Friday, December 19, 2008

Bush administration $17.4B auto plan provides the carrots -- and the stick

General Motors and Chrysler now have a chance to become 21st century automakers.

The Bush administration's $17.4 billion loan plan provides the necessary carrots and the stick. According to the Wall Street Journal:

"The deal is contingent on the companies' showing that they are financially viable by March 31. If they aren't, the loans will be called and all funds must be returned, officials said."

The plan means GM and Chrysler won't have to go through what would have been a destructive bankruptcy. It doesn't guarantee they'll recover from their years of blindered decision making, but the money, plus costs savings and new product technology and design that are already being put in place, means the automakers have a shot at competing with foreign companies who produce increasingly popular U.S.-made vehicles.

GM, Chrysler and Ford (which doesn't need emergency financial help) can turn automaking into a "green" industry. If they become technology leaders in low-pollution, all-electric autos, the Big 3 could capitalize on major growth that's projected in global sales as millions more poor people achieve middle-class status in countries like China, India and Brazil.

Thursday, December 18, 2008

Rick Warren is a 'conservative' evangelist, but what does that mean in the Obama era?

When the pastor of my former Catholic parish announced from the pulpit several years ago that Rick Warren's "The Purpose-Driven Life" would be the text for our Lenten studies program, I exclaimed to myself (in a whisper) Oh, no -- from Paul, Augustine, Teresa of Avila, Aquinas and Thomas Merton, we go to a TV evangelist for spiritual insight and guidance?

I had heard about Warren's book, and lumped it with other inspirational best-sellers that clog bookstore tables, right next to those on how to lose weight (in six or eight or 10 easy steps).

But while preparing some material for my parish's Lenten studies, I had to confront "The Purpose-Driven Life." The first two paragraphs forced me to rethink my stereotypes:

"It's not about you.
"The purpose of your life is far greater than your own personal fulfillment, your peace of mind, or even your happiness. It’s far greater than your family, your career, or even your wildest dreams and ambitions. If you want to know why you were placed on this planet, you must begin with God. You were born by his purpose and for his purpose."

These words were the perfect antidote for our narcissism. They had, I immediately recognized, a Pauline thrust -- direct, prodding and aimed well beyond the reach of our reflected images. Warren recognized that we were the lineal descendants of the clever, self-regarding, high-maintenance Corinthians who were such a special, and recurring, challenge to Paul.

What Warren preaches -- like Paul -- is that "God is not just the starting point of your life; he is the source of it." In other words, faith is not a one-on-one negotiation between man and God , it is a surrender of man to God.

Yet Warren, again like Paul, is not saying that surrender to God means man is essentially a nobody. He writes:

"...there is a God who made you for a reason, and your life has profound meaning! We discover that meaning and purpose only when we make God the reference point of our lives. “The only accurate way to understand ourselves is by what God is and by what he does for us [paraphrase of Romans 12:3]. ”

Warren strikes a balance between man as the center of the universe and -- the other extreme -- a mere dot.

Some more conservative Southern Baptist religious leaders criticize Warren as a "feel good" evangelical. But Warren himself specifically rejects that notion:

"The number one goal of a hedonist is to feel good, be comfortable, and have fun."

President-elect Obama's decision to have Warren deliver the invocation at his Inaugural has enraged gay groups because Warren -- pastor of the huge Saddleback Church in Orange County, CA -- supported the successful Proposition 8 banning same-sex marriages in California.

Gays make a good point, but the Obama Inaugural team argues that the day-long event will be inclusive. The benediction will be given by the Rev. Joseph Lowery, whom the Rev. Martin Luther King Jr. chose to lead the epochal civil right march from Selma to Montgomery in 1965, and who today is a supporter for gay marriage. The Lesbian and Gay Band Association will, for the first time, march in the Inaugural parade.

But, in the end, obsessing about who's conservative or liberal or in-between runs counter to the new spirit that Obama has sought to kindle from the beginning. In the lexicon of labels, Rick Warren is indeed a "conservative" religious leader. But that label doesn't tell us much about Warren's spiritual message of finding purpose in our lives.

President-elect Obama -- who technically would be called a "liberal" -- speaks about purposeful lives too.

It's no coincidence.

Wednesday, December 17, 2008

Bernard Madoff -- the unlikely macher

What was Bernard Madoff really thinking, and when?

In all the extensive coverage of the multi-billion-dollar fraud connected with this so-called pillar of Wall Street, I don't find any substantial clues helping to explain why or when Madoff started his self-described Ponzi scheme. Did it begin after he tried, perhaps unsuccessfully, to be a Wall Street Master of the Universe?

To me, that seems the likely explanation. It's hard to believe Madoff consciously made fraud the starting point of his investment ventures back in the 1960s. He would have had to know that such a pyramid scheme would, sooner or later, collapse -- at which point his inflated status would become a shrinking, flubbering balloon.

I am not persuaded that Madoff was quite the macher -- Jewish "big shot" -- he's described as in the media. Yes, he gave to Jewish charities and he had rich people literally begging to permit them to invest in his funds. But can you see this pudding-faced guy holding down a mike at, say, a New York charity event, and triggering a wave of inside laughter as he laser-beams the real big shots commanding the center tables?

Here's how Madoff described his investment company, as reported by Los Angeles Times columnist Tim Rutten:

"In an era of faceless organizations owned by other equally faceless organizations, Bernard L. Madoff Investment Securities LLC harks back to an earlier era in the financial world: The owner's name is on the door. Clients know that Bernard Madoff has a personal interest in maintaining the unblemished record of value, fair-dealing and high ethical standards that has always been the firm's hallmark."

No real macher would powder his image with such platitudes.

Madoff was "smart," he worked hard and -- here I'm venturing into perhaps pop psychologizing -- he wanted to make his mark in a world where there were many Masters of the Universe who were not only "smart" and worked hard, but had that je ne se quois that I don't think Madoff had but sought.

So, to continue my theorizing, what could Madoff do to compete against -- even outdo -- the Masters who got all the attention? He could deliver investment returns that over time would beat the ups and downs of the mercurial Masters. That, I believe, was the road to perdition for Madoff. Perhaps early on he had to do a little trimming if not cheating on returns in the hope that his market guesses would, over the longer term, pay returns bigger than the Masters. But if Madoff proved to be no more a Master of the Universe than he was a macher, what could he do? The better question might be what would he have been forced to do?

The answer, I believe, was replacing small-scale trimming and chating with the massive Ponzi pyramid that ultimately would collapse. If Madoff, cornered by his bad choices, resorted to such a dead-end scheme, then he was perhaps still rational but not sensible.

Rational people can spin logic up to the point of walking off a cliff. Look at all the business executives who have found a cliff to walk off in the current financial crisis. Sensible people don't do that.

Friday, December 12, 2008

Will what's left in TARP go to Detroit Big 3?

The collapse of legislation in the Senate to help save the Detroit Big 3 may or may not spell the end of emergency aid for the automakers. The White House says it's considering using what's left of the $700 billion TARP financial bailout fund to finance the $14 billion bridge loan that was torpedoed Thursday by GOP senators. The bridge loan would keep the Big 3 alive until a longer-term aid plan was taken up by the new, more Democratic Congress in January.

If the bridge loan fails, Chrysler says it will close all 59 of its plants and lay off 53,000 workers. GM hasn't announced what it would do, but even if it stays alive through Chapter 11 reorganization, it would probably be forced to close plants, adding thousands more to the unemployment rolls.

The impact on the U.S. economy, which has seen job losses totaling nearly 2 million through November, would be devastating. A big plunge in the markets today could concentrate minds, and, one way or another, produce the $14 billion bridge loan for the Big 3.

A not incidental note: The drive by Senate Republicans that killed rescue legislation was led by GOP members from Southern states, where international automakers have non-union production facilities. Heading the Southern opponents was Richard Shelby of Alabama, where the internationals have several major facilities.

Wednesday, December 10, 2008

$73 hourly salary for Big 3 production workers adds up to bad math

Most media commentary on General Motors and the Big amounts to one endless smackdown. But yesterday and today the New York Times offered quite different takes on the ailing domestic automakers. First, there was the profile of GM Vice Chairman Robert Lutz. My favorite quote from the tart-tongued Lutz:

“My sense of frustration is that all of this is hopelessly out of date,” he said. “Much of what I read and hear is reflective of the criticism that would have been legitimate of General Motors in the 1980s, but not today.”

The other piece is an admirable deconstruction of that frequently quoted "$73 an hour" that Big 3 production workers are supposed to make -- way over the $45 hourly salary that Toyota, Honda and other international automakers pay to their American workers. The biggest reason for the difference is the $15 share of the Big 3 hourly wage that covers pension payments to retirees. The internationals don't have to add that number to the wage costs of their workers because they don't have -- yet -- many thousands of retirees.

Monday, December 8, 2008

The bad news about newspapers

Bad news about newspapers just keeps coming. Tribune Co., owner of the Chicago Tribune and Los Angeles Times, among other nameplates, has filed for bankruptcy, McClatchy is reportedly trying to sell its prestigious (19 Pulitzers) Miami Herald and Scripps Howard is virtually begging for a buyer of its 150-year-old Rocky Mountain News in Denver.

Penny stocks now include some major newspaper companies: Journal Register, whose holdings include 22 dailies, among them the New Haven Register, sells for 6/10 of 1 cent a share, down more than 99 percent from its price two years ago. GateHouse Media, which owns eight dailies and more than 500 community publications, sells for 8 cents a share, also down more than 99 percent from its price two years ago.

Companies with the most prestigious nameplates have also been sucked into the downward swirl. The New York Times Co.'s share price has fallen from the mid-$20s two years ago to the mid-$7s, and the Washington Post Co., from the $700s to the $400s.

The recession has accelerated these dismal trends, but the bigger and longer-term problem is the migration of print readers to the Internet. Newspapers have responded by developing websites, but in a ham-handed way. Basically, the sites are simply electronic versions of the print products, with a few webby bells and whistles. Newspapers are mostly clueless in building websites that are interactive, socially sticky communities.

Here's what a sampling of dailies in some of the biggest markets offer potential online audiences in the millions: Detroit Free Press, Atlanta Constitution, San Diego Union-Tribune. Is it any wonder that newspaper web traffic, overall, shows such weak growth, compared to non-newspaper news sites?

An important exception is the New York Times, whose website attracts 20 million unique visitors monthly -- 20 times its print circulation. But even the Times site doesn't really exploit the potential of its huge, demographically attractive audience. If it did so, I argue in this article on Online Journalism Review, it might generate millions of dollars that would offset the double-digit percentage losses in advertising in the Times print version.

The Times' 20 million unique visitors are a community waiting to be formed, but the Times has to create some social networking opportunities for that to happen. Other newspapers, big and small, could create their own communities. Look at the success of Facebook and other networking sites. They are filling a vacuum while newspapers stumble about trying to convert their print products to pixels.

Very bad news -- and there are few signs it'll get better.

Sunday, December 7, 2008

"Meet the Press" gets a new moderator, but it's still stuck with its 60-year-old format

The new moderator of "Meet the Press" -- the successor to the late and venerated Tim Russert -- is David Gregory. Gregory is articulate, well informed, convivial and probing. When he feels he's being spun, he can be waspish. Early on, President Bush gave him the White House Press Room nickname "Stretch," in recognition of his 6-foot-5 height. But after what Bush seemed to think was one too many assaultive questions, he cut the NBC correspondent down to size with the new nickname "Little Stretch."

Given all his qualities, Gregory would seem to be destined to be a successful successor to Russert. But is that what's desirable? Astonishingly, "Meet the Press" has changed very little in its 60 years. The format is (usually) a top government official being grilled by the moderator. Russert pumped some new life into the creaky format by displaying sometimes embarrassing and even contradictory quotes by the guest (in block letters or even video), and then, prosecutorial style, asking the quotee to explain.

Transitional "Meet the Press" host Tom Brokaw did just that Sunday morning with President-elect Barack Obama. But Obama knows how to cool down the hot seat. Brokaw tried to get Obama to say something for the record about whether he supported a "pre-packaged bankruptcy" as a condition for federal loans to General Motors, Ford and Chrysler. Obama, shrewdly, refused to step into a trap that would launch a flurry of stories that would force him into defensive explanations over several days that undermined his President-elect maneuverability. When Brokaw persisted, Obama just kept moving the issue to other areas of discussion.

I don't see how Gregory will be able to extract much more from his subjects. He is, of course, younger (38), hungrier and more energetic than Brokaw (who, in his 68th year, would prefer to be fishing in Montana) and, as he's shown at Bush's White House press conferences, can throw some sharp darts when he thinks he's being spun. But Obama and his communications-savvy team will be ready for the darts. Other potential "MTP" guests, Democratic or Republican, also have learned how to cope with the "gotcha"-tuned format.

"Meet the Press Executive Producer Betsy Fischer should use the transition from Russert to Gregory to take the program to a whole new level that reflects the radical changes that have come to how the media and the public relate in a world where the consumers of news can be producers as well. "Meet the Press" is, to be blunt, out of date with its 60-year-old format. One obvious post-Russert change it could make would be to display not only the sometimes embarrassing or contradictory quotes of the interviewee, but comments by "MTP" viewers, who would be invited to contribute their thoughts as the program is being broadcast live Sunday morning. Those on-the-fly comments would give Gregory a rationale to be persistent when his subject tries to change the subject -- as Obama did, and successfully so, with Brokaw Sunday.

Uinterview -- whose subject is the entertainment world -- is one example of how to turn passive audiences into active, and productive, participants -- no green room required.

Maybe "Meet the Press" needs a new name -- "Meet the Press & the Public."

Thursday, December 4, 2008

If the auto Big 3 is a bad business model, which industries are better?

The Big 3 automakers don't deserve federal loans, say critics, because they have lousy production, sales and financial records and their restructuring promises are too little too late. So which other U.S. industry has a better business model, and can prove it by its composite stock performance or at least its last quarterly and yearly results ?


Investment companies?

Mortgage companies?

Real estate investment trusts?

Hedge funds?









Health care?

If you want to see how well (i.e. badly) any of these industries are performing, check out this chart.

Which of the most financially hurt companies in these industries have presented detailed restructuring plans that include their CEO's reducing their salaries to $1 per year until the firms' financial situations are turned around, as the Big 3 chiefs have pledged to do? If any companies from these industries have done so, I missed it.

If Congress turns thumbs down and forces the Big 3 into bankruptcy, that decision will create an economic cataclysm more severe than any of the worst recession scenarios that have been spread before us like upside down Tarot cards.

Astonishingly, newspapers and the rest of the media -- among the worst industry performers -- are clamoring loudest to gangplank the Big 3 into bankruptcy.

I hope they're spared what they wish on the Big 3.

Wednesday, December 3, 2008

Big 3's restructuring is a road map to saving jobs and making them green

The blather about "pre-packaged bankruptcy" for General Motors and possibly Ford and Chrysler continues to echo in media reports, but is fading fast as the automakers present their restructuring plans as a precondition to federal loans.

Bankruptcy, however it would be tied up with ribbons, would ensured the death -- immediate or within a few years -- of that considerable part of the auto industry owned by U.S. companies. The auto Big 3 is often called "Detroit," but nearly half of the companies' domestic jobs -- 112,000 -- aren't in Detroit or Michigan. They're in Ohio, Indiana, Wisconsin, California and other states. Then there are all the other related jobs -- auto parts, sales, etc. -- that bankruptcy would also wipe out.

Take a look at the restructuring plans presented to Congress by GM, Ford and Chrysler. They all agree that even under the worst production scenario, each company can return to profitability over the next four years -- and pay back the $34 billion total in loans they're seeking.

They companies detail soon-to-be-realized savings from their historic 2007 labor contracts with the United Auto Workers, and other recent and future cost cutting that will, finally, let them produce all their vehicles -- including money-losing small ones -- at a profit, and compete with international companies whose plants are located in non-union states.

From the GM plan:

"General Motors’ total cost per hour for new hires can now be as low as $25, growing to $35 over time, significantly below the average fully-loaded labor cost for Toyota, which public sources indicate is between $45 and $50 per hour."

With all its restructuring, the Big 3 won't ever be as big as they used to be, but will still be the power train of U.S. industry, and, with the billions they plan to invest in advanced technology, make a big contribution to the necessary greening of American jobs.

Tuesday, December 2, 2008

Obama and Pakistan: A die waiting to be cast

Will President-elect Obama's "new beginning" mean a new U.S. war -- in Pakistan's terrorist havens bordering Afghanistan?

Presenting his "national security" team Monday, Obama was circumspect:

"We're going to have to bring the full force of our power -- not only military but also diplomatic, economic and political -- to deal with those threats. Not only to keep America safe but also to ensure that peace and prosperity continue around the world."

But early in his race for the Presidency, on Aug. 1, 2007, he was very precise about what he would do as Supreme Commander:

"I understand that President Musharraf has his own challenges, but let me make this clear. There are terrorists holed up in those mountains [of mostly lawless tribal areas in northwestern Pakistan] who murdered 3,000 Americans. They are plotting to strike again. It was a terrible mistake to fail to act when we had a chance to take out an al Qaeda leadership meeting in 2005. If we have actionable intelligence about high-value terrorist targets and President Musharraf won't act, we will."

Pakistan's then foreign minister in the since-resigned Musharaff government, Khusheed Kasuri, assailed Obama's "very irresponsible statement," and Pakistani protests against the candidate's remarks included the very public burning of a U.S. flag in Karachi.

The new Pakistan government -- headed by Asif Ali Zardari -- is just as opposed to U.S. military action in the tribal areas. The Pakistani ambassador to the U.S., Husain Haqqani,
said in September at a presentation at the Carnegie Endowment for International Peace in Washington:

"Pakistan will not allow foreign troops to conduct operations on Pakistani soil. Never."

Haqqani cannot be stereotyped as a super-nationalist or creature of Pakistan's military. A journalist as well as diplomat, he has a inside-out understanding of U.S. interests from having been a visiting scholar at the Carnegie Endowment, adjunct professor at the School of Advanced International Studies at Johns Hopkins University and a professor at Boston University.

At the Carnegie event, Haqqani elaborated on why Pakistan was unalterably opposed to unilateral U.S. military action in his country:

"...if you go and just conduct the operation like this latest one in which you don’t get any identifiable target, then all you do is enrage people and create ill will. And that is not what you need if you are going to have a holistic approach to fighting terrorism. You need the people to support those who fight terrorism rather than those who are on the side of the terrorists."

Haqqani maintains that contrary to most perceptions in the U.S. media, Pakistan's military is making gains in those tribal areas that have been terrorist havens. He says the U.S. must be patient and give Pakistan time to gain control in the northwest, and to complete the exit of the military from politics.

But will the Obama administration be heedful? Frustrated by its inability to subdue the Taliban rebels in the Afghanistan war, the U.S. is, inch by inch, moving the battle to Pakistan's northwest, where rebels and terrorists hide and incubate. Based on his public statements, Obama appears ready to make even bolder incursions -- to protect the U.S. and its vital interests.

If Obama indeed pursues this interventionist course, what will happen to the nation of Pakistan? Will the military, which had controlled the government for more than a decade, reverse its decision to withdraw from politics -- signaled by the resignation of Musharaff in early 2008? Will Islamic militants in an already fragile nation state manage to seize control or at least be a partner in a coalition government?

In October, during the U.S. presidential campaign, President Zardari gave high government awards to Obama's VP running mate, Joseph Biden, and Republican Sen. Richard Lugar for their legislation to give Pakistan $7.5 billion in non-military aid over five years. The awards seemed to indicate at least a tacit acceptance of the bill's language regarding U.S. military aid to Pakistan -- that it would not be given unless the U.S. secretary of state certified that Pakistani security forces "are making concerted efforts to prevent al Qaeda and associated terrorists groups from operating in the territory of Pakistan."

The Biden-Lugar bill will be taken up by the House and Senate when the new Congress convenes in January. If it passes, will Obama -- who has made it clear that he will be the last word on setting U.S. foreign policy -- give it a chance to succeed? Or will he decide to expand the Afghanistan war to northwest Pakistan?

Depending on which way he goes, Pakistan could be his Iraq.

Friday, November 28, 2008

Mumbai massacre shows need for global anti-terror intelligence

The terrorist siege of Mumbai was frighteningly successful. More than two days after it began, two of the estimated 10 attackers were still holding out against all the forces that India threw at them. The message to terrorists anywhere is that with some money, careful planning and, of course, a willingness to fight unto death they can shake an entire major city to its foundations.

Mumbai will recover, but how after how long and how diminished? What will happen to foreign investment in rapidly industrializing India? To India-Pakistan relations? Which city and country will be the next targets of emboldened terrorists?

The answers to those questions may be more rueful than we even imagine -- if nations everywhere don't adopt a common strategy, reinforced by a reliable international web of anti-terror intelligence. The planned visit of a top rep of Pakistan's formidable ISI intelligence service to India is a reassuring initiative between the two often-feuding South Asian countries. But more, much more, will have to happen to prevent more Mumbais.
If the attackers were not part of Al Queada, that is even more terrifying. It would mean that massive, multiple-target offensives are within the reach of groups that may have only a fraction of the resources. That's why all potentially targeted nations must develop coordinated global anti-terror intelligence -- geared to detect not only Al Queada cells, but also smaller groups that may be exist in only one country. Until that happens, terrorist groups anywhere and of any size and mission can confidently plan the next Mumbai.

Tuesday, November 25, 2008

Obama and his 'centrist' economic advisers

Obama's newly assembled economic team is described as "centrists" who have a history of emphasizing balanced budgets over federal stimulus spending.

Yes, they do have that history. But Rubinomics -- of which all the members of the team were dutiful adherents -- may end up consigned to the dustbin of history.

Larry Summers, who was Robert Rubin's protege at the U.S. Treasury in the Clinton administration, hasn't been talking like a centrist lately. From a story in today's the Wall Street Journal:

"There are a lot of different ways of saying it, but the way I heard it said best was by President Zedillo about six months into the Mexican financial crisis. He said: Markets overreact -- and that means policy has to overreact. You don't want to come up late -- and you don't want to come up short."

Today's financial crisis has turned even the Republican anti-regulatory stalwart Treasury Secretary Paulson into an on-the-fly Keynesian.

And looks who's elbowed its way to a special place at the federal bailout trough -- Citibank, whose top economic adviser during its calamitous embrace of securitized mortgages was Rubin.

Christina Romer, the new chair of Obama's Council of Economic Advisers, is a resolute monetarist who thinks fiscal stimuluses, unless they are tightly controlled, lead to inflation. But at his press conference Monday, Obama called for Congress to pass stimulus legislation that may cost as much as $700 billion and extend over two years. While Obama was urging passage of this legislation, standing alongside him -- to the left and right, but not in the center, were all the members of his economic team.

Monday, November 24, 2008

Citi's reward for reckless pursuit of profits: $306B guarantees plus $20B up front

You have to believe that many banks are licking their chops after looking at the deal that on-the-ropes Citibank got from the U.S. Treasury. In exchange for a guarantee of $306 billion in very troubled Citibank real estate assets, plus the injection of $20 billion of capital on top of the $25 billion pumped in earlier, the U.S. gets $7 billion worth of preferred stock paying 8% interest annually, well below the 12-13% rate that Citi would have to pay if it could get a commercial loan, which it apparently can't. The text of the deal here.

Nowhere in the agreement does Citi receive even a velvet-gloved slap of the hand for its reckless pursuit of profits, reported with devastating detail in this investigative piece in the New York Times and this analysis by the Washington Post's excellent business columnist Steven Pearlstein, who wonders if Citi is too big to succeed.

The agreement says to banks, in effect, that the U.S. will hold them harmless for profit-at-all-cost decisons as it showers bailout money on them.

President-elect Obama said today at his news conference that the financial/economic crisis requires action extending from Wall Street to Main Street. In the meantime -- almost two months -- it looks as if one of the worst players in Wall Street will be the primary beneficiary of the federal life line.

Saturday, November 22, 2008

Saving Detroit: There's a better way than bankruptcy

Why bankruptcy won't work for General Motors is masterfully explained by New York Times columnist Joe Nocera. The nut graf:

"It is a long, difficult, drawn-out process with no guarantee that a bankruptcy judge will go along with everything G.M. wants to do. Several bankruptcy lawyers I spoke to all made the same point: if there is any way these goals can be accomplished outside of the bankruptcy process, then that should be tried first."

But read the whole piece, which details how a U.S. bailout can achieve bankruptcy's goals, but without the fallout that can be fatal to a company as big and complicated as GM.

There's also this interesting piece in the Washington Post's Sunday Outlook section -- "Why Detroit Can't Keep Up" --that explains why international automakers, particularly in Europe, are so much more nimble in going from design to production, and reaching the break-even point with fewer units.

The writer, Bernard Avishai, a former technology editor at the Harvard Business Review, says the U.S. "still has the world's largest proven reserves of intellectual capital. " But the Big 3 needs to unleash that capital the way Silicon Valley does to come up with product wonders like the iPhone.

Thursday, November 20, 2008

Joe Lieberman's performance as the cat who ate the canary: Gulp

Democratic Sen. Joe Lieberman's post-election "charm offensive" probably helped him keep his key Senate chairmanship, despite his all-out support for GOP presidential candidate John McCain. But I didn't see much charm in his interview with Katie Couric during her CBS Evening News program Wednesday evening. What I saw -- and heard -- was deviousness, and with a smarmy sheen.

Couric bore in on Lieberman's answer to a cable-show question regarding whether Brack Obama was a Marxist.

Couric: "You said, quote, 'It's a good question to ask.' Are you sorry you said that?"

Lieberman: "Well, that's one of those things I wish I had said more clearly. Obviously Barack Obama is not a Marxist."

Couric: "But you said it's a good question to ask."

Lieberman: "Well, then I answered that and said he's not a Marxist. I said at the time that he's somewhat to the left of me on some issues."

But here's what Lieberman actually said during the cable-show interview:

Lieberman: "Well, you know, I must say that’s a good question. I know him now for a little more than three years since he came into the Senate and he’s obviously very smart and he’s a good guy. I will tell ya that during this campaign, I’ve learned some things about him, about the kind of environment from which he came ideologically. And I wouldn’t…I’d hesitate to say he’s a Marxist, but he’s got some positions that are far to the left of me and I think mainstream America."

Notice the choice of phrasing: "I'd hesitate [emphasis added] to say he's a Marxist."

Was Lieberman trying to correct a gross distortion of Obama's economic philosophy -- as he claimed with Couric -- or was he trying to extend the life of one of the ugliest, and most preposterous, campaign smears?

I would hesitate to say it was the former.

For all its blunders, Detroit's Big 3 is a big part of the American family

I like this commentary from the Detroit Free Press about the real case the Big 3 should be making to save the U.S. auto industry. Forget parsing the numbers about "two-tier" wages and other talking points, says columnist Tom Walsh, and make a straight-to-the-heart appeal to the "American family," of which Detroit has been a prominent member for a century.

Shes my little deuce coupe
You dont know what I got
(my little deuce coupe)
(you dont know what I got)

Sure, Detroit has committed a succession of blunders in product strategy, labor deals and foot dragging on mileage standards. But it's asked for federal help only once -- $1.5 billion in loan guarantees to Chrysler in 1979 which later resulted in a $350 million windfall to the U.S. Treasury. Compare that to the hundreds of millions that have been showered on insurance giant AIG and banks which committed much more costly blunders during the mortgage securitization craze of the last decade.

Does big-hearted America want to kiss off Detroit? I don't think so.

Wednesday, November 19, 2008

Should Obama emulate Lincoln or FDR? It's irrelevant with 'democracy 2.0'

There's the continual debate over whether Barack Obama is or should be more like Lincoln or FDR. It's easy to get pulled into the debate because Lincoln and FDR are such huge change agents in American history, and comparisons to the 44th -- and "Change Now" -- President are irresistible.

But Obama, even before he's inaugurated, has already broken both the Lincoln and FDR molds with a new, 21st century model for how he wants to govern. He's done that by creating a Web-based grassroots force that could scarcely be imagined in Lincoln's or FDR's time -- and maybe any time right up to when Obama launched his presidential campaign in front of the Old State Capitol in Springfield, Ill., on Feb. 10, 2007 (where Lincoln gave his "House Divided" speech).

Go to the post-election Obama site, and see why it isn't useful to debate whether Obama should pursue a Lincoln or FDR model. Make sure you drill down to the blog, "An American Moment" and other sections that encourage people to get involved in issues that animate them or maybe just bear witness. Behind most of this focused but non-frenetic post-election campaign is Obama Campaign Manager David Plouffe, who, with Field Director Jon Carson, masterminded the primary strategy that nailed down whole contingents of delegates in caucus states, like Idaho, to exceed Hillary Clinton's successes in statewide votes where even a second-place performance by Obama was good for a healthy percentage of delegates.

What's clear is that Obama is attempting to create a permanent, post-election grassroots force. This force, if you read between the lines of the site, will be active not only through the first 100 but the next 1,360 days of the Obama administration. Signups will not just be cheerleaders for the Obama change mission in Washington, but active on the local and state levels in pushing climate-change, health-care reform and other Obama initiatives.

In Lincoln's administration, change was concentrated in his cabinet and in the military leaders he was active in selecting, pre-eminently Ulysses Grant. In FDR's administration, change was more horizontal -- extending from his brain trust and cabinet to the practical-minded idealists who were attracted to Washington, or conscripted, and filled old and newly created agencies. Under Obama, the agents of change will be more distributed -- to the grassroots across America, where hundreds of thousands of citizens who aren't in government and maybe don't want to be, but do want to participate in the transformation of America. Think "democracy 2.0."

Monday, November 17, 2008

Myths about Detroit get a lot of mileage

This "6 Myths About the Detroit 3" answers some of the biggest stereotypes that are continually trundled out against federal help for GM, Ford and Chrysler. While the article comes from the Detroit Free Press, which is often a booster of the auto industry, it is based on facts, not opinion. The piece could have added a seventh myth -- that Detroit is so burdened by union labor costs it can't compete with international automakers who build and sell vehicles in the U.S. In fact, the new two-tier wage schedule, which goes into effect in 2010, will cut production-line costs for new workers in half. GM has also off-loaded its employee health-care costs to the United Auto Workers -- one big reason it needs a bridge loan to 2010.

Any federal bailout of the Big 3 should have tough conditions that ensure Detroit can't backslide to gas guzzlers, and that it continues to invest in the all-electric vehicle. The conditions should be pointed to the future -- where hundreds of millions of people will become first-time car buyers, helping to raise global auto production by 26% by 2014. For sure, the sellers will include automakers in Europe, Asia and Latin America, providing millions of jobs and bolstering the economies of industrialized countries in those regions . Will the U.S. be the odd country out?

Friday, November 14, 2008

Why Clinton is Obama's best choice for Secretary of State

What a brilliant stroke -- Hillary Clinton as (maybe) President Obama's Secretary of State. Clinton, more than any candidate I can think of, is so well suited to epitomize the message of the Presidential Seal --the Bald Eagle brandishing, in either claw, arrows and an olive branch, and betraying no pre-disposition.

There are other qualified candidates -- Sens. John Kerry and Chuck Hagel, pre-eminently -- but none as good, or right, as Clinton. U.S. influence around the world has taken a terrible beating during the Bush/Cheney Presidency. Obama has promised to reverse that record. Clinton, more than any other possible choice, could help him do what Gen. Colin Powell said could when he endorsed Obama -- "electrify the world. "

Obama has indicated he would build a bipartisan Cabinet that included Republicans. Clinton would be stronger proof of his bipartisanship -- and his confidence as a leader who, like Lincoln, was comfortable surrounded by former adversaries. In the hard-fought Democratic primaries, Clinton ran up 17.8 million votes compared to Obama's 17.5 million. Imagine the message of confidence and strength that Obama would send around the world if he chose Clinton.

More on GM and bankruptcy

Jonathan Cohn's "Panic in Detroit" piece in the New Republic is a good explainer on why GM should be saved. Cohn tells why well-intentioned Chapter 11 reorganization could send the automaker into no-exit Chapter 7 liquidation. With reduced production costs from recent two-tier labor agreements, GM will save almost $3,000 per vehicle. But those savings won't materialize until 2010 -- which is why the company needs a bridge loan of $25 billion guaranteed by the U.S.

Global demand for new autos over the next decade is estimated to be about 180 million units. GM needs to be strong enough to keep its approximately 14.5% share of worldwide production, and possibly increase that number. If it can make a global success of its 40MPG Chevy Cruze mid-size sedan (due in 2011), it could increase -- actually recover -- share. Bankruptcy, however its "pre-packaged," will be a brake on that happening.

Thursday, November 13, 2008

If GM is neutered, U.S. won't be a player in meeting surging global demand for autos

In the debate over whether GM should be bailed out or pushed into bankruptcy, I see almost no discussion of the big global demand for new vehicles that will come over the next decade, pushed particularly by fast growth in developing countries (like India and members of the Russian Federation). If GM goes under or into bankruptcy, the U.S. will not be a major player in producing the demand for 180 million vehicles from new owners -- on top of replacement demand. Most of that production will be ceded to international makers. Just think about that 180-million number. Say the average global retail price for those cars is $15,000, which is on the low-low end of current average prices. That comes to $2.7 trillion.

GM's share of that growth, based on its current 20% of the international market (including the U.S.), would be $540 billion -- or $54 billion a year over two decades. Its fuel-efficient, mid-size Chevrolet Cruze sedan (photo above) will be its major entrant in the global market starting in 2011. It will offer 40 MPG. Figure on a price tag north of the current global Chevy Cobalt, which goes for $15,0000-$17,000.

Keep in mind, too, that if GM were able to keep its market share as that growth gains steam, and production transitions to the all-electric auto (which GM finally is totally committed to), it would provide a big chunk of the 5 million "green collar" jobs that President-elect Obama wants to create over the next decade.

Could GM do that with a bailout? It has a shot -- a far better shot than if it is forced into bankruptcy that will prevent it from taking the expansionary steps it would need to take to be a player in meeting the coming global auto demand. asked a variety of quotable people whether they thought federal bailout money should be available to the Detroit Big Three. The only big foot who raised the issue of future global auto demand was Peter Fenn, a Democratic media consultant. Too many of the other quotables were talking off the top of their heads.

Grim economic forecast reinforces need for "big bang" response from Obama

"Beware of those who say we've hit the bottom," says Nouriel Roubini, the New York University economics professor who saw a recession coming back in 2006 when so many other experts were still cheerily optimistic.

The recession will last through 2009, he says, and it will be "U-shaped," with a slight possibility it could be worse -- "L-shaped," like Japan's stubbornly long economic downturn in the 1990s.

Even if Roubini is only three-quarters right (a Wall Street Journal survey of economist sees growth resuming in the second half of 2009), the U.S. better get moving on a strong response. Treasury Secretary Paulson did the right thing in deciding the U.S., instead of using the $700 million in bailout money to buy "troubled assets" would inject funds directly into financial institutions to keep them solvent, and also aid consumers more directly.

But Paulson and the Bush administration should back off from the opposition to using bailout money to save General Motors from bankruptcy. There's a lot of talk about a "pre-packaged bankruptcy," but however it's wrapped and be-ribboned, bankruptcy for the giant automaker would be devastating -- to the entire U.S. economy. As I argued last week, GM has already taken major steps to cut its production costs. What it needs is a bridge loan to get to 2010 -- when the cost cutting takes effect and lowers the private of each GM vehicle by about $3,000. The fragile economy doesn't need a body blow like GM bankruptcy, which would threaten several million auto-related jobs and, possibly worse, imperil the company's ability to create its share of the 5 million "green collar" jobs that is President-elect Obama's 10-year goal. A GM bailout can be tied to conditions that the company be required to meet to become competitive with international automakers.

The U.S. response to a deep recession should also include President-elect Obama's "big bang" reform package, as reported in the Financial Times and flagged on Brad DeLong's blog. That package would push a short-term stimulus to aid consumers and long-term investments for neglected infrastructure, and defer budget-deficit reductions till the economy was beyond the U- and possibly L-shaped recession.

Tuesday, November 11, 2008

Are Republicans "Looking Towards the Future" or the past?

The sorry post-election state of the Republican Party is captured by David Brooks in his New York Times column today. The "Traditionalists," who believe their party lost so big because it strayed from bright red values, will come out on top during in-between election jockeying, Brooks says resignedly. It'll be an indeterminate period of time, he says, before the "Reformers" "build new institutions, new structures and new ideas, and the cycle of conservative ascendance will begin again."

Conservative blogger Hugh Hewitt thinks Brooks' assessment is too Beltway-centric and elitist, and therefore "can't drive a movement or a party."

Jonah Goldberg offers his view in his Los Angeles Times column, "Was George W. Bush a conservative President?"

It will be interesting to see what comes out of the Republican Governors Association meeting this week in Miami. Will there be a healthy debate about ideas -- or will the meeting be dominated by the incandescent Gov. Sarah Palin, who will be on the panel "Looking Towards the Future"?

Sunday, November 9, 2008

Palin is center of GOP gravity, but demographics pull in opposite direction

Almost a week after their party was soundly defeated in the presidential and congressional elections, the Republican faithful is in deep denial.

A Rasmussen poll last Friday has 66% of Republican men and 61% of party women supporting Sarah Palin for President in 2012. These numbers collide with New York Times/CBS polling held shortly before Election Day showing that 48% had a "very negative" or "somewhat negative" opinion of Palin -- way up from early September when adverse opinion of Palin totaled 27%.

It's a long way to 2012, but Palin, for all her negatives, is the gravitational center of the GOP. As she gains more experience and exposure as governor of Alaska, and possibly becomes a replacement for Alaska senator Ted Stevens -- a convicted felon -- Palin may become an even more commanding figure within her party. Her only serious competitors -- at this time -- are Mitt Romney and Mike Huckabee, neither of whom wears the mantle of elected public official.

Some elected Republicans are saying their party has to move beyond the iron circle of the base. California Gov. Arnold Schwarzenegger is urging his party "not to get stuck in ideology," and "let's go and . . . fund programs if they're necessary programs." And here are four Republican governors -- all of them re-elected last Tuesday -- talking about a bigger-tent party, in David Broder's column.

These successful Republicans understand the implications behind this year's returns. The once extensive national pattern of Republican states is shrinking to red patches in the Deep South and the Plains. In deep-red Texas, Democrats are strategizing -- not just dreaming -- about winning statewide elections in 2010. Montana went for Bush 67 to 30 in 2004, but McCain won the state by just 50 to 47 this time. Longtime red states North Carolina and Virginia and Indiana and Ohio all went for Obama.

Driving this transformation are what demographer William H. Frey of the Brookings Institution in Washington, D.C., calls "Melting Pot Metros," fast-growing urban regions where blacks, Hispanics and Asians are or soon will be the majority. In a new Brookings report, Frey and Rudy Teixeira, also of Brookings, say Barack Obama won so big -- 52.6 to 46.1 -- because he "connected the party to potent demographic trends," which Frey mapped in his earlier study. His "Melting Pot Metros" are located in states that are becoming more deeply Democratic blue -- like California and Washington -- or turning from red to purple -- like Nevada and North Carolina.

"Melting Pot Metros" also tend to mirror the so-called "New Economy" metros with large and growing numbers of knowledge workers, who vote disproportionately Democratic.

To avoid becoming the semi-permanent minority party they were for four decades -- from FDR's first election in 1932 to Nixon's re-election in 1972 -- Republicans will have to appeal to steadily growing minorities and knowledge workers. Yet during the campaign, Palin, while appearing at a rally in Greensboro, N.C., said she liked visiting "pro-America areas of this great nation" -- a remark for which she later apologized. Oddly enough, Greensboro is part of the demographic changes favoring Democrats. It went from being 77% white in 1990 to 67% in 2004, according to Frey, and it ranks 45th among the Top 50 in the "Metropolitan New Economy Index" produced by the Progressive Policy Institute. Living up to its Melting Pot/New Economy profile, metro Greensboro voted 59 to 41 for Obama. In 2004, Kerry barely beat Bush 50 to 49 in greater Greensboro.

What do Republicans plan to do about this continuing demographic transformation -- filibuster against it?

Saturday, November 8, 2008

How soon should Obama start trying to emulate FDR?

Some commentators wish that President-elect Obama in his first press conference Friday had been more Roosevelt-like. Joe Nocera, who writes a thoughtful, and diligently researched, business column for the New York Times, asked, "Where Is FDR When We Need Him?" But Roosevelt didn't become President for more than three and a half years after the Great Depression began. Americans were truly despairing when Roosevelt, in his 1933 inaugural address, said "the only thing we have to fear is fear itself." So here's Obama, less than two months after the financial meltdown, followed by the diagnosis of a recession of indeterminate force, making his first media appearance -- more than two months before he takes office. For him at this time to pull out the rhetorical stops would be...erratic. On Nov. 4, American voters demonstrated what they thought of the impulsive responses to the financial crisis that occurred the presidential campaign. Obama wisely chose not to offer up a post-election reprise to what his opponent did.

At his press conference, Obama said, emphatically, about the pace of his economic recovery program: "I want to emphasize 'deliberate' as well as 'haste.'"

Since he won't be President for more than two months -- during which time the financial/economic situation may go through continuing volatile changes -- doesn't this make sense?

Friday, November 7, 2008

Voter turnout: A split decision

Analysts can't agree on whether there was a sizable uptick in overall voting last Tuesday. The Center for the Study of the American Electorate at American University says bullish pre-election estimates were all wrong. The center says the actual turnout will reach between 126.5 million and 128.5 million, which, percentage-wise, would put it close to the 2004 total -- "or, at most, one percent higher." But Michael P. McDonald, the George Mason University professor who runs the United States Election Project at that college, doesn't agree. McDonald has revised his original estimate of 133.3 million voters down to 130.9 million, but that's still appreciably higher than the AU center's estimate.

But both Curtis Gans, director of the AU center, and GMU's McDonald agree that some Republican voters, unenthusiastic about GOP presidential nominee John McCain, shunned the polling booth on Election Day. McDonald goes further, saying his higher turnout estimate reflects "Democrats and African-Americans enthusiastic to vote for Obama."

We won't know the actual turnout total until early December, when, says McDonald, all states will have certified results.

Thursday, November 6, 2008

What's good for GM is good for the country, and vice versa (pace Charlie Wilson)

General Motors drove itself into a deep ditch after a decade and more of bad product strategy. Should the federal government haul it out with a multibillion-dollar bailout?

For both short- and long-term reasons, the answer has to be yes.

Without more federal aid -- the company is seeking $25 billion in loans on top of billions already approved by Congress for retooling -- GM very likely will be forced into bankruptcy. The Washington Post's savvy, Pulitzer prize-winning business columnist Steven Pearlstein contended recently that "pre-packaged bankruptcy" would actually help put GM back on a path to stability. But many experts who follow Detroit closely -- more closely than Pearlstein -- agree bankruptcy would have disastrous consequences -- not just for the whiplashed U.S. auto industry but the reeling national economy. My initial impulse was to punish GM for its bad product decisions. But think back to investment banker Lehman Brothers' bankruptcy in September. More than any other single event, that hasty U.S.-decreed liquidation triggered the financial crisis that went global within days.

Pearlstein argues that a bankruptcy judge could quickly dismantle GM's obligations to the United Auto Workers. But GM has already offloaded $51 billion in retiree health-care obligations, and by 2010 it will start saving billions more with implementation of its two-tier, union-approved compensation schedule that halves hourly wages for production workers and slashes fringe benefits. Together, the two moves lower per-car production costs by close to $3,000.

That cost reduction, plus GM's continuing strong gains in productivity, plus retooling for higher-mileage cars and trucks (including super-hybrid electric "plug-ins"), should, finally, put the company in the same market fast lane as Toyota and other internationals that build vehicles in the U.S. But GM needs a $25 billion bridge to get to the turnaround year of 2010.

That doesn't mean that the federal government should just drop $25 billion in GM's lap. The loan should be accompanied by conditions -- not ones that encourage bureaucratic meddling, but promote the long-term health of the huge auto-related industry in Detroit, the tri-state area of Michigan, Ohio and Indiana, and throughout the U.S.

The conditions should ensure that GM implement its public pledges to pursue fuel-cell propulsion systems and the all-electric vehicle, and, shorter term, accelerate production of a stable of "plug-ins" (beyond the Chevy Volt due out in 2010) that would be transitional to the completely electrified car. The U.S. should also demand that Michigan take immediate steps to increase the number of new state engineering students, which was down more than 13% between 2000 and 2007, as mass boomer retirements were leaving big gaps among those critically important knowledge workers. These conditions should be prominently folded into President-elect Obama's strategy to produce 5 million "green collar" jobs over the next decade.

The demand for cars won't disappear with petroleum reserves. Beth Lowery, GM's vice president for environment, energy and safety policy, says global ownership by 2020 will increase to over 1 billion vehicles from the current 820 million. Many of those extra 180 million vehicles will be "green" ones. Most of them will be produced by international makers if GM goes under or is crippled by bankruptcy. The end result would do far more than mar the prestige of the U.S. as an industrial giant. It would devastate this country's ability to keep its already precarious technological lead as industries and entire national economies struggle to make the all-important transition to a post-petroleum future.

We should be careful that any damning epitaph we wish to chisel for GM doesn't become an RIP for the entire American economy.

* * *
Postscript: For what "Engine Charlie" Wilson, the president of GM who became Dwight Eisenhower's secretary of defense, was famously misquoted saying at his confirmation hearing, check out his obituary from Time magazine.

Tuesday's turnout sets record, with more than 133M casting ballots

The drive to register voters, particularly young ones, apparently paid off. Tuesday's turnout was 133,275,000, smashing the record of 122 million voters set in 2004. Tuesday's turnout percentage of eligible voters -- 62.6% -- was the highest since the election of 1964 -- 62.8%.

Wednesday, November 5, 2008

Obama, JFK, the Chicago riots -- and the two Richard Daleys

To appreciate how much America has changed, look at these two images of Chicago police reacting to groups expressing their political views. The first image (from the Chicago Tribune) shows an officer autographing the T-shirt of a participant during Barack Obama's victory celebration at Grant Park. The second image shows police autographing protesters' heads during a protest outside the Democratic National Convention in 1968 that rammed through the nomination of Hubert Humphrey, who chose to support Lyndon Johnson's prosecution of the Vietnam war against the opposition of many Democratic delegates.

The Chicago mayor on Obama's victory night was Richard M. Daley. Forty years ago the mayor was his father, Richard J. Daley. The current Mayor Daley is a huge supporter of Obama, and helped pave the way for his political success (even while the impatient Obama pushed boldly against the levers of Daley's Chicago machine). Daley's father was a staunch supporter of John F. Kennedy, and unquestionably helped Kennedy squeak to victory over Richard Nixon in the extremely close 1960 presidential election, where Illinois put JFK over the top. Eight years later the senior Daley encouraged the excesses of the anti-Vietnam movement by running the Democratic convention like the boss he was of his city and overreacting to the the Yippies and other anti-war protesters who decided to draw their line in the sand as Humphrey's nomination was rammed against antiwar candidate Eugene McCarthy.

Historians will argue over whether the Boss Daley of 1968 could have prevented the head-crunching protests that besmirched his and his city's name. When I look at the slideshow of the Grant Park Obama victory celebration decreed by his son, I marvel how times could change so epochally within two generations in one geographical space.

Of course Obama is pivotally in the middle of this sea change.

Obama's election and the swing of history's hinge

Last night America stepped into a new era. It was a sure step, accompanied by 52% of voters casting their ballots for Barack ("Yes, we can") Obama. Many forces came together to swing this hinge of history, but the biggest push came from the junior Senator from Illinois who in January will be the 46th President.

For many people, in the U.S. and in other countries, Obama fulfills their so-often-frustrated hopes -- for a more harmonious world, for racial reconciliation, for anything and everything that helps us see that each of us is part of a human community that is as small as our family and friends and big as the world.

In their speeches last night, Obama and John McCain recognized that elemental truth, each in his own way.

Let's hope what they said continues to echo, particularly in Washington, and starting on Jan. 20, 2009.

Tuesday, November 4, 2008

Wall Street's "raging bull" calls for tough reform of outdated global financial system

This is the best proposal I've seen for reforming a 21st century financial system that's regulated by 20th century rules. It comes from Stephen Schwarzman, the high-living founder and CEO of the global private equity firm Blackstone Group. When Schwarzman emphasizes the need for transparency and more and centralized regulation in today's often-opaque system of financial instruments, he knows whereof he speaks. Blackstone, among other things, manages hedge funds, the secretive, little-regulated entities in which the very rich invest ("speculate" might be a better description). Highly leveraged hedge funds are part of the global financial web that's been snapping strand by strand. I notice that Securities and Exchange Commission Chairman Christopher Cox makes a similar case for transparency and centralized regulation in an op-ed article in the Washington Post. But the call for reform means more coming from the Wall Street player who happily describes himself as the "raging bull" of private equity -- Stephen Schwarzman.

Monday, November 3, 2008

The final hours of the McCain-Obama campaign: Closing thoughts

Some last pre-election thoughts:

* McCain was (mis-) served by a team of small minds and hacks who created a campaign cutout McCain who was a pale shadow of the McCain who became an admired national political figure. The cutout McCain chose Palin as VP candidate, did a closely watched pratfall when the financial crisis burst open, and spent the critical last weeks of the campaign throwing futile glancing blows at his agile opponent.
* Obama got a huge boost from the financial crisis, which, following historical precedent, would be blamed on Republicans, including maverick McCain.
* The press was indeed biased toward Obama. It did not, for example, get to the root of how Obama could maintain that he himself had never heard his pastor, Jeremiah Wright, deliver wild invective from the pulpit (e.g., "God damn America!"), even though he sat in the pew of Wright's church for 20 years' worth of sermons (the most damning of them available for purchase in the church gift shop).
* Obama developed and sustained a powerful tax message ("Everybody making less than $250,000 a year won't pay a dime more in taxes") that made more sense than McCain's frantic "Joe the Plumber" message based on the hypothetical huh? threat from Obama's plan to raise the tax on present $40,000 earners when their income exceeded $250,000.
* Obama, whatever his weaknesses in experience, was seen as a young, temperamentally steady leader, while McCain was seen as an old, temperamental maverick.
* The electorate, even die-hard Republicans, was fed up with the Bush administration. Any Republican would have had an enormous handicap trying to overcome that eight-year legacy. Obama couldn't help benefit from the GOP wreckage. But wouldn't any other Democrat, particularly Hillary Clinton, have achieved the same? Maybe. Possibly. We'll never know for certain.

Election Day question: Will mathematical odds prevail over volatile feelings?

The polls point toward an Obama victory. But what if the polls are wrong, asks Slate's John Dickerson. The most famous wrong poll, of course, was Gallup's in 1948, which said Dewey would defeat Truman. But Gallup's last tracking in the 1948 race was more than a week before the election, after which Truman gained a lot of ground and, of course, ended up winning.

Sixty years later, polls are more finely tuned. There are also more of them, and they track opinion closer to the Election Day. Still, Obama has not succeeded in pushing his percentage that much above 50% -- except in the last Gallup poll -- from Nov. 2 -- where he is given a 55 to to 44 lead when undecided votes are allocated.

McCain's problem is that he has to come from behind in so many states that used to be reliably red. Mathematically, the odds are way against him. But the potential for surprising results in this election is high.

Will a Republican base energized by McCain's pick of Sarah Palin as his running mate offset a big turnout by young voter weighted toward Obama? What about the "Bradley effect" where white voters, once they're in the secrecy of the voting booth, supposedly decide not to back a black candidate? Will the disproportionate high percentage of Catholics who are reportedly undecided -- as many as 11% -- tend toward McCain, whose pro-life position mirrors the church's? What if voters who initially leaned toward Obama as the financial crisis exploded, express their swirling fears in a sudden new direction -- toward McCain?

So many questions, for which, before the votes are counted, there are no sure answers.

Friday, October 31, 2008

Some Republicans think about erecting a bigger tent, but...

If Republicans get drubbed in the election, which way will they go? Will they keep trying to energize their base -- or will they return to the "big tent" approach that prevailed in the Reagan years? In a new piece, Kimberley Strassel, the Wall Street Journal's Potomac Watch columnist, argues for the big tent -- or at least a bigger tent.

Some other Republican thinkers -- like David Frum and David Brooks -- are saying the same thing, but the passionate believers who rally the base aren't yielding. They are already preparing to hoist SARAH PALIN IN 2001 banners.

Ideologically, the GOP is going through the same agonies that gripped the Democrats after their New Deal-Fair Deal-Great Society big-government programs didn't work in an America whose aspirations were increasingly middle class and geography increasingly suburban.

"Joe the Plumber" incantations will rouse the Republican base, but they don't address problems like how to dig out from a financial crisis that circles the globe, re-energize the U.S. economy and create more winners than losers (like auto workers) and enact an immigration law that balances strictness with openness. That's just for starters.

Sadly, John McCain came to the presidential race with a political history that suggested he would enlarge the GOP tent. But he shaped his campaign to appeal to the base. Why such a political maverick would have made such a conventional move is puzzling. As Washington Post columnist Anne Applebaum said in her "Why McCain Lost Me" piece earlier this week, McCain is no die-cast base politico. Maybe he went with the base because he felt he had to keep proving himself to the diehards who were cool toward him -- until he chose Palin.

If the election goes as the polls are forecasting, the Republicans will not only have to decide which direction to go in -- hunker in with the base or build a bigger tent -- but who will lead them in the struggle to a solution. If Palin is leading the base, who will be her opposite?

Thursday, October 30, 2008

Obama talks to the "undecideds"; can McCain match him?

The Obama 30-minute infomercial was a shrewdly spent $4 million worth of campaign money. Its primary target was those "undecideds" who probably amount to less than 10% of the electorate, but because of the tightening race, may truly decide who will be the next President.

The main vibe I picked up from the show was that Obama is a guy who doesn't get rattled easily, if at all, even when the subject is what he calls America's biggest economic challenge since the Great Depression. With many Americans feeling the pangs of panic, those who tuned in or watched replays had to be struck to the calmness and steadiness that Obama projected.

With less than five days of electioneering left, the McCain campaign will have to act fast to make a counter-appeal to the undecideds. It'll have to be better than the "socialism" label that GOP ads have tried to pin on Obama. It should be woven around McCain -- why this war hero and courageous senator is the best person to be President in these dark times. It's a powerful message, but it may be too late to deliver it.

Tuesday, October 28, 2008

In polls, Obama's blue line keeps going north, and McCain's red line south

It's easy to get carried away by polls when they seem to back up what you wish for. Still, I was struck by the uniform pattern of state polls trending for Obama, as compiled by Real Clear Politics. In 12 "battleground" states, polling charts show a consistent pattern -- Obama's blue line rising and McCain's red line falling. Sometimes the blue line flattens out, but since September, in all 12 states -- including GOP strongholds like North Carolina and Missouri -- it never yields to the red line. Even in Indiana, which Bush won by more than 20 percentage points in 2000 and 2004, the blue line is now on top, albeit slightly (46.8% to 46.5%).

To find battleground states that are still polling for Bush, you have to go to the West or Deep South, but in some of those -- Montana and Georgia in particular -- Obama's blue line grows stronger.

GOP bloggers like Hugh Hewitt cherry-pick the rare national poll that shows the presidential race tighter than the composite of state polls, which typically are based on more respondents. There are also the warnings, like this one aimed at the mainstream news media, that voters might "pull a Truman" on Nov. 4 and leave the polls looking like confetti on the convention floor the morning after.

There is still a week left in the campaign, and McCain and the GOP could unleash a multi-megaton accusation at Obama aimed at suddenly reversing the steady upward path of that blue line. After Bill Ayers and "spreading the wealth around," what might that be?

Monday, October 27, 2008

With Stevens now a convicted felon, what will reformer Palin do if he won't step aside?

So Ted Stevens, the longest-serving member of the U.S. Senate, is now a convicted felon. The Republicans are being ground down by an amazing string of bad luck. Stevens can appeal and keep his case going for several years, during which he could probably continue to serve in the Senate, assuming he wins on Nov. 4. While the Democrats are hungry for as big a Senate majority as they can get, they might prefer to see Stevens choosing to hold on by his finger nails -- a desperate act that could turn off undecided voters everywhere, not just in Alaska, and move them toward Obama and Democratic congressional candidates on Nov. 4.

Sarah Palin is in yet another predicament in her short national political life. If Stevens decides to keep running for office despite his conviction, will she -- the acclaimed reformer who took on her own party in Alaska -- oppose that decision? If she says no to Stevens, she's got a good chance of turning his scandal into a net plus for her party --and for her and her running mate John McCain's chances in the White House race.


Saturday, October 25, 2008

A Republican warns Republicans, but is anyone listening?

How McCain's post-convention campaign strategy -- to re-energize the deeply conservative GOP base -- is wrecking not only his chances but those of many incumbent Republican members of Congress is mournfully laid out in this Washington Post op-ed by David Frum. Author of the recent book "Comeback: Conservatism That Can Win Again," Frum is resigned to the Democrats capturing the White House, but he thinks it's not too late for his party to hold on to enough of its Senate seats so it can thwart what it considers the worst of Democratic tax-and-spend legislation.

Even Democrats might see the wisdom in their party not controlling Pennsylvania Avenue from one end to the other. But with about 10 days remaining in the campaign, will McCain and GOP strategists step back from their suicidal march that could cost them what should be secure Senate seats in North Carolina, Minnesota and Oregon? It's possible Republicans could even lose their contested seat in bright red Georgia.

Talking about what he'd do if he lost, McCain said no problem, he'd just go back to Arizona and be a senator again. But if he and his party keeps pushing the campaign to the base-pleasing right, some of his colleagues in the Senate may not be able to do the same.