GOP Will Show Us the Money

GOP Super PACs and related groups are planning to spend $1 billion between now and November to fight for the White House and Congress.*  That’s not including Mitt’s campaign and the Republican National Committee, which expect to throw another $800 million into the pot.

Groups related to our friends the Koch Brothers, like Americans for Prosperity, had planned to spend $200 million, but, what the heck, they’ve decided to increase it to $400 million.  That money will be spent convincing Americans to vote against their own economic interests and for the interests of billionaires instead.  If you’re a middle class American, things do not go better with Koch.

Karl Rove’s groups American Crossroads and Crossroads GPS are expected to spend $300 million.  Now he’s an Evil Genius with overflowing coffers, definitely a dangerous combination.

Where does this leave President Obama and the Dems?  Outspent by two to one.

* “GOP groups plan $1 billion blitz,” Mike Allen and Jim VanderHei, Politico

Both Obama and Mitt Face “Friendly Fire”

When you’re running for president, you focus on winning each day by getting your message out and trying to knock your opponent off his message.  If you win enough days, you win the election.  Every distraction is a day (or days) lost.

It’s one thing to take hits from your opponent, that’s going to happen, but it’s inexcusable to take hits from your own side, and we’re seeing that with both candidates.

President Obama has had to waste valuable time dealing with pundit Hilary Rosen’s reigniting of the “mommy wars” when she said Ann Romney hadn’t worked a day in her life.  Rosen is an obnoxious  loudmouth, a slightly more refined version of Rosie O’Donnell.  Obama has had to waste valuable time dealing with Newark Mayor Corey Booker’s defense of Bain and private equity, Booker’s effort to feather his own nest for a statewide run with Wall Street money.

Now Mitt is going through the same thing with Donald Trump and his birtherism, which takes the spotlight off of Mitt and puts it on the Donald, which is all Trump really cares about.  Every day wasted talking about where Obama was born is a day Mitt loses lying talking about how Obama is handling the economy.  Like Booker, Trump is out for himself, he is not a team player.

If you lose control of your message, you lose control of your campaign.  If you lose control of your campaign, you lose the election.

If they hope to win, both Obama and Mitt need to lose the surrogates who are sabotaging them.

Why Is Press Giving Mitt a Pass?

From “The Morning Plum:  Stop letting Mitt Romney off easy,” Greg Sargent, The Plum Line:

“So Romney will now go back to claiming Obama subtracted jobs. But there’s a new twist: Romney will claim that the effect of the stimulus has been to destroy jobs. As it has in the past, the Romney camp will justify this by pointing to a bogus metric — the net jobs lost on Obama’s watch. That includes the hundreds and hundreds of thousands of jobs lost before the stimulus went into effect. Really: The Romney camp’s claim is that we can calculate that the stimulus destroyed jobs overall with a metric that factors in all the jobs destroyed before the stimulus took effect. That’s not an exaggeration. It really is the Romney campaign’s position. It’s time to ask Romney himself to justify it.

“The Romney camp will also begin claiming that Obama has “never created a job.” Will anyone ask Romney about the two dozen straight months of private sector job creation we’ve seen?

“And if Romney is now going to start hitting individual stimulus projects, it’s also time to ask him what he would have done if he had been president in January of 2009. He has previously said positive things about stimulus spending. Are those no longer operative? Would Romney really not have proposed any government spending to stimulate the economy when it was in free fall? What would he have done instead? This question is absolutely central. How about asking it?”

The Great Unraveling

Yesterday the “risk premium” for ten-year Spanish bonds versus German bonds grew to 5.1%, the biggest difference since the euro was born.  The divide between Spain and Germany, and not just on bond rates, grows wider each day.

Solutions exist — euro-wide deposit insurance, like our FDIC, to stop bank runs; euro bonds as a parallel system to country-specific bonds that would offer lower interest rates, but also lower risk.  Merkel said they are studying euro bonds, but that’s like when we were small and our parents said, “We’ll see.”  “We’ll  see” always meant no.  Solutions delayed are simply solutions denied.

No one knows where or how this will end.  I think what we can predict is that economic events will overtake political leaders.

This is the moment before all hell breaks loose.  It’s frustrating to watch the moment slip away.  A controlled crisis is always better than an uncontrolled one.

 

The Fair Thing Isn’t Always the Right Thing

A “Grexit” may be the fair thing, but it may not be the right thing.  It may be cutting off the nose of Greece to spite Europe’s face.

From “The Fairness Trap,” James Surowiecki, The New Yorker:

“This [a Grexit] isn’t an outcome that anyone wants.  Even though a devalued currency would make Greece’s exports cheaper and attract tourists, it would do so at a terrible price, destroying huge amounts of wealth and seriously harming the country’s G.D.P.  It would be costly for the rest of Europe, too.  Greece owes almost half a trillion euros, and containing the damage would likely require the recapitalization of banks, continent-wide deposit insurance (to prevent bank runs), and more aid to Portugal, Spain, and Italy….  That’s a very high price to pay for getting rid of Greece, and much more expensive than letting it stay.

Rationally, then, this standoff should end with a compromise — relaxing some austerity measures, and giving Greece a little more aid and time to reform.  And we may still end up there.  But the catch is that Europe isn’t arguing just about what the most sensible economic policy is.  It’s arguing about what is fair.  German voters and politicians think it’s unfair to ask Germany to continue to foot the bill for countries that lived beyond their means and piled up huge debts they can’t repay.  They think it’s unfair to expect Germany to make an open-ended commitment to support these countries in the absence of meaningful reform.  But Greek voters are equally certain that it’s unfair for them to suffer years of slim government budgets and high unemployment in order to repay foreign banks and richer northern neighbors, which have reaped outsized benefits from closer European integration.  The grievances aren’t unreasonable, on either side, but the focus on fairness, by making it harder to reach any kind of agreement at all, could prove disastrous.

“The basic problem is that we care so much about fairness that we are often willing to sacrifice economic well-being to enforce it.

“You can see this in the way the U. S. has dealt with the foreclosure crisis.  Plenty of economists recommended giving mortgage relief to underwater homeowners, but that has not happened on any meaningful scale, in part because so many voters see it as unfair to those who are still obediently paying their mortgages.  Mortgage relief would almost certainly have helped all homeowners, not just underwater ones — by limiting the spillover impact of foreclosures on house price — but, still, the idea that some people would be getting something for nothing irritated voters.

“The fairness problem is exacerbated by the fact that our definitions of what counts as fair typically reflects…a ‘self-serving bias.’  You’d think that the Greeks’ resentment of austerity might be attenuated by the recognition of how much money Germany has already paid and how much damage was done by rampant Greek tax dodging.  Or Germans might acknowledge that their devotion to low inflation makes it much harder for struggling economies like Greece to start growing again.  Indeed, the self-serving bias leads us to define fairness in ways that redound to our benefit, and to discount information that might conflict with our perspective.  This effect is even more pronounced when bargainers don’t feel that they pare part of the same community — a phenomenon that psychologists call ‘social distance.’  The pervasive rhetoric that frames the conflict in terms of national stereotypes — hardworking, frugal Germans versus frivolous, corrupt Greeks, or tightfisted, imperialistic Germans versus freewheeling, independent Greeks — makes it all the more difficult to reach a reasonable compromise.

“From the perspective of society as a whole, concern with fairness has all kinds of benefits:  it limits exploitation, promotes meritocracy, and motivates workers.  But in a negotiation where neither side can have what it really wants, and where the least bad solution is as good as it gets, worrying too much about fairness can be suicidal.  To move Europe away from the brink, voters and politicians on all sides need to stop asking themselves what’s fair and start asking themselves what’s possible.”  Emphasis added.

 

 

GOP Wants to Repeal Obamacare, Kinda, Sorta

If you ask Americans if they like Obamacare, a majority says no.  But if you ask about the components of Obamacare individually, they say yes.  They like kids being able to stay on their parents’ insurance till age 26, they like insurers being required to cover those with pre-existing conditions, and they like eliminating the “doughnut hole” for seniors’ prescription drug coverage.

What’s interesting is that the GOP now seems to be coming around to the same point of view.  As we await the Supreme Court’s decision on Obamacare, the GOP is backing away from outright repeal.  More and more Republican voices are speaking out in favor of the specific provisions I mentioned above.  A big split is developing in the party over this, which makes it hard for Mitt.  He’ll go anywhere you tell him, since he has no real convictions, but here he’s being torn in half by his own party.

The GOP says they want the Supreme Court to find Obamacare unconstitutional.  But then they’d be forced to confront their growing divide, and one faction would lose and be angry in a presidential election year.  Be careful what you wish for.