Archive for the ‘2010 Elections’ Category

The Death of Keynesianism?

Saturday, November 13th, 2010

Here’s Peter Beinart’s Post Election piece. Aside from the contentious bit about “American Exceptionalism,” (which is a separate topic worth returning to later),  the larger issue is where the economy has been and where we go from here. Beinart argues that the biggest casualty of this election is not Democrats, but Keynesianism, the economic theory that argues that when the economy is in recession, the government needs to pump money into the system in order to pick up the slack. While Keynesianism holds that the most effective way to do this is through government spending, temporary tax cuts are also considered stimulative. The idea here is that during times of recession, the private sector stops investing so even if the government lowers taxes, the additional income is likely to be saved or used to pay off debts, not invested into the economy.

Ironically, the discrediting of Keynesianism comes at a time when we have just seen its success. As much as the stimulus was maligned by the Republicans, independent experts such as John McCain’s top economic advisor have argued that it was an integral part of the successful government efforts to avert a Great Depression 2.0. Mark Zandy writes in a report earlier this year that without the massive government intervention by the Treasury Department, Congress and the Federal Reserve (AKA–Lower Interest Rates, TARP and the Stimulus–AKA everything the Tea Party was against), GDP in 2010 would have been 11.5% lower, there would have been 8.5 million less jobs and the country would have been experiencing deflation. While much of this change can be attributed to TARP and the Fed’s actions, Zandy estimates that in 2010 GDP is 3.5% higher, unemployment is 1.5% lower and there are 2.7 million more people employed due to the stimulus.

I’m not arguing that the stimulus was perfect, that there wasn’t waste, or that it couldn’t have been more effective if it was designed differently, but I am arguing that it was effective and that the Republican alternative of just tax cuts and monetary policy would have created the same giant deficit, and produced less economic growth, because despite the lowest US tax rates in 50 years, no one was creating jobs or expanding their busineses in 2009 and interest rates were already at close to zero.

Why Obama wasn’t waving this report around on the campaign trail is a mystery to me, but it is difficult to base a campaign on:  ”you think things are bad now, just think of how bad they would have been…” Also, while government intervention did prevent a Great Depression, job creation has stalled this year as private industry (which is actually doing quite well) has been content to sit on large cash reserves instead of hiring new employees or expanding their businesses.

It has become an article of faith among Republicans that Health Care Reform, Financial Reform and the prospect of capping carbon emissions has created a climate of uncertainty that has decreased investment. This argument probably has some merit, but I think it’s overblown. You can complain about a 2000 page Health Care Bill, but health care costs increased over 100% in the last decade. The heath care status quo was inherently uncertain and remains so. Similarly, we could have quibbles over how much regulation of the financial industry is necessary, but again, anyone who watched as Wall Street crashed this economy should have trouble arguing that reforming the banking industry wasn’t needed. In fact, it’s clear that Obama, Geithner and the Banking Committees in Congress engaged in a deliberate strategy of minimizing the impact of financial regulation on the existing system (yet another eggregious example of how much special interest control our government).  

A good case can be made that, while the stimulus and other government intervention succeeded in creating a floor for the economy, the current stall in the recovery highlights the fact that there should have been more incentives for private sector hiring. In retrospect, the stimulus should have included tax cuts that were specifially targeted to job creation, like a payroll tax, instead of the $500-$1000 tax cuts that were given to 98% of Americans. Those tax cuts fulfilled an Obama campaign promise, but probably did little to stimulate the economy.    

Republicans, for their part, were either incapable of telling the difference between short term stimulus and long term deficit spending, or they did a great job pretending that they couldn’t tell the difference (I honestly am not sure which). For their obstructionism and unwillingness to help rescue the economy in any way, they reaped the rewards in this election. Democrats also played right into their hands, by not making any credible moves to cut the deficit in the long term, and in fact, using Medicare cuts that should have been used to balance the budget, to fund Health Care Reform.

Just to give a sense of the hole we find ourselves in, here is a report on the jobs created in October. This number was a positive surprise, since 150,000 jobs created in the month was higher than expected and it comes on the heels of 4 months of net job loss (due to lost government jobs), but the increase was not enough to move the unemployment rate. The article points out that

even if the economy suddenly expands and starts adding 208,000 jobs a month — as it did in its best year this decade — it would still take 12 years to close the gap between the growing number of American workers and the total available jobs.

So Beinart’s frustration is not misplaced. Despite the money that was spent on the stimulus, our infrastructure is still in major need of upgrade and a targeted effort to invest in American infrastructure could stimulate significant private sector job growth.  As China and India industrialize and reorient their economy for the 21st Century with investments in green technology, our infrastructure is crumbling and our politicians are so immobilized by partisan politics that they can’t agree on a plan to decrease our dependence on foreign energy, despite the fact that everyone knows how important this is for the country. 

Republican control of the 2/5 of the Senate has stopped this kind of investment in America and the midterm election results make them even less likely. We have officially entered an era of retrenchment, where the question is not how should we stimulate the economy, but how should we balance the budget. While the economic pain continues for the country, all options to stimulate the economy (including tax cuts) have effectively been taken off the table. In the coming weeks, Democrats and Republicans will argue about whether to keep the Bush Tax Cuts or let them expire. But even this debate is only about whether to take the foot off the pedal, not a new strategy for how to accelerate.

But don’t worry Republicans. now that your guys are calling shots in Congress, I’m sure that the Democrats will give Boehner and the Republicans as long as they gave Obama to start creating jobs.

How does next week sound?

Latino Voters Key Part of Western Democratic Firewall

Monday, November 8th, 2010

On election night last week, NBC’s Brian Williams interviewed Jose Diaz Ballart, the Telemundo anchor, who said that if Harry Reid was elected, he better learn to say “muchas gracias,” because Latino’s turned out to vote for him at levels that matched or exceeded those of the 2008 presidential election.

This pattern was repeated in a number of other high profile races in the West. While the dynamics in each case vary, Latino’s played key roles in Democratic victories in Colorado, Nevada and California, and in the process highlighted what should be a concerning trend for Republicans.

In Nevada, Sharron Angle went out of her way to make not so subtle racial appeals in her closing arguments. This, combined with a strong get out the vote effort by Harry Reid’s campaign helped propel Reid to an upset. In Colorado, Latinos combined with women to help Michael Bennet buck the trend and win a close race against Tea Party candidate Ken Buck. Meanwhile in California,  the allegations made by Meg Whitman’s maid and the way in which she handled them combined with another strong get out the vote effort focusing on Latinos helped not only Jerry Brown, but also Barbara Boxer. Over 1 in 5 voters in California were Latino in this election cycle and they broke overwhelmingly for Democrats.

Gil Cedillo points out that George Bush and Karl Rove saw the importance of Latino voters in building a successful Republican party in the long term, but that many Republican politicians have been focused on short-term political gain that can come from scapegoating Latinos, especially in the Republican primaries. While this may be a successful strategy in some parts of the country, it will become less and less so as time goes on.

Republicans may want to consider the fate of the Republican party in California, who never recovered from Pete Wilson’s attempt to deny illegal immigrant children access to school in 1994. Pete Wilson won that election, but he was the last non-action hero Republican to win a major statewide office in the state.

We can only hope that the Republicans are dumb enough to follow his lead nationwide.

Republicans Celebrate Pelosi’s Return

Saturday, November 6th, 2010

Perhaps the only thing more demoralizing than this week’s midterm loss of Congress is Nancy Pelosi’s announcement that she will seek the Minority Leader’s position. As the Wall Street Journal notes, Pelosi would be the first Majority Leader since Sam Rayburn in 1948 to accept a demotion to Minority Leader.

Let me be clear. Nancy Pelosi has been a remarkably effective speaker in terms of getting things done. I wrote previously that Pelosi, Reid and Obama have done more in two years than most presidents do in two terms, and it’s worth noting that even more would have been accomplished if the bills that passed by Nancy Pelosi’s House would have passed the Senate.

But despite legislative success, Pelosi has often been an inarticulate spokesperson for Democratic causes and, as a female San Francisco liberal, she has been a lighning rod for the opposition party, not unlike both Newt Gingrich in the late 1990′s and Tom Delay in the last decade.  Her term as Speaker ended with a historic defeat propelled by the fact that many of the candidates won by effectively nationalizing the elections and running against the Speaker. 

A few months ago, I wrote about the irony of 2010, which is that losing the House and Senate might be a better outcome for Barack Obama’s electoral fortunes (if not his legislative ones), by allowing him to draw distinctions between himself and the Republicans. I still believe that this is true, but it is undoubtedly less true now that Harry Reid kept his position as Senate Majority Leader and the effect of electing more Democrats could be the return of Nancy Pelosi as Speaker of the House.

There has been much discussion about the center of gravity shifting in the party with the defeat of many of the conservative Blue dogs and the survival of more liberal Democrats in safe districts that tend to support Pelosi, but this isn’t about ideology. It’s a raw political calculation. The next Minority Leader can be liberal or moderate, but I think it’s clear that the Democrats have a better chance at electing Democrats and regaining power with someone other than Nancy Pelosi leading the party.

It’s time for Pelosi to step down and welcome a new generation of leadership to protect the gains of the last two years and  build a new foundation for electoral success in the future. Early indications are that this won’t happen, but there’s still time for a competent challenger to emerge.

Let the Republican Civil War Begin

Saturday, November 6th, 2010

The cracks in Republican unity are already beginning to show.

Even before the election, Politico reported that the Republican establishment was working to try to find a viable alternative candidate to defeat Sarah Palin in the 2012 primaries for president.

Increasingly, it seems that Palin would have a good shot at the nomination, starting with a win in Evangelical dominated Iowa, followed by a tougher, but not impossible race in New Hampshire, and then another good chance in South Carolina. But John Heilman’s recent piece on how she could actually win the presidency relies on the idea that New York mayor Michael Bloomburg would run, split the electoral college vote and send the election to the House of Representatives (where the Republicans would elect her president, even though she failed to win the election outright). The fact that he needs to rely on so many “ifs” for Palin to win the general election shows how difficult this would be.

Sister Sarah fought back hard on the Politico article, using her favorite Republican tactic of blaming the media, calling out Jim VandeHei and Mike Allen by name and telling them to ”man up.”   The woman’s a treasure.

Meanwhile, another intra-party skirmish has broken out in the wake of the Republicans underperformance in the Senate elections. To be sure, a 6 seat pickup is nothing to scoff at, but there’s a clear case to make that two more Senate seats (in Delaware and Colorado) would have shifted to the Republican column and a plausible case that Sue Lowden could have succeeded in Nevada where Sharron Angle failed, effectively tie-ing up the Senate and elevating Joe Biden’s official role of presiding over the Senate to more than ceremonial duty.

The day after the election, the divide was in full effect, with prominent Republicans Lindsey Graham stating the obvious:

Candidates matter,” said Sen. Lindsey Graham (R-S.C.). “It was a good night for Republicans but it could have been a better one. We left some on the table….If you think what happened in Delaware is ‘a win’ for the Republican Party then we don’t have a snowball’s chance to win the White House,” he said. “If you think Delaware was a wake-up call for Republicans than we have shot at doing well for a long time.”

An anonomously sourced “high-profile” Republican senator was even more direct, saying of Senator Jim DeMint, the biggest supporter of GOP ideological purity, “It’s like you’re on the five-yard line ready to score and the quarterback calls the play and some member of your team tackles one of your members and keeps you from scoring…We came tantalizingly close to a majority.”

Fox talking head Mort Konracke was just as withering, pointing the finger at Palin and DeMint specifically:

The people who got slapped the hardest in this election — besides Nancy Pelosi and Barack Obama — are Jim DeMint and Sarah Palin…Jim DeMint and Sarah Palin are responsible for the fact that the Senate did not go Republican. They’re the ones who are responsible for Christine O’Donnell. They’re the ones who are responsible for Joe Miller in Alaska. They’re the ones who are responsible for Ken Buck in Colorado. They’re the ones who are responsible for Sharron Angle in Nevada.

Kondracke also said of Palin,  ”She’s a joke even within her own party. The idea that she would be the presidential nominee is unthinkable.”

The fight between the old country club Republicans and the Tea Party nuts is going to be a fun side show over the next couple of years.

The Philosopher King Returns

Thursday, November 4th, 2010

I love this speech.

Jerry’s no Obama with a teleprompter, but through all of that “bumbling” shines some honesty and humility.

We elect politicians to balance budgets and run government, but it doesn’t hurt to have someone who understands that the bitter partisanship and gamesmanship that is endemic to our political system is just a symptom of a spiritual crisis that  plaques the country.

How’s that for touchy-feely?

Shine On You Crazy Diamond.

Republican Wave Crashes in Western States

Thursday, November 4th, 2010

Well, there’s not much silver lining to find in the largest loss of House seats since the Truman Administration, but I’m glad for a few things today:

My home state bucked the trend, returning former Governor Jerry Brown to the Governor’s Mansion as well as Barbara Boxer to the Senate and electing every Democrat on the statewide ballot (Kamala Harris leads Steve Cooley for AG by only 10,000 votes out over 6 million cast). Although legalizing pot went down by a surprisingly large margin, Californians did defeat a measure to gut the state’s greenhouse gas emission law and another measure to (finally) allow the state budget to pass with a majority vote…I’m just glad that Meg Whitman will no longer be on my TV during every commercial break.

In fact, most of the West bucked the trend, with Patti Murray looking like a winner in Washington, Harry Reid beating Angle in Nevada and Bennet beating Buck in Colorado.

The Reid victory is particularly sweet. I’m no fan of Reid (I’d trade him for Russ Feingold in a minute), but I’m sure as hell glad that I won’t have to deal with media coverage of Sharron Angle for another 6 years.

More on these races and the growing importance of Latino voters later.

Democrats keeping the Senate by a number of votes is also a nice surprise. You know it’s bad when you’re celebrating that you only lost 6 Senate seats instead of 10, but we’ll take whatever we can get at this point.

Lots more in the days to come on the short and long term effects of this election.

In the meantime, I’m getting some much needed shut eye.


Dems Drubbed in House, Exceeding Expectations in Senate

Tuesday, November 2nd, 2010

Throwing in the live blogging towel…

It was kind of a lark and don’t have the resources or energy tonight.

Right now it looks like a “split decision” with the Democrats getting clobbered in the House, but slightly over-performing expectations and maintaining their hold in the Senate.

MSNBC is projecting a House gain of about 66 Republican seats.

In the Senate, CNN just called the race for Boxer, effectively maintaing control of the Senate for the Democrats. Meanwhile, Harry Reid is up by 7 with 18% in(!). Bennett leads Buck in Colorado by 3 with 35% in. They just called PA for Pat Toomey (Sestak ran a much tighter campaign than most people projected) and it’s not over yet, but it it looks like Kirk will beat Gianoullias in Illinios.

Much more later, and I’m sure I’ll have some links in the morning.

In the meantime, in case anyone needs a recommendation for live blogging, check out Nate Silver’s Blog.

Manchin Wins in West Virginia

Tuesday, November 2nd, 2010

The live blogging portion of the evening has just begun.

Joe Manchin just took the WV Senate seat vacated by Robert Byrd.

Hard to see how the Republicans take the Senate now.

They’ve gotta run the table in the rest of the country and then take both California and Washington.

As Dana Carvey would have said: “Not…Gonna…Do it.”

Final Election Projections Are Out

Tuesday, November 2nd, 2010

Election day is like Christmas morning for me.

And even though I’m getting coal in my stocking this year, I’m still excited. We’ll see how I feel after the results are in.

Here are final election predictions from Nate Silver and Larry Sabato.

Interestingly, they both have the exact same numbers: 8 Senate Seats for the GOP and 55 House seats.

Both show the Republicans coming up slightly short in the Senate. In order to pull the upset, they need to take West Virginia and then either Washington or California, while realizing victory in close elections in the states of Colorado, Nevada, Illinois and Pennsylvania.

In the House, the prediction is for 55 seats, but this is notoriously hard to predict. They both have 47 losses as a likely floor (which would still be a loss of the House) and of course there are the whisper numbers of over 70 seats.

Bring on the Teabaggers.


Feingold’s Last Stand

Monday, November 1st, 2010

All indications are that Russ Feingold’s going down.

The man whose been called the Senate’s True Maverick by the Nation magazine is on the verge of losing his reelection battle.

I heard someone on MSNBC say earlier this week that this is the thing about wave elections: good people lose, and by extension, bad people (see Sharron Angle) win.

I’ve made peace with the Grand Old Tea Party taking over the House. What I haven’t made peace with is seeing people who have a history of bucking the special interests lose elections in a wave of anger at the people who are bought off by the special interests.

What I haven’t made peace with is people like Sharron–I want to abolish the EPA, the Department of Energy and the UN–Angle being sent to the Senate to represent our country while people like Russ Feingold get sent home.