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.   

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. 

Palin's Speech

Today will hopefully mark the last time I have a post about Palin for awhile. Personally I am kind of tired reading about her as I don't think all the attacks on her have been fair, nor in the end do I think she will actually matter when people go into the voting booth. When push comes to shove, the vast majority of people will vote for the name on the top of the ticket when they pull the lever (punch the chad, push the electronic check mark box, or how ever you vote in your state). 

I have just finished watching Palin's speech and my initial reaction is mixed. Overall, I think she delivered her speech well, there were no real speaking mistakes, and it only seemed one time that she went off script with telling a joke about the difference between a hockey mom and a pit bull (the punchline is that hockey moms wear lipstick). I am not sure how those types of jokes play in small towns in America, but I am willing to guess that the McCain campaign advisers will make sure we don't see that again from her. 

The positives of speech were that she attempted to clearly define who she is, how she got to where she is today, and how her story is a lot like Obama's in that she started small and is now in the big time. I think it is hard to question that she hit that part out of the park. She also clearly showed herself to be the champion of family values and not just talking the talk, but walking the walk on social conservative issues by trolling her family in front of the crowd. 

Where I think mistakes were made was in making her the attack dog. Her speech was incredibly negative and loaded with personal attacks on Obama, as opposed to attacks on his ideas/polices. I was keeping rough track during her speech and I counted 14 interruptions when the audience gave supportive boos to her remarks versus 11 cheering interruptions. While the speech was strong in many ways, it was extremely negative and I think incorrectly frames her in negative terms. If the goal of having her on the ticket was that she is like your next door neighbor and can pick off independents, why would you have her give a speech that was very hostile, negative, and derisive? Was a speech like that needed? Absoultely. But I am surprised they had Palin give it at the same time that she is introducing and defining herself to the public. 

I am not saying that Obama and Biden didn't take their shots at McCain. However, their speeches in almost all cases said, I respect McCain, just not his ideas. This type of civility was completely lacking in Palin's speech and for me and was the most disappointing part. Her speech demonstrated that republicans want to win the election by dividing the country, where as the democrats want to win by uniting. I know that this is a vast and unfounded generalization, but the tones of the speeches so far between the two conventions seem to fall that way. 

In the morning, the fact that is going to be most remembered of Palin's speech is that she aggressively attacked Obama personally. Perhaps she felt that she had to show she had a tough side based on the media backlash she has received. Maybe she was right and that this will get the critics off her back. But, I don't think the McCain/Palin ticket can win by running on a platform of "we are not Obama" or "Obama is not good". To win a presidential election you need to define yourself independently of your opponent, not merely attack your opponent and I feel Palin did little of that tonight. 

In the end, I think Palin did fine tonight, but if this marks the tone of how she will campaign, I think she will find little support from independents or disappointed Hillary supporters because she is doing little to reach out to them. Instead of trying to reach across the aisle, tonight was a speech that widened the divide. Palin proved she can be tough, but she did it at the expense of showing she could be a uniter, which I think the republicans are going to need if they are going to win in November.