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Thursday, November 27, 2008

Why Not Just Cut Taxes?

President Elect Obama has decided that the $175 billion "economic stimulus" he suggested during the campaign may not be enough to get the economy rolling again. So now, he's discussing a plan somewhere between $500 and $700 billion dollars. (GPO linked XL spread sheet. Cell BI)

To put this in perspective, that's between 40 and 60 percent of all personal income tax revenue estimated to be collected for FY 2008. If you do the low end of it, $500 billion, that would be every bit of tax income paid by the bottom 95% of tax payers; folks with an income under $153,000 in 2006. (Tax Foundation Table).

This begs the question, why not just eliminate the income tax on the lower 95% of the population for the next year or so? That seems to be the simple solution to getting that money out there. But there is are political reasons it won't be done.

Simply put, Mom and Pop feel better about getting a check from Uncle Sugar than they do about seeing their paycheck go up a few bucks. Over 40% of tax payers complain about their income tax, yet don't actually pay any. They see the money come out of their check, but then come April, get a refund with tax credits that is more than they paid in. They like that check, and seeing taxes deducted over the course of a year gives them something to bitch about, and politicians a way to claim the little guy is being screwed.

The second reason is that by cutting taxes directly, you aren't able to pay off the lobbies and interest groups that got you elected. If instead you send that $175 billion back to tax payers, and spend the other $325 billion on infrastructure projects, you can make a lot of folks in a lot of industries that invested in you happy.

For those not familiar with this method, it's known as the Chicago way. Our state leaders; the mentors of Barack Obama; have become the national experts at buying votes from interest groups with OPM (other peoples money). It was a trend started in Chicago (hence the name) to keep the Original Mayor Daley in power, and has spread to our state capital in a big way. Big enough to have the last Governor in prison and the current one under investigation by the feds.

If you think you need help from road builders, get a federal grant and spend a billion or so, spread among the 10 biggest, and redo every major freeway in Chicago, at once. Want help from health care providers, expand the state health care system to pay for just about anyone, then let the judges say it's illegal. It's how we do business here in Illinois.

President Obama would like to carry this quaint midwest tradition to the White House, deficit be damned. And, great for his union buddies, The Davis Bacon Act makes sure that all that infrastructure money gets funneled through them.

Yes, a tax cut would get the money back to the people in the most efficient manner, but let's not get confused here. The purpose of the economic stimulus expansion has much less to do with you, the tax payer getting something than it does with paying back political backers.

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Wednesday, November 26, 2008

Happy Thanksgiving

Hey All!

Hope you have a happy, safe Thanksgiving holiday and are able to spend it with family and friends.

If you are driving, as I will be, keep the shiny side up and the rubber side down. And if you are flying don't crack jokes at security about the exploding turkey in your luggage, unless you really want to miss dinner.

When you sit down to your meal, give thanks to those folks on ships, in the trenches, or flying top cover for the men and women overseas. We get to give thanks for our freedom because of them, so please remember them.

Also, thanks the cops, firefighters, doctors and nurses who are probably pulling double shifts so others can be with their families, and you can still be safe.

Have a safe and Happy one. If my insomnia gets the best of me over the weekend I may post a few things. If not, I'll see you next week.


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Tuesday, November 25, 2008

Demanding a Failing Plan

Congress, in it's decree to the (formerly) Big 3, wants sustainable green vehicles as part of the plan that they bring back to DC next month as they beg for more money.

The problem is, as pointed out by the Washington Post; in it's green section; is that green vehicles are money losers, and probably will continue to be for the foreseeable future.

The story reminds readers that the Toyota Prius, the poster child for how to build a good hybrid, is a money loser for Toyota. The company won't say how much they lose per car, but experts figure thousands of dollars per unit sold.

The Chevy Volt, the car that gets environmentalists into a nearly orgasmic state, won't save GM. Instead, it could sink the company based on estimates of $8-10,000 just for the battery pack. Conservative estimates are GM would need to get upwards of $50k per car to turn a profit on it. Even at $4.00 a gallon for gas they'd be hard pressed to price the car at a profitable price. That's why they are limiting early production to 10,000 vehicles a year.

GM already plans to have nine hybrid models on the market next year, but if each of them is a money loser, that Congressional bailout money might just as well go down the drain.

President-Elect Obama yesterday reiterated the requirement for a bold plan from the automakers to come up with a sustainable business model based on vehicles such as the Volt, Fusion Hybrid, etc.

I wonder what Congress will say if the three CEO's show up and tell them the truth, that business model doesn't exist, and probably won't for the next five to ten years?

Here's something Congress could look at, though it will drive the Green lobby nuts. They need to relax some of the diesel restrictions that they put in place. Ford's Fiesta, (which isn't going to come here with a diesel), and VW's Jetta diesel give people cars with mileage in the Prius range, but with the ability to turn a profit on the car.

VW and BMW both have diesel cars that have passed California's tough emissions standards, and are going on sale in all 50 states, and don't eliminate the performance Americans like to get better mileage. The flip side is with the federal fuel tax, and most state taxes being higher on diesels, the cost of fuel for them has a 20-30% premium over gas, discouraging the sales of those higher mileage vehicles.

A second thing Congress could do, instead of limiting the tax credits they are planning to hybrids, they could provide a smaller tax credit towards anyone who purchases a vehicle with an EPA estimated milage greated than 32 or 35mpg combined, and increase that number slightly each year.

As the Post story points out, getting the full benefit of the proposed $7500 non-refundable (you don't get back more than you pay in) credit for hybrids and electic vehicles means only those making more than $50k per year would see the full benefit of the credit.

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Sunday, November 23, 2008

Looking the Wrong Way

Rhetoric from Democratic Congressional leaders and President-Elect Obama's advisors is heating up towards the automakers, and all being aimed the wrong way.

I've got little sympathy for the 3 clowns from Detroit who flew in on private jets; at a cost of $20k each; to beg for money from Congress. The $12 to $24 Million each makes is a ripe target for lawmakers, admittedly.

However, you can cut all executive pay, sell all the corporate jets, and each of the (formerly) Big 3 will still lose $1-5 BILLION per month. Ford burned through $7.7 billion last quarter. Their CEO, Alan Mulally will make $24 million this year. Take out 3 months of his pay, and Ford still lost $7.694 billion in the quarter. Sell off their $150 million worth of jets, and they still lost $7.55 billion.

It's easy to see why lawmakers want to look at those things, it's easier than going after the root cause of their losses, labor costs present and past. That's where the money is going, that's why Ford loses over $1000 per vehicle sold.

That's why lawmakers have positioned themselves to allow the Big 3 to file bankruptcy, and blame them. Senior Democrats have told them to come back in December with a plan that preserves the current labor deals, and retiree benefits, but will somehow magically make them profitable if they want government help.

The truth is they can't; it's not possible. You have a better chance of spinning straw into gold. When they come back to the Hill next month, and can't show on paper they they can turn a profit in a recession with a 3 month cash infusion, Congress can throw up their hands, blame the evil corporate management, and say they tried.

Late January or early February is when you can probably expect to see GM toss it's papers to the court. Ford will be following shortly, with Chrysler last. They still have about 7 months worth of cash.

Then it will really get interesting in Washington.

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Secret Ballots For Us, Not You!

Senate Democrats are waiting giddily for January, when they hold substantial majorities in Congress, and the White House to reintroduce their pet Card Check legislation, that removes the National Labor Relations Board requirement of secret ballots for unionization votes.

With the amount of money that the AFL-CIO, UAW, NEA and other unions poured into their campaign chests last cycle, it's at the top of the agenda.

The Wall Street Journal and LaborPains.org both point out the hypocrisy of Democrats when it comes to their own votes on committee chairs. Every committee will vote on their chairperson via a secret ballot, or already has.

Joe Lieberman retained his Homeland Security chairmanship after a secret ballot was taken by the committee to decide his fate. Henry Waxman wrested the top seat on the Energy and Commerce Committee from John Dingell; one of the longest serving chairman; on a secret ballot.

Why do they do this? Well, to protect themselves from flak both inside the capital, and outside. Lieberman has been a hated target of the Daily Kos/Huffington Post crowd for years, since he started getting vocal about the failings of his party and national security. Anyone on that committee that voted openly to retain a guy who supported John McCain over Barack Obama would get blasted by the far left blogging crowd.

Secondly, if Waxman or Lieberman knows for sure you voted against them that puts you pretty low on the ladder when it comes to ranking positions on their committees, and getting your legislation on the agenda. It also means they, who now hold some sway with the House at large can start usurping larger pet projects from you as payback.

One of the big jokes of this is that the guy who orchestrated Waxman's rise on the committee, as pointed out by the Journal; Rep. George Miller; is one of 10 Congressional Democrats to write a letter to Mexico a while back stating "We feel that the secret ballot is absolutely necessary in order to ensure that workers are not intimidated into voting for a union they might not otherwise choose."

Evidently that's only important in Mexico, not the US. I'm sure if Mexican unions were contributing to the DNC he'd recant on that letter in a heartbeat.

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Saturday, November 22, 2008


Hope you like the new color scheme and fonts. If you have problems with it let me know. It seems readable on my newer dell monitor, my 10 year old Gatway monitor and my laptop, so I'm hoping everyone else can read it too.

One problem, the blog won't look good at 800x600. Fight with it as I might, I can't make it work at resolutions below 1024x768. Sorry. Hopefully with monitors dirt cheap no one's using that low a resolution anymore anyway.

(Update, 11/23) The Digg Tool isn't quite right. Submitting a story from the main page submits "Crazy Politico's Rantings". To submit individual articles you have to click on the "Read the Whole Story" link, then Digg it. That's not a totally bad problem, since it gets the blog on Digg,
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Trickling The Wrong Way

President Elect Obama laid out his plans for getting 2.5 million people back to work by 2011. Unfortunately, it's the standard liberal plan. Spend a bunch of government money on projects, instead of trying to create long term sustainable jobs outside of the government.

His major proposal is to put people back to work fixing our infrastructure. And it's hard to disagree that it needs it. However, road and bridge construction aren't long term projects for the most part, and with a $500 billion dollar deficit next year, where does the money come from?

One proposal that will gain steam come January is to jack up the gas tax. In fact ideas of raising the baseline gas tax, then having a "punitive tax" added on to keep gas prices at a certain level are very popular on the left.

If you set the level high enough, you have tons of cash for building those roads and bridges. Never mind that the "fair for all crowd" is championing one of the most regressive taxes there is, getting rid of SUV's is more important than making sure low income workers can afford to drive to work.

The downside is another price spike in oil and suddenly the punitive tax is wiped out, and they still have a money hungry group of road builders to pay.

Another proposal of Mr. Obama's is to put folks to work building new solar and wind farms. Great idea, because renewable energy is a great idea. Utilities actually don't mind wind and solar power. They cost much less to operate and maintain than coal and gas fired plants. However, they balk at "minimum renewable" requirements for various reasons, and the fact that most legislatures put the onus on them to create the power, but limit their ability to recover the higher than normal start up costs.

The different wings of the same environmental lobby that wants those wind and solar farms sues to prevent the construction of the transmission lines to get the power to the grid. Here's a site from Rhode Island that is trying to prevent government bodies and utilities from building either the wind farms or transmission lines. It's not limited, just google wind farm lawsuits.

Yet another group sues to stop the wind farms based on the birds and bats that might fly into the blades.

Solar is another good idea, but it costs so much per kilowatt hour that most consumers couldn't afford electricity if it becomes a major source. The second problem with it is the industry itself. Most of the solar industry loves the idea of the "roof top" installations where individual homeowners make their own power, or a portion of it. Unfortunately it's also the least efficient manner of installation, since it's normally a fixed installation, where you never really get maximum benefit of the solar panels,

Utilities, on the other hand, like the "solar farm" plan, where you toss thousands of KW worth of panels in an area, and have them on movable platforms to produce the most power possible whenever the sun is out. It's also the most cost effective way of producing solar power, with the lowest cost per user.

All of these plans seem to have one common thread. The federal government is central to their planning, implementation, and execution. In other words, the least economical mode of operation is the default setting. While roads and infrastructure are probably best handled at the government level, the state and local levels are better for it than the feds. Power issues are better handled by utilities, unabashed by government mandates, regulations, and interference.

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Thursday, November 20, 2008

Obama-Care Looks Like Hillary Care

For those who wondered, it seems that Obama Care will look much like HillaryCare. though not as many details will come out, so as to keep us from bitching this time around. Considering Barack ran his entire campaign by not releasing much info other than he "hoped for change" that shouldn't be a surprise.

The Wall St. Journal has a nice piece on what Obama Care will probably look like. They base it on what Obama has said, who he's probably picking to run Health and Human Services (Tom Daschle) and the policy blueprint making it's way around the staffers of the House Finance Committee.

Basically, the plan that appears to be coming together will be three pronged. The first, govenment regulation of the insurance industry to require all companies that sell health insurance to do it at a group rate. An expanded Medicare that competes against the private companies will also be part of that insurance pool. Everyone gets to chose their policy, but as many states do now, the Fed's will be telling the companies what they have to have in the policies.

Second, and employer mandate that a certain percentage of payroll must be spent on health care, or you'll get a tax penalty. As the Journal points out, that number has to be targeted correctly. If the penalty is too low, a lot of companies will just dump their coverage and pay the fine. Why not save some money if you can.

The reverse is also true, though. If the percentage is set too high companies will just shed jobs in the US and move them elsewhere. We already have the second highest corporate income tax of all industrialized countries, adding to that burden will cause some to leave.

The third the Journal devined from Max Baucus' policy blueprint. That is an individual mandate to buy insurance, or face a tax penalty for failing to. Obama campaigned against this, but if he wants the rest of the package, the guess of the Journal (and me) is that he'll cave to this demand.

For those who can't afford the insurance, a tax rebate will be given to help pay the cost. Who is considered to not be able to afford coverage? According to the Baucus blueprint, families making less than FOUR HUNDRED PERCENT of the federal poverty level, or about $85,000 a yearfor a family of four.

The reason for not getting to wonky on the details? Obama learned from Hillary. She brought in about 3 million "experts" from every possible interest group to help build her plan. Instead they ended up with a brawl in the White House and nothing getting done. Obama will limit the number of folks coming in to give ideas, and limit the amount of information that comes out, lest we get unruly about the details again.

There will be interst groups that do bitch. Unions will be the biggest. While they claim to love the idea of universal care, their members may balk at it; and then you'll have them asking for an exemption for collectively bargained benefits.

Obama say's he'll exempt small businesses from the mandate, but the level that equals "small" hasn't been set. Is it based on number of employees, gross income of the company? Who knows, and we probably won't until it gets to the floors Congress.

Baucus' plan gives no idea of what it will cost. "Conservative" estimates are about $150 billion a year. That's a joke folks, even if Katie Couric can say it with a straight face. Medicare, which only covers about 44 million people has a baseline budget number for 2009 of $420 BILLION. Somehow, for 1/3 that amount, we think we can double the number of people in the program, and more than likely triple it.

Tripling may actually be a conservative estimate, too. Consider that insurance companies will be asked to write group rate policies for everyone, and Obama has already said that he want's no pre-existing condition clauses. When you do the math on that, companies are going to walk from the business. Not being able to charge more to folks like me who are overweight, smoke, drink, and don't exercise means that they will have to jack up everyone's rates to cover us slobs. That means selling insurance suddenly becomes less profitable, if at all, and they'll start walking from the health coverage business.

If anyone doubts this, New Jersey provided a great example in the late 1980's and early 1990's with their auto coverage mandates. By the time the legislature there was done imposing restrictions on what could and couldn't be covered, and charged extra for, most of the big insurance companies just pulled out of the state.

That of course is the utopian vision of the left. Get rid of the private insurance companies, and just let the government handle health care all together. Seriously, considering how well they've done with Medicare and Medicaid why would anyone doubt their abilities to handle it for the rest of us, right?

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Short Honeymoon

Most President-elects get at least a few weeks in office before they get called out by the media. The AP, at least, has only given Barack Obama a few weeks after his election.

"President-elect promised change, picking insiders" is the top AP news story on the wire this morning. While a lot of folks on the right grumbled about Rahm Emanuel as his Chief of Staff, we probably thought, secretly, that it was a good choice if Obama was going to bring a lot of new blood into the Neophyte House with him.

Instead, his cabinet choices are starting to look like a who's who of Beltway insiders. Hillary Clinton for Secretary of State, Colin Powell (possibly) for Secretary of Education, Tom Daschle as Health and Human Services, and Eric Holder (a good choice, though) as Attorney General.

Many folks will brush off the critism, and compare his cabinet choices to those of George Bush who brought back half of his father and Ronald Reagan's old cabinets. The difference is Bush didn't claim he was going to change the way we do business in Washington, just the tone. His misjudgement was that the Democrats wanted a new tone.

The irony of it is that while many of his friends in Congress are working on the bail-out ideas for the Big 3 they are claiming that without a wholesale change in leadership at those entities it's going to be impossible to make them work right. Barack Obama claimed the same thing about Washington, but is bringing back the same old folks to DC who've help keep it screwed up for the last 2 decades.

So far the only "outside" name to come up as a possible Cabinet member is Penny Pritzker for Secretary of Commerce. Her claim to fame is running Obama's fund raising efforts, and being an heir to the Hyatt Hotels brand. Well, that and running Superior Bank, which lead the way in turning subprime loans into marketable securities. That bank failed with Pritzker and her family at the helm.

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Wednesday, November 19, 2008

Walk Into The Light

Hey, Big Three, see that bright light. It's not the one at the end of the tunnel, it's the one at the end of your business as usual attitude, since it looks like Congress isn't going to pass a bailout for you before the end of this session.

If, as the CEO of GM claims, his company is going to run out of money by the end of December, I see a bankruptcy judge in his future.

Mitt Romney has a great piece in today's NY Times about what should happen in Detroit, and why. Basically, file for bankruptcy, and then rebuild the business model from the ground up.

I listened to Senator Russ Feingold on the radio this morning talking about that being the "death of car making in the US". That's of course patently false; Toyota, Honda, BMW, and Hyundai employ well over 100,000 workers building cars in the US. And, the court isn't going to shut down the Big 3, as their CEO's would like you to believe.

3 Million people aren't going to immediately be out of work, unless the CEO's decide that liquidation is the route they should take.

So, how can the (formerly) Big 3 declare bankruptcy, and still have folks buy their cars, which they say is impossible? Easy, explain it to the people. Take off the advertisments for your vehicles for a few days, and instead, advertise what the company is doing, and why.

Assure consumers that Chapter 11 isn't the end of your companies, but the beginning of a new era for them. An era where instead of losing between $600 and $1200 per vehicle produced, you actually turn a profit.

Assure them that while there may be less dealers (at least 1/3 less is what GM needs), they will still get warranty work done, and be able to find parts for their cars.

Dan Hesse from Sprint has been trying for months to show you guys how to get on TV and let consumers know what you offer, talk to him for some advice.

Yes, it will cause pain, for both current employees, some who will have to lose their jobs, and retirees. But that pain is much less than what they'll feel if Congress just tosses a lifeline, that will run out in mere months.

GM's own CEO says the company is burning through $5 billion a month, and may be broke before January. Giving him the 10-12 billion of the bailout money he wants means that unless something major is done about their costs RIGHT NOW, they'll still be broke by the end of March, and going to DC with his hat in hand again, looking for money to make it to the new model year.

A quick word for Congress, too. The Volt isn't going to save GM. To be sold at a price consumers will pay it will probably lose more money per car than anything any car company has ever produced. Yes, it might get people into the show room, and thinking about a Cobalt or Malibu, but one of them barely turns a profit, the other loses money every time one is sold.

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Saturday, November 15, 2008

Save Our Jobs, But Don't Ask Us to Help!

You gotta love unions. The UAW has said that while they want a goverment bailout of the auto industry, Congress and the car makers shouldn't look to them for any more concessions.

Ron Gettelfinger, head of the UAW claims that "labor costs now make up 8 percent to 10 percent of the cost of a vehicle". That might be true, if all you look at is direct labor costs such as wages. However, when you look at the included health care costs of current and retired workers, pension costs, etc, the US auto industry still spends more money on workers; active and retired; than it does on steel.

Congress of course is in a tizzy over the bailout. They of course want to help their union buddies with money from the financial bailout. But the Treasury won't do it, claiming the money is for a "financial sector bailout", like the law they passed says.

One of the things the car makers (and President Bush) want to do is use the $25 billion they've already been given towards operating costs instead of green technology investments. Congress would probably agree to this, except it has the Democrats environmental allies in a tizzy, wanting more green cars, not caring that they aren't profitable.

Congress could make a common sense concession toward the industry, and kill the "two fleet" CAFE rule, which treats North American made cars and imported cars as two separate lines. That would immediately allow Chevy to count it's high mileage Aveo as part of it's fleet, and lower the penalties it pays for the trucks and SUV's that actually make them money. They could then get rid of the money losing Cobalt, or move it's production somewhere that it would be a profitable car.

Wait, they can't do that, the UAW, who doesn't want to help, can't stomach the idea of the Korean and Japanese imports that the Big Three buy being counted in the fleet. It would mean they'd have competition in the company for their jobs.

Here's my idea, the heads of GM and Chrysler, the two automakers most likely to fail soon, need to send Nancy Pelosi and Harry Reid a note. "Drop the two fleet rule, or we file for reorganization, and dump all of our retirees into Medi-Care and the Pension Guarantee fund".

While Congress may think the $50 billion the automakers want is expensive, it's nothing compared to the costs they'll incur if GM decides to file and rip up it's retiree benefits package.

And while the UAW may think that their current posture is best for current and former employees, they'll have to explain to them why they wouldn't work with the automakers to get through the crisis, and why the retirees don't have pensions anymore.

If I were a GM retiree, I'd be looking to some of the former US steel workers for advice on what to tell the union. They were all feed the same lines the UAW is using, and a good number of them lost their pensions.

I don't buy the union line that if any of the car makers file for bankrupcy no one will buy their cars. The airline industry already proved this to be untrue after 9/11 when all the major carriers had to reorganize. They emerged and stayed fairly profitable until fuel costs killed them this year. They proved that consumers are smart enough to know the difference between a liquidation sale and reorganization.

The truth is, the union doesn't want anyone to file because it will mean that their contracts end up under the scrutiny of a judge, who'll get to decide what's best for both parties. That would mean workers and retirees having to start paying some of the costs of their health care, and current workers under the old contracts picking up some more of their retirement costs.

They also lose their biggest bargaining chip, striking, under Chapter 11. The judge can decide if the company can hire permanent replacement workers to keep operating, instead of working under the mirade of state and federal labor laws; or the judge can just order them back to work (more likely), with the power to decertify the union if they don't obey.

Personally, I don't want to see the US car makers fail, even though I stopped buying their products years ago. I mentioned the Elantra above because I bought on in 2005 over a Chevy Malibu, which was about the same size that model year. To get a comparably equipped Chevy would have cost me about $5,000 more, with a lesser warranty.

What I'd like is to see a US auto industry, and UAW, that realize the 21st century is truly a global market place. It's going to take decent, well priced, fuel efficient cars for them to stay in business. The white collar end needs to design them, the blue collar end needs to realize that the cars have to be profitable, and a Congress that realizes some of it's rules are causing these problems.

35 years of eroding market share hasn't taught any of them anything. Maybe a big time failure of one of the (formerly) Big 3 will.

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Friday, November 07, 2008

Predictions For The Next Two Years

Here's a bold, against the grain prediction for the next 2 years. Barack Obama will NOT push the extreme liberal agenda many in Congress want, and supporters will demand.

Like it or not, and many on the left will be in the NOT category, Obama has a couple of problems with pushing the repressed liberal agenda through to law. It's another case of reality meeting rhetoric.

The first is the economy, stupid. He can't afford a bunch of new social spending when he's already looking at a TWO TRILLION dollar deficit for next year. That's a big number, but with the bailout, and another looming economic stimulus, and a Detroit Bailout there just isn't the money. He knows he can only raise taxes on so many, so far, and not finish killing the economy.

Second, history. In the last 32 years the Democrats have controlled both houses of congress, and 1600 Pennsylvania for a total of 6 years. They lost 2 of 3 in 1980, finally got them all back in 1992; and then lost the House in 1994, and the Senate a few years later. All of the losses are easily attributable to pushing to big a social agenda too fast and coming up with economically horrible game plans; 1994 being the best case in point of it.

If you look at the choice of John Podesta as transition coordinator; and probably senior cabinet member; and Rahm Emanuel as Chief of Staff Obama has grabbed a couple of Clinton advisers that not only know what was done right in those 8 years, but what was done wrong. They'll probably both work towards a somewhat moderate agenda until after the mid term elections. It's entirely possible they'll work on him, and congress, to push a close to centrist agenda until 2012, to ensure a second term and continuing majorities.

Third, it's still the economy, stupid. Some of the pet projects of Democrats are going to get held off on until the economy recovers. One of the surprises in the first 100 days will be that the union backed "card check" legislation won't get signed into law, it may not make it in the first two years.

Obama and his advisers are smart enough to know that increasing labor costs when the job pool is shrinking isn't a great idea. So it will be brought up to placate the union bosses who supported him. But then will die because of a GOP threatened filibuster in the Senate.

So what will liberals get to keep them happy? They'll see a reimportation bill pass, to allow buying drugs from Canada. They may even get some modest price controls on drug bought through medicare with a "negoiated price" on many popular drugs.

SCHIP will expand to higher income levels. It will be hard to demonize childrens health care when the unemployment rate is going up. The GOP may be able to push through a timeframe on the expansion though, or economic milestones that bring it back to the current level.

The Bush tax cuts that took 30 million off the tax rolls will get extended, and some of them will be allowed to expire, specifically say "Welcome Back!" to the death tax and marriage penalty. Capital gains may end up off the table for a while, but increasing withholding for Social Security, in some form, for incomes over $200,000 will probably happen.

Liberals will also get a "security agreement" with Iraq that will bring everyone home in a relatively short amount of time. They'll also claim any problems after they leave aren't their problem because of such an agreement. Anyone looking for a long term basing agreement such as we have with Kuwait and Bahrain will be sorely disappointed.

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House Cleaning

Well, as I mentioned the other day, some of the GOP leadership is being cleaned out in DC. While Roy Blount 'resigned' his leadership position in the House, one can only imagine that it wasn't a totally voluntary resignation.

The other side of the aisle is doing some expected house cleaning too. Joe Lieberman; no longer needed to keep a Democratic Majority in the Senate; is likely to be stripped of his committee chairmanship shortly.

Joe pissed off the left by supporting Iraq. They thought they were rid of him when they organized to defeat him in the primaries two years ago, but they weren't, he won the general election as an independent.

That was very uncomfortable for Democrats, since they had to have his vote in their caucus to get control of the Senate, but hated the idea that he was even there. So they gave him a committee chair to keep his vote on their side of the aisle.

Now of course, it's different. The Democrats don't need him for anything, and of course, he supported John McCain for President, not Barack Obama. So, off to the scrap heap he goes in Harry Reid's new Senate.

Joe has been offered a spot in the GOP Caucus, though I doubt he'll take it. Unfortunately, for him, he still believes in enough Democratic ideals that he'll probably still give them his vote, though be asked for no input.

Much like McCain, Joe hasn't figured out how politics work today. It's no longer a gentleman's game, where you do what's best for country. Party is first and foremost, especially to the Democrats. If the GOP played by the Democrat's rules folks like Chuck Hagel, Olympia Snowe, and John McCain would never have had big committee chairmanships.

This will play out again in the House, where the Blue Dog's that Nancy Pelosi mollified over the last few years are tossed onto small crappy committees with no power. The ultra liberals she prefers will ascend to more powerful positions now that she has a big enough majority to ignore the Blue Dogs.

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Wednesday, November 05, 2008

How Empty Is Your Life Today?

Reality Versus Rhetoric

Come January 20th, as the Democrats enjoy solid majorities in Congress and hold the White House for the first time in sixteen years, reality will set in for them. And they'll learn, once again, as the GOP earlier that reality is much tougher to deal with that rhetoric is to spout off.

The Wall St. Journal had a great piece yesterday about one of those realities, Guantanamo Bay, following up on a New York Times story that said closing Gitmo is going to be tougher than anyone wants to admit. The problems there are many, including the fact that about a quarter of the detainees have been cleared for release, but no country wants them.

Another issue there is going to be what to do with those who really do need to be detained, and as the Times pointed out, really are dangerous people. Deciding to try them here in civilian courts, and if found not guilty, releasing them, will bring more problems. My guess is that the Hyde Park crowd won't be begging for a halfway house for terrorist detainees awaiting repatriation.

Another issue, where rhetoric is going to get overrun by reality is the budget. With Congress already on a bailout spending spree, and talking of another economic stimulus check for everyone, money will run short. As much as the rhetoric over the last 8 years has said that entitlements need to expand, there isn't anyway to pay for it without huge new deficits.

While you can talk a lot about raising taxes on the upper 5% (which is 150,000/yr); or folks making over $250,000 a year; there isn't enough money there to pay for everything Democrats have been talking about. So either they get to scale back their plans, or go back on the tax promise.

Keep in mind that much of their new tax income is from "voluntary taxes" like capital gains. Raising that rate has always resulted in less income from it, not more, because those who pay it just hold onto more assets instead of selling them and paying the higher rate.

Iraq will be another place where reality will meet rhetoric in probably the harshest way. President Elect Obama has already slid back from his 16 months and out pledge, and may have to slide back even further.

Reality on the ground, not just in Iraq but the rest of the region is going to be a slap in his face that he probably doesn't want. While there is a lot of talk of wanting a less arrogant America in the region, the leaders in most every country mean that in a "you stay here, but don't shoot anyone new" sort of way.

All one has to do is look back to 1984 to realize this. When the US pulled out of Lebannon Iran felt empowered to exercise more control over the Persian Gulf. The US ended up escorting tankers in and out of the region to provide stability for world oil prices and supplies. Anyone who believes that something similar won't happen after a full pull out from Iraq is fooling themselves. Anyone who believes that the other Arab states would welcome a big US withdraw from the region is delusional.

There is a reason we are still in Iraq two years after Democrats took control of Congress, there is still a reason Gitmo hasn't closed. While they've had George Bush as the scapegoat for those things those two years, suddenly he's going to be gone, and reality will meet rhetoric for Obama, Reid and Pelosi. If you want to know where my money is, we'll still be in Iraq at the next mid-term election, and Gitmo will still have some sort of purpose.

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Tuesday, November 04, 2008

GOP Minority Agenda

Here's a weird thought. The GOP will be in the minority, though I doubt a filibuster proof one in the Senate, come January, and a bigger one in the House.

The first order of business on their plate should be to ALLOW the Democrats, as soon as possible, to pass their new "fairness doctrine" bill. Why would I, a conservative, who knows that the whole idea is to kill talk radio want this to happen? Easy, an Obama president and Senate probably won't get to put anyone on the Supreme Court for the next year, and probably won't replace a conservative for 2 or 3 years. So, you get the law passed while you have a majority on the court who enjoy free speech, and then challenge it.

Once you get something tossed; and I think you would at the first lawsuit in the right district court; and challenged to the top, as with most court precedent, it's hard to overturn.

Secondly, the GOP, as a party, not just a few folks, need to eschew earmarks for the next two years. Not only not ask for them, but vote no on everyone of them, and publicize them. David Obey from Wisconsin was going to champion their reform for the Democrats. He has instead found more new and creative ways to hide them. The GOP needs to avoid them, and point out who's spending the money and where it's going.

Thirdly, they need to be the vocal, annoying minority that the Democrats were for a dozen years. They've wasted the last two years defending George Bush instead of pointing out the hypocrisy of what got the Democrats elected in 2006 and what they've actually done in Congress (nothing).

Finally, they need to clean house on the leadership side. McConnell, Bohner, and the whole crew need to be tossed down the stairs, and get new, young leadership in place.

One of the great things about the 24 hour news cycle, and our collective short memories is that by May of 2010, when races for the House and Senate start heating up, everything will be the new President and Congress's fault. The Democrats will have a hard time blaming a minority party, and President gone for 18 months for all that ails them in Congress.

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