Politicset Cetera

A publication from The Political Forum, LLC

Wednesday, January 2, 2013

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They Said It:

As we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns — the ones we don’t know we don’t know. And if one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones.

 Secretary of Defense Donald Rumsfeld, Defense Department News Briefing, February 12, 2002.



As we look back on last year’s domestic policy forecast, we are tempted to pat ourselves on the back.  But we won’t.  Last year was easy, you see, or as easy as political forecasting gets.  Presidential election years tend to be that way.  This year, by contrast, will be a little tougher.  And we suspect that when it’s over, we – and everyone else in the forecasting business – will look a little foolish.

Last year we were right about a great many things.  We were right that the GOP would settle on (and settle for) Mitt Romney as its presidential nominee.  We were right that this would lead, in turn, to the reelection of Barack Obama.  We were right that Obama would run a shockingly ugly campaign and one designed specifically to divide the country almost in half, 50.1%-49.9%, which is to say the slimmest possible electoral majority.  Most notably, though, we were right in our expectation that all of this would, in the grand scheme of things, produce a pretty dull, status-quo-oriented year, with the real fireworks to take place after the year had ended, which is to say in this year.  To wit:

As far as we can tell, 2012 will be much like any number of years before it.

It will be like last year in the content of its political discourse, i.e. overheated rhetoric, completely extraneous subject matter.  It will be like the last ten years in its economic results, that is subpar growth and below-average job creation.  It will be like every year in anyone’s memory with respect to fiscal policy, which is to say that the federal government, the states, and the municipalities will spend far more than they take in, adding to the already enormous deficit and ever-ballooning debt.  And it will be like just about any presidential election year since 1984, when many voters will find no vehicle for the expression of their concerns, while the political class will make all the decisions that matter, with a disastrous outcome – no matter what that outcome might be.

Now, we should note that this is not to say that we do not believe that 2012 will be unimportant.  Actually, precisely the opposite is true.  The status quo, which our old friend Bob Feinberg once defined as “the mess we’re in,” cannot hold forever.  And those who are expecting it to change or are hoping for some relief will, we suspect, come to see 2012 as the proverbial straw that broke the camel’s back.  Or, to mix our metaphors quite gruesomely here, 2012 and its relative ordinariness will be the calm before the storm of 2013.

Now, as we said, that was the easy bit:  in an election year, the episodes to be forecast are also pre-cast, which means that one knows beforehand what is going to happen and has only to determine how it will happen.  No such luck this year.  For the most part, events in a non-election year are unscripted; they are what the former Secretary of Defense Donald Rumsfeld once described as “unknown unknowns.”  We suppose that we are fortunate then, that we have the above-mentioned “storm of 2013” metaphor on which to rely for some guidance.  For domestic politics this year will, no doubt, be stormy.  Whether any of it will mean anything in the long run, though, we find it hard to say.  After all, the status quo is the status quo; and it will remain so until it isn’t.

So let’s start with the good news, if you can call it that.

Forecast #1:  From the perspective of the markets – and the equities markets in particular – Washington will, for the foreseeable future, continue to be a source of solace and encouragement.

This is not, we should note, a comment on public policy.  Indeed, it is precisely the opposite, a comment on Washington in the absence of public policy.

If one were, heaven forbid, to look at the effects of public policy on the economy, then the notion of “solace and encouragement” would be ridiculous.  The brokest nation in the history of the world decided last week to become broker.  It’s “leaders” – and we use that term advisedly – agreed to spend more and tax more and to ignore the long-term effects of their fecklessness.  Even the folks at the generally uninteresting and woefully conventional-wisdom-disgorging Economist have noticed that the “policy makers” in Washington are no more serious about policy than are their counterparts in Brussels, and throughout Europe.  They put it this way.

America’s economy may not be in as bad a state as Europe’s, but the failures of its politicians—epitomised by this week’s 11th-hour deal to avoid the calamity of the “fiscal cliff”—suggest that Washington’s pattern of dysfunction is disturbingly similar to the euro zone’s in three depressing ways . . .

Messrs Obama and Boehner seem to be [unaware] of the wider damage their petty partisanship is doing to their country.  National security is not just about the number of tanks or rockets you have.  As it has failed to deal with the single currency, Europe’s standing has crumbled in the world.  Why should developing countries trust American leadership, when it seems incapable of solving anything at home? . . .

This week Mr Obama boasted that he had fulfilled his mandate by raising taxes on the rich.  In fact, by failing once again to clear up America’s fundamental fiscal trouble, he and Republican leaders are building Brussels on the Potomac.

The real economy is stagnant.  Jobs are growing, but slowly and not enough to return the nation to full employment for a long, long time.  Income growth is nearly nonexistent, and REAL income growth IS nonexistent.  There is nothing to keep consumers engaged and nothing on the policy horizon that would suggests that good times are right around the corner.

Thank heavens, then, for Helicopter Ben Bernanke.

As our friend Ed Yardeni put it last week, you (still) can’t fight the Fed.  And the Fed is bound and determined to inflate an asset bubble in equities in a desperate attempt to make someone – anyone! – feel as if they are “doing well.”  As the Chairman himself put it, “the tools we have involve affecting financial asset prices.”  And if the effect on asset prices only benefits a small group of people; if the “someones” who will feel as if they’re doing well is restricted to large and active investors; and if even those assets and those investors will do well only for a while . . . well . . . what’re ya gonna do?  Enjoy it while you can.  Feel well while there’s well to be felt.

At some point, of course, the Fed’s asset bubble will either pop or be slowly deflated.  In either case, the good times and the “feeling well” will probably end at that point and may well end quite horrifically.  But that’s not gonna happen anytime soon, as far as we can tell, and there’s no point in resisting in the meantime.

Public policy in this country is hopelessly dysfunctional.  So, for that matter, is monetary policy.  But for the time being, monetary policy is dysfunctional in a way that favors equities.  Again, what’re ya gonna do?  Don’t fight it.

But do plan for the future – because it will, all but certainly, be far uglier than the present.

Forecast #2:  Newly re-elected President Barack Obama, a man remarkably incapable of self-reflection of self-restraint, will overreach on a matter of policy and, in so doing, will damage his standing among the broader electorate and damage his party’s long-term prospects.

Anyone who doubts that Barack Obama is capable of squandering his political capital almost as quickly as he accumulated it is either delusional or just waking up from a four-year-long nap.  During his first term, you see, our illustrious President did exactly that.  Of course, the mainstream media protected him.  And they will continue to do so.  But this time around he is freed from the bonds of ever having to run for reelection again.  That is, he can do anything he damn well pleases.  And it really doesn’t matter if anyone else opposes what he does or what he plans.  Anything he damn well pleases means ANYTHING he damn well pleases.  And, in our opinion, this virtually assures that at some point he will stretch the bounds of the main stream media’s affection for him to the breaking point.  Indeed, our guess is that he will break it.  At which time he will be in trouble.

Our guy will, we should note, have plenty of opportunities to overstep.  Just yesterday, for example, the President announced that he will, in fact, nominate the wildly unpopular Chuck Hagel (the former Senator from Nebraska) to be the next Secretary of Defense.  As far as Obama is concerned, it doesn’t matter if Hagel’s only two fans in the world are named Chuck Hagel and Barack Obama.  It doesn’t matter if Hagel’s nomination is considered offensive by both Jewish voters and gay voters.  It doesn’t matter if a vote on Hagel’s confirmation will put Obama’s fellow Democrats in a very uncomfortable position, forcing them to choose between crossing the President or offending two traditionally Democratic constituencies.  It doesn’t matter that this show of “bipartisanship” will yield exactly ZERO votes from Hagel’s erstwhile party.  None of it matters.  The only thing that matters to Obama is that he wants Hagel.  And he can do anything he damn well pleases.

In the long run, we suppose, Obama will be lucky if Hagel bows out or is filibustered by the annoyed GOP minority.  No one remembers the nominees who failed.  But everyone remembers actual cabinet members who prove disastrous, as Hagel almost certainly will if he gets the job.

Of course, even if Hagel is approved and manages, contrary to his nature, to serve the President and the country rather than the demands his of own ego, Obama will still have multiple opportunities to overreach.  And if past is prelude, he will seize them firmly.

How do we know this?  Let us explain.  Obama loves crises because they present myriad opportunities to move his radical agenda forward.   They are the political battlefield on which he is most comfortable.  He treasures them so much that he will create them if they don’t appear on their own.  As his former chief of staff and fellow denier of 2nd Amendment rights, Chicago Mayor Rahm Emanuel, put it, “Never let a crisis go to waste.”  Saul Alinsky, who wrote the Obama political playbook, put it this way: “The real action is in the enemy’s reaction.” “The enemy properly goaded and guided in his reaction will be your major strength.” “Tactics, like organization, like life, require that you move with the action.”

We discussed it this way last month:

Obama quite clearly enjoys crises.  For years, we resisted this idea, fashionable in some corners of the political Right.  It always struck us as absurdly complicated to expect that Barack and his minions would intentionally tank the economy, for example, specifically so that they could expand unemployment payments, increase food stamp use, expand welfare of all sorts, and thereby extend the reach of government.  Obama doesn’t have even a basic, comic-book understanding of how the private economy works.  How could he possibly be expected to manipulate it and to foster crises all in the service of leftist whimsy?

 We still believe this, more or less, but we no longer doubt that the guy craves crises, like a junkie craves a fix.  He sees the world in black and white, good and evil.  Whatever side he’s on, naturally, is the side of good.  Those who oppose him are always and everywhere evil and must be beaten . . . Peggy Noonan wonders, “Why does it always have to be cliffs with this president?  Why is it always a high-stakes battle?”  The answer, simply, is because that’s what he wants, high stakes battles.  ALL THE TIME.

It may be because these battles present him with opportunities to take measures that will further some strange left-wing fantasy.  It may because they makes him feel important.  Or wanted.  It may be that this type of political anxiety burnishes his image of himself and, at the same time, further putrefies his image of his opponents.  Perhaps it relieves the nagging awareness that comes with knowing that everything he has is unearned, given to him by people who saw him as a means to advance their own interests.  Perhaps it’s because he’s just an unhappy person, churlish, even in victory, and he wants to take it out on other people.  Who knows?  It is clear that crises feed his ego and reinforce for him the notion that he is great man destined to do great things in the face of great odds.

The thing is that it doesn’t matter why he likes crises.  He just does.  Which means the nation will have crises for the next four years.  Lots of them.  And to quote Yeats, that’s all there is to know and all ye need to know.

But, of course, this is dangerous game.  And the longer it is played, the greater are the chances that it will backfire.

The current crisis, of course, is the shooting last month at Sandy Hook elementary school.  Obama, naturally, thinks that the uproar and distress over that act of evil provide him a perfect opportunity for crisis exploitation.  Yes, he has to know that the chances of ridding the nation of guns are nil.  And it is arguable that the attempt to limit the number of guns “out there” has actually made things worse from the standpoint of the anti-gun crowd by increasing the sales of guns far beyond any gun store’s fondest dreams.  But it is a crisis, after all.  And that’s his specialty.

Already, a handful of Democrats are conceding that the President’s policy is too extreme for them, or at least too extreme for them to accept and still be reelected.  One would think that Obama would heed the advice of his fellow partisans, elected officials who, unlike him, will have to face voters again at some point; or that he would heed the anecdotal and survey evidence that demonstrates just how unhappy Americans are at the prospect of having their 2nd Amendment rights curtailed.  But he won’t.

He is clearly itching for a fight and is clearly determined to pick one, despite the political dangers involved and the fact that there us zero chance that he can achieve a meaningful victory.  Long after he has left the scene, Americans will still have their guns.  Yet, consider, what the Washington Post reported over the weekend:

The White House is weighing a far broader and more comprehensive approach to curbing the nation’s gun violence than simply reinstating an expired ban on assault weapons and high-capacity ammunition, according to multiple people involved in the administration’s discussions.

A working group led by Vice President Biden is seriously considering measures backed by key law enforcement leaders that would require universal background checks for firearm buyers, track the movement and sale of weapons through a national database, strengthen mental health checks, and stiffen penalties for carrying guns near schools or giving them to minors, the sources said….

One potential strategy would be to win support for specific measures from interest groups that are normally aligned with the NRA, according to one person who works closely with the administration on gun-related issues and who spoke on the condition of anonymity because of the issue’s sensitivity.

For instance, this person suggested, Wal-Mart and other major gun retailers may have an incentive to support closing a loophole that allows people to bypass background checks if they purchase firearms at gun shows or through other types of private sales. That could result in more people buying guns in retail stores.

So, Obama is going to save us all from ourselves by expanding the reach of the corporatist state and by facilitating rent seeking/extraction.  Does anyone think this will work any better this time than it did last time this same administration did the same thing with the help of the same rent seekers?  For those of you who may not recall, Wal-Mart, among others, supported the President’s health care reform initiative for precisely the same reasons, i.e. to screw over smaller, less well financed competitors.  And how, exactly, did that work out for everybody?  Everyone loves health care reform, right?

Will this be the overreach of which we speak?  Maybe.  Maybe not.  But it is a perfect example of this President’s penchant for crises.  And, our bet is that, sooner or later, one of them is going to get him in the kind of trouble that historically dooms second term presidencies.

As for his opponents….

Forecast #3:  As is the tradition among losing parties, the leaders of the national GOP will spend most of the next year trying to “change the party’s image” so that more people will love them, never even contemplating the fact that THEY, not the party or its ideology, are the problem.

We won’t bore you with another long recitation of our ongoing Political Class vs. Country Class theme, which we long ago appropriated from our friend and intellectual better Angelo Codevilla.  For our purposes today, it should suffice to note that the people who are most exercised about the GOP’s failings last fall are, unsurprisingly, the same people who took it upon themselves earlier last year to “fix” the “sinking Republican brand,” so that the party could compete, going forward, as a less abrasive version of the Democratic party.

Seriously.  Does anyone care any longer what Karl Rove or Peggy Noonan or any of the other consultant/commentarians have to say about conservative politics?  The consultants and the insiders, the party big shots and campaign-creating gurus, the Washington long-timers, and those who hate the Tea Party all worked to sell the Republican rank-and-file on Mitt Romney and then worked just as hard to sell their services and ideas as the keys to his victory.  And they failed.  Again.  And now they want to help the party pick up the pieces and start all over.  Again.  Doing it their way.  Again.

This, of course, is nuts.  Anyone who thinks that the GOP insiders – the Republican political class – have it all figured out hasn’t been paying attention at all since, say, 1990.  The only energy in the Party has always come from the grass roots – in 1980, 1994, 2010.  And the only way the party will figure out how to regain its proverbial footing will be going back to those grass roots.  The insiders let the Party down, yet again.  But that doesn’t mean that the Party itself is doomed.  In fact, wherever the Washington insiders are not – which is to say at the state and local level and amongst the Tea Partiers – the “conservative brand” is doing just fine, thank you.  The “Republican brand” is suffering, by contrast, because of the fecklessness of the political class.  Ditching them and moving on with the plans, ideas, and policy designs of the grass roots and the wildly successful GOP governors could be a huge boon for the party.

We don’t expect that to happen, of course.  And we expect most of the year to be filled with incessant hand-wringing about how the GOP is “out of touch” and squabbling internally.  But then, would it really be the Republican Party if that weren’t the case?  What else is the GOP known for, except being out of touch and infighting?

More seriously, who cares?  The GOP critics are, of course, correct that the national party is mightily screwed up.  But they are wrong about the reason this is so.  It’s not because conservatism is out of ideas or because the ideology is failing, or because “Progressivism” is on the rise.  The fact of the matter is that the Democratic Party is every bit as screwed up, but it happened to win the election, so no one cares.  The old policy model – or the “old political paradigm,” if you prefer our parlance – is dying.  No one has yet to construct or capitalize on a new paradigm, at least on the national level.  The Democrats are clinging to the old model and hoping against hope that the markets don’t prove that model’s obsolescence before they get a chance to think of a new model.  The Republicans, in turn, are trying out various iterations of the new model at the state level.  If you ask us, we’d rather be in the Republicans’ shoes.

But no one asks us, which means that the hand-wringing, the pitiable “self-reflection,” and the infighting will continue throughout the year.

And speaking of GOP infighting and Democrats clinging to obsolescent models . . .

Forecast #4:  In the only two electoral contests with national-level implications this year, a Democrat will win one by clinging to an obsolete model, and a Republican will win the other by fighting with the rest of his party.

In the year after a presidential election, there are only two elections that have any real national implications, the elections for governor in New Jersey and Virginia.  Given that an incumbent Republican is running this year in New Jersey, those “national implications” are undoubtedly more significant than usual.

That incumbent Republican, Chris Christie, is, as you may have noticed, taking quite a hit from many of his fellow Republicans for his scathing and seemingly unhinged attack last week on the Speaker of the House John Boehner.  We agree that Christie was out of line and painfully melodramatic.  But then, he’s always been bit of a drama queen to begin with, and, more to the point, we understand why he did what he did.

Think about it for just a minute:  Chris Christie is a Republican running for re-election in a state that voted for Obama by 16 points, which is to say 13 points ABOVE his national margin of victory.  New Jersey is a deeply blue state.  And yet Christie not only won election the first time, but delivered on many of his promises to rein in the Big Blue constituencies (public sector unions, most notably).  If he wants to have any chance at all of winning reelection, he has no choice but to try to put some distance between himself and the national party.  Sorry, John Boehner.  Nothing personal.

Christie is in a tough spot here; damned if he does, damned if he doesn’t.  If he doesn’t distance himself from the GOP in Washington, he has no prayer of reelection.  And if he doesn’t win reelection, he can’t run for president.

At the same time, if he does too much bitching about the GOP, he’s going to alienate a great many Republican rank-and-file voters, the very same voters who will pick the party’s nominee three years hence.  And that means that he couldn’t run for president.  At least not successfully.

We tend to think that Christie will err on the side of too much criticism, rather than too little.  And we think that he will win reelection.

He will also slit his own political throat in process.  Sorry Chris.  Nothing personal.

As for the other high-profile contest, Virginia’s governor’s race, that one should be fun.  Really fun.

Right now, it appears that the contest, which is for an open seat, as Virginia’s governors a limited to one term, will pit the Republican Attorney General and staunch conservative Ken Cucinelli against the Democratic fixer Terry McAuliffe.  You may remember McAuliffe from such roles as the Democratic National Committee Chairman handpicked by Bill Clinton; the Clintons’ personal banker who arranged to “loan” Bill and Hill the money they needed to buy the house they couldn’t afford in suburban New York so that Hill could run for the Senate from a state in which she had never lived; the guy who made $18 million off of a $100,000 investment in Global Crossing, but managed to get out before bankruptcy; and, best of all, the Clinton re-election campaign chairman who was, according to the DNC’s finance chairman, the guy who dreamed up the scheme to launder Teamster funds through Democratic party accounts, thereby allowing Teamsters president Ron Carey to win reelection by out-crooking a guy named Jimmy Hoffa (Jr.).

Is this a great country or what?

The fact that McAuliffe will likely be the nominee says all you need to know about the paucity of serious Democrats in Virginia.  And our expectation that he will actually win says all you need to know about the future of the Commonwealth of Virginia.  Once upon a time, Virginia was part of the solid South, in both its iterations.  Between 1968 and 2004, Virginians voted every time for the Republican presidential nominee in every contest.  Even the state’s Democrats were conservatives.

But no more.  In each of the last two election cycles, Virginia voted for Barack Obama.  And with the election of Terry McAuliffe, it will formally shed its secessionist past and join the ranks of the bluest of the blue states, thanks to the tens of thousands of bureaucrats who live in the ostentatiously wealthy, the incredibly powerful, and the painfully liberal Virginia suburbs of Washington.

McAuliffe’s victory will say two things.  First, that the denizens of the waste land of Washington, the bats with baby faces in that unreal city, have grown to view corruption as a protective blanket.  And second, that Obama’s belief in the political efficacy of bringing more and more and more people onto the public payroll is well founded.

Forecast #5:  The Obama administration will commit horrible and heinous acts that set back the cause of human rights and women’s health by two-hundred years!  Or, to put it more precisely, after losing several high-profile court decisions, the Obama administration will grant religious employers far greater leeway with respect to the so-called Birth Control Mandate in Obamacare.

We know at least two things about President Obama.  First, he doesn’t like to be embarrassed.  And second, all of his promises come with expiration dates (as the inimitable Glenn Reynolds, aka Instapundit, has noted repeatedly).

In the context of the birth control fight, what this suggests is that he will find a way to short-circuit the potentially losing debate over Obamacare’s position on contraception before it gets to the Supreme Court.  To date, the federal courts have a mixed record on the mandate.  Most recently, Federal Judge Lawrence Zatkoff ruled that Dominoes founder Thomas Monaghan had “shown that abiding by the mandate will substantially burden his exercise of religion.”  Of course, neither this ruling nor any of the others – for and against the mandate – are definitive.  But it smacks of a defeat and Obama knows this, and he will, we believe, seek to avoid a definitive ruling.

Will his supporters be upset?  Of course they will.  But what’re they gonna do about it?  He’s their guy.  They helped get him reelected.  But he doesn’t need their undying support anymore.  Sorry, Sandra Fluke.  Nothing personal.  And it was fun while it lasted, no?

Forecast #6 (out-of-left field prediction):  Barack Obama will suffer the first serious blowback from a scandal.  And it will hurt his agenda badly.

It is common knowledge that Barack Obama wanted desperately to sign legislation that would have created a carbon cap-and-trade system.  Such a system would have increased energy prices dramatically, but it also would have “done something” about “global climate change,” one of the Left’s favorite pet projects.  It is also common knowledge that Obama didn’t intend the legislative defeat of this pet project to stand in his way and that he intended to do administratively, through the Environmental Protection Agency, what he was unable to the do legislatively, which is to say that he intended to put such a system in place after the election, legislative authority be damned.

Enter Richard Windsor.

Who is Richard Windsor, you ask?  Well, he’s nobody.  Literally.  Recently, John Fund told Mr. Windsor’s tale:

The sudden announcement that Lisa Jackson, the controversial head of the Environmental Protection Agency, will be resigning later this month means that the mysterious Richard Windsor will be leaving the building with her.

 His is apparently one of several fake names on official EPA e-mail accounts that Jackson used to conduct business while at EPA. Her office claims the name is a combination of her dog’s name and that of the town of East Windsor, N.J., where she once lived.

 It’s not uncommon for government officials to have private e-mail accounts. But federal law has set up several barriers to prevent officials from using non-official or secret e-mail addresses to conduct business and then conceal the contents of those accounts from Freedom of Information Act (FOIA) requests.  Politico reports that the EPA was supposed to ensure that anyone requesting Jackson’s e-mails under FOIA would also have access to communications from “Richard Windsor.”  “But the system is far from foolproof,” it dryly notes.

 When the Competitive Enterprise Institute, a free-market group, came up empty on its FOIA requests for Jackson’s e-mails relating to her anti-coal efforts, it was told by an EPA whistleblower that she was using “Richard Windsor” and other aliases to coordinate with outside anti-coal groups and engage in other activity she wouldn’t want to come to light.

So, as it turns out, the “most transparent administration in history” has been colluding in secrecy (and in violation of federal law) to kill coal, jack up energy prices, and God knows what else.  And now the administrator in charge of the agency at which the collusion took place is heading out of Dodge, one step ahead of the law.

Will this scandal have the proverbial legs that the other Obama scandals haven’t?  Who knows?  Only time will tell, naturally.  But you can bet that this makes Obama’s plans to regulate carbon emissions far more difficult.  The energy cost increases that such regulation would create are already acknowledged to be particularly regressive.  Add in the fact that they might have been created in violation of both federal law and Obama’s own promises and they would likely come to be seen as dishonorable as well.

This is good news, of course, for everyone but Barack Obama, Lisa Jackson, and Richard Windsor.  All of them will pay a price for this scandal.  Windsor, of course, has already been “disappeared.”  Whether the effects on Jackson and Obama will be anywhere near as significant, we cannot say.

Although we can hope.

Copyright 2013. The Political Forum. 8563 Senedo Road, Mt. Jackson, Virginia 22842, tel. 402-261-3175, fax 402-261-3175. All rights reserved. Information contained herein is based on data obtained from recognized services, issuer reports or communications, or other sources believed to be reliable. However, such information has not been verified by us, and we do not make any representations as to its accuracy or completeness, and we are not responsible for typographical errors. Any statements nonfactual in nature constitute only current opinions which are subject to change without notice.