure, this is completely unfair. The reckless Wall Street firms screws up, and yet they benefit because no American can afford to let them fail (this is moral hazard everyone keeps talking about).  Also, those with a mortgage who could otherwise afford to pay it and now can't because of a decline in the market, increased interest rates, or inability to get a loan/credit (due primarily because of the bad lending practices) do not have much to gain from this bailout. 

There is some tax relief for homeowners, but this is paltry.  However, relief for those with a mortgage is a dicey political issue that would likely not get passed by the current Congress.  It does look increasingly likely that Democrats will gain even greater control of Congress as well as the White House, and helping homeowners directly is a top priority on their agenda (Republicans too wish to help homeowners, but they continue to insist on more indirect market oriented methods of helping them so I am making an assumption that more immediate and direct assistance would be more forthcoming under a Democratic Congress and President). 

This deal seems to get worse and worse for average taxpayers, Wall Street gets a bailout, and if there is any help for the homeowners (some of which the lender should not have even lent to in the first place), it will not be until at least next year.  But the biggest concern that should be on every American’s mind is the failure of the credit market.  Why is the credit market so important? 

The credit market allows individuals to get loans for homes, education, cars, consumer goods and everything else they need to get by on a day-to-day basis.  Stories are starting to trickle in of people being denied a loan (credit), but whether this will continue is unknown; it does, however seem to indicate a probable consequence of a collapsing credit market.  But consumers are not the only ones who need credit. Businesses need credit to expand, buy inventory, or even just pay their employees.  Without credit, business will start to contract.  Local governments are also having trouble getting credit, which they need to keep state services going and pay employees.  It also makes it more difficult to finance the sale of state bonds, further contracting state coffers. 

The conundrum of an diversified and integrated financial system that touches every aspect of our economy (and the global economy as well) is that we are completely dependent on it continuing to maintain our own personal economic well being.  The Free Market does allow greater growth and efficiency, but not always and it will inevitably fail at some point without proper regulation.  The current failure is extraordinary, and because the financial system is integrated into all the other aspects of our economy (and Americans are extremely dependent on credit), it is bringing down the whole house of cards.

A bailout may not stave off a recession, which is another downside to this deal, but it may be necessary to avert an even greater economic disaster.  This deal is unfair for sure, and it is ironic that there is more political outrage and pushback over such a bailout when compared to issues such as going to war, but it is currently the only game in town for immediate aide (I wouldn't call it a fix, its more like putting a Band-Aid on a wound—hopefully the Band-Aid is big enough).  In the best-case scenario, the government can sit on the assets (which still have value, and once the market recovers will gain value again) and eventually make money on the bailout.  The worst-case scenario is that the bailout is not enough, or is too late to stop an economic disaster, and it won't matter if Congress forces Wall Street to pay for the losses the taxpayer absorbed because of their incompetence.  The choice is a chance at stopping a disaster or just letting it happen, hopefully Americans will recognize the need to do something, the government will make money, and Wall Street will be regulated enough to prevent the need for future bailouts.

Thursday, October 2, 2008

VPs: Bring it On

Tonight's VP debate was very interesting in many ways. I will admit to screaming a few times at the tv screen when ridiculous things were said and for those interested in the score: ridiculous things said by Biden two, ridiculous things said by Palin six. But taking the debate as a whole, there were three aspects that stand out to me and will probably be what most people and media remember from this debate. 

First, Palin was relatively good and much better than she has been in the media interviews. This was hands down the best she has done since her speech at the republican national convention. She, for the most part, was able to answer questions without going into long stories that led to nowhere and she spoke in simple terms. More importantly, she showed herself to be a Washington outsider, which is clearly how the McCain campaign wants her seen. 

Second, don't like the question? Its cool, just answer the question you made up in your head. At two points in the debate Palin either did not understand the question or misheard it because she provided speech that never approached an answer to the question posed. The first time was when the moderator asked her whether she believed there should ever be an instance in which the United States should use nuclear weapons. Rather than answer this question, Palin instead talked about how we should stop nuclear proliferation. I agree with her. Nuclear proliferation is an important issue and we should stop it, but the question was asking about when she thought the United States should use nuclear weapons. The goal of these types of questions is to try to establish how risk adverse a candidate is in foreign affairs. If you say never, then you are very risk adverse, if you say only if attacked by nuclear weapons, you are considered rational, and if you say always, you are nuts. Clearly, this is an oversimplification, but the basic idea is that your answer to this question is supposed to be a kind of bellwether to how you approach crises. Do you panic? Do you over-react? Do you under-react? Are you decisive? Do you Plan? etc. Palin completely avoided this softball question and missed another opportunity to show that she might actually be competent in some foreign affairs issues. 

The second question that Palin completely disregarded is the standard job interview question: What is your greatest weakness? Instead of saying that she might have a weakness, she instead talked about all her strengths. From someone who used to do a lot of job interviewing, when I have a job candidate not answer a direct question like that it immediately tells me one or both of the following about the person. One, this person has a real weakness that he doesn't want me to know or two this person is unable to analyze himself, which means that he will be very difficult to work with because he will believe he is always right. Either way, whenever I had a candidate not answer that question it usually ended the chance that person had of getting the job. Unlike Palin, Biden made sure he answered this question and I think it will payoff because beyond my own feelings about this question, most people get annoyed when people pretend they have no weaknesses. 

The third memorable aspect of the debate were two responses delivered by Biden. The first was his comparison of McCain's health care tax credit as the ultimate bridge to nowhere. It was such a well timed response that even the audience and the moderator could not help but laugh. I think it spoke volumes to what people think about that particular policy proposal by the McCain-Palin ticket. The second aspect was Biden's response on the kitchen table issues. His response here was incredible and possibly one of the best moments in recent debate history. After being accused of being out of touch by Palin in a very gimmicky and winking manner, Biden told a story about his family that was deep, sincere, emotional, intense and real. I don't think he actually cried, but he came across as really understanding what people are going through. This, I think more than anything else this is what will be remembered from this debate. He took her attack and made her look small and childish, while he displayed deep empathy for being in tough positions. 

Overall, I think the debate went slightly to Biden, but in the end nothing happened tonight that should shift voters. While this last note may be lost on most voters Palin's closing statement was probably the sign that the McCain-Palin ticket is in trouble. She attempted to present voters with a clear division of which ticket to choose in Novemeber. The key aspect of this type of tacit is that you never say which ticket you are discribing. The key is to have the voter associate everything postive you are saying with your ticket and everything negative with the opponents. The problem that she had though is all of the McCain-Palin ticket's ideas that resonate with voters are issues they borrowed from Obama. Thus, when she listed the choices, it sounded like she was saying you can vote for the change ticket (Obama-Biden) or more failed policies and half baked ideas (McCain-Palin). It could just be me, but her closing statment seemed to confirm to me, who is winning control of the messages of this campaign.

Saturday, September 27, 2008

The Debate

So I apologize for not having a post up for a few days. Life has been a little hectic, but hopefully things will slow down just a tad in the near future.    

Last night featured the first of three presidential debates that are going to take place over the next several weeks (there will also be one vice presidential debate this coming Thursday). After some drama created by McCain stating that he may not attend the debate because of the need for him to be on the hill to get a compromise on the bail out bill, the debate itself went rather well for both candidates. The reason for this is that both candidates had different objectives coming into this debate and that made the result, in some ways, a non-zero sum game (i.e. that it was possible for both candidates to win and no one to lose).    

For Obama, success in the first debate was in accomplishing mainly four things: 1) being gaff free; 2) relaying that he is the candidate for change; 3) showing himself to be rational, level headed, and even keeled, while not coming across as aloof; and 4) portraying readiness to president. Obama clearly accomplished all four of these tasks by not getting frustrated when McCain made attacks and coolly refuting the claims made against him with well constructed, but simple, explanations. At no time last night did Obama become flustered and, in fact, many of his prepared responses and exchanges with McCain showed that he is deeply knowledgeable about key economic and foreign affairs issues. 

Obama's theme of the night seemed to be that we have had 8 years of impulsive executive leadership based on feelings and emotion. This leadership style lead us to the current crises we now face, and McCain embodies more of this style of leadership, while I (Obama) am collected, rational, and deliberate.    

As for McCain, success for him last night was also based on mainly accomplishing four things: 1) being gaff-free; 2) distancing himself from Bush on the economy and spending; 3) showing himself to be the candidate who could actually bring change to Washington; and 4) maintaining vigor and energy to assuage fears that his age is an issue. I think McCain pretty much accomplished all of his tasks as well. McCain drove home repeatedly that he is against spending and that he has a record to prove that he can reform Washington. His remarks were well animated  with a great deal of enthusiasm. 

In examining McCain's message of the night, it seemed to be that the voters should trust him on foreign affairs because he has been on the ground and he has surveyed the terrain on which we are going to fight, while Obama “doesn't get it” because he hasn't been there. This was an interesting attack strategy by McCain. I think it would have been very effective if Obama hadn't demonstrated each time that even though his feet may not have been on the ground, he had a very accurate picture of what needed to be done. However, I do think that this type of attack by McCain should play well with the Republican base, so I am sure we will see it used again and again.    

Thus, since both candidates accomplished what they set out to do, in some ways this debate was a win-win for both candidates. One thing to note is that unlike in recent past debates, such as Bush vs. Gore or Bush vs. Kerry, the candidates had to do a lot less to differentiate themselves on the economy and foreign affairs issues. Polls show that not only do voters recognize that Obama and McCain have different views on these issues, but approximately 65% can correctly place the candidates and their views together and provide at least one major difference between them. Thus, I think we saw a lot less time being spent on trying to say “here is how I am different from my opponent” and more time spent saying “this is why I am right.”    

The key aspect to remember of any debate, however, is that unless someone makes a gaff, very few people actually remember what was said. Rather, what people take away from presidential debates are feelings about the candidates and what the candidates represent. It is in this category that I think the edge went to Obama. It was clear from the debate last night that both candidates are for change. But, as we saw at the conventions, McCain is for change by fighting and defeating those who are resistant to change; he said he would be the sheriff of spending, veto every spending bill he deems no good, and make Washington change by bringing the fight to them. By contrast, Obama is for change by bring people together to work out differences and make compromises; he repeatedly stated that he understands that there are deep divisions, but that the president's job is to bridge these gaps, not to increase them. History has clearly shown that both strategies can be effective in the right situation.   

However, in today's political climate, the idea that voters want more division and fighting in politics seems silly. We have had 8 years of very derisive politics, and the situation created by the Bush era is unlikely to be fixed by the next president simply wielding a big stick. Rather, it is going to take carrots and compromise to really bring change to Washington. This notion of how to bring change is in many ways really the heart of the election. It could just be me, but my gut tells me at this decision node, voters don't want change through force, but through reconciliation that brings people together.    

Traditionally, debates do not have a huge effect on how people will vote unless one of the candidates makes a huge mistake. However, debates are important because they give voters a chance to not only hear the candidates’ issue positions side by side, but also their tone and message. While I don't think last nights debate will have any real impact on who votes for whom, it did reinforce what type of leadership style voters have to choose from in the next election. 

Wednesday, September 24, 2008

Political and Financial Bailout

Today Senator John McCain said he would suspend his campaign and return to Washington to work on the Wall Street bailout plan on which Congress is currently working. He also stated that he would work with Obama to make a joint statement delaying the debate on foreign policy this Friday in Mississippi. McCain said that the urgency of the situation requires that he and Obama put the campaign aside and go to Washington until the bailout is passed.

Obama later went in front of reporters to say that he and McCain had talked earlier that day - apparently Obama's campaign called McCain after Senator Coburn (R-OK) suggested it would be a good idea to give a joint statement - and their campaigns agreed to make a joint statement. Obama expressed his surprise at McCain's statement regarding the suspension of his campaign and a delay in the debate as Obama thought their campaigns would work on a statement before they went to the press.

McCain and the Republicans are saying that he is being bipartisan and that he and Obama are so needed in Washington that the debate can't go forward. On the other hand, Obama and the Democrats are saying McCain is attempting a cynical political move to delay the foreign policy debate - one he has the most likelihood of winning in the eyes of Americans - which would otherwise be lost in the turmoil of the financial crisis.

Regardless of either candidate’s political motivations, the economic crisis is extremely serious at the moment. McCain may have political reasons for wanting to delay the debate and suspend campaigning, but there is a legitimate reason why he and Obama will be returning to Washington soon and why they may even stay through the weekend.

Since financial institutions on Wall Street began to fail, starting this spring first with Bear Sterns and most recently with AIG, the financial system has been deflating. Bear Sterns Treasury Secretary Henry Paulson has been talking about governmental measures similar to taking out "bazooka" to reassure investors; by this he meant governmental intervention disproportionate enough to the problem to reassure investors such that money continues to flow into the credit markets. However, the size of the AIG failure, the lack of a recovery in the housing sector, and the constant stream of bad financial news has spooked investors to such an extent that massive government intervention is necessary to restore investor confidence.

It may seem odd to the average person that our markets are suffering from a lack of confidence; after all, business people and economists deal with money and numbers, things that have value and are absolute. Unfortunately, the market (and economics in general) is more of an experiment in social science and psychology than anything else. Value on the market is assigned by what people are willing to pay for something based on their needs and wants. When a major crisis like the collapsing housing market occurs, no investor is willing to buy a bad investment (such as a subprime mortgage backed security). This makes it difficult to value anything in the market, but it is widely known that those securities are dropping in value. Goldman Sachs and Morgan Stanely, the only significant investment banks left in existence, have been given a free pass to become regular banks in order to gain the greater security that comes with government regulation of that sector of the economy.

Investors are seeking to find the safest possible investments and hold back on lending, thereby freezing up the credit markets even for good borrowers and sound investments. Franchises of McDonald's are now finding it hard to get credit to repair their restaurants, and GM is taking out all the credit it has left for fear of not being able to find cash later. Businesses need access to credit to expand, but they also need it to pay the bills when they have no cash on hand. So not only will the economy not expand, it may contract once businesses start going under after they can't afford to pay their bills, and more importantly their employees. Even individuals with good credit may not be able to get loans for new homes, cars, or higher education tuition.

Secretary Paulson and Federal Reserve Chairman Ben Bernanke believe the situation after the AIG fallout to be so serious that they think the government must intervene and buy the bad mortgages - at a discount as they are so low in value right now - so that financial institutions can pay off their debts and prevent the credit markets from freezing up. However, the political problem here is that this will be an unprecedented bailout of incredible size. Americans are used to hearing billions of dollars being spent, but $700 billion is a massive amount of money. To put this in perspective, the Iraq War has cost $550 billion from its start through August 2008 and the entire budget for 2007 was $2,730 billion ($2.73 trillion).

Paulson and Bernanke believe that this bailout must be passed by next week or the credit markets will freeze. So far, many financial experts seem to agree. Experts also believe that this may not be a losing proposition to Americans, as the assets that are purchased - U.S. mortgages backed securities owned by U.S. or foreign financial institutions - will eventually rise again after institutions are relieved of their bad investments and credit markets begin to flow regularly again. If there is a loss, it won't be the full $700 billion, but there could be a $200 billion loss or even a $200 billion gain.

The key to the current bailout plan, and the reason McCain wants to claim a need to suspend debates, is the need for a speedy government reaction to stop the credit markets from freezing. So far, Republicans have been the more resistant to a bailout because of their faith in the free market and dislike of government spending or intervention. Regardless of what either candidate or party says, the politics of this crisis and the election will always be a major consideration in any decision that has to be made. Fortunately for Americans, both candidates and a majority of Congress agree with the Administration that bailout plan must be passed within the week. Hopefully this will be a big enough "bazooka" to stave off economic collapse such that future intervention of this scale will not be needed.

Monday, September 22, 2008

The Need For Speed?

Today, President Bush announced that the whole world is watching to see if we can act quickly to resolve/contain the U.S. finical crisis. The message he was trying to deliver was not directed at the American public, but at Congress, to act quickly in passing his 700 billion dollar bank bailout proposal. Bush felt that this was necessary as many congressional democrats and a fair number of republicans have questioned the wisdom of the Bush bailout in its current form.    
It is clear that Bush wants to react quickly to this financial crisis, but a key question to consider is whether speed at this juncture creates more problems down the road. In other words, while waiting to take action in the short term main cause additional drops in the stock market, if we take the time to work out a compressive rescue and correction for what went wrong in the financial markets, will we be better off in the long term?    

I am not an economics expert, so it is difficult for me to offer a real analysis of this inherent economic tradeoff. However, from a political standpoint, the current situation is rife with potential political gains and losses. To understand the likely outcome of this situation, it is important to take a look at the different political motivations for several key players: President Bush, congressional democrats, the Republican Party, McCain, and Obama.    

For President Bush, a large part of his legacy as president will be affected by how this economic crisis unfolds. If the crisis leads to another great depression, then regardless of any good he has done in his political career, he will always be remembered as the president who failed to prevent a great depression. President Hoover’s legacy supports this point of view. Hoover was an extremely accomplished public servant before he became president, and he was an immensely popular president until the economic downturn in 1929. The result of his presidency coinciding with the start of the great depression is that his legacy is forever tied to that event.  Thus, beyond any personal conviction Bush has regarding  the best present course of action, from a political motivation stand point, Bush is best served by having a short-term solution rather than a more long-term comprehensive fix.    

Congressional democrats have competing political interests. From one perspective, they should be in favor of a short-term fix because if it temporally rights the economy, they can go back to their districts and say "see I was there to protect you. I saved the economy." However, initial responses by the democratic base have been very negative towards the Bush bail out plan. Thus, if they were to fast track the bill with just an up or down vote with no amendments, they risk being seen as weak to these key supporters.    

In addition, congressional democrats don't want to be seen as obstructionists (because they held up necessary legislation at a critical juncture) or partisan (since conventional wisdom argues that economic downturns favor the party out of power for the presidency), as it could result in an electoral backlash from voters who are hurt by an increasingly worsening economy. A key fact to remember is that even after the election, the new president will not take office till the end of January. If no action at all is taken, a lot could go wrong in those four months. As a result, if we weigh all of these pressures, it appears that the motivation for congressional democrats would be to pass some package to rescue the economy, but likely some altered form of the Bush Plan.    

As for the Republican Party, its motivation is quite similar to that of President Bush. Survey research has shown that up until Carter, the Democrats were consistently rated as more competent in handling the economy. When experts studied this empirical regularity in detail, they found that this opinion was the result of the Republican Party's association with control of the White House at the start of the Great Depression. For voters who lived through the Great Depression, the Republican Party was, in their minds, inextricably linked with economic failure. Thus, the Republican Party should do everything in its power to make sure we do not enter another depression while it holds the presidency. Therefore, republicans should also be in favor of quick action to ensure that the economy doesn't slide into recession or depression while they are in control.    

The last two actors to take a look at are the two presidential candidates. As both are senators, they are both going to have to cast votes on the Bush Plan. This is one of the few opportunities that voters are going to get to see how both candidates act at the same time and at the same level of policy making. Both candidates are running on a message of change. Well, I can almost guarantee that the bail out plan is going to get spun as more of the same in Washington. So the question becomes whether both candidates can take the comprehensive change approach and vote against a simple bailout of the banks and get away with it with their supporters.    

In looking at Obama, he clearly cannot support a simple bailout; that would go against all of the themes of his campaign about reform in Washington. However, he cannot be seen as not working to find a solution for the crisis. The problem for him is that he is not the President of the United States in the senate. Thus, he is just one of 100 and it would be difficult for him to dictate a completely different plan. As a result, it would appear that Obama's best course of action would be to vote against the Bush Plan, but support any modification that provides some regularity reform. This way he can say "I have fought for reform in good and bad times and if you elect me, you will keep seeing reforms coming."   

In the case of McCain, he is in a much tighter spot than Obama. If he is truly a candidate for change, then how can he simply vote for the Bush Plan? He has tried so hard to distance himself from Bush, and there is no way he could cast a “yea” vote for the Bush Plan and win the presidency; in the minds of most voters that would be the same as saying he endorses how Bush has handled the economy for the past eight years.    

However, McCain also could not easily vote for a Democratic Party sponsored bill that calls for reforms and regulations. If he were to sign on to the bill, he would look like a follower of the Democratic Party and a deserter of the Republican Party. In addition, a lot of his support comes from fiscal and small government conservatives who are outraged over the level of government spending and intervention that democratic reform plans for the finical markets call for. As a result, McCain is stuck in a hard position of not being able to support the Bush Plan, but also being equally unlikely to support a democratic reform bill. His best bet is to try to sponsor a bill himself, but in a democratically controlled senate, that is very unlikely to happen.    

Taking all of this analysis together, it seems that the likely outcome of this crisis is that the democratic controlled Congress will write their own bill that incorporates large aspects of the Bush Plan (so that they can move quickly), but that also provides for additional regulation and protections for the taxpayers (thinking more long term). I am not sure this is the best outcome as it may rush the passage of critical reforms for the finical markets, but given the nature of the crisis, it is probably the best-case scenario.   

Sunday, September 21, 2008

Ah, What A Mess

I don't have much time for a post today so this one is going to mostly be posing a question for everyone to ponder for the remainder of the weekend. Feel free to post your thoughts on the matter below. 

On Friday, President Bush announced that he wants congress to pass a 700 billion bailout of the financial markets. The basic idea is that the government will buy all the bad loans and mortgages that banks have on their balance sheets from homeowners defaulting on their loans. Most analysts agree that if all of these bad loans were taken off the hands of the banks, then they would once again be able to turn a profit.

There are two key points to notice here. First, when Bush says the government is going to use 700 billion to buy these loans, the government doesn't just print more money, it has to generate it from somewhere. To raise this amount of money, it can do three things. One, it can raise taxes to cover the cost (very unlikely in this case). Two, it can cut current spending levels in social programs or a war effort to off-set this new cost (again very unlikely in this case). Three, it can take very high interest foreign loans to finance the deal (most likely option). In essence, this last option is how the Bush administration has financed the wars in Iraq and Afghanistan without raising taxes at home. The take home point is the money doesn't just appear, it has to come from somewhere.

The second point to note is that there is another way to solve this crisis that hasn't been discussed. The Bush plan focuses on saving the banks, but does nothing for the home owners who have these loans. A viable alternative would be to have the government either help homeowners make their payments, or restructure of all floating loans that have been made in the last five years to fixed rate loans with affordable monthly payments (i.e. lower fixed interest rates and perhaps extending payment periods beyond 30 years) so that people can make their payments. The effect would be that banks would not be making big profits (and perhaps might even be taking small losses as opposed to their current huge losses), but they also would be able to remove the bad debt off their books, since payments would be coming in. 

So, the big question is which plan is better? I personally come down on bailing out homeowners over bailing out banks, or at least having a combination of bailing out both.  The idea that only the banks should be bailed out with my money seems both morally wrong and financially unsound. I completely agree with idea that these banks can't simply be left to fail. They are too integrated into the financial system. However, that doesn't mean the solution to the problem has to let the banks completely off the hook, while individual homeowners get nothing and are led to financial ruin themselves. It seems to me if you are going to use taxpayer dollars to solve this problem that the solution better address both sides of the crisis. 

In the end, the question comes down to who should get rescued: the banks, the homeowners or both? Both banks and homeowners are guilty of greed and have both made mistakes, but why should only one side get bailed out?

Saturday, September 20, 2008

The Six States To Election Victory

Recent polling that has come out in the last two days has capped off quite an impressive shift in both the national and state polls for the presidential election. In essence all the gains that McCain made after the republican convention have been wiped out and even more impressive, Obama is leading by larger margins in most swing states than he was before either convention. 

While this may cause many democrats to celebrate and republicans to be concerned, this interpretation of the polls is not quite accurate. If one inspects the polls carefully, it is easy to understand why we are seeing such movement in polls trying to project electoral vote counts. 

The first aspect to remember is that the president is not elected by a national popular vote. Thus, national polls that do not control for likely voter location are not incredibly useful in determining likely electoral vote outcomes beyond overarching trends. Since most states are winner take all systems, as soon as a candidate gets 50%+1, all of the extra votes a candidate gets in that state are wasted. So for example, in New York, even though Obama will likely win the state with about 70% of the vote, 19% of this vote is wasted. Thus, when national polling is done, it is hard to weed out this wasted vote effect. In my opinion, national polling is pretty worthless unless you have a candidate up by more than 15 percentage points. 

So, since the president is elected via the electoral collage, when trying to project the outcome of the race, the key statistic to look at is how candidates are doing in individual states. Luckily for us, most polling outfits agree with me and this election marks an unprecedented amount of state polling. 

Before we go to the analysis of the seesawing projections of who is going to win the election, it is important to remember there are 538 electoral votes and that to win the presidency, a candidate needs 270.

So with our electoral math hat on, let's take a look at state polling numbers.  The most striking result is that of the 538 electoral votes, about 459 (or 85%) electoral votes are immovable. These are electoral votes from states that are strong supporters of the respective candidates, and have showed no signs of moving since June, with very high poll numbers in favor of a respective candidate by at least 12 to 15 percentage points. States in this category include NY, CA, TX, AL, GA, etc. When we break down these 459 electoral votes by candidate, we find that Obama has 259 electoral votes, while McCain only has 200. 

This is where things get interesting. The remaining 79 electoral votes are split between only six states: CO-9, FL-27, NM-5, NV-5, OH-20, and VA-13. Every time one of these states moves back and forth between the candidates, it drastically affects who is projected to win the presidency. Hence, the seesawing that we are getting in the polls and projections is not because the nation as a whole is really changing its level of support for the different candidates, but rather, is the result of small movements in these six states where split between support for both candidates is very close. 

The net result of this is to interpret polls that keep showing drastic shifts in the outcome not as drastic shifts in levels of supports for the candidates, but rather as an artifact of how we elect a president in this country.  Very small amounts of support shifting in very few states can have a drastic impact on the outcome, which is what the polls are picking up. Thus, if Obama falls behind by a large margin in a outcome projection, it is not because he has lost vast amounts of support, but rather that a very small number of people in one of the six states has sifted their support. 

This volatility is likely to continue until actual election day because the numbers needed to switch one of these six states to either candidate is around 1-3%. 

Now, an astute mathematician who has been following the math may have noted that based on the safe electoral vote count, Obama is in a much stronger position since he has to win far fewer of the six swing states than McCain does (Obama only needs 11 more electoral votes to get to 270, compared to McCain's 70). I think that this line of reasoning is spot on and is why you have see Obama and Biden shifting away somewhat from their 50 state strategy to focusing on these six key states in this critical period of the election. For those that want to know the current break down in these six states, Obama leads in NM and CO, while McCain leads in VA, OH, FL, and NV. Under that scenario, Obama would win with 271 electoral votes. 

Friday, September 19, 2008

111th Congress Senate Forecast: Overcast With Chance of Gridlock

As the 2008 election looks good for the Democrats in the Senate, who, as we said yesterday, will probably pick up between 4-5 seats and enlarge their majority to 55 or 56 (and likely enlarge the majority in the House of Representatives to 242 from the current 233), it would seem that Democrats might actually be able to pass significant amounts of legislation. This would be even more likely if Obama wins the presidency, eliminating the veto threat and negating the need to broker as many deals with Republicans.

Despite the almost certain increase in Democratic majority in the Senate, Democrats will likely still face an uphill battle against Republicans in trying to pass legislation. Even Democrats admit that Republicans are masters of parliamentary procedure and excel at putting the procedural brakes on legislation. They also aren't timid about using that power in the current political environment.

Republicans set a new record for filibusters in the Senate during the 110th Congress measured by the number of cloture votes (a motion to cut of debate and vote on a bill or amendment). The Republicans set the
record at 62 in December of 2007, only halfway through the Congressional term. That surpassed the 107th Congress's 61 votes between 2001-02, when Democrats had just regained control of the Senate and Bush had just defeated Gore for the presidency.

Republicans may be on track to have over 100 cloture votes this Congress, and they are open about their strategy of obstruction. According to the
New York Times, Senator Mitch McConnell (R-KY), the Senate Minority Leader, said in December "I think we can stipulate once again for the umpteenth time that matters that have any level of controversy about it in the Senate will require 60 votes." This strategy has two basic levels: win over the Republican base by stopping Democrats; and (more incredibly) blame Democrats for not accomplishing anything while being in charge for the first time in 12 years. This is indeed a demonstration of dramatic irony as up until this Congress, Republicans lambasted Democrats for using the filibuster and threatened the so-called "nuclear option" of eliminating it altogether.

It may not make sense—or even be valid—for Republicans to blame Democrats for a slow down in legislation; but it is effective as a message to the average American who does not follow Congress’s daily proceedings. Even McCain has called this Congress the "do-nothing" Congress, despite the fact that he and his party are the ones slowing down legislation.

Many Democrats are hoping a greater majority in the Senate and House, along with a Democratic president, will allow them to pass a great deal of legislation that has so far languished as a result of the use of the filibusters, procedural maneuvering, and presidential vetoes. However, even if the Democrats gain 56 seats, the largest number they are most likely to achieve in 2008, they would still need 4 Republican votes to pass any legislation. Democrats have, at times, been able to gain up to 6 or 7 Republicans to vote for their cloture motions to cut of debate and end a filibuster, but Republican discipline is remarkably tough.

However, the Democratic gains would most likely replace the moderates that vote with them already; this still means the Democrats come up 4 votes shy of the necessary 60. On the
ideological spectrum, the most moderate Republican Seats Seats are Gordon Smith of Oregon, Norm Coleman of Minnesota, Susan Collins of Maine, Olympia Snowe of Maine, and Arlen Spectre of Pennsylvania. This leaves 5 Republicans more likely to work with Democrats than not, which would seem to allow the Democrats to achieve 61 votes in the Senate when needed.

One problem with this scenario is that Democrats are unlikely to always get all five of these moderate Republican votes. Another problem is that Joe Lieberman of Connecticut not only actively supports John McCain, but he attacked Barrack Obama at the Republican convention and, according to, either wildly exaggerated the truth or simply lied about Obama's record in order to undermine the Democrats. Lieberman will likely lose his chairmanship of the Homeland Security Committee, and it is also quiet possible that he will be booted out of the Democratic caucus; he is already an Independent, which would cause him to caucus with Senate Republicans.

This puts Democrats back at 55 seats, meaning that they would have to get every single moderate to vote with them on any piece of legislation with which Republicans have even the slightest disagreement (which would be a majority of legislation). Democrats would likely pass far more legislation than they have so far, and with a Democratic president things would be even easier (relative to the current stand still), but this still presents a huge uphill battle against Republicans who hold the advantage when it comes to procedural maneuvering.

In order to truly advance their own agenda without any significant Republican interference, Democrats would need to pick up 6-7 seats in the Senate, creating a 57-58 majority, as well as with winning the Presidential race. This means they need to pick up
Senate seats in States like like North Carolina, Mississippi, Minnesota, and Oregon, which are close, but have consistently polled in the Republican candidates’ favors.

This does not mean Democrats won't be in a far better position than they are now, where the Republicans can often effectively dictate their own agenda while halting the Democrats and simultaneously blaming them for the slow down.
Polling has tightened up in all 2008 elections, after swinging in the Republicans’ favor for the last few weeks, but it remains an uphill battle with momentum still with the Democrats.

Thursday, September 18, 2008

When The Music Stops Will There Be 60 Democrats Sitting?

Today we will take a break from the presidential race and take a look at the Senate races that are occurring this fall. While they have garnered far less attention in the national media, the break down of Senate members is a critical factor in the ability of a president to get anything done.   

The magical number that is required to get anything real done in the senate is 60 votes. This is because it takes 60 votes in the Senate to invoke cloture and end debate. As the Senate is designed to be a more deliberative body than the House, the rules for debate in the Senate are much less structured than in the House. Consequently, a single senator can prevent all senate business from occurring by refusing to yield the floor. If 60 of his/her colleges disagree with the filibuster, they can vote to end debate by invoking cloture.   

The net result is, in order to get any major or controversial piece of legislation to a vote in the Senate, the majority party needs to have 60 reliable votes so that it knows it can end debate and get a vote on a bill. Based on the current breakdown in the Senate, if the democrats can take nine seats currently held by republicans in the fall, they will reach the magical number of 60.   

It is important to note that the democrats actually have only 49 members in the Senate currently, but the two Senate independents caucus with the democrats, which give them 51 votes on procedural matters. On top of this, one of the independents is Joe Lieberman, who has angered many democrats for his support of Bush and McCain. Thus, in reality while the math may say nine seats, there is the chance that the democrats will really need ten seats to switch party lines, without losing any of their seats that are up for grabs.   

So the $64,000 question is can they do it?   

There are several factors to consider. First, only a third of the Senate is up for election at a time. So only 34 seats are actually up for grabs (the extra seat is a special election in WA). Second, of these seats, 22 are currently held by republicans, and 12 by democrats. Thus, more republicans are up for reelection this time around than democrats. With such a high number of republicans up for reelection it is unlikely that all 22 seats will remain republican.   

A third factor to consider is the number of incumbents that are rerunning in these 22 republicans seats. The incumbent advantage is well documented in the Senate. According to latest data, about 85% of incumbents win reelection. So, while it is not impossible to knock off an incumbent in a reelection, the odds of the democrats winning a previously held republican seat drastically improve for elections in which a republican incumbent is not running. In examining the 22 republican seats up for election, seven do not have incumbents (CO, ID, MS, NM, NE, VA, WY). Of these seven, only CO, NM, and VA are states that are not solidly republican.   

The last aspect to consider is in what states the 22 republican seats are from. Clearly, it should be easier for a democrat to be elected to the senate from a “blue state” than a “red state,” where blue and red are defined in how they voted in the 2004 Election. Taking a look at the 2004 Election map, of the 22 republican seats, only two (MN and ME) are from blue states in 2004.   

Taking all of this together, while it seems that the democrats will pick up seats in the Senate, it is unlikely to be the nine (or ten) needed to reach 60. It is much more likely to be 3-5 seats. The reason for this is simply that while there are vastly more republicans up for election and a lot of republican retirements, these seats are predominantly safe republican seats from states that reliably vote republican. Of the 22 republican seats, 14 are very safe for republicans, with polling numbers all above 90% that a republican will be elected.   

This is not to imply that it is impossible, just highly unlikely. The current polling, while not as frequent as for the presidential race, backs up this analysis. If the race was held today, based on current polls, the democrats would hold on to all of their existing seats and gain seats from CO, AK, NH, NM, and VA. Thus, they will shift their majority from 51 to 56. Between these five pick-ups and the 14 safe seats, this only leaves 4 other races (NC, MN, OR, MS) out there. While republicans in these races are not up by the 90% mark, they are all leading by about 70%. Since the democrats would have to win them all to get to 60, it seems unlikely to happen.  

Thus, while the democratic majority in the Senate will increase, it will still be short of that magical number 60.  

Wednesday, September 17, 2008

Let's Play a Word Association Game

The continued bad news from the financial markets has clearly shoved the economy into the limelight as one of, if not the key issue in this election. Many pundits believe that this has the potential to shift the race in Obama’s favor. I happen to agree with this sentiment, but it is important to understand why; the reasoning is not as simple as it may seem.   

The traditional logic of the economy and presidents is that since the president is the only nationally elected official, he is held (rightly or wrongly) accountable for the overall wellbeing of the national economy. In many ways, the president is kind of like a quarterback in football: when things go right he gets too much credit, and when things go wrong he gets too much blame. The key fact to remember is that while a president is a critical player in the health of the economy, he is still only a single person among many other players in the game. Thus, he can make all the right choices and still get stuck with the blame for other players’ poor performance.   

Rather then trying to actually assess how much blame we should attribute to the Bush administration for the current economic crisis versus mistakes made by key finical institutions, it is more important to examine how the current set of events is likely to be interpreted by likely voters in November. Intuition may suggest that if people are personally feeling the pinch of a bad economy (i.e. they suddenly have less in their purses or wallets than they did previously), they should hold the party in power of the presidency responsible and vote for the opposing party’s candidate.    

However, most reputable research disputes this theory. Rather than voting based on ones own economic situation, the vast majority of voters tend to vote based on what they perceive as the general condition of the economy as a whole. This raises several important questions regarding the current election.   

The first is that for the first time in the history of the United States, most adults have some stake in the stock market. Either as a result of personal stocks or retirement funds, peoples’ well-being is much more closely tied to the welfare of the stock market than ever before. The result is that even if the overall fundamentals of the economy are strong, if people perceive that the overall stock market is in crisis, then the nation is in a national economic crisis. Thus, using the same logic as before, if people perceive a national crisis in the stock market, which I think most currently do, they will likely vote democrat in November.   

The second aspect that is unique to this financial market crisis situation is that in some ways the republicans are guilty of their own image success. In terms of associations, if you asked most people which party they associate with big business or Wall Street, they will say republicans. Thus, even though the Republican Party is not probably directly responsible for the current finical situation, republicans are guilty via association.   

If this association theory is correct, then all Obama should have to do to win on this key issue is to hammer on this association and pose the question “who you would rather have clean up this mess: the people who are in bed with big business or an outsider who knows what is right?”  

The third aspect to take note of is that in terms of the abilities of the candidates, McCain will be hard pressed to win an election that is based on the economy. McCain’s best chance of winning this election is to keep the agenda on national security, experience, and social conservative issues. He has almost no experience with economic issues and his age, race, income (via his wife), and own statements on the economy all make him ill suited to play the understanding white knight to the rescue.   

This is not to imply that Obama would actually do a better job at attempting to resolve the situation. That question will largely be the result of what kind of economic teams are put in place by the respective candidates. But actual chance of success is much less important in the economic arena of politics than association with ability. On this count, Obama is clearly far out ahead of McCain. 

Monday, September 15, 2008

Back To The Future

The Iowa caucuses not only marked the beginning of this election season, but also ushered in what was to become the theme of the election: Change. In Iowa, all the candidates from both parties saw that the two candidates that campaigned on a message of change did incredibly well (Obama and Huckabee).

Since then, the theme of change has remained a constant in the campaign. Obama has stayed with his message of "Change We Can Believe In," while McCain has attempted several different change themes prior to the republican convention (remember "The Change You Deserve" back in May).

After the convention, an interesting development occurred. Somehow Obama lost control of the theme of Change. All of a sudden McCain was all about Change. He had taken what Obama had been saying, and started campaigning as the Maverick team that could bring change to Washington. Instead of trying to come up with an original theme he simply used the media spot light of the republican convention and flatly stated, as if no one had ever thought of this idea before, that he was the candidate for change.

What happend next was quite surprising, it caught on. All of a sudden McCain, who remember is from the party who has controlled the presidency for the last eight years, as well as the House and Senate for the first six of those eight years, was the Change man. It appears to me that he was able to pull off this transformation because the base of the republican party has never embraced him (and in fact still haven't--remember they really only got on board once Palin was on the ticket), so he was able to sell himself to moderate republicans (and perhaps independent leaning republicans) that he is different than the last eight years. He can bring Change. Not the Change the democrats want, but he can bring a different kind of republican control to Washington.

With such a high level of success on the overarching theme of Change, McCain started very slowly to adopt a lot of the exact same language that Obama has been using over the last year. If you examine McCain's speeches post convention with Obama's remarks, there is no mistaking that McCain has become somewhat of a mimic or echo of Obama.

McCain has been able to pull of his copy cat nature of Obama's messages, in essence by using the same language and ideas, but in slightly different patterns and cadences. The result has been quite remarkable in the short term. McCain's national and swing state polls have shot way up. This development however has clearly made many Obama supporters quite angry. The claim is that McCain has usurped Obama's issues and is a charlatan or a wolf in sheep's clothing.

What is interesting is that this is not the first time the strategy of co-opting your opponent's popular ideas and messages as your own has occurred in a presidential race and it is not even the first time it has been done by a republican presidential candidate.

Issue and message co-option was the bread and butter of the republican party in presidential elections of most of the 1930s and 1940s. The most famous example is probably the election of 1948, in which the republican party took Truman's entire campaign platform and passed it through congress during the election in an effort to take the issues away from Truman.

The good news for Obama, is that in each historical case when the republican party attempted to take a democratic platform as their own they have lost the election in November. The historical argument for why this is the case is that in the end, issue co-opting by a rival candidate signals to the voting public that there are really only one set of options for moving forward. So when forced with a choice, why would you choose the imitator over the real Mccoy?

What has generally happened is that while issue co-optation can cause short term excitement by the partisans of the candidate that co-opted the issue, because there is no previous record of the candidate having such a position the candidate cannot make a credible commitment to actually carrying through on the co-opted issues once elected. Thus, faced with a choice between candidates that are saying the same thing, voters choice the candidate who is more likely to actually carry out those issues as promised.

As a result, issue co-option helps with popularity in the short term, because the issues themselves garner attention, but in the long term, results in the original candidate being elected. Of course there is no way to know for sure if the same will happen in this election. It is up to Obama to ensure that he remains the authentic choice by showing that McCain is merely echoing his ideas. But it cannot be denied that Obama has history on his side in this development.

Sunday, September 14, 2008

Why Tell a Lie?

Today may mark the first and only time in history that Karl Rove and I agree on something. In a recent interview with Fox News, Rove stated that "McCain has gone in some of his ads one step too far...and sort of attributing to Obama things that are, you know, beyond the 100 percent truth test."    

I find several aspects of this development quite interesting. First, let me put it in writing that I do agree with Rove. Several recent ads that have been put out by McCain have been quite nasty and border on actual slander.    

A recent example is an ad, released in areas with high latino populations, that stated that Obama voted against immigration reform and was instrumental in stalling the creation of any guest worker program or a path to citizenship. The problem with this ad, of course, is that Obama and McCain actually worked together on this bill, each voting to end the filibuster in the senate; in fact, they voted identically on the procedural and final passage votes.    

All political ads lie to some extent, and to pretend that Obama hasn't produced negative ads either would be a mischaracterization. However, Obama has not been foolish enough to create an ad that states a lie that can easily be verified and shown to be untrue. What is more startling, however, is when one examines where the nastiest attack ads are being run, it is pretty clear that the demographic groups that are being targeted are those containing individuals who are statistically on the lower end of the income and education scales.    

This tactic is about as low as it gets as it amounts to directly lying to confuse people who will not be able to gather complete information about the candidates due to limitations regarding time, resources, and language ability. Candidates launch such attacks because they can be very effective since these voters are not constantly tuning in to see what is occurring in the campaign, and reserach has shown that first impressions of a candidate are very important in deciding who to vote for among voters with lesser educations.    

The decision to go negative is not a surprise, but the manner in which is has occurred is highly questionable. It raises questions about McCain's ethics that I myself would not have thought possible. It is clear though that the straight-talking express has broken down.    

I think it is silly to argue that campaigns should always be positive; that’s not how the world works, and it isn't how campaigns are won. We may all hate negative ads, but they are really effective. I don't deplore McCain's choice to go negative, but the degree to which he has done so has the potential to backfire in a big way. 

Saturday, September 13, 2008

Is the Tide Turning?

Quick post tonight, as with Hurricane Ike going full force there is not much election coverage.  Over the last few days an interesting set of events has been set in motion that may set the stage for a poll reversal this week. 

The first is that, unlike the relatively unsubstantiated attacks that were leveled at Palin, the media has actually started to find cracks in the Palin armor that cannot be whisked away. Neither crack is that large, but both highlight an odd trend on the McCain/Palin ticket: to lie about information that can easily be fact checked. 

One, claimed earlier in the week, is that Palin had visited Alaska troops in Iraq. This has been disproved quite easily by the media, who got access to her travel record. Another is her claim that she brought in both republican and democrats to work in the executive branch in Alaska when she was elected Governor. The New York Times is reporting that this claim is false and that the appointment and civil service records show otherwise.

The other event is that the Obama campaign has learned that it needs to stop going after Palin, as it makes her an issue. Instead they have returned to attacking McCain. In my opinion this is the correct course of action. Palin appears vastly more popular than McCain. Obama's best bet is remind voters that they aren't voting for Palin, but McCain. In addition, McCain has a much longer record to defend, which clearly shows it is hard for him to be a candidate for change. Remember, before Palin came on the ticket, people were not excited about McCain. This is probably still true and Obama needs to remind them who is running for president on the republican side.

Lastly, as a poll update, the numbers still look terrible for Obama in both national polls and key swing states. We still have a long time to go, but if we don't start to see some halting to the McCain gains in swing states by the end of the week it may be time to start getting concerned. 

Friday, September 12, 2008

Two Steps Forward, One Step Back?

Taking a brief break from the election today, I want to talk about some of the other political news in the world. The Russian invasion of Georgia caught many in the West by surprise. What is even more of a concern, beyond the actual invasion, is the pretext for why it occurred and some of the direct events it caused.   

First, Russia claims that it had to protect ethnic Russians who were living in Georgia. I do not have enough information to know whether or not there is any validity to this claim, although I am personally very skeptical. Second, since the partial Russian withdrawal, there has been a clamoring in many Eastern Europe states for NATO to finally extend membership to Georgia and Ukraine (another state that does not have great relations with Russia and has a sizeable ethnically Russian population).   

Since the end of the Cold War, NATO has been searching for a reason to exist. Its alliance structure is designed to defend Europe against a communist invasion force from the then USSR and calls for each member nation to commit to the defense of any other member nation that is invaded or attacked. In the interest of full disclosure, I am about as strong a supporter of international institutions as one can find in the United States. I am not against NATO, and in fact, I think NATO has the potential to be the military force that other international organizations, such as the United Nations, need.   

What strikes me as disturbing however, is how similar these current events are to those surrounding the outbreak of World War I. For starters, NATO represents a fixed alliance structure that contains some states with moderate to large ethnic Russian populations.  

There is a good chance that based on latest Russian actions, the membership of Georgia and Ukraine in NATO will be considered very seriously. In both cases (WWI and now), the alliance structures call on their member states to defend any member state that was attacked as if that state was its own homeland.   

Next, in many ways, World War I began because Tzarist Russia felt that it had to protect Slavic populations in Serbia. As a result, when attacks in Serbia began, Russia felt obligated to become involved to protect those populations. In many ways, Russian claims at the outbreak of WWI are very similar to their claims over Georgia today.   

I am not suggesting that we are heading towards another world war centered in Europe, nor am I claiming that the West will be going to war with Russia; however, I don’t think the similarities can be ignored either. The key in WWI was that many believed that any war would be short, and no one had then seen the destructive power of all-out war with the power and horrors of modern weapons. I think these are important lessons that could prevent the outbreak of a new world war.   

Mark Twain is famous for commenting once that history doesn’t repeat itself, but rather it rhymes. I don’t think for any reason that we are in immediate danger of facing another world war, but I do think now is a time to remember the lessons of history to ensure we don’t head any farther down that path that would lead to such a terrible end.  After all, as Albert Einstein once stated, “I do not know with what weapons World War III will be fought, but World War IV will be fought with sticks and stones.”

Thursday, September 11, 2008

Together Forever?

Parting ways can be difficult, which would be one explanation for why McCain and Palin are still campaigning together now that the convention is behind us. That explanation would be wrong, but it makes for a nice lead in for today’s post.   

Traditionally, after the conventions, the newly foraged party candidates for President and Vice President head off and do about 3-4 days of heavy campaigning together. After that, they bid each other ado and separate. The logic in separating is that two people can cover far more ground than a single person, and since a party ticket is usually designed to appeal to different types of voters, the splitting of the two candidates allows each to go and campaign separately to court these voters. It is not unusual for the ticket-mates to meet back together for large events, big fundraises, or meet for rallies in swing states, but generally each will spend the month of September campaigning alone.   

Obama and Biden have followed this traditional form to the letter. After the convention, the two drew huge crowds at several joint events and have since separated to court voters individually.  Since separating, Obama and Biden have done several big events together, but by and large they have been keeping separate travel schedules, events, and hotels.   

Over on the republican side, the original plan coming out of the convention was for something very similar for McCain and Palin. They would do a few events together and then separate to hit their respective bases of support. However, this has not occurred. Rather, they have repeatedly added joint events and have not really separated yet (take today’s joint campaign stop in northern VA).   

The pundits have noticed this occurrence, but have attributed it to the fact that when McCain was campaigning alone before the convention, he was pulling crowds in the 100s, whereas after the convention, he and Palin together have been attracting thousands. Thus, the two have not split yet because they want to ride the wave.   

While there is clearly merit in this explanation, I have trouble with it because logically it doesn’t make sense. It is not the fact that they are campaigning together that is drawing larger crowds, but that the republican convention really energized republicans. So whereas the support for McCain was luke-warm before the convention, that indifferent sentiment has been completely replaced by an air of excitement and enthusiasm.   

Now some will claim that if Palin wasn’t with him, he wouldn’t get the crowds. So what? If Palin is the reason they are getting crowds, then her campaigning on her own would still pull the large crowds and McCain could be working a different, if smaller, group of people at the same time. To me, the republicans’ strategy here makes no sense if the explanation is to ride the Palin wave to bigger crowds for McCain.

However, there are two alternative hypotheses that do explain why the republicans have not yet shifted to the split campaigning. The first is that the McCain staff is very afraid that if they separate, Palin will pull more people to her events than McCain will to his. Such an event would clearly be covered in the media and make McCain look weak. Obviously, the VP candidate should not pull more than the boss.   

The second alternative hypothesis is that the McCain camp is afraid to have Palin campaign by herself on the national stage at this point. It is clear that she can be very powerful when she is protected and in a controlled environment, but if she is on her own at her own events, the McCain campaign will have little control over what she says or how she answers questions.   

In both cases, these alternative hypotheses are good news for Obama. The longer McCain and Palin campaign together, the more ground they will lose as Obama and Biden each individually reach out to voters. Plus, McCain and Palin will have to separate at some point, and in terms of having something embarrassing happen, the farther it is from November 4th, the better off it will be for the campaign that makes the mistake.     

Wednesday, September 10, 2008

The Power of Lipstick

Well who would have thought that lipstick on a pig would cause such a ruckus? For those who are not following the constant news feed of the campaign, here is the back-story before we get into some analysis.   

In a recent speech (I believe it was yesterday), Obama said that McCain’s economic plan is like putting lipstick on a pig. The phrase was supposed to imply that one cannot make a bad plan better by simply dressing it up. Thus, Obama saying McCain’s economic plan was like putting lipstick on a pig was the equivalent of saying that McCain’s economic plan is worthless and tries to fix the economy by making only cosmetic changes.   

Obama’s comments immediately caused outrange in the McCain/Palin camp, but not exactly as one might expect. Rather than being upset that his economic plan was called into question, McCain responded that Obama’s remarks were an unjustified sexist attack on Palin.  

The connection, for those who are lost and wondering why the McCain campaign would react the way it did, is that during Palin’s acceptance speech, she said that the difference between a pit bull and a hockey mom is that one wears lipstick. Thus, the McCain/Palin ticket reacted believing that the swipe was at Palin and not the economic plan.   

It will never be known what Obama intended, but to be honest, whether it was planned or not, the move by Obama was absolutely brilliant. Since the end of the republican convention, all that has been talked about is Palin and how strong she is, what a good selection she was, etc. She has been caught in a very powerful and positive media cycle. Since there hasn’t been anything else for the media to really cover since her speech, she has stayed in the news. However, McCain’s response seems to have ended that by giving the media something new to cover.   

Now, you might ask, why is this comment by Obama good? Because McCain’s response is completely irrational based on what was said. Palin’s name was never mentioned and Obama was talking about economic plans. It shows that McCain can’t talk about real issues, but would rather talk about unrelated aspects of the campaign. It feeds into the image of the republicans that the democrats are trying to build: republicans are out of touch, they have no new ideas, and they can only win by relying on platitudes.   

Luckily for Obama, McCain took the bait, and the resulting news cycle has done two important things. First, the post-convention positive coverage of Plain has ended. This is possibly the most important change the democrats could hope to effectuate. They had to find a way to shift the focus without attacking Palin directly because doing so would just add to the media frenzy. Second, they were able to once again show that McCain/Palin would rather talk about lipstick than real issues. Obama attacks an economic plan and McCain responds by calling the attack sexist. I think I can see the campaign ad already.   

Clearly, this is not going to be remembered as a key turning point in the election, and for the vast majority of people, it will remain completely unknown. But in reality, this little comment has once again shifted media focus back to Obama and gotten Palin’s name out of the positive news cycle. For this to really be a turning point, Obama now needs to capitalize on McCain’s mistake and really drive home that McCain would rather talk about lipstick than issues that matter to Joe America.   

As one final note on this story, McCain’s response becomes even more bizarre when you take into account that he was actually the first person in this election to make the comment that someone’s ideas were like putting lipstick on a pig. He was referring to a plan by Hillary Clinton in the early primaries. Don’t think that that aspect won’t make it into the news cycle as this story passes. 

Microbes: Solution to the Energy Crisis?

For those who haven't been paying attention to the news, paid a utility bill, or tried to fill up their car at the pump recently there is an energy crisis at the moment.  Not only in America, but around the globe as developing countries like China, India, and Brazil slowly rise to 1st world nations and consume more.  Higher demand has increased prices in the U.S. and spurred the public to demand offshore drilling (thanks to to some clever marketing).

There are numerous problems with drilling, not least of which is the fact that it would take a decade for it to have any impact on prices.  Another important drawback most Americans don't think about, justifiably because they can't afford to, is that the more we drill now the less we will have in the future when the scarcity of and demand for oil are both even greater than now, hence when prices are highest our domestic supply will have been drained.  Another question arises as to whether domestic supply will actually affect domestic prices or whether this simply increases global supply which would have a smaller impact on domestic prices.  This says nothing of the environmental consequences of more drilling, or if the push for more leased offshore drilling rights is simply an attempt to make the financial assets of oil and gas companies look more impressive to investors.

Most worrying about our current energy system and needs is that global supply is limited.  Eventually the oil, coal, and natural gas will simply run out.  This may take decades or centuries, but many scientists believe that we are already reaching the peak of oil production and it will begin to decline in the next decade or two, this as demand for energy rises with along with the economies of the developing world.  Once the supply runs out everything about modern society shuts down.  No fuel for trains, planes, or automobiles and more importantly the ability to create plastics becomes severly limited.  Everything in modern society needs plastics, from medicine, defense, clothing, computers, buildings, etc.   Without plastics the world we have to revert methods of constructing goods employed prior to World War II.

All of this could potentially become irrelevant with new developments in biotechnology.  Not within the next century or even the next half century, but within the next decade.  J. Craig Venter, instrumental in the mapping of the human genome, and his company Synthetic Genomics, stated in a recent interview with Newsweek that he believes that within two years that can create a bacterium that will consume CO2 and produce fuel, with mass production occuring within the next five.  All of this would work within existing infratsructure.

The potential consequences of this are astounding.  It could solve or reduce three major threats facing the entire planet in the form of current environmental, security, and economic crises related to oil:
  1. By using CO2 as the means to creating fuel there is the potential to drastically reduce carbon emitions and other emitions which cause environmental degradation and climate change.
  2. The ability to produce oil (or natural gas and hydrogen) would not be limited to areas of the world with natural reserves, solving a geopolitical crisis where the West and developed nations transfers billions every year to unstable countries.
  3. The cost of the fuel  could also potentially be reduced drastically, because supply would not be limited by natural reserves and the cost of extraction (this would also depend on how expensive it is to produce bacteria versus drilling miles under the earth and sea, but logic and intuition would suggest it would be cheaper).
Synthetic Genomics recently won a top industry award for its work in developing green fuels and a scientist at the company also testified before Congress before the U.S. House Select Committee on Energy Inpendence and Climate Change.

Hopefully this is more than just a pipe dream as it has not garnered great media attention as of yet.  But this is probably a good thing until Venter's company reaches the point where they are simply tackling production problems rather than creating bacteria itself, and if Venter's estimate is right this could be by 2010 or sooner.