The election of Scott Brown to the United States Senate has been the sexy political story of the week, but it’s also a reminder to the Democratic party — and President Obama — that “change” doesn’t come without a fight. For the past year, Obama and the Democratic leadership have been far too conciliatory in their efforts to govern.  Reagan Revolutionaries — fueled up on a heady mix of Randian certainty, (Leo)Straussian political theory, von Hayek economics, evangelical Christian social conservatism, and a right wing media coalition of AM talkers and Fox News Channel — have, for decades now, been at the storm front of their efforts to remake America in their own image.  The presidency of George W. Bush demonstrated the limits of that ideology, and with the election of Barack Obama, the vast majority of the electorate connected with his message of change and projected their hopes (and votes) on him to bring about something other than Bushworld.

The issue of health care was a key concern among Americans during the 2008 campaign (still is, despite all the hoopla about “41″ being the magic bullet killing “Obamacare”).  Back in the post-glow of the presidential election, the thought that we here in the colonies would finally get health care that was affordable and universal meant many things to people.  Mostly, I think people where excited by the thought that 1/6 of their paychecks weren’t going to 1/6 of an economic sector that, in some states, had a near monopoly over health insurance. Yes, there are 40 million people without insurance, but for many of those who have health insurance, it’s a world where each year you’re almost guaranteed to see your rates go up, your co-pays go up, and a level of care hampered by a private bureaucracy. People complain about taxes, and vote for candidates who promise not to raise theirs. But rarely do we see people voting to stop the rate of inflation on our health insurance.

In a way, it wouldn’t matter if Obama tried to create a health care plan like the Clintons did back in the ‘90s, or, like he chose to do, sketch some broad goals, and let Congress create a bill that took in the variety of goals and voices represented in both houses.  Both methods of trying to reform the system meant that the opposition to such change would not go quietly into the night. And that’s exactly what happened.  Republicans, and their conservative allies with deep pockets, threw tons of money at opposing Obama at every chance they could get.  What did they have to lose? They were already a minority party who could say the most crazy-ass things on TV, radio, the Internet, or print, with very few people calling them on their shit.  Indeed, the more crazy they were, the more media time they got. Sure you could watch Jon Stewart featuring a parade of wingnuts, see him shake his head and make a snarky remark, but then surf over to CNN, Fox News, or even the Big Three and see them taking up the topic of “death panels” like they were covering intricacies of the moon launch.

So Scott Brown wins and the big message is that it’s a political game changer. Well, it’s certainly going to make Obama’s job tougher in Congress, but how did that “filibuster-proof” majority in the Senate work out for Obama?  It didn’t seem to stop Republicans from all the delaying tactics that kept the Senate in session almost to Christmas, nor did having clear majorities in both houses keep the bill from being watered down to the point where it hardly seemed like reform at all (Hello?  Remember the deals with insurance companies, Nebraska, Louisiana, and unions?)  Personally, I think Obama and the Democrats in Congress need this kick in the crotch. They need to be passionate about their politics the way Republicans are passionate about theirs.  They need to energize the people who voted for them and remind them that if they don’t make demands like the people who oppose the reforms Obama are trying to make, the president is going to cave and chart a middle path between center-right and hard right. In short, the Democrats (both elected officials and voters) need to be clear on what the Democratic party stands for.  With Republicans, they have their message down (even though for the last 8 years, their party has not walked the walk), but the Democrats?  What do they believe in?  Part of the problem is that the party is made up of a loose affiliation of groups that are not united around an ideology. Another part of the problem is that the president cannot (and does not) articulate a consistent set of goals he’s committed to (or in political parlance, issues he’s willing to die for). Maybe it’s because Obama was happy to be all things to all people on the campaign trail and have them project their hopes on him. His speeches were certainly rousing, his campaign was masterful, and the public loved the fact that he was a fresh face whose national political experience was minimal. However, for those who were really listening to his speeches, it was clear that he was very much a centrist much like Bill Clinton. And like Bill Clinton, he had a lot of corporate friends helping him fund his campaign. Money does indeed talk, but if we’re to believe Michael Lind writing in Salon, then the deep pockets that supplied Obama with cash did so because corporatists were placing their bets that Obama would correct the “neo-Confederate right[ward]” shift George W. Bush took the country. Corporatism seems to demand a coalition of Blue Dog Democrats and Olympia Snowe Republicans. There are certainly a good number of Blue Dogs in D.C. but where are the moderate Republicans? I guess the neo-Confederates that Lind is talking about either aren’t supporting Republican candidates, or if they are, their guys on the right ain’t delivering what they want.

Whatever the case, what really matters from here on out is whether Obama addresses the economic desperation that the corportists help to create for those struggling to hang on to whatever crumbs are blown their way.  The unemployment rate is but one indicator in the Great Recession, and while it’s understandable that Obama had to address the big fires that would have certainly made matters worse if left unattended, losing focus on jobs, jobs, jobs (or to bring back a golden oldie from the Clinton era, “It’s the economy, stupid”), it left the field wide open for Republicans like Brown to tap into and foment resentment toward a president and his policies that were less than a year old.

So, where do we go from here?  And by “We” I mean those who understand that in crisis like this, playing it politically cautious is the wrong thing to do. Since Obama is not going to change his cautious ways unless he’s forced to, and unless he just likes smiling for the camera, kowtowing to the Right, and acting like it’s all okay that he’s not getting what he was elected to do, he won’t get passionate about a liberal progressive agenda unless the people who voted for him hold his feet to the fire (Like LBJ told MLK to do back in the ’60s) and demand he act on the democratic wishes that propelled him into office.

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“Wow, these grapes are sour!”  A fitting epitaph for Republicans as they try to grab the spotlight to bitch and moan about Obama, the Democrats, and spending while really only offering one policy prescription for the economic dire straits we’re in:  tax cuts.  And tax cuts they got! Even a casual glance at both bills reveals that when it comes to spending, both houses of congress aren’t too far apart. The Senate bill is the one where you wonder what happened to the party that advocates for states.  The sizable tax cuts, the lack of local spending for states’ local governments, and the glaring gap between the House’s bill on infrastructure spending makes me question some Republican’s love for the states and localities that comprise these United States.  Yeah, we’ve heard the old saw about this stimulus bill being the proverbial “Democratic Christmas Tree” when it comes to spending, but c’mon! The idea is to get people back to work so they have money to spend on products and services that come from private businesses — and that won’t come from tax cuts alone.

It doesn’t take much effort to realize that every day private industry is shedding jobs, that unemployment rolls are growing, and consumption is falling.  In short, people are not spending money, and private industries are doing the same.  Credit is tight, people are saving their dollars, businesses are cutting and slashing budgets to weather this storm.  It’s batten down the hatches time, folks. It’s a natural response when times are tough.  But what force turns fear into optimism?  What entity has the kind of power and resources to “prime the pump,” shock the system out of the current doldrums and restore large scale trust?  Government.  In fairness, tax cuts do have a stimulative effect at times, but they take a long time to work. What’s needed are spending programs (yes, spending) that will increase GDP.

Government spending on programs and projects will lead the way to create stable jobs that will allow individuals to feel optimistic about buying products and services that private businesses provide.  However, unbridled consumption is something that comes with consequences to our environment and even to our psyche. I have long been critical of society’s fixation on “things,” and I am in no way saying that we need to go back to a yuppie ideology. Rather, since we’ve already tried variations of the kind of Reagan-inspired economic policies hardcore Republicans have embraced for over a generation — and those polices have clearly shown their limits and their failures — it’s time to see if the democratic pragmatism Obama embodies works.

Obama’s first press conference underscored many of the points I just made above and in past columns.  Getting the unemployment rate down to a level that’s accepted as full employment (which some have stated is five percent or below) is crucial, since a great deal of the spending that will drive the economy will come from consumer spending.  Other areas of spending are from the following:  Government, businesses, and exports. If, however, we are to take Chuck Todd’s question about financial priorities to heart (i.e., spend or pay-off debt), I think the answer, though not universal, would be a combination of both.  Spending will drive production, which in turn increases the likelihood that employers will hire.  However, if there is such a thing as circumspect consumption that tempers the urge toward irrational exuberance, then ideally that’s what we should be striving for.  It may mean less “chasing after the newest and the shiniest” and learning to make the durable goods we consume last by seeking out maintenance rather than replacement.  It will also mean adjusting GDP goals, increasing personal savings, and reinvesting for the long term. It’s a kind of financial sobriety that we often hear preached, but is rarely practiced.

If Obama’s stimulus plan and TARP 2.0 works,the economy rebounds and the worst is averted, the era of “Government is not the solution to our problem; government is the problem” will be over.  The new era will not be like the New Deal or the Great Society. Rather, it will most likely reflect the temperament of the generation in power — and those who elected them.  I’m not one of those people who read Generations by Neil Howe and William Strauss back in the early ‘90s and thought “Hmm…Gen Xers are going to be the ones who are more practical than their Boomer brothers and sisters, and we’re going to see a more responsible age.”  However, if Obama’s pragmatic approach to governing is any indication, we may be headed into an era that could be described as not only The Great Transition, but The Great Clean-Up as well.

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Managing expectations is a tough thing to do when, for example, Obama’s presidential campaign was premised on the keywords of “Change” and “Hope.” People are expecting rapid change; a wave of a magic wand and things will be “back to normal.”  But whatever “normal” was, we’re not going back — hell, I don’t think we even want to go back.  Clearly, we’re at the proverbial turning point where the current economic problems that plague the world  aren’t going to go away in a few months. And if there were ever an image that sums up the shock, frustration, and collective inability of the world’s leadership to manage this crisis, it would be Desmond Tutu’s excessive emoting at the World Economic Forum in Davos, Switzerland.

As the political culture in Washington D.C. frets over the likes of Tom Daschle and certain provisions in the economic stimulus plan, there’s very little talk about the nature of the global economic mess we’re in. Perhaps it’s just easier to concentrate on taxes owed, pork barrel spending, what constitutes lobbying, but it seems whatever heavy lifting that is done by our friends in the mainstream media to enlighten us plebs on the details of this economic crisis, is undercut by a plethora of “sexy news stories” designed for easy consumption.  Fortunately, the information is out there, and while it’s not really that sexy to read, it does illuminate the enormity of the crisis and how we got to where we are.

To wit: The Economist has a wonkish, but ultimately helpful feature in the January 24th-30th edition that was broken up into a series of articles examining the current financial crisis from a number of perspectives.  Now, I’m not an economist, but after reading through the articles, I have a good sense of why the economic leaders who convened in Switzerland haven’t a clue what is to be done.  Ideology and downright confusion over the mechanisms that brought us to this current state have a great deal to do with it.  Not all who attended the conference were die hard capitalist, but many were and it seems the “way out” of this mess involves a partnership with an entity capitalists tend to dread: the State.  Like it or not, the State is the only entity with the wherewithal to instill an important “soft factor” in the economy: optimism.  Optimism bolsters trust, and our capitalist economies thrive when these, admittedly, difficult to quantify variables are strong.

In the U.S., Japan, many parts of Europe and the like, belief in trust as an economic determinant is kind of amazing when you think about it.  For example, when I want to buy a car, a dealer must first trust that the currency I’m using to buy the car has enough value to match the list price.  Now, if I’m not the type of guy who can walk into the dealership with a bag of cash (pieces of paper built on trust), or funds in the bank that I can transfer by signing a check (another form of trust), then I have to get credit (also based on trust). Fortunately, there are banks in the business of lending me the money –  which they generally trust that I’ll pay back over a period of time. I sign legal agreements saying I’ll adhere to the terms of the contract, the dealership has assurances from the financial institution that my credit is good, they have confirmation of my employment status, yearly income, FICO scores, and all the other requirements that are needed for the transaction to occur. If those assurances of trust are met, then they hand me the keys and I drive my new car home. It’s a fairly simple process when the the terms of a purchase contain variables of trust that can be confirmed, quantified, and legally binding.

It gets tricky when, for example, we’re talking about the combination of real estate, credit, and the gambling nature of financial services — which, according to The Economist, is a different animal of capitalism because “[their] business is writing bets.”  I say it’s tricky because it’s not a simple case of “you’re up” or “you’re down,” but because we’re talking about real estate as the gambling chip, and the behavior of the “owner” (whether she/he defaults on the loan or makes consistent payments), the winner may not have made enough cash to off set the scale of the overall loss — or may not be paid at all since the loser may not have the money, or the assets on the table (i.e., real estate) lost value.  Well, you could take out an insurance policy through AIG (which many did), and if you can’t pay your gambling debt, AIG would.  However, the game produced more losers than winners, and if the government didn’t step in and restore confidence in the system by ensuring trust that AIG would pay what it was contractually obligated to pay, the global financial system was ready to go down, down, down.

Collateralized-Debt Obligations (CDOs) were another sector in the financial market that contributed to this mess. When economists, politicians and market analysts call for transparency in the market, CDOs are one of the reasons why.  They are not only complex (because each CDO can be quite different from next), but the factors that go into assessing the risk of these CDOs is filtered through a mathematical formula called the “Black-Scholes Options Pricing Model.” Black-Scholes calculations enables financial analysts to determine the risk of an investment by working out the pricing of its individual components. However, Black-Scholes — even with the introduction of other formulas derived from physics that provided greater accuracy — analysts could not reliably assess the risk of those who were issuing the CDOs.  Add to that a fudging of the ratings system of CDOs by those who issued these so-called commodities, and you had a house of cards build on an erosion of trust. I mean, many of those firms who issued CDOs hired companies whose business was to take bits and pieces of this or that security, bundle it in such a way that even though they were mostly composed of lower-grade elements, they would be labeled with a AAA rating. And because all this was largely unregulated, it gave rise to a large amount of mistrust, malfeasance, and outright duplicity — factors corrosive to two of the more important “soft” variables in a healthy economy.

So, a restoration of trust in The System is something the Obama Administration has to do.  The stimulus package is one element — and it has to be a big enough package to help restore the economic system to a more healthy environment.  The other element is another bank bailout whereby the government “quarantines” the bad loans banks are holding which, if this works as intended, creates conditions whereby banks get back to lending money with stricter standards in place.  Then, when the economy starts to recover, and the tax receipts go up, the government will deal with these “bad loans” in a way that will involve, yes, the taxpayer getting the short end of the stick. To use a pithy phrase, what’s being proposed is “Privatizing profits, and socializing risk.”  However, there are few options for addressing this crisis, and this “middle way” is far more palatable and preferable to a capitalist nightmare:  complete nationalization of the banking system.

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President Obama’s proposed $825 billion stimulus package is currently running through the sausage mill of Congress, but this time, it’s supposed to be an “earmark free” bill.  But that’s not stopping Republicans from bloviating about pork in the bill that allots money for family planning (Contraceptives!) and the NEA (Robert Mapplethorpe! “Piss Christ!” One of the Guys!).  Those amounts are small compared with the money directed at improving the infrastructure of many agencies in the federal government — which, like the Social Security Administration for example, have not upgraded their central computer system Since the last days of the Carter Administration.

If pork = any kind of government spending, then the Republicans ought to stop acting holier than thou on this stimulus package and remember the heady days when they were in full support of blowing billions on war and war related organizations like Kellogg, Brown and Root.  You remember Kellogg, Brown, and Root, right?  You know, the company Dick Cheney was president and CEO of before appointing himself the vice presidential candidate during George W. Bush’s campaign for the White House?  The same company that’s been overcharging the American taxpayer for services provided to American soldiers serving in Iraq — just to name one example? I know, there’s a thing called “the loyal opposition,” but it seems the Republican leadership has very little they can really oppose, so they are going after those golden oldies of the cultural wars:  birth control and controversial artists.  What was that line Obama used about setting aside childish things?  Clearly it has fallen on deaf ears.

However, believe it or not, harping on Republican blah blah is not what I wanted to focus on.  Rather, I’ve been fascinated by the elements of policy that will be woven into the economy once Obama gets the stimulus package through Congress, and what that entails for both Big Money and Main Street. And as we know, Big Money, Main Street, families and individuals are all roughly in the same economic boat that is leaking quite badly.  However, it’s the worker whose going down with the ship first.

So, how did we, the average wage earner, get to where we are now?    Part of the problem is that our paychecks have been decreasing while the amount of work we do on the job has been increasing.  According to labor economist Sylvia Allegretto at UC Berkeley, from 1947 to 1973, as our collective productivity rose, so too did our incomes.  Sounds fair, doesn’t it?  You do more work, you should get paid more. And between 1947-1973 that’s pretty much what happened:  wages kept pace with output — and then the party was over.  From 1973 to the present, worker productivity increased over 80%, but the amount of money paid for all that extra work was a little over 12%. As global capitalism started to flourish after the Cold War, wages declined as outsourcing and downsizing labor increased. What bridged the economic gap in the U.S.?  You got it: credit.  Taking on more and more debt to maintain middle-class dreams, Americans spent oodles of money funded through a combination of credit cards and tapping into home equities.  Add to that the fact that banks were more than eager to offer credit because they were repackaging that debt and selling it off as securities to global and domestic investors who thought the party was going to go on for a long, long time. Then, of course, we got that Batman “Pow” in the face, and, well, here we are; broken, bruised, but not quite out for the count.

On the campaign trail and during his inaugural speech, Obama talked about major investment in infrastructure, green technologies, science, and even technology.  On the surface, this  all sounds wonderful, but what does it really mean for the average working stiff? It’s possible that jobs in the emerging green sector won’t require long-term training as many of the products created will need people who can do the heavy lifting of installations, construction, and the like.  In the medical field, doctors and nurses aren’t the only ones who will benefit.  As the field becomes reformed, and more and more people have access to health care, the number of blue- and white-collar jobs will also increase. Add to that the graying Boomer population, and you’re going to have decades where the health industry is going to be in a growth mode.

However, one of the major shifts in our economy will be its morphing from a consumer economy (fueled in large part to the availability of easy credit) to an economy where our exports drive the economic engines – this according to Tom Abate of the San Francisco Chronicle. “Consume less, export more” is the headline and the pith of the article. This all sounds promising for larger corporations, whose business models take into account the global marketplace.  But what if you’re a small business owner whose clientele is local?  How can you “export” into the global market when your customer base is in the same geographic location you’ve set up shop in? For small business owners, hearing the clarion call to “consume less” sounds like the death knell for those businesses. And what about workers as the economy evolves? Government can help by funding community colleges and universities to develop curricula to train individuals for jobs in the growth industries. This may also mean colleges and universities undergo their own transformation to better serve the employment needs of their students.

In the here and now, however, people have to eat, pay their rent/mortgage, support their families, and the like.  What are people doing in the interim? The New York Times has a story about so-called “safe jobs” that many are flocking to.  In finance, people are hunting for jobs that pay less, but offer two-year employment guarantees. As more people enroll in community colleges (for retraining, and because it’s cheaper than a four-year institution), the need for part-time college professors has increased (less pay, no benefits, but there’s a good chance of lining up fairly steady work depending where you live). If you’re talented in math and science, teaching those subjects in a public school is a job that’s been in demand for years. In blue-collar fields, commercial trucking and welding are in demand in some regions of the country. These are not the sexiest jobs, but if you can find one, it’s work.

Last week I wrote that even if Obama was just another white guy in the long line of presidents, this would still be an historic moment.  Looking at what lies ahead of us, and the wrenching pain many of us will endure as our economy evolves into … well, something else, it’s clear we’re witnessing the beginnings of a new era where the economic competition of global capitalism and the American Dream Billy Joel alluded to in the song “Allentown” (i.e., Every child had a pretty good shot/To get at least as far as their old man got) are colliding in ways we have yet to feel their full force. I’m just glad that someone with vision is in the White House now.

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Even if Barack Obama was just another in the long line of white males who have been elected to the presidency, this would still be an historic moment in the United States. There’s a political sea change happening that, if played right, could herald a new progressive era; an era where instead of “going back” to an ideal of small government of the 19th century, we will see an active government that uses innovations from the private sector in novel and pragmatic ways to address the mess Bush left.

The sweeping changes enacted by Bush since his presidency began will have to be quickly undone so the United States can repair deep rifts with our allies, address the economic catastrophe we’re currently mired in, and defuse tense political situations in the Middle East, the Gulf, Russia, Afghanistan, Pakistan and India (just to name a few).  Add to that all the small, medium and large political battles that will be fought daily, weekly and monthly, and it’s clear the number of hurdles Obama must overcome to be an effective leader are jaw-dropping in scope. But he spent two years telling us that he wanted the job, and, well, the majority of voters gave it to him — and gave it to him enthusiastically.

During my years of political socialization, the high level of cynicism toward government and politicians has been a constant that I didn’t think would ever change in my lifetime.  However, during this election the exigencies of our economic and political condition were such that a good deal of that cynicism transformed into genuine hope. Never have I witnessed the energy, elation, and enthusiasm of voters as they worked and worked and worked to help get Obama elected president. And unlike Bill Clinton who, it seemed, promised voters anything and everything  — only to break their hearts over and over — Barack Obama comes across as a guy whose realism and understanding of the political processes are such that the phrase “the art of the possible” may aptly describe the guiding philosophy of his administration.

Time will indeed tell if the progressive pragmatism of Obama will be a reality. My views of his candidacy, his campaign, and his ultimate election to the highest office of the land are, for those who regularly read my writing, well known.   However, I’d like to start an open thread on what you think are the most pressing problems the Obama Administration needs to address — and the realistic outcome you would like to see.

I’ll meet you in the comments section!

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Watching President Bush’s final press conference yesterday reminded me of the phrase “failing upward.” Never in recent (and not-so-recent) history have we had a president so thoroughly unqualified for the job.  Many sneered at Ronald Reagan because of his acting background, but few would deny that serving seven years as president of his union (Screen Actors Guild) introduced him to the art of politics in ways that would help him as governor of California, and then as president.

With George W. Bush, however, I get the sense that he went into the family business of politics because, well, there was nothing left to do.  He had already run his business into the ground and had proven that he was not the most adroit person at heading up a baseball team, but, to his credit, he had succeeded in one thing: becoming an alcoholic.

What Karl Rove saw in George W. Bush I’ll never know.  Perhaps it was Bush’s old money insouciance that impressed the intellectually rich but monetarily poor Rove.  Perhaps it was the idea that he had found a guy who had a high “EQ Factor” with the masses, but was fine being a sock puppet when it came to day-to-day decisions. Maybe it was his frat boy belief that he could do anything to anyone and get away with it that made him perfect for Rove’s Machiavellian designs.  It’s difficult to know, since Turd Blossom and Dubya don’t really talk about their relationship. But watching and experiencing the last eight years of the Bush Administration, it’s clear Bush and his team were in awe of radical transformation. However, the fountainhead of that radical vision wasn’t Bush — and therein lay the problem.  Bush was surrounded with radicals but, if pushed, was really interested in the status quo of the country club set.  His intellectually incurious mind, his inability to form coherent sentences, his failure at grasping the complexities of political events and exerting an artful diplomacy when needed reinforced that even Bush’s puppet masters couldn’t get the dummy to convincingly act the part.

Even as he stumbled his way through his final press conference, trying in vain to promote his successes (i.e., “In the first 24 hours after Katrina we airlifted 30,000 people out of there.”), and demonstrating that he could buck his free market ideological conditioning by supporting government bailouts for the financial sector, when asked about mistakes made during his presidency, he was quick to point out that the “Mission Accomplished” sign on the USS Abraham Lincoln in 2003 was a big mistake.  Why?  Well, it sent the “wrong message” when his administration was trying to convey “something differently” by sending that message, but people got the wrong message.  Ah, now that was a classic Bush moment — and something I suppose I’ll miss from our departing leader: non-sequiturs.

But even as I try and unpack the deeper meaning behind Bush’s admission that he made mistakes, I couldn’t help but notice that the “mistakes” he was referring to were P.R. mistakes.  If that damn sign wasn’t there on the aircraft carrier … if he’d landed Air Force One in Baton Rouge, the press would complain that his presence would take away law enforcement from helping the public to safety … Abu Ghraib was a “disappointment” … not finding WMDs in Iraq was a “disappointment” … trying to reform Social Security was a mistake, but only because he didn’t address immigration to dispel the view that the GOP is the party of resentful white males.

For his last hurrah in front of the press — and one where he could be as unguarded as he wanted — Bush displayed plenty of what has made him such a frustrating public figure (i.e., being mostly vague, often vacuous, rarely enlightening, and prone to annoyance).  As I cringed through his last press conference, it was clear that the man-child who became president of a radical group of right-wingers never really drank the Kool-Aid of the movement’s ideology.  The most horrendous things could happen on his watch (i.e., wars, rendition, torture, erosion of civil liberties, financial collapse), but because this guy was obviously wrapped in cotton for the last eight years, he couldn’t be bothered by it all. “Let history be the judge” was his recurring defense — which was probably the most politically telling thing about our 43rd president.  In other words, it’s Bush’s public image that concerns him the most.

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If you’re a Republican Party stalwart, and say you went to the Republican Governors Association meeting in Miami hoping for a good answer to the question of “Now what?” you might find yourself sweating bullets that the brand you thought was going to be a “permanent majority” for a generation (if not two), because Karl Rove said so, is looking a little like GM nowadays. Not quite bankrupt, but pretty close to it in terms of winning political ideas.

Now what, indeed.  The GOP is certainly at a crossroads as it’s abundantly clear many voters lost their taste for what the Republicans were selling and bolted in large numbers to Barack Obama. The party, though down, is not out, and hopes they can win voters back by getting back to basics like small government, low taxation, fiscal prudence and the like.  But there’s another wing of the party that thinks the culture wars will work its voodoo and bring voters back into the Big Tent. Moreover, they gots to get ‘em some of that Web 2.0 that Obama successfully used to stay in touch with supporters.  In short, despite the dubbing they got on November 4th, Republicans are convinced the old brand still has national appeal — they just have to find the right medium to deliver the message.

However, here’s the problem:  George W. Bush’s presidency has knocked away the tent poles that kept that Big Tent aloft. Small government?  Ha!  Lower taxation comes with a huge deficit.  Fiscal prudence?  Please, do I really need to go down that road?  And what about compassionate conservatism and “Restoring honor and integrity?” If you read even a little of a new study by U.C. Berkeley entitled Guantánamo and Its Aftermath: U.S. Detention and Interrogation Practices  and their Impact on Former Detainees you’ll see example after example of a lack of compassion, honor and integrity emanating from the Bush White House.

The only hope the GOP has is the short memory of the American public, and a repetition of a few talking points that reinforces the core principles of the GOP — even though examples from the recent past (and present) will contradict the message heard in the echo chamber.  Having Obama in the Oval Office frees the GOP from having to say up is down and slavery is freedom every time the President speaks.  An Obama administration relegates Republicans to their areas of strength:  back-benching bomb-throwers who know how to tear a person down rather than commit to the day-to-day of governing.

But they have to be careful. This isn’t the ’90s, and Obama is not Bill Clinton whose dodgy past and equally dodgy personal behavior provided a steady stream of cannon fodder.  The Democratic Party has learned a lot from being held up as the demon seed for the past 20 years.  It took time to shake out a lot of the dead wood in the Party, but I think Obama is poised to usher in an era where the long shadow of the ’60s ceases to be a source of division in our country.  I bring up the ’60s because without that era, it’s not clear the Republican Party (in its current incarnation) would even exist. The heated rhetoric of the culture wars, the fanatical devotion to free-market principles, and the belief that government is the problem are not necessarily conservative points of view. Many on the left during the ’60s had similar views that — while filtered through a new leftish perspective — were very much about identity politics, cottage-industry/DIY capitalism, and a huge distrust of government.

I’m not saying either of these political perspectives were entirely misguided (though the excesses of each are very well known, and for the Right, all-too-recently familiar), but these ideologies are bound by a specific time in history.  And what is happening is that as our historical circumstances change, the ideologies that seemed so fresh, so radical, so appealing at one time, are now relics and roadblocks that do little to address the needs of people today.

We live in a world where the U.S. is not the biggest economic player around.  Our relations with the world cannot be framed by a “Well, we won the Cold War” mentality or a continuation of the Bush Doctrine. Nor can our feverish desire to always attain more in a material sense drive our sense of purpose. And while this may rankle libertarian sensibilities, government (for better or worse) has been and will continue to be an active agent in framing our future. Our responsibilities as citizens is to do our part to minimize the rot in the system by being actively engaged — instead of sitting on the sidelines listening to political bomb-throwers and media clowns foment resentment at the very institutions that can be the most responsive to our needs.

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It’s been said that a political campaign is run on the poetry of promises, while the task of governing is about the prose of policy. As President-Elect Barack Obama sheds his poetic cloak and has to become a wordsmith of a different sort, there are a myriad of emotions in this post-election/transition time that Americans are certainly feeling. Will Obama be like FDR, Jimmy Carter, or Bill Clinton? It’s too soon to tell, but one thing is certain: Obama won not because of a political crisis like Watergate, or because a third party candidate split up the vote allowing him to squeak in, but because a clear majority voted for his campaign of hope and change. What many Americans hope for is that Obama will be a transformative leader who is able to steer the ship of state in another direction; a direction that will bring greater prosperity, less cynicism, and more cooperation in the culture at large.

It will be an interesting time for Reagan revolutionaries, too. Many conservatives are big admirers of FDR.
They are impressed by his patrician demeanor during a crisis, his ability to explain governmental action to Americans via his “Fireside Chats” (where he would often start his address with “My Friends”– which should sound familiar to those who listened to John McCain’s speeches), the way he and his administration had the political acumen to reshape the Executive Branch, and, above all, the way his policies won the hearts and minds of the majority of Americans. In Reagan, conservatives thought they had their FDR that would realign the political map so conservatives would hold power, much like New Deal Liberals did. It didn’t quite go the way they envisioned. Now that most Americans have clearly rejected the politics of resentment (and “Joe the Plumber” as its poster boy) in favor of a pragmatic activism, it will be interesting to see if the prose of Obama’s leadership proves to be a strong enough tonic to put the politics of resentment into remission.

There’s a loyal opposition, and then there’s opposition that offers very little except resentment, hate, paranoia, and fear. The noise machine operated by the Right has made a lot of money for those who are stars in its cruel theater, but after a decade plus of running 24/7, the show has finally reached the point of diminishing returns. Sure, there will always be people who seek out the most negative and hateful blowhards to confirm their own resentment, but if Obama’s campaign is any indication, he’s very good at avoiding the chum-soaked waters where the sharks circle ready for a feeding frenzy. The Jeremiah Wright controversy was something that could have easily deep-sixed his campaign, but he was able to turn a politically embarrassing moment into a very personal speech about race in America that not only softened the rage at his (former) spiritual adviser’s remarks about “God damning America,” but created an opportunity for channels of discussion about our multi-ethnic and multicultural heritage. People seem to forget that Obama is bi-racial, and that hybridity is very much what American culture is about — but it’s also a source of insecurity.

We’re at a transition moment in our history; a transition borne out of crisis, but one where our insecurities about money, status, security, power, and the like are not going to be sated by conservative calls to “going back” to a more fragmented, disconnected, and suspicious culture — or at least, not yet. Obama knows the window of opportunity for his agenda is short, but as the presidential bubble forms around him and his day-to-day is taken up with the prose of meeting after meeting, as President he must take great care not to forget his poet’s heart displayed on the campaign.

“Hope,” Rush (Download)

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When I was growing up, I remember my father used to keep a credit card hidden in the back of his closet.  It was one of those “In case of emergency” things that he rarely used.  If he did use it, he paid it off at the end of the month.  So, I had it embedded in my mind that if I ever got a credit card, that I had, had, had to pay it off at the end of the month if I ever made a charge.  And for the most part, that’s what I did.

I was surprised when I got a my first credit card.  It was a department store card that came in the mail weeks after I filled out an application at a table in the quad during my first year of college. I had a part-time job that paid minimum wage, and I put down what I earned at the job figuring I’d never get approved for credit.  After all, I didn’t make much money, so why would a credit card company take the risk?  Ha!  Macy’s looked at the “financial me” that was on the paper application, and stamped out a card with my name on it. A few days after it arrived, I went to the mall and bought some socks and a shirt, and felt some unease when I presented my card.  “Will they accept this from such a fresh-faced kid?” I thought.  Yes they did.  And then I did something naive:  I ran upstairs and paid my credit card bill because I thought it was the responsible thing to do. The woman at the credit department had a good laugh when I pulled cash out of my wallet to pay for the credit charge I just made.

She just worked there as an hourly employee, but I’m sure somewhere in the thicket of the billing department, some salaried analyst cringed.  Why?  Well, my behavior marked me as a deadbeat.

Yes, financial responsibility equals “deadbeat” in the world of credit. And until the financial meltdown, credit card companies were on the hunt for “revolvers” whose financial behavior was that of an addict who couldn’t stop spending and needed a little something “extra” to help them get what they needed. Maybe you were one of the, um, lucky ones who would get weekly credit card solicitations tempting you with 0% APR for six months.  Did you ever wonder how they made money on those 0% cards?  Well, it took time to loosen the laws controlling things like interest rates, late fees, and other fees that could be tacked on whenever a credit card company felt like it (as long as they notified you within 15 days). But after 20 years, credit card companies were able to get what they wanted:  a complex contract between the company and the individual that structured the terms with little to no government oversight and no real recourse if you felt like you were getting a fist rammed up your anus. In 20 short years, we’ve gone from a form of debt that was used sporadically by many people (and was hard to get), to an economy largely built on debt spending.

As middle class wages stagnated (spurred in large part to the globalization of labor in manufacturing), the cost of living increased, and the gap between wages and expenditures grew, the 0% APR card became the way in which people could bridge that gap and still feel like they were living the American Dream.  But of course, it all came at a price, and now that we’re in a financial pinch, credit card companies are doing things that, while within their contractual rights, are basically souring the milk individuals have been sucking on for over a decade.

What are they doing to sour the milk? Well, these companies are using the same “financial behavior profiling” they used to identify “revolvers” (their prized customers), but are now assessing their overall risk of default in a different way.  If the risk is too high (and no one except the credit card companies make that determination), they cut the credit limits of revolvers to roughly the amount they have outstanding in debt.  So, let’s say you’re a revolver and have $30,000 in debt — but you thought your limit was $40,000 — well, the company now says that your new limit is amount of your debt. Now let’s say you make a $10,000 payment so you can have a $10,000 cushion in case you need it.  Well, the company could reset your limit to your new balance so that your $30,000 limit becomes $20,000. The more you pay down your debt, the more they can decrease your limit.  It is a way companies control the risk of default, but you see what’s happening here, don’t you?  The contraction of credit means the velocity of money will slow and so will the economy — and this is on the individual level.  At the institutional level, you have to follow indicators like the Libor rate and the TED spread, but a similar thing is happening.  Credit is contracting, governments are shoveling money into the system to loosen the flow of money and reduce the severity of the recession. Money is being put in, but, it’s not trickling down in the form of loans to individuals.  Instead, banks like JPMorgan Chase are using taxpayer money to buy up the competition and get tax breaks to boot.  Huh, what?

So for all the money we as taxpayers are loaning to these financial wizards, what are we getting in return? It seems it boils down to this: financial austerity for individuals, and financial rewards for the companies who created the scheme that lead to the crisis we’re in.  Pretty much the same deal we’ve been getting for over 20 years.

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I don’t know if you remember the days when newscasters would routinely smile when the Dow Jones Industrial Average ended the day in positive numbers. It was a not-so-subtle sign that “The system is working” for those who profited from the financial sector.  For the rest of us, a smile meant good news — even though we probably had no idea what they hell the numbers meant, or what all this talk about “The Dow” was about.

Something like that is happening now, as newspapers report the surge in stock markets.  And it’s clear that the move many countries have made to nationalize banks and inject capital into the system to loosen up credit may have the desired effect.  The headlines won’t say anything about “Socialism Saves Capitalism,” but that’s pretty much what’s going on. Yes, it is ironic, but if we’ve learned anything in last eight years, irony has reigned supreme among the Bush Administration and the Republican Party.

The party that supposedly hates nation-building, had to become advocates of nation-building.  The party that promotes freedom and derides “government interference” were zealous in supporting policies that lead to government intrusion into the lives of Americans. The party that believes in low taxes and curbing government growth, spent tax money and increased the size of federal bureaucracies in a way that would give FDR chills.  And finally, the party that has been ramming through deregulation policies affecting the financial sector, has had to French kiss socialism to provide a trillion dollar safety net to keep the world-wide economic panic from reaching a depression.

I don’t think the Democratic Party is in much better shape. If Barack Obama wins the election, his administration will have to make equally tough choices on how to lead the country out of this economic and political mess.  It will probably mean abandoning campaign promises, tacking right on some issues (most likely tax policy) and continuing the war he promised to get us out of.  I’m not saying that’s what will happen, but given how fluid events have been in the last couple of months, it’s very likely the specter of Bill Clinton and the DLC will hover over the day-to-day operations of an Obama Administration.

But back to the Dow for a moment — because, you know, it’s the economy, stupid.  A couple of weeks ago I joined a rather dour group of economists on a conference call through the RGE Monitor. They were analyzing the political response to the financial crisis, and because all the speakers were economists, they spoke a language all their own.  Feverish talk about Ted spreads, LIBOR rates and the like were bandied about to the point of dizziness.  Interestingly enough, there was very little talk about the Dow, or other stock market indicators, and, not being an economist, I wondered why.  My answer came not from the conference call, but from my local paper.  A heartfelt thanks to Kathleen Pender at the San Francisco Chronicle for helping me, and others, with a quick glossary of terms as the psychology of the credit crunch plays out.  I’m not holding out hope, but it will be interesting to see if John McCain or Barack Obama can communicate how their policies will affect the indicators below in a folksy way from now until the election.

Okay, are you ready for your speed date on economic terms?  Here we go …

Treasury Bills

Investors freaking out over stocks tanking will often invest in T-Bills as a place to keep their money. When the three month yield on T-Bills is low (say, .25%, as it was on 10/10) it means, as George Costanza from Seinfeld would say, “there’s shrinkage” in the market and investors are fearful of swimming in the cold water.  When the three month yield starts to go up, it means investors are feeling a bit more confident about market conditions, pop a Viagra, liquidate their T-Bill investments, and put their money elsewhere.

The London Interbank Offered Rate (LIBOR)

This is the rate banks lend to other banks, and the loans are for short periods of time (though, not always). If the LIBOR rate is close to what the Fed is lending banks, then things are trending in a direction that says: “Baby Jesus is saving corporate capitalism.”  Just compare the LIBOR rate to the Federal Reserve Discount rate and you’ll see if Baby Jesus is working his magic.

Ted Spread

Another indicator that compares data sets. The “spread” gives you data to measure the Fear Factor in the markets — and the number to watch is the difference between the three month LIBOR rate and the three month yield of T-Bills.  Fortunately for us, the Ted Spread calculates that difference, so put your calculators away.  The higher the number, the more fear there is in the market, the more my first name is mud.

So, these are some indices to watch as this recession continues and we read the daily tea leaves of market psychology.  While stock market activity is certainly grabbing the headlines, have fun at home by being a bit more savvy with the economic news and keep your eyes on the indicators that are more telling than the ups, downs, smiles, and frowns of The Dow.

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