Home › Blogs ›

Alan Peel's blog

Obama Stimulus Will Fall Flat; GOP Must Stand Up and Fight

by Alan Peel | December 22, 2008 at 8:38 PM
in

President-elect Barack Obama has laid out a plan to “create or save” three million jobs during his first two years in office. His plan is to increase government spending, deficit be damned, by at least $775 billion dollars over that same period. While the projects he plans to invest in are things that we Americans can all use, the stimulus plan will be a flop. Here’s how I got here:

Let’s start with the money. Obama plans to increase government spending without any increases in taxes, so that negates his use of PAYGO budgeting. At the same time, the total amount of money per job that he creates or saves will come out to more than $258,333 per job. There are business executives who don’t even make this money for their job, yet Obama, who has never held a private sector job in his lifetime figures the cost of a job to “create or save” at more than one quarter of a million dollars.

Any reasonable businessperson, like myself, will tell you that if it cost that much money to save a job, we would rather sooner terminate the job immediately. The problem here is that Obama and the other people in government have no real concept of what it costs to run a business, generally speaking. The purpose of a business is not to make customers happy or to employ as many people as possible. The end goal of a business is maximizing their profits and making their shareholders money. Those who do not live by that mantra of making money for the company and stockholders quickly go out of business.

The two things that the average person on the street does not realize are how much one billion is and how much one trillion is.  For the concept of one billion dollars, imagine that on the day of the birth of Jesus Christ you were given one billion dollars and had to spend $1,000 each day onward while gaining no interest, you would be still be spending money for at least the next 700 years.  By comparison, one trillion dollars is one thousand times one billion.

Second, according to the CIA Factbook, the current Gross Domestic Product (GDP, or the total value of all goods and services produced inside the borders of the United States) currently sits at $14.334 trillion. In other words the stimulus is only 5.4 percent of GDP. From here, that percentage goes down fast.

In the Highway Spending Bill that Congress recently passed, less than 26 percent of that money was spent within the first fiscal year. If this holds true, it then means that a value of less than one-and-a-half percent of the nation’s GDP will be infused in to the economy within the first fiscal year of the stimulus bill’s existence. For an economy that will be going in to a deep recession throughout 2009, this does not bode well for Obama.

The end result is an increase in inflation thanks to the increase of the deficit to a level that will approach or exceed two trillion dollars this fiscal year and a slow-to-respond stimulus bill that will actually, when implemented, cause the death of many jobs.

However, that is only half the story about Obama’s economic plans for America. House Speaker Nancy Pelosi wants to get Obama to sign the Employee Free Choice Act (EFCA) which is Orwellian by name, but will cause considerable damage when implemented and enforced. Barring a miraculous filibuster by the Republicans in the Senate, America’s workforce will become unionized and small businesses will close their doors.

What’s more is that the unions will get the ultimate payback from the Democrats they helped get elected. Their membership and union dues received will increase which will give the unions considerable influence in American politics and with their membership. Also, the union bosses will be able to oversee how each of its members votes in a union election, bringing to an end the secret ballot. If the Senate Republicans cannot stop this bill, small businesses in the United States will either have to shell out more of their money to meet the demands of the unions or they will close their doors, or both.

If this comes in to play, the projections for an unemployment rate of nine percent will look good to Americans because the unemployment rate in the USA will be higher than at any time since Ronald Reagan’s first term following the horrific economic policies of Jimmy Carter. The only difference is that Reagan was able to lower the unemployment rate from its peak in December 1982 of 10.8 percent to 8.3 percent in December 1983 and ultimately to 7.2 percent the very month he won a 49-state landslide win against Walter Mondale. By contrast, Obama won his election with an inflation rate of 1.07 percent and an unemployment rate of 6.7 percent in November 2008.

Finally, research from economists at UCLA determined that the Great Depression lasted seven years longer because of the New Deal. Obama wants to implement the New New Deal almost from the moment he takes office. Considering that the double-digit unemployment rates did not end until 1943, this means that had the New Deal not been implemented by President Franklin Roosevelt, the Great Depression would have ended in 1936 leading to an easy reelection.

The reality is that Obama doesn’t have the luxuries that FDR had when he was President, yet he wants to take us back to the past with an economic policy that exacerbated and extended this long economic slump. If this plan flops (and it will), just like FDR, Obama will come back with a sequel of New New Deal II which will be used as a means to “save” his job during a time of economic distress.

If the Republicans are able to do anything, it will be to vote against the stimulus package and to attempt to block the EFCA. Should this happen, they will have the ability to say that these things are prolonging the economic crisis and that they fought it all the way. If not, they will be on the same side of the line as Obama and the Democrats in 2010 and again in 2012 which could pave the way for two terms of economic agony.

It’s almost crunch time and the Republicans need to fight the expansion of big government early and often, then turn around and use it as a means to defeat Obama and Obamaism when given the opportunities to do so in 2010 and 2012. If not, they will become a permanent minority party with previous successful Presidents like Abraham Lincoln, Teddy Roosevelt, Dwight Eisenhower, and Ronald Reagan as distant memories of what was once great about America, but never will be again.

It’s time for the GOP to be ready to fight Barack Obama when he’s wrong (like on these matters) and Obamaism. 

Carmakers need Delta Model, Not UAW Bailout

by Alan Peel | December 10, 2008 at 9:04 PM
in

The hard reality is that the Big Three automakers could be facing bankruptcy if they don’t get a combined $14 billion in “loans” in order to stay in business and support their business model. However, the reality is that this is really a bailout of the United Autoworkers who need this bailout to keep their wages and benefits even as General Motors, Ford, and Chrysler go down the tubes.

Everyone has been talking about how we need manufacturing jobs and not bankruptcy of the Big Three. However, I will give you the reason why Ford, General Motors, and Chrysler need to pursue a Chapter 11 bankruptcy filing. I give you Delta Airlines.

As early as 2004 and in to 2005, Delta pursued cost-cutting measures that ended up cutting service, but did nothing for both executive pay and the pay received by union employees working for Delta. Everything came to a head with the company’s Chapter 11 filing on September 14, 2005 citing fuel prices and high labor costs.

While the company was in bankruptcy, unionized airline pilots took a cut in pay of 14 percent, executive officers took one of 15 percent, and CEO Gerald Grinstein took one of 25 percent. Also, the company laid off somewhere between 7,000 to 9,000 of the 52,000 employees.

On April 25, 2007, Delta had their bankruptcy strategy approved and emerged from bankruptcy five days later. This proves that a Chapter 11 filing will not kill a company, but restructure it so that it can function free of constraints from management and the unions and make a profit in order to stay viable.

According to the Heritage Foundation, GM, Ford, and Chrysler are paying $73.26, $70.51, and $75.86 in per-hour wages and benefits respectively. By comparison, the foreign carmakers like Toyota, BMW, Nissan, Honda, and Mercedes are profitable thanks to their locations in right-to-work states like Alabama, Georgia, Tennessee, and South Carolina at a fraction of what the Big Three pay in wages and benefits. This does not include the new Kia plant that will employ 2,500 new autoworkers in West Point, Georgia at just $17 per hour in wages. On a side note, the average American makes only $25.36 per hour in the same category.

Business executives and owners (past and present) are irritated by the difference in the earnings between the two biggest car-selling companies in the world, GM and Toyota. Last year, both companies sold 9.37 million cars each. The difference became the labor costs with GM posting a loss of $38.7 billion (a loss of $4,130.20 per car sold) versus Toyota making a profit of $17.7 billion ($1,889.01 in profit per car sold). The Big Three are fighting a losing battle thanks to the UAW who wins if the bailout passes.

What would be simple to avoid any bankruptcy would be for both sides to agree to necessary pay cuts. The UAW isn’t willing to do it because they will lose all leverage in negotiating. Where are the CEO’s telling these union thug bosses that they can either have their jobs at a lower wage or have no jobs at no wages?

All of this has led to Americans losing sympathy for the unions, who have been noticeably absent in the media’s coverage of the ongoing behind-the-scenes work on the bailout. As it would turn out, there are reasons why the American people no longer want to support the unions.

First, more Americans work in white-collar jobs that pay higher wages and provide more benefits because of the skill and education required to obtain and keep those times of jobs. When Americans were making more money during the 1980’s during the Reagan years and the new types of business leaders that were making changes for the better while maintaining and increasing profitability, the sympathy for unionization went out the window and down the drain.

Second, there are the list of high-profile unions that have gone on strike and why they did. Consider that in my lifetime, the biggest strikes were in Major League Baseball, the National Football League, the National Basketball Association, the National Hockey League, and the Screenwriters Guild. All of them wanted just one thing: more money.

When you have even the bluest of blue-collar workers being told to support millionaires on strike, even they begin starting to think the unions have outlived their usefulness. No longer are they fighting overbearing bosses, dangerous working conditions, or oppressive hours. The unions are fighting for the almighty dollar and for political influence and clout.

It’s time to tell the automakers to drop dead to force bankruptcy so that we can restructure the costs of the manufacturing sector so as to compete with the global economy. As long as we are bailing out failed companies in pro-union states thanks to the unions at the expense of taxpayers in successful right-to-work states, America will never be able to compete with the rest of the world.

Obama's Boundaries for Year One

by Alan Peel | November 15, 2008 at 10:53 PM
in

Going in to the first year of his Presidency is something that any President needs to handle delicately. Jimmy Carter failed to do it, Ronald Reagan and George W. Bush did it almost flawlessly, and Bill Clinton went with the flow of Congress and it cost Congress. For all the things that the United States is facing in economic policy, foreign policy, and cultural divisions, President-elect Barack Obama needs to act as if he is walking on eggshells. If not, the first year could take away his aura of almost messianic appeal. 

In looking at a number of things that the Democrat-led Congress and Obama are eyeing as policy they would like to implement, there are eight things that Obama cannot sign in to law or else he could make the Republican takeover of Congress in 1994 look like a blip on the radar screen by 2012, if not 2010. Here are the nine policy changes Obama and the Democrats cannot pursue if they hope to expand their majorities or hold on to them over the next two to four years:
 
#1: Any Tax Increase
 
Everyone knows that the economy is in a slowdown. Despite Obama’s calls for “trickle-up” economic policy, reducing taxes on the highest of income groups always appears to lead to greater economic expansion. John F. Kennedy took the top from 90 percent to 70 percent and Ronald Reagan took the top rate from 70 to 20. The end result both times was an economic expansion and greater tax revenues. However, Obama might tempt his fate by going against this approach.
 
The three areas where Obama would want to raise taxes would be on the so-called “rich” by raising income tax rates to the Clinton-era top brackets of 36 and 39.6 percent, eliminating the cap on FICA taxes, and to raise the capital gains tax rate. Any of these three would turn this current recession in to a full-blown depression. As I mentioned in an earlier post, tax increases were the last of the four things that pushed the economy of the 1930’s in to the Great Depression.
 
One of the reasons that the stock market has shed anywhere from 11.7 percent to 14.8 percent of its value in the eight trading days since the Presidential election came to a close (depending on which market you’re evaluating) is that Obama has not addressed his plans on taxes for the foreseeable future. Even the Wall Street Journal has called on Obama to hold a press conference, give a speech, or issue a press release that says he will not increase taxes for the “foreseeable future”. If this does not happen, the stock market will continue to shed its value while waiting with baited breath as to what Obama intends to do as President.
 
If a tax increase comes, it would not be felt until at least the next year. However, the effects of the tax increase would be long lasting in that it would take a potential economic recovery in 2010 in to a second recession that would likely come before the Congressional midterm elections. If the economy is still an issue, 2010 could go for the Democrats the same way it went for Republicans in the middle of economic woes in 1970 and 1982 and Democrats in 1978.
 
#2: Trillion-Dollar Deficit Budget
 
If anyone has been paying close attention, there have been calls for President-elect Obama to increase deficit spending once he takes office. It appears all but certain that unless strict budget discipline is imposed by Congress and Obama, the deficit could hit $1 trillion by the end of the year. All of a sudden, a party that had promised to restore fiscal responsibility and budget discipline by way of PAYGO budgeting would be well on their way to losing all credibility on the matter.
 
It was one thing for Obama to slam President Bush on doubling the size of the deficit during the Presidential Debates against John McCain, but it would be another to not practice what he preaches. By the time of the midterms in 2010, there is no more George W. Bush to blame for unbalanced budgets. Either the deficit is reducing in size as Obama said he would like to do or it is increasing in size as Congressional Democrats would be willing to let happen.
 
When it comes to a budget battle, the home-field advantage belongs to Congress because of the ability it has to draft its own budget and to get members to vote for it based on a number of pork-barrel projects and other giveaways. It also makes it harder for the President if he decides to wage a budget battle with Congress as it will trickle in to other areas on matters of public policy.
 
About the only way out for Obama would be to severely cut military spending. Doing so in a time of two-theater military engagements would cause a great deal of harm to the military. Even the blue-dog Democrats will attempt to stop him (until they get pork or tax cuts they desire). In the end, reducing military spending by increasing runaway earmarks could actually accelerate the size of the deficit at an even faster pace.
 
Chances are that if spending is increased and tax revenues start to run dry thanks to a faltering economy, Obama will have no choice but to become the first President to sign a trillion-dollar budget in to law. If it happens, there will be wrath from the voting public who had expected better from the Democrats on budget matters.
 
#3: The Employee Free Choice Act
 
Speaking of bolstering the unions, the biggest thing that Obama and the Congressional Democrats can do to help their base is to pass the Employee Free Choice Act. What this bill intends to do is to boost union membership by automatically creating a union shop thanks to more than 50 percent of a company’s employees signing a union card.
 
By doing this, it forces an already harmonious relationship between owners and workers in to a more tension-fuelled environment by forcing upon big and small business alike in to pro-union collective bargaining agreements with the government as an arbiter. The problem with this is that workers will get more benefits and wages and job protection while hurting any company’s bottom line with pro-union bureaucrats fighting business at the same time.
 
Also, this would end secret-ballot elections in union elections. Instead, all union elections could be open-ballot votes with union bosses seeing how particular members of their membership voted. In effect, it would turn a union election in to the equivalent of a Saddam Hussein-era Iraqi election with members ostracized and ridiculed for not voting the union line. In a sense, it makes “employee free choice” sound Orwellian.
 
President Bush was smart to veto this bill in 2006, but it will take the filibuster efforts of 41-plus Republicans (which could be in doubt) to stop this bill dead in its tracks. If Obama is all about jobs, he will reject this bill because it will actually kill jobs instead of creating them.
 
Already, there are economists predicting an unemployment rate of as much as 7.3 percent by May 2009 and 9 percent by the end of 2010. If this bill becomes law, we will be talking depression-level unemployment by the time the midterms arrive.
 
#4: Bailouts of American Automakers
 
Rasmussen Reports released the results of a poll showing that 73 percent of Americans fear the United States Government running out of money. If the automaker bailout goes in to effect, Obama will increase that number further thanks to the bailout itself and the number of failing companies in the business community also calling for a bailout.
 
The airlines, cities, and states are all getting ready to get in to line to see how much money the government will give them in the form of a bailout. If this goes through, then Congress will be hard pressed to find a way out of telling all of them “no” directly to their faces.
 
If nothing else, the bailout isn’t for General Motors, Ford, or Chrysler, but it’s for the establishment of the United Auto Workers union to an effort to keep their negotiating leverage. If a Chapter 11 bankruptcy (which is needed) were to ever come about for any of the big three, then it would zap the UAW’s power away thanks to a conservator who would dramatically scale back their pay and benefits.
 
Chances are good (and I’ll be the first to make this prediction) that if the automakers are bailed out now, they will be back for more cash before the Presidential election in 2012 because of the unions and their bad business models. If bankruptcy happens, it could actually save an entire sector of the economy from an even bigger calamity.
 
#5: Repealing Abortion Restrictions with the Freedom of Choice Act
 
To the best of my (or anyone else’s) knowledge, there is not a single state that has successfully restricted abortion by way of a constitutional amendment. If the Freedom of Choice Act ever becomes law, it would result in abortion on demand sans restrictions and even allow for the federal government to directly pay for as many abortions as possible.
 
One of the ways in which Obama and the Democrats succeeded in winning elections was by neutralizing the values-based voters of the conservative persuasion. This was done by their rhetoric of sounding like Reagan on issues such as abortion, faith, and gay marriage (more on this later) and sounding genuine about it. Even President-elect Obama did this in his run for President.
 
What also helped was the complicity of the mainstream media in not probing Obama or other Democrats on social issues. If this one flies under the radar (the media hopes), this will all be forgotten by the midterms and 2012. Instead, there are a number of voting groups that would know better.
 
For one, the Catholic voters went for Obama by the margin of 53 percent to 45 percent while Protestants only went for McCain by a 53 to 45 percent margin. What could be important is the Catholic vote, which made up 26 percent of the electorate versus the Protestant vote (55 percent). For years, Catholics were a reliable part of the Democrat Party base until Roe v. Wade when the Democrats took up the feminazi’s struggle on abortion and kicked Catholics to the curb on the matter. Despite this, Catholic voters went for Obama this year.
 
However, what Obama could not afford to do would be to legislate against abortion bans and encourage more abortion. Catholic clergy (priests and nuns) would not stand for it and would relay their message from their lecterns. If the Catholic vote were to go 75 percent to a Republican, that would be more than 25 million votes, or a projected increase of 10 million votes for the GOP. This switch alone would be enough to defeat Obama in his reelection bid unless he could get some 1.5 million votes elsewhere.
 
#6: Repealing the Defense of Marriage Act
 
From what has been taking place in California in regards to the passage of the gay marriage ban in that state might set the stage for this action taking place. In order to throw the far-left base of Obama’s supporters a bone, there might be a move to repeal the Defense of Marriage Act (DOMA) that was signed in to law by President Clinton in 1996. Should this happen, it could galvanize a majority of voters who oppose gay marriage.
 
Again, this goes back to the plans of Obama and the Democrats to sound like moderates or conservatives on social issues, but their rhetoric ultimately becoming lip service. Far-left politicians on social issues have a hard time being elected when they become an issue in a campaign and when they proclaim left-of-center social policy approaches.
 
In districts where conservatives outnumber liberals by substantial margins, this would not play well at all. If the issues of gay marriage and abortion become the forefront in these campaigns, it almost always favors the Republicans. It would be wise to back off this for quite some time until at least what Obama would hope to be his second term. If not, there will be major electoral losses and Obama would have to reinstate a gay marriage ban in order to save himself from being attacked along social policy lines.
 
#7: “Comprehensive” Immigration Reform
 
This was tried back in 2007 by John McCain and Ted Kennedy and we all know how it turned out. In the end, there were not enough votes to break the filibuster and bring “comprehensive” immigration reform to the floor of the United States Senate. One of its supporters who tried to break the filibuster was then-Illinois Senator Barack Obama who supported this bill.
 
The major point at which the American public and most Senators began to oppose the bill was that amnesty would be granted to all illegal immigrants currently here in the United States and to their immediate families living outside the country. It also drew opposition because of the reduction in the length of the border fence.
 
Obama, who also expressed his support to give driver’s licenses to illegal immigrants during the Democrat primaries, has said he wants to sign it in to law. If there are not enough votes to sustain the filibuster, it will likely pass and another 20 million illegal immigrants and their immediate family members will be put on a “path to citizenship”.
 
Amnesty was tried in 1986 when Ronald Reagan made it happen with his idea that it was the “right thing to do”. Sadly, we have come to the realization that amnesty is not the answer, but a band-aid for a gaping wound.
 
#8: Reinstating the Off-Shore Drilling Ban
 
Later this month, OPEC will meet to discuss further cuts in oil production in an effort to raise prices. This comes as there was the expiration of the off-shore drilling ban and George W. Bush’s executive order ending a ban on the practice. However, as any economist will tell you, when you cut supply, you increase the price.
 
The same would likely take place here as OPEC will almost certainly cut production dramatically in order to start making money the same way they were back in the summer. Iran alone has called for a cut of up to 1.5 million barrels per day. Of course, the Democrats and Obama will become useful idiots by attempting to restrict domestic oil exploration.
 
All of this will actually increase energy prices as the calls for more oil exploration become louder and louder by the day. In the end, it could prove to be fatal as Obama tries to make plays to extreme environmentalists and sacrifices the pocketbooks of average Americans to make a play to his base.
 
#9: Brining Back the Fairness Doctrine
 
There’s an old expression of “if you can’t beat them, join them”. However, in the liberal lexicon, the expression goes “if you can’t beat them, silence them.” Sadly, liberals support free speech only when it appeals to liberalism. The return of the Fairness Doctrine (aptly called the Censorship Doctrine by Sean Hannity) would only impose on AM and FM radio so-called balance as determined by government bureaucrats.
 
Former Clinton advisor Dick Morris has predicted that it will happen, but will be overturned by the Supreme Court “in two years”, but talk radio is effectively dead if this happens. Their targets are the successful conservative talk radio programs because of the failure of liberal talk radio programs. In other words, they are going to destroy success in order to prevent failure which is a long way of saying the attempt is an equal outcome.
 
This will put the United States on par with Venezuela and Russia in terms of restricting free speech on the radio. Meanwhile, television, newspapers, and the internet will not fall under this kind of regulation. In other words, one might call it the Hush Rush Act of 2009. All of this would be designed to end any voice of opposition even as Obama and the Democrats put the United States in the fast lane on the highway to hell.
 
All of these in some way could be plays to the Democrat Party or liberal bases, but they would all begin to antagonize the center, center-right, and right-wing elements of the country to where they take it out on either Obama or on Democrats in Congress. If this becomes the case, it will take either a Republican majority in both houses of Congress to bring Obama to the center following the 2010 midterms or the complete overhaul of Democrat majorities and Obama in 2012.
 
If nothing else, the GOP needs to get to work to offer opposition and alternatives or to be prepared to electorally defeat the Democrats within the next four years.

 

Foreign Policy: What Obama Must Do

by Alan Peel | November 10, 2008 at 3:48 PM
in
One of the biggest items of “change” that President-elect Barack Obama ran on was in the department of foreign policy. It was one of the major reasons that he was able to engineer an upset of Senator Hillary Clinton in the Democrat primaries and clinch the nomination. However, when faced with the realities of a dangerous world, one that was dangerous before George W. Bush took office, “change” may seemingly have to take a back seat in order to defeat Islamofacist terrorism.

First, Obama must make the commitment to winning in Iraq. During the campaign, Obama ran on a promise to end the war in Iraq. However, his plan for a 16-month troop withdrawal may hit a snag: How history will remember him in regards to winning an important theater in the first war for America’s existence since the Revolution.

If Obama commits to winning the war before pulling all of the troops (he can still hold his pledge on not having permanent bases despite the desires of the Iraqi government), history will think of John McCain as the whistleblower, George W. Bush as the implementer, and Barack Obama as the closer and victor. It’s a political win-win-win all around the board. It would also have historians forget that Obama was willing to concede defeat in the middle of the success of the surge.

Also, the American public is hearing little about what’s going on in Iraq today. Since the start of October, there have been a total of 17 U.S. troops killed over a 40 day period for an average of just under 0.43 troops per day dead. To top this off, there has only been one month this year (June) where the body count was greater than the number of days in the month. Prior to that stretch, the only months that had a monthly body count less than the number of days in the same respective month were in February 2004 and December 2007.

The other is for Obama to fulfill his complete campaign promise to pull all the troops within 16 months, or by the end of May 2010. This could be risky for his majorities in Congress should Iraq descend in to chaos. Already, Israel is about set to elect Benjamin Netanyahu as Prime Minister of Israel thanks to the election of Obama on Tuesday. Netanyahu will likely have to take over as the leading head of state in the war on terror if Obama decides to withdraw any troops that are necessary for victory and appease rogue dictators who are supporting Islamofacist terrorists.

A withdrawal also empowers Iran and Syria who would align with the Shiite majority in Iraq and fight the Sunnis who will be backed by Jordan and Saudi Arabia. This would be problematic and a catastrophic failure of the Obama administration because Syria and Iran have been building up their military for an invasion of Israel, but would get the parting gift of Iraq. Jordan and Saudi Arabia will be unable to fight because Jordan has made peace with Israel and Saudi Arabia depends on the United States to protect them as it has since just before Desert Storm.

Pulling out of Iraq sends the mixed signal to forces fighting the United States in Afghanistan by saying “We don’t believe that this ‘surge’ worked in Iraq, but we’re going to implement it here against you anyway.” There would be an emboldening of the terrorists in Afghanistan and Pakistan if the United States doesn’t commit to winning in Iraq alongside that of a troop surge in Afghanistan to root out insurgent forces once and for all.

Second, Obama must decommit himself from meeting with rogue dictators ranging from Venezuela’s Hugo Chavez, North Korea’s Kim Jong Il (it is still up in the air as to whether or not he’s alive), Iran’s Mahmoud Ahmadinejad, Syria’s Bashar Assad, and Cuba’s Raul Castro. It cannot happen because it would set up a disaster akin to what John F. Kennedy had after he met with Nikita Khrushchev.

The meeting resulted with the Soviet construction of the Berlin Wall and the Cuban Missile Crisis. Neither of these were successfully concluded by the Kennedy White House. In the case of the Berlin Wall, it stood until 1989 when it was torn down as both Berlin and Germany were reunited. As for the Cuban Missile Crisis, Fidel Castro feared an invasion by American military forces that would oust him from power if the missiles were not taken back. Khrushchev acquiesced on the Cuban missiles.

Third, President-elect Obama must not condemn any actions taken by Israel in defense of their country. This was a problem of his that emerged when the Russians invaded Georgia this past summer. In his first response, Obama called on Georgia to “exercise restraint” in the defense of their country. This was absolutely laughable and showed his ignorance and naivety on foreign policy matters.

If Iran is accelerating towards a nuclear bomb and the Israelis have credible intelligence that indicates this, it would be wise to let Israel deal with the problem and take out Iran’s nuclear program with air strikes of their own. Should Netanyahu decide as Prime Minister (and he will win election in February) to bomb Iran, Obama would be wise to not condemn the actions of an ally against a mutual enemy. It is neither politically wise for him to do so nor would it be strategically wise in a worldwide war against Islamofacist terrorism.

Finally, Obama needs to come to the realization (and the intelligence briefings better do the trick) to make Obama realize that the enemy of Islamofacist terrorism is an even graver enemy than that what the Soviet Union could have ever been. That realization has to come about from the methods, tactics, and aspirations of Islamofacist terrorists versus that of the former Soviet Union.

The Soviet proliferation and expansion was initially as a result of their territorial gains and reconstruction of Eastern Europe from World War II. From 1945 to 1989, the Soviets had puppet Communist governments in Czechoslovakia, Poland, Rumania, Hungary, and Bulgaria as well as recapturing Estonia, Latvia, and Lithuania and absorbing them into the Soviet Union itself.

One of the greatest methods that the Soviets used was spreading military technology and money around to nations, especially Arab ones, in order to gain influence and to back them against Israel who was being backed by the United States and Western Europe. They also sought to further influence nationals from other nations by spreading Communist teachings and ideology.

Meanwhile, the Islamofacist approaches of countries like Syria and Iran as well as terrorist groups like Hamas, Islamic Jihad, Hezbollah, and al-Qaeda results in a goal of complete subjugation to strict Islamic teachings and law. Their means are the use of intimidation by killing civilians with bombs and to pursue greater and more deadlier attacks throughout countries that don’t subscribe to or support their ideology.

If Obama decides that he is going to scale back the War on Terror and attempt to use a type of détente with terrorism like that of what Nixon, Ford, and Carter did with the Soviet Union, there will be many more major losses coming over the next four years. The end result of détente with the Soviets was their invasion of Afghanistan which was responded to with the Moscow Olympics boycott, the dumbest of all foreign policy decisions made since in the last 30 years.

There can never be coexistence with terrorism and President-elect Obama must come in to office on day one with that realization. Either we stop it and destroy its capabilities or we allow them to intimidate and dictate the future of freedom and liberty with subjugation under what many in the post-modernity West would consider barbaric.

Should Obama push for a kind of coexistence with those who have a goal to kill or subjugate us to their radical and barbaric philosophies of hate, he will be even more naïve than what America’s enemies are being led to believe.

 

Chicken Little or Nostradamus

by Alan Peel | November 10, 2008 at 3:43 PM
in
Saturday morning, I turned on “Bulls and Bears” on the Fox News Channel and I heard one of the strangest stock investments to make for the next four years. Believe it or not, this guy said that the economy was going to be so bad that the best investment he could come up with was Molson Coors Brewing Company. In other words, his message was to keep plenty of booze handy because this is going to be an economy that will drive even the most ardent teetotalers to drinking.

Now, I will admit that like a lot of others, I do see a light at the end of the economic tunnel with Barack Obama being elected. However, I also hear the sounds of a locomotive coming from that general direction. For Obama’s sake and for our country’s sake, I would prefer that the economy be in a boom. Sadly, I don’t see it happening.

Last night, I was reading on the causes of the Great Depression and there is a real possibility that we could get a miniature version of a depression. In looking at the signs and the symptoms of the Great Depression, I couldn’t help but notice how each of the signs and symptoms are going to create an even worse economic crisis. All four of them adversely affected the business community and ultimately affected the American public. Consider them the four horsemen of the economic apocalypse: Tight credit (pestilence), stock market dives (war), price destabilization (famine), and tax increases (death).

The first thing that happened was a tightening in the credit market. Back in the 1920’s, lending was such a fast and loose practice that there was speculation on the part of investors to make money off of debt. The end result was a deflation in debt caused by liquidation that ultimately tightened the credit market.

Compared to today, we are now in a state where the economy is seeing a tightening credit market. It’s harder to get loans because the banks are trying to get their balance sheets in order after the collapse of the subprime loan market.

The second thing that happened was the fall of the stock market. In 1929, the Dow Jones Industrial Average dropped 68.90 points, or a drop of 23 percent. It wouldn’t be until 1954 until the full drop was recovered. This was the kind of equity crunch that firms had difficulties with for years.

Back on May 19 of this year, the market closed for the last time over 13,000. Since then, the market has dropped from 13,028.16 to 8,943.81 for a total percentage drop of 31.4 percent. Granted it was over a period of almost six months, but it’s been enough to drive down stock prices and create tightening of equity.

The reason that these first two items, debt and the stock market, is because of the importance the two of them have in the life of a business. In order for firms to expand, they need to have cash. To generate cash, aside from sales and profits, they need to be able to acquire loans or to generate a higher stock price. As this environment is now and may be for the next four years, it will be harder for firms to generate more money.

The first is the possible increased tightening of the credit market. President-elect Obama has proposed loan forgiveness and a freeze on foreclosures. This will create an environment where a loan officer may as well take his paid vacation time because the banks won’t lend unless under threat of the government to commit financial suicide.

The second is that the Democrats want to take over 401(k) funds from individuals who have them. By the government taking over the 401(k)’s, it will create less incentive to buy stock. Instead of allowing for your retirement to be the result of successful investing yielding in high rates of return, the rate of return is a fixed four percent per year before inflation. If inflation above four percent, you actually lose the inflation-adjusted value necessary to retire more comfortably.

By comparison, if someone had opened a 401(k) fund and invested in the Dow Jones Industrials Index Fund on October 20, 1987, your value would have increased by 314.3 percent. In other words, that would be an average gain of almost 15 percent per year or 3.75 times the rate of return of the government’s 401(k) rate of return. Sadly, the government is the only entity that can make bad business decisions and still stay in business all these years later.

The third of these problems was price destabilization. Because of the deflation of debt and the stock market crash, prices wildly deflated as a result of the United States loaning gold to Germany to industrialize in order to pay France who needed the money to pay debt to the United Kingdom and the United States. This was in response to the early 1920’s hyperinflation in the Weimar Republic.

However, the current situation could be increased inflation due to higher energy prices from the proposals of Obama, a contraction of oil supply by OPEC, and the desire to implement cap-and-trade programs that have the goal of reducing global warming, but will have the effect of reducing industry.

Inflation will be further fueled by record-high deficit spending by the next Congress when it convenes in January. With the bailouts being proposed, a second stimulus package in the works, increases in government spending for programs, fighting two wars, and an economy that is providing less tax revenue, a deficit of $1 trillion will probably become a reality before the mid-term elections if not by this year.

The increases in regulations and the increases in wages that will result from the increase in the minimum wage from $7.25 to $9.50 (the inflation-adjusted figure of the original minimum wage is less than $4) that Obama and the Democrats want will result in increased job losses and reduced production. When you have fewer goods in the marketplace, the price has nowhere to go but up.

Finally, there is the last of these: increased taxes. Following the prior three things happening to the economy, Herbert Hoover and the Republican Congress in 1930 enacted the Smoot-Hawley Tariff Act that raised taxes on imported goods (tariffs) to record levels despite the pleas and protests of over 1,000 economists and a number of business executives including Henry Ford who called it “economic stupidity”.

Despite these pleas and protests, Hoover signed Smoot-Hawley in to law and the goods imported from Europe alone decreased by half of what they were before the act. Also, there was a backlash where a number of other nations increased their tariffs on American goods.

The other tax increase was in 1932 with a Democrat-led Congress and Hoover. This time, it raised the top marginal tax rate was raised from 25 percent on those making $100,000 or more to a top rate of 63 percent on those making $1,000,000 or more (by comparison, the rate on $100,000 to $149,999 was raised to 56 percent). On top of that, the corporate tax rate was increased from 12 to 13.75 percent (an increase of almost 15 percent).

The end result was a jump in the unemployment rate from 7.8 percent in 1930 to 25.1 percent in 1933. It would not be until 1943 when the unemployment rate dropped below 10 percent.

By comparison, President-elect Barack Obama is proposing an increase in the capital gains tax from 15 percent now to anywhere from 20-28 percent (which would make buying in to the stock market a less desirable proposition), closing corporate tax loopholes that will ultimately increase the tax burden on corporate America (a tax rate that is already the second highest in the world), and raising the top effective income tax rates from 33 and 35 percent now back to the Clinton-era levels of 36 and 39.6.

What makes matters worse is that high taxes at the state level have devastated the state of Michigan perhaps more so than any other economy. Along with Oregon, the state has one of the two highest unemployment rates of any state in the country because of high tax burdens.

I bring up Michigan because of the incompetence of Governor Jennifer “Jenny No Jobs” Granholm who was right behind Obama during his Friday press conference. Granholm has done more to drive jobs away from her home state as governor. It was because of a bad Republican year in 2006 that she was able to get reelected, but her political career will officially end when she leaves office because of how damaged she has left Michigan with tax increase after tax increase.

As it stands now, the unemployment rate under “Jenny No Jobs” rose to 8.7 percent in September, more than two full percentage points higher than the unemployment rate above the national unemployment rate for October. Overall, the Granholm administration in Michigan has cost the state 143,000 jobs since she took the helm in 2003 (an average of more than 21,000 jobs a year).

What’s scary is that Obama is embracing Granholm’s high tax, no jobs approach to economics. This is why Obama’s economic policies will fail Americans. It will not provide jobs, sustainable growth, or stable prices. Instead, it will provide unemployment, higher taxes, more regulations, and more big government.

I may be Chicken Little or Nostradamus depending on the outcome. For the time being, I will be monitoring not whether or not those who voted for Obama will have buyer’s remorse, but when.

 

Obama Swallows Poison Pill, Spares GOP from Pyrrhic Victory

by Alan Peel | November 7, 2008 at 3:17 PM
in
The outcome of the election, as reported by the media, was one of a historic victory by Barack Obama and the Democrat Party. However, I want to put a look on this going forward as opposed to going backwards. My take on it is that Obama and the Democrats have swallowed the poison pill of a bad economy and John McCain and the Republicans were spared from a Pyrrhic victory.

Defined, a poison pill is that of a strategic move in politics or business designed to increase the likelihood of negative results as opposed to positive ones during a takeover. By winning the 2008 Presidential and Congressional elections, President-elect Barack Obama and the Democrats have willfully swallowed a big poison pill left behind by George W. Bush.

Meanwhile, a Pyrrhic victory comes from King Pyrrhus, the ruler of Eprius, who won a series of battles that his army won in 280 and 279 BC against the Romans but the casualties they took on were devastating. Had John McCain been elected President, it would have been one such victory that would have been enough to strengthen Democrat majorities in the House and Senate while setting up the Democrats for a landslide win in 2012. For that, McCain and the Republicans spared themselves what would have been a costly victory.

The good news for the Republicans is that there are a number of ways that Obama can consume poison pills and do so happily while fooling himself by proclaiming it as an “engine of change”. Believe me, that the Republicans will be more than happy to keep supplying the poison pills. All of this with the GOP’s rise back to the top by 2012.

Had the roles been reversed with McCain winning and a Democrat-led Congress to work with, the Democrats would have blocked many of McCain’s economic policies and would force him to cross the aisle for the policies they wanted, which would have made McCain the second-comings of Herbert Hoover and Jimmy Carter.

In the end, it would have made John McCain’s Presidential win that very Pyrrhic victory that would have lengthened the minority of the Republicans in government and turned John McCain’s legacy from that of “Maverick” John McCain the war hero to John S. McCain the failed President. Instead, Obama and the Democrats took a tighter grip on power that could ultimately give the public one reason to vote Republican.

What Obama and the Democrats are proposing could be a prescription for an unmitigated economic disaster that could lead to GOP victories in 2010 and 2012. Those victories also assume that the Republican leadership in Congress and party back in working order.

If nothing else, it would be highly unlikely that Obama governs from the political center. Back in 1992, then-President-elect Bill Clinton was told by House Democrats that they would pull support for centrist positions of his if he tried to get Republicans to vote for his proposals. They told Clinton that if he stayed within the confines of the Democrat Congressional and Senatorial Caucuses, they would deliver other policy proposals. That ended in 1994 with a Republican landslide in the House and Senate elections.

Before that, Jimmy Carter decided that he was not going to govern from the left in the early stages of his presidency. The end result was a clear alienation of his own party that led to Carter vetoing in four years more than double the bills that George W. Bush did in eight years. By the time Carter tried to woo the liberal base of his party, it was too late. Thanks to not governing from the left and his ineptitude, Ronald Reagan defeated him in a 44-state landslide in 1980 in an election that was over one hour before the polls closed on the west coast.

President-elect Obama is now in a bad spot electorally. If the economy goes from bad to worse post-2009, Obama and the Democrats will not have Bush to blame. Instead, they will have to answer the question “What have you done for me lately?” If they’re not careful, the Republicans will start by making significant electoral gains in 2010 and could regain power back from the Democrats in 2012. That would be the final, fatal poison pill.

There was no secret by the Obama campaign about their desires to raise the capital gains tax from 15 percent to anywhere between 20 to 28 percent. The last time an increase in the capital gains tax was implemented was back in 1986 when the tax code was reformed under Ronald Reagan to make the capital gains rate the same as the top rate of 28 percent. When implemented, capital gains tax revenues dropped 44 percent because selling stock became less desirable.

What could make matters worse is the desire of Obama and the Democrats to raise the top marginal income tax rate from the current 35 percent rate to that of the 39.6 percent it was back in 2000. There are a number of serious consequences that would arise from a tax increase in an economic slowdown or an economic recovery. According to Obama’s proposals to repeal the Bush tax cuts for the top five percent of wage earners ($153,542 in adjusted gross income or more) and Obama’s proposed removal the income cap on FICA taxes could impose a federal tax rate of 54.9 percent.

As for the rest of the Bush tax cuts, they will be set to expire on January 1, 2011. If there is now tax cut extension put in to place, an economy that could be poised for a recovery would instead suffer a contraction. George W. Bush will not anywhere close to the scene of the crime (he’ll probably be getting ready to go fishing in Texas by this time) to be blamed and Obama would take the hit. In other words, Obama will be the first President to run for reelection on the heels of a recession since George H.W. Bush lost to Bill Clinton in 1992.

Spending can also get out of hand with the Democrats wanting more money for more spending programs. John Kerry has called for a new New Deal and Barney Frank has called for more spending, deficit be damned. This, combined with Speaker Nancy Pelosi’s push for funding for embryonic stem cell research (which is more throwing good money after bad since embryonic stem cell research has produced no cures while over 80 cures have been found via adult stem cell research) and Ted Kennedy’s push for socialized health care will be enough to generate our first-ever trillion-dollar deficit.

Once the recession is over, the next monster the economy will become hyperinflation that has gone unseen since the 1970’s. The contributors will be record deficit spending, energy prices run amok, and artificially increasing wages.

Obama has proposed raising it from the $5.15 it was back in 2006 when the economy was actually good to the $7.25 per hour wage that it will be next summer to $9.50 by 2011. The dirty little secret about labor pricing in economics is that if you inflate wages against the will of employers, you actually create more unemployment—like what is happening right now.

If you look at the inflation-adjusted number of the original minimum wage when it was implemented in late 1938, today’s minimum wage would only be $3.64 an hour. The $9.50 an hour that Obama would attempt to implement would be the 1938 equivalent of 68 cents. In other words, when adjusted for inflation, non-skilled workers—mostly high school teenagers, people working for the first time, and those looking to start a business by learning a trade—are making more than 2.61 times more than what they were making 70 years ago.

In some ways, inflation was made worse by the Carter administration in the 1970’s by increasing the minimum wage every year he was in office. When Carter took office, the federal minimum wage was $2.30 an hour. That figure went up to $2.65 an hour in 1978, $2.90 an hour in 1979, $3.10 an hour in 1980 and to $3.35 an hour when he left office in January 1981. By comparison, the Reagan administration never passed a minimum wage increase and one would not take effect for more than nine years.

Why does the minimum wage matter? It is the only real way to create a trickle-up economic effect. It will increase wages across the board by an even bigger percentage than that of a minimum wage increase. Employers will respond to higher taxes and higher wages with higher job cuts. We will be longing for the days of a 6.5 percent unemployment rate.

Then there is the credit crisis as we are facing as banks are more reluctant to give loans for any reason. Obama wants to give selected homeowners the ability to refinance during a 90-day foreclosure freeze. That will lead to a freeze on lending for either the same length of time to one that’s even longer. That is, unless of course, Congress decides to force banks to lend (which is what got many of the banks in this mess in the first place).

With the shrinking equity from Wall Street and the reduced lending of the banks (barring mandatory lending against the better interests of the banks), businesses will be harder-pressed for cash which will lead to more layoffs and less production of goods. When inflation by contraction (stagflation) on this scale happens, more Congressional bailouts won’t be enough to save corporate and small-business America.

Speaking of bailouts, there will be a push to bailout the automotive industry to the tune of $250 billion. For once, I agree with Congressmen like Dennis Kucinich. It is only on the issue of equating this to corporate welfare. However, he and his fellow far-leftists in the Democrat Party will likely acquiesce thanks to all of the additional goodies thrown in the form of pork-barrel spending projects to win votes just like what Nancy Pelosi did with her first Iraq spending bill that George W. Bush promptly vetoed.

The end result is a Democrat Party and an Obama administration overwhelmed with political poison pills gladly accepted on their part from the Republicans. By 2012, Obama will likely go down as one of America’s worst presidents and could make Americans long for the days of—dare I say—George W. Bush. At that point, the American public will vote probably for Republicans…any Republican.

 

Obama's Choice

by Alan Peel | October 26, 2008 at 9:56 PM
in

Should Illinois Senator Barack Obama get elected President in November, it will come likely that he will have to make the most pivotal decision of his presidency almost immediately after taking office. It has to do in regards to his tax and spending proposals and how they will impact the economy.

Considering the promises that he has made and the position he has put himself in, none of the four options on the table are desirable to Obama and the American people. Here is a look at the four proposals that he will have to consider:

Choice #1: Obama Decides to Go Back on New Spending and Tax Cut Promises

For a candidate as ambitious as Barack Obama has been, this would be a complete change of course. However, it could prove to be both necessary in order to slow the growth of the deficit but politically fatal at the same time.

The problems that could be caused stem from the desire of Congressional Democrats to increase spending at accelerated rates unseen since the Great Society and possibly even the New Deal. There is also the potential political baggage that could be put on Obama by the Republicans in the 2010 mid-term elections and the 2012 Presidential Election.

It would be similar to Bill Clinton when he took office in 1993. During the 1992 Presidential Campaign against George H. W. Bush, Clinton ran on a pledge of a middle-class tax cut. However, days after taking office, Clinton announced that there was no possible way to pass a middle-class tax cut and instead increased taxes on the rich with the hopes of balancing the budget.

However, there are also the proposals to give health care to 47 million without health insurance (including 10 million illegal immigrants), increases in early childhood education, and an increase in funds for infrastructure and public works. John Kerry and Barney Frank have been calling for increasing domestic spending akin to that of Franklin Roosevelt’s New Deal programs that actually exacerbated the length of the Great Depression by several years.

It would be unlikely for Obama to make this move on the spending front, but might consider doing so on the tax front. If not, Obama would have to hope that his proposed tax increases on those making $250,000 or more per year, increases in payroll taxes, and increasing the capital gains tax provide enough money to pay for his new spending plans without running up the deficit even further.

Choice #2: Obama Raises Deficit to Pay for New Spending

Another call from Barney Frank has been his call to throw caution to the wind and to increase spending without even the possibility of considering the impact on the deficit. This is a hard call for Obama because of the widespread criticism this could bring from Republicans, blue-dog Democrats, and the American people.

This would prove to be unpopular with the voting public. The mood of the American public will go sour over Obama if this is the decision he makes because of the support for less government spending to balance the budget.

It would also violate the principles of PAYGO that Senator Obama has expressed support for in the Presidential Debates. Instead of finding areas to reduce spending or new tax revenue to pay for his spending proposals that total more than $1.2 trillion over the next four years, it would run up the debt by that additional amount over the next four years.

Chances are that Obama will be counting on the expiration of the Bush tax cuts in 2011 to pay for all of his new spending proposals which would be a devastating tax increase for all of those income groups who paid taxes in 2000.

Choice #3: Obama Cuts Spending to Pay for New Spending

This is the second way under PAYGO that Obama could see about making his new spending proposals work. It would be deficit neutral but it could raise ire with Democrats and Republicans alike who have projects or budget interests they would like to see fully funded.

It also poses a problem to Obama because, like other politicians, he has promised to go in to the federal budget with a scalpel and cut spending and waste that way. However, the other politicians left the scalpel at home when they started going through the budget.

One of Obama’s proposals is to save $10 billion dollars a month by pulling the troops out of Iraq in 16 months. However, that means that his savings will not be realized until July of 2010 if he goes through with the plan. The only problem is that Obama will have to face a prospect that is worth more than money: The possibility of losing Iraq with a premature withdrawal versus that of winning Iraq by rejecting his base and keeping troops until the job is done.

His Iraq plan might share the same fate as his middle-class tax cuts in that he will not pull the troops in order to ensure that he does not create a massive security disaster under his watch. On the other hand, he was against the war as a state senator in Illinois and his anti-war sentiments might force his hand for withdrawal. Pulling the troops is now all of a sudden a major-league risk for Obama.

However, there have been calls from leading Democrats, including Massachusetts Congressman Barney Frank to reduce military spending by up to 25 percent. In the middle of two wars, this would be unprecedented and would be met with opposition from Republicans as well as moderate and conservative Democrats.

Obama, as evidenced in a video on YouTube, Obama expressed his support for military spending cuts including missile defense. The problem with the spending cut on missile defense is that this is the only other option other than a preemptive strike that would successfully stunt Iran from firing a missile with a nuclear warhead attached to it.

Choice #4: Obama Raises Taxes to Pay for New Spending

With an economy that is going in to the soup, if it isn’t already there, this would be the worst of the four proposals. Despite this, it could prove to be the solution that Obama chooses.

Obama has made no secret that he doesn’t like the Bush tax cuts and sees no desire to extend them. He has also made no secret that he wants to increase taxes on those making more than $250,000 in income. However, his tax proposals will likely go beyond that in order to ensure that his spending proposals are “paid for”.

He has proposed increasing the capital gains tax from the current rate of 15 percent to that of at least 20 percent in the name of “fairness”. What it will cause is stagnant real estate and stock markets. For home owners, it will make them more hesitant to sell their homes. For companies listed on the stock exchanges, it will create an equity crunch which will make it much harder for them to raise funds for the purpose of business expansion. The equity crunch on corporate America coupled with the current lending crunch will almost certainly lead to massive contraction in jobs and productivity.

He has proposed taxing windfall profits on oil companies. The end result will almost certainly be oil companies ordering wells to be plugged and less domestic energy supplies. Instead, it will create greater dependency on foreign oil companies who are also looking to sell to China and India as well as the United States. It would also empower Iran, Russia, and other countries that do not have the best interests of the United States at heart.

He has also proposed eliminating corporate tax loopholes as well as taxing natural gas and coal energy. This would prove to be devastating with electric companies increasing energy prices on their customers to make up the losses from increased taxes. Price increases would also come from corporate America as they look to increase their equity stakes through better and higher profits thanks to an increase in the capital gains tax.

If Obama initiates increases in taxes on upper-income earners and the business community at-large, it will result in decreased productivity, decreased employment, and could lead to an increase in prices. This coupled with possible increases in energy prices and Obama’s desire to restrict free trade would lead to higher inflation almost akin to that in the 1970’s under Jimmy Carter.

In any event, if Obama becomes President, it could prove to be problematic for the economy and for his presidency.

Not Even Close

by Alan Peel | October 2, 2008 at 10:42 PM
in

Growing up, the last thing that any boy ever wanted to have happen is to compete head-to-head against a girl and lose. Despite the number of girls at my school that were exceptional athletes (one of whom was a Division I basketball player at Tulsa University), the taunts of “You got beat by a girl!” would mortify any boy on the playground. Tonight, the taunt is directed at Delaware Sen. Joe Biden.

Folks, we have a race again! It was a four-to-six point race entering tonight, but it’s going to get a little bit tighter before next debate between Arizona Sen. John McCain and Illinois Sen. Barack Obama on Tuesday night. Alaska Gov. Sarah Palin took it to Biden and it was not a good night for the Obama-Biden campaign as a result. John McCain’s gamble paid off for tonight.

The girl on the playground that went head-to-head with boy was better than the Biden. Sarah-Barracuda is back and Obama should be concerned about what the fallout of this is when polling comes out on Monday.

Tonight, Joe Biden looked his age and presented himself as a cantankerous, old man. Believe me when I say that some of these people can be funny (go watch a Jeff Dunham video with his doll Walter and you’ll see why). But, Biden looked downright mean.

At this time, Biden hasn’t been called on his gaffe-proneness, but he had a moment during tonight’s debate where it reared its ugly, hair-plugged head. Palin made it a point that the Obama-Biden ticket had done nothing more than chastising the last eight years as opposed to sharing their vision for the next four years. When Biden went back to “old reliable” and attempt to tie President George W. Bush to John McCain, Palin caught him and field-dressed him in front of millions of people watching at home.

Meanwhile, Gov. Sarah Palin looked fresh, energized, and was able to lace her beauty and wit when she was critical of both Barack Obama and Joe Biden. If there is nothing else, it appears to me that the American public wants something fresh. Democrats think that Barack Obama is that embodiment while Republicans see Sarah Palin in the same respect. On this night, Palin looked fresher than Obama and many times fresher than Biden.

However, despite all of the beauty and grace that was exemplified by Governor Palin, the most surreal moment for her came when she asked moderator Gwen Ifill, “Can we talk about Afghanistan for a minute?” This was a moment where Palin wanted to talk foreign policy in a debate against a foreign policy “genius” (really a doofus, but that’s neither here nor there). She then went after Obama on accusing troops of “air raiding villages and killing civilians”. That was the game-changer of the night.

While Biden’s approach plays in the Boston-New York-Philadelphia-Washington axis as well as the in-the-tank-for-Obama media, Palin appealed to just about everyone west of the Mississippi (save California), the Midwest, and the South. In using those totals with a calculator (minus Hawaii), McCain-Palin defeats Obama-Biden 341 to 197 in the Electoral College and that doesn’t even include the 21 electoral votes in Biden’s native Pennsylvania.

It was also an amazing and surprising job done by debate moderator Gwen Ifill of the PBS show “Washington Week”. Ifill was able to stay surprisingly unbiased despite the cloud hanging over her head with her Obama book that would be a six-figure windfall for her.

All in all, Palin just made this race tighter and gives McCain an opportunity to narrow the gap further, if not close it, Tuesday night against Barack Obama at the town-hall format debate at Belmont University in Tennessee.

 

What a Night!

by Alan Peel | September 27, 2008 at 2:25 PM
in

Last night, both the Democrat and Republican nominees for President of the United States, Barack Obama and John McCain, met face-to-face in a debate forum for the very first time. Both appeared energetic and prepared to engage in this rhetorical battle in front of thousands who were there and millions watching at home.

Both of these two met and exceeded expectations set forth by their respective campaigns. For Barack Obama, long term, this might be where the good news for him ends.

I say “long term” because of the raw transcript of the debate. There were a number of instances where Obama looked as if he was trying to be all things to all people. There were also moments where he showed his youth and inexperience in other areas.

First, when the moderator Jim Lehrer asked the candidates about scaling back the federal budget as to what each of the candidates would do as president, Obama never mentioned one area where he would freeze or reduce spending. Instead, he mentioned his support for increased funding for early childhood education. All told, the combination of the Paulson bailout plan combined with Obama’s four-year spending proposals would add an additional $1.5 trillion to the federal budget alone. He needed to show where his cuts were going to be, but he showed an instance where he was going to increase spending.

Meanwhile, McCain gave areas where he would reduce spending starting with his least favorite items on the budget, earmarks. Next, McCain went to eliminating the ethanol subsidies and by tighting the screws on defense contracts so that defense spending is more efficient.

Obama supporters might be fast to point out that he will eliminate $10 billion a month ($480 billion over four years) by ending the war in Iraq and eliminating the Bush tax cuts for those making $250,000 or more a year. For the 48 months that he would be president which would not even come close to covering the costs for his spending proposals, tax cut for the bottom 95% of wage earners, covering a projected $600 billion deficit in his first budget, and the Paulson bailout plan. Sacrifices will have to be made and they might most likely start with the proposed tax cut (a la Bill Clinton).

The second mistake by Obama was a reversal of his position on so-called dirty energy. John McCain has made the construction of 45 new nuclear power plants to provide energy and combat climate change along with support for clean coal and offshore drilling parts of his energy plan along with renewable energy, flex-fuel vehicles, and better fuel economy.

Prior to last night, Obama had previously expressed his desire to tax coal, natural gas, and place a windfall profits tax on the oil companies which even he admits would not produce another drop of oil. However, last night Obama got in to the mode of being all things to all people by advocating his support for drilling, clean coal technology, and nuclear energy. The Sierra Club cannot be happy about this.

Third, Obama was clearly on the defensive about unconditional negotiations with Iranian President Mahmoud “Adolph, Jr.” Ahmadinejad. A major mistake made here was the citation of former Secretary of State and McCain’s friend and advisor Dr. Henry Kissinger. Obama cited Kissinger as one of five former Secretaries of State who had advocated Presidential-level talks with Iran. The five include both of Bill Clinton’s (Warren Christopher and Madeline Albright) and James Baker, who served under Bush-41. McCain had said that Kissinger was not one of the five though Obama insisted he was. 

After the debate last night, Kissinger said the following: “Senator McCain is right. I would not recommend the next President of the United States engage in talks with Iran at the Presidential level.  My views on this issue are entirely compatible with the views of my friend Senator John McCain. We do not agree on everything, but we do agree that any negotiations with Iran must be geared to reality.” Oops!

Fourth, there was a moment in the debate where John McCain and Barack Obama were comparing the bracelets they received from mothers who had lost their sons in Operation Iraqi Freedom. McCain gave the name of the soldier who was on his bracelet instantly without having to look. The same cannot be said of Obama who had to look at his to get the name. It might have been better for Obama to have not mentioned the name if it required him to take a look.

However, the biggest missteps by Senator Obama went under the radar because they were sprinkled throughout the debate. In all, there were eight instances where Obama expressed his agreement with Senator McCain. Within minutes, McCain’s campaign released a web ad (potentially a television ad in the future) showing where Obama agreed with McCain on responsibility and accountability, the earmarks process, and that business taxes are high. More could be made against Obama on the issues of spending cuts, the success of the troop surge strategy in Iraq, and that the world cannot tolerate a nuclear Iran.

Writing in the National Review, Byron York stated a prediction: “The next time McCain and Obama meet in debate, on October 7 in Nashville, start a drinking game in which you take a big swig every time Obama says, ‘John is absolutely right.’ I’ll bet you get to the end of the debate without ever lifting a glass.”

In all, Senator McCain won this round despite the curtailing of national security issues (the original topic of the debate) for three questions on economic issues. The night was largely on McCain’s turf thanks to national security, talks about government spending more than anything else, and the aforementioned missteps of Senator Obama. However, for McCain, thanks to Obama’s energy and exceeding expectations, the win was not by as wide a margin as some anticipated.

The Big 12 Strategy

by Alan Peel | September 12, 2008 at 2:30 PM
in

On thenextright.com, there were a series of blogs talking about the importance of the states in the Big Ten Conference. After reading that series, having time to reflect, and the commencing of the shortest general election campaign in history, I felt that it would be appropriate to point out another conference: The states in the Big 12 Conference.

I am not doing this blog series to put down the Big Ten (though I’m not sure I’d want to be a math major from the 11-team league), but I am doing this to show that the Big 12 states will play a central role in the 2008 Presidential Election. I should also point out that there are a number of reasons that the Big 12 may be overlooked in favor of its sister conference to the east.
 

  1. The Big 12 is made up of smaller media markets compared to the Big 10. The five biggest media markets in the Big Ten are Chicago, Detroit, Minneapolis-St. Paul, Cleveland, and St. Louis. The ones in the Big 12 are Dallas-Ft. Worth, Houston, St. Louis, Denver, and Kansas City. The St. Louis-area is included twice because it sits on the border of Big Ten state Illinois and Big 12 state Missouri.

     

  2. The volume of electoral votes in Big 12 states is largely concentrated in one state. Outside of Texas (three of the six largest Big 12 cities are in Texas), no other Big 12 state has 12 or more electoral votes. The Big Ten region has four states with more than 12 electoral votes. Of course, the larger pot gets the most attention.
     

In short, the size of the composition of voters from the two regions draws large attention to the Big Ten and away from the Big 12. However, size isn’t the only thing that matters. Consider that George W. Bush, on his way to 286 electoral votes in 2004 won every Big 12 state. While the race came down to Ohio, imagine what his chances would have been if he had lost Iowa and Colorado. Take away Missouri as well as Iowa and Colorado and John Kerry is President.

Also, consider that the last time that a Democrat won three of the seven states was Bill Clinton in 1992. Clinton won 370 electoral votes and won Colorado, Iowa, and Missouri. Meanwhile, the last time that a Democrat swept the Big 12 states was in 1964 with Lyndon Johnson’s landslide win over Barry Goldwater. In short, the Big 12 is an important hold for Republicans and a chance to win an election for Democrats.

The states that make up the region are Colorado, Iowa, Kansas, Missouri, Nebraska, Oklahoma, and Texas. As of today, it appears that Kansas, Nebraska, Oklahoma, and Texas are likely to go for John McCain. For the purposes of this blog series, I want to focus in the coming days on the three swing states from this group: Colorado, Iowa, and Missouri.

Syndicate content