Detailed Abstractions

Well, the verdict is in. The Republicans are being cast as the party of no.  The party without ideas.  The party of obstruction.

Please make no mistake about it, this marketing push isn’t really about obstruction, but about the upcoming elections.  Just as President Clinton did brilliantly prior the 1996 elections when he cast all Republicans as following Newt Gingrich and obstructing spending laws, the Obama administration is moving forward in much the same pattern.

This is possible because the White House, regardless of occupant, has historically been able to control the news cycle.  In my opinion, this should be an indictment on journalism as a whole when alternatives which exist aren’t being reported, but simply put:  when the President talks, news happens.  When your normal representative talks, you’re lucky if you even hear about it.

It worked during the Clinton Administration on spending, it worked during the Bush (43) Administration on the Patriot Act, & it certainly might work again this time. Irregardless, the campaign is back and in high gear (here via USA Today):

…”Too often, the Republican leadership in the United States Senate chooses to filibuster our recovery and obstruct our progress,” Obama said. “And that has very real consequences.”…

Or here via NY Times blog, here via WaPo, & on and on and on…

From a critical point of view however, obstructionist should not automatically be a pejorative.   Without analyzing what exactly is being obstructed, this is little more than name calling.

As an example, if say in the 1940s Congress was actively trying to “obstruct” the intermittent of thousands of innocent Japanese-Americans, this would not only be a moral good, but any thoughts to compromise solely to be seen as a non-obstructionist would be wrong.  What would be a compromised alternative?  House arrest?

Additionally, we have to be on the lookout for the differences between the marketing of bills and their actual language.  Think of the new health care legislation.  President Obama’s promises of more health care for all at cheaper prices, simply don’t seem to be fulfilled by the 2500 page law passed… or maybe they are being fulfilled, but like the Patriot Act, no one really knows what the new legislation actually means (here via Cato):

…The Patient Protection and Affordable Care Act represents the most significant transformation of the American health care system since Medicare and Medicaid. It will fundamentally change nearly every aspect of health care, from insurance to the final delivery of care.

The length and complexity of the legislation, combined with a debate that often generated more heat than light, has led to massive confusion about the law’s likely impact….

Or on yesterday’s Meet The Press Rep. Van Hollen stated (transcripts here via MSNBC):

…The frustration is there are lots of important bills to push for jobs that are sitting over in the Senate.  But it’s not the fault of the Democratic leadership in the Senate.  I mean, frankly, you know, John Cornyn and his allies have been trying to block a whole lot of very important jobs measures.  We in fact sent a piece of legislation over very recently that would remove these perverse tax incentives to ship American jobs overseas, that give American corporations a bonus if they ship American jobs overseas….

Just like health care, the basic idea that our representatives are working on private job creation incentives is a good one.  But just like the Obama Administration’s promises on health care, Rep. Van Hollen is selling us a job creation bill which has little chance of actually creating jobs.

To translate – what they mean by “removing incentives” is to increase taxes on businesses who outsource.  Now, some may want this to happen for various reasons, but the economics are pretty straight forward.  Tax increases have never increased jobs & forcing a tax such as this could actually result in companies simply moving their head quarters as well.

To be fair, there are bills I don’t believe the Republicans should block, for instance the extension on unemployment benefits (though it seems likely to pass soon: here via The Hill).

Yes, the point isn’t that the Republicans are doing the right thing and the Democrats are failing at every single step, the point is only intended to remind us of the old saying about representative governance:

The people will get the government they deserve.

& so long as we allow marketing campaigns to have more force in elections than critical analysis does, we will likely continue to be disappointed.

With high levels of bipartisan anger, not only affecting elections, but affecting polls on the flagship legislation… er, I mean, the monstrous health care bill which no understands as well (here via WaPo):

…A CNN poll last week found that only 25 percent of Americans want Congress to pass a health-care bill similar to the one it has been working on for the past year, while 73 percent say Congress should either start from scratch or not pass health-care legislation at all (other polls show support for the bill in the low 40s). …

The White House is once again, on a media blitz to prove the administrations’ efficacy and job one is selling the idea the simulus worked.  While they have seemed keen enough to not discuss actual housing or job numbers, but instead spend time on nebulous items such as “saved jobs“, they are nonetheless telling us with great frequency what the stimulus did for us.

Vice President Joe Biden (here via ABC News):

Vice President Joe Biden said today that it is “taking a while” for the nation’s economy to “get out of this ditch” but credited the Obama Administration’s stimulus legislation, enacted one year ago, for laying a foundation for long-term economic growth. …

As well as President Obama himself (here via USA Today):

President Obama credits the one-year-old economic stimulus legislation with staving off a second depression …

The President even sent high level officials all over the country to prove the stimulus worked.  In one case, they used construction for residential housing to spotlight the great work the stimulus package has done for Cincinnati (here via Cincinnati.com).

With unemployment numbers continuing to rise (UE Rate for January 2010 10.6%)

& defaults on existing mortgages doing the same (here via Reuters):

…More than 8 percent of homeowners were behind 30 days or more on their mortgage loans, up 4.4 percent from December 2009 and 21 percent from last January…

& just like the last media blitz the White House went on to prove the stimulus was working (here via DA), they have spent approximately 34% of the money they claimed to need originally (here via ProPublica).  Combining the money spent and tax cuts approved listed on Recovery.gov they find:

…the government has now moved at least $272 billion into the economy, or 34 percent of the total amount approved by Congress last February….

So there you have it.  Successful stimulus program is now defined as a jobless, homeless, shaky recovery, for which the majority of the money requested has yet to have been spent.

With the recession ending (@MSNBC):

WASHINGTON – More than 90 percent of economists predict the recession will end this year, although the recovery is likely to be bumpy….

Or maybe a double-dip (@Politico.com):

…All that’s enough to convince some observers that the economic recovery is faltering and could be heading for a “double dip” recession. And that would mean the recent green shoots of recovery turn out to be just a pause in a much longer economic slide….

& a stimulus which has saved jobs (@USA Today):

WASHINGTON — States have reported using stimulus money to create or save more than 388,000 jobs so far this year, buttressing the Obama administration’s claim that the $787 billion plan has had a significant impact on the economy….

Or maybe not (@WashingtonExaminer):

…Even if we take at face value the White House claim that it created or saved all these jobs with approximately $150 billion of the economic stimulus money, a little simple math shows the taxpayers aren’t getting any bargains here: $150 billion divided by 650,000 jobs equals $230,000 per job saved or created. Instead of taking all that time required to write the 1,588-page stimulus bill, Congress could have passed a one-pager saying the first 650,000 jobless persons to report for work at the White House will receive a voucher worth $230,000 redeemable at the university, community college or trade school of their choice. That would have been enough for a degree plus a hefty down payment on a mortgage….

Maybe some perspective is needed.  To truly put it in context, let’s look at the Great Depression (@Cato):

…According to most accounts, the stock market crash of October 1929 was the spark that sent the economy spiraling downward.

How could this be? After all, by November 1929, the stock market had started to recover, and by mid-April 1930, it had reached its pre-crash level. Contrary to the received wisdom, massive government failure — not the stock market crash — pushed the United States into the Great Depression….

As written here before (here, here & here), economic predictions are inherently tricky and the government does a very poor job because politics always gets in the way of objective truths.  NBER who is usually the group society follows for when a recession starts and ends told us in December of 2008 that December 2007 was the beginning of the dive demonstrating that most “objective” economic truths are only found in hindsight.

In fact, some brilliant legal minds have made just this point to contemplate delaying financial regulations intended to mitigate similar future scenarios in which we might find ourselves (here).  Richard Posner’s analysis:

The Report is premature in two respects. The first is that it advocates a specific course of treatment for a disease the cause or causes of which have not been determined. Now it is not always necessary to understand the cause of something you don’t like in order to be able to eliminate the effect. If you have typical allergy symptoms you may get complete relief by taking an antihistamine; it is not necessary to find out what you’re allergic to. But generally, and in the case of the current economic crisis, unless the causes of a problem are understood, it will be impossible to come up with a good solution. The causes of the crisis have not been studied systematically, and are not obvious though they are treated as such in the Report. (Remember, the Great Depression of the 1930s ended 68 years ago and economists are still debating its causes.)…

Note – this doesn’t mean that we don’t understand basic incentives and most likely results.  Like chaotic systems in which minor changes in the beginning state of a system can show drastic changes in the end results, our economic system is so complex as to defy attempts to model very specific changes.  Though with hindsight and true analysis, we can get to a point where we know with probabilities what has happened and what will likely happen given specific policies.

For instance, if we make houses cost less by giving tax breaks or whatever, sales will increase for the time that incentive exists.  If the incentive is timed, then some sales will just be premature sales and show corresponding decreases in future quarters.

Meaning, we can use a basic understanding of incentives in order to gauge most likely results, but today only with hindsight can we show real numbers on very specific things such as the stimulus bill’s impact on house sales or jobs.

& even then, given the inherent difficulty in defining a “saved” job and politicians willingness to ignore any data contrary to any rosy picture they wish to present, any economic predictions or numbers coming from politicians should be suspect by default.

With the state of Missouri’s recent fiscal problems and a 9.4% unemployment rate, the state worker’s union has decided now is the time to act.

Questions for the unions:  Is it time to cut back?  Become more lean?  Follow the rest of private industry and cut back as revenue growth loses momentum?

Union’s answer:  Surely ye jest!  We’re the union & the time is ripe for a pay raise!

That’s correct.  As the entire state population spends less money to try to tread water in these tight times, the unions apparently believe they are in prime position to negotiate:

…The union has proposed a 6 percent annual pay raise for the next three years and a “fair share” fee for nonunion members who are covered by union-negotiated contracts. The negations are over a contract for patient care support workers that expired in June and one for craft and maintenance employees that expired in December.

But wait!  Ask them nicely and they’ll tell you that they only have the best of intentions:

Curt Ostrander, the union’s chief negotiator, told The Associated Press that the union’s priority is protect state workers, address staff shortages and help people do their jobs better. He described discussions with the state thus far as “cooperative,” and said the two sides are trying to find ways to be more efficient to save money and solve problems.

“Our top priorities are to provide a contract that gives workers the necessary protection in order for them to perform their jobs in a safe, effective manner and to provide state services,” Ostrander said….

For those MBA’s out there – please note the very sound logic incorporated in “address staff shortages and become more efficient to save money” while simultaneously asking for a 6% raise for the next 3 years during a recession.

The audacity it takes to ask the tax payers of this state to pony up 6% annual raises, while many in the state can’t or won’t get a raise at all this year, is pompous and arrogant.

This combined with them selling the money grab as something that will reduce costs, while increasing staff, is completely disingenuous.

To be fair, this is an opening gambit and it’s not likely they’ll get everything (though the governor is pro-union), but if we continue to allow our elected leaders and unelected leaders (read: special interests) to operate within side the quiet world of doublespeak without so much as a whimper of an objection, then we surely are going to get exactly what we deserve.

Read all about government wages versus free market wages in The Great Recession here

Unless you were lucky enough to be traveling or otherwise unavailable on Sunday, you were likely deluged with Mr. Obama’s media storm to sell not only health care, but apparently many other items as well.

First, it should be noted that this WH is above all, extremely insecure.  The President could be seen on 5 Sunday news shows: NBC, ABC, CBS, CNN and Univision.   But he didn’t have time for Fox, the number one rated Sunday news show…

Regardless of the WH being extremely petty and worrying more about perceived injustices than an honest discussion with those who might disagree, what he actually said is far more serious.

When asked if a health care mandate was a tax increase on ABC’s this week, the President responded:

…”I absolutely reject that notion,” the president said….

“What it’s saying is, is that we’re not going to have other people carrying your burdens for you anymore,” said Obama. “Right now everybody in America, just about, has to get auto insurance . Nobody considers that a tax increase.”…

Using flawed logic is nothing new for Presidents, but this one isn’t even close.  Hhe’s analogizing the privilege of driving with the “privilege” of being a citizen.

The difference of course as that by my very birth, I have a “right” to be a citizen, whereas driving has always remained a privilege with constraints.  You see, I can forgo auto insurance, so long as I don’t drive.  There are many ways around without a car in this day and age, but if I “choose” to drive, then constraints can be placed on me.

Health care on the other hand would be required simply because I existed and no other reason.  & If the government says, “You have to buy this” – it is a tax increase as not paying it can land you in very serious legal troubles.

On CBS’s Face the Nation, with an omnipotent sense of when health care, our fearless leader goes further:

…Obama put his support behind the idea of taxing employers that offer high-cost insurance plans.

“I do think that giving a disincentive to insurance companies to offer Cadillac plans that don’t make people healthier is part of the way that we’re going to bring down health care costs for everybody over the long term,” Obama said on NBC’s “Meet the Press.”…

Even ignoring the fact that this goes against his basic premise that more people need more health care, one wonders if there is anything our President doesn’t know.  So far, he’s taken over banks, car companies, told car companies with whom to merge, who to hire, who to fire, what to build… and now we find out he knows how much health care is too much.

But let’s not stop there.  Not only is our community organizer one of the smartest men in America when it comes to economics and health care, he’s also a brilliant strategist with respects to Afghanistan:

…”What I’m not also gonna do, though, is put the resource question before the strategy question,” Obama told NBC’s David Gregory on “Meet the Press.” “Until I’m satisfied that we’ve got the right strategy I’m not gonna be sending some young man or woman over there- beyond what we already have.”…

I’m not sure exactly what happens to man to think he has the answers to every single last question. Maybe it’s just arrogance and ignorance, as Hayek stated:

If most people are not willing to see the difficulty, this is mainly because, consciously or unconsciously, they assume that it will be they who will settle these questions for the others, and because they are convinced of their own capacity to do this.

Whatever the reason he believes so strongly in his ability to decide what’s best for our own good, history shows us without question where this inevitably leads.  Hayek again:

To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm.

Let’s hope we begin to understand the value of humility before we do too much damage.

A mere 10 days ago, we were told by our President, that his recovery act has diverted a disaster (here):

Good evening.  Before I take your questions, I want to talk for a few minutes about the progress we’re making on health insurance reform and where it fits into our broader economic strategy.

Six months ago, I took office amid the worst recession in half a century.  We were losing an average of 700,000 jobs per month and our financial system was on the verge of collapse.

As a result of the action we took in those first weeks, we have been able to pull our economy back from the brink. We took steps to stabilize our financial institutions and our housing market. And we….

…passed a Recovery Act that has already saved jobs and created new ones; delivered billions in tax relief to families and small businesses; and extended unemployment insurance and health insurance to those who have been laid off.

Of course, we still have a long way to go. And the Recovery Act will continue to save and create more jobs over the next two years – just like it was designed to do. I realize this is little comfort to those Americans who are currently out of work, and I’ll be honest with you – new hiring is always one of the last things to bounce back after a recession.

As I wrote previously, I’m not sure what a “saved” job is or how one goes about calculating a figure, but we do know the unemployment rate is 2% higher than predicted.  Additionally, when one is contemplating whether this or any other President is truthful, we should ask if any of their other projections were correct in the first place.

From Bloomberg:

July 31 (Bloomberg) — The first 12 months of the U.S. recession saw the economy shrink more than twice as much as previously estimated, reflecting even bigger declines in consumer spending and housing, revised figures showed.

& for comparison, something we also know.  When Senator Kerry, then Senator Obama, and many other people, liberals and independents all, were dismayed by President Bush’s tax cuts during a recession and a war:

The revisions showed that the 2001 recession was less severe than originally estimated, reflecting a smaller decline in business investment. The economy actually grew 0.1 percent from the fourth quarter of 2000 to the third quarter of 2001, erasing the 0.2 percent drop previously reported.

Of course Bush started us down our current road with the first stimulus bill, because something just had to be done… which I guess presupposes that allowing 300 million people to work to bring back the economy is “nothing”…

Either way – lastly, and most importantly, we know that this has been tried before.  It took several decades to move beyond the blindness people had due to FDR’s almost cult-like status to revise the books written at the time, but the New Deal did in fact lead to a longer Great Depression that was necessary (here):

The New Deal is widely perceived to have ended the Great Depression, and this has led many to support a “new” New Deal to address the current crisis. But the facts do not support the perception that FDR’s policies shortened the Depression, or that similar policies will pull our nation out of its current economic downturn.

The goal of the New Deal was to get Americans back to work. But the New Deal didn’t restore employment. In fact, there was even less work on average during the New Deal than before FDR took office. Total hours worked per adult, including government employees, were 18% below their 1929 level between 1930-32, but were 23% lower on average during the New Deal (1933-39). Private hours worked were even lower after FDR took office, averaging 27% below their 1929 level, compared to 18% lower between in 1930-32…

No worries though – I’m sure the government is telling the complete truth about how much health care will cost, what it will do to the current system (good & bad), and all the rest of it.  We just have to believe!

…Some other articles on this as well here @ Reason.com, article on economist research @ UCLA here, & detailed research paper here @ Cato.org.

Mr. President, are you kidding?

I listened intently to your entire speech and for a gifted speaker, all I heard were disjointed platitudes, class warfare rhetoric, and a little political bashing just for good measure.

Let’s start at the top (all quotes are paraphrased, not direct quotes):

Obama:  As a result of the actions taken in the first weeks of  my administration, we stabilized the housing market, saved jobs – created new ones, and gave tax relief to millions.

Wow!  I wasn’t aware the government was this powerful.  Maybe unicorns really do exist?

Seriously though, first, the housing market is still declining.  It is not stabilized yet and in some parts of the country is still losing quite a bit of value.

Second, I’m not sure what a “saved” job is or how one would go about calculating it, but what we do know is that on net, jobs continue to be lost.  So growing jobs is absolutely incorrect and saving jobs is a feel good phrase that would be impossible to prove (or disprove).

But who cares about little things like facts when you’re trying to take credit.  By the way, who’s really to blame?

Obama: Through the last few decades of unprecedented growth, only a small minority of wealthy people actually saw their incomes grow, while the economy was not making good paying jobs or green jobs like it should’ve.

Oh, ok.  So it’s the rich’s fault?  They should have to pay!

Come on Mr. President, this is class warfare and theoretically beneath someone who promised to usher in “Hope & Change” and a new kind of politics.  Just to clarify for you Mr. President, class warfare has existed for centuries.  It’s not new and it’s not built on a foundation of “Hope & Change”.

But why do we need this Mr. President?

Obama:  Because middle class families have been struggling due to the constant rise in health care costs.  They have had wage increases, but due to increasing health care costs, the wage increases were offset.  This is also causing employers to not be able to afford health insurance anymore either.

So, the government medaling in health care through medicaid, medicare, FDA, and the myriad of laws that cover things such as, what qualifies a surgeon, what kind of needle can I use to draw blood, what drugs have to be based on prescription, and ever other intrustion they’ve made have pushed costs higher and  higher.

Additionally,

Obama:  I’m confident that when people look to see the costs of doing nothing at all, the people will support me.

Mr. President, if you’re not aware of the current level of intrusion into the current health care system, then it’s possible GWB might have a lead in the IQ race.

We’ve tried.  & time and time again, health care has become harder to deal with and more expensive.  Each time the government does something like this, it costs more than they thought it would, usually by multiples of at least 10, and the savings they say they’ll get never materialize.  But this time will be different.  Why?  Cause I’m Barak!

How will we do it?

Obama:  First, the government will not get in between you and your doctor.  What we will do is pass a bunch of laws that change the way insurance decisions are made, work towards decisions on “end-of-life” care, put limits on the amount of money a person will pay out of pocket, and many other laws.

But this is definitely NOT government interference.

Mr. President, congrats.  I have to applaud you as I couldn’t have said all that with a straight face.  You deserve an Oscar for logic twists needed for this.

What will it cost?

Obama:  Nothing of course.  We will save billions by fixing existing inefficencies and taxing the top 1% just a little bit.

So, we get everything we want and it costs hardly anything?  Someone once told me about things too good to be true, but I’m so enamored now by his speaking ability that I forgot.  But basically he seems to believe that to fix government intrusion into health care, more government intrusion is needed.

He seems to believe that while every time the government has gotten into health care or retirement funds or any other social spending they’ve always gotten the numbers wrong.  But this time is different.

What’s stopping you?

Obama:  I heard a Republican strategist state that it’s better to go for the kill against Obama than pass meaningful reform.  I heard a Republican Senator state, we want him to fail.

So… you have the executive branch, the House by a good majority and a filibuster proof majority in the Senate.  But the Republicans are causing problems?

It’s quite an exciting time to live for those people who love to see barriers broken.  We’ve come a long ways from the 50′s segregation to the first African-American President and likely to be the first Hispanic female Supreme Court Justice.

Of course if those were the only firsts, we’d be doing just fine, but there are others to list:

First time in American History where the budget will include a 1 to 2 trillion dollar deficit (here):

WASHINGTON — The federal deficit has topped $1 trillion for the first time ever and could grow to nearly $2 trillion by this fall, intensifying fears about higher inflation rates, inflation and the strength of the dollar.

The deficit has been widened by the huge sum the government has spent to ease the recession, combined with a sharp decline in tax revenues. The cost of wars in Iraq and Afghanistan also is a major factor.

(that I’m aware of) The first time in history we will waste tax payer money, during a recession, to investigate a non-existent program (here – emphasis added is mine):

WASHINGTON – Congressional demands for an investigation grew on Monday over new disclosures that a secret CIA program to capture or kill al-Qaida leaders was concealed from Congress for eight years, perhaps at the behest of former vice President Dick Cheney.

The program, which never got off the ground and remains shrouded in mystery, was designed to target leaders of the terrorism network at close range, rather than with air strikes that risked civilian casualties, government officials with knowledge of the operation said Monday.

& finally, the brand new era of the czars (here) with names such as:

1. Infotech Czar
2. Faith Based Czar
3. Cybersecurity Czar
4. Compensation Czar

In  a time fraught with issues such as nuclear proliferation (there is a czar for that as well) from Iran & NK, a declining economy (new unemployment figure 9.5%), continuing wars, we might be looking into the future with an undeserved pride in our decision making abilities.

Getting back to the basics of what made our country able to stand as the the superpower it does today would be a better use of our time than hiring more czars to control more of our economy.

We seem to be moving fairly quickly from a society that was known for fierce independence.  A society known for arrogance, but revolutionary innovations which have increased the standard of living for millions. A society that truly stood as a beacon of freedom in a world where the majority live in crippling dictatorships.

We moved from a society that would rather ask their neighbors for help, but instead they now ask the government (or call a lawyer).  A society that wanted to live free, to a society that believes it’s ok to take by force money from your neighbors so long as most people feel they are spending it incorrectly.

Maybe instead of attempting to fix everything, as if the current decision makers have more of the truth than did previous generations, we should instead follow the doctors’ calling:  First, do no harm.

This isn’t to say changes aren’t needed, but the last time some sales guy told me I had very little time to make a decision, I laughed and walked away. & that was a for some piece of electronics I didn’t really need.  It even took me three months to buy a new car.

If we truly want to make effective changes that will really impact others’ lives in a  positive way, prudence and open skepticism of our government is warranted.

Of course yelling fire in a crowded theater makes for better tv debates and news reports, but it’s possible prudence is the virtue we should be heeding at this time.