Keep Your Friends Close, But...

The warrior saying is keep your friends close, but your enemies closer. Watching Barack Obama pick his cabinet, I think he's kept that in mind.

Call me a cynic if you must, but I think that part of the Obama strategy in picking his cabinet is to discredit the Clinton Era, since that's when most of their careers took off. I know where Obama is from, and how politics is played in his neighborhood. When you can't get rid of thorn in your side in Chicago's political world you bring that thorn TO your side. Then, as soon as the time is right, you find a reason to toss it, normally with enough innuendo to destroy the person.

When you look at his economic team, it's nearly all made up of Clinton leftovers. Most have some pretty decent credentials, and no less than "the most evil man on earth" Karl Rove has called the selections excellent. That alone should make those folks wonder what's next.

Simply put, we are in a 24 hours news world. People don't want to hear that we've been in a recession for a year, they want to know why it didn't end yesterday. When it doesn't end by June, Mr. Obama; who last week claimed it would be his vision those Clintonites would be working towards; will start letting on that his economic team has let him down, hasn't shared his vision, and led us astray. And he'll start firing them.

His foriegn policy team, though is where he really gets to make a killing. Keeping Robert Gates as Secretary of Defense has to be driving the netroots nuts. But is truly a good move. And when Gates starts disagreeing with ideas on Iraq and Afghanistan, he's easy to cut loose as a left over from the last administration.

Hillary Clinton though, is the big prize, and not nearly as smart as many thought she was. Secretary of State sounds like a dream job for her, but it will be her nightmare, you can quote me on that one. Her acceptance of this job will be the end of her political career. Unlike her husband she's not a "comeback kid". And when she's dropped like a hot potato, for what ever the reason, she's done. Once she resigns her Senate seat it won't be coming back soon. Her own party will get to fill it, so challenging for it won't be an easy option. Moving "down" to the House won't really be an option either.

Hillary is really the only person in the party with enough horsepower to challenge Obama should his term prove to be troublesome, or worse, Jimmy Carter like. But if he's got her strung up in the State Department, she can't really do much to challenge him. Better, if he comes up with a reason that she "screwed up the State Department" then he discredits her, and can get rid of her and any potential challenges.

Her better option would have been to respectfully decline the offer, behind closed doors and quietly, and pushed for John Kerry who also wanted the post. Then, from the Senate she could have pushed against agenda items she had problems with; cherry picked to be the most damaging to Obama; and in four years if things didn't look good for him, challenge, showing by her Senate actions how she'd have done things differently.

Those in the "rose colored glasses" crew will say that Obama has artfully picked a team with experience to help the inexperienced. And that is true; but they are also a group that he can just as easily say didn't alway share his vision, and are easier to get rid of.

There are some pretty safe folks he's named. Eric Holder, though he has baggage will probably stick around as AG for quite some time. While his involvement in some of Bill Clinton's pardons will come under scrutiny at his confirmation hearings, his body of work since the Reagan administration will get him confirmed.

Bill Richardson at Commerce will have no problems. Disregarding the fact that he was probably the most qualified of all the Democrats in the primaries, he doesn't pose a threat to Obama. In fact, his pick to be at Commerce and not State is strange, he's much more qualified for Hillary's upcoming job than she is. That's part of the reason I think she might be short for the post.

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Democrats And Secret Ballots

Ah the irony of the Democratic Party. As the Wall Street Journal has on it's editorial page today, and earlier reported on Politico.Com, the Obama team was seriously considering a secret ballot and abbreviated roll call vote at the convention last week. The reason? Clinton supporters were complaining of intimidation on the floor by Obama supporters looking for a unanimous proclamation of Barack.

Then it struck them. One of the key items in the party platform, and legislative agenda, is to eliminate secret ballots in the workplace when it comes to forming unions. The party, and unions, deny that any intimidation goes on with "card checking" for membership, and want the rules changed to take a way the ability for management to ask for a secret vote.

Evidently someone in the party realized that having such a vote on the convention floor, then running on a platform of denying it in the workplace would make a pretty easy target for the GOP.

The whole incident shows once again that the Democratic Party isn't working for whats best for the people, but what's in the interest of their own special interest bankrollers.

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Democrats on McCain

Who do Democrats seem to have a lot of respect for? If you watch his lastest ad, it's John McCain. Hillary's jab at the end is great.

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On the Democratic Nominee

William J. Bennett, who's been a member of both political parties, held cabinet level posts in the Reagan and H.W. Bush White Houses' and is now a political pundit, and author had this to say today in Nation Review Online's "The Corner":

My Old Party

This is an astounding moment in American politics. You cannot credibly say the Clintons are a political dynasty the way, say, the Kennedys or Bushs are. But I think one has to say the Clinton rule of the Democratic party has been dynastic. Bill Clinton is the only Democrat to have served two terms as president in two generations, the only Democrat to twice beat Republican nominees for president and his wife is a two term U.S. senator who will likely be in the Senate for years to come. Bill Clinton has been rated one of — if not THE — most popular person in the world, and yet Clinton rule in American politics ends tonight. Whatever it was the Republicans and so many independents did not like about the Clintons, we’ve learned the Democrats have had enough as well.

And thus the Democratic party is about to nominate a far left candidate in the tradition of George McGovern, albeit without McGovern’s military and political record. The Democratic party is about to nominate a far-left candidate in the tradition of Michael Dukakis, albeit without Dukakis’s executive experience as governor. The Democratic party is about to nominate a far left candidate in the tradition of John Kerry, albeit without Kerry’s record of years of service in the Senate. The Democratic party is about to nominate an unvetted candidate in the tradition of Jimmy Carter, albeit without Jimmy Carter’s religious integrity as he spoke about it in 1976. Questions about all these attributes (from foreign policy expertise to executive experience to senatorial experience to judgment about foreign leaders to the instructors he has had in his cultural values) surround Barack Obama. And the Democratic party has chosen him.

Most of the main reasons for Hillary staying in this race this long are listed there by Bennett. Like it or not, (and many of his supporters don't) Barack Obama is probably the least vetted candidate for President either party has tossed out there since Carter.

For those not from Illinois, who think that Obama took the state by storm when he won his Senate race a few years ago, the truth is he was getting kicked like a lame dog until the Chicago Tribune and a few others rescued him, twice.

In the primaries in 2004 he was all but sure to lose, until the papers and a few other folks started filing tons of court requests to unseal Blair Hull's divorce record. Messy divorce, and Hull is out of the primary.

Jump to the general election, when, again, Obama was getting ready to go down to a guy with a real story of helping in the inner city. A millionaire trader and partner at Goldman Sach's, who quit trading and started teaching high school. Again, the Tribune and others got Jack Ryan's divorce (From uber-hottie Jeri Ryan) unsealed, and it seems Jack had some skeletons. And BOOM! You get Obama as a Senator.

Thomas Sowell, also writing at NRO, urges voters to get past the election year rhetoric of Barack Obama, and look at his actual legislative record. Again, his handlers will tell you things like "he didn't read the questionaire", or "you're misinterpretting what he meant", to get around the fact that he has the most liberal record in the Senate.

Sowell is correct, you have to look at the record as a whole, not the promises made in an election year. I've urged people for years to get rid of the one issue mentality, and to get away from buying politicians from used car salesmen. Yet, you discover while reading what people write in defense of Obama and his record, that many people are driving used cars. In fact, it seems the entire leadership of the Democratic Party is happy as hell with that 81 Cutlass they got for a steal.

Finally, over at "The Page" Mark Halperin writes about What Obama and Clinton underestimate
and points out a number of things that he doesn't feel Obama is ready for. The main one's being how unready Obama is for the media focus he will get, and how ready the GOP is to help sharpen that focus.

While many in Democratic circles have fretted over the long, drawn out primary season, the truth is, it will be nothing compared to what happens in the next five months. While there were a few unladylike outbursts from Hillary, the truth is Obama's record will now get the vetting she refused to give it, but warned was coming.

While Hillary stayed off the Tony Rezko and Bill Ayers connetions (for the most part) the GOP won't. Expect to see ads about Obama's connection to unrepentent domestic terrorists, convicted (soon) political sleeze, and racist ministers of multiple colors and faiths regularly for the next few months.

Hillary didn't bring up Obama's views on partial birth abortion (doesn't see the problem), gun laws (we shouldn't have guns, then we wouldn't need laws), taxes, Iran, etc. The GOP, McCain, and their surrogates will, loudly.

One of the things that general elections do that primaries don't, since you generally don't trash your own party too badly in them, is focus on what you've done. McCain has a long list he can point to, and even use to move across party lines. Yes, some of it has angered Republicans, but the truth is, he can say he's always done what he thought was best. Not always a trait you find in politicians.

Obama, on the other hand, has a thin record at best, and little of it appeals to anyone who considers themselves a centerist, or slightly right leaning person. While "Hope and Change" sound great, so would an answer to the question "What have you done in the Senate?".

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Obama Jumps Church

So, Senator and Presidential wannabe Barack Obama has decided to leave the Trinity United Church of Christ. He's clarified remarks about it, and decided it wasn't "a political manuever". Sure, and the 465 foot shot Russel Branyan hit in Milwaukee last night wasn't a home run.

Over at the Chicago Tribune, The Seeker blog asked the question "What do you think? Can a political figure join a congregation without putting it and its spiritual leader under the microscope?"

The answer of course, is yes. It happens all the time. In fact, Dick Cheney, one of the most despised politicians in the country goes to church regularly, can anyone name his pastor? How about George Bush's? Hillary Clinton?

The problem with "The Seeker" question was that it should have been "Can Obama pick a pastor that won't put himself under the microscope." Keep in mind, Oprah Winfrey left that church years ago because of Rev. Wright. So it's not like he just recently went off the deep end.

The Swamp has more insight from Obama on his decision, but the more he talks, the more it appears that he made a calculated political decision. While he says that he doesn't want the church coming under more scrutiny because of his candidacy, I think that the opposite is true, he's tiring of the scrutiny he's receiving for his choice in associates.

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The Problem of Identity Politics

One of the biggest problems with the big tent of the Democratic party is that everyone wants what's best for their group. This year, they have battling groups, women and minorities.

This lady wasn't too happy with the fact that the party big wigs decided that Michigan and Florida will only get 1/2 of their delegations seated. She was unhappier that the rules committee tossed her (and many others) out of the room.




When you play identity politics, as the Democrats have for decades, you can't help but run into problems when the identities clash. Truthfully, this should have been banner year for the Democrats, hoisting the identity of the first black nominee with a chance onto their mantle. The problem is that eight months ago the party thought it would be a banner year when they did that with the first serious female nominee.

Now the women are pissed off at the black guy, the black guys are pissed off at the woman, and the party of unity is a fractured group of individuals, pissed that their identity isn't the one being recognized.

Here's an idea for their party to try in 2012, run on ideas, not identities, and see if it works out better.

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Today's Funny Politics

I got some good laughs, politically, today. The first was listening to Rush Limbaugh nearly in tears declaring the end of the GOP. If, by the "death of the GOP" Rush means lockstep dittoheads who do his bidding, and only his bidding, I hope he's right. It would be the best thing for the GOP.

If he means the "Reagan GOP", that died years ago. That caused the other part of my laughing at Rush. He whined about the loss of Dennis Hastert's Illinois congressional seat to the Democrats. The thing was, Hastert was one of the leaders of the death of the conservative end of the GOP. Dennis, while out of power, talked of fiscal restraint and smaller government. When the GOP got control of the House (and appropriating money) he was one of the fattest pigs at the trough. He never found an earmark he wouldn't toss into a bill.

He could stand to be reminded that under Reagan, who did get tax cuts pushed through, just like with George Bush's time in office spending went up. It took Gramm Rudman and Gramm Rudman Hollings to get spending under control.

If Rush means the GOP that holds it's breath and stomps it's feet when it doesn't get exactly what it wants in Congress, I hope that one is dead. Just like I hope the Pelosi-Reid Democratic party dies. All or nothing politics, which is what it sounded like Rush was lamenting the loss of has done NOTHING good for the country. If that brand of politics goes away we are all better off.
Rush should keep in mind that St. Ronald was not only the great communicator, but the great negotiator, and was able to move things in goverment not by an iron fist but through shrewd give and take since he never controlled both houses of Congress.

The second big round of political laughs today was a two parter with Barack Obama as the star.

After Hillary crushed Obama yesterday in West Virginia I'm sure John Edwards phone started ringing off the hook with DNC big wigs telling him to endorse Obama NOW!!!! That happened this afternoon.

The party wants, desparately, for Hillary to go away, and quit pointing out that Obama can't win white working class votes, no matter how hard he tries. Somehow a millionaire trial lawyer is supposed to make a millionaire latte liberal look like the new champion of the working guy.

Dick Morris does a good job of pointing out why that group isn't voting for Obama, and why many of them still won't when Hillary is out of the race. Sorry Barack, getting the endorsement of Edwards, who didn't even last to Super Tuesday, won't help you much.

For the record, Senator Obama, your "bitter" remarks, your reverend, and your wife have permanently turned them off. Even your new lapel pin won't help much. Now wearing the flag looks like you are pandering to the folks who called you on it months ago.

The second laugh is Obama campaigning in Michigan. I'm sure that while he was stumping there today, he didn't mention that it was his campaign that kept them from having a new primary where their votes would count. He couldn't, it would have been another example of how the working class whites won't support him.

I'm sure that he didn't mention that at the end of the month, when the rules committee of the DNC meets, his folks are going to fight to keep Michigan and Florida's delegations out of the convention. If those get counted, he no longer gets to claim he won the popular vote.

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Spin Cycle

The spin cycle has gotten running so fast on the elections that I think I'm stuck in my washing machine. If you don't believe it, go to the Washington Post editorial page, where there are five by-line columns devoted to the idea of the campaign, four of them on the fate of Hillary Clinton.

Depending on your angle, Hillary has to drop out to save the party, should stay in to save the party, should fly to the moon to save the party.

Harold Meyerson over at the WaPo has written the liberal view on what a lot of conservatives have been saying about the final outcome of the Democrat's process in "Titans On The Mat".

That view is that Clinton can't win without destroying the party. A victory by her will assure that the black vote stays home, or shows in a dwindling number come november. The youth vote that Obama has gained would walk too, and then of course, Hillary would be crushed by McCain.

The problem with that is if Hillary doesn't get the nomination, then you have the Florida and Michigan voters who will (rightfully) be able to say that Obama didn't want them counted. Make no mistakes about it, quotes from Obama and his crew that killed any possibility of a revote in those states back in March and April, and having them count will pop up in October.

This hasn't been discussed much since April when Obama killed the "do over" vote plans in both states, and now acts as if they don't exist.

The other group that will probably bail on Obama in fair numbers is the white working class. Especially those in the upper middle class who will be reminded (ad naseum) of his tax plans that will crunch that group hard. He hasn't done well with them in any state, and it's hard to believe a scenario where suddenly they find him the savior. In fact many of them might be a little "bitter" about him.

Finally, and I think this group is ignored way to often by the media and politicians, the older vote. Hillary Clinton has carried the AARP vote in every primary. Many of them will see in McCain a guy their age, or slightly older, with more experience, who can talk to them.

And while the Democrats love to rage about the youth vote, the AARP group is voting in much bigger numbers in every primary. When you break down the demographics, it's a much more important block of voters than the unreliable youth, who may well lose interest by November if a good PS3 games comes out.

It's going to be an interesting time, the next few weeks, as Hillary tries to hang on, and I think eventually realizes she can't. But she will try, and may well alienate more voters in the process, creating a bigger chasm in the Democratic Party in the process.

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It's Going to Go Nuclear

Looks like today's primary results won't result in Hillary Clinton leaving the race. While she's only winning Indiana by 5-6%, she "only" lost North Carolina by about 14%, or 10% better than she'd been polling there a few weeks ago.

I think the party leaders will be screaming before next weeks primary in West Virginia for Clinton to drop out. They've been asking kind of nicely up until now; but she'll probably win that in a landslide, and Kentucky on the 20th; and they don't want her to reload the "I'm more electable" cannon and start shooting it off. Considering she's moved up in most polls by 5-10 points in Oregon, and could make that a close race, the leaders want her out.

The more I think about it, the more I think that there is going to be a nuclear war in the Democratic Party, with Clinton lobbing the missiles. And, while I dislike both of them, she's got not only a right to do it, but a point.

The "Electability Arguement", whether Obama supporters like it or not, is a valid one. And, again whether they like it or not, he hasn't done well in any large state that Democrats "have" to win to take the White House except Illinois, which isn't a surprise. When it comes to swing states, he's hasn't done particularly well and doesn't poll well against McCain.

Expect to start hearing from Hillary's folks about electability, and the popular vote, with Florida and Michigan counted, since with those votes she's ahead in the popular vote. In fact, expect her to fully channel Al Gore's 2000 mantra of "every vote must count" on a regular basis for the next week or so, fighting to get the delegates from those states seated.

One other bomb waiting to be dropped on Obama before June is the Tony Rezko verdict. That case rested yesterday, with closing arguements next week and then to the jury. If there is a conviction, expect Clinton's folks to quietly remind Superdelegates that the "GOP Attack Machine"® will have commericals up faster than you can say Swift Boat to remind folks that Obama is a good friend of Mr. Rezko.

I'd like to say I feel sorry for the Democrats for having this long drawn out primary, but I don't. As I've said before, they've brought this on themselves by insisting that everything be "fair" and now it's biting them in the ass.

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Run Boy Run

You know that catch line, "Run Boy Run Boy Run Boy Run", it comes from the latest Kia commercial. It could just as easily come from the latest Barack Obama press interviews.

A month ago he said that he could no more disown his Reverend, Jeremiah Wright than he could the black community or his grandmother. This week Wright said those were the comments of "a politician". Now, the politician has decided that he can disown Wright, and is running as fast as he can, as far away from him as he can.

Obama's Wright problem got worse, and worse, and worse this weekend and Monday, as the "snippets" Obama claimed were used out of context were put into context, publicly, by Wright himself. It turns out that those "snippets" weren't out of context things pieced together to make the man look like a demagogue, they were his true feelings.

Suddenly Obama's Wright problem is two fold. The minister himself, obviously, and Obama's own speech in Philadelphia, where he defended him. To believe the minister would mean that Obama probably knew the man's feelings, after a 20 year association. To believe Obama's speech you have to believe that a man who wants to be President is completely tone deaf to his ministers rantings. Either one of those ends up meaning that Obama probably isn't the guy most folks want running the country.

Charlie Sykes put up a great list of links to both conservative and liberal reaction to Wright's recent appearances. The consensus seems to be that Wright may have damaged Barack beyond repair. The liberal defenders are starting to wonder out loud how Obama could NOT have known how Wright feels, and the conservatives are just too busy laughing about the whole thing to say much of anything.

If any of the list of liberals, or liberal leaning columnists like Dana Milbank, Eugene Robinson, Susan Estrich or Joe Klein had singly written columns announcing the downfall of Obama it would be one thing. When all of them do, then you know that the wheels are coming off the bus.

For the folks out there who think this can still pass, and Obama will win in November, all I can say is 527. There are going to be tons of 527 groups showing up, and tossing up photos of Obama and Wright together, and Wright's comments will be heard over every picture. They'll play every day from nomination to election, on every TV station in America, most radio, and be in print ads.

Add to that Obama's own foot shooting moments of late, especially "bittergate" and what you'll find is that he's so damaged he can't win. His core supporters may stick around, but that group isn't big enough to win the popular vote in the Democratic primaries, much less a general election.

Howard Dean said recently that the candidates will know when it's time for one of them to bow out of the race. It's possible that the one of them will be Obama, and it may be sooner than folks think. If he can't win North Carolina in two weeks by more than 10 points, and loses Indiana, Hillary will have more ammunition for her cannon shots of "I'm more electable".

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Clueless

What does Hillary Rodham Clinton have in common with truck drivers? Cluelessness, that's what. Hillary has suggested that we take a "gas tax" break from Memorial Day to Labor Day (good idea) which would save drivers 18 cents a gallon at the pump.

However; and this is where she's clueless; she would like to make up that money with a "windfall profits tax" on oil companies. Now, I'm no business genius, but I know that taxes are a cost on business, and to make up profits, they pass costs on to consumers. So just how much will my gas price go down if I only replace one tax with another?

Then there are the truck drivers who are rallying in DC today complaining (rightfully) about high prices. The problem is that the folks in DC can't do much, short term, to lower them. They've been missing long term chances since the mid-90's by not doing anything to ease the litigation burden on oil companies that want to increase their refining capacity, or opening any new areas to oil exploration.

The truckers would like to see an end to the export of oil from Alaska. They are clueless on this. You see, we don't have the refining capacity on the west coast to handle that oil, and the shipping costs of sending it to the Gulf Coast is prohibitive, and would raise, not lower the price of gas. To ship from Alaska to Mississippi, Louisiana and Texas would require either small enough tankers to get through the Panama Canal, or trips around South America. Small tankers are inefficient and the trip around South America is a long one. The oil companies actually keep their (and your) cost down by selling what can't be refined on the west coast on the world market.

They'd like to see the national petrolum reserve opened up, which would give a brief respite from prices, but not huge. Most of our refineries are working at capacity right now, so you wouldn't be able to do much with that oil, except sell it on the world market to lower prices. No guarantee it would come here, and odds are it would end up in China and India. Both of which have excess refining capacity.

Truckers, for some reason, think that by revoking some of the exploration tax breaks that oil companies are given will somehow reduce the price of oil. Again, I'll go back to Business 101, if you increase the cost of business (exploration in this case) those costs will be sent back to the consumer.

You'd think truckers would get most of that, many of them have been raising the rate per mile they charge to haul cargo due to higher costs. Evidently they think that theirs is the only business that has to make up for higher costs somehow.

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Why The Frustration?

Yesterday I read a lot of blog and newspaper entries on the Democratic debate from last week. The biggest sense from all of them was frustration. While on the surface it seemed to be aimed at the questions and questioners, below the surface it is more likely aimed at the process that brought about this debate.

One of the more common lines was that McCain wasn't going to face such a debate between now and the convention. There wouldn't be a Gibson to ask him about his famous temper, since he doesn't have to do any more debating.

But that's not because he was the only candidate. Hell, six months ago John McCain was consider a DOA candidate. But the GOP primary system allowed him to sew up the nomination early, and concentrate on the broad picture. The Democrats, on the other hand, have developed a "fair" primary system, that has tied their party in knots. Today won't help, Hillary will win the primary in another big, "must win" state, and still not be the leader in delegates. More doubt may creep in about Obama's electability.

The Democrats came up with a system that worked great in basically from 1972 to 2004. The party generally got behind one person quick enough to have a "presumptive nominee" fairly early, and they could do the big picture campaigning in spring and summer. But none of those years had two really good candidates in the party view. This time around the flaw of their convoluted system is showing. Because the system does everything proportionally (read fairly) and the candidates are evenly matched, the campaigning against each other can't stop until Denver. In Denver it could be an ugly, 1968 style floor fight. Talks of a brokered convention with an outsider as the nominee are still floating around out there.

Now, out of fairness, every state left wants a debate, because the other one's had one. The problem is, that the policy stuff has been rehashed 21 times already on a stage. So the questions start getting to character, associations, etc. Those questions are uncomfortable to the candidates, and by reading the opinions on the web, more so to their supporters. People probably need to know more about candidates slips of memory, friends like Hsu and Rezko, and Wright and Ayers. The problem is the folks who've already committed to a horse in the race don't want to hear about that horses problems anymore. They want to reiterate why they can win, not expose the flaws they have.

When the Clinton and Obama partisans are complaining about the debate, they are really complaining about the system that brought them the debate. Maybe after this year they'll decided that they need to reform it. If they lose in November you can bet that the 2012 primary season will be run differently, if they win it still should be. The beast that is "fairness" will cause the problems in the future again.

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Charlie Gibson, Agent of the GOP?

(Long, boring economic post. Read it, you might learn something.)

The one thing you couldn't miss since last week was the furor over the debate on ABC. To read liberal blogs you'd think Charlie Gibson and George Stephanopulos are probably McCain staffers working under deep cover for ABC.

To the liberals defense, they probably did spend a little too much of the debate on the "gotcha" stuff that's been running around the news lately on Bosnia, Rev. Wright, etc. While they shouldn't have ignored the subjects, they could have cut that part short.

The second biggest uproar, though is over the question, and follow up, to Obama on capital gains taxes. EJ Dionne over at the Washington Post said Gibson "sounded like a lobbyist for tax cuts for the wealthy".

For those who don't know, you can download all of the IRS tax data and look at the numbers yourself. What you find is that not only with capital gains, but income taxes, the lower rates generate more, not less income, generally after a 1 year drop off.

Obama's answer that he wants to raise rates so hedge fund managers pay more is a joke. Kind of like the Alternative Minimum Tax of the 60's, used to catch 14 millionaires then, that 20 million paid this year, Obama's tax hike would hit 100 million tax payers, 50% of whom made less than 75K last year. That's only the direct hit. Not bad, to get a few thousand managers to pay more taxes we hike them on 100 million others.

The truth is, that the tax hike hits more than 100 million. If you have a 401(k), IRA, etc, you will pay it also, just not directly. This is what confuses the folks defending the tax hike. Capital Gains don't show up as a tax on those, you pay standard income tax rates on your withdrawls.

But someone does pays capital gains on the investments in those accounts. The funds companies pay that rate. That means that you, the holder of an IRA get less money as a return on investment and pay a higher service fee on the account to pay those taxes. Loaded mutual funds will see higher loads and lower returns for the same reason. But since they are "hidden taxes" some folks claim you don't pay them.

The other arguement on capital gains is that it reduces available investment income. Those hedge funds and venture capital funds, which are used to start up businesses, suffer under higher rates. That tightens money supplies (which is already a problem) for folks trying to start or expand a business.

Gerald Jackson wrote a great piece about how the Laffer Curve works last September. The Laffer Curve says that lower tax rates increase tax receipts due to the availability of income to invest. It's been a counter intuitive piece of fact for Democrats since JFK died. Kennedy cut tax rates to increase productivity and the economy, it worked. But since then the left has decided that imperical evidence be damned, higher taxes are needed.

Jackson applied it specifically to capital gains, and the availibility of capital to start businesses. When the rates gone down our economy expands, when it goes up, that expansion slows, or stops.

The reason is simple, but again counter-intuitive to those who refuse to believe data. You see, capitalists don't take their earnings and stuff them in a mattress so they can roll around in it late at night. When an investors make money they generally re-invest it into something else, to make more money.

Higher capital gains rates make less money available in two ways. The obvious is the extra money going to the government, not being reinvested. The less obvious, but proven true, is that the number of transactions that incur capital gains taxes goes down as the rates go up. Investors don't sell as many stocks to realize the gain with higher rates. Since the higher rate causes the rate of return to fall, they end up holding stocks longer, and therefore don't have "reinvestment" capital available as often. This prevents folks who need that capital to start or expand a business to have a more difficult time finding it. That affects you if you need a job, or want to go into business yourself.

For those who had fits about Gibson's return to the original question, as EJ Dionne did, get over it. He did what a moderator should do, he called BS on the answer. If more moderators would do it, and ask for answers tied to facts, not sound bites, we might all learn a little more about our politicians.

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Not So Saintly

St. Barack has put his foot in it, yet again, with his comments that folks in Pennsylvania cling to "god and guns" because of the states economy. While he was at it he should have said "rural Pennsylvania is why they call it a TOOTH brush".

Of course that line wasn't supposed to get out, it was at a media free fundraiser, and the conspiracy theorist figure it was a Clinton supporter who leaked what he said. Who cares, he said it.

The more he back tracks, and tries to apologize, the more Obama sounds like what I've been calling him for months, a politicians, not some new fangled "agent of change".

Part of Obama's reasoning is correct, people are frustrated when they live in areas for years, or decades, they've felt left behind. He's even partially correct that they should be frustrated with the government. The problem is his solution, more government, is the problem in many of those areas.

When you look at Michigan, Pennsylvania and other "rust belt" states that are facing many of the problems he mentioned the government solutions of tax something to pay for retraining, tax something to pay for new programs hasn't worked. Yet his idea is for more taxes to pay for a new program.

The reason Pennyslvania, Michigan, and Wisconsin don't attract more companies, more jobs, etc is that companies look at them as "tax hells". Why locate in a place with high corporate tax rates, crazy mandates on what business has to provide (Wisconsin's "gold plated" insurance requirements) and generally unfriendly attitudes when you can go to Texas, New Mexico, Iowa, and elsewhere and be greated as someone wanting to help, not as a new source of revenue.

Forbes put Pennsylvania in the bottom ten states to do business in it's 2006 "Best Places To Do Business" list. Every indicator they use to create the ranking system had Pennsylvania rated 29 or lower, save quality of life. However, that one is great for employees, but doesn't do much to attract employers when the rest of the deck is stacked against them.

Unfortunately, Obama can't lay the blame on Pennsylvania's problems where it belongs, with the state government. They are all democrats, and already mostly supporting Hillary Clinton. But the truth is, until the state decides to do something to make itself more attractive to businesses, there's going to be little Obama, Clinton, or John McCain can do to change the frustration of those left behind there. Though not making condescending remarks about them might help.

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Misleading Polls

So, I'm over at Yahoo, reading an article on Obama's softening support among Democrats, which isn't surprising, it's hard to remain in the 70% region forever. Later in the article, it notes that according to the NY Times/CBS Poll, both Obama and Hillary Clinton hold 5 percent leads over John McCain nationally. That sounded suspect to me, since Rassmussen and Zogby both have it the other way around.

Then, in the last paragraph, they explain it:

The nationwide telephone poll was taken March 28 through April 2, with 1,196 registered voters participating, including 510 Democratic primary voters and 323 Republican primary voters.

19% more of the participants in the poll are registered Democrats! Obama had a 47-42% lead over McCain from this poll, but 46% of the respondents were Democrats. That means if he got all of the Democrats polled to say they prefer him, then he only got 64 of the 363 non-aligned voters to say they'd vote for him. If 63% supported him (as they say earlier in the article), then he got about 50% of the non-aligned vote.

Regardless, having that big of a skew in the polled individuals is going to skew the results. Pollsters will tell you they "normalize" numbers to take out the inconsistancies, but a 20% difference is hard to normalize, or justify.

Considering the Times and CBS ran the poll I guess my surprise should be at the fact they released the numbers on who they polled.

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Howard Dean Endorses McCain?

Okay, the title is a little misleading, but I was lead to this 2004 quote by Howard Dean when he endorsed John Kerry for President:

(From the Washington Post)Dean added, "The real issue is this: Who would you rather have in charge of the defense of the United States of America, a group of people who never served a day overseas in their life, or a guy who served his country honorably and has three Purple Hearts and a Silver Star on the battlefields of Vietnam?"

Jack Tapper, at ABC was nice enough to post that quote on his Political Punch blog, and ask the question, will that and other quotes Dean (and presumably other Democrats) made to bolster Kerry in 2004 be used to hurt Clinton or Obama in 2008? He also noted McCain's awards, the Silver Star, the Legion of Merit, two Bronze Star Medals, a Purple Heart and the Distinguished Flying Cross.

I'm sure Dean cringes when that quote is brought up, and will probably have to duck and run for cover over other 2004 quotes between now and November. He, and much of his party which used John Kerry's military service to try and bolster their stance that he was the best to defend the country now have to figure out how to downplay that same service by McCain.

My guess is Hillary's dodging bullets in Bosnia won't quite qualify for a Dean endorsement.

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Change That Tune!

Today's newest game is evidently "Change That Tune". If you claim that you dodged sniper fire one week, and everyone else their denies it happened, Change That Tune, and claim you were speaking in generalities, and your memory was fogged, since it was a dozen years ago.

If you give a speech saying you'll stand by your pastor, but not his words, and folks start jumping from you ship, Change That Tune! What, you don't get this one?

Evidently on tomorrow's installment of "The View" Barack Obama will say that if Rev. Jeremiah Wright hadn't decided to retire he'd have left the Trinity United Church of Christ. But wait, a week ago he wasn't leaving, he couldn't, he was married there, his children baptized there. It would have been like ripping a piece of the family away.

While people had been willing to ignore his legislative record as the most liberal member of the Senate, and consider him the great hope for uniting the country, they evidently won't forgive him for his association with Rev. Wright. Now that he's figuring that out, in full politician mode, he's changing his tune (for the third time) on what he'd have done about the minister.

(This song is paraphrased, I don't have the exact lyrics in front of me)
Stanza 1. (Sunday Talk Shows)
If I had heard any such sermon from Reverend Wright, I'd have confronted him about it.

Stanza 2. (The Great Speech of 2008)
Yes, I heard some things that I strongly disagreed with. But I could no more abandon the Reverend than I could a family member.

Stanza 3 (tomorrows View)
I'd have left if he hadn't decided to retire.

Months ago I said that once the sheen started wearing off folks would realize that "St. Barack" isn't the next messiah, but a politician. It looks like that's starting to sink in. The Democrats are realizing that they have Hillary "Harding" Clinton in one corner, and "The Great Unknown" in the other, and are starting to get nervous.

Tennessee Governor Phil Bredesen is calling for a neutral site meeting of the party Super Delegates in June to "assess the situation" and see if they can't come to a consensus over who the nominee should be. He wants it to be public, and on the record. Good luck with that part, most of them don't want to be know as the backstabbers who killed a candidacy before the convention.

Unfortunately for the Democrats Bredesen's idea probably won't fly, and we'll have a fight through the summer until their convention, turning off more potential voters as the mud continues to fly. And John McCain will get to sit back, laugh, and let his opponent fight their own party.

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Choosing Friends, and Pastors

Mary Mitchell at the Sun Times is indignant over Hillary Clinton's mentioning of Rev. Jeremiah Wright with the Pittsburgh Tribune-Review editorial board. I'll give Mitchell the point for Clinton wanting to change the subject from her Bosnia lie. She also gets a scores one for pointing out that some politicians depend on voters being idiots to get elected.

However, Hillary's comment on Wright was correct, you can't chose family, but you can chose friends, associates, and pastors.

Mitchell, like many in the media, seems to be disconnected from "the average joe" on the Wright issue. While many of us are wondering how you'd sit through 20 years that had to include more than a few such sermons and not be wondering if the preacher was off his rocker, Mitchell is wondering why were aren't all just happy St. Barack talked.

I've left a couple of different churches over issues of management and direction. It's not hard to find a new one if you look. In Chicago Obama could have picked from hundreds of black parishes to find spiritual guidance. Instead, he chose one that apparently chose to mix some very unchristian thoughts with it's Sunday sermon.

While Mitchell paints Clinton as someone who needs dumb voters to move off the Bosnia problem and go back to Wright. The problem with that theory is Obama counts on the same dumb voters to believe that he was oblivious to his spiritual mentor's radical leanings for 20 years. Maybe we could rename the candidates Dumb and Dumber, or the folks defending both of them.

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Going Tonya Harding

I caught a piece on the morning show that I listen to that sent me over to ABC to find out what's going on with the Democrats.

Jack Tapper has a piece up on Political Punch that says DNC insiders are starting to whisper that the Clinton's are finding that throwing everything, including the kitchen sink at Barack Obama isn't getting them where they want to be, nominated. Therefore, according to Tapper's unnamed source, they are looking at the "Tonya Harding Option". In other words, whacking him in the knees so hard he can't compete.

Evidently, Hillary still wants to be the nominee, though her chances are small. To that end, her folks are supposedly looking for enough dirt to make Obama toxic come November.

Good Morning America's home page has a big piece up (also written by Tapper) on how other Democrats are worried about such a scenario. They are starting to see McCain's numbers rise, and the bad blood boil into crossover votes for him from the loser of such a fight. Gallup's polls* show that if Obama got the nomination 28% of Clinton supporters say they'd vote McCain, and 19% of Obama supporters would do the same if Hillary is nominated.

Those are the types of numbers that can't be ignored. No matter what percentage of independents or undecideds you get, losing 10-15% of the party base would be the death blow to the Democrats chances in November.

One outcome of such a fight could end up being a brokered convention, where Florida Congressman Tim Mahoney has suggested Al Gore could be put on the top of the ticket with the survivor of the Clinton Obama melee as the second.

While many see Gore as the White Knight who, on his Prius Powered Horse, would save the party the truth is Gore is damaged goods already. Add to that McCain is a global warming believer, and shares many Democrat's views on things like Guantanamo and immigration you'd have taxes end up being the big issue of difference. Name the last "tax more people" candidate that won the election. Better, ask Walter Mondale how that position works.

If the Democrats want the White House back this fall, the two candidates need to start playing a little nicer. Their toxic stew of accusations and half truths is turning off their own party base, and the independents they need to get the keys to 1600 Pennsylvania.

*corrected to say Gallup instead of Rassmussen. there are too damn many pollsters out there

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Bottoming Out Too Soon?

The Dow was up 187 yesterday, mostly on news that (existing) home sales went up by 3% in February, and that JP Morgan Chase was looking to up it's Bear Stearns offer from $2 to $10 per share. That in turn lead to a rise in the dollar, and a fall in oil prices, all good things for the economy.

The Bear Stearns news was a psychological boost for investors. If JP Morgan was upping the offer to $10 per share to appease Stearns investors, there had to be an "on paper" reason for it. Let's call the reason sanity. When actual money driven accountants started looking at all that paper Stearns was holding that said "mortgage secured debt" they ran the numbers and found out what's been said for months, the subprime meltdown is only a small fraction of the mortgage industry. A lot of that paper is worth more money that the news would have the emotion driven investors and politicians believing.

The housing number was actually mixed, while sales were up for the first time in 6 months, prices were down. But, as most everyone knows when those occur together you've probably found the bottom of a market.

National Association of Realtors regional figures show that the Northeast seems to be coming out of the slump, with sales up 11% and prices up slightly, while the West coast remains a drag on the overall picture. It's not totally surprising, since the west was where the ridiculous run up in prices began. The South would have done well if not for Florida, another hotbed of speculative buying.

For some folks, finding light at the end of the subprime tunnel isn't good news. If you have another month of homes sales increases, even slight, without Congressional intervention, it will show that the market is capable of correcting itself. That doesn't work well for the folks on the campaign trail telling us more government regulation is the solution to the problem.

It will be harder for Hillary Clinton to sell her fix for the housing crisis, which Barack Obama says looks suspiciously like one he laid out last year, but with more money. It will be harder for the doomsayers to beat up John McCain for not having a plan for the government to fix the problem, if it's fixing itself.

She's also supporting the Barney Frank proposal (written about here) with a few added features, like the feds actually buying foreclosed houses (not held by FHA/VA type loans), and then holding them until the market improves. Something she claims would be "revenue neutral". Since the average price for foreclosed homes is discounted at sale by about 19%, the revenue neutral idea doesn't hold much water.

If month to month foreclosures continue to fall (as they did in February) and houses continue to sell, suddenly a lot of the pessimism in the general public will start to fade. Add to that the fact that if home sales increase again in March the Fed will be less likely to cut interest rates, which will again help the dollar. Suddenly all of the gloomy numbers look better (not great, but better), and selling despair becomes a tougher job.

It must be tough being a politician who hopes that good news doesn't continue, only for self gain.

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