How much Tax is Not Enough Tax

Even if you've been paying absolutely no attention at all to the Republican Primaries (a.k.a. The Race For Who Gets To Lose To Obama), you have surely learned one thing by now: Mitt Romney does not pay enough in taxes. He somehow uses his tricks that all rich people know to pay less than he should on taxes, and that makes him a bad American! I know that you are in this position, because I, as a Ron Paul supporter, have stopped paying attention a long time ago, and yet I still have heard this story over and over again.

So let's delve into it. Mitt's tax rate brings up a lot of interesting questions. Does Mitt not pay enough? How does he sidestep the IRS? What loopholes is he using? Is he a bad American for doing this?

In reverse order: no, obvious ones which everyone knows, he doesn't, and he pays too much, in fact.

You wanted more detail? Well, if you insist.

First of all, Mitt has no obligation to pay more than he does. Congress sets the tax rate, and all of the "loopholes" that Mitt uses, for reasons. Most of it is for a reason. Congress WANTS people doing the activities that lead to deductions. Congress WANTS people to have babies. Congress WANTS people to invest in non-inventory assets, such as the stock market, and to make a profit there. All of the ways to lower your effective tax rate are in fact tiny measures of social engineering in order to budge Americans into doing activities they want them to do. Is it a little perverse? Are some of them horribly thought out? Of course, it's our Congress we are talking about here. In many ways, Mitt is doing what Congress wants him to do.

Furthermore, nobody, not even rich people, have a duty to pay more than they do in taxes. I can't think of anybody that pays more than they have to in taxes. That's the whole reason HR block exists and advertises the fact that they can save you more money than their competitors. Unless everybody who uses such a service is on the edge of survival, everybody could afford giving more to the government.

Actually, ignore that last paragraph. I'll quote somebody much smarter than me, Learned Hand (best name in the history of justice? Yes), "Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes."

So then the next question is how does Romney pay so little in taxes. According to multiple sources, Romney pays 13.9% in effective tax rate (basically taxes payed divided by income). Of course, once reading that number, everybody ran to their computers or smartphones or local HR Blocks and looked at THEIR tax rate. Just from listening to people talk about it, most people found something like this: Tax Calculator. They all then gasped, and thought "I am paying somewhere between 10 and 35%! And he's rich, so he should be paying 35%!" That bastard.

Of course, that ignores a lot of things. First of all, that number reported is the marginal tax rate. It does not show what % one is paying in tax, but instead what % they will pay on their next dollar made. All dollars made before that level are still taxed at their lower level. No matter how much somebody made last year, they will only have to give 10% of their first $8,700, 15% for the next howevermany dollars to reach $35,350, etc. As anybody who took pre-calc can now tell you, that means nobody will ever pay 35% as an effective tax rate. They would have to pay an infinite amount of dollars, as their effective tax rate will, at best, approach 35%.

Still, 13.9% is very low. The answer, of course, is that most of Romney's income is made through capital gains. How low capitals gains taxes should be is another debate for another time. Let it just suffice to say that Congress has decided that capital gains should be taxed at 10%, Romney didn't, and almost all of Romney's income came from capital gains last year. To suggest that it is Romney's duty to NOT invest his already-earned money elsewhere, just to avoid capital gains taxes is idiotic.

That brings up another point. Romney does not pay 35% on his current income because it is not actually income. He ALREADY paid the marginal tax rate on his earlier earnings. The fact that he is more-or-less retired now and focusing fully on trying to be President is why his rate is so low. He is basically a non-productive member of society, the country has already wrung what it could from his earlier income. The Wall Street Journal has made the argument that it is a double-tax, and they are right. It's a tax on money after you have already paid tax to get that money in the first place. However we are double-taxed all the time (sales tax is one example), so I really won't focus on that.

Also, every American has a much lower effective tax rate than their tax bracket would suggest. The Tax Foundation, which has every incentive to inflate the number to make taxes seem more burdensome, estimates that the average American pays 11% in effective tax rate. That's because, like I suggested above, every American gets as many deductions as they can think of. Also, many Americans have money invested in stocks and bonds, meaning that they also benefit from the capital gains tax. Considering that Romney is all but retired, the fact that he still pays a 2.9% higher tax rate than the average American is actually higher than I expected.

Just note from a quick search: Obama pays a 26% effective tax rate. Much higher than Romney, sure, but also much lower than the tax bracket, which is what everybody seems to be arguing Romney should pay. Also, I imagine Obama doesn't have to withdraw much of his money from his investments yet, as he gets a lot of money for, you know, being president. And a lot of his expenses are paid for him. Therefore, I would estimate that almost all of Obama's income is, well, income, compared to Romney, where almost none of his income is, well, income. If you understood that sentence, you can understand the tax code.

Finally, we come to the messy point of the Constitution. I could stomach the argument that somebody should pay more in taxes, effectively giving a donation to the government, if the government was within it's Constitutional bounds. However, as the government is instead way too bloated, and any extra money will just be used to bomb whatever Muslim nation is the War-of-the-Day, trying to convince me that somebody should give more money to a machine that eats dollars and spits out waste and bombs is damn near impossible.

Yes, Dane, that last sentence was a challenge.

The Debate Part 332324

I just finished watching the CNN debate in Florida.

I'll make my review short and sweet. Romney won. I saw a side of Romney I haven't seen before. He was aggressive and angry, but human. I liked it and for once I thought he would make a decent, albeit lacking, candidate.

The prize for tonight? Florida. I think Romney gets it.

Gingrich definitely lost. Newtmentum is over.

By the way, Ron Paul is both awesome and hilarious.

Drudge & Newt

Let it be known that I am addicted to the news aggregator the Drudge Report. I check it several times a day, and I visit it every time I'm on the internet. The Drudge Report, as you should know, is run by the elusive and mysterious Matt Drudge, and as such is biased.

One thing I've been noticing is that there has been a huge anti-Newt out-put of the Drudge Report in recent days. For the past week, Matt has been running one story after another attacking Newt Gingrich.

Drudge is not an establishment Republican, so it leaves me to ask why is he backing Romney so hard. Ponder this, I will.

Interesting Foreign Policy News today

• French manage to not be offended long enough to agree to long term non-combat operations cooperation agreement with Afghan Government.  We haven't yet, but this is another indicator that we probably will: Washington Post
• Phillipines becoming more amenable to hosting more US forces as part of what I am officially christening "Operation Wu-Tang: remind China that America ain't nothin' to f*$& wid.": Stars & Stripes 
• Business Casual Fashion Pioneer and President of Iran Mahmoud Ahmadinejad is ready to reopen nuclear talks in a sign that crippling sanctions are starting to have a, well, crippling effect on Iran: Al-Jazeera; Fox News; NY Times

Four Political Articles of Varying Interest

• First, a very good piece on a critical issue for the Republican Party.  To paraphrase Jose Mourinho; Read it. Do it. Be Champions.:   Jeb Bush on Hispanic voters
• The Telegraph calls Newt out on a pretty out there speech he gave yesterday on Space policy. Also, great title on the article. (the speech is certainly ummmm... interesting watching.): The Telegraph; Video of Speech
• A former Reagan aide gives lie to Newt's recently discussed attempts to link himself with Reagan:  National Review

• I thought long and hard about not linking to this, because it is basically a roundabout press release from the Obama campaign, so only shows reality the way they want it to look.  It contains a lot of "rah rah" wishful groupthink (I recognize it all to well from interning in the Summer of 2008 at the NRSC, or the pre-iceberg Titanic as it was otherwise known),  but I decided to include it because of two valuable takeaways: 1) Obama's offensive strategy is to focus on candidate personality and tie Mitt to Wall Street; 2) His team seems to realize that they might be vulnerable if Romney can make this about management and leadership.:  Washington Post   

(FYI- don't expect a Dan Balz link to appear anytime again soon, you'll be disappointed)

In Post-Apocolyptic Australia This Would Be Settled in Thunderdome...

Obama landed in Arizona this morning to visit an Intel plant, and what followed was the dreaded PHOTO OP GONE WRONG!  Governor Brewer and President Obama apparently had a public argument which included Brewer pointing her finger at Obama and Obama understandably becoming agitated and leaving.
Full story Here: http://www.washingtonpost.com/blogs/44/post/obama-tangles-with-arizona-gov-jan-brewer-over-immigration-book/2012/01/25/gIQArXnpRQ_blog.html?hpid=z4

The State of Obama's Campaign Strategy

                Well, the 2012 State of the Union has been delivered, and, if the Mayans and the History channel are right, it was the last State of the Union speech before the inevitable apocalypse later this year.  Apart from this potential historical novelty, the speech was not particularly notable.  It was what all State of the Union addresses are, a carefully crafted collection of phrases that are calculated to sound good, make the President look good, and throw up some very hazy policy objectives and proposals that sound nice but are not very concrete or practical.  Obama and his team are experts at delivering these inexact, rosy, hopeful speeches.  But that doesn’t mean that the State of the Union was totally devoid of content or value, you just have to look a little deeper to find it.  So buckle up, keep all arms and legs inside the vehicle, and accompany me on an exciting journey down, deep into the political core of last night’s speech.

                There were a few instances in the speech where Obama made clear policy suggestions.  These policy suggestions are generally designed to sound like great, common sense ideas at the first listen, but after only a few moments of serious consideration, they are generally found to be either impossible to implement, ineffective, or redundant.  This is because the State of the Union Address is intended for as broad an audience as possible, and they assume that most people will simply hear the initial proposal, think, “yeah, that’s a good idea, I like this guy, he’s got good ideas”, and then leave it at that.  I hope for the country’s sake that this grossly underestimates the average voter.  As far as the actual concrete proposals made in last night’s speech, I counted nine, and tried to give each of them a balanced consideration here. 

                But the State of the Union is not really a policy speech.  It is primarily a political platform, especially during an election year.  This is where last night’s speech is more interesting.  It provided Obama his first opportunity to lay out his campaign strategy, and start staking out the positions he wants to take in his upcoming re-election campaign.  So, what did we learn about Obama’s re-election strategy?  Well, for one thing, it seems pretty clear that he is going to fall back on his big guns of “hope” and optimism this election cycle.  Why wouldn’t he?  The unfailing optimism of Barack Obama is appealing to lots of people (especially young people), and it is the single biggest reason behind his demolition of John McCain in 2008.  In fact, as a rule, the candidate who can present the rosier image of America wins elections.  Just look at what Ronald Reagan did to Jimmy Carter after the infamous “general malaise” speech.  One particularly well placed piece of optimistic prose was Obama’s claim that, "anyone who tells you that America has declined or that our influence has waned doesn't know what they're talking about".  This is clearly a preemptive strike on anticipated Republican attacks against his foreign policy record.  Now anyone who says that America’s reputation or influence has suffered under Barack Obama is going to come across as pessimistic and borderline unpatriotic.  Most Americans (especially those in the center and on the right of the political spectrum) do not like to think that it is even possible for us to lose influence or standing in the world of foreign policy.  There is definitely a bit of “America, FUCK YEAH!” in our national consciousness.  Attacking Barack Obama as having made America weaker is going to have to be done very carefully, if at all. (n.b. I believe a case can be made here, especially regarding what is basically the loss of Pakistan as any kind of partner, but I am not sure it is a political “winner”)

            On domestic matters, Obama was equally optimistic.  He continued to attempt to stick the blame for all of the jobs lost over the last 4 years on Bush, and then claim that his policies are really net producers of jobs.  He also seemed to claim that the economy now is actually not that bad and easily fixable.   The storyline going into the speech was that it was going to contain strong notes of economic populism (or class warfare if you asked Conservative commentators).  Obama handled the notes of economic populism with his typical political deftness.  He started out by saying that he wants an America where, "everyone gets a fair shot, and everyone does their fair share".  This line is going to play great with the left and many in the middle class, and is pure populism.  Having established that he was going to play the populist game, he went on to lay the blame for the financial crisis and economic downturn right at the doorstep of the banking institutions and the financial industry.  The incredibly paternalistic line that the crisis was caused in large part because "Mortgages had been sold to people who couldn't afford, or understand them", was typical of his strategy here.  Obama’s strategy is to insulate those who took bad loans or were (or are) living beyond their means from blame for their, or society’s misfortunes, and to demonize the big, faceless, evil banks who should really know better and should watch out for our best interest.  Obama said of the banks behavior, "it was wrong, it was irresponsible".  I’m not suggesting the banks are blameless, but a bad loan is bad on both sides, and the people who took those loans need to take a share of the blame.  If we all admit the mistakes we made and learn from them, we can prevent another financial crisis.  If we do not, then it is only a matter of time before we find ourselves back in the same situation. 
            Throughout his speech Obama maintained the narrative that the base of the economy was fine, but the financial industry and Wall Street were holding it back after being responsible for wrecking it in the first place.  However, he made a conscious effort to avoid crossing into class warfare territory, and moderated the economic populism of his message by repeatedly including himself among the wealthy.  Whenever he mentioned raising taxes on the wealthy, he made sure to phrase it as, “folks like me, who can afford to pay a little more”, or, “wealthy folks like me”.  This is clearly going to be Obama’s strategy going forward.  For another candidate (e.g. Romney), going out of your way to point out your own wealth would risk alienating middle class voters, but Obama doesn’t have to worry about that.  He has a folksy appeal and his middle class roots are pretty well established.  Last night he brought up the fact that his grandmother worked in a factory and his grandfather was a tank soldier in WWII.  Also, although it is patently absurd that the color of someone’s skin play any role in how they are perceived, the fact is that his race insulates him from coming across as “highfalutin” or “out of touch” to many people.  He is almost uniquely able to demonize Wall Street and criticize the wealthy while not coming across as mean spirited or envious.  It will be tough for Republicans to get charges of class warfare against Obama to stick when the general election rolls around.

                On Energy Obama continued to beat the drum on making a bigger investment in renewables.  He is on dangerous political ground here.  His argument that renewable energy was not just an ecological concern but an economic concern was a decent one last year, but after the Solyndra disaster, he risks sounding like he is out of touch with economic reality by continuing to publicly insist that renewable energy investment is going to be a corner stone of the economic recovery.  In fact, I think he is weak on energy in general, and I think he realizes it.  The statement that he is ordering the opening of 75% of our offshore oil reserves was clearly meant to deflect the heat he knows he is going to take from his decision on the Keystone XL pipeline.  He is between a rock and a hard place on energy.  He knows that fossil fuels, especially natural gas, are providing a much needed shot of adrenaline to the economy, but he risks alienating his liberal base if he is seen as being pro-fossil fuel.  This was definitely the weakest part of the speech, and it is where Republicans need to hit the hardest this Autumn. 

                Ultimately the Obama strategy is pinned on the bet that the most sunny, optimistic candidate is going to win.  This doesn’t mean we should expect all sunshine and rainbows Obama, he isn’t going to pull his punches when he’s laying into Congress or Wall Street, but he the overall tone and focus will be positive.  The big risk with this strategy is that his optimism won’t connect with most voters.  If Obama’s economic optimism is too far from the mood of the average voter on economic matters, then all of his rosy speeches and flowery prose will just make him seem more and more out of touch and in over his head.  To that end, the eventual Republican candidate would be wise to make this campaign about statistics, facts, records, and concrete plans rather than style and speeches.  

                But then again, if the Mayans and the History channel are right, then this is all pointless anyway.  I'm gonna go have some beer.

Obama Needs a New Speechwriter

http://www.youtube.com/watch?v=UDDRiGIUYQo

No comment.

SOTU Reaction #2- Substantial Policy Proposals

• President Obama proposed that Congress enact legislation that makes multinational corporations pay taxes at a higher rate than countries which keep themselves in America.  This seems nice at first glance, but would run into legal problems with international trade agreements and would be almost impossible to enact.  Also, even if he were to succeed in enacting such a policy, it seems that it could induce multinational countries to simply leave America, or discourage their investing here, rather than pay these high tax rates.
• Creation of an International Trade Enforcement Unit to look into violations of international trade rules by foreign entities-  Again, at first glance this seems like a good idea, but what exactly is this unit going to do? Are they going to go to China and start sanctioning people violating trade agreements? China might have something to say about that, and last time I checked, they are still a sovereign country.  The President mentioned preventing the importation of counterfeits and illegal copies, but ICE already does that, why create a new unit?  This is what I call a classic "Faulkner idea" full of sound and fury signifying nothing.
• "Train 2 million Americans with skills that will lead directly to a job"- His plan to do this is basically through federal funding of community colleges.  In order for what he outlined to be effective, it would mean a huge federal presence in the everyday running of these schools.  Damn near a federal takeover of community colleges.  Not sure how I feel about that, but I like the idea of incorporating a mandatory training element into federal unemployment, provided it can be paid for, which I kind of doubt it can.
• Have all states require individuals stay in HS until graduation or turning 18- maybe a better version of this is to limit unemployment benefits to those who have either received, are continuing to work towards a high school diploma, or are adjudged mentally incapable of doing so (in which case some kind of disability would surely be more appropriate).  Otherwise, the President can't force states to require that individuals stay in school until graduation or turning 18.  The 10th Amendment hasn't been repealed.  Has it? No? oh good.
• Ordering the opening of 75% of offshore oil fields - If he is actually doing it, and not just saying he is and then requiring that they pass some ridiculous administrative hurdles, then that is great news! Pardon me if, in light of the recent decision on the Keystone XL pipeline, I don't hold my breath.
• Require a "living will" for banks, explaining "how you'll pay the bills if you fail"- I could just be misunderstanding the President here, but it seems to me that it is when a bank is unable to pay its bills that it has failed.  How then, is it supposed to explain how it will pay out if it finds itself in a situation where it cannot pay its bills.  I am a fan of stress-testing banks to ensure they are maintaining adequate resources, but I'm not sure what this "living will" stuff is about... Dane?
• "send me a bill that bans insider trading by members of congress" - How is this not already banned? Insider trading is illegal at any level, presumably including when members of Congress engage in it.  This is a case of misappropriating a phrase which describes a criminal behavior and using it to insinuate that some vague malfeasance is taking place in Congress.  Unless the President can clarify exactly what he meant, than this is just meaningless double-talk
• "let's stop any elected official from owning stocks in industries they impact"- with government as big as it is, this would essentially prevent elected officials at the highest levels from owning any stocks at all.  This is neither reasonable nor desireable, as it would strongly discourage  many successful Americans from pursuing political office, as they would have to make a major financial sacrifice to do so, on top of the financial sacrifices already associate with running for office (campaign expenses, opportunity cost of not working in higher paying private sector).  Fortunately, it is not likely to be enacted either.
• "All Judicial or civil appointments receive a simple up or down vote within 90 days" - This seems like such a benign idea, but it is possibly the most dangerous proposal he made in his entire speech, a post expanding on this opinion is coming later in the week.

A more structured post on some of the rhetoric from the State of The Union containing more analysis will be out tomorrow.

SOTU Reaction #1 Humor and Randomness

• Is there anything lamer than Congressional President groupies camping out on the aisle hours beforehand to get a second on camera, and maybe an autograph afterwards? (I'm looking at you Dennis Kucinich)
• The tone of the opening and the closing of this speech was generic optimistic SOTU stuff, it makes nice listening, but its what you expect.
• The tone of the middle of the speech was very "chidey" if I may coin a horrible word.  Papa Obama is NOT pleased with the way his naughty children Congress and Wall St. are behaving, and if they don't start behaving, he WILL turn this car around!
• Joe Biden is one fidgety dude.  I find him wildly entertaining and likeable.
• at least 5 references to things still being Bush's fault by my count.  This is kind of a lame excuse 3 years in.  I think it makes him sound kind of desperate, and if this tactic still carries any weight with the American people, that's sad.
• oh God, "worth crying over spilt milk" joke. just... uhhhh
•  Paul Ryan is a stud. Also, man does he look happy at an "all options energy policy"
• Eric Cantor looks very serious, but is not a very coordinated clapper.
• Camera shots of the Joint Chiefs are always somehow simultaneously unnerving, hilarious, and patriotic
• Chuck Schumer has some shifty eyes for an otherwise pretty jovial looking fellow
• William McRaven looks smart... this only makes him more terrifying 

Added Upon Further Reflection

• Mitch Daniels, you are cordially invited to join me and Paul Ryan on our totally platonic man-love weekend in Park City
• Seal team Congress is a great image, and is begging for somebody with photoshop skillz to make a captioned picture.

I lied

Ok, So I broke down and actually watched the state of the union. I didn't see the beginning and I missed a chunk in the middle. Here are some random thoughts.

Hillary's hair is pretty terrible.

I think Joe Biden was tweeting or on a black berry or something. He kept diverting his eyes downward, like when someone is in class or a meeting and is trying to hide the fact that they are texting on their phone.

Fox News cut to Chuck Shumer a lot.

Maybe I missed this, but no mention of Obamacare.

No mention of the deficit, either.

Nice, strong ending.

Overall, I was surprised. The speech was narrow in its focus. It had tons of random, micro-proposals that sound nice on paper, but have little chance of getting passed. It was more of a first term SOTU, not the speech of someone who has been in office for three, going on four, years. The speech seemed as if a focus group gathered a bunch of people together, tested what proposals sounded good, and then threw them into the speech. There was no overarching proposal or idea. It was a well delivered speech, but very empty. Hollow. I think the word I’m looking for is unambitious.

I think people will like it. It will likely give him some boost in his poll numbers. But did it change the election, did it provide anything lasting?

I don’t think so.

The State of our Union is… Flabby

The State of the Union is today, at 9pm. What will determine whether or not I watch it is if I go to the gym in time to turn it on as I waddle on the treadmill. Considering it’s 8:51 PM and I’m eating pierogies, it doesn’t look likely. I’ll probably catch the middle or ending of it.

The State of the Union is masturbation for people interested in politics. It feels good, it’s exciting, but in the end, nothing comes of it. Every pollster and pundit worth his or her weight in gold will be predicting and analyzing and prognosticating and dissecting and debating until the wee hours of the morning. And for what? A speech that will not likely be remembered by next month. I dare you to come up with three things that were proposed or said at the 2011 State of the Union.

Here’s what happens in every state of the union.

President walks in to applause. He shakes hands. Says some platitude like, “The State of our Union is strong.” Reviews the last year. Calls out Republicans. Calls out Democrats. Highlights the random guests sitting with the first lady. Proposes a bunch of random programs in the last half hour. Leaves.

Bam, I just saved you two hours. You can thank me later.

Although mandated by the constitution, the state of the union – wait I’m sorry – State of the Union was normally delivered by letter to the Congress. It was only until the advent of radio and Woodrow Wilson, and government expanding ways, that the State of the Union was delivered live to Congress.

To be frank, the whole affair reeks of monarchy. It empowers the President and visually reduces what is and should be an equal branch, Congress, into a bunch of braying clowns. The past eighty or so years have witnessed an accumulation of the powers of the President. Something I believe is antithetical to the spirit of the constitution. The State of the Union only enables this development.

It’s tempting to think of the SOTU as innocent political theater. It is not. It’s political theater that leaves a bitter aftertaste in one’s mouth and the rightful institutional hierarchy of government.

Mitt Isn’t a Human

I have a long running theory that Williard Mitt Romney is not really a human. He’s just too perfect, too put together. Look at his never messed, never trampled hair and tell me that’s the hair of a human being. If Romney is a human, I have a second theory. He’s been in a time capsule since the 1950s. His mannerisms, his sayings, his weird sense of humor, all of it seems to come from a “Leave it to Beaver” conception of the 1950s.

Regardless of whether he is a time travelling super human from the 1950s or a robot, Mitt Romney has a serious problem with connecting people. I think a large portion of his support comes from the fact that he looks and has the resume of a President. However, the longer he is the news, the more people are going to pay attention to him and see an utter lack of connectability. Put him up against Obama, who is in some ways likeable, or at the very least human, and you start to have a real problem.

This is particularly a problem for Romney since his entire campaign has had one theme: I’m electable. Look at these bozos around me, he says, I am not like them. I actually look and sound like the president, plus I have the favorability and polling numbers to back it up! Don’t mind my history of flip flops, my designing of the policy forerunner of unpopular Obamacare, and my lack of essential human traits, I’m electable by gosh! Did I mention I’m electable.

Take away the electability numbers, and the Romney campaign becomes an Emperor without any clothes.

Consider all of this a prelude to these two links.

The first, http://www.nationalreview.com/corner/288977/romneys-moment-jonah-goldberg, is a quick blog post by Jonah Goldberg (whose writing skills have steadily improved – but that’s room for another post). He basically describes Romney as someone who can’t make the sale. I think it’s more than that. Romney is someone who you are skeptical of even allowing into your home to begin to make the sale.

The second comes from the Washington Post:

http://www.washingtonpost.com/blogs/behind-the-numbers/post/public-sours-on-romney-in-january/2012/01/03/gIQAUeetLQ_blog.html

Read it, learn it, and let it sink in. Romney’s favorability ratings near Gingrich’s. Yeah, that’s bad, very bad. He’s at a 50% un-favorability rating among independents, aka the group who decides elections. Now, of course favorability doesn’t determine who wins or loses an election, but it still matters.

Republicans are supposed to always win on the who would you rather have a beer with poll, not the who do you think would fire you and reinvest what was once your salary into a triple leveraged hedge fund poll.

The Skutnik Brigade

Apparently Warren Buffett's secretary is the President's guest of honor at tonight's State of The Union Address. I think it is safe to assume this is not going to be a conciliatory speech.  story here.

Full guest list here.  I hope Adm. McRaven enjoys his night and that all those involved with that operation take pride in the raucous applause which is undoubtedly headed his way.

New Narratives in the Nomination Knife-fight?

                Although I don’t think that the results of the South Carolina Primary are going to change the final outcome of the Republican Primary Campaign, (more on that later this week), last night’s debate at USF clearly demonstrated that it has induced both front-runners to alter their campaign strategy in the short term.  At last night’s debate each of the two leading candidates introduced new campaign narratives.  Mitt Romney started what should be a concerted effort to frame the campaign as being about executive experience, management skills, and leadership.  Up until this point, one of Romney’s major selling points was the issue of electability.  Romney was seen as the candidate best suited to beat President Obama in a general election because he had the broadest appeal to centrists among legitimate Republican candidates (sorry Dane, but I’m not counting Huntsman as a legitimate candidate, he had 0 appeal to the right wing of the Republican Party).  This perceived electability was a big factor in Romney’s win in New Hampshire.  Of the 35% of primary voters who cited ability to defeat Barack Obama as the most important candidate quality, 63% voted for Romney, and only 12% voted for Gingrich (CNN Exit Poll).  Then, just a few days later in South Carolina, Gingrich turned things around with the 45% of voters who cited electability as the most important candidate quality, getting 51% of those votes to Romney’s 37%.  What happened?

                South Carolinians approached the question of electability differently.  They refused to accept the conventional wisdom that the candidate with the broadest appeal is the most electable candidate in a general election.  They instead thought that their best chance of defeating Obama lay in nominating the candidate who would provide the sharpest contrast with President Obama and could bring a more confrontational style to the campaign.  Whether they are right or wrong in this belief makes no difference to the outcome of the primary.  The end result is the same; Romney can no longer be assured of winning primary votes based on electability, especially in the South.  At last night’s debate, Romney repeatedly made reference to his impressive resume as a high level executive, manager, and leader.  He also made sure to bring attention to Gingrich’s lack of success in leadership or management positions.  His repeated claims that Gingrich “resigned in disgrace” as Speaker were particularly noticeable.  (Also, was anybody else reminded of Ben from Parks and Recreation repeatedly and hilariously referring to his own resignation as “resigning in shame”?)  While Newt is right to claim that saying he “resigned in shame” is a slight overstatement, it does draw attention to the fact that Newt was essentially forced out by dissatisfied members of his own caucus.  By focusing on this episode, Romney is setting Gingrich up as someone who talks a big game and has a lot of interesting ideas, but lacks the proven management and leadership skills to effectively run the country.  The Romney line from here out should, and likely will be, “we elected a big talker and a big thinker four years ago who ran on ‘hope ‘ and ‘change’,  we don’t need another one, we need somebody who knows how to lead as the chief executive of the country”.  If Romney is able to redefine the discussion as being about management and leadership, he wins the nomination, and likely the general election as well. 

                Gingrich, on the other hand, is now attempting to establish himself as Republican Aragorn.  He is returning from his self-imposed exile as the rightful heir to Reagan, and he will lead the Republican Party back to the Halcyon days of yesteryear.  He played up what is actually a pretty tenuous connection to Ronald Reagan throughout the debate and even name-dropped Barry Goldwater.  In his closing statements, Gingrich stated, “I went to a Goldwater organizing session in 1964, I met Ronald Reagan for the first time in 1974, I worked with Jack Kemp and Art Laffer to develop Supply Side Economics in the late ‘70s, I helped Governor Reagan become President Reagan, I helped pass the Reagan Economic Program, and I worked with the National Security Council on issues involving the collapse of the Soviet Empire”.  This would be a very impressive resume if it were not vastly overblown.  Gingrich was a back bench Republican Congressman while Ronald Reagan was in the White House.  Gingrich held no party office until 1989, when he was elected Minority Whip in the House, by which point Ronald Reagan had been replaced by George H.W. Bush.  Gingrich’s real legacy is the 1994 Republican Revolution and the “Contract with America”, which was a remarkable success story for the party.  Why can’t he just be happy with that?  For somebody who likes to constantly remind us how much he knows about history, he should know better than to place himself at the center of the Reagan years, when he was at most a marginal character. 

                The desire to take credit for everything good that has happened in American Conservatism since 1970 might be a symptom of a larger problem for Newt.  He is starting to come across as a little smug and arrogant.  Newt clearly thinks he is very smart, but comments about Romney trying “High School” debating tactics do not make Gingrich look more sophisticated in comparison, they make him look like a bully.  Gingrich needs to be careful in attempting to play up his role in past Conservative triumphs, he lest he enter Al Gore, “I invented the internet” territory.  He was dangerously close last night, and I suspect at least a few voters were turned off by his self-congratulatory tone. 

                It will be interesting to see if both Romney and Gingrich continue on their respective new courses and how much traction each narrative will gain in Florida, the most diverse and most important state so far this primary season. 

Monday Links: Timmy Thomas and the Tampa Bay Throwdown

Not too many links today, because the state of the Union has already occupied everybody in Politics' minds, and most of the immediate analysis of the debate out there is, well, bad.

• Good, fairly unbiased fact checking work from the USF (yes, even the Washington Post can be fair when they try): WaPo Fact Checker
•  Full video of the debate courtesy of MSNBC (yeesh, MSNBC and WaPo links, what's the world coming to): Rock Center
•  Finally, because I love it when sports and politics collide, and because this is the type of thing that Liberals would have lauded as principled four years ago but they now decry as utterly shameful, Tim Thomas, Boston Bruin's goalie, NHL playoff MVP, native of Flint, Michigan, and Michael Moore anti-particle, decided to skip out on President Obama's "Look, I like hockey! Hockey fans, vote for me!" photo op with the Bruins yesterday to make a political statement about Government gone mad: Thomas Statement;  A Hockey Writer's Take;  A Predictably Less Favorable Take From the Post.  (Also worth noting on this story, Obama has been to exactly 0 Hockey Games during his time as POTUS despite the Caps being the best team in DC, and apparently didn't even realize that Thomas wasn't present at the ceremony)

We're still trying to figure out a reasonable time frame for posts like this linking to notable stories and interesting articles from around the digital world.  By doing it too often, we risk having to link to crummy articles to fill space, not often enough, and we miss stuff.  The thought right now is to have a regular link aggregation post once or twice a week, plus special posts like this one after big debates, speeches, or elections, but we are open to change.  Please comment with your thoughts, let the vox populi be heard.

Florida NBC Debate Reactions

Some random thoughts:

The dynamic of this debate was really different from the two held in South Carolina. The audience was instructed not to cheer and to remain silent. This, combined with the smallness of the stage, had a weird effect of inducing a gentler tone to the whole affair, when pundits expected it to be much nastier and combative.

Without a crowd, Newt is emaciated and Romney shines through.

Brian Williams really seemed disinterested in the whole thing.

Someone brought up Terri Schiavo. Really? What more can be said about it, it’s no longer 2005.

I liked it when Romney refused to support the sugar subsidies. Subsidies are terrible in principle, agricultural subsidies are absolutely indefensible.

There’s this feeling out there than Ron Paul is some crazy old kook. He’s certainly eccentric, but if you watch his debate performances you’ll notice that he always takes time to answer the question and not fall into the trap of mindlessly reciting soundbites. And his answer on the wetlands shows that he is not dogmatic. Sure, he’d like to get rid of it, but there are greater priorities.

Newt needed that crowd. I thought he faltered here a bit. He didn’t screw up enough to lose Florida, but if this were a widely watched debate, it might slow his momentum.

Romney is a weak candidate, but he does well in forums like this. I think Romney has this weird anti-social streak to him. He doesn’t feel comfortable in the middle of a crowd, around large groups of people. Give him a small, quiet audience and a power point and he’s in his element.

This debate, in the grand scheme of things, will prove to be pretty irrelevant unlike the two South Carolina debates which propelled Gingrich to victory and altered the shape of the race.

Oh, I forgot Rick Santorum. Ugh. What else can be said about him?

More On Keystone

From the New York Times, no less.

http://www.nytimes.com/2012/01/22/business/heating-oil-costs-surge-and-many-in-northeast-cant-switch.html?ref=science

But I'm sure cutting off oil supplies doesn't affect this in any way.

Oh my...

https://twitter.com/#!/ppppolls/status/161267070040936449

Newt and Mitt are tied in Florida. If Mitt loses Florida...

Crazy prediction time. Newt wins Florida, then things get really, really crazy.

The Left Cares, They Really Do

One of the most amazing magic tricks of the last thirty years or so has been the continued propagation, both in the US and internationally, that it is the left that is truly on the side of working class people. A large portion of left wing policies directly harm the middle and working classes, usually at the benefit to some niche group or elite. That is not to say that the right wing is always on the side of the middle/working class. I don’t think they are. But I don’t think the left is either.

Let me explain, using two examples.

First, the Keystone Pipeline.

Read here:

http://money.cnn.com/2012/01/18/news/economy/keystone_pipeline/index.htm?iid=Lead

A long story short, here’s what is happening. In Alberta, the Canucks have recently discovered a huge amount of oil. Over the last ten years, Canada has begun to put in place the infrastructure for extracting this oil, dramatically changing the energy situation for both Canada and the United States. The Canadians want to build an extension of a giant pipeline, bringing much needed oil to US refineries in both Louisiana and throughout the Midwest. Not only could the pipeline bring jobs (though the amount is subject to debate), it could also bring new supplies of gasoline to the Midwest of the US, relieving the current high prices of gasoline.

What happened? The Obama administration put the kibosh on the plan, arguing that it didn’t meet their standard for environmental concerns. The Canadians in response have entered into negotiations with the Chinese to sell their oil, where it will no doubt cause more pollution under China’s comparably lax regulatory standards.

The lower down the income ladder you go, the more energy prices matter. It’s hypocritical to say we want to help the poor and middle class, and then implement policies that drive up their energy costs. How is forcing Americans to pay more for gasoline and heating fuel helping them? Wealth is a dirty business. A nation cannot get rich by having its people work in NGOs and call centers. Dirty, polluting industry is needed and oil is the lifeblood of this industry. It is not a coincidence that the most ardent advocates of the strictest understandings of environmentalism are wealthier people, far removed from industry. It is ethically duplicitous to claim to fight for the poor and then enact policies that will knowingly drive up their day to day living costs.

Second example: immigration.

The left, both in the US and elsewhere, is usually pretty keen on high levels of immigration. Now, let me preface this point by saying two things. First, the right, particularly those in big business, are also very keen on mass immigration since it gives them a large, cheap workforce. Second, I have no problem with controlled, limited immigration or immigration itself. I actually think we need more highly skilled immigrants. Immigrants themselves are usually good, hardworking people and should be treated as human beings with all the rights that fact accords.

The main proponents of mass immigration are usually those that A) claim to fight for the poor and working class and B) are concerned about high levels of income inequality. However, mass immigration, particularly of unskilled workers, harms the well-being of the poor and contributes to inequality. How?

A large scale immigration of unskilled workers, whether it is by Mexicans in the United States or Poles in the UK, leads to two economic effects. First, jobs are taken directly taken from the domestic populace by immigrants who can work at a lower wage and under worse conditions. Second, the expansion of the pool of unskilled workers with no accompanying expansion of demand leads to competition in wages. This competition places a downward pressure on wages, meaning that wages either fall or fail to rise at a fast enough pace relative to inflation and other people’s incomes.

That’s a lot of econ-babble. Let’s use an example. If Danetown has ten people without college degrees and ten available jobs for people without college degrees, each person should find a job. Imagine if a bunch of Danish immigrants, let’s say ten, came to Danetown, all without college degrees. There are now 20 workers all competing for the same ten jobs. How will the employers decide who gets the job? Whoever works for the cheapest! Now, ten people are unemployed, with ten having a job. But even those with a job are still screwed, since they are working at a lower wage then they would have if those dirty Danish immigrants hadn’t arrived! 

Fear not, for some oh so brave politician will come to save the day in Danetown, promising higher wages for all, while simultaneously letting more Danish immigrants in! 

Atheism, Pirates, and Bill Maher

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Some Disjointed Thoughts on South Carolina

Gingrich wins. Romney loses. It’s difficult to state how much of an upset this is. Consider this. About a week ago, Gingrich was dead in the water, having lost both Iowa and New Hampshire. His earlier December rise was deflated, he was running low on money, and polling in second in South Carolina. Then, what literally happened overnight, he came back to win South Carolina in a four person race by decisive margins. Now, he’s leading in former Romney strongholds such as Florida. Romney’s sense of inevitability is gone. What the hell is going on?

Some points.

1) Money matters, except when it doesn’t.

If you talk to anyone on politics, they’ll always say some variation of this classic line: “Man, if only we could get the money out of politics, then politicians would care more about the people.” It’s doubtful that most politicians will ever care about “the people” but underneath this statement is this idea that money and only money corrupts our political system and thwarts the will of the people. I’m not going to deny that money plays a big role in politics. That’s pretty obvious. But I do think people overstate the importance of money and downplay other factors. Ideas matter. Candidates matter. Speeches and debates matter. Retail politics, face to face interaction, kissing babies, these things matter. If money were all that mattered, Romney would have won Iowa and South Carolina, since he and his super PACs spent the most in those two states out of all of the candidates. But Gingrich’s message, whatever it was, got through despite not having money on his side.

2) People don’t like the media.

Part of Gingrich’s rise can be explained by the two debates held in Charleston and Myrtle Beach in the week before the debate. In these two debates, Gingrich was on the offensive against Romney and Obama, but his most effective hits were against the moderators themselves. Consider this:

http://www.youtube.com/watch?v=owI91EP2Abc

Gingrich gets asked about the details of his ugly relationship with his second wife, Marianne. He turns the question into an attack against the media as a whole, and boy did it work. Within the Republican Party, there is a deep dislike and distrust of the mainstream media. Conservatives argue that the media is biased against their viewpoints, and rightfully so. But I think this traditional dislike of the mainstream media is beginning to stretch across party lines. Increasingly, I see moderates and especially liberal Democrats skeptical or wary of the media. I don’t think an attack the media strategy can win him the election, but I do think it’s not as damaging to his standing among independents and Democrats, whereas previously it may have been. Expect him to keep doing it.

3) Romney has problems.

I had a debate with a friend the other night over the viability of Romney. Coming from the industrial Midwest, I think Romney has huge issues with Bain Capital and his taxes. His defense with regards to these two issues has been lacking. No, scratch that. It’s been piss poor. Using “rah rah capitalism” as a defense for shutting down factories and paying a lower tax rate (15%) than many in the middle class isn’t only lame, it’s ineffective. Republicans have a real chance of sweeping the Midwest, especially as blue collar whites defect from a party that is increasingly hostile to their culture. Romney kills that chance unless he comes up with a better defense. His nomination and election to the Presidency is far from inevitable.

4) Don’t misunderestimate Gingrich.

Think back to 2004. Democrats were running against a fairly unpopular guy by the name of George W. Bush. They thought that the election would be a walkover, given the state of the economy, weariness with Republican governance, two wars, etc. Thinking back to this time, many Democrats whom I spoke with thought that there was no way Bush could win again. Guess what? He did. In politics, confidence can quickly become arrogance, which becomes hubris, which leads to inactivity and failure. I see many on the left laughing at the Gingrich candidacy, and perhaps rightfully so. He polls the worst against Obama and has terrible favorability ratings. Yet, I think they underestimate Gingrich at their peril. The man has come back from the dead twice, well actually three times, and is going toe to toe with the feared and strong Romney organization. My advice to Democrats out there? Stay vigilant. 

Newt Gingrich, the Rogue Elephant in the Room

                During the Punic wars between the ancient Romans and the Carthaginians, the Romans came face to face with one of the most fearsome sights the ancient battlefield had to offer, a fully grown elephant, equipped for war.  As the invention of firearms was some 1700 years away, killing these war elephants was no mean feat.  A few elephants could disrupt an entire formation, and decidedly tilt the balance of power on the battlefield.  However, the Romans came up with a brilliant strategy to counter the Carthaginian war elephants.  They realized that elephants are incredibly hard to kill, but relatively easy to panic.  Rather than killing the elephants, they used fire and trumpets to panic them into running wildly around the battlefield, ignoring their riders and trampling friend and foe alike. 

                Newt Gingrich is President Obama’s panicked elephant.  Gingrich is undoubtedly a powerful debater, a great modern conservative thinker, and should be a huge asset to the Republican Party.  Out of all of the current candidates in the Republican primary, you would be hard pressed to find anyone who either has a more appealing set of ideas (to both conservatives and moderates), or does a better job of explaining those ideas than Gingrich.  However, his temperament is decidedly non-presidential.  He is pugnacious, at times bordering on impudent.  He likes to speak extemporaneously, and this leads to occasional gaffes.  He was able to overcome these flaws as Speaker of the House, but the President is the Head of State, with responsibility for directing the country’s diplomacy.  Gingrich is many things, but he is decidedly not diplomatic.  People thought George W. Bush pissed a lot of other countries off?  That was nothing compared to what Gingrich would do.  Gingrich also brings a tremendous amount of personal baggage to the race.  In fact, it is a testament to the quality of his ideas and his skill as an orator that he is even considered a serious candidate.  The man has had two divorces, and was fined for ethics violations while speaker (the charges were overblown, but still, THE MAN WAS FINED FOR ETHICS VIOLATIONS, just a thought, but that might provide your political opponents with some ammo).  Gingrich has secured his place as one of the great men of late 20^th century conservatism, but he will never be President.

                Gingrich, however, seems unwilling or unable to reconcile himself to this fact.  Gingrich has been driven mad by what he sees as the unfair, ungentlemanly (but extremely effective) personal attack ads aired against him by Romney’s super-PAC.  The rest of the world might find it a bit hypocritical for the man who led the charge to impeach Bill Clinton for his personal indiscretions in the oval office to cry foul over ads which reference his personal life while he seeks the oval office.  But whether Gingrich is genuinely convinced that Romney has crossed a line, or he is just seeing his political life flash before his eyes, he has embarked on an impulsive, destructive rampage that puts panicked elephants to shame.

                Rather than trying to promote his conservative agenda, Newt is striking out at Romney with anything and everything he can think of that might gain traction with the public.  One line of attack in particular is damaging not just to Romney, but to the Republican Party, and American Conservatism in general.  This is the charge that in his time at Bain Capital, Romney was a greedy Wall Street tycoon who heartlessly killed companies, fired all the workers, and pocketed the assets for himself.  He’s not accusing Romney of breaking any laws.  He’s accusing Romney of being an integral part in a broken, manipulative, unfair system.  The problem is that that system happens to be the free market economy.  Newt Gingrich, the champion of small government, free market conservatism during the 1990’s, is now criticizing Mitt Romney for being an extremely successful free market capitalist.  (For the record I do not buy a lot of the criticisms of Romney’s work at Bain financial.  But more on that later. ) Gingrich’s attacks are the kind of attacks you would expect from not just a liberal, but a fairly left-leaning liberal.   At the least, Gingrich’s attacks will provide the Obama campaign with a roadmap of how to attack Romney.  If Romney ends up winning the nomination, not only will Obama be able to pull the old, “even your fellow Republicans said…” move, but he will also know exactly how various forms of attacks on Romney’s Bain record resonate with each cohort of voters.  There will be no risk involved with running attack ads against Romney, he’ll know exactly what he’s getting.  Even worse, Gingrich’s attacks could actually succeed and convince a chunk of the electorate that the free market system is an evil that needs to be radically overhauled or abandoned, and shift the American electorate a little bit further to the left.   Talk about a politician cutting off his nose to spite his face.

                As a countermeasure to the Roman strategy of panicking their elephants, the Carthaginians began equipping their elephant riders with a spike and a mallet that they could use to instantly bring down the elephant if it started to panic and posed a danger to other Carthaginian troops.  Newt has no rider.  His staff is bare bones.   All of his experienced advisers and campaign gurus left the campaign during its early difficulties.   No one can calm Newt down or rein him in.  So Newt will continue to rampage, striking out wildly at whoever dares to approach him, until his rage is sated by time, or Romney finally manages to clinch the nomination and forces him to accept the fact that he will not be the Republican nominee for President.

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This is Chris and Dane's blog. It will seek to bring a rational perspective to the frequently irrational worlds of politics and economics.  We will discuss politics, economics, good music, and perhaps even an occasional article on sports or food.