I would like to sarcastically thank my fellow Californian's (morons) who passed Prop 1A. More info. With record deficits nothing could have hurt this state more. Don't count on Obama to bail out your train to nowhere.

http://apnews.myway.com/article/20081105/D94925900.html

Since that train will have to follow a zig zag path through the central valley stopping in at least one cow town in each legislative district it will never get up to speed.
I'll add my sarcastic thanks too.

Worthy Prop. 11 wins – but so does awful 1A

UNION-TRIBUNE EDITORIAL

November 6, 2008

Although they were overshadowed by the fight over Proposition 8, many of the other 11 state propositions on the ballot were also highly significant. Thankfully, the most crucial of these – Proposition 11 – was narrowly adopted. As a result, an independent panel will draw state legislative districts beginning with the 2012 elections – ending the current system, an incumbent-protection racket in which Democrats and Republicans divvy up seats among themselves in a way that guarantees uncompetitive races.

This practice has created an irresponsible Legislature that ducks every tough issue because it knows there is no consequence for cowardice. Soon, however, that will change – and we can count on a more productive, less polarized state government as a result.

For this, Californians should give Gov. Arnold Schwarzenegger deep thanks. He both led the retail campaign fight for Proposition 11 and was its chief financial backer.

But whatever credit Schwarzenegger gets for his key role in redistricting reform must be tempered by criticism of his de facto support for Proposition 1A, which will add at least $600 million in debt service costs a year to a budget already billions in the red.

The measure – which requires the state to float $9.95 billion in bonds as a down payment on a statewide high-speed rail system – looks likely to be the worst boondoggle in California history. It relies on at least $35 billion in additional federal and private financing that is unlikely to be forthcoming. Its ridership estimates are absurdly high and its operating cost estimates are absurdly low. This list could go on and on.

Even if California were running a huge surplus, such a project deserved to be shunned. Instead, Schwarzenegger said Californians shouldn't let tough times make them spurn ambitious initiatives.

But Proposition 1A isn't ambitious so much as it is fraudulent. The last thing the governor of a struggling state should do is push such folly.

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me@rescam.org

The forces that defeated McCain

CHARLES KRAUTHAMMER
THE WASHINGTON POST

November 7, 2008

In my previous life, I witnessed far more difficult postmortems. This one is easy. The patient was fatally stricken on Sept. 15 – caught in the rubble when the roof fell in (at Lehman Brothers, according to the police report) – although he did linger until his final, rather quiet demise on Nov. 4.

In the excitement and decisiveness of Barack Obama's victory, we forget that in the first weeks of September, John McCain was actually ahead. Then Lehman collapsed, and the financial system went off a cliff.

This was not just a meltdown but a panic. For an agonizing few days, there was a collapse of faith in the entire financial system – a run on banks, panicky money-market withdrawals, flights to safety, the impulse to hide one's savings under a mattress.

This did not just have the obvious effect of turning people against the incumbent party, however great or tenuous its responsibility for the crisis. It had the more profound effect of making people seek shelter in government.

After all, if even Goldman Sachs was getting government protection, why not you? And offering the comfort and safety of government is the Democratic Party's vocation. With a Republican White House having partially nationalized the banks and just about everything else, McCain's final anti-Obama maneuver – Joe the Plumber spread-the-wealth charges of socialism – became almost comical.

We don't yet appreciate how unprecedented were the events of September and October. We have never had a full-fledged financial panic in the middle of a presidential campaign. Consider. If the Standard & Poor's were to close at the end of the year where it did on Election Day, it will have suffered this year its steepest drop since 1937. That is 71 years.

At the same time, the economy had suffered nine consecutive months of job losses. Considering the carnage to both capital and labor (which covers just about everybody), even a Ronald Reagan could not have survived. The fact that John McCain got 46 percent of the electorate when 75 percent said the country was going in the wrong direction is quite remarkable.

This is not to say that McCain made no errors. His suspension of the campaign during the economic meltdown was a long shot that not only failed, it created the McCain-the-erratic meme that deeply undermined his huge advantage over Obama in perception of leadership.

The choice of Sarah Palin was also a mistake. I'm talking here about its political effects, not the sideshow psychodrama of feminist rage and elite loathing that had little to do with politics and everything to do with cultural prejudices, resentments and affectations.

Palin was a mistake (“near suicidal,” I wrote on the day of her selection) because she completely undercut McCain's principal case against Obama: his inexperience and unreadiness to lead. And her nomination not only intellectually undermined the readiness argument. It changed the election dynamic by shifting attention, for days on end, to Palin's preparedness, fitness and experience – and away from Obama's.

McCain thought he could steal from Obama the “change” issue by running a Two Mavericks campaign. A fool's errand from the very beginning. It defied logic for the incumbent party candidate to try to take “change” away from the opposition. Election Day exit polls bore that out with a vengeance. Voters for whom change was the most important issue went 89-to-9 for Obama.

Which is not to say that Obama did not run a brilliant general election campaign. He did. In its tactically perfect minimalism, it was as well conceived and well executed as the electrifying, high-flying, magic carpet ride of his primary victory. By the time of his Denver convention, Obama understood that he had to dispense with the magic and make himself kitchen-table real, accessible and, above all, reassuring. He did that. And when the economic tsunami hit, he understood that all he had to do was get out of the way. He did that, too.

With him we get a president with the political intelligence of a Bill Clinton harnessed to the steely self-discipline of a Vladimir Putin. (I say this admiringly.) With these qualities, Obama will now bestride the political stage as largely as did Reagan.

But before our old soldier fades away, it is worth acknowledging that McCain ran a valiant race against impossible odds. He will be – he should be – remembered as the most worthy presidential nominee ever to be denied the prize.

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me@rescam.org

Many more statements as this and he will see his popularity diminish here:

"Obama also would appeal to the Coalition's original partners to
expand their refugee quotas. Coalition partners such as Great Britain, Australia, Italy, Spain, the Netherlands,
Denmark, and Japan have done woefully little to meet the refugee crisis, and must be encouraged to do more."

We have paid 100 mill. DKK to let Iraqi refugees be able to stay in the neighborhood areas, it's there they are needed, not sitting in refugee camps here, very far away from Iraq.

Obama seems pretty clueless about this!

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"I'm trying to maintain a shred of dignity in this world." - Me

Many more statements as this and he will see his popularity diminish here:

"Obama also would appeal to the Coalition's original partners to
expand their refugee quotas. Coalition partners such as Great Britain, Australia, Italy, Spain, the Netherlands,
Denmark, and Japan have done woefully little to meet the refugee crisis, and must be encouraged to do more."

We have paid 100 mill. DKK to let Iraqi refugees be able to stay in the neighborhood areas, it's there they are needed, not sitting in refugee camps here, very far away from Iraq.

Obama seems pretty clueless about this!

I believe he has a world vision and the world will fit into his vision no matter how many sledge hammers are needed. If we are lucky he will find someone to run the State Department who can tell him it isn't so and make it stick. Otherwise the world had better get ready for more years like shrub's terms.

Bailout line keeps getting longer and longer

UNION-TRIBUNE EDITORIAL

November 11, 2008

When the federal government moved in September to provide an $85 billion revolving line of credit to AIG, Treasury officials made two arguments.

The first was that the government had no choice but to prop up the world's largest insurer because of its fundamental role in the U.S. and global economies. The second was that the $85 billion was plenty to get AIG back on track, given its basic strengths.

The first argument still holds up. The second argument, however, quickly fell apart. In October, $38 billion was added to AIG's credit line. This week, the Bush administration announced the federal government had purchased $40 billion in AIG stock and modified several of the provisions of the original bailout, including reductions in the credit line. The net effect: The U.S. government has either lent or invested a staggering $150 billion in AIG and now amounts to its majority partner.

Given the sound reasons to doubt taxpayers will recoup this vast outlay – and given policy-makers' initial inability to see the size of the hole AIG was in – this case is unsettling enough. But what's far more worrisome is the increasing prospect of a dozen or two more AIGs petitioning Washington in the confident expectation of similar massive federal aid.

Some of these petitioners will be companies with billions of dollars of losses from investments in exotic mortgage-backed securities such as the ones dragging AIG and so many banks down.

Some of these petitioners will be in a different category: poorly run companies sent into a tailspin by the recession. This list starts with General Motors and Ford.

And perhaps some companies in either category will be able to make a plausible case that their collapse would cause simply too much collateral damage. This is why we support considering federal help on a case-by-case basis.

Nevertheless, we fear we are now in an anything-goes era in which taxpayers will be asked over and over to bear others' burdens at a cost of literally trillions of dollars.

Before long, we expect to see corporate lawyers rounding up home-district congressional support for targeted bailouts in the same way Congress is gamed for earmarks. Michigan lawmakers' push for help for automakers may soon become the norm for legislators from every state with an ailing industry.

An odd alliance of consumer advocates and banks is already clamoring for a taxpayer bailout of credit-card debt.

State governments have gotten in the bailout line, too, led by New York. It is only a matter of time before local governments join in.

President George W. Bush has so far rejected sweeping new bailouts. President-elect Barack Obama has been circumspect and cautious in his comments.

We hope this caution continues after he takes office. The federal government already spends nearly 10 percent of its budget just to pay the interest on the $10.6 trillion national debt. Making our national equivalent of a bad interest-only mortgage much worse risks catastrophe.

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me@rescam.org

These are dog days for Republicans

WILLIAM KRISTOL
THE NEW YORK TIMES

November 11, 2008

Just before midnight on Nov. 4, I wasn't that worried.

Sure, the election results had been bad – but they weren't devastating. Obama wasn't winning the popular vote by double-digit margins, as some polls had suggested he might. Republican losses in the Senate and House were substantial but not catastrophic. Obama was ahead of John McCain by about the same margin with which Bill Clinton defeated George Bush in 1992, and he would be taking over in January with similar congressional majorities to Clinton's in 1993.

Well, Newt Gingrich was able to lead a Republican takeover of Congress only two years later. And after his victory in 1976, Jimmy Carter had even larger Democratic margins in Congress. Ronald Reagan trounced him four years later, bringing with him a GOP-controlled Senate and an era of conservative governance.

What's more, this year's exit polls suggested a partisan shift but no ideological realignment. In 2008, self-described Democrats made up 39 percent of the electorate and Republicans 32 percent, in contrast with a 37-37 split in 2004.

But there was virtually no change in the voters' ideological self-identification: in 2008, 22 percent called themselves liberal, up only marginally from 21 percent in 2004; 34 percent were conservative, unchanged from the last election; and 44 percent called themselves moderate, compared with 45 percent in 2004.

In other words, this was a good Democratic year, but it is still a center-right country. Conservatives and the Republican Party will have a real chance for a comeback – unless the skills of the new president turn what was primarily an anti-Bush vote into the basis for a new liberal governing era.

Those were my thoughts when, a few minutes into his victory speech, just after midnight, Obama told his daughters, “And you have earned the new puppy that's coming with us to the new White House.”

I gulped.

Not out of my deep affection for dogs, fond of them though I am. But because while we've all known that Obama is a very skillful politician, he hasn't until now been a particularly empathetic one. Competence plus warmth is a pretty potent combination. Suddenly visions of the two great modern realigning presidents – Franklin Roosevelt (with his Scottish terrier Fala) and Ronald Reagan (with his Cavalier King Charles spaniel Rex) – flashed before my eyes. Maybe a realignment could be coming.

Obama was, naturally, asked about the promised-but-not-yet-purchased puppy at his press conference Friday. (If one were being churlish, one might say that it was typical of a liberal to promise the dog before delivering it. A results-oriented conservative would simply have shown up with the puppy without the advance hype.)

Obama commented wryly that the canine question had “generated more interest on our Web site than just about anything.” He continued:

“We have two criteria that have to be reconciled. One is that Malia is allergic, so it has to be hypoallergenic. There are a number of breeds that are hypoallergenic. On the other hand, our preference would be to get a shelter dog, but, obviously, a lot of shelter dogs are mutts like me. So – so whether we're going to be able to balance those two things, I think, is a pressing issue on the Obama household.”

Here, in a few sentences, Obama did the following: He deepened his bond with every dog lover in America. He identified with every household that's tried to figure out what kind of dog to get. He touched every parent with a kid allergic to pets. He showed compassion by preferring a dog from a shelter. And he demonstrated a dry and slightly politically incorrect wit by commenting that “a lot of shelter dogs are mutts like me.”

Not bad. It could be a tough four or eight years for conservatives.

It will be tougher yet if they underestimate Obama. His selection of Rahm Emanuel as chief of staff suggests that Obama's not going to be mindlessly leftist, and that he's going to shape a legislative strategy that is attentive to congressional realities while not deferring to a congressional leadership whose interests may not be his own. Jimmy Carter and Bill Clinton were both tripped up in their first two years by their Democratic Congresses. Obama intends for Emanuel to ensure that that doesn't happen.

And Obama has the further advantage of inheriting a recession that will give him a very tough first year or two (for which he won't be blamed), but that should be followed by a recovery well timed for his re-election bid.

So Obama will be formidable. But conservatives should welcome the challenge. It's good for conservatism that conservatives will have to develop refreshed ideas and regenerated political skills to succeed in the age of Obama.

And it wouldn't hurt for Governors Sarah Palin, Mitch Daniels, Bobby Jindal and the other possible 2012 GOP nominees to begin bringing some puppies home for their kids.

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me@rescam.org

Raising concerns about deflation

ROBERT J. SAMUELSON
NEWSWEEK

November 11, 2008

Until recently, the idea that deflation – the decline of most prices – was possible, let alone a potential economic danger, seemed outlandish. If anything, inflation was the threat.

Led by rising oil and food prices, it was increasing in most countries. But in the past two months, deflation has suddenly become conceivable and, though still a long shot, it's much more menacing than most people realize. The most urgent economic task for Barack Obama and other world leaders is to prevent the long shot from happening.

A mild deflation – like a mild inflation – would be barely noticeable, and even pleasurable. Who doesn't like lower prices? But beyond a few percentage points, deflation can create economic havoc by forcing debtors to repay loans in more expensive money and causing consumers to postpone purchases.

In the Great Depression, deflation reigned. Consumer prices fell about a quarter from 1929 to 1933. Spending collapsed. Supply swamped demand, driving prices down. By 1933, manufacturing output had dropped 39 percent and joblessness had reached 25 percent.

It's this history that makes deflation terrifying. Obama and his fellow leaders should worry. Since mid-September, economic conditions have deteriorated badly. In October, General Motors' U.S. sales were down 45 percent from a year earlier, Toyota's 26 percent. Payroll employment dropped 240,000, the 10th straight month of decline.

Abroad, signs of distress also abounded. In September, manufacturing orders in Germany fell 8 percent from August. Stock markets in developing countries have declined about a third since September.

By all odds, this signals a recession that, though severe, fits within the post-World War II experience. It will suppress inflation, not trigger deflation. Remember: U.S. consumer prices in September were about 5 percent higher than a year earlier; in developing countries, inflation now averages about 9 percent.

Remember, too, the economy has changed fundamentally since the 1930s. Then, factories and farms dominated. Gluts quickly depressed prices of wheat, steel and meat. Now, our service economy features health care, entertainment and education. Their prices are less volatile.

Still, this crisis has repeatedly confounded “experts.” A few months ago, it was widely believed that many poor countries had largely escaped the financial turmoil of rich countries. Their growth would cushion the downturns in the advanced world. No more.

In 2007, China grew 11.9 percent and India 9.3 percent. The latest forecast from the International Monetary Fund cuts their growth in 2009 to 8.5 percent and 6.3 percent. Indeed, the IMF has tossed out forecasts made only a month ago. It now predicts harsher recessions for rich countries and slower growth for poor countries.

So, there's an outside possibility that we're on the doorstep of a more dangerous global downturn. Something significant happened in mid-September, either caused by the bankruptcy of Lehman Brothers or coincident with it. Trust among financial institutions evaporated. Credit spreads – the gap between commercial interest rates and rates on safe Treasury securities – exploded. Stock markets plunged. Economies everywhere lurched downward.

Prices for basic commodities, the feedstock of modern economies, attest to a major break. Since early summer, they'd drifted down from historical highs that were usually attributed to strong demand from China and India. Suddenly, prices nose-dived.

It wasn't just oil, now about $60 a barrel, down from almost $150. Copper fell from about $8,900 a metric ton in June to $3,800, aluminum from $3,000 a ton to $1,900. “I've never seen markets turn this quickly or violently,” says economist John Mothersole of IHS Global Insight.

In theory, lower commodity prices could be a boon. If the propensity to spend among consuming nations is greater than among producing nations, lower prices would promote a global recovery. But in practice, lower commodity prices might herald a broader deflation. We don't know.

But we do know that a severe deflation could abort any recovery. Its harm would operate through two channels, says economist Desmond Lachman of the American Enterprise Institute.

First, debt: As prices fell and old debts stayed fixed, companies would have a harder time repaying; bankruptcies and unemployment would increase; banks would suffer more loan losses; the same process would happen to household debts if wages fell. Second, deferred spending: If people believe prices will be lower next month, they may wait to buy; if too many shoppers wait, the economy spirals downward.

The specter of deflation explains much of what many governments are doing. Government central banks – the Federal Reserve, the European Central Bank, the Bank of England – are cutting interest rates. But given the reluctance of many banks to lend and many households to borrow, the effect may be muted.

A “stimulus package” of more spending increases and tax cuts would provide extra insurance against an economic free fall. The trick for Obama and other leaders is to ensure that new commitments are temporary – and don't worsen grim long-term budget outlooks.

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me@rescam.org

An unspoken illness among veterans

By Linda Rosenberg; president and chief executive officer of the National Council for Community Behavioral Healthcare.

November 11, 2008

When Chris Hill was honorably discharged from the U.S. Marine Corps in 1982, he made sure to remove the medical records in his permanent file about his visits to a psychiatrist. Hill, who was experiencing severe anxiety attacks, was afraid to be labeled as a veteran with psychiatric problems.

“I was embarrassed about it at the time,” says Hill, who now works as a mental health counselor for the Jefferson Center for Mental Health in Jefferson County, Colo. “There was a stigma in my own mind about it being bad to get psychiatric help. As a Marine, I didn't want to appear weak.”

Research shows that Hill's trepidation about receiving psychiatric care is not unique among members of the Armed Forces. A 2004 study of 6,000 military men and women involved in ground combat operations in Iraq and Afghanistan found that of those whose responses indicated a mental health problem, only 23 to 40 percent sought psychiatric help. Many who did not seek treatment cited fear of being stigmatized as a reason.

After leaving the Marines, Hill struggled with alcohol, attempted suicide and says he “lost every material thing I ever owned.” Hitting bottom taught him he had to deal with his alcoholism and depression, and he finally began psychiatric counseling.

For the thousands of veterans like Chris Hill who return home with physical and mental scars, their wounds can present particular challenges for years to come. The wars overseas rarely make front page news these days, but the wars still loom large for families left behind during tours of duty and dealing with the war's aftermath in the form of veterans returning with posttraumatic stress disorder, anxiety, depression, and substance abuse.

Nearly 300,000 veterans from the wars in Iraq and Afghanistan suffer from either posttraumatic stress or depression, according to a recent study by the RAND Corporation. The Department of Veterans Affairs says mental health is the second largest area of illness for veterans of these wars.

Some of these troubled veterans seek help from a network of community mental health centers nationwide. These centers' deep roots in the community make them well suited to counsel veterans by engaging churches, synagogues, schools and other community stalwarts to become involved in a holistic approach that treats the veteran's entire family.

Soon more veterans may be able to receive counseling from community-based organizations. On Oct. 10, President Bush signed “The Veterans Mental Health and Other Care Improvements Act of 2008” into law. The new law directs the Veterans Administration to contract with community-based health care organization to provide mental health services in rural areas in which access to VA services is inadequate.

But we should not expect mental health professionals to go it alone. Everyone has a role to play to help veterans overcome the stigma of mental illness. A few easy ways to help veterans overcome the stigma of mental illness include:

Talk about your family's experiences with mental illnesses and addictions as you would about other medical conditions. Mental illnesses and addictions need to come fully out of the closet.

Decide to become literate about mental illnesses and addictions. Read and ask questions about these conditions and look for courses on mental health literacy in your community.

Support veterans groups and your local mental health center's efforts to make mental health and addictions treatment available in every community.

On this Veterans Day, whether we are a veteran, family member, friend, co-worker or simply a concerned citizen, we all need to make sure we continue to fight the stigma attached to seeking mental health treatment. We need to do go the extra yard to ensure that veterans who may be suffering from mental illnesses receive the help they need.

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me@rescam.org

Will Democrats reform immigration?

UNION-TRIBUNE EDITORIAL

November 12, 2008

This was a bad year for conventional wisdom in politics. Some things that were supposed to happen didn't. And some things that no one expected would ever happen did.

What if next year isn't any better? What if some of the things that people think are sure to happen as a result of Barack Obama being elected president are more unlikely to happen precisely because Obama was elected.

For instance, we can assume there are many Obama supporters who – whether they are Democrats, Republicans or Independents – also support the idea of comprehensive immigration reform. These aren't just Latino voters that we're talking about, although that's a big part of his constituency. Two-thirds of Latino voters supported Obama, according to exit polls. And, according to other surveys, roughly the same percentage of Latinos supports comprehensive immigration reform.

Some may even assume that electing Obama will somehow make it more likely to get through Congress a fair and thorough immigration reform package that will accomplish all three of the essential goals: strengthening enforcement on the border, creating a new guest-worker plan to fill jobs that Americans don't want, and laying out a path to earned legalization for some illegal immigrants.

But if you believe that, then you must also believe that the problem last time – in the failed attempts of 2006 and 2007 – was that there was a Republican president or that Republicans in Congress were the main stumbling block, and that, now with fewer of them, comprehensive reform should breeze through both houses.

But wait. Making history is one thing, and rewriting it is another. President Bush was a champion of immigration reform. In fact, it was his idea in the first place. And Republican opponents in Congress may have been vocal but, in the overall, they were a minor annoyance.

Remember, for the last two years, Democrats have controlled Congress. And yet they still have this bad habit of blaming Republicans when things go wrong. As we've said on many occasions, the record shows that it was Senate Democrats who killed immigration reform at the behest of organized labor because unions remain vehemently opposed to guest worker programs. AFL-CIO President John Sweeney called the concept of importing labor “a bad idea that harms all workers.” And now, as a result of last week's election, Democrats have more seats in Congress, the unions are emboldened, and the presidency is about to transfer from someone who championed immigration reform to someone who has said that he doesn't intend to get to it in the first 100 days – if at all during his first term.

Add all these things up, and it's hard to feel optimistic about the prospects for comprehensive immigration reform anytime soon. That is all the more reason not to assume anything, and to keep the pressure on both the Democratic Congress and the Obama White House until they deliver the kind of reform the country demands and deserves.

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me@rescam.org

Immigration unlikely to be Obama priority

RUBEN NAVARRETTE JR.
THE UNION-TRIBUNE

November 12, 2008

In July, during an address to the annual meeting of the National Council of La Raza, Barack Obama promised to make comprehensive immigration reform “a top priority in my first year as president.” Don't hold your breath.

Just a few days before the election, CNN's Wolf Blitzer asked Obama to rank in order of priority five issues – tax cuts, health care, energy, education and immigration. Obama made up his own list, appropriately adding the economy as his No. 1 priority and dropping immigration altogether.

For Latinos who assume that helping to elect Obama president guarantees them another shot at comprehensive immigration reform, his selection of Rep. Rahm Emanuel as his chief of staff is not a good sign. As Speaker Nancy Pelosi's enforcer in the Democratic-controlled House, Emanuel was – in the last two years – a major stumbling block to achieving an immigration package. Capitol Hill newspapers reported shouting matches between Emanuel and members of the Democratic-controlled Congressional Hispanic Caucus, who tried unsuccessfully to pressure the leaders of their party to tackle the issue.

It's not that Emanuel has anything against immigrants or immigration reform. It's just politics. According to The Washington Post and other newspapers, Emanuel decided that the issue was a loser for Democrats and that it belonged on the back burner. He was protecting the Democratic majority in the House by covering members who might be vulnerable to ouster if they were seen in their home districts as going along with “amnesty” for illegal immigrants. Once in the White House, I suspect Emanuel will channel those instincts toward protecting President Obama from a sticky debate.

The conventional thinking is that the issue has very little benefit for Democrats beyond scoring points with Latino voters, who will probably stay in their camp anyway. And it has a significant downside in that it makes some powerful enemies. Contrary to what you hear from the pundits, the Democrats' major concern is not the nativists on the far right. Those who call into talk radio shows to complain about taco trucks or having to press “1 for English” never had much power to begin with. And they have even less now that their mean-spirited worldview has been repudiated by an election where much of the narrative was about embracing cultural diversity.

As has always been the case with the immigration issue, what Democrats worry about most is antagonizing their sponsors in organized labor. Bringing back the debate over comprehensive immigration reform means restarting the discussion of a new guest-worker plan – which John Sweeney at the AFL-CIO considers “a bad idea (that) harms all workers.”

It's true that President-elect Obama owes Latinos an enormous debt for giving him two-thirds of their votes. But Obama and congressional Democrats also owe a lot to labor. Those IOUs are headed for a collision. I'm betting on labor to win. I expect immigration reform to be off the agenda for the next four years, especially since Obama will be looking to placate the unions while backing off the loony idea of renegotiating the North American Free Trade Agreement. That was never a serious proposal anyway, only something that Obama embraced during the Democratic primary to win votes from defeatists convinced that American products can't compete with foreign ones.

Expect Latinos to get the shortchanged – again. They may get bought off with a couple of high profile appointments. Bill Richardson is already mentioned as a possible secretary of state, and Los Angeles Mayor Antonio Villaraigosa could also be in line for a prominent role in the new administration. As someone who made history, Obama could also make more of it by appointing the first Latino to the Supreme Court. That would buy a tremendous amount of goodwill.

Yet when it comes to immigration, Obama will have trouble keeping his promise of comprehensive reform from last summer. He will probably toss Latino supporters a bone by stopping construction of the border fence that he voted for in the Senate and ending the workplace raids that have caused so much disgust in the Latino community.

But nothing else. And if Latinos are paying attention and holding the new president to account, they'll know they've been used. And, if honest with themselves, they'll have something else to be disgusted about.

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me@rescam.org

An industry that became brain-dead

THOMAS L. FRIEDMAN
THE NEW YORK TIMES

November 13, 2008

Last September, I was in a hotel room watching CNBC early one morning. They were interviewing Bob Nardelli, the CEO of Chrysler, and he was explaining why the auto industry, at that time, needed $25 billion in loan guarantees.

It wasn't a bailout, he said. It was a way to enable the car companies to retool for innovation. I could not help but shout back at the TV screen: “We have to subsidize Detroit so that it will innovate? What business were you people in other than innovation?” If we give you another $25 billion, will you also do accounting?

How could these companies be so bad for so long? Clearly the combination of a very un-innovative business culture, visionless management and overly generous labor contracts explains a lot of it. It led to a situation whereby General Motors could make money only by selling big, gas-guzzling SUVs and trucks. Therefore, instead of focusing on making money by innovating around fuel efficiency, productivity and design, GM threw way too much energy into lobbying and maneuvering to protect its gas guzzlers.

This included striking special deals with Congress that allowed the Detroit automakers to count the mileage of gas guzzlers as being less than they really were – provided they made some cars flex-fuel capable for ethanol. It included special offers of $1.99-a-gallon gasoline for a year to any customer who purchased a gas guzzler. And it included endless lobbying to block Congress from raising the miles-per-gallon requirements. The result was an industry that became brain-dead.

Nothing typified this more than statements like those of Bob Lutz, GM's vice chairman. He has been quoted as saying that hybrids like the Toyota Prius “make no economic sense.” And, in February, D Magazine of Dallas quoted him as saying that global warming “is a total crock of [expletive].”

These are the guys taxpayers are being asked to bail out.

And please, spare me the alligator tears about GM's health care costs. Sure, they are outrageous. “But then why did GM refuse to lift a finger to support a national health care program when Hillary Clinton was pushing for it?” asks Dan Becker, a top environmental lobbyist.

Not every automaker is at death's door. Look at this article that ran two weeks ago on autochannel.com: “ALLISTON, Ontario, Canada – Honda of Canada Mfg. officially opened its newest investment in Canada – a state-of-the art $154 million engine plant. The new facility will produce 200,000 fuel-efficient four-cylinder engines annually for Civic production in response to growing North American demand for vehicles that provide excellent fuel economy. . . .”

The blame for this travesty not only belongs to the auto executives, but must be shared equally with the entire Michigan delegation in the House and Senate, virtually all of whom, year after year, voted however the Detroit automakers and unions instructed them to vote. That shielded General Motors, Ford and Chrysler from environmental concerns, mileage concerns and the full impact of global competition that could have forced Detroit to adapt long ago.

Indeed, if and when they do have to bury Detroit, I hope that all the current and past representatives and senators from Michigan have to serve as pallbearers. And no one has earned the “honor” of chief pallbearer more than the Michigan Rep. John Dingell, the chairman of the House Energy and Commerce Committee, who is more responsible for protecting Detroit to death than any single legislator.

OK, now that I have all that off my chest, what do we do? I am as terrified as anyone of the domino effect on industry and workers if GM were to collapse. But if we are going to use taxpayer money to rescue Detroit, then it should be done along the lines proposed in The Wall Street Journal on Monday by Paul Ingrassia, a former Detroit bureau chief for that paper.

“In return for any direct government aid,” he wrote, “the board and the management [of GM] should go. Shareholders should lose their paltry remaining equity. And a government-appointed receiver – someone hard-nosed and nonpolitical – should have broad power to revamp GM with a viable business plan and return it to a private operation as soon as possible. That will mean tearing up existing contracts with unions, dealers and suppliers, closing some operations and selling others and downsizing the company. . . . Giving GM a blank check – which the company and the United Auto Workers union badly want, and which Washington will be tempted to grant – would be an enormous mistake.”

I would add other conditions: Any car company that gets taxpayer money must demonstrate a plan for transforming every vehicle in its fleet to a hybrid-electric engine with flex-fuel capability, so its entire fleet can also run on next generation cellulosic ethanol.

Lastly, somebody ought to call Steve Jobs, who doesn't need to be bribed to do innovation, and ask him if he'd like to do national service and run a car company for a year. I'd bet it wouldn't take him much longer than that to come up with the GM iCar.

The case against GM bailout

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Lastly, somebody ought to call Steve Jobs, who doesn't need to be bribed to do innovation, and ask him if he'd like to do national service and run a car company for a year. I'd bet it wouldn't take him much longer than that to come up with the GM iCar.

It might take a little longer. Apple isn't a union company.

Where to end government bailouts

CHARLES KRAUTHAMMER
THE WASHINGTON POST

November 14, 2008

Finally, the outlines of a coherent debate on the federal bailout. This comes as welcome relief from a campaign season that gave us the House Republicans' know-nothing rejectionism, John McCain's mindless railing against “greed and corruption” and Barack Obama's detached enunciation of vacuous bailout “principles” that allowed him to be all things to all people.

Now clarity is emerging. The fault line is the auto industry bailout. The Democrats are pushing hard for it. The White House is resisting.

Underlying the policy differences is a philosophical divide. The Bush administration sees the $700 billion rescue as an emergency measure to save the financial sector on the grounds that finance is a utility. No government would let the electric companies go under and leave the country without power. By the same token, government must save the financial sector lest credit dry up and strangle the rest of the economy.

Treasury Secretary Henry Paulson is willing to stretch the meaning of “bank” by extending protection to such entities as American Express. But fundamentally, he sees government as saving institutions that deal in money, not other stuff.

Democrats have a larger canvas, with government intervening in other sectors of the economy to prevent the cascade effect of mass unemployment leading to more mortgage defaults and business failures (as consumer spending plummets), in turn dragging down more businesses and financial institutions, producing more unemployment, etc. – the death spiral of the 1930s.

Bush is trying to move the LIBOR or the TED spread, which measure credit flows. The Democrats' index is the unemployment rate.

With almost 5 million workers supported by the auto industry, Democrats are pressing for a federal rescue. But the problems are obvious.

First, the arbitrariness. Where do you stop? Once you've gone beyond the financial sector, every struggling industry will make a claim on the federal treasury. What are the grounds for saying yes or no?

The criteria will inevitably be arbitrary and political. The money will flow preferentially to industries with lines to Capitol Hill and the White House. To the companies heavily concentrated in the districts of committee chairmen. To clout. Is this not precisely the kind of lobby-driven policy-making that Obama ran against?

Second is the sheer inefficiency. Saving Detroit means saving it from bankruptcy. As we have seen with the airlines, bankruptcy can allow operations to continue while helping shed fatally unsupportable obligations. For Detroit, this means release from ruinous wage deals with their astronomical benefits (the hourly cost of a Big Three worker: $73; of an American worker for Toyota: $48), massive pension obligations, and unworkable work rules such as “job banks,” a euphemism for paying vast numbers of employees not to work.

The point of the Democratic bailout is to protect the unions by preventing this kind of restructuring. Which will guarantee the continued failure of these companies, but now they will burn tens of billions of taxpayer dollars. It's the ultimate in lemon socialism.

Democrats are suggesting, however, an even more ambitious reason to nationalize. Once the government owns Detroit, it can remake it. The euphemism here is “retool” Detroit to make cars for the coming green economy.

Liberals have always wanted the auto companies to produce the kind of cars they insist everyone should drive: small, light, green and cute. Now they will have the power to do it.

In World War II, government had the auto companies turning out tanks. Now they would be made to turn out hybrids. The difference is that, in the middle of a world war, tanks have a buyer. Will hybrids? One of the reasons Detroit is in such difficulty is that consumers have been resisting the smaller, less powerful, less safe cars forced on the industry by fuel-efficiency mandates. Now Detroit would be forced to make even more of them.

If you think we have economic troubles today, consider the effects of nationalizing an industry of this size, but now run by bureaucrats issuing production quotas to fit five-year plans to meet politically mandated fuel-efficiency standards – to lift us to the sunny uplands of the coming green utopia.

Republican minimalism – saving the credit-issuing utilities – certainly risks not doing enough. But the Democratic drift toward massive industrial policy threatens to grow into the guaranteed inefficiencies of command-economy maximalism.

In this crisis, we agree to suspend the invisible hand of Adam Smith – but not in order to be crushed by the heavy hand of government.

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Ditch the smooth transition. The people voted for change
Instead of accepting the corrupted bail-out and reassuring Wall Street, Obama's team must start doing the hard stuff now


Naomi Klein

guardian.co.uk, Friday November 14 2008 00.01 GMT
The Guardian, Friday November 14 2008

The more details emerge, the clearer it becomes that Washington's handling of the Wall Street bail-out is not merely incompetent: it is borderline criminal.

In a moment of high panic in September, the US treasury pushed through a radical change in how bank mergers are taxed - a change long sought by the industry. Despite the fact that this move will deprive the government of as much as $140bn in tax revenue, legislators found out only after the fact. According to the Washington Post, more than a dozen tax attorneys agree that "[the] treasury had no authority to issue the [tax change] notice".

Of equally dubious legality are the equity deals the treasury has negotiated with many of the banks. According to Congressman Barney Frank, one of the architects of the legislation that enables the deals: "Any use of these funds for any purpose other than lending - for bonuses, for severance pay, for dividends, for acquisitions of other institutions ... is a violation of the act." Yet this is exactly how the funds are being used.

Then there is the nearly $2 trillion that America's central bank, the Federal Reserve, has handed out in emergency loans. Incredibly, the Fed will not reveal which corporations have received these loans or what it has accepted as collateral. Bloomberg news service believes this secrecy violates the law and has filed a federal suit demanding full disclosure.

Yet the Democrats are either openly defending the administration or refusing to intervene. "There is only one president at a time," we hear from Barack Obama. That's true. But every sweetheart deal the Bush administration makes threatens to hobble Obama's ability to make good on his promise of change. To cite just one example, that $140bn in missing revenue is almost the same sum as Obama's renewable energy programme. Obama owes it to the people who elected him to call this what it is: an attempt to undermine the electoral process by stealth.

Yes, there is only one president at a time, but that president needed the support of powerful Democrats - including Obama - to get the bail-out passed. Now that it is clear the Bush administration is violating the terms to which both parties agreed, the Democrats have not just the right, but a grave responsibility, to intervene forcefully.

I suspect the real reason the Democrats are failing to act has less to do with presidential protocol than with fear: fear that the stockmarket, which has the temperament of an over-indulged two-year-old, will throw one of its world-shaking tantrums. Disclosing the truth about who is receiving federal loans, we are told, could cause the market to bet against those banks. Question the legality of equity deals, and the same thing will happen. Challenge the $140bn tax giveaway and mergers could fail.

More than that, the Democrats, including Obama, appear to believe that the need to soothe the market should govern all key economic decisions in the transition period. Which is why, just days after a euphoric victory for "change", the mantra abruptly shifted to "smooth transition" and "continuity".

Take Obama's choice for chief of staff. Rahm Emanuel, the House Democrat who received the most donations from the financial sector, sends an unmistakably reassuring message to Wall Street. When asked if Obama would be moving quickly to increase taxes on the wealthy, as promised, Emanuel pointedly did not answer the question.

This same market-coddling logic should, we are told, guide Obama's selection of treasury secretary. Fox News and MNSBC explained that Larry Summers, who held the post under Clinton, is the man "the Street would like most". Let's be clear why. "The Street" would cheer a Summers appointment for the same reason the rest of us should fear it: because traders will assume that this champion of deregulation will offer a transition from Henry Paulson so smooth that we will barely know it happened. On the other hand, someone like Sheila Bair, the chairman of the banks' insurer of last resort, the Federal Deposit Insurance Corporation, would spark fear on the Street - for all the right reasons.

One thing we know for certain is that the market will react violently to anyone likely to impose serious regulation, invest in people, and cut off the free money. In short, the markets can be relied on to vote in precisely the opposite way that Americans have just voted. (A recent poll found 60% strongly favour "stricter regulations on financial institutions", while just 21% support aid to financial companies.)

There is no way to reconcile the public's vote for change with the market's foot-stomping for more of the same. Any moves to change course will be met with market shocks. The good news is that once it is clear the new rules will be applied across the board, fairly, the market will stabilise and adjust. Furthermore, the timing for this turbulence could not be better. Over the past three months, we've been shocked so often that market stability would come as more of a surprise. That gives Obama a window to disregard the calls for a seamless transition and do the hard stuff first. Few will be able to blame him for a crisis that predates him, or fault him for honouring the clearly expressed wishes of the electorate. The longer he waits, however, the more memories will fade.

When transferring power from a functional, trustworthy regime, everyone favours a smooth transition. When exiting an era marked by criminality and bankrupt ideology, a little rockiness at the start would be a very good sign.

This column was first published in The Nation

First female 4-star general named

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Fiction as fact - Hoaxing of MSNBC the latest media fiasco

UNION-TRIBUNE EDITORIAL

November 15, 2008

This is lesson No. 1 from the latest journalistic fiasco: the hoaxing of MSNBC by a pair of aspiring filmmakers, Eitan Gorlin and Dan Mirvish, who created Martin Eisenstadt, a fictional adviser to Republican presidential nominee John McCain. This faux adviser, MSNBC reported, had admitted that he was the McCain aide who told Fox News that GOP vice-presidential candidate Sarah Palin was so ignorant she believed Africa was a country.

It turned out that this was only the latest hoax by Gorlin and Mirvish. The fictional Eisenstadt's call for the construction of a casino in Baghdad's Green Zone was picked up by the Web site of Mother Jones magazine. Eisenstadt's claim that Paris Hilton's parents complained bitterly to the McCain campaign after it ran an ad comparing Barack Obama to the starlet was picked up by a Los Angeles Times blog.

The kicker is the pair kept getting away with their hoaxes even after the journalism watchdog sourcewatch.org had exposed “Martin Eisenstadt” as a fraud.

The irony here, of course, is that the mainstream media have forever held themselves up as vastly more trustworthy than the blogosphere because of their insistence on such journalistic basics as fact-checking or getting two sources for scoops.

Thankfully, much of the mainstream media still care about these basics. But too many reporters are willing to spread blog baloney instead of substantiating it.

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MSNBC SUCKS!

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After the auto bailout, then what?

DAVID BROOKS
THE NEW YORK TIMES

November 15, 2008

Not so long ago, corporate giants with names like PanAm, ITT and Montgomery Ward roamed the Earth. They faded and were replaced by new companies with names like Microsoft, Southwest Airlines and Target. The United States became famous for this pattern of decay and new growth.

Over time, American government built a bigger safety net so workers could survive the vicissitudes of this creative destruction – with unemployment insurance and soon, one hopes, health care security. But the government has generally not interfered in the dynamic process itself, which is the source of the country's prosperity.

But this, apparently, is about to change. Democrats from Barack Obama to Nancy Pelosi want to grant immortality to General Motors, Chrysler and Ford. They have decided to follow an earlier $25 billion loan with a $50 billion bailout, which would inevitably be followed by more billions later, because if these companies are not permitted to go bankrupt now, they never will be.

This is a different sort of endeavor than the $750 billion bailout of Wall Street. That money was used to save the financial system itself. It was used to save the capital markets on which the process of creative destruction depends.

Granting immortality to Detroit's Big Three does not enhance creative destruction. It retards it. It crosses a line, a bright line. It is not about saving a system; there will still be cars made and sold in America. It is about saving politically powerful corporations. A Detroit bailout would set a precedent for every single politically connected corporation in America. There already is a long line of lobbyists bidding for federal money. If Detroit gets money, then everyone would have a case. After all, are the employees of Circuit City or the newspaper industry inferior to the employees of Chrysler?

It is all a reminder that the biggest threat to a healthy economy is not the socialists of campaign lore. It's CEOs. It's politically powerful crony capitalists who use their influence to create a stagnant corporate welfare state.

If ever the market has rendered a just verdict, it is the one rendered on GM and Chrysler. These companies are not innocent victims of this crisis. To read the expert literature on these companies is to read a long litany of miscalculation. Some experts mention the management blunders, some the union contracts and the legacy costs, some the years of poor car design and some the entrenched corporate cultures.

There seems to be no one who believes the companies are viable without radical change. A federal cash infusion will not infuse wisdom into management. It will not reduce labor costs. It will not attract talented new employees. As Megan McArdle of The Atlantic wittily put it, “Working for the Big Three magically combines vast corporate bureaucracy and job insecurity in one completely unattractive package.”

In short, a bailout will not solve anything – just postpone things. If this goes through, Big Three executives will make decisions knowing that whatever happens, Uncle Sam will bail them out – just like Fannie Mae and Freddie Mac. In the meantime, capital that could have gone to successful companies and programs will be directed toward companies with a history of using it badly.

The second part of Obama's plan is the creation of an auto czar with vague duties. Other smart people have called for such a czar to reorganize the companies and force the companies to fully embrace green technology and other good things.

That would be great, but if Obama was such a fervent believer in the Chinese model of all-powerful technocrats, he should have mentioned it during the campaign. Are we really to believe there exists a czar omniscient, omnipotent and beneficent enough to know how to fix the Big Three? Who is this deity? Are we to believe that political influence will miraculously disappear, that the czar would have absolute power over unions, management, Congress and the White House? Please.

This is an excruciatingly hard call. A case could be made for keeping the Big Three afloat as a jobs program until the economy gets better and then letting them go bankrupt. But the most persuasive experts argue that bankruptcy is the least horrible option. Airline, steel and retail companies have gone through bankruptcy proceedings and adjusted. It would be a less politically tainted process. Government could use that $50 billion – and more – to help the workers who are going to be displaced no matter what.

But the larger principle is over the nature of America's political system. Is this country going to slide into progressive corporatism, a merger of corporate and federal power that will inevitably stifle competition, empower corporate and federal bureaucrats and protect entrenched interests? Or is the U.S. going to stick with its historic model: Helping workers weather the storms of a dynamic economy, but preserving the dynamism that is the core of the country's success.

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