All Eyes on California

Quite possibly the second most popular, contentious and expensive campaign behind the presidential election, the California ballot initiative known as Proposition 8 seeks to change the California Constitution by eliminating the right of same-sex couples to marry in the state. That means that only marriage between man and woman will be valid and recognized.

For many this speaks to a religious and moral issue. The union of marriage is, after all, a religious union that takes place (in biblical definition) between man and woman. And that is the argument many are making in support of Proposition 8. To be fair, Proposition 8 does not seek to deprive gay unions of their rights or benefits that civil unions are accorded.

However, though we may have co-opted a religious term for the legal union of two people, it is in fact a legal union and the law should never discriminate. Proposition 8 seeks to do exactly that. This is not about marriage; this is about civil rights and the attempt to deny people their civil rights because of who they are. It is possible that Proposition 8 will be aided by the influx of new voters – black and Latino – Barack Obama is bringing to the political process. This troubles me. How do he and she who have firsthand knowledge and experience with the hurtful and dehumanizing effects of discrimination then turn around to mete out the same discrimination and intolerance on another human being? How?

We have learned in this past year that we as a nation are ever closer to living in a truly egalitarian society. We will learn to see ourselves differently starting tomorrow. How Californians vote on Proposition 8 will echo across the nation as not only a referendum on same-sex marriages in America, but also as a referendum on intolerance in America. I urge all Californians to join me in voting no on Proposition 8.

On Robert S. Moore 1917-2008

On Tuesday, I buried my grandfather. He passed away in his sleep after 91 years, having lived a very full life. Most of his life, he worked for McDonnell Douglas as an aircraft machinist. He became a union member, later a shop steward. It was during this time that he grew a passion for politics. I’m recalling now, with a smirk, how his stories about building aircraft almost always included a reference to how he walked a picket line for 44 days to keep health benefits for himself and his colleagues so that he could take care of his family. Back then, there were no copays or deductibles; coverage, subsidized by employers, meant full coverage. He was president of his Neighborhood Watch for years.

A trip to his house meant sitting down on the couch, he in his recliner, sparring with him over policy issues in-between watching him yell at the television with Crossfire or Bernard Shaw or Tim Russert in the background. He could never understand how I, having been raised in a family of Democrats, could be at all open to the possibility of any other points of view. Usually, when I showed up, he would answer the door with a big grin and a hug saying, “how’s my favorite closet Republican?”

As a young man, I remember how much he despised Ronald Reagan and later how much he loved Bill Clinton. While away in the military, I remember hearing about how he shed a few tears the day Bill Clinton was impeached. Later, I remember him grinning proudly while near breathlessly recounting how he shook Bill Clinton’s hand during the 2000 Presidential Campaign at a rally for Al Gore. Bill called him Bob- just like all of his friends. How excited he was!

My love of politics is borne out of all those talks about life with my grandfather. For much of the year, dementia had robbed him of the ability to follow this presidential campaign. He would have really enjoyed following this one. And I would have loved the chance to spar with him one last time.

In search of a "New Deal"

Earlier this week the House of Representatives rejected a bailout plan for Wall Street and its malfeasance in the mortgage crisis that now threatens to send our economy into an abysmal dive.

The effort behind Treasury Secretary Henry Paulson’s Troubled Asset Rescue Plan was to buy from banks and investment companies the mortgage-backed securities whose values have plummeted and can no longer be sold on the open market.

The idea was to free up these banking institutions to extend credit – to the American taxpayer, corporations, as well as other banks – and avoid a credit crunch that would certainly freeze up the market and take us to a place “somewhat” reminiscent of the early 1930s.

In the 1930s, the period known as the Great Depression, the economy took a drastic downturn spurned by the weaknesses and imbalances within the 1920s U.S. economy. Franklin Roosevelt, elected in 1932, sought a “New Deal” with the American public in an effort to turn America’s misfortune around. Government action, whether in the form of taxation, industrial regulation, public works, social insurance, social-welfare services or deficit spending, came to assume a principal role in bringing economic stability back to America.

Roosevelt introduced a number of major changes in the structure of the American economy, using increased government regulation and massive public-works projects to promote economic recovery. His New Deal was fashioned, in large part, on the economic principles of John Maynard Keynes.

The Keynesian theory of economics suggests that government regulation and deficit spending in stimulating the economy will ensure a long-term, stable economy. This is in stark contrast to the Milton Friedman approach to economics, which suggests that if you leave the market to govern itself, it will work in the best interest of the economy. That is the mantra of early 21st century republican economics. That is, in great part, why we find ourselves where we are today.

Although I somewhat agree with giving the market breathing room, this approach would have to be predicated on the assumption that market management would be free of selfish greed, corruption, irresponsibility and mismanagement. No Enron, no Worldcom, no bailout of Wall Street.

Roosevelt got the economy on the road to recovery by imposing government regulation and investing (deficit spending) in infrastructure. Certainly there was more room for expansive government than now, but the lesson from history could and perhaps should be applied to our present economic status. It should be noted, for argument’s sake, that the rebirth of the economy after the 1930s, and Roosevelt’s New Deal, got a healthy boost by the industrial spark of World War II.

Today, we are being told that if we do not approve a bailout plan that will cost the taxpayers $700 billion, we will most certainly face something likened to the Great Depression. And we have to move now. Though I agree that it is necessary to free the banks to extend credit to free up their liquidity, I am not sure this is the best deal for the American people.

What are missing from this latest proposal are provisions to stimulate the economy. That should be the key lesson learned from Roosevelt’s New Deal. What is missing from this deal is the restructuring of many of these awful, sub-prime mortgages that need to be refinanced at market value, at 20-30 year rates that homeowners can afford. THAT is how you get money back into the economy, and subsequently back into the banks. That is a benefit to the taxpayer. In its current form, this deal seeks only to bail out the fat cats on Wall Street with no definable payout to the taxpayer.

So which presidential candidate benefits from the latest deal falling through? Not sure.
John McCain made a risky move by suspending his campaign to go back to Washington and “fix” the problem. Ultimately, he may have kept this bad deal from going through by injecting presidential politics into the sensitive negotiations. Barack Obama was correct in his initial reaction to remain distant from the proceedings unless called for. However, the spotlight – and the rush – of the campaign with five weeks left, may have caused this deal to fall through which, I believe, was in the best interest of the American public. Passing a bill of this magnitude deserves more pragmatism from our elected representatives and it has to center on reinvigorating the economy. That means putting money back into the hands of the American people. I don’t believe we will fall into the Great Depression II tomorrow. As the Senate has just passed a revision that still falls short accomplishing the right mission, the bill now finds itself yet again in the House. Our representatives need to take their time and strike the right deal – A New Deal.

Why I Have To Vote For Barack Obama in 2008

As a true Independent who has voted for Democrats and Republicans, this is honestly the longest it has ever taken me to pick a candidate. I love John McCain. I don’t see him at all as “four more years of Bush.” I'm an ex-military man. I'm a free market capitalist. I'm for small government. But, I’m voting for Barack Obama.

So that I am clear, I am still not comfortable with Mr. Obama’s shockingly thin resume, in terms of his preparedness to lead the United States of America. And for such an intellectual, Mr. Obama’s “if they [Congress] need me, they will call me” response to the most dangerous financial/credit market crisis since the Great Depression and negative response to Mr. McCain’s call for both candidates (they are both sitting US Senators after all who are the current nominal leaders of their respective parties) to return to Washington to help move a resolution forward, shows a level of arrogance and lack of political awareness to the magnitude of a rare bipartisan opportunity such as to still amaze me. But, arrogance I can handle and don’t necessarily see as a bad trait in a President. Plus, it is clear to me now that Mr. Obama can be convinced to modify his faulty tax and economic policies. On the other hand, there is no substitute for judgment.

As it relates to his experience and service to the country, John McCain is imminently qualified to be President of the United States. But, since the end of the Democratic National Convention, his judgment seems erratic...all over the map. Because choosing the VP is the most important decision of a Presidential campaign and for me the choice of Sarah Palin reflects so poorly on the judgment of Mr. McCain, I have been sufficiently persuaded. After watching Palin in a series of interviews, no reasonable person could conclude that she has either the intellectual capacity or sufficient command of the important issues to be Vice President. I gave her the benefit of the doubt in her interview with Charles Gibson because I felt the much bantered question about the Bush Doctrine was a journalistic "gotcha" question, considering that Googling the phrase "Bush Doctrine" returns at least 6 different definitions. But, her recent interviews with Sean Hannity of the Fox News Channel and Katie Couric of the CBS Evening News were so bad that even conservatives, who weren’t exactly enamored with Mr. McCain either, have begun calling for her to withdraw "for the good of the party".

So, there you have it. I will not stop criticizing Mr. Obama when I feel it’s appropriate. Nor will I stop giving Mr. McCain props when I agree with him. And vice versa. However, I have made my decision and it is not subject to the Bradley Effect.

God bless you all and may God Bless America.

Related Posts: Why Barack Obama Will Win The 2008 Presidential Election, Why John McCain Will Win The 2008 Presidential Election

McCain and Obama Take Back Seat To Financial Market Crisis

Does anyone remember that the first Presidential Debate is on Friday? I forgot. I’ve been a little busy watching both candidates flail in the wind, trying to find a position on the current state of our financial markets. Fortunately for them, the first debate is on foreign policy so they will not have to perfect their messages just yet. Since both candidates have been running for President since George W. Bush’s 2nd term began, it is easy to forget that both are sitting US Senators with a real role to play in bringing stability to Wall Street. Absolutely no one, perhaps not even John McCain, still believes that fundamentals of our economy are still strong.

It is hard to find any good things to say about the 2nd term of the Bush Administration, but I believe either by chance or dumb luck, President Bush deserves credit for the astute hiring of Henry Paulson to lead the Treasury Department at this particular time. There are very few people in the country today with sufficient grasp of the magnitude of this looming slate of economic problems. The former CEO of Goldman Sachs, one of a handful of investment banks that appear likely to survive this current meltdown, not only knows the issues but also has a personal stake in resolving the matter, the value of his own Goldman Sachs stock options having fallen from $809.5M when he went to Treasury to $523.5M at Friday’s closing bell.

A brief history lesson- the current crisis can be traced to government policy in the 1990’s to expand access to homeownership by reducing lending standards. Fannie Mae and Freddie Mac have always provided liquidity to banks by buying conforming loans with the implicit guarantee of the Federal government. Wall Street banks got in on the action in the early '90s by buying up packaged up subprime and/or non-conforming loans and selling them as mortgage backed securities (MBS) with the actual properties providing collateral. The Federal Reserve reduced interest rates. This combination of low interest rates, relaxed lending standards and new loan financing products offered by banks sent property values through the roof.

Home values increased at a rate disproportionate to increases in wages which took first time home buyers out of the market. Without first time buyers, existing homeowners had no one to sell their properties to. A new wave of fraudulent loan applications, 100% financing programs and pencil whipped home appraisals provided a way to keep home sales up. But as increasing mortgage payments became a burden for homeowners who had obtained loans for dollar amounts unsupported by their incomes, foreclosures rose. Banks became increasingly stuck with properties not actually worth their appraised value as homeowners began walking away from the now unaffordable mortgage payments, in many cases, with no money lost.

The result of the housing crisis was paralysis in the credit markets which spilled over into the stock market. Banks became afraid to lend money because they were busy trying to shore up their own balance sheets, forced to write down bad debt associated with faulty MBS. Today, banks still have no idea what the intrinsic value of these MBS is. Given this, short sellers began betting the house that the collective value of this debt was nil and driving the stock prices down on all of these firms, destroying their values. Ultimately, this is what killed Bear Stearns, Lehman Brothers and what was about to off AIG and Merrell Lynch before the government stepped in.

Secretary Paulson’s fix is to provide a government agency that can purchase shaky MBS at a discount from Wall Street investment firms with taxpayer dollars and provide an orderly sale of those securities to obtain the best price available. This is not a free market response but rather injects government further into the private sector. However, while inexcusably late to the party, this is a sound financial response, recognizing that traders have apparently lost all confidence in the balance sheets of most of our country’s financial institutions and had become content to profit from destroying all of them.

Purchasing an asset for the purpose of selling it is not exactly the same as going into unsecured debt. The mortgages which back these securities do have value, just not the value stated. The orderly sale of these MBS, under Paulson’s plan, provides the best opportunity to obtain a fair market value for them. Also, the government will improve the balance sheets of remaining financial institutions to restore trader confidence in the market and sell off the MBS at a price that recoups as much of the planned borrowed dollars as well as the hope of possible profit. The government may buy and sell repeatedly. What remains to be seen is if the $700B the Treasury wants to borrow will secure $600B of MBS or $800B of MBS, in terms of actual value.

$600B bad. $800B good.

In any case, make no mistake about it, to prevent financial Armageddon, we are about to see the largest bailout in US history. Now, in an election year, the focus shifts to Congress where Democrats want any bailout to include many new and expansive Federal regulations and oversight powers over Wall Street. Republicans, especially those in the Senate not up for re-election, see a bailout as a socialist response to a free market problem and are not yet onboard. The White House’s position is that this is a potentially lethal fire that needs to be extinguished immediately and the time for blame and new rules should come later. The potential for this legislation to get bogged down by political add-ons is very high. Hopefully the market does not collapse during negotiations.

While opening up the credit markets on their own would help all Americans who have or need mortgages, credit cards, auto loans etc. as well as those looking at dwindling 401(K) and IRA balances, it is unlikely that legislation will pass without some help aimed directly at homeowners at present risk of foreclosure. Let’s look at the bright side though. At least one American dream will come true. Under Paulson’s plan, finally everyone will become a homeowner. Sort of.

Stay tuned.

A Letter to a Friend

Dear Senator Obama,

As fabricationgate, troopergate, and the commencement of the Palin bubble burst are picking up speed; as the financial markets seem headed in a most abysmal direction, you, sir, are being presented with the gift of one hell of an opportunity to take back control of this race. Why, then, are you still faltering in not only the national polls, but now the electoral polls where you have maintained a lead since you were declared the democratic nominee?

We could certainly sit down over a cup of joe – excuse me, macchiato espresso - and ponder where the disconnect is, as I am sure we could put our fingers on a few powerful X-factors. Rather than go there, however, I would like to offer you a couple laymen-like observations as to what you might do to eek out a win in this election in the ensuing 49 days.

1) Sarah Palin
The queen of verisimilitude, herself. You have spent far too much time on her. Though I believe you have now received the memo, I will reiterate the point - leave her alone. This bubble is beginning to burst. In being very selective about her media exposure, the media has become quite motivated to sufficiently vet her, as no one believes John McCain did. You will have to trust that they will do so thoroughly. You are running for the president of the United States. You need only to focus on your sole opponent for that position, Senator John McCain.

You know, since Governor Palin was asked to join the republican ticket she has conveniently adopted a newfound praise for Senator Hillary Clinton and her historical run for the democratic nomination. Gov. Palin encourages Senator Clinton’s supporters to be angry by the perceived way Senator Clinton was treated during the primaries and for those disaffected Hillary supporters to join her in crashing through that glass ceiling in which Hillary placed 18 million cracks. You have numerous sound bites from Gov. Palin stating just that. Log a few of them on file. Then piece them together with a sound bite from earlier this year in which Gov. Palin accuses Senator Clinton of “whining” about sexism during the primaries. “When I hear a statement like that coming from a woman candidate with any kind of perceived whine about that excess criticism, or maybe a sharper microscope put on her, I think, 'Man, that doesn't do us any good, women in politics, or women in general, trying to progress in this country,' " Gov. Palin said during the primaries. Run that sound bite continuously up to the debates. Let your 527 groups* do this, among some other defense work for you. Senator McCain and Governor Palin offer much material that can be used to marginalize the effective, Karl Rove-style character war they have waged against you. Perhaps that might even free up Senator Biden’s inhibitions when he and madam Governor square off in the debates.

2) The debates
I sense that you are a bit arrogant in your belief that you and Senator Biden will dominate in the debates. I have more faith in Senator Biden than I do in you. I watched you grow as a debater during the primaries but I believe you face a more formidable opponent this time in John McCain. Why, you may ask? Senator McCain “connects” better than you do. He does this by staying on message. You have not connected in some time. So what do you do? You follow his lead in the way you approach your answers. We need less nuanced responses from you and quicker, more concise, substantive answers. It is a style more characteristic of a Commander-in-Chief. Nuances unnerve the general public. In fact, you should be moving from a nuanced approach to a more concise, sharp, substantive message on the stump, in general.

3) Bill Clinton on the stump
That’s it. I don’t really need to say much here. I know you two had a meeting last week. Whatever it is he is asking for I certainly hope you are giving serious consideration to letting him have it. He could really help you sway the swing states in your favor.

4) It really is the economy, stupid
This week brings us the failure of Lehman brothers, the buyout of Merrill Lynch, the government bailout of AIG, and a single-day Dow Jones fall of 500+ points. You can legitimately attribute this to the “laissez faire” Republican deregulation policies which are predicated on the belief that the economy works best if private industry is not regulated and markets are free; small government, indeed - which has given way to greed, gross mismanagement, and corruption. John McCain supports these policies and that is a matter of record. And this presents your greatest opportunity to strike.

Now is the time to really sharpen your economic acumen and reconnect with voters, particularly the independents who are still nonplussed by your economic plan. What voters want now is someone to give them confidence in their financial futures. They want Hope. They want to know that you know how we get back on track and compete with the rest of the world. They want access to affordable healthcare. The Democratic Party stands on the favored side of public opinion on these issues so seize the moment.

5) Dance with who brought you
What not all these polls reflect is the impact of your grassroots organization – the foot soldiers. They are not capturing the newly registered voters you are bringing to the political process. This is a good sign for you but still represents an unknown. Most of these voters belong to groups that traditionally are apathetic come election day. If I were you, I would pour some money and effort in securing and re-energizing this base.

I take you back to when you first embarked on this journey… There was a movement brought about by the thought of true change in America. Everyone knew what you meant by “change” without you having to supply the “specifics” which your critics used in an attempt to shame you from your platform. These people understood what you meant even when “change” meant different things to different people. You had - and still have - the most diverse coalition of supporters who were hungry for what an Obama presidency could bring - hope. You were connecting then. You aren’t now. They need to know they still have your ear and vice versa. You need to reignite this movement.

Remember, the African American community did not show up to the polls in the numbers they should have in the Pennsylvania primaries. This is the apathy from minorities that represents the unknown in the efforts of your grassroots organization.
Make sure you stay present in the Latino communities. This is a vote that is admirably considered up for grabs and should not be assumed a guarantee in your favor.

Your many young supporters traditionally tend to jump from trend to trend. Remind them that you are not a trend. What you represent is a real chance for them to truly own a piece of the government they believe has failed their futures due to the irresponsible voting of their parents and grandparents. Do not be afraid to give a few more stirring “Yes We Can” speeches to remind them of the movement that was.

In other words, reconnect and shore up your base, Senator. Shore up your base.

Good luck,
A Friend

*A 527 group is a type of American tax-exempt organization named after a section of the United States tax code, 26 U.S.C. § 527. A 527 group is created primarily to influence the nomination, election, appointment or defeat of candidates for public office. Although candidate committees and political action committees are also created under Section 527, the term is generally used to refer to political organizations that are not regulated by the Federal Election Commission or by a state elections commission, and are not subject to the same contribution limits as PACs.

Why Barack Obama Will Win The 2008 Presidential Election

Electoral College Math
As we were reminded in 2000, states elect the President of the Unites States; citizens do not. According to Real Clear Politics, John McCain’s lead over Mr. Obama in the popular vote has vacillated between 1-2% for a little more than a week now. However, state by state, it is Mr. Obama that has a very narrow 273-265 lead in the electoral vote. This 273-265 was even cited by none other than Karl Rove on the Sunday talk circuit.

The following are the true “toss-up” states (by my definition, those where 3% or less separates the popular vote)- Colorado, Michigan, Nevada, Ohio, Pennsylvania, and Virginia. Mr. Obama is currently ahead in Colorado, Michigan, Pennsylvania and tied in Virginia. Mr. McCain does not have a lead in any state that went for John Kerry in 2004. Conversely, Mr. Obama is presently ahead or tied in 4 states that went for George W. Bush in 2004, representing 33 electoral votes.

Stupid McCain-isms
“The fundamentals of the economy are still strong.” So says the guy married to the gal with either 7 or 9 houses and the multi-million dollar inheritance. After saying something foolish like this today on a day where the stock market drops 500 points, one major US financial institution goes bankrupt and another is bought for pennies on the dollar, what would be foolish is to not believe a few more votes moved from Mr. McCain to Mr. Obama.

It’s The Economy, Stupid!
The sluggish economy has overtaken Iraq as the #1 concern of American voters and, by a 52-40% margin, most Americans believe Mr. Obama is better equipped to handle the economy. Much of his economic appeal comes from making such populist friendly claims as that he intends to cut taxes on 95% of American households. Objectively, one should evaluate Mr. Obama’s 94 votes in the United States Senate related to cutting taxes and the fact that, on balance, the bottom 50% of American households already pay little to no taxes. While Mr. Obama really has not been challenged on this issue, a simple majority of households are on board with his economic plan.

9% of voters remain undecided. These are Independent voters who like both candidates and can still be persuaded to choose either. Mr. Obama’s call for Change resonates much more than questions about his experience. Mr. McCain has been successful in distancing himself from George W. Bush in the minds of Independent voters without alienating the Republican base. The upcoming debates will play a crucial role in deciding this election. The candidate who can best articulate a plan that appeals to the Independent minded voter for dealing with this country’s economic woes will win. Today, by a healthy margin, Americans believe that is Barack Obama.

Related Post: Why John McCain Will Win The 2008 Presidential Election