Politics, et Cetera
A publication from The Political Forum, LLC
Tuesday, January 6, 2015
They Said It:
The hard truth is that not everyone is sharing in this city’s splendor and glory. A shining city is perhaps all the President sees from the portico of the White House and the veranda of his ranch, where everyone seems to be doing well. But there’s another city; there’s another part to the shining the city; the part where some people can’t pay their mortgages, and most young people can’t afford one; where students can’t afford the education they need, and middle-class parents watch the dreams they hold for their children evaporate.
In this part of the city there are more poor than ever, more families in trouble, more and more people who need help but can’t find it. Even worse: There are elderly people who tremble in the basements of the houses there. And there are people who sleep in the city streets, in the gutter, where the glitter doesn’t show. There are ghettos where thousands of young people, without a job or an education, give their lives away to drug dealers every day. There is despair, Mr. President, in the faces that you don’t see, in the places that you don’t visit in your shining city.
Mario Cuomo, 1984 Democratic National Convention Keynote Address, July 16, 1984.
DOMESTIC POLITICS 2015: A TALE OF TWO CITIES.
It is fitting, we suppose, that we publish this piece less than a week after the death of Mario Cuomo, the erstwhile three-term governor of New York and the father of the state’s current governor. The elder Cuomo, for those of you who don’t know, was, in some ways, very much like our current president. He captured the “progressive” imagination and was once considered the “spark” that would ignite the liberal renaissance. Like Obama, he introduced himself to a nationwide audience with a keynote address at his party’s national convention. But unlike Obama, Cuomo could never muster up the self-importance to run for president himself. More to the point, unlike Obama’s allegedly “impressive” keynote speech that was, in truth, mere platitudinous puffery, Cuomo’s address was something of a rhetorical masterpiece.
Unfortunately for him and for his fellow Democrats, however, Cuomo’s address was simply overwhelmed by the far more theatrical, far more stirring, and far more realistic speeches given by President Reagan and Ambassador Jeanne Kirkpatrick at the Republican convention in Dallas. Even so, the themes about which Cuomo spoke – “this nation is more a ‘Tale of Two Cities’ than it is just a ‘Shining City on a Hill’” – resonated with his fellow liberals and formed the foundation of the Left’s critique of this nation for years to come.
Interestingly – ironically, we suppose – it also forms the foundation for this week’s column, our domestic political forecast.
You see, from all external appearances 2015 is a year of optimism, of joy, and of great expectations. Or at least it is if you listen to the grand poohbahs in the world of politics, entertainment, and punditry. The economy is cooking for the first time in years. The markets are screaming higher, setting records almost daily. The price of oil is down – miraculously! And all is right with the world once again. Barack Obama is excited for 2015. The mainstream media is excited for 2015. Larry Kudlow is excited for 2015. Heck, even Peggy Noonan is excited for 2015. And so are all the people she knows!
Indeed, Noonan dedicated her entire column last week to gauging the “attitudes” of “people” about the New Year. And who, exactly, are these “people” whose opinions she surveyed? One is the founding editor of a political journal. One is a former Senator, a former Governor, and a current university president. Another is a historian, an author, and a presidential scholar at a university. Still another is a current Senator (and a former House Member and big shot Washington trade and budget administrator). One is a former two-term governor, the son of one president and the brother of another. Two are well-known journalists. And then there is a high-powered New York attorney, a former presidential press secretary, another historian, the former executive editor of a news magazine, and a billionaire oil baron, respectively.
These are the people Peggy Noonan surveyed, because these are the people that Peggy Noonan knows. They’re the people with whom she speaks, hangs out, and imbibes cocktails. A Pauline Kael for a new century, Peggy Noonan just doesn’t understand how anyone could be glum. Everyone she knows is excited for 2015. And if they’re excited, well then, why shouldn’t everyone be excited?
What Noonan doesn’t understand is that neither she nor her acquaintances are typical of the average American. Like Miss Kael – the late film critic who infamously didn’t know anyone who voted for Nixon – Peggy Noonan lives in a “special world.” And in that special world, things look pretty good. Larry Kudlow lives in that special world too. And so does the mainstream media . . . .and the Republican Congress, and Jeb Bush, and Barack Obama, and all the rest. As far as they’re concerned, everything is just ducky, as the saying goes.
For the rest of the country, however, 2015 does not look quite so wonderful. The benefits of the American economic, social, and political system continue to accrue unevenly, perhaps more so now than ever before. Three decades ago, Mario Cuomo unearthed a kernel of truth when he said that the nation was deeply and stubbornly divided between the “haves” and “have nots.” What he never understood, however, was that both he and his fellow statist-liberals were actually part of the problem rather than the solution and that their well-meaning but woefully misguided efforts were actually strengthening the mechanism that produced and preserved that divide. Then as now, the state and the power it wields were the ultimate enablers of privilege.
We hate to be the ones who break this news to Peggy Noonan and the rest of the ruling class, but we suspect that this truth will be more evident than ever in 2015.
All of which brings us to . . . .
Forecast #1: Barack Obama will spend 2015 acting as if he hasn’t a care in the world. He will enjoy himself. He will feel “unbound,” “liberated.” And his media allies will rejoice that finally – after six painful years of waiting – they have been graced by The One for whom they’ve been waiting.
We’re not sure if you know this, but Barack Obama had a sensational 2014. You don’t think so? Well, don’t take our word for it. Just ask him. Or ask any of his mainstream media toadies. They’ll tell you. He. Was. Awesome!
What’s that, you say? What about the Obamacare disaster; the Russian invasion of Ukraine; the rise of ISIS; the Ebola scare; the Bowe Bergdahl outrage; the VA wait-list scandal; the race riots and the related assassination of two of New York’s Finest; the swarms of unaccompanied minors pouring over the Southern border; the midterm election debacle; and on and on and on. . . .?
Don’t pay any attention to any of that. Heaven knows Obama himself doesn’t. As far as he’s concerned, he won 2014, and he won it BIG. And he’ll win 2015 the same way.
And lest you find this hard to believe, just punch “Obama” and “unbound” or “Obama” and “liberated” into the old Google machine and see what you get. Or maybe just read the following from Michael Cohen in the Boston Globe, which is but one example of the media’s current Obama “narrative.”
In a popular and hilarious YouTube clip, the honey badger has been immortalized as a bold, fearless, and undaunted creature who doesn’t care. That’s pretty much been Obama’s modus operandi since the midterm elections.
First there was Obama’s trip to China, in which the two nations reached a historic agreement to reduce greenhouse gas emissions, paving the way for a possible climate deal in 2015. Next came Obama’s executive order on immigration that will provide temporary legal status and forestall deportation for millions of illegal immigrants. Then there was the move earlier this month to restore diplomatic ties with Cuba, ending a failed five-decade policy of political and economic isolation. In between, Obama endorsed tougher rules for companies that provide broadband access, to the benefit of consumers; issued an executive order protecting the Bristol Bay salmon fishery in Alaska; and upended a tax bill in Congress — supported by prominent Democrats, including Senator Harry Reid — that he said wouldn’t do enough to help working families. He’s even used the symbolic elements of the bully pulpit. In last week’s press conference, he purposely called only on female journalists; and at a Toys for Tots event this week he made a point to put traditional toys for boys — like sports equipment and Legos — in the bin for girls. When questioned about the move, the president asked derisively, “Girls don’t like toys?”
Don’t you see? This is really, really great stuff! Obama is brave and clever, and best of all, undaunted by those stupid Debbie Downers who don’t know greatness when they see it. So everyone is happy. Right?
Well, no. There is a segment of the population that is not happy. This group, which we’ll call “normal people,” is actually pretty unhappy. These “normal people” are members of the middle and working classes. They’re the people whom folks like Mario Cuomo promised to help but who have instead been hurt at the expanse of the liberal state over the last five-plus decades. They’re the folks who put their faith in government and politicians and who bought into the “New Deal” and the “Great Society,” but have seen their political and economic relevance decline, in fits and starts to be sure, since at least the Nixon administration. These “normal” people have seen very little benefit from the growth of the administrative state. And worse yet, they know their children will see even less.
In case you haven’t yet guessed, these are the people whom our old friend Angelo Codevilla labeled the “country class.” They’re also the people who comprised the much-maligned Tea Party. They were unhappy six years ago. They’re still unhappy now, despite Obama’s so-called “liberation.” And most notably, there a many more of them than anyone in the ruling seems to understand.
For starters, the members of the country class don’t care at all about Cuba or about détente with the Castro brothers. They may tell pollsters, if they are asked, that they support ending the embargo and opening up relations with the island country, but if the pollsters hadn’t asked, they never would have thought of it – ever. Unlike the leftwing political activists and the media types (same thing, we know), these people have never given much thought to the Castros, to their regime, or to the normalization of relations with Cuba. What do they care if Jay-Z and Beyonce need a nice, quiet place to vacation, away from all the other “tourists?” What interest do they have in Cuban rum or expensive cigars? Cuba, as it turns out, is strictly an insider concern, a ruling-class worry.
As for the rest of Michael Cohen’s list of Obama’s “victories” – greenhouse emissions, immigration, and of course gender-neutral Christmas toys – the people of the country class don’t have the time or the inclination to worry about such things. And if they did, they would find them to be either stupid or amusing. In short, Obama’s “victories” are victories for him and the ruling class, not victories for the people or for the country. There is a reason, you see, that the Congress has NEVER passed greenhouse emissions legislation or ratified a climate treaty. There is a reason why Congress can’t and won’t pass an immigration overhaul that provides legislative amnesty to bolster Obama’s administrative version.
And what, pray tell, is that reason? Well, it’s the fact that average Americans hate, hate, HATE these policies. They want jobs and economic growth, not global warming deals. They want a secure border and disincentives to illegal immigration, not rewards for those who broke the law and incentives for others to do the same. And they have told pollsters all of this over and over (and over) for years.
Not that any of that mattered to Obama or to the rest of the ruling class. They had a good time. And really what’s more important than that?
All of which is to say that you, gentle reader, should look for more such “victories” in the year to come.
Forecast #2: The members of the newly elected Republican Congress will respond to the “unbound” Obama precisely as everyone expects them to: they’ll roar their terrible roars and gnash their terrible teeth and roll their terrible eyes and show their terrible claws. And then they’ll do nothing of any substance. And this will cause them immeasurable political harm.
Look, we are as happy as anyone that the Republicans took over the Senate and expanded their margin in the House. We think that a two-house Republican Congressional majority is absolutely necessary to steer the federal government in the proper direction. Unfortunately, while it may be necessary, it is hardly sufficient.
To be fair, we wouldn’t want to be either John Boehner or Mitch McConnell. Being a Republican leader in Congress, especially when facing down a Democratic president, is no easy task. Newt Gingrich, for example, may have been the greatest conservative political talent of his generation. But he was beaten, battered, and eventually booted by his own party because he was pitted against the greatest political talent of his generation, regardless of party or ideology.
The good news for Boehner and McConnell is that they don’t have the same problem. As we’ve said countless times in these pages, when it comes to political skill, Barack Obama is no Bill Clinton – and it’s not even close. Even so, the Speaker and the new Senate Majority Leader will have their work cut out for them.
Not only do they have to deal with a president from an opposing party, but in their case, they have to deal with one who is unlike any other president in modern history. Beyond that, of course, each man has to balance the demands of numerous different constituencies, those being: the country as a whole; their party; those members of the party that put them in power; their constituency back home; their donors; and yes, their consciences.
Rarely do the interests of all of these constituencies align. Most of the time, they do not. And the one constituency that usually gets the proverbial shaft when disagreements occur is, yes, the “country class,” the “normal people,” the everyday, working class American who can’t figure out what the hell has happened to the country and the promise it once held.
The result is that the “country class” has come to detest Congress and its leadership. Even among their own, they are not liked, , as Kristin Taylor noted for Gateway Pundit over the weekend:
A second round of poll results from a survey of Republican voters taken Christmas week by Pat Caddell’s EMC Research was released on Sunday. The poll shows that a revolution is at hand with a stunning majority of 2014 GOP voters who gave their party control of both houses of Congress ready to throw out the Republican leaders of both houses in favor of new leadership.
Only sixteen percent of voters surveyed want both John Boehner and Mitch McConnell to serve as leaders of the House and Senate respectively when the 114th Congress convenes this week. Boehner’s support on his own for Speaker of the House of Representatives is a pitiful twenty-five percent while McConnell’s support for Senate Majority Leader is just as bad at twenty-seven percent.
A shocking nine out ten GOP voters have no faith in political leaders of either party.
Ninety-one percent agreed with the statement, “Political leaders are more interested in protecting their power and privilege than doing what is right for the American people.”
Eighty-nine percent agreed with the statement, “The power of ordinary people to control our country is getting weaker every day, as political leaders on both sides fight to protect their own power and privilege, at the expense of the nation’s well-being.”
Seventy-nine percent do not believe, “the US government is working for the people’s best interests.”
Does this mean that the new Congress is going to respond to the concerns of the “country class?” Well, no. That’s not how things work in your nation’s capital. In practice, the new Congressional leaders – and, by extension, the Congress they lead – are going to push immigration, for example, because that’s what the Chamber of Commerce wants. They’re going to fund the Export-Import Bank because that’s what various business interests want. They’re going to avoid rocking the boat by threatening a shutdown or impeachment or censure or . . . well . . . anything else. In short, they are going to “play it safe,” because that what Peggy Noonan and her friends want them to do and what they think constitutes “responsible” leadership. And that makes sense, after all, since things look pretty rosy for them and theirs.
The Tea Partiers tried to break this pattern some years ago, if you recall. And while they had some political success and managed to shake up the Republican Party a bit, ultimately, they failed. They failed, of course, not because of opposition from the Democrats or the mainstream media. They failed, rather, because the establishment wing of the Republican Party didn’t like them. The establishment saw the Tea Partiers as kooks; ignorant sorts who simply didn’t understand the way things really work in Washington. The Tea Partying country class rocked the Republican boat. And that was more than the establishment could take.
What that means, we think, is that the country class and its demands are going to meet with the same response from the Republican Party leadership in this Congress as they did in prior ones. This country class provided the votes that put Boehner and McConnell into their leadership positions. But they don’t have the power to much beyond that. And everyone in Washington knows it.
In short, we anticipate that the country class is not only going to remain unhappy, but is going to grow unhappier over the next couple of years. Barack Obama will be happy being the“unbound. The Republican Congress will be happy with its biggest majority in nearly a century. Bill Gates and Mark Zuckerberg will be happy that their companies’ stocks are doing well and, relatedly, that their policy preferences are being enacted by the nation’s leaders. Peggy Noonan and her friends will be happy because the economy is growing again and divided government is awesome and . . . well . . . because it’s good to be part of the ruling class.
Meanwhile, the members of the country class will be lucky if they get to drag themselves off to work in the morning, after waking up their college-educated kids living in the basement. And they are going to resent the ruling class that continues to do nothing for regular folks like them, or to bring some normality to a culture that seems to them to have gone mad They’ll get angry at Barack Obama. And they’ll get angry at the Republican Congress. They’ll blame them both equally. Of course, only one of the two has to stand for election in two years.
You think Barack Obama is lightweight policy naïf who does stupid things? Well, you’re probably right. But he’s smarter than his opposition. He never has to face the voters again. They do. The “stupid party” rides again, in short.
Forecast #3: Jeb Bush will emerge as the frontrunner for the GOP presidential nomination.
A few weeks ago, John Ellis Bush – a.k.a. “Jeb” – announced his intention to “explore” the possibility of running for the presidency of the United States. Last week, he demonstrated the seriousness of this exploration by resigning from the boards of directors of all the corporations and non-profits on which he sat. And if you want to know how this prediction fits into our overall theme, think about that for just a minute. When was the last time you prepared to interview for your next job by resigning from the boards of directors of all the companies on which you sat? If the answer is “never,” or “what boards?” then you probably see our point.
Let us be clear about this. Jeb Bush is a fine conservative. He is a good politician and would probably make a very good president. When he was the Governor of Florida, he was universally lauded for his statesmanship, his competence, and his conservatism by folks like the editorial board at National Review and our old friend Steve Moore. Moore, for those of you who may not know, is one of the most interesting and dynamic conservative economists around. He is the co-author of more than one book with the godfather of supply-side economics, Art Laffer. And he is also the founder of the Club for Growth – the original and best known RiNO-bashing conservative campaign organization. Frankly, if Steve vouches for a guy’s conservative bona fides and his leadership skills, then that guy is fine by us.
But, of course, that’s not really the point.
The point is that Jeb Bush will be the establishment choice in the 2016 GOP primary contest, ideology notwithstanding. With a brother and a father who, between them, have twelve years of presidential experience, how could he not be? The GOP – with only two exceptions over the last sixty-plus years (1964 and 1980) – nominates the establishment candidate. Bush will have the fundraising advantage, the operatives advantage, the media-hype advantage, and, of course, the name-recognition advantage. He’s the guy to beat now and he will be the guy to beat next January.
Bush will not, of course, be the only competent candidate in the race. Indeed, the primary field will be loaded with good candidates, for the first time since . . . well . . . maybe ever. But even the early list of potential candidates not-named-Bush gives Jeb an advantage.
Consider, if you will, the candidacies of Mike Huckabee and Rand Paul. Huckabee, as you may know, is the former governor of Arkansas, a former presidential primary candidate, and now a former Fox News personality as well, having quit his show over the weekend to prepare for his own run at the 2016 nomination. He is also, of course, an ordained minister and a strong social conservative.
Now, as a hardcore social conservative, he has limited appeal. He tends to do very, very well among evangelical voters, but very, very poorly among non-evangelical voters. He does well in Iowa, in other words, but not in New Hampshire. The odds are infinitesimally small that he will win the GOP nomination or the presidency. Those odds are not entirely non-existent, but they are quite long.
All of that said, Mike Huckabee is an extremely entertaining and engaging candidate and an excellent orator (as you might expect from a Baptist minister). He is a very capable politician, and he has an ability to make less confident and less capable politicians look foolish. As more than one commentator has noted since Huck’s resignation over the weekend, he will likely play the role of a spoiler in this campaign, setting his sights on one candidate in particular – a frontrunner – and taking that candidate out.
Oh, and did we mention that he doesn’t much care for libertarians?
So here’s how we see this playing out. Mike Huckabee will find himself intellectually and morally incapable of cutting Rand Paul any slack. He will hammer Paul on social issues, moral issues, and most especially foreign policy issues. He will kick Paul around for his (and his father’s) vague and somewhat distressing civil rights notions and affiliations. Huck will, in short, expose the younger and less-experienced Paul’s youth and inexperience, as well as his policy deficiencies. In short, he will knock the Tea Party favorite out of serious contention for the nomination.
And who will be the big winner if that happens? Jeb Bush, that’s who.
In the end, the nomination will come down to the establishment candidates because it ALWAYS comes down to the establishment candidates. Jeb Bush will square off against Chris Christie or John Kasich or . . . well . . . some other nice, plain, vanilla, conservative who would be a perfectly adequate president. The GOP insiders will, as they always do, decide the nominee. And the candidates representing the most vibrant, most energetic, most vocal, and fastest-growing wing of the party – the insurgent Tea Party/libertarian/small government/constitutionalist wing – will be packed up and sent back home by the end of next January. The ruling class will see that one of its own is nominated and the country class will have no real choice but to go along.
Forecast #4: Hillary Clinton will NOT be the frontrunner for the Democratic presidential nomination at the end of 2015.
If you’ve been reading our stuff over the last couple of months and especially if you read out blog post after the election, you may know that we’ve long thought that Hillary would flame out before she won the nomination. She and Bill have made over $100 million since leaving the White House, mostly by giving speeches to businesses, non-profits, and college kids whose student loans go to pay the Clinton’s outrageous speaker fees. Additionally, Hillary is rather universally loathed by the white working class, the very people who formed the core of her husband’s electoral coalition.
In many ways, she is the personification of the societal duality that has been the theme of this piece. She and Bill are quite possibly the most prominent examples in the country of people who leveraged their connections to the state to secure jobs, fabulous wealth, and immense power. Bill was president, which led to Hillary being in the Senate, which led to her being Secretary of State, which led to her being the frontrunner for the Democratic presidential nomination, and all of which helped them amass a huge fortune, all while committing “public service” on the poor, unsuspecting people of the United States.
All of that said, the real reason we think Hillary will not be the next president or even the next Democratic nominee is our suspicion that she won’t even run. Now, a great many observers have speculated about her health and have suggested that she may stay out of the race because she is not especially well. For our part, we think that the “health concerns” will make a nice cover story.
The truth is that Hillary is not an especially talented politician. She proved that in 2008 and she proves it again every time she steps up behind a podium. We’d say that at best, she’s actually pretty average. The biggest asset that Hilary has is not her intellect or her experience or even her wealth. The biggest asset she has is her husband. If Hillary’s last name were Smith, no one would ever consider her presidential material. And yet she’s the presumed frontrunner – for the second time! – simply because she shares a last name with the country’s 42nd president.
We’ll concede that the same is undoubtedly true for Jeb Bush, who shares a last name with the 41st and 43rd presidents. But in Jeb’s case, these assets of his are unlikely to cause him unending embarrassment and are thus unlikely to mitigate the electorate’s enthusiasm for him. The same cannot be said of Hillary and her asset.
For months now, Rand Paul has made it clear that he thinks Bill’s conduct is fair game in any campaign against Hillary. There’s a reason for that, of course. As the late, great Father Richard John Neuhaus put it, observing Bill was like watching “with fascinating disgust as an unstoppable toilet backs up into [your] living room.” Before long, we suspect that everyone – including Hillary’s Democratic challengers – will be doing their best to make sure that everyone in the country watches with the same fascinating disgust.
As you may have heard or read, England’s Prince Andrew is currently embroiled in a sex scandal involving underage girls. But he is not the only political celebrity whose name has surfaced in the investigation. As London’s Independent reported over the weekend:
A list of people who have associated with Jeffrey Epstein over the years would take in the world of celebrity, science, politics – and royalty.
Over the years, the casually-dressed, globe-trotting financier, who was said to log more than 600 flying hours a year, has been linked with Bill Clinton, Kevin Spacey, Chris Tucker and Manhattan-London society figure Ghislaine Maxwell, daughter of the late media titan Robert Maxwell.
Epstein reportedly flew Tucker and Spacey to Africa on his private jet as part of a charitable endeavour. Clinton, meanwhile, flew on multiple occasions in the same plane to Epstein’s private Caribbean island, Little St James, between 2002 and 2005 as he developed his philanthropic post-presidential career. It would later be alleged in court that Epstein organised orgies on that same private island in the US Virgin Islands.
Last March, the Wall Street Journal reported that some member of the Clinton inner-circle were trying to talk Hillary out of running for president for just this reason, to save her the embarrassment of having to answer for Bill’s “love” life. Our expectation is that these advisers will eventually convince her that they’re right and that Bill is simply too great a weight to carry throughout a long and grueling campaign for the White House. We know that Democrats have routinely ignored the fact that Bill is a lecher. But at some point, this fact becomes sad rather than charming.
Forecast #5: The economy will continue to improve overall. Barack Obama will talk about how awesome the economy is. The mainstream media will talk about how awesome the economy is. And yet the economy will continue to be voters’ most intense and most understandable concern.
We know the economy is improving and we are quite happy that it is. We’re a little annoyed that Barack Obama will claim credit for it, and we’re a lot annoyed that the Republicans won’t be able to explain why they should get more credit, if for no other reason than that they stopped Obama from strangling the recovery in the cradle. Remember when we needed more fiscal stimulus or the economy would never recover? Remember when we needed an extension of long-term unemployment benefits in order to stimulate the economy and keep it from crashing again? Remember when the government shutdown would kill any nascent recovery? Remember when the sequester would forever doom the nation to low-growth austerity hell?
Over the past couple of years, Obama has tried and tried and tried to force the Republicans in Congress to accede to his Keynesian economy-boosters. Over the past couple of years, Obama has tried and tried and tried to liken Republicans to Ebenezer Scrooge for their unwillingness to give just a little here or a little there to help the economy and its victims. The Republicans resisted, of course, earning the title of the “least productive Congress in history.” And good for them. For lo and behold, the economy has recovered anyway. Paul Krugman, the Nobel Prize Committee’s biggest embarrassment to date, says that no President should get credit for economic growth – except Barack Obama. In a way, we suppose he’s right. If Obama had been a little less caustic or a little more adept at negotiation, he might have convinced Congress to pass more of his economic schemes. And heaven knows where we would be then. Hurrah for gridlock and do-nothingness, say we, the smartest policies Washington has advanced in decades!
Unfortunately, the big problem with the “Obama Recovery” is that it is playing out precisely as we feared – and as Obama had planned. Corporate profits continue to rise. Consumers continue to struggle. The uber-rich continue to get richer. The middle class continues to see stagnant wages. Markets continue (more or less) to scream upward. And those without equity holdings continue to see no benefit whatsoever. The Obama economy – that is, the new feudalism, in which the fabulously wealthy on Wall Street and Silicon Valley fund the welfare state for everyone else – is right on track.
This week, while President Obama was preparing, yet again, to campaign across the country, touting his economic policies, Ron Fournier, a dedicated liberal, a senior political columnist, and the editorial director for National Journal, checked in from Northern Michigan, where he is on book leave and is witnessing first-hand the effects of the Obama “recovery”:
The diner smelled like bacon and wet socks. I sat at one table, scrolling through Twitter as news broke from Washington that the economy is on an upswing. At four other tables sat five regular customers sharing a single conversation.
“I leave my Christmas lights on for two hours — tops,” said the waitress, flitting between regulars with a pot of off-brand coffee.
“An hour for me,” said the local cop. The farmer at the next table nodded his head, “That’s about all I can afford, too.” . . .
Twitter brought good news from the nation’s capital: The U.S. economy grew at its fastest rate in more than a decade between from July through September, hitting an annualized rate of 5 percent. The Washington Post declared that “a once-sluggish recovery is now running at full speed.”
I didn’t share the news with the regulars. They’re already skeptical about the bald guy from Washington who comes around every couple of months. Except for gas prices, which had plunged for the holidays, they don’t believe happy talk about a new economy that has left them behind.
A great many people have been left behind, of course. And even with the surprising stimulus provided by the drop in oil prices, a great many will still be left behind. In noting this, we are not confessing a left-ish conversion of some sort. We are merely noting that the economic recovery has been and continues to be exceptionally uneven. In previous recoveries, particularly the Reagan recovery in the mid-1980s, everyone benefitted from growth. The much maligned “trickle-down” economy really did trickle down to everybody. That’s not been the case with the current recovery so far. And even with the oil-stimulus, it still won’t be.
The other day, we saw our friend, the aforementioned Steve Moore on TV talking about the economic benefits of the drop in oil prices. He noted, almost as an afterthought, that some states – namely Alaska, North Dakota, and Texas – will see some economic damage from the price drop, largely because their economies are heavily dependent on energy production. On the surface, we suppose, that doesn’t sound like much of a big deal. Three states, out of fifty. That’s what, 6% of the country? But then . . . when you think about it, Texas really is kind of a big deal. Or as Mark Perry of the American Enterprise Institute put it just over two months ago:
Since December 2007 when the Great Recession started, Texas civilian employment has increased by 12% and by more than 1.32 million jobs, from just over 11 million jobs in December 2007 to 12.32 million in September of this year (see blue line in chart). In contrast, civilian employment in the other 49 states without Texas is still 0.73% and almost one million jobs below the December 2007 level (see red line in chart) – 134.27 million non-Texas jobs in September vs. 135.26 million in December 2007. . . .
In another job-related milestone for Texas, the BLS reported today that annual payroll employment in Texas increased in September by more than 400,000 jobs from a year ago for the second straight month, and established a new all-time state record for job growth over a 12-month period with a 413,700 gain from September 2013. Over the last year, Texas has added almost 1,600 new jobs every business day – a hiring rate of almost 200 jobs every hour! Also, Texas’s annual job gain of 413,700 through September represented 15.7% of the country’s 2.635 million increase in nonfarm payroll employment over that period, even though Texas’s population is only 8.4% of the US total. In percentage terms, Texas payrolls increased by 3.7% over the last 12 months, almost double the 1.9% growth in US payroll employment.
The Dallas Fed noted earlier this year that the job growth in Texas has been across the board, covering all industries and all income levels. Indeed, from 2000-2013, Texas led the nation in job growth in ALL four income quartiles. What that means is that Texas has been one of the few bright spots for everyone. It has seen growth in first-jobs, in step-up jobs, in lower management positions, in high-wage manufacturing jobs. Texas is the outlier and the mutineer in the Obama economic plan. Or at least it was.
Does this mean that we’re pessimistic about the oil-price slide? Of course not. We think it’s great. At the same time, we also think that the slide will actually reinforce the increasing duality in the American economy and indeed American society more broadly.
Even in our business, the driver of the economic recovery, the duality of the American society is evident. The markets have set record after record after record. But does that mean that everyone is getting richer? No, actually, as Joshua Brown noted in a recent column for Forbes:
It’s been one of the worst years for investment decision-making on record, almost across the board. No strategy worked consistently, save for the type of shareholder activism that only a handful of Wall Street’s billionaire titans are able to engage in.
For almost everyone else, it was a year of frustration against a backdrop of better-than-average returns for the most popular index in the land. . . .
While the S&P 500 is on track to conclude another stellar year of gains, those who sought to beat the index are poised to finish with a more dubious distinction. According to Lipper, 85% of all active stock mutual fund managers had been trailing their benchmarks through the end of November. In a typical year, there are nearly twice as many managers outperforming, with only around two thirds of funds struggling to catch up. Lipper says this is the worst year for active managers relative to the market in three decades.
Stock pickers encountered difficulty this year in part because of concentration at the top of the market. Just five stocks — Apple, Berkshire Hathaway, Johnson & Johnson, Microsoft, and Intel — accounted for 20% of the market’s gains. If you weren’t at least equally weighted toward them, you had virtually no shot at making up for missing their enormous, index-driving gains. A majority of the market’s stocks did not perform nearly as well. According to the Leuthold Group, only 30% of S&P 1500 stocks posted gains exceeding the index itself. You’d have to go back to 1999 to see anything like this. . . .
The malaise was not confined to those picking individual stock winners. Through December 1, aggregate hedge fund returns trailed the market to the point of farce. According to data compiled by Bloomberg, hedge funds were up an average of 2% on the year, just barely offering the coupon rate of a risk-free 10-year Treasury note. Over 1,000 funds are on track to close down in 2014, the worst year for liquidations since 2009.
It’s no coincidence, we suppose, that Brown uses Charles Dickens as the hook for his piece, citing his most famous line, “It was the best of times. It was the worst of times.” And that line, of course, is the very first in A Tale of Two Cities. . . .
Forecast #6, our Out-of-Left-Field Prediction: Former Democratic Senator and Republican Secretary of the Navy Jim Webb will either save the Democratic Party or provide the catalyst that destroys both parties.
For the record, when we say that both parties may be destroyed, we don’t mean that literally. We mean that the parties – as they currently exist – will be destroyed. The parties will remain, but they will be changed and their coalitions will be altered. They will, in short, look very different.
And the catalyst for that change/destruction may well be Jim Webb.
We really, really don’t want to like Jim Webb. We find him to be one of the more brusque and arrogant members of Congress we’ve seen in a long time. Moreover, we thought he behaved badly in his personal encounters with President George W. Bush over the Iraq War.
At the same time, we find Webb fascinating. He is like no other national politician in the country. He is a graduate of the Naval Academy. He is a highly decorated Marine who served in Vietnam. He is, as we noted above, a party-switching politician who served in the Reagan administration and the Senate. He is an accomplished businessman, a very talented and thought-provoking author. Most interesting of all, he is an unashamed Southerner who not only defends his Confederate soldier ancestors, but staunchly and aggressively celebrates the Scots-Irish and their incomparable impact on American history. He is an anachronism in today’s Democratic Party and, frankly, in the ruling class more generally.
Jim Webb is also the only Democrat officially currently running for the 2016 presidential nomination and the only Democrat who has any hope at all of winning back the votes of the “Jacksonian” white working-class that abandoned Obama in droves.
The problem with Webb is that he is actually more out-of-touch with the spirit and the energy of the Democratic Party today than even Jeb Bush is with the spirit and energy of the GOP. The Democrats have been moving leftward since Bill Clinton left office. And Webb is, if anything, to Clinton’s right on most issues. He is, in other words, an unlikely successor to Barack Obama, whom the mainstream press and the Democratic base consider too “centrist.”
Can Webb win the Democratic nomination? Maybe, especially if Hillary backs out of the race. But if he does, he will radically change the Democratic Party and will alienate the party’s already alienated left wing.
If he did win the nomination, Webb would be shoe-in for the White House, since he represents not only the centrist faction of the Democratic Party, but much of the disenchanted “country class” as well. Webb could well be the first nationwide, bi-partisan consensus candidate since Reagan won reelection 30 years ago.
But he can’t get there unless he somehow manages to pacify the Democratic Party’s left wing, an almost impossible task.
So what will he do? We’ll be damned if we know. But his candidacy in of itself is a threat to both parties. He and his messages resonate with the forgotten country class. And therefore he represents a very serious threat to both parties.
We have no idea whatsoever how this threat will play out, but we will watch it with intense interest. As we said, Webb is a fascinating politician. And if his candidacy gains any momentum, then his effect on the political landscape of this country could be fascinating as well.