Could we get some Clarity amidst the Chaos?

"God grant me the serenity to accept the things I cannot change;
courage to change the things I can;
and wisdom to know the difference..." Reinhold Niebuhr's "Serenity Prayer

Despite the fact that this quote has been repeated in AA Meetings across the country, it seems apt these days for all of us (recovering alcoholics, or even recovering credit card debt-compilers), in a world of chaos, confusion and fear. The idea that there are forces and events in this world that we cannot control must be conceded. But there are individual things that we all can change, and for the better. This should give us all hope that better days lie ahead, and that we all can do little things to help make that happen.

But we need to listen to the fears, understand them, and begin to deal with them in such a way that doesn't paralyze our ability to function as an individual or a society. It's a scary prospect these days. There's a lot of insanity out there:

• American Icons of Finance--Citibank, AIG, and Bank of America are on the verge of Nationalization (in other words, the government is going to have to step in and take over the bank, save it, and at some future date, privatize it again...).
• Doomsday pundits--I have a ton of respect for the Nouriel Roubinis, Peter Schiffs and Nasim Talebs of the world. They have been calling for sanity in the economic markets for years, and are now enjoying the spotlight for having seen these events coming. I commend you all. But the time for basking in the glow of your brilliance has come and gone. It's time to start to share your plans for how to help rebuild a saner financial system.
• International Chaos--Eastern Europe is in full-fledged Depression. Western Europe has to bail out the banks that hold their debts as well as bailing themselves out. Latvian leaders have declared their economy "dead". Poland is totally in debt to Switzerland. Russia has had to defend its currency to the brink of bankruptcy. And Asia isn't any better. Taiwan and Korea have had runs on their currencies. Japan's GDP shrank by double digits last quarter. It makes you wonder if ANYONE (other than perhaps CANADA) has skirted the shores of economic disaster.
• US Government TARP, TALF, and Fed Backstops--Debts, Spending, and guarantees in the $7 TRILLION range are scary in and of themselves. The notion of an unfunded liability in Social Security and Medicare in the $40-60 TRILLION range over the next 50 years is just about incomprehensible.
• CPAC--This year's CPAC convention may be the "jump the shark" moment of the Conservative Revolution. And America may finally be waking up to the idea that for too long, we have been following leaders who have been making important national decisions based upon a few economic, foreign policy and social "theories" (the Laffer Curve, Foreign Strength through intimidation, the Government can legislate personal behavior, etc) that are draconian, and in many ways, favor the rich over the fiscally sensible, the strong over the weak, and the majority at the expense of the minority. CPAC has thusfar been a series of speeches that have provided no alternative path, no interesting ideas, and a series of "sideshows" that would make PT Barnum blush. When you have Joe the Plumber, Tucker Carlson and Michele Bachmann making the headline news of the day, and Rush Limbaugh is delivering the keynote speech, it's time to take a serious look at the inner workings of the movement.

It's enough to lead someone TO drink (hence the Serenity Prayer above!). But in the process of deteriorating into oblivion, there have been some positive developments, that should serve us well, should the world rediscover some sanity...

• Credit sensibility--it has been good to see that people are taking this economic free fall as an opportunity to reduce their credit card debt. Building an economy on credit debt is not the same as building it on Credit. That concept has finally sunk in with people.
• Budgets--The idea of looking at individual spending, taking advantage of things like coupons, savings deals, and even cooking at home, rather than eating out. Americans may be figuring out that they can still enjoy themselves, and spend less. What a concept.
• Investing in America--The Government cannot make the economy and financial system work on its own. There are many factors out of their control, set in motion, that need to work their way through the system first. But making key investments in the technologies and sensible decisions on where American's priorities are, is a good start. To that end, the existing budget decisions, while expensive and disconcerting to some, also represent a hope that America can emerge from this crisis stronger, and competitive in the new economy of the 21st Century.

This brings me back to the original quote--that we can't control what is going to happen in the economy, but we can control how we each deal with the situation, and hope that our leaders are making decisions to help us be competitive, as things start to stabilize.

Everyone knows the lines above, but the next three lines of the Serenity Prayer are even more appropriate to the current economic situation:

"Living one day at a time;
Enjoying one moment at a time;
Accepting hardships as the pathway to peace..."

These are words for all of us to live by.

How do Republicans Take Back the Congress? One seat at a time...

Finally there appears to be a sign of sanity in an otherwise insane political stance being taken by the Republican Party. John Cornyn has taken his NRSC post seriously, and is on the hunt for Moderate Republicans to run in moderate districts. It is his hope that the Republican party can make a return to power in the Congress.

All I can say is, "it's about bleepin' time!" Let's take a look at the political ravages of the party, shall we?

In 2004, the GOP had 55 Senators, up to 230+ Congressmen and Women, as well as a sitting Republican in the White House. And not just any Republican, but a CONSERVATIVE President, who would go along with just about any spending or social bill put in front of him, as long as it came from Bill Frist and Dennis Hastert.

Fast forward to 2009. The GOP has 41 Senators (lucky to have that), 178 Congressmen and Women, and the best representation of their Republican party in the Executive branch is Sec. of Transportation, Ray LaHood (former GOP Congressman from Illinois). At LEAST 4 of those Senators are retiring, and a half dozen Congressmen have had enough. Bravo to GOP leadership on recruiting and campaign strategy!

How did the GOP get here? How did the "Party of Lincoln" become the "WHIG Party"? Heck, even the Lincoln Mantra has been stolen by this Democratic President!

I can hear the cynics now. "...same thing happened in 1992, and by 1994 we got the House back, and just 6 years later, we got it ALL back!" But the 1994 election had other factors involved, including a tired, 40 year Democratic reign at the top, with old and weak leadership, and a realignment of the South that had finally reached its pinnacle in the mid-term elections that year. Try as they might, the GOP, during their recent 12 year reign on top, never really got the kind of stranglehold on the Senate that Democrats had enjoyed in the years preceding, nor did they ever get the kind of Republican numbers in the House that the Dems currently enjoy. Even George W. Bush never got the kind of election mandates that Clinton, or even Obama currently have.

But during these past years, the Conservative Right took the opportunity to exploit a tiny majority, and use it to test all aspects of the Reagan and Laffer philosophy. Taxes, Government, Supreme Court, Foreign Policy, etc. As the Hard Right took over more aspects of the government, ideological purity was demanded, and any attempts at pragmatism, or expediency were dealt with in harsher and harsher terms. Loyalty was the only currency left with the administration, by the end.

The Republican Congress started to realize this during the run up to the 2006 elections, and tried to find ways to save themselves. But by then, the momentum of a Country fed up with budget deficits, jobless expansion, a "lack of wealth" effect, foreign quagmires, Katrina, Harriet Miers, Corrupt Executive officials outing CIA Spys, and firing US Attorneys who wouldn't toe the political line; it was all too much.

Once the economy and stock market fell, that was the last straw. People from the right of center, to the center, to the left, all looked around, and said, "is there ANYTHING in my life here that is better than it was 8 years ago!?" Who could blame them for wanting to vote for the guy offering a message of hope, rather than the old guy yelling at you to "stand up and fight"?

But that's all history. It's time for the GOP to take a good, hard look in the mirror, and figure out what to do about it. I would offer a word of advice (for any Republican willing to listen). John Cornyn has the right idea, but if you can get over this stubborn adherence to ideological purity at all costs, the Congress is there for the taking in 2010. How do you get there? Well, one seat at a time. But more practically, you get there by taking back the portion of the electorate that was thrown away by the Bush loyalists--running Center and right of Center candidates.

I will make my case this way--Arlen Specter has been a loyal Republican for years, and has faithfully served his state, his party and his country as the Senator from Pennsylvania. While having a solidly Republican voting record, he has broken with his party on social issues at times, and has most recently broken with the party in his vote for the Budget Stimulus package.

My question is this--given today's Republican Party, would Specter ever have been able to even RUN for Senator? The party has spent the past number of years recruiting more and more conservative candidates, and the country just can't get behind these people who are espousing the very ideology that has led the country to where we are today.

25-30% of Americans are stridently Conservative, and probably about 50-75% of those are the Limbaugh "dittohead" population. The problem is that a good percentage of the party has some independent thought on topics as far ranging as fiscal responsibility vs tax cutting, immigration, energy independence, abortion rights and social issues, and on and on. A party demanding ideological purity drives many of these folks to the other alternative, or keeps those people home on election day. Let's look at it, region by region, shall we?

Northeast--Why can't a Republican win in the Northeast these days? Because the only Republican left in these areas is the "Rick Santorum" model. The stridently social conservative in a land of steady habits, free thinking, and Liberal Social positions. Why not try to recruit politicians more like Chris Shays, Susan Collins, or (dare I say?) Arlen Specter? As Cornyn has just noted, "I'd rather get someone in the Congress who will vote with me 80% of the time, than [never]"

Mid-Atlantic--For the most part, same as the Northeast, but there is certainly no reason that Virginia and North Carolina should be turning blue so fast. Fiscal conservatism is a plus, but what about someone without the snake tongue of an Eric Cantor, George Allen or Virgil Goode? Certainly, in Allen and Goode's cases, they had no business losing those elections, but for their very foolish comments. In both cases, it was a situation where the right politician for the right district tried SO hard to embarass the competition, that they shot themselves in the foot. The issues, social AND fiscal, are on your side. Time for Brand R to start winning BACK some of these seats already.

Mid-West--Why is this such a hard place to win? LOWER TAXES ALREADY! Enough with the Social Agenda. Get people working again, and they will let you put the 10 commandments on the walls, Life Sized images of Bill Buckey on the flagpoles, and declare every Friday Ronald Reagan Jelly Bean day.

Mountain West--Why not a sensible play to the Libertarian nature of the region? Immigration policy that makes sense, water rights laws, and someone with a human touch should help. Bob Schaffer had all the common man touch of Nelson Rockefeller. The Democrats learned this lesson, running candidates like Brian Schweitzer, Dave Freudenthal, Mark Udall, and the like. These guys could all pass for Republicans, if the GOP could accept something other than total ideological purity.

West Coast--Sensible Education and Immigration policy should help. And for crying out loud, how about a few fiscal conservatives who are not SO Conservative on social agendas? If you EVER want Republican representation in the state again, you have to look for more people who act like the Governator (Arnold). I know his name is like death in the GOP circles these days, but that is the kind of Republican you are going to need, if you EVER want a return to the reigns of power. The alternative is Governor Feinstein, and Senator Pelosi. Now tell me who you'd prefer--Arnold or Pelosi? Yeah, I thought so...

In the end, there are 250 seats that the Republican party can reasonably go after in 2010. But they have to accept a few hard truths. If you want John Boehner and Mitch McConnell driving policy, you are going to have to plug your nose, and accept a few more Olympia Snowes and Gordon Smith's in the party.

There's finally a Republican in the Senate who has looked up from the herd. Let's hope it's not too late.

Obama-1, Jindal-Zero

Last night was the first "State of the Union" speech (not its official name, since the President doesn't give a State of the Union in his first year, but I digress...) for our new President. As a political junkie, I spent the night watching all of the coverage before, during and after. Many things were noteworthy about last night, but one specific concept kept resonating in my head that was impossible to shake: the contrast between President Obama and Bobby Jindal's speeches. The difference in their messages and delivery was so blatant, so stark in its contrast, that it overshadowed everything else for me about the night.

Obama delivered a speech that addressed the issues of our time--the economy, health care, education. Topics that have been ignored for far too long in this country. Issues that are finally pushing the wedge issues (the small-minded issues) to the side, like Immigration, Marriage Amendments, "Move-on.org" Censure proposals, etc. It was a message of (what else?) hope, of shared accountability, and motivation. It was a message to America that better days lie ahead, which is something we haven't heard much of recently. (He also appears to be able to pronounce the word nuclear, which makes me and my wife very happy, but that's not really important right now...)

So far, the worst comments I have seen on the speech have been Michelle Malkin calling it a snoozer, and the National Review's Rich Lowry worrying more about how the speech may actually shift the country's perceptions on the expanded role of government.

If that's the best the far right has to offer, it's about as lame as it gets. But that's only half the story. The second half of the night was even worse...

In the most unenviable position, Bobby Jindal was selected to deliver the Republican reaction to Obama's speech. Jindal has been crowned the rising star of the Republican Party, and on the short list for the next GOP Presidential nomination in 2012. But from the beginning, it was a delivery that made me long for the speech-delivery prowess of John McCain.

The first thing that struck me, even before he opened his mouth, was the almost childish appearance of Jindal, walking out, much the way President Obama had during his earlier press conferences. It appeared as if a choreographed scene, meant to evoke images of a future president, were set up, but the crowned prince showed up, wearing a diaper. Jindal looked like a kid, wearing dad's suit, trying to play big shot on tv. Remind you of anyone?

But despite my initial reaction, I was intent on listening to a potential future national leader.

Jindal began his speech benignly enough. Pleasantries were extended to President Obama, and his historic election, and ascendancy to the Presidency. But the tone, and the rhetoric just started to slide from word one, and never got better throughout the entire speech.

Jindal made references to how government had failed the people of Louisiana during Katrina (never mind that his Party was in charge at the time), how fiscally responsible Louisiana had been since he took over (not tying this fact back to anything relevant), how Republicans had "gone along" with irresponsible spending that had led to a large federal deficit (not noting that it was in fact the Republican party that had been in charge and spent that money to create the deficit in the first place), and how he was eternally optimistic, despite all the doom and gloom we were hearing from Washington (tone deaf to the speech just delivered by the President).

In short, Jindal delivered the old line GOP response about cheery optimism in the face of the evils of government. All he didn't do was try to channel images of having a wife named Nancy, and a vision of defeating the Soviet Union. This was, in retrospect, a man trying to deliver a Ronald Reagan, circa 1982, speech, without the actor's charm, or any perspective on the reality of today's world.

The pitch of the two speeches couldn't have been more starkly different. Obama addressed the issues of the day head on, with determination, and a rallying cry that we are not a nation of quitters. Jindal's speech tried to make big government the enemy, made a mish-mash of mea-culpas about the GOP party, and explain why the "other guy's" speech was short sighted.

If this is the picture of our choice of leaders going forward in this country, I think I can breathe a sigh of relief that we dodged a bullet on this one, electing a leader who can inspire us to be better. Score--Obama 1, Jindal ZERO.

Economy--How do we fix this boat?

I finally threw in the towel (along with the shorts, sunblock, and sandals) this week, and headed to Hawaii, to get away from all the negative economic news. Just took the week off. But I still couldn't totally escape the news of the economy.

As it turns out, though, long flights, and tropical paradises are a good way to take a step back, and start to evaluate things. I read 2 great books, and 3 great magazines on what is happening, and I think I have started to come up with a workable solution to the economic solution.

The good news? Obama's team is starting to make the moves to get there. The bad news? He needs to step up the speed of delivery.

The OVERT Issues:

• People are losing their jobs
• The Stock market is dropping
• House Values are dropping

The COVERT Issues:

• Consumer Confidence is shattered
• Toxic assets are killing bank's ability to lend

What to do to fix it:
For the past few months, we have been focused on the right issue, but the wrong side of the issue. The Obama plans are a first step to addressing the issue, but don't go far enough. Here's what I mean.

Our banking system is in this mess in part because of the securitization of mortgages into Collateralized Mortgage and Debt Obligations (CMO's and CDO's). What does this mean? It means that the banks you used to trust your mortgage to, no longer actually service mortgages. They simply package up the payments that you make, into a fixed income product, that they can sell in the open market. Other banks and financial institutions buy these securities, and hold them as assets on their balance sheets.

The problem comes in when determining what these products are actually worth. If I am a financial institution, and I bought a package of someone else's mortgages (which is really what a CMO is), I may have paid $100 for a single CMO "security" or "bond". I expect that it will pay me back a rate of, say, 6% over the next 5-10 years (the average life of a mortgage).

What is happening, is that the bank that made all those mortgages (the initiator bank) get their monthly payments (interest and principal), on the first of the month, and "pass through" those payments to the CMO "packager", or the institution that bought the mortgages and sold them in a CMO, to me. That pass through happens around the 15th of the month. The initiator bank gets to earn interest on the money being passed through, and the packager skims some of the interest as well, leaving me with my 6.5% interest payment each month. All is well, as long as everyone makes their mortgage payments, right?

Unfortunately, not everyone is making their payments these days. "...but Mr. Pundit", you may ask, "aren't foreclosure rates still REALLY low, like 3-4%?". I would respond, "you are absolutely correct, but the increase in foreclosures from 1% to 3% is in fact a 200% increase, and is causing two major issues:

First, the number of defaults increasing so much, and so rapidly, is causing fear and concern in the overall market place.

Second, and most importantly, the ability for a secondary market to buy and sell these securities has completely frozen. There is NO activity, no buys, no sells, other than companies SO DESPERATE to move these securities, that they will take any price. Why is this important, you ask? Because without a functioning market, there is no way to value these securities. Without a way to value these securities, these bank's auditors are forcing companies to write down the value of these securities to the lowest possible values. In other words, they are being valued at "fire sale" prices.

Put another way, I may have a brand new, Plasma television that I want to sell on eBay. I know it's worth $2,000, but if I HAD to sell it tomorrow, to, say, bail my wayward brother out of jail, and the best bid I could get for it was $300, guess what I have to value the television at? $300. Is it fair? In reality, it's really the only way to get a true market price these days.

The same thing is happening in the market place. There are trillions of dollars floating around in these "CMO's", and there is no real market place to buy and sell them. Everyone is worried about the underlying value of the bonds. With no functioning market, companies are being forced to value them at rock bottom, and unrealistically low prices. This is killing the bank's ability to loan money, since they have to use all of the TARP, and other fed funds to simply improve the asset reserves they lost in this horrible valuation write down.

So Hank Paulson started with the idea of simply buying up these terrible assets from banks. The idea makes all the sense in the world. After all, if there is only a 3% default rate, then 97% of the assets the federal government buys will make money. That's an incredibly successful investment.

There's only one problem with the logic. What do you PAY for these assets? Valuing a CMO isn't like putting a value on a 2004 Chevy Malibu with 50,000 miles on it. You have to determine the probability of future cash flows in an increasingly deteriorating housing sector. That sounds a little like trying to catch the wind in your mosquito net. As Paulson and his pal Neel Kashkari found out this fall, the task proved to be much more difficult than just giving banks money to lend.

But pushing dollars out to banks is a little like trying to fill up Lake Michigan with a garden hose. A bank that has lost $100 Billion in asset valuation isn't going to start lending just because the federal government gave it $25B. Especially if it sees mortgage default rates rising 300%, and unemployment rates going higher.

So what's a Fed, and a President to do?

Instead of looking to solve the problem at its end point, let's try to solve it at the beginning point. Focus less on the mortgage provider, and more on the Mortgage PAYER. How can we guarantee more of the payments going into these securitizations will pay off? Well there are a few things Obama and Geithner can do. Some they are already doing:

1. Keep "upside down" mortgages paying, through a mortgage cram down, and renegotiation--many people who have the capacity to pay their mortgages are walking away from their debts, because they are "upside down". In other words, they paid 10% down on a $200,000 house ($20,000), that is now worth only $150,000. They now owe $180,000 on a $150,000 house. For these people, it is easier to walk away from this house than to keep making payments on an investment that is under water. Obama's plan is to renegotiate these mortgages with the banks down to $150k, to give people incentive to keep paying. This could fix PART of the problem.

2. Allow ALL credit worthy investors to renegotiate mortgages at 4%. This, in my opinion is THE way to solve a few problems at once. First, it allows all of the good creditors, who are paying their mortgages on time and in full, to put as much as a few hundred dollars A MONTH back in their pockets. Second, it allows default rates on many of the mortgages in these CMO's to decline, and increases confidence in the securities. Third, it gives the market a better opportunity to evaluate the underlying value of these securities, and in many cases, can be an INFLATOR of valuations, back to the point that banks will be more capitalized. In essence, it is a "split the difference" solution.

3. Message to the Treasury--Start picking winners and losers. Save the winners, nationalize the losers. Yeah, I said it. Nationalization of some banks. It's going to have to happen. Save JP Morgan, Wells Fargo, Goldman, Morgan Stanley, and Nationalize Citibank and AIG. Bank of America is a toss up. This is Geithner's plan. But it is going to need to be evaluated soon. I think you try steps 1 and 2, and immediately. Step 2 should give the markets a boost, and could lead to enough euphoria and additional cash flow, that some of the economic problems take care of themselves. Step 2 should act as a shadow tax cut, and will reward those people most fiscally responsible. Not a bad way to make government work for you, eh?


In the end, I think this is where the Obama team will end up. They don't want to be running banks, and now that they have their initiatives moving (green technologies, SCHIP, infrastructure, etc). A healthy economy should give them the kind of political capital that would allow them Reagan-like carte blanche in the years ahead.

Republican or Democrat, who wouldn't want a better economy, more money in their pocket, and reduced dependence on foreign oil? Sounds like a winner to me...

Health Care Debate--What is so great about our current system?

I will start this out by saying that I don't know what the right answer is on Health Care. But I am in favor of Universal Health Coverage. Is that a Single Payer? Government-assisted Private coverage? I have some thoughts, but I'll get to that. Primarily, though, I want to debunk a few arguments that I keep hearing about from people who are against changes to the existing health system:

1. I have to wait to see a doctor--I love this myth. This notion that ONLY in the USA can you be afflicted with anything from the sniffles to imminently life-threatening stab wounds, and see a doctor INSTANTLY. As if emergency rooms don't exist in England, France, Russia, Brazil, etc. ONLY IN AMERICA.

I love people who say "I don't want to have to wait in line to see my doctor". I'd like to know who THEIR doctor is. I tried to get a physical from MY doctor in the USA. I have to wait 3 months. If I got shot in the leg three times, I could get right in, but for something non-life threatening, I have to wait forever in the US. So my question to those people who can get in to see their doctors faster for a routine check up is this, "what's wrong with your doctor that he/she has the capacity to see you at any time?"

The fact is, I wait for health services IN THE USA TOO! This notion that Universal Health Care will take away some fantastic efficiency we currently have, is nuts. The problem is, most people have been listening to this argument for years, to the point that they just nod their heads and say "yeah, I don't want to have to wait for a doctor..."

2. My taxes and costs will go up--Really? You sure about that? Let's take Canada as an example. Let's say I make $100k. Good salary, eh? What's my tax rate? About 36-43% (depending on which Provence you live in). Pretty high, eh? Okay, let's consider that my US Taxes would be about 30% (25% Federal plus 5% State, on average). So there's about a 6-13% additional tax rate, or a $6-13,000 benefit to the good citizens of the USA.

Hey! That's money in MY pocket. Now I can go out and find the best health care coverage! I have as much as $13,000! Only one problem. Average cost of health care for a family of 4 in the US? $12,000, and going up. Co-pays? I have a wife and two kids. I incurred about $3,000 in incidentals, co-pays, etc. last year So am I really making out here? Okay, I am willing to concede that this one could be a PUSH for younger, and perhaps even middle-aged people. Anyone on medication, or needing regular physician care should really start to look at these cost comparisons...

3. I don't want to be like Canada--So, I suppose that the only choice we have in the whole world is either the US model, or Canada's model? Why not the French model? It's the most popular in the world. Most people in France say they like their health system, and they don't seem to be struggling for doctors, new techniques, or the newest drugs. What about the Swiss? Their model looks more like what states like Massachusetts have done, with a federal mandate over purchasing health insurance, and covering the costs of amounts individuals cannot pay. Perhaps England has a model to copy.

And do we REALLY understand what Canada's model is anyway? We hear stories about people not getting in to see doctors, but let's look again at question 1 above. I personally hear stories about people in the US who can't get in to see their doctors too. Is that really a unique thing to Canada? Is it really better now in the US model?

4. Companies won't make as many drug breakthroughs--I love this one. So Pfizer is going to stop doing research on its newest drug to cure cancer because it can't charge 3X what it did before for a pill of Viagra? And since when did Universal health care include discussions on regulating the cost of prescription drugs? Personally, making a buck on the back of someone not having the ability to see a doctor when they are sick just doesn't sound very humane to me. We didn't like it when gas hit $4/gallon, everyone was suffering, and Exxon posted a gazillion dollar profit. Why is this one different? So Merck would stop spending on R&D? really? Because I thought that companies that made $10B in profits, and spent $2B on R&D may be able to take a haircut on profits, without cutting into R&D. But that's just me.

But hey, I'll concede this point too. Drug company price regulations could be left out of the bill...for now.

5. I don't want government controlling my health care decisions--How much control do you really have over these health care decisions now? Is anyone proposing that the Government take control over health care decisions? There have been no new powers of the Government proposed. And besides, in today's system, no one is forcing you to see certain doctors, only in certain networks, or demanding you to get referrals for certain types of illnesses to specialists, only to not cover the costs, because you forgot to fill out the claims forms in triplicate, using your middle initial on ALL THREE copies, are they? Oh wait, I forgot. You have an HMO...

6. I won't be able to see MY doctor--see point 5.

7. I'll be paying for someone Else's health coverage--This is the true American-style, "me first, I don't give a crap about anyone but myself" kind of attitude that just makes me so proud. If you can promise me that you will NEVER need a doctor for a surgery, procedure, drug, never get cancer, pregnant, Alzheimer's, or have a child with Asperger's syndrome, then you can make this claim. And I mean EVER. But for the rest of you, what do you think happens when you need a week in the hospital for care? Or two days for a baby delivery? SOMEONE ELSE'S PREMIUMS are paying for part of YOUR stay. That's the whole idea behind insurance.

Why do you think premiums are so high right now? Because for the 50-60 million Americans not insured, but going to the hospital anyway, YOU are paying for part of that.

I am not suggesting that Hospitals turn those people away. But if those people had basic health care, they could go to doctors and get check ups like everyone else, or visit without going to the emergency room, and run a lower cost.


In the end, health care coverage will probably look like the Massachusetts model. Everyone will have some form of it. They will pay for it privately, and without attaching it to Company employment. The Feds will have to help with a government pool for people who the private companies won't cover (smokers, cancer survivors, etc). It will probably lead to an increase in taxes, a leveling of, or slower increase in premiums, and a reduction in the fear of getting laid off and losing coverage.

In the end, that's a bargain I can live with. What I can't abide by, though, is this complete distortion of the facts on the news shows on the health care debate. I am willing to engage people on their points of view. But if anyone tries to give you one of these arguments, be sure to smack them on the back of the head for me?

Has Obama found his Inner "Sun King"?

"Le etat...c'est moi" (Louis XIV)

As usual, I find that History, Caddyshack, and Seinfeld usually provide the most striking parallels to modern day news and politics. In this case, Macbeth's musings about life also seem to be most appropriate to describe the recent Congressional battles. Full of "Sound and Fury, signifying nothing." In the end, this bill was going to get passed. The Republican Party took a calculated risk, putting up the roadblocks, and rhetoric it did, but they knew in the end, blocking passage of a Jobs and Spending bill, in the middle of the economy going over a cliff, would ensure their position as the modern day "WHIG Party" for decades to come. The American electorate would never allow such actions to go unpunished in the next election round.

But the most obvious takeaway from yesterday was that the President awoke from an apparent hibernation, and discovered that the Democratic Party was indeed, him. No one else from his party was going to make an effective argument that this Stimulus bill was necessary for the country. And when left to their own devices, it is clear that the Democratic Party in the House and Senate is truly bereft of leadership, and was simply unable to deliver a clear message on the merits of a Stimulus Package.

So what was left was a small, weakened Minority Party, emboldened by a lack of coordination and leadership on the opposing team, to play bigger than they really were. As the past 10 days or so wore on, the Republican Party saw this as an opportunity to find their voice, and start to rebuild their brand.

Unfortunately, what they also found was that the country was watching, and their stories of how partisan the politics were, did not fit the fact pattern of Obama spending time on Capital Hill, negotiating the bill in good faith with both parties. The stories of no important tax measures was belied by the fact that over $200B in tax cuts were clearly laid out. The tales that Republican Congressmen and Senators were spinning were simply contradicted by the facts.

Don't believe me? How do you explain Lindsay Graham complaining that the President was "AWOL" on the Senate Debate, while President Obama was making a one-on-one visit to Republican Senator Susan Collins (ME) to discuss the Stimulus bill that SAME AFTERNOON? Apparently, he also visited with Olympia Snowe the same day. I guess there's another appropriate quote here, "Who are you gonna believe, me or your lyin' eyes?" The polls indicate that people are starting to believe their own eyes, for a change. Obama, and even Congressional Democrats enjoy popularity far and away above those of Congressional Republicans. The actions of both parties over the past couple of weeks are a clear indication of why.

Despite all of the complaining and whining, this bill was still passed by over 60% of Congress in both chambers. The fact that no Republicans (save 3) voted for the bill doesn't change the fact that, indeed, this bill passed both chambers by wide margins.

And so, Obama, not content just to have a narrow victory on this matter, set forth to make the point to Republican leadership. "I am the President. I have Majorities in both Houses. I will get my Legislative agenda passed. You can either bicker, and get NOTHING, or you can meet with me, and we can discuss some of your ideas, and build them in". He did it because someone had to. He did it because he is the President. He realized yesterday that, in his attempts to be President of the whole United States, he forgot that he was still a Democrat, and his party still needed leadership. His leadership.

One of the more interesting things that Obama himself may have learned yesterday, was just what a bully pulpit the Presidency is. When he speaks, people listen. And it is a far cry from being one of 100 Senators, going on Face the Nation, to make your case. Let's see if the new President can capitalize on his new found understanding of the lay of the land in Washington, and his place in it.

Stimulus--What would be good for US?

We are hearing lots of noise about the Stimulus Plan--too big, too small, too much spending, not enough spending, too many tax cuts, not enough tax cuts, etc. etc.

What should we be shooting for? How about a bill with some built in accountability for the institutions and measures that can truly help us. What do I mean by that? Here's what I mean.

Instead of asking how much the bill will cost, let's try defining the problem, and putting forth the potential solution for it. Here's an example:

Problem one: Housing. And this is a multi-layered issue. How do we get excess capacity sold? How do we get mortgage rates affordable again? How do we get mortgage balances in line with depressed values?

PragmaticPundit Thoughts: The goal here is to get existing inventory sold, get valuation stabilized, and get people out of foreclosure or upside-down mortgages. How do we address this? Here's a few thoughts:

• Mortgage Rates--The idea of setting fixed mortgage rates at 4% for refinancing, or even lower for first time home buyers is one that really NEEDS to be tried. Banks should tighten up their lending practices, to be sure. But there are a lot of good credit risks who have been sitting on the sidelines, because refinancing right now isn't cost-beneficial to them. Republicans have put this idea on the table. Time to take it seriously.
• Upside-down mortgages--this idea is out there a little, but would help immensely! Allow people who are upside-down in their mortgages to apply for a federal program to bail out the loan to an assessed value, and refinance the home amount at a 3.5% 30 year fixed rate. It will cost the tax payer, but so will many of the other stimulus plans. And this plan has a chance to keep millions of home-owners in their homes, and banks receiving payment. After all, a bank getting a $500/month payment on a reduced-value home each month beats the bank pushing to maintain its $1,000/month payment on an upside down homeowner, and receiving nothing. I think there's an Aesop fable about this concept (something about a dog, a stolen piece of meat, and a reflection?). John McCain put this idea out there, and people laughed. That was October. Now it looks like something that could work.
• Incentive to homeowners to buy--The current proposal of an up to $15,000 tax relief for home buyers is a good start. Are there other initiatives HUD or others can think of, to try to get people to buy up remaining inventory? I'd love to hear a few.

Problem two: Lending. How do we get Banks to lend? How do we get people to take entrepreneurial risks in a market like this?

PragmaticPundit Thoughts: TARP is somewhat key here. Additionally, lending practices are important. I have been trying to think through the different ways banks can get to a place where they are willing to take on risks, in a recessionary, deflationary environment. Unfortunately, there are really only two options that seem palatable. One is to stick it out, start behaving more like a local thrift store, and take on more local, more stringent loan requests, and attach more strict repayment terms and conditions. The other is to take TARP money, and be willing to take on some more risk, but know that "big brother" is looking over your shoulder. Sorry, but there isn't a "best of both worlds" for the banks anymore. No one in their right minds would give the banks, say, $350 Billion and not demand any accountability for the decisions the banks may make for deployment of the funds. Well, maybe someone would...

Problem three: Personal Saving. How do you encourage people to save? How do you get them to pay back debt faster? How do you instill a discipline in people to manage their money effectively?

PragmaticPundit Thoughts: This is such a counter intuitive argument. "how do we get people to spend, but at the same time, how do we get them to save?" But saving and proper household budgeting is really the only way to rebuild the American base of proper fiscal responsibility. I hate to think it has to come at the expense of a robust economy in the short term. But we should be thinking about tax incentives, and yes, interest rate increases, to encourage savings, and give people a feeling that they are getting their fiscal house in order. The increases in returns should give people a psychological lift, make them feel richer, and more inclined to go out to dinner one more time this month than they would have otherwise. In our economy, that may be all it takes.

Problem four: Infrastructure. How do we fix roads, bridges, utilities, broadband?

PragmaticPundit Thoughts: This has to be initiated by the federal government. This is spending that is palatable to both sides of the aisle, and is in the stimulus bill. But it is way too little in dollar terms. Here is an opportunity to modernize, do it in an environmentally friendly way, and create jobs and wealth. Let's step on the gas here. Hundreds of billions of dollars could be spent here. Let's figure out how.

Problem five: Jobs. How do we find ways to save jobs that exist? How do we find ways to create new jobs that will expand over time, not decrease?

PragmaticPundit Thoughts: This could be a tax incentive solution here. Small and large business tax rates are high, and could stand to come down some. Additionally, tax credits for environmental spending (ie., buying hybrid car fleets), or a corporate investment income tax holiday, could be ways to encourage capital investment in the future. I am always interested in hearing other ideas. The tax breaks, and encouragement of capital spending would both be beneficial to job growth.

Problem six: Energy. How do we provide it to our people in a way that is cost effective, doesn't require us to grovel at the feet of foreign, hostile nations, and can be distributed to our people in a modern power grid?

PragmaticPundit Thoughts: we have to create alternative energy solutions. But how? For starters, what about more aggressive efforts to put LNG or electric cars on the road? It creates the need for coal-fired energy plants? For the short term, let's pick our poison. We need to get off of foreign oil. Let's do that. But you can't get off of Foreign oil for transportation, or heating needs, without getting off of domestic oil too. So we need to get these other technologies up and running (wind, solar, tidal, nuclear). and we need to give home oil heaters incentive to switch to Natural Gas, or electric. If we can get oil demand down further, we can continue to put the screws to the international leaders who are our worst enemies. There is nothing in an international negotiation like leverage. $10/barrel oil is leverage. All tax incentives I mention here should be on the table in this stimulus package. And investments in these technologies need to be there too. But I'd like to see some accounting for the results. Can we measure how much less oil we need through such measures? Can we count how many homes come off the oil standard for heating each year? The American people would love to see that their efforts are contributing to something better...



Wow! Lots to fix. Can this Stimulus package handle it all? Probably not. But I'd like to think that we as a country could find ways to be sure that all of our spending in this and subsequent bills, helps us towards addressing the problems we face today. It's what we must demand of our leaders...

Moderates Finally Show Some SPINE

All I can say is "it's about time, dammit!".

For too long, we have suffered under the weight of ideology and extremist positions. From both sides. And this Stimulus package has been the embodiment of partisan positioning on both sides.

The problem, of course, is that neither side sees their actions as contributing to the problem. Nancy Pelosi sees her actions to shut out Republicans in the deliberations of the bill as "the way it works" in the House. The idea that Education spending could be cut from this bill (even though many Republicans even concede that they would vote for an increase in Education spending in a future bill, just not here for a specific stimulus) seems to have roiled Pelosi. I understand that someone needs to champion these causes, and she has the platform to do just that.

But why not use the platform to champion such education spending in a separate bill, to be judged on its own merits? What, Education can't be fit into the Congressional docket for 2009? Seriously? Doesn't she create the legislative schedule, after all?

It's equally bad on the Right. Frustrated, and out of power, Republicans have simply become what they say they didn't want to be. The Party of "NO". John McCain's actions here recently have just been so troubling. To excoriate Centrist Senators like Collins and Specter for their willingness to make a deal just shows what a small, bitter man he has become. The "Maverick" has shown himself to be simply a Partisan hack, who has been exposed as an opportunist, rabble-rouser, "part of the problem" player, and one who no longer deserves a seat at the leaders table. And what a shame too. To think this could have been a man to contribute to the solution. Ditto for Lindsey Graham. To say that Obama has been "AWOL" on this discussion, is to ignore the facts. Obama and his team have spent their entire Presidency, and transition phase, doing nothing BUT working on this plan. Reaching out to Republicans the whole way. Does Graham think he has true credibility to make such a statement at the same time that Obama is MEETING with Senators like Susan Collins-Republican of Maine? It looks terrible, but then again, Graham has spent a career taking unprincipled stands (remember his pushing for impeachment of Bill Clinton, but pardoning of Scooter Libby for the exact same offense?).

But just as I was giving up hope, a ray of sunshine came through the clouds, and has given me something to cling to. At work on Thursday, I saw a familiar face on TV. It was Ben Nelson. This guy has a voting record that some Republicans wish they had. I was just waiting for him to say something bad about the bill. When he said he was working with Susan Collins and Arlen Specter on an amendment to pass the bill, I knew there was a chance. I was skeptical, but curiously interested. Sure enough, a couple of days later, here we sit, with a tentative agreement. And a delighted Pundit.

Admittedly, I am STILL skeptical. The bill hasn't passed YET. But I do have hope. Collins, Nelson, Olympia Snowe (R-ME), George Voinovich (R-OH), Mel Martinez (R-FL), and a few others hold the key to success on this bill. Dems such as Kent Conrad (ND), Blanche Lincoln (AR), Evan Bayh (IN), and even Joe Lieberman (I-CT), need to start to step up and face the reality that their little working group holds the key to a functioning legislative body that could truly save America. Obama could take a page from George Bush, and try to ram it through with the Dems he has. But I think he neeeds to work with a group of Senators that have been ignored for too long. After all, legislative battles still loom. Anyone up for a Healthcare debate next?

Yesterday's actions could signal the fact that this group of Senators has finally realized that this is their time to step up and lead. Senate rules just don't allow a purely partisan bloc of votes to hold sway over all policy discussions. Not without 60 votes, anyway. And perhaps that is a good thing. For too long, we have allowed ideology to rule the roost. Obama has taken the first step, by showing that he wants to lead ALL of America, not just the Democratic Party. The actions of the Senate Moderates have shown that perhaps enough of the Congress recognizes it has to pull together to succeed, or die on principle. I say, Amen to that. Let's try winning again, for a change. It's been a long time.

How to Survive on $500,000 a year

A Bank Executive's User Guide To Surviving a Government Bailout:

So. Barack Obama is going to cap salaries for any Financial Institution receiving a TARP Federal Bailout at $500,000. Seriously? Who does this guy think he is!? Where does he think this is? Albania, circa 1985?

Since Mr. President doesn't seem to understand how IT IS in the REAL WORLD, let's look at how YOU (Mr. Bank Executive) can SURVIVE on just $500k per year. Impossible, you say? I beg to differ. Just follow some of these tips, and you are sure to muck through...somehow.

#1--Teach your spouse to Drive: You can get rid of that driver. It may be a little tough at first, insuring the Rolls Royce. And you will face the possibilities of the missus putting a scratch in the fender. But think of the costs you will save. It will be a true hardship, but we'll get through this if you are brave...

#2--Save costs by having your mistress move in: This one is pure genius. Think of the cost savings. No 5 star hotels to put your mistress up in. No additional jewelry purchases. She and the wife can share. Her using the guest room is optional, I guess. She may even prove to be a good substitute to the nanny. She's certainly a cheap alternative to actually having to take care of your own children. You can even cut down on the expensive dinners you have to take her out on. If you have two mistresses, imagine the cost savings you could employ. Perhaps one of the mistresses even knows how to drive!

#3--Purchase a lawnmower: Landscaping is pretty expensive. Bonus points for a rider. You can teach your children to help you in your efforts to figure out how to start it.

#4--Toughen up your calluses-Use the washer/dryer: I know it's a lot of buttons to push, but washing your clothes means that you could wear them again. I know the concept of wearing clothes a second time is blasphemy, but hey, now that you are poor, you can't afford to be buying a new wardrobe EVERY WEEK! Let's start by dropping the shopping sprees to once a month.

#5--Skip the trips to Gstaad, Cannes, and Grand Cayman: I hear the Jersey Shore is wonderful in the Summer! Think of all the new people you can meet, and pal around with! Just be mindful of those potholes on the Garden State Parkway (fortunately, it's winter right now. In reference to point #1 above, you have MONTHS to learn how to drive in New Jersey! Think what an adventure being poor is!).

#6--Commercial flights go just about everywhere: Consider First Class (let's not get hasty here!). You may find it surprisingly comfortable, despite those pesky lines and security checks.

#7--Denny's Grand Slam Breakfast: No great words of wisdom here. I just happen to think it's a great meal, at a great value. A viable alternative suggestion here is "Moons over my Hammy!"

#8--Other Serious Cost Reduction ideas: Cut down on the trips to Scores to only once every OTHER week. That should save about $100,000 a year right there. Ladies, you could scrape by without that trip to Aspen this winter, right? Seriously, you HATE those other trophy wives anyway. And it's cold there. Really!

Whew! It seems almost impossible, doesn't it!? At this rate, the trust fund will be dry in what seems like just months!

But don't worry. This is just a starting point. I am sure others will continue to contribute ideas as to how to cut corners, scrimp and save, and somehow...with a little luck, and gumption...YOU TOO could survive on just $500,000 a year!

(note, I wanted to thank my friend, Regis Philbin for his contributions to this article)

Where is the Political Center!?

Many people had hopes for this new administration. Hopes that things would change. Everyone had their own definition, though of what "change" really meant. For me, as I have said before, it was the hope that change would be in the leadership mentality of leading from the extremes, and start to lead from the middle of the political spectrum.

So far, Obama has proven to be pragmatic, and look for ways to work from the middle. But the Congress has been brutally partisan--ON BOTH SIDES. And the Party apparatuses have been even worse. My question is this: Why are all the party leaders SO extreme on both sides?

From the Left:

Nancy Pelosi--How about having a couple of amendments from Republican lawmakers be considered? Perhaps there could be a modicum of civility as well? Republicans have ideas. Yes, I recognize that the Democrats won the election, and have a large majority. But people are hurting. Leading the country without input from the 46% of people who disagree with you is a bad idea. For the sake of a few meetings, and a few amendments, some Republican support wouldn't kill you, would it? After all, we all saw the results of Bush and Delay leading the Congress with an iron fist. Where are they now? Do YOU want to end up there in 4 years?

Harry Reid--ditto for you. Obama seems willing to meet with these guys and discuss ideas. Would it kill you to do the same? Make it public. Let the world know you are reaching out. Honestly, I can't understand how this guy can lead the MAJORITY PARTY in the Senate.

Senate Seats being treated as family heirlooms--What did you think the country's reaction would be to the notion that the Delaware and New York Senate seats were being "held" for future runs by Joe Biden and John Kennedy's children? It smacks of "elitism". One thing the parties never seem to learn is that these types of behaviors just kick sand in the face of the opposition party. And it opens you up to looking terrible, which is exactly what has happened.


From the Right:

Rush Limbaugh--What's dangerous here is that Rush has now become THE figurehead of the party. People now associate the Party with Rush, and his policies. The problem is that Rush is too Conservative, too polarizing, too negative, too nasty for too many people. He's no leader. And he would say the same. He sees his role as cheering from the sidelines, and influencing the leadership. But he has been running the risk here, of putting himself too much into the action. Criticism is much easier than effectuating policy, and being held up to scrutiny by the masses. This guy has created more issues than he has solved, and it won't get better, the more we hear from him.

John Boehner/John McCain--Is putting out press releases, or petitions to vote against the stimulus bill, the way to craft better legislation? It makes you look partisan, petty, and like you are the problem not the solution. Every time I see John McCain, he looks smaller, angrier, less like a leader. It's really a shame. He can be so much more. Boehner has led his group into the Minority, and if he isn't careful, will lead them to even smaller numbers. Wake up, and start getting your ideas across without sounding like a 15 year old girl ("Oh...my...god...")

Sarah Palin--Do I even need to address this? Why is she still even on the radar screen? This is someone smart enough to be a real force in the party, but has been intellectually lazy, incurious, and has been relying on her looks, party talking points, and obvious opportunities, to promote herself up the ranks. Honestly, it's pathetic. I don't know who looks worse. The Republican Party that has so few bright spots that they look to this C- candidate as a hopeful, the Media, who sees her as a curiosity, as someone who could provide laughs to the masses at any point, or the hordes of American "Joe 6-Packs", who couldn't care less about her ideology, but just like seeing her on the screen. DO us all a favor. Go back to Alaska. Either take politics seriously, and come back, or just continue on with your self-styled slogan "Coldest State/Hottest Governor". I am tired of it. Your 15 minutes are almost up.


Honestly, between the Left and the Right, we could really use some people in the middle, working things out. Perhaps we will see some leaders emerge in the Congress from the middle of the aisle, who are willing to take the best ideas from both parties, and do what's right for America. I suppose that's my HOPE. I'm not holding my breath...

Could someone PLEASE pay their TAXES!?

Good GRIEF! It's no wonder we have a budget deficit here!

Perhaps it is time to think of adding a few questions to the people vetting candidates. Questions like "Have you paid all your taxes?"

Economy--ITS NASTY OUT THERE!

It's getting nasty out there! Everywhere I look, everything I see tells me things are "different" then they were before. And not for the better. I can now get a seat on the Commuter Rail to NYC. I can get a coffee at Dunkin' Donuts at 8am, with NO LINE. My friends tell me their commutes are easier, their dry cleaning comes back to them faster. They are all telling me that layoffs are either imminent, or hitting their companies NOW. All of this does NOT bode well for the economy. I am not looking forward to the new Economic data for January. It seems like a TON of people have been laid off.

And the next two weeks will tell the tale. As public companies start releasing their 2008 financial results, this is THE time they will be announcing their plans to downsize, or sell parts of their business, or lower their guidance for the foreseeable future. I am starting to hear folks like Bill Gates, and Newt Gingrich say that this is a 4-5 YEAR problem, which would rival the Great Depression.

I have been trying to figure out what it will really take to get out of this morass. The truth is, I don't know. But here are some thoughts on the matter:

1. It won't get better for at LEAST 6 months--that is going to be the time that companies can assess the impact of their current downsizing. At that point, I am hoping, against hope, that companies start to stabilize, as they start to gain some clarity on their upcoming sales cycles. Keep in mind, this is BEST CASE.

2. Commercial Mortgage, and Alt-A securities still have a ways to go on the downside--this can be stopped, but not without some major financial pain. We may need some government intervention, perhaps pushing mortgage rates down to something unbelievable, like 3%?

3. Unemployed people + no job opportunities = desperate people--I am concerned about crime rates, bank runs, depression, failed states, increased terror risks. These are extreme concerns, to be sure. We aren't there yet. But we are getting closer.

4. Entitlement/Health Care Crisis--This is already here, but could become a full fledged nightmare over the next few years. 2011 is coming, and with it, the Medicare rolls start to swell. Social Security goes into the red. It all makes you wonder. "What were we doing to prepare for the storm all those years up until now?"

It's not a pretty picture. I am not going to suggest that we can't overcome each of these issues. But the first step is to consider the worst case scenarios, and take steps to avoid the potential doom.

To start, we need to take bold action. What is this bold action? Not sure. But half measures won't do. If we want to cut taxes, we need to be AGGRESSIVE! Cut Corporate Rates in HALF. Cut all income taxes 5-10%. Or give people a $3,000 per person rebate.

OR

Stimulate spending. BY A LOT. I am talking $2 Trillion here. Or bail out the banks ENTIRELY. At this point, I am getting less and less married to any ideology on what will work, and I am starting to become open to the idea of trying ANYTHING that sounds plausible.

These half measures have been tried. If you want to know how it turned out, ask anyone living in Japan. Oh, and ask them how they feel about their economy. Then duck.

Don't agree with me? Think I need to chill out? Just wait until we get the economic news for January, and the employment figures. I don't need the Fed to tell me what I see every day. It's getting NASTY out there!

2010 Congress--Are Republicans looking at a THIRD Stinging Defeat!?

Say it ain't so! We aren't even TWO WEEKS into the election cycle, and already, Republican House and Senate seats are up for grabs. To hear about this amount of attrition so early in the cycle has got to be demoralizing for a party that seemed to get some swagger back last week (with the unanimous "NO" vote on Obama's stimulus package).

Let's take a look at the carnage, shall we?

Senate:

The map is already brutal for Republicans. Mel Martinez (R-FL), Sam Brownback (R-KS), George Voinovich (R-OH), and Kit Bond (R-MO), have already announced they won't seek re-election. Add to this the possibility of others announcing the same (Chuck Grassley-age, David Vitter-sexual escapades, Arlen Specter-age and health, Jim Bunning-age and lack of fundraising), and still more sitting Senators facing other challenges (Judd Gregg-liberal state and Obama offer of Cabinet job, Richard Burr-state trending blue, poor fundraising), and there are all the makings of a THIRD Republican bloodbath.

None of the Democratic seats are nearly as vulnerable, and it would take a further worsening of the economic times, and a true lack of leadership (or heaven-forbid, further terrorist act) to stem the tide. The Republican Senate caucus is a mess, and is showing few if any signs of improvement. Few prominent Republican leaders are stepping up to run in these states, and the ones who are have age issues (names like Warren Rudman in NH--he's 78 years old), or are extremely partisan (Roy Blunt--Missouri)

House:

Already, names like Roy Blunt, Jerry Moran, Todd Tiahrt, Gresham Barrett, and Zach Wamp have come out and said they are seeking other offices, or other employment, come 2010. Now Adam Putnam's announcement that he will not seek re-election comes as a surprise, as Putnam was considered a real star in the party. The common thread in most of these announcements is that these are all folks from the South and Mid-west, and mostly deep RED areas of the country. But what does it say that these folks have had it with the Congress? Being in the minority stinks, without a doubt. But getting back to leadership doesn't happen when your party has to spend all its time and money figuring out how to win seats it should have had in the bag. Putnam hurts bad, and really takes some of the wind out of the Party's sails.

In all, a further deterioration of the economy will probably bode well for Republicans. But not if they don't get their act together, and come up with something more substantive than tax cuts, and saying "no". If they aren't careful, and the stimulus WORKS over their objections, they will truly be the Whig Party, come 2010.

Note to Obama--START THINKING BIGGER!!!

At this point, as we start getting more details about the pending stimulus package, it seems that the common response to the issue is this: "It is NOT bold enough." Democrats argue that the spending is not going to be commensurate with what is truly needed. Republicans argue that the tax cuts are not sufficient to stimulate the economy. In some respects, I think they are both right.

Pundits like Jim Cramer are saying that the infrastructure spending proposed in this bill is woefully inadequate. He points to the slump in industrial and building company stock prices, post Stimulus announcement, as a sign that the market doesn't like the Bill.

On the other end, GOP leader Rush Limbaugh has been issuing edicts to the GOP to try to get more bold tax cuts into the plan, such as a halving of the business tax rates from 35% to (I suppose) 17.5%. And a one year moratorium on the Capital Gains tax. He is even willing to concede government spending that Obama wants (although I would suspect he will continue to rail against whatever spending he doesn't approve of).

I don't think the capital gains tax cut idea is a winner. Giving someone a tax cut on $0 gains is kind of like giving Paris Hilton a free weekend stay at any Waldorf Astoria in New York. It sounds great until you realize that she owns the hotel.

On the other hand, slashing corporate tax rates could be an idea to ponder. Here are a few more:

1. Increase funding for Amtrak--By a LOT. $5Billion to lay the high-speed tracks. I can hear the howling already. "They haven't made a profit in years. They can't do anything right". But they have never been funded properly. And it is shameful that they can't build the track to allow the Acela to run from Boston to New York, to Philly, to Washington, to Atlanta at high speeds. Make them competitive with flying on price, and take a bite into the daily spending on foreign oil for the air flights between those cities. Every bit helps!

2. More funding for Domestic Energy programs--Wind, solar, tidal. Whatever we have put in, we need more. Let's be real here. There is a way to get this done. A commitment to using wind in the plains states, and Solar power in the desert southwest alone (even without an improved electricity grid) would reduce our dependence on foreign oil. Can we at least TRY this? With a REAL effort?

3. Opportunity for refinancing at 4%--here's the attempt to get some of the mortgage train wreck fixed. Let's reward the people who did it right, with an opportunity to refinance, and put money in their pockets. At the same time, let's save those who can be saved with a decrease in mortgage rates. Let's get cash in the hands of people by reducing their monthly debts. This could also help to start wiping out excess inventory.

4. Infrastructure, Infrastructure, Infrastructure--Broadband, Water, Bridges, Public Transports, new auto and truck fleets that run on LNG, Electricity--This is all part of the Stimulus package, but is there enough of it? Can we make a real effort to make this happen over the next 10 years? Will we look back in 2019 and see a better America in these areas? Will we still be driving cars that run on gasoline, at 15 MPG?

5. CAFE Standards--on that point, isn't it time to follow California's lead on this? Let's make a real dedication to getting off our habit of foreign oil. I have written in the past that every 5 MPG improvement can save us 4-5 days of foreign oil. I was saddened the other day, when I walked through an Acura dealership, and saw brand new Acura TL's, getting 16-22 MPG. It was truly disheartening. That is a car that should get 35 MPG. End of story. I am troubled that the auto makers are not taking a lead on this. I am actually thinking that this may be a case for America to lead the way. Ford and GM have moved their fleets above 30 MPG, and perhaps this is a sign that American cars could survive after all.


In the end, I am not against tax cuts, and I am not against spending. I am against trying to do one at the expense of the other. And I am against a small-time effort. It's time to go big or go home, here. It's time to give game-changing ideas a kick in the seat.