Dark Adapted

The Two Debt Ceilings

2011-07-17T09:15:00.000-07:00

Lots of heat and little light about the debt ceiling this week. The President has set July 22 as the deadline for a deal regarding the debt ceiling, which begs the questions "What is the debt ceiling anyway?" and "Why does Duvall think we have two of them?" I will try to provide links to my sources. I have opinions, one of them is that people should have data before they make statements.

Part I: The Debt Ceiling

For the first question, the answer is the debt ceiling is an arbitrary limit established by Congress in its present form in 1939 (originally in 1917, as part of war bond sales) that sets the maximum limit to which the government may become indebted. Article I Section 8 of the Constitution assigns to the House of Representatives the ability to create bills that allow the borrowing of money on the credit of the United States Government, among other powers. No body or person in the government has or shares that power, it resides in the House of Representatives. Why? Because as the most granular representation of the will of the public (435 elected officials) it is presumed to be the body most responsive to the will of the public. There are only two Senators from each state, and only one President. Although we all vote for the President, he is one person that is expected to represent the entire population. Your House Representative is responsible to only about 600,000 people, and responsible every two years. All laws regarding spending by the government have to be generated in the House of Representatives. The Senate may or may not approve them, the Senate may have their own ideas and the House and Senate get together in what is called a conference committee to hash out the details and make a final bill approved by both houses, but the power of the purse is in the House of Representatives.

Every few years the House of Representatives has voted to increase the debt limit. Usually, the party in power votes for the increase and the party out of power votes against it while tut-tutting the profligate ways of the party in power. The current President, in his partial term as Senator for Illinois, voted against a debt limit increase in 2006. His thoughts at the time were,

"The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better."

John Boehner, current Speaker of the House, voted to raise the debt limit five times between 2002 and 2007, when his party controlled the Presidency. Both persons now find their roles reversed, both seem a little hypocritical, but hey they're politicians. This is a dance that both parties have done for decades.

The reason that the debt ceiling debate is taking up bandwidth now is that back in March the US hit the maximum indebtedness allowed by law, $14.294 trillion dollars. To put that in perspective, a billion seconds is about 30 years. A trillion seconds is about 30,000 years. Fourteen trillion seconds ago there is no fossil evidence of homo sapiens on the planet. That is a staggering amount of money. The gross domestic product of the United States, the value of all goods and services produced by every person in the United States in one solid year is a little over that level, almost $15 trillion dollars a year. We owe 96% of our GDP in debt ALREADY, before any debt ceiling increase. The wheels fell off Greece when they made it to 120% of GDP in debt, we are not far behind that level. We are only 12th in the world in the debt-GDP ratio, but in terms of total indebtedness we are far and away number one with a bullet. Greece is underwater with a paltry $500 billion in debt, we owe 28 times what they owe.

"But hey," you ask, "it's almost August and the debt ceiling was hit in March. How come we aren't seeing mobs march on the Capitol, burning Starbucks stores as they go?" Well, there are a couple of reasons for that. The Treasury has some latitude to short-term borrow from federal pension funds, which has kept us afloat until now. The other reason is that while our government borrows 43 cents of every dollar it spends, tax receipts pay the other 57 cents of every dollar. We don't need to borrow everything to keep going. Tim Geithner, the Treasury Secretary, has juggled the books with the pension money and kept us going this long without having to hit the market for more debt. That pension-fund borrowing is about to run out, so we either raise the debt ceiling or we have to live on the taxes we collect.

So what happens if the government is unable to borrow from itself in this manner after August 2? The answer is that the government will not have enough money to meet all of its commitments, and it will have to begin prioritizing who and what gets paid. Even without access to the international debt markets, the United States collects about $200 billion a month, roughly 57% of what the government feels it needs to make ends. What it costs to pay the interest (the "coupon") on the debt we already have is $20 billion a month or so, well within our means. When politicians use the term "default", they mean the government cannot pay everyone for everything. In the narrow but more important financial definition, "default" means failing to make an agreed interest or principal payment, much like missing a mortgage payment. Anyone who tells you the United States is going to "default on its debt" is misinformed. Unless the President and Treasury Secretary are completely incompetent (ahem) the first payment out the door will go to people holding the public debt of the United States. Should the US default on its debt in the financial sense, the credit rating of the US will drop to somewhere around Greece's and interest rates will skyrocket.

If this happens it will NOT be because the Congress did not raise the debt limit, it will be because the Treasury failed to prioritize payments to debt holders, plain and simple. This eventuality is the one that people worry about, but it is very, very unlikely. The only time the US technically defaulted on debt was in 1979, and the last thing the Obama Administration needs is yet another analogy to the Jimmy Carter administration. We can be reasonably certain that the US government will not default on its debt, but with 57 cents to cover every dollar of commitments, somebody is going to get shafted. So who is that going to be?

Although the President shamelessly attempted to scare those dependent on Social Security payments, SSI consumes only about $60 billion a month, meaning that those payments can very safely be made. If you add in Medicare, the military, funds needed to support troops in Afghanistan and Iraq, you get pretty close to the $200 billion that we take in every month. Other things will have to go by the wayside. National Park Rangers, Border Patrol, FBI, Department of Education, Department of Agriculture, school loans, etc. As Chief Executive, the President will have to see how much can be done with the tax reciepts, what will happen is not a default but in essence a partial government shutdown, with the Chief Executive responsible for turning out the lights in the parts of the building that cannot be paid for. There have been government shutdowns in the past, but full shutdowns where people's government benefits have been threatened. This will be different: there is legally-authorized money, just not enough for everything.

The job of the President as Chief Executive is to see that the programs established by Congress are run properly and the money spent appropriately. There was an amendment to the constitution, the 14th Amendment adopted in 1868, that has gotten some press recently in the discussion about the debt ceiling. The main reason we remember the 14th Amendment has been for the Equal Protection Clause, upon which a large body of civil law including anti-discrimination statues are based. That is Section 1 of the Fourteenth Amendment. Section 4 is what is being debated now, quietly and in corners, as to the power of the President to ignore the debt ceiling. Section 4 reads:

Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

It is the first sentence that is in debate. Reading the entire Section and understanding the context as a response to the Civil War, the gist to me is that "Yes, the Confederate States of America owes you money. No, the United States of America is not going to pay it. We are going to ignore the CSA debt because we won, but any debt we issued is going to be honored." Reading the first sentence only, some people argue that because the validity of the public debt of the United States...shall not be questioned the President has a Constitutional duty to ignore the debt limit if Congress does not authorize raising it, and order the Secretary of the Treasury to continue to offer debt after August 2.

The Fourteenth Amendment was adopted over 70 years after the Constitution, which gives it "precedence" -- it has to be evaluated first. If the President decides to use this authority to offer debt above what the Congress has authorized, it will create a "Constituional crisis": the Executive Branch will be appropriating powers given to Congress and the House specifically, and it will be up to the Judicial Branch (eventually the Supreme Court) to decide who wins. There are people that have made arguments on both sides, but I find the argument that the President cannot do this to be more compelling. The Constitution is hostile to rule by fiat, and the 14th Amendment in context is a different story, to my non-lawyer-but-originalist interpretation. I can tell you what Scalia will say, in any event. This will be bad, because if the President authorizes the sale of debt against the will of Congress I would not want to be holding that debt. If negated by the courts the claim of debt holders against the government would be...suspect at best. The markets do not like 'suspect', I imagine that debt will be somewhat undersubscribed.

A 14th Amendment end-run I therefore see as unlikely. What should happen, and what will happen, is that the House of Representatives will pass a bill to raise the debt ceiling, with some conditions. The shape of those conditions is what the debate has been about in the past weeks, a debate that will reach a fever pitch in the coming week. Any agreement to raise the debt ceiling will be accompanied by some combination of offsetting budget cuts and/or tax increases, so that the US has the freedom to borrow to meet cashflow requirements but in essence doesn't have to borrow as much in the future. It's important to know the players and their ideological positions, some inference on my part will follow.

President Obama has stated his position that the issue should be addressed with shared sacrifice. He is absolutely committed to tax increases in addition to spending cuts as part of the offsets to the debt ceiling raise. He wants a debt ceiling raise that is large enough that it will not have to be addressed again until after the 2012 elections. When the idea of a short-term raise in the debt ceiling raise was offered, to allow more time for shaping a larger deal he declined, warning "Don't call my bluff" on a short-term deal before storming out of the meeting. He has not been present at the meetings that have occurred in the months leading up to now, sending Vice President Joe Biden to attend the meetings. The details of the proposals in these meetings are not public, but he has yet to propose any change in the entitlement programs (Medicare/Medicaid, Social Security, others) that will comprise ever-larger portions of the federal budget in upcoming years. The tax increases he wants are also not specified but he has mentioned eliminating some depreciation allowances on oil companies and corporate jets, as well as closing other tax loopholes for "millionaires and billionaires". What is certain is that any proposal acceptable to him must have tax increases as a part of the mix.
John Boehner, the GOP Speaker of the House, has not expressed personal opinions as to the composition of the offsets for any debt increase. He has clearly expressed that he does not have the votes to pass any legislation that increases taxes as a part of the debt ceiling increase. The GOP House will not accept that proposal and chances are good that even with 100% House Democrat support of any tax increase plan there are not enough Republicans willing to cross the line to form a majority. The plan at this point is to cut $2.4 trillion from the Federal Budget over the next 10 years, in return for a debt ceiling increase of $2.4 trillion. That will get the President the term on the deal he wants through the 2012 election, but not the composition. The GOP House has already announced that they will take up the measure today, Tuesday July 19th, and given that they have a majority it will almost assuredly pass.
Mitch McConnell, GOP Senate Minority Leader, is working on a plan that will allow the debt ceiling increase in automatic intervals for a total of $2.4 trillion in the next two years, with the President required to send a list of offsetting cuts to the federal budget that may or may not be approved by Congress. This is kind of a head-scratcher, but it forces the President to detail cuts to get money while allowing the GOP to vote against debt increases. The best description of it is here (Keith Hennessey is wicked smart), opinions vary and analyses I have seen are largely positive or negative depending on the analyst. McConnell is doing this because the House plan will almost assuredly not pass the Democrat-controlled Senate, and there needs to be something on the table or there will be no debt ceiling increase on August 2. Unfortunately, this is unlikely to pass the GOP House so its validity is in question.

The reason for the headache over the composition of the deal is that the GOP does not trust the Democrats to propose actual spending cuts; however, they believe the tax increases will be not only entirely real but detrimental to the economy. The Democrats know the people who will elect them will pillory them if they make cuts to Great Society or New Deal-era programs, support for which largely defines the Democratic Party, and they think the wealthiest Americans have gotten a free ride for the last decade, and should pony up.

Some inconvenient realities are that if you seized ALL of the income of the top 2%, leaving them no income for the year, it would still not close the budget deficit this year...and what would you get out of them next year? Would they even work? Would they still be Americans or would they be economic refugees? Depending on income tax increases for the wealthy to pay for this is a bad idea, particularly because those taxes will also hit small businesses, and economically speaking we are not out of the woods yet.

President Obama acts as if tax increases are not already on the way. There is a raft of tax increases coming in 2013 to pay for Obamacare (the Patient Protection and Affordable Care Act), detailed at the link. Furthermore, the two-year extension of the Bush tax cuts expires in 2013 as well, a bit of a double whammy for the people who largely fund small business in the United States. The tax increases the President wants as part of a debt ceiling deal are in addition to all these taxes that are going to increase on their own already.

Tax receipts as a percentage of GDP are down considerably from the Bush years, this chart from the Tax Policy Center shows that compared to a historical average of tax collection in the US since 1950 of 16.9% of GDP, tax receipts are down to 14.9% of GDP, tax collection was as high as 18.5% even with the Bush tax cuts in 2006. People who want to raise taxes will point to this and say "Stop whining, you're paying far less in taxes than you ever have". People who don't want to raise taxes will point out that the tax receipts by %GDP are probably low because the economy sucks. In 2006, we had 5% unemployment. Our stated rate is now 9.2%, and the real rate is probably somewhere in the mid to upper teens. With a better economy we can get back to historic rates of tax collection by %GDP fairly quickly, and increasing taxes is unlikely to boost the economy. The opposite may be true.

On the spending side, the situation is a whole lot less nebulous: we're spending far more money than than we ever have, both in dollars and in percentage of GDP. The last time we had a budget surplus (2000) we spent 18.2% of GDP and collected 20.6% of GDP in taxes. During President Bush's term, spending increased as a percentage of GDP, and with the stimulus, the bailouts and a variety of other reasons the government spent the equivalent of 25% of GDP in 2009 while collecting only 14.9% in taxes. There are some confounding factors, the peaks of tax collection were the dot-com and real estate bubble years where the wealthy paid a staggering amount of capital gains taxes, but the fact remains that we have gone from spending 18.2% of GDP to spending 24-25% of GDP in the last couple of years. Tax collections will vary with the economy, but our spending has dramatically outstripped the historical standard.

To summarize the first part:
1. The debt ceiling is approaching on August 2.
2. Very doubtful that the US will default on its debt, very likely that absent a deal there will be a painful partial government shutdown.
2. Opinions vary about what to do about it, largely on ideological lines. The President and Democrats have an ideological bent to preserve spending and increase taxes, because taxes are too low. The GOP has an ideological bent to cut spending, as they believe spending is far above historical levels.

Part II: The Second Ceiling

So far I have discussed the things that are under the government's control. They may or may not reach a deal to increase the debt limit. If they do, they will cut programs, raise taxes or both. If they do not, the President will have to decide what portions of the government to keep operational and what portions to shut down. These are known unknowns, questions that we know there will be answers to though the answers are not yet known.

The larger, and to my mind far more significant problem that the debt ceiling is but a small part of is the staggering amount of debt the United States has accumulated. We are talking about increasing debt by a few trillion dollars to allow for cashflow. The rest of the world is far more concerned about our existing debt, and the obligations that we have made that are not part of the debt: Social Security, Medicare and other entitlement programs that are a demographic certainty to destroy our federal budget.

As a nation we enjoy a AAA credit rating. The belief in the veracity of the "full faith and credit of the United States" is strong, so strong that during the economic meltdown in the fall of 2008 when Lehman Brothers went bankrupt and Morgan Stanley agreed to become a ward of Bank of America, investors purchased short-term Treasury bills (T-bills) with a negative yield. They were willing to lose a small percentage of their money (getting back less than they paid) in return for not losing a larger percentage of their money in stocks and other commodities. Our government benefits immensely from this AAA rating, it's worth at least a percentage point of interest on the debt we issue -- which is a lot of money on $14.3 trillion dollars in debt. Every percentage point of interest on that debt that we do not pay is $140 billion a year we save.

Credit ratings agencies have not covered themselves in glory in the last decade. They greenlit an incredible amount of bad debt, part of the causality chain in the residential mortgage meltdown that burst the latest economic bubble in 2008. They underestimated the risk of that debt very badly, but the fact that they are wrong when they call risky debt safe does not mean that they are wrong when they call what has been safe debt risky, and they are doing that now. Standard & Poor's, Moody's, Fitch and others have notified the federal government that they are getting ready to downgrade our debt, to take away the AAA rating that saves us so much money in interest and upset the world's financial apple cart.

I cannot emphasize enough that our credit is about to be downgraded because of our existing debt, and the lack of any Congressional or White House plan or will to stop acquiring debt in the near future. The downgrade has little to do with our debt ceiling, which is an arbitrary cap on the acquisition of debt and which, if enforced, would actually put us on a more sound fiscal footing, albeit with a very low level of federal services. As I have shown earlier, we will not default on our debt even without a debt ceiling raise, absent gross incompetence on the part of Treasury officials, so the warning is not about our short-term inability to pay back debt. The warning is that our debt is already so high, our future plans in terms of what we've said we're going to pay for Social Security and Medicare imply so much more debt and our economy is so anemic for a variety of reasons that S&P thinks it's possible that we will not pay back our debt at some point in the future. S&P and others, will be saying to investors and money managers, "You should ask for more in interest rates if you agree to take this debt, because the United States government may not have the ability to pay you back," which is kind of a staggering statement but one they WILL make without major structural changes in our budgets.

A credit rating downgrade will be a sign that we are getting close to the second, real debt ceiling: the point at which the market will stop treating our debt as something special and start assessing our debt much like that of Argentina or other distressed nations. We have benefited greatly in the past few years by selling debt into a low interest rate environment. The Federal Reserve has cooperated with this over the past year by in essence buying large amounts of debt from the Treasury as it was issued, this was called "Quantitative Easing", and since it was the second such program the Federal Reserve undertook since the 2008 financial crisis, it was called 'QE2' for short. In essence, the Treasury created $600 billion in debt and the Federal Reserve bought it over the last several months, pumping $600 billion into the economy through the government in addition to the 2009 Stimulus money and all the other "pump priming" efforts of the government. The QE2 is now over, and there is talk of QE3 or other efforts to ostensibly stimulate the economy. While the stimulative ability of QE and Keynesian deficit spending are the subject of debate, the effect on the currency is not: both are creating inflation.

Why inflation? Because if you lower the value of your currency you are able pay people tomorrow with money that is worth less that it was when you borrowed it. The Chinese have noticed this, and are not happy. S&P is noticing this, and is not happy. When investors get unhappy they want more interest, and as each interest point is another $140 billion annually on debt we already owe, you can see why anything that jacks up interest rates is detrimental to the nation. We are already looking at about $1.5 trillion in deficit this year, with a 3% increase in interest rates we'll be looking at more like $1.92 trillion in deficit, with interest payments climbing rapidly as new short-term debt is issued. The recent bias toward issuing short-term debt will work against us, in that interest rate hikes will hit the short-term debt faster as we have to roll it over. Just like at your house, the debt builds up faster and faster when you're paying others interest.

The difference between the "second" debt ceiling and the August 2 debt ceiling is that we may have very little notice as to when the markets suddenly decide in a "tipping point" fashion that they don't want our debt anymore. Interest rates demanded for our debt will suddenly climb, and that's not subject to Congressional action. There will come a point, as there has come a point in Greece, where nobody wants to buy our debt at all, and that will be the true debt ceiling as well pretty much the end of America as we have known it. Our options at that point are defaulting on most government obligations or inflation of the currency to pay off our debts. There is even the potential for hyperinflation, when the currency is simply useless. In my lifetime we've seen similar instance in Zimbabwe (2000s) and Chile (1973), the classic example is Weimar Germany between World Wars I and II. Hyperinflation comes because people don't want or trust the currency, barter is preferable because in the time it takes to get from a place where you sell something for money to where you're intending to buy something for money you can lose significant value. Zimbabwe doesn't even have a currency anymore, they use dollars or Euros but their national currency stopped being printed shortly after they started printing $100 million dollar bills. What is a laugh line in 'Austin Powers' was a reality for those forced to use cash in Zimbabwe.

Bad politics can create bad economic situations, but bad economic situations often lead to the worst of bad politics. The worst example of all is Hitler rising in Weimar Germany, but there was plenty of other demagoguery in the 1930s, from Italy to Argentina and elsewhere. The economic shocks of the 1930s brought us great expansion of the federal government under Hoover and Roosevelt, measures that were ultimately unsuccessful at fixing the structural problems of unemployment and economic depression. What was successful at ending the Great Depression was relaxation of the onerous regulation the federal government laid on industry so the US could arm itself for war, and six years of the fiercest combat in human history that successfully if temporarily de-industrialized Europe, at least, by the time our bombers were through with it. That situation is neither welcome, nor likely to come again.

In summary,
1. The real debt ceiling, as opposed to the arbitrary one set by Congress, is when the world stops wanting to buy our debt. This will most likely happen because we cannot pay the debt we already have.
2. This is not subject to Congressional or Presidential control, and it can happen with little or no warning.
3. Credit rating agencies already believe we are close to the end of our means and are threatening to say so publicly, which will hasten the downhill process.
4. Credit rating agency statements are based on the debt we have and the spending we have planned, which looks reckless to them. Just so you know what 'reckless' means to them, they thought making mortgage loans to people with no job or documentation was fine and dandy. By comparison, the federal government's fiscal policy looks foolish.
5. Credit agencies are not threatening to downgrade us over the absence of a plan to raise the debt ceiling. The downgrade will come because there is no consensus plan to deal with our debt or control government spending.

Enjoy the next week!

UPDATE: Since I wrote this on Sunday and Monday, Moody's has announced that they want to see at least $4 trillion cut from upcoming federal budgets over the next 10 years to continue a AAA rating on the United States Government. The "McConnell Plan" and the "Gang of Six" plan announced today will not cut this much. The only plan that cuts enough is the GOP's "Cut Cap and Balance" plan...the one the Democrats say is dead on arrival.

On The Death of Osama Bin Laden

2011-05-02T16:38:00.000-07:00

Heard it on the satellite radio on the way home from work last night that the Earth is short one terrorist leader, courtesy of Joint Special Operations Command, SEAL Team Six and some chopper pilots.

Some thoughts:

1. Am I "happy" about this? Not really. Satisfied would be a better description. A very bad person has been neutralized, one who would create disorder and chaos. The man who watched the 9/11 coverage and later claimed to be pleasantly surprised that the towers fell has met justice. About time, too. A box on a long list is checked, but as far as I am concerned, back to work. There's still Ayman Al Zawahiri, the physician-leader of Al Qaeda who is now the likely head. For strictly professional reasons I want that stain on my field of knowledge removed. There's a whole host of people in Yemen, including Anwar Al-Awlaki, that need a 5.56mm craniotomy. The list is long, and will grow until the ideology behind Al Qaeda is discarded by the Muslim community worldwide. This is an important step, but only a step.

2. The chanting and cheering outside the White House last night made me nauseated. First, it looked suspiciously like the same kind of victory lap the Gazans did after 9/11. The intent of creating goodwill or mollifying anger by treating the body of Osama Bin Laden with respect in keeping with Muslim tradition may not counterbalance the looped video of college kids signing our national anthem off-key and high-fiving each other over something they did not even do.

Second, all this celebration reminds me of bad football end zone dances, the kind that make you think the player had heard of the end zone but never dreamed he'd ever get there. We zapped a high-level terrorist, great job but in the scheme of things we put six landers on the moon forty years ago. The more we celebrate the more we raise the worth of Osama Bin Laden. I think it's reasonable for us to thankfully acknowledge a job well done by people whose names might be known 50 years from now, and move along. A memorial for those lost in 9/11 and in the fights against the kind of xenophobic religious extremism he represented might be more appropriate.

If you're in the military or if you're a NYC Firefighter, you get a pass -- these are your brothers and sisters that have died and been wounded and if you want to hoot and holler you have skin in the game. The GW and Georgetown students outside of the White House, eh, not so much. Congrats, the boogeyman of Osama Bin Laden who appeared when you were eight or ten is now gone. Attempt to comport yourself with some dignity. In case you don't remember we are Americans, we do the impossible immediately, the miraculous takes a bit longer. Save your excitement for things that matter. Save the "USA! USA!" chants for Olympic Gold Medals. We are professionals, this is not exceptional, it's what we DO.

3. Yes, Osama Bin Laden needed to die. He was a bad man, who did unspeakable things and planned worse, the hell he would have unleashed on us but for lack of resources is even worse than the things he is responsible for. A partial list includes the 1993 WTC attack, the 1996 Khobar Towers attack, the 1998 Embassy bombings, the 2000 attack on the USS Cole, the 9/11 attacks in 2001, the Spanish train attacks in Madrid in 2002, the Bali bombing in 2002, the London Underground attacks in 2005 and a lot of the insurgent activity in Iraq that left tens of thousands dead. There are also a host of other individual attakcs, the Daniel Pearl beheading, the Nick Berg beheading, little things in the overall scheme but horrific and intended to terrify. He declared war on us once in 1996, again in 1998, and 13 years later he took two to the head and one to the chest, followed by a short trip to the bottom of the Arabian Sea.

Now maybe he didn't pull the trigger or draw the knife, but he was an inspiration for those who did. Osama Bin Laden was an inspirational figure for years in the extremist Arab world, and his continued defiance of the United States made him a Robin Hood-type folk hero among those Muslims predisposed to active jihad. His arguments were persuasive to them and those close to him displayed intense personal loyalty. It's important to note that he had a $50 million price on his head, and nobody turned him in. The people who believed in him never stopped believing in him, maybe just maybe his death will cause a reassessment of positions that Osama, being fish food, cannot argue away. As a symbol of defiance he had to go, because you can't tug on Superman's cape even if Superman might not want to be an American anymore.

4. The death of Bin Laden is not the end of the War on Terror. Being a cellular network, shooting the lead node in the network does not disable the network. The things Al Qaeda likes, much like The Joker in The Dark Knight, are cheap: gasoline, explosives, firearms. Having built the foundation (literally, Al Qaeda is Arabic for "The Base") Islamofascism is not something you can snuff out with even a dozen takedowns of high value targets. It is a philosophy, a worldview, and those are far harder to kill than even one influential figure with what may be governmental cover in a far off land. None of the signers of the Constitution or Declaration of Independence are still alive, but their ideas linger on.

A similar dynamic is present with Osama, the idea of Islamofascism is out and it's like a bell that can't be un-rung. What wins wars is not the death of soldiers or leaders but the defeat of an ideology. The Japanese spent the better part of thirty years spooling themselves up on ideas of racial superiority, subjugating the Chinese and raping Nanking for ten years before attacking Pearl Harbor. They attacked because their ideology said they could. Our ideology contended with theirs in men and material and their ideology was shown to be unsound. The story of Nazism is similar but shorter, only 12 years from national prominence to utter destruction. The ideology of Japanese militarism and Aryan supremacy did not survive a test of arms. The wars did not end because we killed everyone who believed in those philosophies, but because reality and those ideologies diverged so wildly that people abandoned the philosophies, and with the philosophies the justification and motivation for war.

The three basic lies that underpinned Osama Bin Laden's string of BS are:
a) The US appears strong but that strength cannot effectively be brought to bear.
b) The US military cannot stay in a conflict if it takes casualties.
c) Religious piety will provide an advantage over US forces.

All three of these assumptions have some basis in fact, in the view of Osama Bin Laden. The Russians in Afghanistan were far more vicious than the United States has been in Iraq or Afghanistan, and religious piety won the day there. The US stayed in Somalia until the Black Hawk Down incident, after taking casualties the US pulled out. The US did not respond effectively to successive attack cumulating in the 9/11 attack, despite its technological prowess. We have a tremendous nuclear force but have not used it in 60+ years, for example. Trillions of dollars in nuclear deterrence did not provent 19 hijackers with box cutters from killing almost 3000 Americans. Power that cannot be brought to bear.

All of these assumptions have been confronted and found wanting in the past decade. Especially in the crucible of Iraq, many wannabe Islamists from the Arab world at large have found much to their detriment and sudden violent death that US troops will stand and fight, and will do so effectively. Armed confrontations give way rather quickly to much safer IED-type attacks, both in Iraq where the battle was hot from the start, and later in Afghanistan once US power was fully brought to bear there. We took casualties in combat but have stayed, in Afghanistan for almost ten years and in Iraq for over seven. Part of the credit for this needs to go to George W. Bush, whose resolve in the face of the domestic criticism, vituperation and outright hatred that Osama Bin Laden assumed no President could withstand is a credit to the office. We stayed in place and changed the dynamic with the professionalism of our armed forces, and the obstinancy of a President.

Our open society's ability to adapt and innovate has exceeded that of Al Qaeda and associated groups. The technological innovations used to thwart IEDs and find, fix and destroy insurgent groups are truly amazing, and aggressive use of these plus our troops' skill and bravery have made significant strides in Afghanistan this year.

So, the ideology is being defeated but it is not defeated yet. Calls of "Mission Accomplished" and "Now bring the troops home!" are well-intentioned but run the risk of snatching defeat from the jaws of our victory. Al Qaeda has been embarrassed by their inability to dislodge us from Iraq, and now their titular head just got taken out with no fuss and no casualties on our side. This is not the time to pull back or leave breathing room for Al Qaeda's interpretation of the appropriate use of jihad. People will abandon philosophies that make them look stupid. Osama himself thought people would follow a "strong horse" (Al Qadea) rather than a "weak horse" (the United States). Who's weak horse now? I'm thinking it's the guy lying with the coral on the bottom of the Arabian Sea.

This needs time to play out, the Arab Spring is (funny enough) the kind of thing George W. Bush was waiting to see happen by shoving an island of democracy or near-democracy into the heart of the Middle East. It is a moment where the Arab world gets a chance to reassess itself, and it's possible that Islamofascism may be discarded like so many burqas after the defeat of the Taliban in 2001. We need to stay in the game to see how it plays out.

5. Finally, credit to President Barack Obama for his handling of this issue. He campaigned with fierce moral urgency on the wrongness of renditions, Gitmo, enhanced interrogrations, the PATRIOT Act and warrantless wiretapping. While it's possible that he believed absolutely none of what he said at the time in 2008 (he is a politician), once he was fully briefed into the situation a shockingly large number of Bush-era programs that he previously castigated were quietly continued. As quietly as possible, mind you, but continued nonetheless.

Up until now his Presidency has not been a particular success, in fact, it was beginning to feel like Jimmy Carter redux. Malaise, the beginnings of stagflation, high unemployment, high gas prices, national discontent. During the Iranian hostage crisis, Jimmy Carter tried to rescue the American hostages only to have the plan fall apart at an airfield south of Tehran called Desert One. Technical problems and an unfortunate loss of life resulted in a scrubbed mission and a snakebit President.

Barack Obama did not risk his life, but a failed mission to capture or kill Osama Bin Laden with loss of life of American servicemen would have done much to cement the idea of BHO as Jimmy Carter II. Despite the political risk, when he had a clear shot at Osama Bin Laden he took it, and he deserves credit for that. That's the kind of "3AM Phone Call" Hillary Clinton's 2008 campaign ad was about, and this time he answered it. He has been criticized for being risk-averse, but he was not this time and deserves credit for taking a large political risk.

In announcing the death of Osama Bin Laden I found him appropriately reserved and he gave credit to the people who actually did the operation. No victory lap, no smiles, just a job done and justice served. I thought that was very Presidential. Doesn't mean I am a sudden convert to Obamacare, he needs to get serious about addressing the deficit, develop a real energy policy, stop bowing to foreign heads of state and get over himself a bit more, but this time he did well.

What The TSA Didn't Learn In History Class.

2010-11-19T16:07:00.000-08:00

At the end of World War I, the French were bled dry. A sizable portion of their military-aged males were six or more feet under as a result of the slaughter of the Western Front. Their solution for the defense of France was the Maginot Line, a series of fortresses with machine-guns, artillery and shelters. Over 5000 fortifications were built across the plains opposite Germany, it interconnected with the Belgian fortifications that also faced Germany, with the anchor of the Belgian defenses at Fort Eben-Emael.

Eben-Emael was a huge excavation roofed with feet of reinforced concrete, bordered by a canal and a deep ditch. Conventional offensive technology of the day was useless against it. Armed and armored, it was practically invulnerable. Then the Germans came.

Using gliders they landed a small number of troops on the grass-covered roof. Using then-new shaped charges they incapacitated the cupolas from which the guns and periscopes projected, rendering the 650 men in the fort blind and unable to shoot back. The small unit was reinforced the next day, and the impregnable Eben-Emael surrendered within a day. With Eben-Emael incapacitated, the Germans ignored the neutrality of Belgium, swept through the Ardennes Forest and around the Maginot Line.

The 3 billion francs put into the static defense of France was utterly wasted and France fell to the Germans within 10 weeks of the fall of the Belgian fort. "Maginot Line" has since become a catchword for defenses destined to be bypassed. It is the classic example of the futility of static defenses against a mobile and inventive enemy. Static defense as a strategic policy has been a laughingstock since, but somehow this lesson of history has not been learned at our own Transportation Security Agency. In fact, they appear to be rather impressed by the Maginot concept, so much that they appear to be building one after another.

The 9/11 hijackers carried box cutters, so no knitting scissors or Swiss Army knives. Line no. 1.

Shoe bomber, so no shoes through the metal detector. Line no. 2.

Plan discovered to use liquid explosives, so no fluids over 3 ounces. Line no. 3.

Nigerian diaper-bomber, so whole-body scans and aggressive, disturbing pat-downs. Line no. 4.

Printer cartridge bombs, so no toner for you. Line no. 5.

Does anyone really believe there will NOT be another attempt, and shortly thereafter TSA's Operation Maginot 6.0 slid into place? Static defense always fails because you cannot put a line, either on a map or in human imagination, beyond which no one will go. Generals are accused of fighting the last war first, the TSA has institutionalized this edict. Were it not for the incompetence of our adversaries we would already be down at least two airliners.

The difference between TSA and Islamic fundamentalists is that incompetence for the fundies is the result of inexperience and will eventually be rectified, while at the TSA it is the result of policy and will not be voluntarily rectified. They will simply inconvenience and/or molest us all so the forms are maintained, and not if but when the next penetration of security comes they cannot be blamed as the protocol was followed. There will be a rectal bomb or at least an attempted bombing at some point, what do the security protocols become at that point? "Okay sir, you're free to go. And by the way, you might want to ask your doctor about your prostate, felt kinda' hard on the right." Free occult blood screens with every flight are part of Obamacare, right?

I don't mind talking with someone about where I am going and why. El Al-type security screenings don't bother me in the least. They might dissuade the constipated-looking religious student behind me who says he is headed to Yemen for "advanced training" though, which is the point. Besides being less invasive, they are more effective as they rely on training and intuition rather than Big Iron like backscatter x-ray machines.

The government has an onus to Do Something, and adding backscatter machines is something that people can walk by and say to themselves, "The government is Doing Something". On one level this is Mission Accomplished for the government, but in my book inflatable and inert machines would work as well for the PR purpose backscatter machines serve. Given that the billions of dollars spent on static machines to create the PR impression of safety is being handily and widely ridiculed by the phrase "Don't Touch My Junk", the PR war is already over and TSA lost. As long as we take intuition out of the loop, as long as people can make it onto a plane having paid cash for a one-way flight with no baggage if they can pass a backscatter exam and a pat-down without being questioned, we are not safer. .

We're just slightly more irradiated, and slightly less free.

What You Probably Don't Know About Goldman Sachs, John Paulson and the Financial Regulation Bill

2010-04-21T14:12:00.000-07:00

Like most blog posts, I got to responding to something someone said on Facebook and kind of got carried away. So rather than boring everyone in that thread, I will reserve my boring for people specifically looking to be bored, by me, about something esoteric.

To recap, on April 16, Goldman Sachs was charged with fraud by the SEC (a civil charge, not a criminal one) for selling mortgage-backed securities that the SEC believes Goldman knew would lose value. The SEC charges that Goldman allowed a hedge fund run by John Paulson to choose the components of the CDO, or Collateralized Debt Obligation, called 'Abacus 2007-AC1' that was then sold to European banks and other investors. Paulson's firm bought insurance against those mortgages declining in value. When they did decline in value, his company made a billion (with a 'b') dollars from the insurance contracts they held against the decline in value of Abacus 2007 AC-1.

Just for a vocabulary review:

Mortgage-Backed Security: A stream of income and capital that comes from the repayment of mortgages issued by banks. Also called a MBS or a RMBS (residential MBS). Many mortgages are sold, and by 'buying' a mortgage the new mortgage owner gets the income and capital repayment coming from the original loan. If you bundle up enough of these, they act like a bond -- interest comes in, the capital is repaid over time, people get to pay monthly for their house and investors get their capital and interest repaid. Also, since banks are selling the mortgages they write and getting their capital replenished, they can offer more mortgages. Otherwise, the bank could only make as many loans as they have capital to support. A MBS is a bundle of hundreds or even thousands of mortgages, the bundles are traded.

Subprime Mortgage: A mortgage written to someone who is not considered an ideal credit risk, either because they have issues in the past with paying people back, or they are borrowing more money than their income would otherwise support. Not everyone who gets a subprime mortgage is a deadbeat, some self-employed people may have plenty of income to pay their mortgage but the bank or credit agency does not consider their income to be as reliable as someone with a 9 to 5 job. Unfortunately, a lot of people got subprime loans in the 2000s who should not have gotten any loans at all. Because the risk of default is higher, subprime mortgages generally have higher interest rates. From the investor standpoint, the risk is higher but the income is higher as well.

Credit-default swap: A kind of insurance against the risk of an investment going bad. This originally came from the municipal bond world, because if Peoria defaults on their sewer bonds, nobody really wants to try to claim their sewage plant back. The idea was that like any unlikely but damaging event, you could buy insurance against the risk of default. The CDS industry exploded in the 2000s as the utility of being able to insure against almost anything became popular. Unlike traditional insurance that you purchase to protect your assets, CDS can be purchased for almost anything that you can find someone else to have an agreement with. People with agreements are called 'counterparties'. CDS are not regulated and you don't even have to own the asset you are insuring against a loss. At one point, the dollar value in CDS was over $60 trillion dollars, more than the entire economic output of the world in a given year. Of course, a lot of those CDS were counteracting CDS -- I insure you against your value declining, and then I go and find someone else to insure me against your value declining so I don't have to pay the full amount. If this sounds like off-track betting with billions of dollars, it kind of is. The fact that respectable insurance companies like AIG were big players in this market is unsurprising, since the factor that decides who makes money is an assessment of the risks involved. Unfortunately, the amount of risk in the 2000s was inappropriately priced.

Collateralized Debt Obligation (CDO): A Structured Investment Vehicle (SIV, another acronym) composed of various MBS of varying quality. This is the next order of complexity beyond just bundling up mortgages. CDOs were designed to minimize risk by getting chunks of MBS from various regions of the country and various levels of risk, the idea being that it was silly to think the whole economy would tank at once. Well, silly before 2007-8. If one region or segment of the market tanked, the rest could carry the CDO and still make payments. CDOs were divided into 'tranches', slices of the income from the best, second-best, not-so-best and worst bundles of MBS. The ones in the worst bundle had the highest interest, because they were the riskiest. The ones in the top tranche had the lowest return, but the least risk. Synthetic CDOs, like the Abacus 2007-AC1 deal, were made of tranches bought from other CDOs. If this seems confusing, it's because this is the kind of thing (along with CDS) that Warren Buffet called 'the WMD of the financial markets'. Basically, a CDO tranche owner would not be cashing your checks each month. The money from residential mortgages went into a mixmaster that makes the most complex highway interchange look like a single thread by comparison. Money came in, swirled around, and ended up in CDO accounts each month.

Others have pointed out that the timing of this news release was suspicious. I find the news release interesting for a few reasons.

1. It was a 3-2 decision whether or not to go ahead with the suit. The Republicans voted against, the Democrats voted for, and the sole independent voted to go ahead with the suit. Assuming the SEC are professionals, this is not the highest endorsement of the validity of the claim. Not that it shouldn't be pursued, but the PR damage is done. The SEC alleges, and must prove, these charges. Most likely, there will never be a courtroom resolution regarding this -- there will be a negotiated settlement so the SEC doesn't have to advance what 40% of its commissioners believes is an unwinnable case, and so that GS can take a smaller hit.

2. The release was during trading hours, rather than after, to insure the media would have plenty of time to dwell on the story. Note that the blog post on MoneyWatch is timed 1:59 pm on April 16, 2010. the release was during the trading day. Goldman Sachs lost 14% of its value and the whole Dow Jones Industrial Average shrank 1%. All you have to do is look at the Goldman Sachs price graph for 4/16/2010 to see that the press conference was around 11AM Eastern. I believe the SEC knew they would cause a stink, and did so despite any disruption in the market that might occur. If this was released on Friday at 4pm, after trading, the weekend might have been spent in reflection, with a more muted stock market response on Monday morning. As it is, the SEC made at least a minor panic in order to seem like they're doing something.

3. This just happens to involve John Paulson (no relation to Hank the Former Treasury Secretary), hedge fund manager and poster boy for profiting on credit-default swaps (basically, insurance) on something he didn't even own. Neither he nor his firm are charged, yet putting John Paulson in your press release will put the financial press in a tizzy. It's kind of like mentioning Brad Pitt in a salacious story for TMZ, but then not saying he did any salacious things.

Paulson made a billion dollars on this credit-default swap because his counterparty(ies) believed he was wrong about subprime mortgages. By comparison, his firm made $15 billion in profit in 2007. The Abacus deal was just 7% of the profits he made by betting that all the other smart guys in the room (including Bear Sterns, Lehman Brothers, and the entire credit rating industry) were wrong. Interesting times when being a contrarian is considered not just suspicious, but enough to indict. At least indict a counterparty. So far. Two other contrarians you might have heard of who thought the subprime mortgage market at derivatives were crazy: Warren Buffet and George Soros. Suspicious persons, indeed.

4. In fact, the CDS that Paulson & Co. bought were from Goldman Sachs -- kind of like buying insurance on a house you don't own, then collecting when it burns down. The insurance company gets screwed, yes, but in this case Goldman Sachs is the insurance company. Most likely GS offset its own risk with CDS that paid it if the Abacus 2007-AC1 went south and it had to pay Paulson, but like everything else, it's a bet and the outcome is not known. Very few people were betting against subprime mortgages in 2007. The folks who bought Abacus, mainly European bankers, are not stupid people. This is not an example of stealing money from Mom & Pop. This is big-boy business with a whole lot of money on the line, and if Abacus had gone long and made money, would the SEC be investigating GS for selling what proved to be worthless CDS to Paulson & Co.? I think not. If Paulson & Co. had collapsed taking all of its investors' assets with it as many other hedge funds did there would be no investigation.

5. Retrospectively they can identify something fishy with Abacus 2007 AC-1, but they can't find Bernie Madoff prospectively after he steals between $12 and $20 billion? And after they were sent a 21-page detailed memo that there was something fishy going on? Top of their game, these guys.

6. Then there is the curious timing of this release followed immediately by a broadside of criticism against the GOP for opposing a bill strongly supported by a Senator who received significant personal support from a subprime lender (Countrywide), a bill that contains not only a built-in fund for bailouts with a large advertised number ($50 billion), insuring that the government will continue to serve as a backstop for more risky investments than the market would otherwise bear, but a bill that vests in the Executive the ability to respond with almost unlimited resources to any future bailout/systemic risk situation. It's not that President Obama will have this power that bothers me. It's that any President has the ability to raid the Fed for whatever seems to be needed in the financial sector. Moral hazard out the wazoo. If you don't want business to try to manipulate government, then don't manipulate business from the government. The last thing the "Masters of the Universe", Tom Wolfe's phrase from The Bonfire of the Vanities need is the idea that profits are private and losses are public, because they can get a low-interest bailout from Uncle Sugar. No way. Take away the net, and they probably won't string the tightrope so high.

7. The timing is on the face suspicious because the press conference (unusual for the SEC) on April 16, immediately preceded the White House announcement Monday that he would be speaking at Cooper Union in NYC on Thursday. Look for the Goldman Sachs charges to be featured prominently. Oh, and floor debate on the Financial Regulatory Reform Bill begins just 10 days after the SEC's announcement, on April 26.

Now, the President denies that there was any coordination with the SEC, but even the press figured out that maybe GS wasn't the only ones cooking the books. Here's a quote from that CBS News link:

"Well, I think now that there has been a lot of momentum behind the financial reform bill, and I think that that momentum is only going to increase," Freeland said. "The charges on Friday will give the Democrats who wanted a tougher bill a lot more energy."

Wow. Ain't it great when things just happen to go your way? And that article in itself is a veritable masterpiece of innuendo and possibly-designed ignorance. Note how the reporter elides everything I've spent the last couple of thousand words explaining and simply implies theft:

Goldman took in $15 million in fees for arranging the transaction, while its investors lost over a billion dollars that became profit at Paulson & Co.

Now, quiz time: did the money from Abacus 2007-AC1 really go to John Paulson? Or did John Paulson find someone willing to bet that the assets in the Abacus 2007-AC1 investment would not decrease in value? And who was John Paulson's counterparty, the folks who paid Paulson & Co. when Abacus 2007-AC1 tanked? (Answer: Goldman Sachs)

The press is so willing to carry water on this one they might as well show up in Washington with buckets in hand. I understand the frustration. But I also understand that things are often far more complex than they seem. I don't see this story as an attempt to make complex things simple for anything other than political reasons.

More background on John Paulson here, from the Wall Street Journal. Excellent article.

NOTE: I do not own any Goldman Sachs shares.

Obama Changes Nuclear Posture to 'Fetal Position'

2010-04-06T06:20:00.000-07:00

Today's New York Times describes the results of President Obama's "Nuclear Posture Review", which has been the product of 150 meetings and is a particularly bad example of the sausage-making process in the Executive Branch.

The United States' Nuclear Posture is the statement of when we will or will not use nuclear weapons. Under President Bush, the posture was essentially that any WMD attack could see a nuclear response. This is a simple and practical policy, because in the field of weapons of mass destruction the United States has divested itself of two of the three main categories of WMDs: chemical and biological. Under the Biological Weapons Convention that has been in force since 1975, the US does not maintain production facilities for or stockpiles of biological weapons. The US is also a signatory to the Chemical Weapons Convention, which went into force in 1997. The US has been steadily destroying its own stockpile of chemical weapons, at considerable expense, and has now destroyed 70% of its chemical weapons, with complete destruction of all chemical weapons scheduled for 2023. If this seems like it's taking a long time, that is because we still have chemical weapon stockpiles from World War I, and that's not the kind of stuff you can throw in a bin and be done with.

So by treaty, the US has already destroyed its biological weapons capabilities, is destroying its chemical weapons capability, and has already pledged to not use either of those weapon classes in warfare. What we're left with is nuclear weapons, and those are so nasty and destructive that they function as a deterrent to the use of biological and chemical weapons. You hit us, we hit you back once, and harder than you can possibly imagine. It's a good policy, and one I agree with. The last President didn't promise to use nuclear weapons, he said that our response may include nuclear weapons.

The three issues involved in deterrence are possessing the means of reprisal, convincing potential foes that you have the will to use the means at your disposal, and keeping any potential adversaries uncertain as to the shape of your response. Deterrence is not the same as a challenge, under the former Nuclear Posture Review we were not daring other countries or groups to challenge us, we were simply announcing the consequences should there be an attack. Deterrence does not seek conflict any more than a concealed carry licensee seeks a gunfight. The consequences of any conflict involving WMD are going to be horrific, and reasonable people can look at the probable butcher's bill and consider other courses of action short of WMD release. Unfortunately, we live in a world where the reasonable people are already deterred, it's the unreasonable ones that are of the greatest concern and here's where the President's characteristic unconstrained worldview begins to fall down.

The President's policy described in the NYT article is not one of unilateral disarmament. We will still have Trident submarines in the water, Minuteman IIIs in the silos and nuclear-capable B-52s able to respond to a strike. The President further refined his policy by stating that the exemption to nuclear response does not extend to countries that are not signatories to the Nuclear Non-Proliferation Treaty (he's looking at you, North Korea and Iran) and that if a biological attack is "serious enough" or biological weapons capabilities become significant enough, a nuclear response may be in order. It appears to me that he is attempting to use the Nuclear Posture Review as yet another lever in what has become a comic opera of trying to get Iran to abandon its pursuit of nuclear weapons, as well as to disincentivize other countries from becoming nuclear powers (he's looking at you, Hugo Chavez). Unfortunately, he and his advisers are overlooking a huge problem.

From an economics standpoint, the barriers to entry to the nuclear weapons club are substantial. A country has to obtain uranium, perform isotope separation to enrich the uranium, create a nuclear reactor, operate the nuclear reactor to produce plutonium, and then separate the plutonium (the optimal nuclear bomb fuel) from the spent and highly-radioactive fuel rods. Then, once sufficient plutonium has been obtained, an implosion system has to be created and tested, and finally the first bomb has to be detonated to prove your technology prior to deployment of a weapon. All of this technology is now 65 years old, but none of it is particularly cheap and most of it has an extra tax in the form of having to be performed clandestinely, with added costs to keep things off the books. If you want to join the thermonuclear club, you need to obtain tritium (a byproduct of nuclear reactors), deuterium (from the sea) and/or lithium-6 deuteride for the second stage of a fission-fusion bomb, along with additional years of testing. So far, none of the "new" nuclear powers (Pakistan, North Korea) have gone to the trouble of making a two or three-stage nuclear weapon. If you're willing to impoverish your country and become a pariah state, at least in the eyes of the United States, all of this is doable but it is neither cheap nor fast.

On the other hand, biological weapons are relatively easily obtainable. The DNA sequence of the H1N1 influenza and 10 strains of the variola virus (smallpox) are available in the scientific literature, with a DNA sequencing machine that is available commercially these can be recreated in a competent laboratory. The US Defense Threat Reduction Agency tested the ability to detect a covert bioweapons facility beginning in 1999, an operation called Project Bachus. For under a million dollars the DTRA was able to create a laboratory that made Bacillus thurigensis, a benign bacterium used to kill mosquitoes in standing water. This doesn't sound like much, but a close cousin of Bacillus thurigensis is Bacillus anthracis, which causes anthrax. If you can make the one, you can make the other. If you have a competent virologist and a supply of chicken embryos (eggs), you have the makings of a nasty virological program even without having to obtain cell culture material. Besides influenza, smallpox and anthrax, there are a host of diseases including tularemia, plague, glanders and a variety of viruses that can and have been weaponized.

Going beyond naturally-occuring pathogens, genetic engineering can create chimeric (mixed) strains of bacteria that can produce diseases the like of which we have never seen. In his 1999 book Biohazard, former Russian bioweapon scientist Ken Alibek describes an experiment performed in the former Soviet Union. A weapons developer inserted the gene for myelin, the protein that sheaths nerve cells, into a strain of Legionella pneumophila, a common and mildly-infectious bacterium that is most often remembered as the cause of "Legionnaire's disease". Legionella is lives in water, and is often found in the condensate within air conditioners. It most commonly causes a mild respiratory illness, and in the rabbits exposed to the engineered strain this occurred as expected. The genetically-engineerd barb in this bacteriological hook began to show several weeks later: by including the myelin protein in the bacterium, the host's immune system was taught that myelin was an invader and should be destroyed. Antibodies to myelin began to destroy myelin throughout the rabbits' bodies, resulting in paralysis and loss of function. In essence, they got a mild respiratory disease that also caused the equivalent of multiple sclerosis. Can you imagine the impact of an extra hundred thousand patients with florid multiple sclerosis? How about a million?

The flaw in the President's plan is that by telling potential enemies that we will respond with nuclear weapons only to a nuclear attack (and even then, only from a non-proliferating state), we are in essence telling them where to spend their efforts. Why build a trillion-dollar infrastructure to make nuclear weapons when a billion will buy you a first-rate biological weapons lab? The proviso that the policy will be reviewed should biological weapons prove to be more "dangerous" than previously thought overlooks the fact that they are already dangerous, and much more so than is currently considered by the President's advisers. This is a pointless policy change that, thinking like an adversary, dictates a cheaper and no less destructive avenue of attack.

A potential enemy doesn't even have to target humans -- the Ug99 strain of wheat rust could affect up to 90% of our wheat production if it makes it to the United States. A couple of bottles of wheat rust spores would take up no more space than a Gatorade, but like most biological weapons with the ability to self-replicate the wheat harvest of the US and Canada could be almost completely destroyed in a few seasons. How many millions would that kill due to famine and starvation?

Rationality works fine with other rational people, but the President has had a singular lack of success in convincing other countries to come along despite his great faith in his own gifts of persuasion. He cannot even convince Brazil to come along on economic sanctions on Iran, much less convince Iran to do much of anything. He has negotiated a nuclear weapons reduction treaty with Russia, which is unsurprising if you are aware of the decrepit state of Russia's nuclear forces. Their current nuclear missile submarines are the 1970s-era Delta-class, and they are reaching the end of their service lives. Their proposed replacement, the Borei-class, are having terrible troubles with their missiles and it's going to cost a fortune to fix those problems and launch new boats. In agreeing to mutual limits on nuclear weapons, the President has solved some very expensive problems for the Russians, with little gain on our side.

The article also mentions that the President's policy "renounces the development of any new nuclear weapons, overruling the initial position of his own defense secretary." The program in question is most likely the Reliable Replacement Warhead, a lower-yield but more-reliable and simpler nuclear warhead to replace our current stockpile. The net effect of bypassing the RRW is that our nuclear forces will continue a decline or require even more expensive refits to remain reliable. When our stockpile was designed "reliability" meant that a warhead would detonate as programmed and for a specified yield after a 6,000 mile flight at Mach 15 or so. Now that we've had them for a while and now that even underground testing is prohibited, reliability has come to mean the knowledge that these exceptionally complex devices will perform as designed after 20 or 30 or even 50 years of riding around in their delivery vehicles. Maintaining that level of reliability for high-speed low-drag mechanisms like the W76 warhead in Trident missiles and the W80 in Tomahawk cruise missiles can be a problem, namely that the things used to originally make those warheads can be difficult to recreate, and therefore even more expensive.

The RRW program was defunded by the Democratic Congress in 2008, and this administration's continued policy consigns our nuclear deterrent to obsolescence. The justification will be for cost reasons, the public will be told that it is just too expensive to maintain our nuclear deterrent, given all the other challenges we face as a nation, and it will sound reasonable. On the other hand, if we lived in a world full of reasonable people we wouldn't really need a nuclear deterrent. This policy is yet another example of ego trumping common sense, the President may be a reasonable man but his election did not make those who wish to strike at our populace any more reasonable. For a leader who claims the mantle of pragmatism, this is a policy that actually makes us more likely to be attacked by signaling that our deterrence is more conditional than it should be, and therefore less assured. By not wanting to appear threatening, the President is actually inviting more attacks, and history is pretty clear that at an unthreatening posture is not a reliable method of defense. We do have a very powerful conventional military, but that is best used for conventional foes. Foes willing to be unconventional should be heartened by our new 'posture'.

What the November 2009 Elections Mean

2009-11-04T18:12:00.001-08:00

Had a bunch of elections around the country, and your interpretation of them seems to vary greatly depending on which party you favor. The GOP points to Bob McConnell's overwhelming victory in Virginia as evidence that Virginia is no longer 'purple', and to Chris Christie's upset win over Jon Corzine to take the governorship of New Jersey as a clear shot across the bow of what the Democrats viewed after November 2008 as a permanent change in electoral politics.

Democrats, like Nancy Pelosi and David Axelrod, believe that the more significant race was in the 23rd Congressional District of New York, where Democratic candidate Bill Owens edged out Conservative Party (yes, they have that in New York, which sounds like a reason to invoke the Endangered Species Act) candidate Doug Hoffman. This sort of ignores the fact that there actually was a GOP candidate, Dede Scozzafava, a state assemblyperson who dropped out of the race after being pummelled in the polls, despite RNC backing and who repaid her supporters in the Republican Party (including Newt Gingrich) by endorsing the Democrat rather than Hoffman. There is an meme floating around that the NY-23 seat hadn't been held by a Democrat since before the Civil War, but apparently people who believe that meme have no access to Wikipedia, the last Democrat to hold that seat was elected in 1991, and the seat has changed hands between the parties eight times in the last century.

In terms of the number of voters, overwhelmingly the votes went GOP on the whole, particularly in Virginia where McConnell stomped Creigh Deeds by a 20% vote margin. Considering that McConnell won the State Attorney General race against Deeds by a fraction of a percent in 2008, the players didn't change but the score most certainly did. Chris Christie was outspent 3:1 by Jon Corzine, a former Goldman Sachs partner and very wealthy man who spent heavily in New Jersey media, which means buying lots of air time in NYC and Philadelphia.

The lessons I take away from these results are as follows:

1. It's Still The Economy, Stupid.

Times are tough. When times are tough, voters tend to punish the party in power. The vote totals in favor of the GOP are similar to those in the 1993 by-elections, which implies that 2010 could end up much like the highly-disruptive 1994 election that swept the GOP into power. This is not an endorsement of the GOP, simply an observation that if the DNC believes that running against George W. Bush will work in 2010, I believe they will be rather rudely surprised, assuming the economy does not improve dramatically. Nobody is buying the 3.5% GDP bump. Unemployment and possible future unemployment is what motivated the voters this time around.

Continuing to trumpet a temporary bump in GDP in the face of continued job losses is a net loser for the White House. Compounding this with "jobs created or saved" numbers that not even the network newscasts will report with a straight face is telling the American people that "All is Well" when they clearly know all is NOT well. A scene from Animal House shows how I believe the White House's economic numbers are being received (note: the White House is played by Kevin Bacon):

2. With Enough GOP Help, The Democrats Can Win Seats In Purple Districts.

You would think that this would have been evident from the 2008 election, but it does not hurt to repeat it. John McCain was nominated from a dispirited field of GOP candidates, flirted with selecting a Democrat for a VP and refused to fight his opponent. Bob McConnell and Chris Christie ran disciplined races against Democratic opponents who had numerous campaign visits from the President -- and won.

Dede Scozzafava was the choice of GOP party people in NY-23, not the product of a contested primary. Her policy positions were far to the left of any mainstream Republican to the point where she was endorsed by ACORN, the SEIU and Markos Mouslitas of the Daily Kos. She made Arlen Specter look like Tom DeLay in terms of conservatism.

Even after getting millions of dollars and campaign volunteers from the National Republican Congressional Committee, she turned around and planted the knife squarely in the back of the party by endorsing not Doug Hoffman, who would have caucused with the GOP, but Bill Owens, whose policy positions were only a little to the right of hers. She quit the Saturday before the race because she was destined to finish a distant third no matter what, but given the small margin between Owens and Hoffman it's likely that her Dead Hand endorsement of Owens lost the district for the party she claimed to support. With enough help from incompetent Republicans, Democrats can eke out a victory.

3. Third Parties Feel Good, But Don't Win.

You know that guy, the one who drives a Peugeot just to be different? The person listens to African pop not because he likes it, but because it's different and allows everyone to know they're different when it leaks out their earbuds? Yeah, those people are probably third party voters, and while they're interesting and funky and unique, they're not going to win elections. It's about being pure to themselves and standing out more than getting anything done. Libertarian party, Green party, Peace party -- they're not unAmerican in the sense of treasonous, they are unAmerican in the sense that they're satisfied with being a stumbling block and not actually winning.

Doug Hoffman did not get Republican party support, but he did pick up endorsements from Fred Thompson, Sarah Palin, Tim Pawlenty and Mike Huckabee, as well as Glenn Beck. Doug seemed like a really nice guy in the interviews I saw, but somewhat unpolished and not ready for prime time. He did spectacularly well for a third party candidate, but -- and it's an important but -- he still lost. The way he came to be nominated over Scozzafava is part of the story here, and since Owens stands for re-election in 2010 I would love to see Doug lead a combined GOP-Conservative Party ticket in that election after he beats all comers in a primary.

The take-home lesson here is not that we need a Tea Party of staunch fiscal conservatives to spend themselves on futile, uncoordinated and underfunded attempts to win office. I sympathize with these people, I think their hearts are in the right place, but their small-government Constitution-quoting butts belong in the Republican Party. Those folks were sidelined within the GOP sometime around 2000, which was a cardinal mistake on the part of the GOP. Folks like Senator Tom Coburn need to go to the Tea Party folks, and the Tea Party people need to get into the Big Tent. Scozzafavas we don't need, you have to draw the line somewhere and she's farther outside the GOP perimeter than even Susan Collins and Olympia Snowe tend to wander.

The GOP needs the passion of the Tea Party people, and emphasis on small government and fiscal responsibility is the shortest path to rehabilitating the GOP brand.

4. Democrats In Red States And Districts Should Be Hearing Footsteps.

The Dems in Virginia didn't get beat, they got annihilated. Bill Owens in New York is not the newest progressive in Congress, he's the newest Blue Dog, and considering that he almost got beat by an almost-competent Doug Hoffman, I don't see him attending strategy sessions with the far-left Dems from deep blue districts any time soon. There are 83 representatives and 20 senators from states that went for McCain in 2008, and all of these people have good reason to point to the blood on the walls in the Democratic HQs in Virginia and tell their leadership that they are NOT voting for any tax and spend packages, like healthcare. Nancy Pelosi may have picked up another 'blue' seat in the House, but IMO the election results cost her many times that on specific issues from people in her own party.

The counter to the revolt of the Democrats in the House who are looking at serious reelection challenges is for the Democratic Congressional Campaign Committee to say, "Yes, you're right. It looks like a bad district in which to be a Democrat that you have there. If you vote with us, we might give you enough support for you to win in 2010, but if you don't -- good luck." Any party only needs 218 to hold a majority in the House, and Blue Dogs who stand a good chance of being replaced by Republicans in any event may find their votes and themselves not only not needed, but not wanted. It's a dangerous counter for the DCCC to play, but it's entirely possible they will invoke the 'death penalty' to get their signature legislative packages across. After all, they believe that PelosiCare, Cap & Trade and Card Check are what we need, even if we're not smart enough to see it for ourselves.

5. Barack Obama Looks Good In His New Suits, But They Don't Have Tails.

The spin on The One's involvment in NJ and VA is "He wasn't on the ticket, this has nothing to do with him." One Democratic representative said, "He hasn't even been in Virginia," which would have been true at the time if she had added, "in the last four days." Obama campaigned heavily for Corzine, Corzine completely outspent Christie, and Christie still won. McConnell, well, he demolished Creigh Deeds. He was expected to win by 15, but he won by 20. Ouch.

The 2010 elections will hinge on the President's ability to effectively campaign for Democrats. His appearances, his charisma, his connection to young and minority voters were deciding factors in 2008, and the Democratic majorities in the House and Senate are great examples of what having a powerful draw at the top of the ticket can do for a national party, only -- he's not on the ticket in 2010, either. It's debatable whether two state governor elections have anything to say about national politics, but if they have anything to say it's nothing that the Democrats whose names appear below the President/Vice-President block want to hear. Given that Barack Obama will be the lead singer in the DNC's national efforts in 2010, he needs to be able to do better. Any thought that the DNC had created a new grand coalition was cracked by Virginia going so solidly Republican and shattered by reliably-blue New Jersey repudiating Jon Corzine.

The "sea change" that President Obama was supposed to have led lasted all of a year -- a year in which the deficit tripled, more people lost jobs than in the year before and the Stimulus, well, didn't. The President's job is secure through 2012, but the Congress is definitely in play. The President's best hope is that the economy comes back, Iran signs a deal and China keeps its appetite for our debt for another 12 months, because if things continue as they have the voters will usher the Democrats to the door.

That's what I get out of this. Your thoughts?

Facebook Nobel Prize/Obama Jokes

2009-10-10T09:14:00.000-07:00

In the future, everyone will win the Nobel Peace Prize for 15 minutes.

In other news, the 2012 Olympic Committee announced today that President Barack Obama has been awarded the Gold Medal in the Decathlon, more than two years before the event was scheduled to begin. Commitee members were convinced of his fitness for the award based on shirtless pictures of the President published in People magazine.

President Barack Obama will receive an Emmy for his numerous appearances on television in 2008 and 2009. Particularly cited was his standout performance in the ABC production "Death of a Fly".

The President of the United States has been named as a 2009 Tony Award winner for his stellar attendance at a Broadway show in May 2009.

The producers of the Academy Awards program have announced President Barack Obama as the winner of the Irving G. Thalberg Memorial Award for lifetime achievement. In addition, the award will be renamed the "Barack H. Obama Award" and presented annually to President Barack Obama.

In recognition of the pitch he threw at the 2009 All-Star Game, President Barack Obama has been named today as MVP of the 2009 World Series.

The Heisman Trophy Trust announced today that the iconic bronze statue will be recast, with a shirtless Barack Obama replacing the anachronistic college football figure from the 1930s. In a mild departure from tradition, the President will be portrayed clutching a basketball, though a similar arm-forward pose will be used. Also, the 2009 award and all future Heisman Trophy awards will be presented th Barack Obama

The Association of Community Organizers for Reform Now (ACORN) has named President Barack Obama as their "Customer of the Year" for 2009. The White House had no comment. Senator Al Franken (D-MN) was disappointed in his second-place showing, but congratulated the President in a press release.

The National Organization for Women followed the lead of the Nobel Peace Prize committee and named President Barack Obama as NOW's "Woman of the Year" for 2009. When questioned about the President's lack of female gender, the spokesperson said, "He said he WANTS to be female someday, and we think that's good enough for us."

Seen elsewhere on the Internet: Barack Obama has been named Motor Trend's Car of the Year.

The First Lady announced that for the first time in her adult life she is proud of Norway.

"Hey honey, Barack Obama won the Nobel Peace Prize." "For what?" "Exactly."

Seen elsewhere on the Internet: The voting was close, but it was the Beer Summit that put Obama over the top.

Happiest guy in the world right now? The guy that had Barack Obama on his Fantasy Nobel Prize team.

I wonder if he sued to get all the other candidates off the ballot this time?

In a little-noted announcement, William Ayers received an 'Assist' award in the Nobel Prize for Literature category.

Chuck Norris could win the Nobel Peace Prize by default, simply by killing everyone else on the planet. Lucky for us, Chuck Norris does not want the Nobel Peace Prize.

Eight Years Ago

2009-09-11T14:46:00.000-07:00

I remember 9/11/01 very well.

I was underemployed at the time, and actually liking it pretty well. The main hospital our radiology group covered had been bought out by its cross-town rival, and not wishing to be an employee for the other radiology group, another radiologist and I were covering our secondary hospital on a per-diem basis. Tuesday was my day off, so I played some Counter-Strike until the late evening the night before, slipped into bed and slept the sleep of the innocent.

About 8:05 am I woke up with the sounds of early morning domesticity wafting in from the kitchen. I walked over to the computer, fired up Drudge Report and was confronted with the headline 'PLANE HITS WTC'. Just a few months earlier someone had run a Cessna into a building in Florida, and a couple of years earlier John F. Kennedy Junior had crashed into the Atlantic. I figured another light plane had struck the WTC, bad for the pilot, passengers and anyone in the office it hit, but not horrific, right?

I switched on "Fox & Friends" to see both towers ablaze, like Godzilla had come to town. Within a few seconds they replayed the video of the second plane hitting the WTC at high speed. The first might have been a badly off-course jetliner with control problems that happened to hit the tallest thing in Manhattan. The second was clearly no accident, with the high-speed bank into the corner of the building. Seeing something so bizarre, so unexpected, I half-anticipated more plane strikes in Manhattan in short order. Within half an hour, word came that the Pentagon had been hit, and I knew that something big was going on. My first thought was, "Someone has been reading Tom Clancy." The climactic scene in "Debt of Honor" is a JAL 747 slamming into the Capitol Building, and this was pretty much the same thing.

After seeing the towers collapse, one after the other, I was sure that I had just witnessed the most significant event of my generation. I also knew that someone, somewhere in the world was laughing and pleased about this, and that the person who planned this was absolutely messing with the wrong people.

Later I found out that someone I had met had been a passenger on Flight 77, the jet that crashed into the Pentagon. Paul Ambrose had been an officer in the American Medical Student Association, a competitor organization to my own AMA Resident Physician Section. I had a couple of chances to meet him at AMA events, he was really an exceptional guy. He did his residency at Dartmouth, was appointed the resident representative on the ACGME (the most important body for resident and fellowship programs), and went on to get a Master's in Public Health at Harvard. At the time of his death, he was a Senior Clinical Advisor to the Surgeon General. Paul was headed for a bright career in public health, and I'm sure he would have had plenty to say about our current health care debate. The Association for Prevention and Treatment Research has an annual conference and scholarship program named for Paul Ambrose. It says something about someone that, even at the tender age of 32, his life's mission and passion were so evident that he's still remembered and honored today.

The first time I met him, he was introducing a presentation from Doctors Without Borders. In retrospect, it's ironic that participation in an overseas mission with DWB seems dangerous and exciting, while getting on a plane from DC to California seems pedestrian. You worry the most about the confinement in your seat, about comfort, not the clean-shaven men in first class who are going to make a political point with your life and that of everyone in your plane, and anyone they can get on the ground.

People critical of our response after 9/11 often begin their criticism by asserting that "You think American lives are more valuable than the lives of people from other countries", and to be honest I don't. Americans of all walks of life are my countrymen and I feel a closer kinship to them than I do to others, I'll be honest. The big reason that another 9/11 needs to not happen is that Americans demand a response from their government, and the American government has the tools to get a response. Often, the tools are blunt and/or explosive, and come whistling down out of the sky to leave a mess on the ground. Avoiding another 9/11 is important because ultimately, it saves lives all around the world. It's hard to imagine a world without 9/11. We would not have put boots on the ground in Afghanistan on a dare. We might have eventually gotten around to getting rid of Saddam Hussein. The events of 9/11/2001 did change the variables in terms of what was 'acceptable risk', if you believe Ron Susskind's book The One Percent Doctrine, anything with a 1% risk of occurring had to be eliminated as a possibility. When you get down to that level of risk reduction, the US military gets very busy.

I'm thankful that my kids have no direct memory of 9/11. I'm glad I didn't have to try to explain it to them so they could understand. The idea that the world contains people so angry and nihilistic that using passenger jets as cruise missiles seems like a good idea is something I'd rather my kids not dwell on. On 9/11, I remember Paul and other people like Barbara Olson, an author whose books I have read, and Rick Rescorla, a British-born US Army officer and genuine hero of the Vietnam war who died at the World Trade Center. I remember the passengers on Flight 93, who showed what is defined by 'the Militia': not goofballs in camouflage crawling around Michigan, but average Americans who, finding themselves in the most dangerous circumstances imaginable, self-organized and probably saved thousands of lives at the cost of their own. The American response to 9/11 started on Flight 93, within minutes of their notification that the WTC had been hit by hijacked planes (through nominally illegal cell phone calls, I might add). Those people didn't wait for someone to tell them what to do. That's Americans in a crisis -- a brief moment of "Oh $%#*", then back to work on solving the problem.

That's what I want my kids to remember about 9/11.

My Position On The Healthcare Debate

2009-08-12T16:50:00.001-07:00

A friend asked me what I thought about it. I didn't have a single link to give him, so I typed this up. Lazy slug that I am, I decided to re-use it, because it's blog-length and it covers quite a bit of ground.

My biases:

1. Single-payer is bad. Lived in Canada. Been there, done that. Great place if you aren't sick.
2. The government doesn't run things efficiently, as a rule, though there are a few exceptions.
3. The current system could use a major tune-up.
4. Freedom of choice and markets are better than government mandates.

What is difficult to discuss is the final bill, there are three House bills, and at least two Senate bills at last count. The deciding factor for me is the "public option" for healthcare financing. It is also the point of greatest contention between the Blue Dog caucus and the Progressive caucus in the Democratic party. The Blue Dogs have indicated that they won't vote for a bill with it, the Progressives won't vote for a bill without it, so basically there is a standoff. The fiscal conservatives' goal and the social progressives' goal during the August recess is to show one side or the other that they're wrong, and hopefully get one side or the other to change. The pattern of town hall meeting attendance is heavily on the (D) side, because really, this is an intraparty disagreement on the blue side of the House and Senate.

I've read parts of HB 3200, and the "death panel" stuff just isn't in there. What it sounds like to me is the authors encouraging doctors to get all their patients to discuss end-of-life issues, like, "If your heart stops, we can try to restart it with electrical shocks, drugs, both or neither. Which would you prefer?" Or, "If you have difficulty breathing and your heart stops, do you want to be put on a ventilator?" I think the goal is to get people to think about those kinds of things, in part because some people will say, "Just let me die" and then those folks are allowed to expire without spending six weeks in the ICU, on a vent and on dialysis and with 24/7 nursing care, running up a bill until they finally die -- like they probably would have six weeks earlier, without the cost. It's not unreasonable to point out that this sounds like they're trying to lower costs by letting people die sooner...because that's precisely what they're doing, IN ADDITION to making end-of-life choices easier on families because Grandpa has already decided that if his heart stops he doesn't want CPR or to be intubated or whatever.

The Healthcare Exchange sounds needlessly complex, as does all the bureaucratic apparatus that HB3200 calls for. It recreates on a national level all of the state insurance regulatory apparatus that already exists. Why does an employer HAVE to go through a federally-approved exchange? Why do private companies have to rejigger all their products to get everything on the same forms the government wants? It's just busywork, to do all the same things that people are already doing, and all of this could be done easier and cheaper by simply making a model base-level policy and saying "Everybody has to offer this. You can add more if you want." Then have one website where patients can go and compare prices, etc. If Orbitz can do this for airline flights, then it can be done for health insurance. I bet Google would give the government a server or three for free.

After seeing the careful and prudent management of Fannie Mae and Freddie Mac, I am not enthusiastic as to the likelihood of success of "Fannie Med", or whatever they end up calling the public option. The President has promised "If you have insurance you like, you get to keep it"...though this does not apply if your company figures it's easier to pay the 8% fine and leave you out on your own, or if the public option is cheaper and they decide to go for that. It will be hard to fathom how politically salable a public option will be unless it's priced below private market options, so in fact it seems likely that many people will end up losing the insurance they have and getting new insurance. The argument is that the government is not forcing them to change, but that's kind of specious to me.

The other things that are telling to me are the state-level public options that have been tried in the past:
TennCare (TN)
Keiki Child Care (HI)
Commonwealth Care (MA) and Dirigeo Choice (ME}

ALL of these universal coverage plans ended up costing taxpayers lots of money, even though they weren't supposed to do so. TennCare worked for a while but eventually was a nightmare for TN docs. The Hawaii plan only covered children, but what they found was that even parents with private health insurance were dropping coverage on their kids and taking the 'public option' at reduced cost. Commonwealth Care and Dirigeo are covered in the Union-Leader link. There is another example of people gaming the system in Massachusetts, spelled out in tooth-grinding detail in this article.

One can argue for the necessity or 'right' to health care (and I would dispute that it's a 'right', Constitutionally or otherwise, for me to have prior claim on the services of another and have the power of the state at my disposal to take it from them), but the dollars have to come from somewhere and the math doesn't lie. These types of plans invariably cost more than projected, and deliver fewer services. We're already bumping up against our new national debt ceiling of $12.5 trillion or so. What gets cut to pay for healthcare? How much bigger does the federal government need to be? How many more weeks will you be working to pay for this new program, and all the minions in office buildings in DC to run it?

The reason that the 'public option' will run into fiscal problems is that it's counting on cost savings from treating chronic conditions earlier and keeping down acute care costs over time. The problem is that, according to the CBO (who reviewed the literature), this doesn't work.

Democrats in support of the plan insist it will work, despite real-world evidence that it does not. If wishes were horses, etc. The other problem is that our current health system serves 290 million people. Adding the extra 45 million is increasing the number of patients by 15%, on a system that in some areas and in some places, is already having trouble serving the number of patient-customers it already has. The number of physicians and physician offices doesn't magically increase by 15% just because the bill has passed. Here in Longview, it's a six-month or more wait to get a well-woman visit with an OB/Gyn. You can just go ahead and extend that to six-and-a-half months, proportionately speaking.

If the 'public option' got $4-500 billion in seed money, and was a live-or-die option with no recourse to the federal government when it, like every plan before it, went broke, I would approve of the experiment. Shoot, we've poured almost that much money into AIG, GM and Chrysler with little to nothing to show for it. But the real goal of a public option for many of the advocates is not to go broke, it's to have the private insurers go broke trying to compete with it. For many people, single-payer is their goal. And if the day comes that the single-payer program replaces all other health coverage in the United States, then there will be cost decisions made that will end in something like (but not called) a "death panel". It won't be overt action, they won't administratively sentence your Dad to lethal injection for being too old. But there can be issues like failing to provide enough NICU beds, or not providing enough therapy centers for cancer patients.

These things DO result in deaths, it's one of the reasons the US leads the world in cancer survival rates for both men and women. All single-payer systems will get into cost overrun problems, or at least, every one that has been tried has done so far to this point in the Untied States. When that happens -- not when HB3200 passes, not when single-payer is introduced to "fix" the problems HB3200 created, but when money gets tight -- then the government will make decisions about rationing care. They have to, they're the only game in town under a single-payer system. People will object that healthcare services are currently rationed based on price. This is true, a discussion of this statement is here.

Finally (and if you've read this far, I admire both your patience and your endurance), there really are options to HB3200 and everything being considered now that are cheaper and will actually help the people who need helping. The bizarre thing about US health insurance is that it's tied to employment, an artifact of WW II and wage & price controls of the time. Insurance is tax-deductible for employers, but not employees, to the tune of $264 billion in what would otherwise be income tax collected on the equivalent in wages that is spent on health insurance. The smart thing to do IMO is to make that an individual tax deduction, refundable as a credit to low-income people on a sliding scale. If you want poor people to have insurance, then make sure they get the money the same way they get EITC checks when they file their taxes. For everyone else, your employer can pay you full wages (instead of wage=(full wage minus insurance)), and you can buy your health insurance the same way you buy your life insurance.

Make it so that people can buy insurance through groups if they want to, like association health plans (NRA, Texas Aggie Alumni Association, BBB, NASB, whatever), and buy across state lines to find better deals. If the government is going to do anything, specify a method of comparison of benefits and costs that all insurance plans have to meet, publish it on the Internet and put printed copies in every post office and library for people who don't have internet access.

The 85% of people who have health insurance will still have their health insurance, and you'll get the people in the 15% uninsured who need and want health insurance. The government can use its existing infrastructure (IRS) to get the money to people, at no additional cost other than a modification of the 1040 form. The government doesn't have to collect any more information than it has right now, on anyone. The government doesn't need to create a whole new fiscal risk to the budget, either.

Why Treasury Auctions Should Matter To You

2009-05-08T08:42:00.000-07:00

Yesterday, the US Treasury had to offer more interest than they were expecting to sell their 30-year bonds.

Now, I'm not a financial whiz, and I'll be happy to hear from anyone who is in the bond-trading business about the significance of this event. But a similar thing happened to Great Britain earlier this year, for the first time since 2002 they didn't sell the entire stock of government bonds that they intended.

Why this is important is that in the last few months of 2008 and early 2009 the spending that the Obama Administration intended to accomplish seemed reasonable if only for the fact that people around the world seemingly couldn't get enough of the Treasury bill. T-bills are offered at a given interest rate, and then they can be traded afterward. If the price of a $1,000 T-bill offering 10% interest goes up, then the yield (interest relative to the price of the bond) decreases, and vice-versa. If you pay $500 for a $1000 bond that pays 10%, then your effective yield is 20%, because you're getting $100 in interest for a cost of $500. Government bond prices generally don't swing this much, but you can get some corporate bonds (GM for instance) at well less than face value now, with an astronomical yield, in part because the people who bought GM bonds originally don't believe they'll get either their money back or even their interest.

If you paid $1200 for a $1000 bond with a rate of 10%, you're actually seeing negative yield, it costs you more to own the bond than you're receiving in interest. For a while in 2008, the credit and investment markets were in such a tizzy that the T-bill was showing a negative yield -- people didn't mind losing a little money if they knew they would get the bulk of their money back. The private equity market was in disarray, and the government equity market was the place to be.

If you're a statist looking to expand the power of government, this latest credit crisis is a self-licking ice cream cone. Private equity is discredited, so people have a great appetite for government debt they feel they can trust. With people lining up to buy your debt, your government spending can increase because they are giving you cash in return for promises, cash you can turn around and spend on what you see as places for the government to "invest". What's more, people are so frantic for government debt that the bidding process keeps the interest rates low, so the cost of incurring debt isn't nearly as great as if you tried to borrow huge amounts of money under normal circumstances. It's a perfect storm blowing in your favor.

But all parties come to an end, and funny enough for the statists, it's good economic news that is now the problem. The latest jobs report that came out this (Friday) morning showed that only 539,000 people lost their jobs last month, rather than the 600,000+ in the preceeding few months, and there are private-sector folks who track this kind of thing so that the lower first-time unemployment number was known. Now, I don't presume to speak to the minds of Treasury auction participants, but reporters seem to feel that the expectation of slight economic improvement led the bidders for 30-year T-bills to ask for more interest (bid less money) for the T-bills on offer yesterday. This is plausible. When the economy is improving, the T-bill is no longer the only lifeboat, and negative yields may lose less than the market in 2008, but if the market is better in 2009 then money managers will need to get better than negative yields themselves.

Other plausible reasons for the Treasury unexpectedly having to offer higher interest yields include the Chinese not buying as much as they used to, meaning more were available and demand was down. As well, investment banks looking at the huge amount of money that has been promised by the government and lent by the Federal Reserve may be asking themselves when the inflation is going to hit, and wanting a higher yield to compensate for the increased risk of inflation.

In any event, this is a sign that the days of the private market being happy to lend to the Federal Government at record-low rates of return and fund masssive government expenditures may be drawing to a close. The auction didn't fail the way the British auction did, the Treasury was still able to raise the requisite amount of money albeit at a slightly higher cost down the road to the taxpayer. But the increased cost of borrowing and the failure of the British bond sale earlier this year does beg the question, "What happens if the government finds it harder and harder to borrow money?" There is not an infinite appetite domestically and abroad for US public debt, so there is an upper bound to the amount of borrowing that can occur.

Being a sovreign nation with a fiat currency, the United States has as many dollars at is says that it has, and the Federal Reserve System is allowed to expand or contract the monetary supply (the total number of dollars) as financial demands require. If the government cannot sell its debt, it can simply ask the Federal Reserve to "print" more money.

As an aside, I wish the presses were running full-tilt cranking out sheets of $100 bills to fund this government expansion, but I doubt the money could be physically printed fast enough to fullfill the requirements of just the amount of money passed out to banks, car manufacturers and expanded government programs since this past October. A trillion dollars is ten BILLION $100 bills. At a gram per bill, that's ten million kilograms of currency, about 22 million pounds of nothing but $100 bills.

This dump truck, the Caterpillar 797B, can carry 380 tons and is used in mining operations.

It would take just under 29 of them to hold a trillion dollars worth of $100 bills. It would take roughly 100 of these trucks, filled with their maximum load of 380 tons of $100 bills, to haul away the federal budget this year -- but hey, only half of that is debt, right?

That trillion dollars can be created in a computer system by the declaration of the Federal Reserve. It most recently happened on March 18, 2009. The Federal Reserve bought $1 trillion in T-bills and mortgage-backed securities with this money, though no 380-ton dumptrucks were reported in the streets of Washington, DC. The computer at the Fed got another 1 followed by 12 zeroes, and shortly thereafter the accounts listing "T-bills held by Federal Reserve" jumped up, and so did the account balance of the Treasury.

If you're getting a mental image of a snake eating its own tail for the nutrient value, then you're pretty much right on as to what is happening. This is of course legal, I'm not decrying it as something evil or nefarious, but everything has consequences. And it's the consequences that are my chief concern when the Treasury has problems selling their T-bills, because the Federal Reserve can always buy them with currency they create not based on items of intrinsic value, like gold or food, or based even on paper currency, but by the declaration of the Federal Reserve. Thus, there are more dollars in the system, and as the amount of goods and services produced in the United States didn't change, by definition the value of goods and services per dollar will decrease. This is called inflation.

When the US Government can no longer exchange its debt obligations to fund government operations, it must turn to making more currency. It's possible the Federal Reserve will tell President Obama that the till is closed, that the risk of inflation is too high. They will do this in part by making it more expensive for everyone to borrow money, by raising interest rates. This not only affects the federal government, it also affects everyone whose ARM resets and leads to higher mortgage costs. It affects anyone buying a car, which is something the auto industry really doesn't need. It affects anyone trying to borrow money to build or expand a business, increasing the costs of economic growth and employing others.

At this point, we must hope that President Obama and the Congress are "moderates" they tell us they are, and will moderate their spending appetites, which to this point exceed that of any Congress or Presidency in US history. I hope Ben Bernanke has the stones to tell the President that they just can't borrow what they want to borrow from the Fed, and that if more T-bill auctions end up more expensive than originally planned that Tim Geithner will pull the President aside and tell him that there is no more appetite for our debt and some serious priority-shuffling is required.

Maybe this will come in the form of significantly increased taxes, but people resist paying taxes (all people, not just wealthy people) and will move to minimize their tax burden. It's more likely that some of the more ambitious parts of the Obama agenda, like health care reform, will have to be seriously scaled back or abandoned altogether, if this happens before things like health care reform and cap-and-trade energy taxes are locked into place.

But it is also likely that what will be described as "a little" inflation is declared to be worth the goal of a "more equitable society". Of course, the inflation won't be or stay "little", and the equality of outcome will never appear, thus the need for continued government pursuit of the will o' wisp, with the inevitable "little more" inflation every year.

And meanwhile, your savings will be ground away, the cost of everyday goods will continue to increase, and we will learn the joys of inflation that has so bedeviled Zimbabwe and Argentina and other nations whose leadership was wrong-headed and felt their ends justified their citizens' increasingly-humble means.

So keep an eye out for news of more T-bill sales going unexpectedly south. I expected this, just not so soon. This current event is minor, and may not happen again for months, but when a T-bill auction doesn't sell out, that will be time to see how much gold you have on hand, because your next set of groceries may be costing considerably more than the last.

How I Spent My First Billion

2009-05-06T16:04:00.000-07:00

I was born wealthy. I had nothing to do with this bequest of good fortune, and I'm not feeling guilty about it as some would have me do. Much of the wealth I had I can only appreciate looking back over my life. I can say that it truly is the experiences that stand out more so than the material things, but I had those, too.

I had houses in Michigan, Ohio, North Carolina, Missouri, Arkansas, Pennsylvania, Iowa and several in Texas. I even spent some time living abroad, it's one of the things you can do when you have the means. I (like many wealthy people) had two families, but they get along exceptionally well. Spending liberally on both of them keeps things on an even keel. In my family, my parents know about spending -- they've each spent over TWO billion.

Rather than being idle with my wealth, I spent quite a bit of the first billion on education. Several schools in several places, sampling what I could learn. I even got a doctorate, and a career to keep me busy. Doing nothing with the wealth you've been given is just wrong, isn't it?

And I spent, boy did I spend. Looking back, it's hard to imagine that I spent on average around eighty-six thousand a day. I even spent my wealth when I was sleeping, but the sleep was worth it. It's funny, when I was younger the wealth seemed more valuable somehow, but now having spent so much I have the memories to show for that billion. In the process of burning through my first billion I found a wonderful, thoughtful, capable lady who really wanted to help me spend it well, and we have three really funny, intelligent children, all of whom have their own fortunes to spend or (so we hope).

I made a lot of good, genuine friends. It's hard for some people to know whether it's their wealth that brings friends to them, or they themselves, but either way I met and befriended hundreds of people while I was spending my fortune. I have friends from nearly everywhere I lived, much like families, when you spend on people they tend to remember it, and appreciate it. People say you can't buy friends, but those people just don't spend the right way.

The end of my first billion I didn't even recognize, to be honest. I was working my first real Big Boy job, living in a great little town, father of two and planning to have Lasik in a couple of months. Best I can figure on August 9th, 1999, at about 5:30 in the morning I spent the last of my first billion.

I turned 31.7 years old. And in my sleep, I started spending my second billion.

*****

The billion I had wasn't in dollars. I had spent a billion seconds of my life to achieve all those things. My two families were my brother, sister, mother and father, and then my own family with my wife. I lived in all those places mostly because I was a kid moving around with my parents. I "bought" friends the way we all do -- with our time, our greatest investment in others.

I found out that I had spent a billion seconds already when I recently read Everyday Survival by Laurence Gonzalez, an excellent meditation on life, people and energy disposition. It was about that time that we were talking about these huge budget deficits, when the phrase "billions" was casually discarded in favor of "trillions", and it struck me how little we understand and relate to large numbers like that. A billion seconds is three-quarters of my life to this point, almost. We consider people who've had three billion seconds of life to be quite old. When people start talking about a $787 billion stimulus bill, that's a little over $86,000 a day for roughly 200 lifetimes.

And when they talk about a trillion -- that's a whole order of magnitude (well, three orders of magnitude) more. A trillion seconds ago was 30,000 years ago. These numbers are staggeringly large, and it sort of makes my mouth go dry a bit to consider that those numbers are debt, money that is intended to be repaid. Statistically speaking, I've worked for 15 years, and spent four months per year working just to pay the taxes I've owed. Doing the math, that's:

60 months
240 weeks
1200 workdays
9600 working hours
34,560,000 seconds

In my next billion seconds I'll probably be working the whole time. Assuming no increase in income tax rates, that's going to mean the income taxes I'm paying will consume 6.9% of my life. That doesn't even count the repayment of debt, the debt this year alone is nearly half of the budget, meaning that if we all spent 13.8% of our lives doing nothing but working to pay taxes we'd break even...this year. This assumes no inflation and no increase in interest on existing or future debt, both of which are exceptionally unlikely.

This is why the debt bothers me: because my kids will be spending a little over a tenth of their adult lives working to pay income taxes just to keep pace with the debt, not to even begin eliminating it. Once you add in the anticipated shortfalls from Social Security and Medicare, they're trillons of more dollars in the hole.

They're kids, and I'm not going to explain this to them until they ask me. Right now, they have a wealth of time they need to spend developing themselves, their skills and abilities. Right now, I'm the adult with the wider view of the world and what's going on, and it's my responsibility to change this. It's the responsibility of all of us who have the skills to do basic math to let our representatives know how much we dislike this level of spending.

It's not just your dollars they're taking. It's your real wealth that's being spent.

Sippican Cottage: My Father Asks For Nothing

2009-03-04T13:04:00.000-08:00

Sippican Cottage: My Father Asks For Nothing

Papa (Marci's grandfather Billy Wise) died in February 2003, I can gauge how long ago by how big my youngest daughter is. She was a tiny spark of happiness toddling around a gloomy living room back then. She didn't get a chance to know him, and it's her loss.

He was a supply Sergeant in the Army Air Force, based in England from 1942 on. His unit got there to set up everything so the B-17s based out of England could start the difficult process of sorting out what worked and what didn't in the aerial bombing of Hitler's Europe. He flew on a few missions, he called them "milk runs" across the channel to France, when they needed anyone who could hold a M2 .50 caliber machinegun in the side gunner position, but he would tell you he wasn't a combat soldier. He was a proud veteran of the Eighth Air Force, though. He had a story or three about going across to Normandy a few days after D-Day to set up Marsten matting to build an improvised airstrip. He wasn't a fan of war.

He came home to a wife who loved him for nearly sixty years (and still does today), a series of sales jobs at which he found middle-class success, and had two children: a daughter and a son, who is the father of my wife and the grandfather of my children.

I knew Papa for what seems like a very short time, it was only 12 years and some change. I intended to take him to an airshow and buy him and I a ride in a B-17, but by the time I had the resources I didn't have the time, and he passed away suddenly. It would have been a great thing, but I dithered, and I missed it. I miss him more.

He died the way he would have wanted to, I think: in the middle of a joke at a doughnut shop where he and his Greatest Generation compatriots met daily to solve the problems of the world. He probably would have wanted to make it to the punchline, but hey, leave your audience wanting more, right? He was a gem of a man.

His burial was at the National Cemetary in Grand Prairie. If you've never been to a military funeral you can't understand the bond that soldiers feel for one another. The attendants at his funeral showed the utmost respect for a fallen soldier, and his survivors. He fought, like so many others who proceeded him into that cemetery, because it was the right thing to do. My wife, my children, maybe even I were witness for him that day, because he made our lives as we know them possible. It was the least we could do.

This is a great piece about a son who got to take his father to see a B-24 like the one that was so formative in his young years. I'm glad for him that he did.

It's also a reminder to me to stop doing the urgent things, and start doing the important things.

The Governance Registry

2009-03-03T12:54:00.000-08:00

This is an idea I have been kicking around for a while. It would make (at the least) an interesting experiment, and not a particularly expensive one.

The proposed Obama budget for 2010 I find to be an abomination, it's only redeeming value is that it makes the steaming loaf of the $410 billion Omnibus budget bill for spending for the rest of 2009 look responsible by comparison. I fundamentally disagree with spending that much money on things that I do not share the President's concern for, and what's more, I pay a HUGE pile of taxes and stand to pay much more when the tax cuts of the Bush years run out.

I remember the misguided "Nuclear Peace" movement of the 1980s, and the phrase, "Wouldn't it be nice if schools were fully funded and the Air Force had to have a bake sale to buy a bomber?" Undoubtedly this doggerel was born in some left-wing think tank, or maybe air-freighted straight over from the USSR itself, but it got me to thinking: would the school or the Air Force win in a budget contest? And for me, there was no doubt, I'd be buying a share in the bomber.

With wedding and baby showers the US has developed quite an infrastructure dedicated to making lists and letting others fulfill the wishes of the honorees, it seems to be a reasonable step to adopt the same thing for the US Government. My "Government Registry" works like this:

1. The Congress adopts a budget for the year, which is divided as much as possible into the smallest dollar-value increment for each program and then fed into an online database. The Congress has 'registered' for the things it would like in a given year, down to the nuts, bolts, tires and policy costs.

2. Congress can set whatever taxation levels it chooses to, brackets, flat taxes, whatever.

3. Taxpayers get a report from the government when their taxes are filed, listing their payroll taxes, their income taxes paid, and their taxpayer ID.

4. Taxpayers then log into a secure website, enter their taxpayer ID and "go shopping", dedicating their tax dollars to specific programs the Congress has asked for in the next fiscal year.

You have to pay your FICA taxes toward Social Security and Medicare, which are programs that you front-end pay to directly benefit you, so when it comes to "shopping" for the government people who don't pay income taxes don't get to play in terms of determining which national priorities get funded.

For the lazy, there can be choices like "Evenly Distribute" and "All Social Welfare" and "All Defense" to allocate their dollars quickly and by formula. For everyone else, they get to know for sure what their tax dollars paid for in the next fiscal year.

I would buy a JDAM kit, medical insurance for a military family or two, childhood immunizations, practice ammo for the military and maybe buy some number of yards of interstate highway repair, and some hours of Air Traffic Controller hours (might need those guys if I fly). I would know what my money went to, and that makes paying my taxes a little more palatable.

The thing about wedding registries is that you occasionally get more in one category than you wanted, and have to return things. It would be interesting to see HUD trying to hawk 120mm tank rounds to fulfill their Congressional mandate, but probably the easier way to handle it is to make a public "gift" of some portion of overages from different government departments to the ones who missed out. The implications for the importance of the different departments of government in the eyes of taxpayers could not be clearer than the DoD announcing that it was funding 70% of the Department of Agriculture's budget for the year.

The budget would look very, very different, I think, if the people who paid the taxes chose where the money would go.

The President and the Fat Tail

2009-02-25T17:36:00.000-08:00

Well, I said in my last post that the next bailout would be sadder, and boy was I right.

Since my last missive of 12/19/08, our Congress has passed a "stimulus" bill of $787 billion dollars. The Democratic Congressional leaders have made the prudent observation that during times of fiscal crisis it is important to pay your debts, and so right out of the chute they first debts they paid were political ones -- a Christmas Tree like no other. The reasons and justifications for this manifold and ultimately silly (though frightfully expensive) exercise really don't bear repeating, though the worst argument I heard was to the effect that their party interests had been shafted since Reagan, so they were evening the scales a bit. For anyone who believes this I would challenge you to look up the expenditures by government department in 2000 (Clinton) and in 2008 (Bush). Non-defense spending increased dramatically, Bush's major failing as a President was his inability to stop his GOP Congress from spending money like, well, Democrats.

You'd think $787 Billion (yes, that's a B) would have been enough, but you're wrong. The next appropriation bill coming down the pike is an Omnibus (when you see that word, hold onto your wallet) bill to fund several departments whose appropriations for 2009 (until the end of the federal fiscal year on September 30) could not be agreed upon by Congress and President Bush. There is more pork in this bill than in the entirety of the State of Iowa, and it leverages UP the baselines that will be used by the Obama Administration to set budget levels in their budget proposal for government actions starting in 2010. This bill, already passed by the House, bumps up domestic spending by 6.7%, the Obama budget will only increase it more, despite his recent pledge to halve the deficit to "only" $500 billion -- in four years. Despite Obama brushing off McCain's anti-pork attacks and promising a bottom-up review of government to find waste and inefficiency, this stinker of a bill is apparently not going to be even remotely opposed. The Democratic House Leadership essentially wrote the stimulus bill, apparently getting your shot entitles you to...getting another shot. Hey, we're all entitled now.

We haven't even begun to talk about the goodies that are hidden in these two bills, two bills that nobody will ever read, except the people who wrote them to advance specific purposes. Those purposes will be revealed in time, but not in time for us peons to have any say in changing those purposes. Much of the welfare reform that was the best thing to come out of the Clinton years has allegedly become undone, the Tiahrt Amendment banning states from using gun purchase records for anything other than law enforcement reasons (the other reasons being frivolous lawsuits against gun manufacturers) may not survive reauthorization or may be repealed outright.

We have not been governed recently, we have been dictated to, with the pretense of democracy. I'm really not sure how else you describe people voting on a bill they can't possibly read, making laws out of text that a minority of the majority concocts in camera. Democratic process does not make a democracy, and we barely have the process, or have for the last few weeks. The idea of a star chamber that is somehow legitimized by having people vote to approve their decisions largely sight unseen is laughable, or at least, it should be in America.

The argument that is frequently advanced by the White House or Democratic leadership is that this is a critical period and we must act quickly. I beg to differ. We get fewer points for getting an answer out quickly than we do for getting the right answer, the difference I believe is substantial and we all will pay for the push for speed. The nonpartisan (at least by reputation) Congressional Budget Office had a rather dim view of the stimulus -- in separate statements they predicted that the recession would end by 2010 and that the stimulus as written had more long-term downside than short-term upside. This does not suggest to me that the stimulus is the right answer, and so the "crisis" will continue. I predict that this crisis will not be declared to have come to an end until the political goals of our current overlords are well and truly met. There will always be the spectre of economic backsliding into recession to goad people into supporting the latest attempt to patch our societal and social dikes with money borrowed from the Chinese. I believe I've said it before, that when you hear "government spending" you should interpret that as "borrow from the Chinese".

If you need any more proof that this isn't the same country it was ten or twenty years ago, then I can't help you. In some ways it's good that this isn't the same country as it was in the past. Electing a minority man with a funny name as President is not the first way our country shows it's getting beyond racism, I believe it rather shows that we're well down the path. But part of the problem we're facing today is that our leadership is proving itself wholly unsuited to the tasks before it. This will not be the same country in 2012 that it is now, and will change further by 2016.

Richard Fernandez at Belmont Club (a great blog, you should read it) makes this point, along with Fabius Maximus (another great blog, if a little more depressing). If it seems like the world is changing, they argue, it's because it really is, and more fundamentally than at any point in my 40 living years. Chaos is taking the reins and we are in for some momentous times.

I only wish the crowd in the White House and House & Senate leadership appeared to be ready for the times. In their defense, I don't know that anyone could be, but there is certainly no lack of confidence from those quarters. They have the plan that will make it all better, fix all our woes -- um, pardon the language but the hell you do. The financial turmoil is beyond the ken of Barack Obama and Timothy Geithner. Their performances have demonstrated this convincingly. Quite frankly, decades of economic assumptions are unravelling at breakneck speed, and if the former New York Federal Reserve governor doesn't know the easy answer, then there isn't one, and Mr. Obama needs to quit telling us that he Has A Plan. He has assumptions, and even those are probably wrong.

People want to make this out into a "Bush vs. Obama" question, but that's not the issue. It is a gross simplification to assume that doing the opposite of the Bush Administration policies are automatically the right answer, the world is far more complex than that. The Obama Administration has its own set of answers -- and these will be wrong, too. The reason is that circumstances have exceeded the ability of the government to control, and the solutions that the Obama Administration and Democratic majority in Congress are applying are political solutions to economic problems. It's hard to blame them, they are after all politicians and it's natural for them to field a political solution, it's the only tool in their toolbox.

We have left the realm of realtively stable economic times and moved into the world of the fat tails, a reference to the Bell Curve and a situation where low-likelihood and high-impact events happen more often than they "should", it's exactly this kind of non-linear behavior that triggered the implosion of the financial world. Everything that has been proposed so far is demonstrably linear -- reviving old programs, pouring money in and expecting commensurate results, investing years into the future when we do not really know what the future will bring. I think that the government's actions are rational, but they are being applied to an irrational, chaotic situation where many of our basic assumptions are changing or about to change. How successful is that likely to be? The rate of success lies in the ability to predict the question that you're trying to answer, if the economy is a game show the stimulus package is punching the button on Jeapordy and giving Alex Trebek your first ten answers without hearing the questions. That's not the kind of change I can believe in. The fact that Obama says the word "change" does not mean that he's ready for it on this scale, and the Back-To-The-Future stimulus bill only reinforces to me the folly of old school solutions for new and novel problems.

The conceit of the day is that our government's fiscal and monetary policy will shape our world during this time of change, and it is a only conceit, not a plan. Normally I wouldn't mind watching a liberal and borderline socialist go down in flames, but this particular liberal happens to be the President of my country and the bet he's making is with my (real) tax dollars and those of my kids. The well from which our government can draw resources is much shallower than the Obama Administration seems to believe it is, things will go south quickly when we can no longer sell debt to foreign countries. This is not a time to centralize power, whether economic or political power. It's a time to allow flexibility, to allow individuals to change their circumstances to match the changes that occur.

I'm pretty sure that the tax burdens implied by the huge price tags on the stimulus, the House appropriations bill, the huge 2010 budget to follow, TARP II and the nationalization of healthcare (not to mention the nationalization of banks) are not what is meant by giving the American people "flexibility". It's just the wrong road, and we're already passing through a period with a lot of quakes. I don't know that anyone else could do a better job, but there are plenty of people who could be more humble. People who could admit that fixing our economic problems is beyond the ability of the government, rather than proposing government spending that increases the size of the government.

I'll be honest. I'm reflecting more and more on each day on the things I enjoy about my life, because I'm pretty sure things are going to really, really change. I wonder when my grandparents realized that things were going to get bad and stay bad for a while back in the late 1920s and early 1930s. I see this time as a twilight. I don't know how long it will last, it may me months or even a few years, but the big drop on the rollercoaster feels like it's coming.

And I haven't even read Atlas Shrugged yet.

Bailouts, Corporealness, Faith and The Pet Sematery

2008-12-19T20:49:00.000-08:00

I gotta tell you, I go off to Facebook for a few weeks and everything I predicted happens. It's as if the people who run this country don't even read my blog.

Okay, it didn't happen quite the way I predicted. The GOP Senators led by Bob Corker, who heretofore has been a relatively silent backbencher, managed to insist on enough common-sense provisions in the Senate auto company bailout plan that it ultimately failed. The sticking point was the UAW having to pick a day in 2009 by which their wages would be reduced to those comparable to the wages paid at Toyota, Honda and other "transplant" auto companies. They were also going to have to take some of their pension and health care trust fund money in stock, and while they definitely want to get paid, nobody's crazy enough to take GM common stock right about now. The date that the UAW is thinking about is January 20 -- when the new President and the new Congress take over and things start swinging their way in earnest.

Like I said, there's no way a Democratic Congress and a Democratic Presidency aren't going to lead-block for organized labor. While this is a great opportunity for a Sister Souljah moment, the Democratic party has never stood up to the unions since the Great Depression, and given that we're on the brink of at least a Little Depression I don't see them doing that now. Heck, with "Card Check", the deceptively-named Employee Free Choice Act, it's not inconceivable that if the UAW waits long enough and twists enough arms at the transplant auto companies ("transplant" is the new term for foreign manufacturers who have set up here -- kind of like a transplanted kidney that is working when the native ones don't), they won't be lowering their pay and benefits to match the non-union shops, they'll be introducing the GM-Ford-Chrysler contract at all the new UAW Locals at the transplant factories. Disparity averted! Problem solved!

So now the White House feels the need to act, and here's where we get into the etymology of "corporation". Now, it seems funny to see the word corporation all by itself, without its constant companion word, "evil". For some reason, a group of people who are organized, like say, a community organization, is good, while a group of people in a corporation are practically destined to do fell deeds. One of the great realizations of my college education was that the words corporation, corporeal, encorporate and corpse all share the same Latin root: corpus, or body. A corporation is a legal fiction: it is in essence a brain-dead human being, forever at the age of majority, and as the officers of this corpus the Board of Directors has what amounts to power of attorney. While this body is never seen and doesn't act on its own, this particular corpse is agreed to exist by legal fiat. The assets of stockholders are shielded by this fictional being, who exists enough to own things and accept responsibility and blame, but not enough to have motive force. A corporation is a fictional person, nothing more and nothing less. The actions of a corporation are the actions of people -- good, bad or indifferent. People who fail to grasp that a corporation is simply an organizational tool and not a moral judgment are nonserious people.

So what we have are three corporations -- three now-very-old fictional people who used to be vibrant and healthy, and were active an vigorous as little as a decade ago. Now, they're functionally in the financial ICU, with multiple organ system failure and at Death's door, knocking loudly. The most recent knock was from Chrysler, who announced earlier this week that they were a bit overstocked on cars and would be shutting down operations for four weeks over Christmas and New Year's. This announcement was apparently made as a means of banging Chrysler's spoon on its high chair, the wallet of last resort (the White House) was insufficiently prompt with a bailout offer, and the owners of Chrysler were getting nervous.

As an aside here, the 80% owners of Chrysler are not Mom & Pop stockholders, it's Cerberus Capital Management, one of the largest private equity firms in the United States. Have you heard about how much money Cerberus is going to put into Chrysler? Yeah, me neither. Why innovate or invest or even manage when you can spend a fraction of that money lobbying for rents (the economic term) in Washington? Cerberus can go hang, I want to know what they're willing to do before my tax money goes to bail out people who make more in interest each week than I do in a year. But I digress...

So Chrysler gives a hint that it's going to take a nap and might not wake up, and the Bush White House folds like a lawn chair. They're scooping the dregs out of the first round of TARP funds (that program that was supposed to buy troubled assets, but didn't, and invested in bank equity to improve liquidity, which didn't work either, but hey) and have announced $13 trillon or so in low-interest loans for Chrysler and GM, to tide them over until February. If the Congress doesn't pull the brake lever on Round Two of the TARP funds (another $350 billion, or as we like to call it, about half of the cost of the War in Iraq -- remember when $350 billion was a lot of money?) in early 2009, there's another four-bil in it for them.

There are a couple of things to like, and this is looking very much on the brightest possible side. One, this is a loan, not a giveaway, though this is in itself a major technicality -- loaning money to your crackhead buddy when you know he's going to blow it and is unlikely to pay you back amounts to a giveaway. Two, to get the money the unions have to lower their wage scale to match the transplant auto companies' by 12/31/2009, among other things. That's it. Otherwise, your money is being used to perpetuate the life of a couple of corporate beings by another few months. They say end-of-life care is the most expensive, and if you needed any proof, well, there it is.

You see, there is an afterlife for corporations, these fictions of life that do our bidding. It's called bankruptcy. All that you have and all that you owe are tallied, and a judge makes a determination about how you'll spend the rest of your existence. There is a holy book that describes this process, the United States Code. It even has Chapters, Chapter 11 is the favorite of many. But to get to the afterlife, you have to have faith -- and faith is what we're missing.

George W. doesn't want to be the President who lets a whole economic sector die on his watch. He only has a few weeks left, and he's trying desperately to avoid becoming George "Hoover" Walker Bush -- his faith is being challenged. He has publicly stated that his purpose is to avoid a "chaotic" bankruptcy, because of the disruption down the supply chain and the further crisis in consumer confidence that would create, so he puts some quarters in the respirator and the corpus stays alive for a few more weeks.

Which brings us to Pet Sematary, a now decades-old novel by Stephen King, the functional lesson of which is that "Sometimes, dead is better". In the story a doctor loses his son and cannot bear the loss, so he buries his son's body in an old and exceptionally haunted Indian burial ground. What comes back from the burial ground looks like his son, but is clearly his son no longer. Eventually, the son-thing kills his wife, and having already lost everything, the now-quite-insane doctor buries his wife in the Pet Sematary and waits for her terrible reanimation. The clear parallel here is that Congress is the Pet Sematary, a magical force that will reanimate these fiscal corpii, though they won't really be alive.

Japan went through this same kind of real-estate fueled boom-and-bust cycle, and one of the lingering aftereffects were "zombie corporations", companies that were perpetually dependent on government handouts to stay alive. They were a further fiction atop the fiction of a corporation, unable to perform even the basic function of a corporation they were nevertheless kept functioning on the government dole to avoid the specter of unemployment. One imagines the Nikkei stock index as a tour of the storage chamber in Robin Cook's Coma. The fear of unemployment and the specter of deflation kept the Japanese government printing money, lowering interest rates and desperately propping up the economy, but there was essentially no economic growth in Japan for more than a decade -- almost the length of our own Great Depression, though without the high unemployment.

I can see Bush shambling toward the Pet Sematary, cradling the corpses of GM and Chrysler -- not because he loves them in particular, but because he fears loss and blame. It's really unfortunate that this and a shoe-throwing incident are the two last acts he'll probably be remembered for at least for the first round of histories. I believe he has faith in the bankruptcy afterlife for GM and Chrylser, but he doesn't want to pull the plug. He's kicking the can, and it's sad to watch.

The next Congressional session will be sadder. But when it comes to the bailout, I'm agin' it.

Pull The Trigger

2008-11-12T13:36:00.000-08:00

I've been hearing about how GM and Ford and Chrysler are on the ropes for months now. I even bought some GM at $6 a share a few weeks ago, the sold it at $6.50 because I read a rather convincing article that GM could very likely fail.

Well, it seems that that eventuality is pretty close to becoming a reality. The Big Three have convinced the Democratic leadership (Reid/Pelosi/Obama) that they need a bailout and now Obama is trying to convince Bush that they need the bailout even before the Obamas can move in with the new First Dog. Nevermind that the Big Three already have $25 billion in low-interest loans, a little tidbit passed in the days before the $700 billion TARP plan made that look like chump change. They need more.

Part of the reason they need more is that the UAW has systematically strangled General Motors and other automakers for decades. I should know, both of my grandfathers were UAW members and retired with UAW pensions, one from Fisher Body, the other from Chrysler. I'm far removed from Detroit now, but Detroit is one of my family's ancestral homes and my own father recently retired from GM. The UAW nearly killed GM a last year with a strike, as part of the settlement the long-term UAW pension and health insurance benefits were to be passed on to trusts, funded by General Motors and run by the UAW. Sounds like a good plan -- GM gets to pay $36 billion to pay for 70% of its massive $51 billion in unfunded retirement benefits.

Well, here we are in 2008, just over a year later and the Big Three's lobbyists are walking the halls of Congress and prophesying doom if they don't get paid. Hope and Change are in the air. GM hopes it will have enough cash to make it to the end of the year, much less until the change comes in late January of 2009. Nancy Pelosi and others are trying to figure out how much to pull out of the national wallet to prop up these automobile manufacturers, in part because the UAW's trust fund is not yet fully paid up.

An ironic note is that when President-Elect Obama is able to issue executive orders, one of the ones he's likely to issue is a variance from EPA standards allowing the California Air Resources Board (CARB) to regulate CO2, and raise fuel efficiency standards for cars sold in California. CARB has already indicated they want to raise standards above what Congress just mandated last year -- efficiency standards the automakers have yet to meet. If President Obama allows California, where 40% of US car sales occur, to set the bar for the rest of the country, within 5 years the car companies will be right back to Congress for yet another handout. If he doesn't, the MoveOn.org and hardcore environmentalist folks will be experiencing the buyer's regret that I expect them to encounter at some point in the first 100 days.

Pelosi, Reid and Obama are very interested in getting help to GM, not so much because they are ardent capitalists but because union households delivered Michigan, Ohio and Pennsylvania, among other states, and unions are a major constituent of the Democratic alliance created back during the last great economic challenge -- the Great Depression. The Wagner Act is a legacy of those days, the adversarial position of union vs. management was enshrined by legislation during the 1930s. The UAW delivered for the DNC in ways they really have not for GM, now they want their government to work for them, and be sure their retirement plans are fully funded.

I predict that GM will be bailed out by the government, at least once, if for no other reason than to preserve union benefits. In fact, literally for no other reason than to preserve union benefits. GM as a company will not be helped by this cash infusion, they'll likely get enough of your money and mine to complete their pension mandates, and then the Congress will find themselves much more interested in the workings of a free and fair market.

My modest proposal to Rick Waggoner is to tell the government to stuff it, save the money he's spending on lobbyists, and declare bankruptcy now.

No other course of action will allow GM even the chance to get the UAW claw off the company's throat. The Democratic Congress will not pay for GM's survival directly, it's mainly the UAW they want to see benefit. Only bankruptcy will allow General Motors to sever its relationship with the UAW and move forward like the other half of the US car industry. GM going bankrupt will not be the end of domestic manufacture of cars -- automobiles are still needed, and GM has the plants and fixtures to make them. But GM cannot do so and make money with its current cost structure, so to save the company the cost structure has to go.

You see, there are two automobile industries in the United States. One is northern, unionized, domestically-owned, and dying. The other is southern, non-union, foreign-owned and thriving. GM cannot continue to compete with Japanese companies who do not have to tote around the UAW. Taking Congress' money will weld GM even tighter to the UAW, and will likely be the end of a domestic industry.

So, Rick, buddy -- we both know you're on the precipice. Take a big step over the edge, before you get pushed. Maybe you can fly without all the deadweight, it's certainly possible. You'll never know until you try.

And Ford and Chrysler -- do you really want to be the last union shop in the auto industry?

Pull. The. Trigger.

Whither Palin?

2008-11-05T18:10:00.000-08:00

Well, the results are out and while the polls generally overestimated the level of Obama's support, they didn't over-overestimate it to the point of missing a hidden McCain victory. I believe Scott Rassmussen's group came the closest on the quadriennial dart throw, predicting a 6.5% advantage in people identifying themselves with Democrats over Republicans. And there's your difference, more or less. The PUMAs are apparently much rarer animals than they chose to let on.

Congratulations to President-Elect Obama. Now all you have to do is deliver on everything you've promised, and quite frankly you have as much chance to do so as your average department store Santa does to get everything under the trees of the kids they meet each year. It does not escape my notice that Barack Obama is the first man of African extraction to become the President. This is a big deal, but whether it changes much of anything with regard to race relations I don't really know. If GOP people opposing his agriculture plan, for instance, get the Race Card^TM deployed against them, little will have been accomplished.

Giving Her The Finger...Or At Least Pointing It

The recriminations are now beginning to boil out of the McCain camp, with a number of fingers pointed at Sarah Palin. Here's just a sample, according to Carl Cameron of Fox News Channel these kinds of things will be coming out for days.

Hey, why take blame when you can pass it on to others? The McCain campaign, unable to craft an economic message until an unlicensed plumber talked to Barack Obama in front of a rope line, figures it must all the Caribou Barbie's fault. For the record I tend to doubt she thought 'Africa' was one country.

The good thing for Sarah is that she has her day job, and can go back to Alaska where her popularity is only slightly dimmed (from 80%) and the Personnel Board has cleared her of any wrongdoing. She might have to fight the legislature over the Branchflower report, but chances are pretty good that they won't go after her. For one thing, it will look petty. For another, she's no threat to Obama and got her ears boxed on the national stage in a way that the Alaska Legislature couldn't dream of pulling off.

The shame of all this nasty talk is that it's just the standard pettiness that comes from losing an election, and in this case it's likely a bunch of insiders sticking knives into Palin and hoping for jobs in the next election cycle -- which starts a whole 100 weeks from now or so. Less, if you can wangle a staff job with a PAC. The maneuvering for 2012 at this point is pretty unseemly. David Frum, no Palin fan, blames Nicole Wallace, a former Bush staffer who worked for the McCain campaign. The kinds of things that are coming out are petty and catty, like she answered the door to her suite in a bathrobe. You mean, she didn't let the staffers stand in the hall? Goodness, how inappropriate...or something? Sounds like the kind of thing someone used to taking care of her own business would do, that's the mark of a humble person, not an arrogant one.

It's a shame the McCain campaign people weren't as effective at real politics as they seem to be at office politics. Could have made a difference.

Senator Palin?

Ted Stevens, Alaska's senior Senator (and newest felon!) might win his re-election bid after being convicted of perjury for failing to report $250,000 in home improvements an oil services company performed for him. If elected, he will most likely face censure and expulsion from the Senate, if not jail time, so he will not be serving. Alaska law requires a short-interval election within 90 days, so someone will be replacing him and will run against (most likely) Mark Begich.

Sarah could run, but it would be a bad idea. First, it looks like naked political ambition. She was elected governor, she should serve out her term. Second, if she wants to run as a Senator, Lisa Murkowski is up for reelection in 2010. I have nothing personal against Lisa Murkowski, but with the name there's probably a body or two buried somewhere and if she has ethical issues Sarah has the opportunity to run. Waiting is better. If she gets to appoint someone, I imagine she will appoint Sean Parnell, the Lt. Governor who she supported in the primary against Don Young.

Finally, being a Senator probably wouldn't add much to her resume. It would destroy her "Washington Outsider" credentials, which are probably going to be really useful because the Reid/Pelosi/Obama group have challenges before them their ideological bent does not prepare them for (war, recession, crushing debt) and their chances of screwing something up badly are very high. She will benefit from staying out of the blast radius of the debacle as much as Barack Obama did from being a state Senator during the 2002 Authorization for Use of Military Force vote before the Iraq War.

R-E-S-P-E-C-T

For someone who was such a punching bag for Saturday Night Live, the real Sarah Palin seemed to really make an impact on at least three people: Lorne Michaels, Tina Fey and Alec Baldwin. None of these folks would you expect to be political allies, and none of them are. But they have an interesting perspective, politics has been described as "Hollywood for ugly people", there is a certain similarity in what they do. Performers in Hollywood know they are at the apex of a very high and steep pyramid where only the best get where they are, and then with more than a little luck. When the guy that launched the careers of Bill Murray, John Belushi, Eddie Murphy, Mike Myers and Chris Farley, among many others says:

What do you think Palin gained from her appearance?
I think Palin will continue to be underestimated for a while. I watched the way she connected with people, and she's powerful. Her politics aren't my politics. But you can see that she's a very powerful, very disciplined, incredibly gracious woman. This was her first time out and she's had a huge impact. People connect to her.

She's a ratings magnet, too — do you think she can land a development deal if this VP thing doesn't work out?
She could pretty much do better than development. I think she could have her own show, yeah.

Lest you miss it, "I think she could have her own show" is a bit of a compliment. Maybe it's a way to get her out of politics and into something where Lorne feels she could do less damage, but either way it's a compliment.

Even Alec "I'm going to move to France" Baldwin is fairly circumspect in his criticism of her during his appearance on Letterman:

Same for Tina Fey on Conan O'Brien.

Obviously, it's easier to be nasty when you're being anonymous and not-for-attribution to Carl Cameron behind the campaign bus, and harder to do it when you're on-camera with Conan or Dave. Nevertheless, there is some acknowledgment from people pretty close to the top of their game in working in front of cameras that Sarah Palin has...something.

What she does have, and more importantly can communicate very well, is a general happiness about her life as an American. Of all the gifts that Reagan had, this was his most potent. Nothing draws people like happiness and love, and Sarah Palin is at her best when she communicates these things. If she can add an uncrackable knowledge base to that, she'll be a fierce competitor in the next election cycle. Contrary to popular belief and MSM assumption, conservatives really are happy. It's kind of our little secret, but when someone like Sarah Palin can get onstage in front of 40 million people and be conservative and happy at the same time, well that snaps the needle off the approval meter for conservatives. If being an Angry Conservative was enough, Pat Buchanan would have been GOP nominee for life.

Then again, after this turn as the punching bag, she might decide to just raise her kids, stay in Alaska and remember that couple of months when she was the first female GOP nominee for Vice-President. It would be our loss, I believe, but I think she's earned some peace and quiet.

Kiss Me, I Voted

2008-11-04T07:01:00.001-08:00

Yup. On the way to work, at Pine Tree High School. There were three people ahead of me in line, and it took about three minutes of waiting.

The "books" were gone this year, it's all on laptops and little printed-out stickers to sign. We've had E-Slate voting machines for the last few elections, they're pretty simple to use and it took a whopping sixty seconds or so to page through the options and make my choices. I didn't get a sticker, though. I wanted a sticker.

If you've already voted, congratulations. If you haven't voted, get out and vote for John McCain. There's always the possibility that your neighbor's useless kid will set down the bong long enough to find a polling place this year, you need to be there to cancel him out if he does.

No matter who wins, this is going to be a really, really big election. If Barack Obama wins, there will likely be a leftward tilt to the American government not seen since the Great Society days of LBJ, not to mention that America will officially be no longer racist.

The biggest game-changer of all will be if John McCain wins, though. It will be huge because a monstrous swath of the media and political elites will have been shown to be spectacularly and phenominally wrong. A sizable portion of those people will later be found to have been complicit in one of the biggest Psy-Ops attempts in American political history, the inevitability of Barack Obama. They will have missed a huge groundswell of opinion, and completely misread the political situation in the United States. You won't be able to sell anything with a poll for years in this country. It's happened before, in 1994. It may very well happen again.

If you're interested in what I'm saying, there are a couple of fairly long 'think' pieces I would invite you to read. The first one I read was from the oddly-named Zombietime and is called The Left's Big Blunder. Read that one and then go to Sean Malmstrom's site and read his entry called Toast.

Go ahead, I'll wait. I have to go to Starbucks and get my free coffee.

Now that you're back, those are a couple of well-reasoned arguments to keep your chin up, aren't they lil' GOP voter? Did you respond to a poll phone call this year? Me neither. Would you respond to a poll phone call? Yeah, me neither. I believe that McCain voters are horribly under-polled this year, and the majority of the polls show such wild swings and divergence from each other than they're useless. No two "scientific" polls using similar sample size and methodology should show a 15-point difference. The fudging always favors the Democrat.

Do not believe the exit polls, either. The media have too much riding on a Barack Obama win to not call the election as soon as possible and try to create a self-fullfilling prophecy. Exit polls are as subject to bias as anything else, the major bias factor is that Obama voters are more likely to tell you they voted for Obama, and McCain voters have to get back to work.

What if the media are wrong? If you've read the Zombietime and Malmstrom articles you're aware of the media either being swept up in or, in the case of MSNBC, pushing the meme of Obama's inevitability -- the poll-weighting, the Palin-hating (how much do you wish Obama could trade Biden for Palin at this point?). If they're wrong, after all that -- how will you believe them about anything in the future? They will have completely missed the largest political story in modern history because the Democrat/New Party candidate sent a thrill down their leg.

Their objectivity is shot whether Obama wins or loses in my opinion but an Obama loss, even a close one, would be devastating to the credibility of the media. They have obviously picked Obama. They have been less than honest in their role as servants of the public knowledge, and yet believe or at least proclaim their neutrality.

Bull. You get this one wrong legacy media and you're dead to me. You're not looking good even if you get it right. When the Los Angeles Times is sitting on a relevant piece of video like the Khalidi tape, they're cheating. When the San Francisco Chronicle fails to report Barack Obama's punitive carbon tax plans and intent to bankrupt the coal industry in the pursuit of the elimination of a trace gas, only quietly making the audio available online for 10 months, it's a problem.

When the media won't report on how completely insane Joe Biden is, that's a problem. When a guy like me on his couch with a laptop can call BS during the VP debate and then with a few more hours of research find that Joe Biden's version of reality is his and his alone, that's a problem. When the media is denied access to Biden and has more access to Palin without the public really knowing this fact, that's a problem. Right now it's a problem for the consumers of news. If the media gets the election badly wrong, it will rapidly become their problem.

And so, my Survival Guide For Election Night

1. Don't believe a single exit poll unless they show Obama with less-than-expected support. McCain voters are much less likely to answer, and the PUMAs will flat-out lie.

2. If you live west of the Eastern Time Zone, MAKE SURE YOU VOTE. Do not listen to a thing the media says. It's over when the votes are counted, not when the media "calls" a state for one candidate or the other. Pennsylvania is a good example -- the media may call the state because of the outcomes in urban counties but not wait for the rural voters. PA is very, very important, as you'll deduce from the Zombietime and Malmstrom articles.

3. We should know quickly if Obama wins, there are some must-gets for McCain on the East Coast and if he loses FL, VA, PA and OH then it's really over. Go to bed, and start digging your bunker tomorrow morning.

4. If McCain wins PA and FL and VA, it won't be over until the last Obama lawyer throws in the towel, but winning those three goes a long way to winning overall. It will still take MO and OH and NV to go Red this year, but if McCain can flip PA it will be huge.

Best of luck to us all, I've been praying for the country and for McCain and Palin for weeks now.

I might do a liveblog of the election returns, but maybe not. I think I have one more Palin piece in me before the election but I have miles to go on the PACS before I can do that.

A Feature, Not A Bug

2008-10-23T12:20:00.001-07:00

Too many reports to ignore that maybe Barack Obama's vaunted fundraising operation is steeped in fraud. Specifically, the allegation is that the donate-by-credit card option on the Obama website is intentionally disabled to allow fraudulent donations.

If you've bought anything online you've probably dealt with the AVS, or Address Verification Service, which is a check to be sure that your name matches the card number and your address and zip code match the account information as well. Many vendors also insist on the three-digit CVV code on the back to confirm you have the real card in your hand when you donate.

The Obama website has none of this, which is part of the reason that the Obama Campaign has accepted donations from such well-known figures of history and fiction as Good Will & Doodad Pro, Adolf Hitler, OJ Simpson, Nodda Realperson, John Galt, Henry Reardon (those last two for the Ayn Rand fans in the audience) and the best "asdf". In some cases these fictional donors have given tens of thousands of dollars in small increments.

The reason for small increments is that donations of less than $200 do not have to be reported to the Federal Election Commission with the same stringency as larger donations. You do not need to record a name, address and occupation of the donor. If you wanted to send millions of dollars to a candidate, the easiest way to do it would be to do so in $200 increments. You could pay someone $10 an hour, enter a payment a minute, and funnel $12,000 an hour into a campaign, limited only by the ability of your keyboardist to invent new names. Quite frankly, you could just automate the process with a large enough database of names and fictional addresses and do it 24/7/365. The personal limit to any individual campaign is $2300 in the primaries and $2300 in the general election.

The disabling of the fraud-protection system got me thinking, though. There are three ways this could work out for the Obama Campaign.

One, it allows foreign donors to contribute, and it's not as if the man is unpopular overseas. Nice that they have an opinion but taking their money is a federal crime, I believe. The fact that so many Obama donations during the primaries were odd-denomination donations (dollars and cents) makes one suspicious that the donated amounts were in Euros or other currency helpfully converted to dollars by the magic of Visa.

Two, it allows people to use lists of valid credit-card numbers to "donate" to Obama in a fraudulent fashion -- which has happened.

Three, if the Obama campaign was working in conjunction with a fraudulent front company to do its credit card processing, fraud becomes a feature and not a bug.

Usually, if your credit card is misused by someone else your bank will reimburse you for the loss, and attempt to ding the merchant for the difference. If there was an intermediary organization that could a) do the credit card billing for Obama and b) had access to foreign cash (or just cash in general over and above what could be legally donated), the front company could reimburse "fraudulent" charges to people whose cards were used wrongly...and never attempt to get the money back from the Obama Campaign.

Let's say Ima Republican shows up with a $2300 charge on her credit card to "Obama Campaign Services". She reports it as a fraudulent charge, and Obama Campaign Services refunds her the money. Well, if OCS is a front bank with its own source of money, then it doesn't have to go after the Obama Campaign itself to make good. It just accepts the loss and moves on. The Obama Campaign is never asked by Obama Campaign Services, its credit-card processor, to repay the money. Assuming OCS has sacks of cash available, the more fraud the better it is for the Obama Campaign, as long as it doesn't get caught too often. OCS is there to take the hits, pushing otherwise-illegal money to the Obama campaign no matter if it's fraudulent or not.

Sounds a little paranoid, I know. But when I hear about Democratic lawmakers circling my 401k like sharks, paranoia becomes a reasonable way to do business. I know next-to-nothing about credit card processing, this is entirely conjecture on my part. But the fraudulent activity is not conjecture. it's something to be concerned about, especially when it would be very easy to make your website fraud-resistant the way the Hillary Clinton and John McCain websites are.

But Sarah Palin has new clothes, so I guess all of this doesn't matter.

UPDATE: Apparently Chase Paymentech is the company that does the CC processing, and they are a reputable firm. Other people have pointed out that the Obama campaign may batch-process a days' worth of credit card payments and automatically drop obviously fraudulent or illegal contributions -- except "Good Will" has made actual donations.

All I can say is that when you're running for President and trying to raise money through credit cards it's occasionally good to have "The Senator from MBNA" for your wingman. Is Joe Biden worth it? If you're in good with the CC companies he's worth (literally) millions.

Barack+Obama 2008 Fraud

On Deterrence and Perception

2008-10-21T09:47:00.001-07:00

I know something about deterrence, both sides of it actually. Now that I am 6'5" and slightly over 250lbs, I represent one defintion of deterrence. My first CHL instructor, a former Green Beret and UN Peacekeeper in the Sinai, told me flat out, "Nobody is ever going to mess with you Darren, not even drunk. You're just too big." I find this to be true. I haven't had anyone in my adult life make anything approaching an aggresive physical move toward me. I know one side of deterrence in this way: I intimidate, without trying.

The other side of deterrence I know from my childhood. I was tall, but not particularly wide. I grew fast and was skinny, and I stood out among my peers. I had some kind of inborn block against beating the crap out of people who deserved it. I have thought a lot about this, and for me I believe it came down to a fear of losing control, of abandoning myself to fury and really trying to hurt someone else. I have subsequently gotten over this concern (it's amazing what having a wife and children will do), but growing up and being the new kid as often as I was, I had people getting aggressive with me all the time.

Now, you may wonder, why does this trip down memory lane have much relevance this political season? Well, Joe Biden made the discussion of deterrence and lack thereof relevant with some comments he made in Seattle, as reported by ABC News:

"Mark my words," the Democratic vice presidential nominee warned at the second of his two Seattle fundraisers Sunday. "It will not be six months before the world tests Barack Obama like they did John Kennedy. The world is looking. We're about to elect a brilliant 47-year-old senator president of the United States of America. Remember I said it standing here if you don't remember anything else I said. Watch, we're gonna have an international crisis, a generated crisis, to test the mettle of this guy."

Amazingly, Joe Biden and I agree on something, though strangely enough when I proposed this a week ago to some committed Obamatons, they said I was absolutely insane. I said that the courage of John McCain was beyond question, but that when Obama talked tough he was unconvincing which meant that he was going to be challenged more than McCain would.

While some of you intuitively "get" this, there are no doubt some readers who will say, "No, now, the practice of international diplomacy is sophisticated! You can get degrees in it, it doesn't come down to something as silly as schoolyard bully calculations!" I agree with that to a certain point. Democracies are often complex, messy and shot through with divergent groups with divergent ends they wish to see met. Even as august a figure as the President of the United States may only be speaking for some portion of the population, and if the President gets ahead of the populace they may jerk his or her chain back into line.

Not so with totalitarian governments. Totalitarian states are built around the personalities of their leaders and inevitably end up taking on the personality of those who run the Cult of Personality. Positions that are complex and may arise from a confluence of different interests in a democracy become much simpler when you're a dictator. If you don't like cheese, you can outlaw cheese and the dairy lobby can't say boo. If there is a warship off the coast of your nation, you can personally weigh the benefits and risks to harassing it or leaving it be. Totalitarian states are the ones most likely to reflect the characteristics of their leaders and to act in a schoolyard fashion.

Should Obama become President, it's not the democracies who are likely to give him trouble. He could run for EU President in 2009 and win that, too, most likely. It is the totalitarian governments (Venezuela, Iran, Russia and to a lesser extent North Korea and China) that will be the most likely state actors to contrive a conflict with Obama, to measure the man and see what can be gotten away with in the next four years. And lest we forget, there are totalitarian non-state actors like Al Qaeda who will be only too happy to see George W. Bush disappear over the horizon, if for no other reason than he would respond to attack without hesitation, and would pursue an attack rather than making a show of aggression like Clinton. They, too, might choose a confrontation with Obama to see if their campaign has produced a more malleable US President.

What's interesting is that Senator Biden didn't stop at saying that we WILL get into a conflict in the first six months of Obama's term (if he's elected). That would be too easy for Joe, he continued, somewhat ominously:

"I can give you at least four or five scenarios from where it might originate," Biden said to Emerald City supporters, mentioning the Middle East and Russia as possibilities. "And he's gonna need help. And the kind of help he's gonna need is, he's gonna need you - not financially to help him - we're gonna need you to use your influence, your influence within the community, to stand with him. Because it's not gonna be apparent initially, it's not gonna be apparent that we're right."

Curiouser and curiouser. I added the emphasis, and that's the interesting part. The guarantee that our nation will be plunged into crisis is garden-variety and patented Joe Biden Stupid (TM), but the idea that the influence of left-wing idealogues who come to an Obama-Biden fundraiser will be needed to counteract what appears to be boneheaded moves by then-President Obama is interesting.

Does this imply that the nominally docile Obama will display a level of aggression in response to a threat that would be off-putting to the granola-crunchers that paid for his campaign? Or will the lefties be drafted to explain why doing nothing in the face of crisis (which seems to me to be more likely) is the "right" thing to do? Either is likely, but in any event Biden is basically saying that they won't get the first one right, at least in the eyes of the public, and they'll need political cover from Obama supporters after the election. Biden implies that there will either be an overreaction or an underreaction, but not that they'll handle the situation in what is clearly the right way.

Makes you wonder about Obama's judgment in choosing this clown as his running mate. Sarah Palin is regarded by many on the left as a stuffed skirt with no intelligence and a drag on the GOP ticket they're thankful for, but so far she's
energized the GOP base (check)
given the highest-rated acceptance speech in VP history (check)
given SNL the highest ratings in 14 years (check)
draws crowds that equal or exceed Obama's (check)

What has Joe Biden done? Besides prove himself unable to count to four?

Joe Biden will be 66 years old a couple of weeks after the election. Ask yourself this: If Joe Biden becomes demented and starts confabulating (making up things to cover the gaps in his memory), how long will it be before anyone notices?

I think Joe Biden would have to agree that the wisest choice would be to avoid the test, avoid the need for political cover from leftists, and just elect John McCain.

Update: When you get schooled by Sarah Palin, whom you disdain, what does that make you? Seriously, watch the video. It's worth a smile.

Music to CPR By

2008-10-18T11:54:00.000-07:00

Saw this at the WSJ Health Blog and had to mention it.

Turns out that most people who do CPR don't compress the chest fast enough to help. The recommended rate is 100 beats per minute, but it seems too fast and wears you out.

The answer seems to be providiing appropriate theme music, which, ironically is Stayin' Alive by the Bee Gees.

At 103 beats per minute, if you can keep up with the Bee Gees you can do CPR at the proper rate. Kind of turns saving lives into Guitar Hero, but when 15 medical students were allowed to listen to music (namely, this song) they could do 109 BPM, and five weeks later, even without the music they were still at 113 BPM. All of this will be presented for the edification of us all at ACEP, the American College of Emergency Physicians meeting October 27-30 in Chicago, or as it is known for those three days, "The Best Town In Which To Have A Public Cardiac Arrest."

Two Debates and one Plumber

2008-10-17T14:57:00.001-07:00

Well, I didn't post anything about the second debate between John McCain & Barack Obama because it was so dull I was afraid I would lose the meager readership I have simply by mentioning it. Nothing happened, literally. People asked questions that the candidates didn't answer, and many talking points were repeated. About the only thing I can say is that I'm glad there weren't 9 more "Town Hall" formats scheduled, and Tom Brokaw has strangely become much more compelling in text than in real life.

Bob Schieffer moderated debate #3, which is the first one that John McCain really showed up for. He was animated and engaged, a little too wordy at some points (stepping on his own points on occasion), but much better than in previous debates. He took it to Obama on the over-the-top accusations of John Lewis, and the best line of the night was "I'm not George W. Bush. If you wanted to run against him you should have run four years ago."

As an aside, while I liked McCain getting on Obama about the falsehoods and distortions, McCain lacks the carpe jugulum (Latin - seize the neck) attitude that his running mate displays pretty well. He made his attacks but did not press them. He landed blows but refused to try to sit on Obama's rhetorical chest and continue pounding until Obama could not reply. It's just not in him, I guess. I have heard it is a generational thing, but either way McCain keeps letting things like Obama's "cut taxes for 95% of taxpayers" line float past unmolested.

The star of the third debate, who wasn't even present, was undoubtedly Joe the Plumber, better known as Joe Wurzelbacher, a Ohioan who Barack Obama had the misfortune to stumble upon and engage in conversation while being videotaped.

Joe the Plumber asked Obama if he was really going to raise taxes on him, Joe was considering purchasing the small plumbing business where he works but was worried that the increased taxes would make it unprofitable to work beyond the 10-12 hours a day he already put in.

Obama, foolishly, was honest. As quoted at Fox News:

"It's not that I want to punish your success. I just want to make sure that everybody who is behind you, that they've got a chance for success too," Obama responded. "My attitude is that if the economy's good for folks from the bottom up, it's gonna be good for everybody ... I think when you spread the wealth around, it's good for everybody."

Oops. In one comment, Barack Obama may have undone four months of careful tacking to the center on economic issues. We may have a problem or even a series of problems in the economy right now, but when one of the people that could be President starts speaking in language dripping with socialist overtones I believe Americans will start to listen a little more critically.

Sensing an unforced error, John McCain mentioned "Joe the Plumber" nine times in the third debate, with Obama forced to mention him twice. The election has a poster child, Ladies and Gentlemen.

Now what makes this infuriating to me is that immediately the left side of the blogging community and the media set to "vetting" Joe the Plumber as if he did anything other than ask a question of Barack Obama.

Within 48 hours we now know that Joe Wurzelbach's actual name is Samuel J. Wurzelbach, he is twice-divorced and does not have a plumber's license, though he does work for a plumber. His home address has been published, his tax lein (filed in 2007) publicized and his local plumber's union notified, lest he actually work as a plumber somewhere near where he lives. He has cameras all over him, and he doesn't have to worry about any of his secrets being revealed. If you can find it online, it's going to be revealed about him.

The real question I have is why Joe the Plumber is getting the third degree? And why is the Obama campaign so completely silent on the public strip-and-cavity search that its allies are performing to a "civilian", a voter? He's just a guy, or he was before he committed the unpardonable act of making Barack Obama flub a question in front of a camera.

I see this as tremendously not-helpful for Barack Obama, because it doesn't bode well for free speech or even criticism should he become President. Apparently the rule is that if you question Barack Obama or his policies, then you make yourself the subject of inquiry. The question to be answered is not, "What is Barack Obama's reply?" but rather, "What makes you think you have standing to ask The One a question?"

At this point, would you want Barack Obama to come up to you and say, "Hi, do you have any questions I can answer?" In essence, he would be asking you if you think it's worth your privacy in case he gets stumped. Joe didn't even set himself up to be a rival of Barack Obama, Barack came to his house and because Joe didn't kiss the ring and move along, he gets both barrels from the press and the left wing.

The vitriol directed toward Joe the Plumber is pretty similar to that directed toward Sarah Palin, in that neither of them were considered to have sufficient stature to question Barack Obama's policies or conclusions. There was a collective, "Who the hell are YOU?" response, as if Joe or Sarah sat down at the cool kids' table in junior high school unbidden. What I find so interesting is that it is the alleged egalitarians and Friends of The Common Man, the leftists, who are the most incensed when an unelite person skewers one of the anointed.

Well, I have a tiny little soapbox, but when the press comes calling I will stand up and say, "I am Joe the Plumber." Somebody has to stop this kind of thing. We need to get in the habit of making our questions and criticisms known, so that maybe an potential Obama government will worry about trying to stifle dissent.

Polls are tightening. If you're of a GOP or conservative bent, keep your powder dry and be sure you vote. This is far from over.

My VP Debate Wrap-Up

2008-10-03T13:28:00.000-07:00

After some consideration, this is my conclusion about the debate.

Joe Biden clearly and convincingly defeated George W. Bush in this debate, President Bush being absent. He also forcefully stated that as VP under Obama, in the face of economic crisis he would not pursue the tax policies of his opponent, John McCain, then went on to list the things he would not be in favor of cutting despite the fact that the bailout bill added another trillion or so to the national debt. He would "slow down" foreign aid commitments, which he later described as vital to winning in Afghanistan. As Bill Hobbs points out, this is "slowing down" a doubling of US foreign aid amounting to $25 billion a year -- against an annual deficit of hundreds of billions.

Palin dodged some questions, the wisest dodge was on the issue of the Unitary Executive and the role of the VP, which is an inside-baseball topic of interest primarily to Con Law professors and something she likely knows virtually nothing about. Joe Biden put on his Con Law professor hat and proceeded to quote the wrong part of the Constitution regarding the role of the VP as Executive Branch. "Everyone should know that," he said. I question whether "everyone should know" something that's patently wrong. Article I, Section 3 refers to the office of Vice-President, it is the part of the Constitution dealing with legislative structure and function. Article II has to do with the Executive.

Joe Biden was fully in command of the facts he made up out of whole cloth during the debate. He showed a far greater range of familiarity with his own fabrications than his opponent. In this regard, he was clearly the winner, as shown by focus group polling from Katie's Restaurant in Wilmington, DE, which has been closed since 1990. He showed boldness by contradicting the Obama website on sitting down President-to-President with Achmedinejad without preconditions. He also showed boldness by contradicting himself on the issue of coal plants. Speaking untruth to power has never had a bolder advocate. In my opinion, Joe Biden is never more convincing and genuine than when seamlessly weaving made-up facts into his statements, and I believe that is an important qualification when choosing a Democratic Vice-Presidential candidate.

But really, I think Palin came out ahead. She lied less, for one, and she's authentic in a way Joe hasn't been for a couple of decades. Considering that this is her first national debate and his third run for the Presidency (this time as VP), he didn't blow her out and she was able to score on him in her vicious-yet-nice way, which is a true political gift. She did not defend McCain as well as I would have liked, a more experienced politician might have seen more opportunities and I can't help but believe that she still could have done better. Nevertheless, she did exceptionally well. Like I said in the liveblog, they need to come up with another word for "maverick", my personal feeling is that the word has attracted as many people as it's going to attract. Drop it, or use it once and then use a synonym.

It didn't change much for the race, but it changed a lot for Sarah Palin. You can bet she'll subscribe to Foreign Affairs and, if she loses, spend the next four years getting the experience and knowledge to run on her own. She's a bit uneducated from a national and world affairs standpoint, which is what you expect from a remote state governor. Ask Biden about the status of salmon fisheries and he'll make something up, but she's probably right on top of that one. Get Biden to talk about anything other than John McCain's votes on alternative energy and he'll tell you a heartwarming story about Bill's Oil & Coal in Wilmington that never existed, or modify a Frank McCourt story about how his family had to make one piece of coal last all winter because President Willkie was such a bad Republican president back in the 1940s. Energy is Palin's issue, and she wasn't asked a single question about it.

She's a superb communicator, and couple that with more experience and she'll be deadly. She is probably about as physically attractive as a woman seeking political power can be without being off-putting to other women, what she lacks is a few more years in the governor's chair and easy familiarity with issues compelling to reporters and media folks. She needs to tone down the homespun a notch, but she's got the right instincts and she'll be a player for years.

She might even be Bobby Jindal.

Sarah+Palin Joe+Biden debate

Near-Liveblogging The Debate

2008-10-02T18:50:00.000-07:00

Through the miracle of TiVo and a new HDTV aerial (new today) I can see every one of Joe Biden's hairplugs. Amazing. Anyway, I'm about 20 minutes behind, so refresh to see my take as it goes along.

Joe is muted and low-key

Sarah blew the answer about the financial issue. She blamed the 'Predatory lenders' without mentioning the effects of the CRA, without mentioning the actions of Freddie & Fannie.

She is bright and assertive but a little hyperkinetic. So far she's able to bring details without having to look like she's straining.

Joe is hammering deregulation, she's not responding and sticking on the tax issue. Needs to stop using the term 'heat up' the economy.

Next question: why is raising taxes not class warfare?

Joe "It's called fairness". Hmm. 30% of income tax filers don't pay any taxes. "Simple fairness" IS class warfare. $300 billion to corporate America.

Sarah "redistribution of wealth" good reframe. And she hits the small business issue. Needs to meniton S Corporations. Backwards way of growing the economy. Nice. Looked like she was going to duck the question on health care. Handled it well. "Unless you're pleased with the way the federal government has run much of anything..." Tap that anger, girl. She also snuck in the word 'Universal' -- that's a Frank Luntz word.

Joe is making a lot of hay out of the tax credit for healthcare. Spouts a lot of numbers but I doubt his specifics. I will have to look this up. $12K per insured, that's a lot of money. Maybe more than the entire private health insurance market.

Ifill reasks the "what promises will you not be able to keep?"

Joe Biden promises to slow down foreign aid, and not to keep John McCain's campaign promises regarding taxes. Will keep alternative energy, education, health care. Eliminate wasteful spending, mentions $100 billion tax dodge for offshore tax havens.

Doesn't tell one thing to one group & one to another. Energy bill 2005 -- "That's what gave those oil companies those big tax breaks" Biden used the $4 billion for XOM line twice, she turned it around and sank it in his eye socket. No, there's no promises we won't keep.

Biden responds that Barack Obama voted for it because it had alternative energy things, tried to strip it out. He calls her severance tax a "windfall profits tax", which it's not. If that is not proof of what I say then I don't know what is. Well, if you lie about it, then does it count as proof.

She's hammering the corruption and greed of Wall Street issue. John McCain to thank for failing to get his bill passed. "A toxic mess on Main Street that is affecting Wall Street." As Willy Wonka would say, "Strike that, reverse it."

Ifill asks about the bankruptcy bill -- it's complicated, Biden says. We should be allowing bankruptcy courts to adjust the principal you owe as well as your interest rate. That sounds fishy. Used to be that when you lost your stuff when you declared bankruptcy. The whole penalties thing?

8:29pm

Brief answer from Palin to deflect the bankruptcy issue and then back to energy. She's doing remarkably well so far, few flubs. She's kind of lecturing here, but hammering the ANWR issue. Energy independence is the key to this nation's future. Needs to stop using "heckuva".

Q: What is true and what is false regarding climate change? I don't want to argue about the causes of climate change, want to figure out how we can do that. All of the above plan. As we rely more and more on other countries.

Biden: It is man-made, it is clearly man-made. The cause is man-made. Gives the 3% of reserves/25% of consumption line, which minimizes our true reserves and ignores unproven offshore reserves as well as natural gas and the trillion barrels of oil shale we have. John McCain voted 20 times against alternative energy. Obama-biden wants to develop energy that needs subsidies to be competitive and try to sell that to the rest of the world. No-go in China or India, Joe. Coal is King there and will be for sure in China

Palin does support capping carbon emissions. Joe supports clean coal technology for 25 years, despite his rope-line comment. Maybe he's all for it if the go government doesn't have to pay for it.

Joe Biden supports gay marriage. First gaffe. Saran-does not support gay marriage. Now neither Joe Biden & Barack Obama do not support gay marriage. So much for the people who think Barack Obama is a closet gay marriage supporter.

Iraq: Palin sounds like she knows this. Compliments Biden on standing up to Obama regarding a political vote.

Biden: needs an exit strategy, needs a time table. Palin says we'll go when we're ready, when the Iraqis can govern themselves. She points out that Biden says he would have been proud to be VP candidate for McCain. skewers him effortlessly.

Biden says Pak nukes could hit Israel. Wrong, I believe. Between nuclear Iran and unstable Pakistan he chooses unstable Pakistan. Sarah says both are important but talks about how a nuclear Iran is dangerous. Gets into the "no preconditions" line. Talks about her meeting with Kissinger. Biden bald-faced lies about what Obama said at a Democratic debate HE WAS AT. Misrepresents what McCain said as well.

Palin is clear and articulate on need for a two-state solution. Sounds entirely reasonable. Biden is now running against George W. Bush. He is four years too late for that. Biden: haven't heard how the policy is different from Bush's.

8:55 When do we use nuclear weapons? Palin answers a line about not allowing nuclear proliferation. Makes point about using surge principle In Afghanistan. Biden says CG in Afghanistan says (today) that surge would not work. Mentions Obama-Lugar as if it's important - an update to a 1991 law makes a big difference how? Makes a statement about spending in 3 weeks in Iraq the same as in 7 years in Afghanistan. Ignores difference in geography, technology, etc.

Biden makes an impassioned speech about Darfur. Palin agrees, a little too smarmy, but then mentions divesting Alaska's investments in Sudan. Didn't know that.

9:05 pm: When do we go into another country? Biden if we can win, makes a statement about countries and when we can invade. Palin needles him again about his voting record and statements, she's hammered this enough that she had better have a couple of Aces in terms of backup documentation.

So what if your President dies? Neither one will change anything.

What a Vice-President does? Palin: working with the Senate, she would lead in areas of Energy, Senate, special-needs children. Biden: Senate, advising President, He will tell president if he disagrees. Ifill asks about Cheney's assertion regarding the split nature of VP as Executive vs. Legislative. Palin ducks the question, wisely. Biden gives a long answer that is probably too much inside baseball.

Conventional Wisdom: Palin is inexperienced, Biden undisciplined. Palin makes a good speech. Biden says he's changed things, tears up when talking about his kids. Pain responds, needs to stop using the term 'Maverick'. It's getting annoying. Find another way to say it. Biden: "Maverick he is not."

Final question: What policy position have you changed? Biden: position re: judicial confirmation. Palm; wasn't able to zero-balance budgets, no compromises on principle.

Now the real final question: How do you stop the partisanship as VP? Biden: Don't question others' motives. Palin: get the job done, don't worry about credit.

Final statements: Palin: I like Reagan. McCain fought for you. Biden: it's time for America to stand up together.

Especially people making $250K or more. It's easier to get at their wallets that way.

Debate over. Palin survived, not broken or dispirited. Biden only gaffed once, wasn't nasty. Both did a good job. Hard to pick a winner, Pain maybe wins by not losing, but not by much.

Bwahaha! Maureen Dowd Kicked Off McCain Plane

2008-10-02T07:57:00.000-07:00

Maureen Dowd, The New York Times' op-ed columnist, is no longer welcome on the McCain-Palin press plane.

She sent an email to the Pittsburgh Post-Gazette:

"I had had a great relationship with John McCain for 16 years, through columns he liked and didn't like. So at first I thought it was a mistake and doublechecked with the press office. They said I was banned from both planes for 'the foreseeable future.' Then [McCain spokeswoman] Nicole Wallace was gloating about it to reporters on the Palin plane," Dowd wrote in an email.

"It was disappointing because I didn't think John McCain would ever be as dismissive of the First Amendment as Dick Cheney."

A couple of notes. First, when did the First Amendment extend to a seat on a plane? Goodness, if that's the case I've had my First Amendment rights violated my entire life. Ms. Dowd could certainly arrange her own travel and cover every news event as it happens -- she's just not actually a news reporter so that would be a little too pedestrian, I guess. It's no secret that in recent weeks the McCain campaign has called out the New York Times as a biased and unfair news operation.

What's more, Ms. Dowd has a column up today, and has had columns published on her regularly scheduled slots in the NYT without interruption since being booted off the plane August 30. I don't see any First Amendment violation here.

Second, Barack Obama's campaign did precisely the same thing to New Yorker writer Ryan Lizza, who lost his seat on the junket to Europe after the New Yorker got sideways with Team O over a sarcastic cover featuring a cartoon of Michelle Obama as Angela Davis and Barack in Somali garb in the Oval Office. Few cries of First Amendment violation there.

It gets even better if you read the comments on these stories at Huffington Post or Daily Kos. Schadenfreude is a term for quiet joy when seeing the pain of others, there needs to be a similar term for self-satisfaction at seeing the stupidity of others. I hope that if Obama wins the netroots people don't actually get to influence things. It's already been established (through a poll, asterisk asterisk) that a whopping 29% of self-identified Obama voters believe the Supreme Court should rule based on what's in the Constitution, so it is entirely possible that the First Amendment entitles Ms. Dowd to her seat on the Straight-Talk Express.

There does appear to be an upside to an Obama win: your seat on an airplane is no longer a contractual agreement between you and an airline, it's now a Constitutional Right!