So much to blog... editorals first

First congratulations to Barack Obama for yesterday's victory over John McCain to be come the President elect of the United States.

So what does this mean? Where to start? Let's look at editorials first.

What's interesting is that they focus on race... which isn't all that shocking until you realize, they the media ignored race throughout most of this election cycle.

From the Chicago Tribune:

Obama’s victory is one of those events that reveal how far the nation has traveled. When he was born in 1961, African-Americans risked death merely to register to vote in some Southern states. The pivotal civil rights and voting rights laws had yet to be enacted. Yet today, the nation is willing to entrust its future to a man whose father was black. His election is a moving vindication of the ideals on which this nation was founded...

Most Americans are ready to give Obama a chance to show he can deliver needed improvements. The financial crisis has also made them open to ideas they would not have considered before. But their motivation is pragmatic, not ideological, and the new president will be judged on results rather than intentions.

And from the LA Times:

By any measure, this is a monumental day in our nation's history. African Americans are rightly proud. The brutal facts of black existence -- slavery, segregation and the stunting of social and political ambition -- have dashed the hopes of black progress time and again. The election of Barack Obama symbolizes the resurrection of hope and the restoration of belief in a country that has often failed to treat its black citizens as kin. For millions of blacks abandoned to social neglect and cultural isolation, Obama's words and vision have built a bridge back into the American family.

And then the BBC:

Back in June, on the night when he finally saw off the challenge from Hillary Clinton, his celebration speech made no reference to his historic racial first, and noticeably he dedicated his victory to his white grandmother.

Throughout the campaign, Mr Obama has emphasised his whiteness as much as his blackness. The president-elect understood one of the great paradoxes of the civil rights era.

While it helped pave the way for his ultimate success, it also made it more difficult for northern candidates, like him, to win the presidency.

And I leave with one of the most condescending pieces of crap journalism ever written. As only the Brits can do:

They did it. They really did it. So often crudely caricatured by others, the American people yesterday stood in the eye of history and made an emphatic choice for change for themselves and the world. Though bombarded by a blizzard of last-minute negative advertising that should shame the Republican party, American voters held their nerve and elected Barack Obama as their new president to succeed George Bush. Elected him, what is more, by a clearer majority than one of those bitter narrow margins that marked the last two elections.

Thanks but no thanks guys. We did something you guys could only dream about.

Taking the Day Off

Not a ton of policy to talk about on the purest political day of the year (or of every four years).

I will say, no matter who wins, both Obama and McCain—from a policy position—should be much better than George W. Bush. I'll tackle Bush from a policy perspective in the next few days.

However, I will say this about election day... voters should not have to wait very long in line. There should not be long queues and hour plus waits for people to vote. This only encourages and creates disenfranchisement. So from a policy perspective, we should do what is necessary to keep those lines fairly short.

Palin and Newspaper editorials

No Con Con talk here... just a few articles that I thought I'd pass along.

Newspapers and policy go hand in hand, mainly because it's historically been the easiest place to start to make a case for a policy. Editorial and Op-Ed pages are filled with policy ideas every day. Therefore, I check out a lot of opinion pages every day.

And in this process I couldn't help but notice the number of newspapers endorsing Obama. But what's truly shocking is that most of these editorials read the same: 'Obama is thoughtful, introspective, and pragmatic. While we liked John McCain, but he's has run as the guy we liked, and nothing proves that more than his decision to take Sarah Palin. And we really don't like Sarah Palin'. In fact, the Chicago Tribune who had never endorsed a Democrat for President choose Obama—in what my opinion was the best written endorsement—in part because of the Palin pick. But for a look at a lot of other papers, I turn it over to the Reader here in Chicago:

Alaska’s largest newspaper, of course, also endorsed the Obama-Biden ticket. “Despite her formidable gifts,” said the Anchorage Daily News of the state’s own Sarah Palin, “few who have worked closely with the governor would argue she is truly ready to assume command of the most important, powerful nation on earth. To step in and juggle the demands of an economic meltdown, two deadly wars and a deteriorating climate crisis would stretch the governor beyond her range.”

Palin was a godsend to editorial writers penning Obama endorsements for Republican papers. The Courant: “Most worrisome, however, is Mr. McCain’s choice of a running mate . . . who is not yet ready for prime time.” The Record: “[McCain’s] selection of Palin as a running mate was appalling.” The Eagle: “She is a candidate of little intellectual curiosity who appears to be hopelessly unready to be president.” The News-Register: “What could McCain have been thinking . . . ?”

Without Palin, some historically Republican editorial pages might have struggled to find words to reject McCain that their readers would accept, and perhaps even endorsed him against their better judgment. But now they can make the argument they believe in, knowing they’ve got Palin to nail it down. She signs, seals, and delivers the case for dumping the GOP. She’s the closer.

Ouch. From a political stand point, assuming that McCain does lose tomorrow, it will be interesting to see how the Palin pick goes down in history. Was it increditably stupid? Short sighted? Obviously transparent? Did it cost him the electin? Or did the Fall 2008 Credit Crisis hurt McCain more than Palin?

No matter what, it should be a fun topic of discussion for years to come at cocktail parties.

Oh, and check out the differences between the Guardian and Economist endorsements of Obama. Oh wait, there isn't one. Weird.

McCain's Energy Plan -- Part III

Part I of the analysis on energy policy – How did we get here?
Part II of the analysis on energy policy – Obama’s plan

And finally, it’s the last time I have to write about a whole bunch of bad policies ideas that would, if implemented, only make things worse. Read McCain’s proposals in his own words here.

We all heard the chorus of Republicans at their convention chanting, “Drill Baby, Drill!” The idea behind this is that drilling offshore and in Alaska will lower our need for foreign oil and at the same time bring down the price of oil (by increasing supply). But let’s clear this up right away—it won’t. While both of those statements are technically true, the impact is extremely small. First, it will take years for that oil to reach consumers and more importantly, oil is traded on worldwide market. That means that oil from Nigeria, Saudi Arabia, Venezuela, Canada, etc, is bought and sold on the same market. If U.S. production was to increase and every other country was to keep output at their current level (or at least rising with demand) then yes, the price of oil would drop. But not a lot. “Drill baby, drill!” won’t have the impact that people seem to believe it will.

This isn’t to say that drilling offshore (or in Alaska) is a bad idea or bad policy—it isn’t. And McCain does support offshore drilling. However, there are some environmental concerns and of course there is always the risk of a spill or some sort of disaster.

Let me quickly go through the rest of McCain’s energy plan.
-- Unlike Obama, McCain is against ethanol, something that not only I’m in agreement with, but the quicker this country moves away from corn based ethanol the better (for reason’s I’ll chronicle another day).

-- McCain wants to build 45 new nuclear power plants by 2030. Nuclear power is cheap. But plants are very expensive to build, so McCain would probably be offering subsidies and tax credits to companies who build nuclear plants. And then there is the issue of what to do with the nuclear waste. No one wants the waste in their back yard because it’s radioactive thus disposing of the waste has been a problem for years. Burying it usually means it ends up in the water supply. Shooting it into space is very, very expensive and a launch failure would probably be a Chernobyl like disaster. So what it really comes down to is that we haven't really figured out what to do with nuclear waste. Anyway, here is some info on what France does with all their radioactive waste.

-- McCain also favors a cap-in-trade system to lower carbon output. A cap-in-trade system is fairly simple: the government creates credits or permits that allow a certain amount of carbon usage. It then sells those permits on the market to carbon producing companies (or speculators). But many economists prefer a carbon tax, were companies are taxed at a fix rate for the carbon they produce. (again, this would be a good post a few weeks from now).

Finally, McCain didn’t want Obama to be the only one with bad energy ideas. McCain has suggested suspending the tax on fuel. (Personally, I think it should be raised). This is a horrible idea because it would manipulate the price of gas. Supply is not being increased, however suspending the tax would lower the price of gas which would encourage driving, leading to an increase in demand… which only increases the price of gas. All the while, Uncle Sam is receiving less money but the oil companies are pocketing more (since the price of gas has increased). In other words, suspending the fuel tax would increase the price of gas and make Big Oil even richer while making the U.S. government poorer.

McCain’s energy plan isn’t as bad as Obama’s, but it is not as environmentally friendly and is very short sighted. Obama’s plans, for all its faults, does look a bit towards the future. McCain’s ideas aren’t exactly fresh, and while he gets major points for being anti-corn ethanol, there also isn’t a ton to really get behind here.

A Quick Look at the Electoral College

I know this blog is about policy and I attempt to shy away from politics, but policy and politics are forever linked. So I thought a quick run down of the 2008 Presidential Election wouldn't be the worst thing in the world...

Things really don't look good for John McCain. Not is he running out of time what has to be more worrisome for his campaign is that the Electoral College is working against him at this point. Looking quickly at the 2004 map, Obama only needed to pick up 18 electoral votes. He has had a very safe lead in every single Kerry state but two—Maine and New Hampshire—however, Obama has opened up a ten point lead in New Hampshire and holds about a 5 point lead in Maine so he can probably count those eight electoral votes.

As for the Bush states, Obama is up by over ten points in Iowa. Those seven electoral votes now means he only needs 11 to win.

Obama is up about nine or ten points in New Mexico, also a Bush state. He can probably safely put those five electoral votes in his column. That means Obama only needs 6 to win.

Before, I move on, I should note that if Obama wins either Florida or Ohio he no longer needs to win Iowa or New Mexico—all he would have to do is hang on to all the Kerry states—and the election is over.

At this point, of all the Bush states that would considered a swing state this time around Obama would only need to win ONE of these states to secure the nomination:

Colorado
Virgina
Ohio
Florida
Missouri
North Carolina
Indiana

And here is a quick run down of how Obama is currently faring in all these states (all figures are approx, though I erred on the side of McCain seeing that these states did go for Bush in 2004. All the polling information I looked up and found from 538.com):

Colarado (Obama +8ish)
Virgina (Obama +5ish)
Florida (Obama + 4ish)
Ohio (Obama +3ish)
Missouri (Obama + 2ish)
North Carolina (Obama +2ish)
Indiana (Obama -2ish)

McCain has to win all seven of these states. No almost or maybe's, he has to win all seven states. If he doesn't, Obama will be President. And for that reason alone, even if McCain makes up the six or seven point points in national polls, I think we should all prepare ourselves for, what I believe, will be the first minatory elected to be head of state in a democracy. All Obama has to do is play it cool and not make a mistake—and seeing that he hasn't this entire campaign going back nearly two years—McCain can't really even hope for that. The only wild card that remains out there is catching/killing bin Laden in the next two weeks. However, I'm not sure that would be enough and maybe be viewed as highly cynical—or even a conspiracy theory—by many voters.

Of course there are always outside forces at play. The financial meltdown and credit crunch has tipped this election to Obama (along with strong Obama performances in the debates). Is there one out there? Time will tell, but things don't look good for John McCain.

McCain's Economic Plan

I covered Obama's play the other day, check it out here.

No intro today—reread the Obama one if you're dying for an intro—here is McCain's economic policy in his own words. I'll try to make it easy.

-- McCain will keep Bush's tax cuts on wages, capital gains, and dividends all of which are supposed to expire in 2010 (the top tax rate will stay at 35% and capital gain and dividend income will be taxed at 15%). This plan, while it would not discourage saving, would increase the gap between the rich and poor. The Tax Policy Center believes that the top 1% would see their incomes rise 2.2%. As I wrote while disusing Obama's plan, the Gini Index in the U.S. has continued to grow at a fairly quick pace over the last twenty years; slowing this down isn't the worst policy idea.

McCain would also cut the corporate tax rate from 35% to 25%, but would also get rid of some deductions. Corporate taxes are always somewhat miss leading... there are so many loopholes and deductions for corporations that it's hard to know what rate companies turely do pay.

Finally, McCain would allow companies to immediately write off the cost of new equipment. This would incourage investment and theoretically lead to higher producvity and thus growth.

Overall, McCain's tax policy is a pretty good plan for long term growth. But with the U.S. government already in debt and then involved in a costly war and now handing out over a trillion dollars to save Wall Street on top of this, McCain's plan does or says little about slowing down this debt. McCain has hinted at reducing spending (even talking about cutting defense spending in the second debate), but he hasn't provided any proposals to reduce spending. The Tax Policy Center estimates that McCain's policies would increase the debt by $758 billion in the next ten years.

-- McCain would increase the exemption for dependants from $3,500 to $7,000.

-- McCain has promised to balance the budget in his first term, but I'm not sure how he would do it with this policy and hasn't offered a credible means of doing so either. Plus, the Federal government doesn't really need to balace the budget for a bunch of macro reasons that I won't go into right now.

-- McCain has been a supporter of free trade while in the Senate and there is little reason to believe that he would stop being a supporter as President.

-- McCain's economic advisors are not as highly reguarded as Obama's team (here is some harsh treatment or if you have time here is a debate between advisors for both candidates). McCain's advisors, unlike Obama's team, does not feagure as many economists from academia. His team is headed by Carly Fiorina the former head of HP and Nancy Pfotenhauer who was a former director at Americans for Prosperity Foundation and has worked for Koch Industries, which does a little bit of everything but oil and energy are the biggest areas of focus in the past.

-- Like Obama, McCain has yet to say much about Medicare or Social Security.

Sadly, neither McCain or Obama has said too much about simplifing the tax code, which is currently a mess. Personally, I think tearing up the current tax code and rewriting it (like Congress did in 1986) would be a wonderful undertaking and something I would get behind.

-- Quick editorial note on McCain and his economic policy. McCain's economic proposals haven't hit home with the American voter. Obama's policies have a more populist tone them—but the reality is that they aren't all that poulist. McCain needs to do the same. If I were him or on his campagin, I would have been working hard over the weekend to roll out a new set of idea and proposals. Maybe concede to raising taxes on the rich, keep corporate taxes low, and find a deduction or two for the American worker. Oh and maybe get Micheal Phelps to pitch the plan for you.

The Future

I know there aren't many readers here and that's just part of starting a blog, but for those who do check this blog out once in a while, a programming note.

With the election coming up, I'm going to try and break down both Obama and McCain's policy positions on various issues like the economy, health care, trade, foreign policy, etc.

Also, being from Illinois, I may throw some stuff up there in the Illinois Constitutional Convention. But that depends if anyone picks up our work... so that might be more towards the end of the month.

So no big post today... no real observations on the stock market other than just remember it isn't the end all be all of the American economy. It is but one indicator. So don't completely panic... plus if you have any extra money laying around, you have to be feeling good about buying stocks... the question is just when.

Framing the Bailout

Last night I talked about how poorly the bailout plan was framed by political figures and government officials; since the policy was never clearly explained to the American public, they were against it. This lead to House members who might be facing a tough reelection to vote against the plan... and now a lot of people in the House (and John McCain) and Hank Paulson have a lot of egg on their face. So TPB offers up a little advise to Hank Paulson, members of the House, and any other government official as how to sell the bailout to the American public.

1) Change the Name of Plan - as I said last night, bailout sounds too risky—a last ditch effort without thinking everything though. McCain, who now has a lot to lose with yesterday's failure, has already realized this by calling it a rescue. At this point, I don't think it needs to get fancier than that; as long as policy makers are no longer calling it a bailout I think this problem has been resolved.

2) Explain to the Public Why They Need the Money - As the The Swamp reported today, Hank Paulson and company went about the bailout all wrong:

As the fingerpointing continues following the House's failure to pass the $700 billion bailout, a lot of blame is going to Treasury Secretary Henry Paulson Jr. for first trying to run roughshod over Congress and the sensibilities of taxpayers until he realized that approach was doomed to failure.

No one bothered to tell the American public why they needed handover $700 billion. Paulson and Congressed failed to explain what the money was for and who were to recieve it. By taking this approach, policy makers allowed opponents to frame the issue by focusing on executive pay and how it was bad investments by the guys and gals on Wall Street that lead to this mess. 'Main Street should not have to bail out Wall Street' became the simple rallying cry.

What Paulson, or someone who has fiscal/financial authority in the eyes of the American public, needs to explain is why this money is needed. It shouldn't be too hard, "Over the past few years a lot of people made bad investments, but we are not asking for money to bailing them out for their mistakes. Instead, we need the $700 billion to rescue the American economy from a liquidity crisis—right now businesses are finding it difficult to borrow money from other companies, which means they are having a hard time paying their bills or investing in their business, and maybe even pay employee wages. The money will be used to inject cash into the economy to help increase the flow of money between businesses and avoid anyone from having a pay check bounce."

I think this is the key for supporters of the bailout now—to frame the issue as a personal matter. Your pay check may not cash on Friday if something isn't done. That will get peoples attention even if it is a bit alarmist. But it's a much better message than "give me $700 billion because I said so."

-- Finally, I fould this to be a decent read and worth at least looking at.

Palin and Policy

This might be a series of posts over the next five or six weeks... Sarah Palin and her effect on policy in this election. I couldn't agree more with what was said in the 538 blog last night:
"The crisis also plays terribly with the Palin pick, because it's increasingly clear that regardless of the way she connects or doesn't connect with someone on the personality level, she doesn't pass the laugh test for qualification. I don't mean that in as partisan way as you might think. Analytically, she's obviously not qualified. It's inarguable. But prior to the crisis it was much easier to imagine a world where she could skate by for 60 days not facing questions and having an American Idol election. Now, I think people are honestly scared by the economic circumstances, and it may shock independents into refusing to take that risk of a McCain-Palin ticket."

No matter what you think of Sarah Palin, Sean from 538 is right about two things about Ms. Palin:
1) She isn't qualified at the moment.
2) The economic crisis and her interview with Katie Couric has made this painfully obvious. Conservatives are left making weak excuses as to why Ms. Palin is obviously unqualified... because she wasn't called Governor Palin she flopped like a fish out of water with Katie Couric?

We could debate the political implication of the Palin pick, but I'm not that interested in that—yes, it solidified the GOP base and yes, Ms. Palin was at least four years away from having any business in a Presidential race—because the Palin pick, a month later, isn't interesting for political reasons any more.

It is interesting for policy reasons. When Sarah Palin was chosen by McCain, the election, which was already treading away from the issues, officially became about politics, the phony culture war, style, and image. Clearly, Obama's campaign has always been about style and image, but he at least sort of backed it up with substance. The Palin pick was all style and no substance.

But a funny thing happened along Wall Street two weeks ago, and in the last week to ten days the election has swung back to issues. Now substance is more important than style. In theory, this should help McCain as long as he can continue to distance himself from President Bush. McCain is more of the substance candidate than Obama, if only because McCain has been in the Senate longer than about 20% of America has been alive (for the record we were 14 months when John McCain was elected to the Senate). Obama critics have been saying for years now "where's the beef" when it came to Obama's policies and ideas. It was a valid question if only because Obama doesn't have a long track record on pretty much anything.

But the financial crisis has exposed McCain more so than Obama—in part because McCain sticks his foot in his mouth when it comes to talking about the economy (or doesn't make any sense). But the financial crisis also hurts McCain because Palin, The Style Candidate, has no substance when it comes to discussing something as big as what's taking place on Wall Street and in D.C. Her lack of pretty much any experience is so glaring that every time you see a McCain/Palin image, her name looks like a mistake and probably creates a lot more anxiety than calm. Joe Biden may be a walking, talking "stupid sound bite", but he can get away with such mistakes because everyone knows that Biden has some substance to what he says and what he's done.

It no longer matters if Sarah Palin believes in dinosaurs or if she wants to teach creationism in school (note: Palin was born and raised Catholic, but she appears to have left the Church and no one really knows what the hell she is). Those are style issues. Substance issues like the financial crisis exposes Sarah Palin as a style pick. And most of America can see right through the style because of the lack of substance in a time when thought and reason is needed.

I don't think John McCain ever wanted Ms. Palin to be his Vice President. He got stuck with her, needing a Hail Mary, he was forced to choose her by the party up and ups. "She'll bring the base together John," they probably told him. And she did. And as long as the election wasn't about issues, she was the perfect pick. But the McCain people should have seen this coming, maybe not the Wall Street near collapse, but some major issue taking the forefront of the campaign. It isn't 1996 or 2000, there are so many issues that the country HAS to deal with that eventually one of them would pop up and grab the headlines. And that's what happened, and now John McCain is left with a VP who is only dragging him down. This effects him politically and from a policy perspective... he not only has to find his own policy positions but he also has to make sure this Vice President actually has a policy position and that the American public buys it.

Debate #1

I was supposed to meet up with some high school friends and go to our Homecoming football game... but they bailed and I found myself in the back room of Jimmy's watching the debate with about 50 undergrads, a few black men, and the bartenders.

So what did we learn from tonight's debate? Well... John McCain talks about how great he is a little too much. And Obama meanders far too much in his answers, it takes him six sentences to say what he could say in two. In other words, this was an utterly boring debate. A draw. Tonight was best summed up by a friend who said on the phone afterwards, "I guess they both did what they needed to do, McCain didn't look old and Obama looked Presidential."

That sums it up well. Neither candidate hurt himself tonight. But at the same time, they wasted 90 minutes of our time saying nothing of any sort of interest. The only time that I was sort of interested was during the Iraq talk (mainly because it's the only major policy difference between the two men). The bar laughed in a condescending, snarky way at a few of McCain's responses... and after McCain said, "when I was released from prison" one of the black guys in the bar got off his stool and did one a 'what the fuck' sort of things as if he lost a bet, which brought down the back bar... but in truth, the smart souls watching the White Sox game in the front were louder and apparently more into the game than anyone was into the debate.

So what to take away from the debate tonight?
1) McCain used existential in a way that you normally don't hear when he said, "... if Iran acquires nuclear weapons, it's an existential threat to the state of Israel." Not incorrect usage, just a word you don't hear every often unless you're at Jimmy's talking about Camus.

2) Obama used irony correctly when he talk about Iran and Iraq.

But that's all I've got. Policy wise, a disappointing debate. Neither one said anything all that interesting... they were more interested in being "right" about what they said than anything else. Yawn.

For more check out 538... they always do a good job. I'm a fan of the Trib's Swamp blog which always does a good job, they think it was a draw also. And if you think anyone of them said something and you went, he's full of shit, here's always a good place to go.

John McCain believes he can save the American economy just by showing up

McCain's announcements yesterday that he was suspending his campaign and that he wanted to reschedule the debate with Obama on Friday in order to deal with the economic crisis is puzzling for a bunch of reasons.

First, how does one suspend a campaign? Is he no longer taking donations? Is everyone working for the campaign taking the day off? Of course not... so the campaign suspension is in name only. But I'm not here to spend too much time on politics.

More puzzling is that he's doing all this so that he can go to D.C. to fix the economic crisis... but here's the really weird part. John McCain isn't on either Senate committee that is dealing with this mess—the Committee of Banking, Housing, and Urban Affairs or the Finance Committee.

As any student of American politics can tell you, the work of Congress is done in committee. And without a seat at the table, McCain's influence is little. In other words, McCain is showing up to the party a few hours late and isn't bringing anything to drink on top of it.

This seems to me to be an obvious political ploy. Will it work? Time will tell, but it's a curious decision since it's highly unlikely McCain's input is needed (or wanted) to reach a deal.

From a policy stand point it's a dog and pony show... and McCain would better serve the country by not bringing any more distractions to an already tense situation.

The Fall Out Continues

A few good articles I've come across in the last few days:

-- A pretty good run down on the details/behind the scenes look at what did happen this weekend on Wall Street.

-- A "what just happened and why does it matter" from the Freakonomics guys. Also, it's interesting that Levitt is so candid in his "I'm just an economist, I haven't a clue what's going on". I think a lot of people expect economists to understand finance and be some sort of financial genesis... and I guess to a certain degree they do. But economics today is not really about numbers; economics today is the study of human behavior—why people make the choices they make and what our choices mean.

-- Politics and policy are interlinked in this country—even if I don't like it, 'dem da facts—so obviously I'll throw up some interesting political observations and musings. And with the election oh so close, expect a lot political links.

But polling results are starting to show a break for Obama, and now the question/headlines becomes/will become... is McCain in trouble? I think this is a bit of an over reaction (just like the Obama's in trouble! after the GOP convention). But if more polling results over the next week show a swing towards Obama then it goes to show how little of an impact the conventions have, how fickle short term polling data can be, and that no matter what this race is very tight. I don't think McCain is in a lot of trouble, but I was wondering how he would handle being in the lead. The past week, a week with him in the lead, has been less than encouraging. Maybe Obama taking the lead is the best thing for McCain...

-- Who says Obama hasn't done anything and hasn't actually done anything? To anyone who follows Illinois politics, getting this moving is nothing short of amazing.

-- Chuck Hagel, one of my favorite Senators, doesn't think Sarah Palin has the experience to be Vice President.