Wednesday, April 30, 2008

Obama's Biggest Problem is McCain, not Wright

Barack Obama is working feverishly to undo the mostly self-inflicted damage caused by the comments of the Rev. Jeremiah Wright, but events this week show that his bigger problem is John McCain. If Hillary Clinton somehow overcomes Obama's lead for the Democratic presidential nomination, McCain is shaping up to be a formidable opponent for her, too.

First, let's state the obvious. Hope and change. Obama was absolutely correct that more than anything else in this election year, Americans want someone who will change the political climate in Washington, D.C., thereby providing hope for the future. If Obama had been what he initially claimed to be, and hadn't totally screwed up the Wright mess, Michelle could be taking measurements in the White House for her interior designers.

Instead, the door has opened for others to take the hope and change mantle. The clueless Clinton campaign has been unable to take advantage of the opportunity. McCain, whether consciously grasping for the mantle or not, seems headed that direction this week with two major items.

1. He has come out in support of suspending the federal gasoline tax this summer. With the price of a gallon of gas closing in on $4 (and over now in San Francisco and Hawaii), drivers are being gouged for driving as much as they are for eating or getting health care.

The solutions being peddled around by our so-called "leaders" is to drill in the Alaska National Wildlife Refuge or to stick it to the oil companies with more taxes. ANWR drilling won't help us now. Higher taxes for oil companies will mean even higher costs for us in the end, hurting us at the pump or as shareholders.

Suspending the federal gas tax helps us now, when we need it. We've all been socked by higher prices for basic necessities and, for some of us, lower income. The price of oil affects not only our driving, but the cost of the wide variety of products that use petroleum in manufacturing. Truckers are hurting terribly. Airlines are closing up shop. That's not big, bad business -- that's people losing jobs.

Now, I have no idea just how good or bad an idea it is to temporarily remove the tax. The bigger point for me is that the McCain campaign is willing to be creative in the issues it supports. Forget the old arguments. Here's a new solution. People who want change in our national leadership are going to give the Arizona senator a lot of credit. Clinton will receive some, too, for her support but I'm not sure how far "me, too" goes with her.

2. Speaking of change, the debate over health care reform has basically been between leaving things as is or edging toward nationalizing the system. Polls have shown, by sometimes overwhelming margins, that people want neither option. They want reform, but not socialized medicine.

So McCain goes out and proposes something almost entirely different. His plan is to disengage health insurance from your work and make it entirely private, like automobile insurance. You go find the best coverage you can at the best price. Again, he is daring to be different in an era when the voters are attracted to the unusual. His plan may not be the best in the world. It might be. But he's going to get credit from voters for proposing something that hasn't been part of the debate before.

McCain's strength, overall, is that he means what he says. Like it or not, and many Republicans have not over the years. Obama had that going for him, too, until his spring meltdown. If McCain keeps up what he's doing so far, it'll be Cindy whose in charge of redecorating the big house on Pennsylvania Ave.

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According to Rasmussen Reports, the polling firm, McCain's numbers have slipped a little bit in a projected November matchup with Clinton, and his favorable ratings are down a few points. It'll be interesting to see what the polls show in a week or so, after people have had a chance to digest the Arizona senator's newest proposals.

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No, I'm not happy that the Federal Reserve cut interest rates again, this time to the lowest level since 2004. However, there is some word that this might be the last reduction to get the economy turned around, before Fed governors turn their sights on inflation.

As has happened just about every time the Fed cuts rates, the expected boost is overshadowed by reality. Today's reality was a report that the economy grew by just 0.6 percent in the first quarter of 2008. That's no recession -- technically -- but nothing to write home about, either. So stocks ended up falling instead of climbing.

Lowering interest rates has done far more to help Wall Street climb out of the housing mess than assist Main Street, which far more needs inflation relief. The sooner the Fed goes after inflation -- and there were two votes to leave interest rates alone -- the higher the value of the dollar will go, which will ease inflation.

Friday, April 25, 2008

Mixed Results in Big Test for New Political Generation

A few years ago I read a very encouraging article that suggested that savvy young voters today would be less likely to be taken in by old-fashioned deceitful political tactics. The plot of the Democratic presidential primary campaign made the Pennsylvania primary the first big test for voters in their late-teens and 20s, and the results are decidedly mixed.

The article I'm referring to was written either during the 2004 or 2006 election seasons. The basic point was that the younger set had been exposed to so many different media marketing strategies so early in their lives that they were far more capable than older adults to see through the muck and find what was tangible, be it good or bad. The ubiquitous Internet was the resource that was to help them cut through the crap and be able to make logical and reasonable decisions based on facts.

Late last year, our nation's youth grabbed onto the Barack Obama's campaign of hope and change, and for good reason. In these times, hope and change are not just trite words brought out of the back of the political closet and dusted off every four years. People really do want significant and tangible change from the way we've been doing things in Washington, D.C. Democrat or Republican, doesn't matter.

Obama and John McCain both sensed this early, which is why Obama is leading among Democrats despite Hillary Clinton's enormous pre-campaign advantage and McCain emerged with the GOP presidential nomination.

Fast-forward to this week. The race for the Democrat nomination has seen Obama in two months reduced from hope and change guru to just another cynical elitist far-left politician who will do whatever he needs to win. He is not what he claimed to be.

Pennsylvania is the first big state primary in which we can measure the reaction of our savvy young Democrat voters since Obama's image was fully blown. He still won their support as a block by large margins, but you can go deeper into the numbers and find results that can be interpreted in ways both encouraging and discouraging.

According to exit polls from Pennsylvania, voters 18-29 favored Obama over Clinton by 60-40 percent. Support for Obama falls by age, as 30-44 favored Obama 53-47 and the rest went for Clinton, who received a staggering 62-38 percent edge from senior citizens.

Breaking the youth vote down further, 18-24-year-olds chose Obama by a whopping 65-35 margin, while that support slipped to 55-45 for those 25-29. Voters 30-39 showed similar support, while those 40 and up strongly favored Clinton.

The bag mixing begins when you break the figures down even more. The 8 percent of the electorate made up of whites 18-29 favored Clinton by 52-48 percent. At ages 30-44 for whites, Clinton won by 58-42. Black voters weren't necessarily broken down by age, but after perusing the results, it looks like 85-90 percent of all black voters went for Obama.

So you have a situation where either whites remain prone to racism in their voting or that white youths have started to catch up to the new Obama narrative, while blacks -- who made up 15 percent of Pennsylvania's electorate -- are steadfastly holding on to hopes of the first African-American president.

While race has sadly been a factor in the Democratic race -- so has sex -- there's something to be said for the latter theory, as exit polls show young whites going for Obama more in Ohio and Texas last month, when Obama's foibles were mainly being bandied about in the conservative media and hadn't gained mainstream attention. Young, maybe savvy, white voters could be slowly edging toward Clinton.

Indiana and North Carolina are next. The basketball hotbeds may or may not produce numbers that can be used for comparison. North Carolina is expected to be an Obama runaway, so comparing the youth vote to Pennsylvania, Ohio or Texas won't make sense. A comparison to another big Obama state, such as South Carolina, might provide a more accurate picture.

Whatever is going on with younger voters, its much too late to impact the primary campaign. But if they really are showing signs of the savvy that was predicted of them, it could have a major effect on the general election campaign. We'll see which candidate best takes advantage.

Wednesday, April 23, 2008

Pennsylvania Fails to Further the Story

One of the fundamentals of writing fiction is that each scene needs to further the plot. Adding some sort of incident for the characters that's ultimately meaningless serves only to slow things down for the reader. The Pennsylvania Democrat primary of 2008 will end up only being one of those incidental items that will be thrown out by any professional editor.

There's kind of a psychological barrier over the 10-percentage point margin of victory by Hillary Clinton over Barack Obama in the long-awaited vote. This being a primary race that's being decided almost purely on demographics, it was clear going in that Clinton would win the Keystone State in a significant way and she did. You gotta figure that 10 points is just about right.

If, say, Obama had closed the margin to 5 in last night's voting. Then you've got a situation where no matter what's gone wrong with the Illinois senator the past two months, he's still campaigning well and there's still a lot of Democrats who don't like Hillary. With leads among both delegates and the popular vote, it would become even more apparent that Clinton was not going to win the party's presidential nomination. Imagine if Obama had won in an upset, with the public completely turned off by Team Clinton's tactics. The campaign would be over, and her speech following the results would have been darned interesting to hear.

Now let's turn the argument on its head. Say Clinton won by 12-15 points. That in today's political climate is something of a rout. You'd be hearing "the Comeback Kid" moniker being bandied about again, and added to that a sobering realization that Obama was truly damaged by the political setbacks of the past two months. Maybe the calls would be for Obama to leave the stage.

Neither of those two circumstances played out. As it happened, the New York senator won by about as much as she was expected. They now move on to Indiana and North Carolina. The first is expected to be close and the latter is shown by polling to be a large Obama win.

For all her effort, Clinton gained just 15 more pledged delegates from Pennsylvania than her rival. Obama still leads in delegates by a large margin, is holding his own in the super-delegates and holds a slim edge in the popular vote tally. Clinton has regained some momentum and has displayed an ability to win big states.

We're no further along in our story than we were at the beginning of the week.

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An analysis published by the Associated Press today suggests five reasons why Obama can't put Clinton away. All five are legit: race, elitism, troubling relationships, his inexperience and her mettle.

Left unsaid is the sixth which is what Obama's struggles of the past two months have told us: the smooth veneer of hope and change has been removed and replaced by your typical politician. He's no longer being judged -- as much -- by his oratory. He's being scrutinized for his beliefs, his record and his past relationships. The concept of Obama would have the nomination wrapped up by now. The real thing is struggling.

Wednesday, April 16, 2008

McCain Gets Close on Taxes

John McCain was close on taxes when he outlined his plans in a speech Tuesday, and if he didn't get the cigar, he could smell the unburnt tobacco.

A lot of people are sympathetic to the idea of a flat tax when someone brings it up, as the Republican presidential candidate did with his idea of an optional flat tax instead of the standard time-wasting 1040 form. No question that we need to simplify the tax code. You don't need to be a liberal or a conservative for that one -- a conservative could put the time saved to good use and a liberal could use the taxes generated by that savings to fund programs!

Individuals and companies just take too much time worrying about taxes. Me, I think I spend probably half my time just compiling all the information. W-2s and 1099s come in the mail, and I'll put them in one pile, my wife will put them in another and the housekeeper will scatter them if not throwing some of them away entirely. By the time all the organizations I've done business with have sent their year-end tax information, I have to search the house and nearby landfills for everything I need.

Then, just filling in the boxes and doing the math is easy -- assuming I have a calculator handy. The trouble is what's behind all those boxes. Before you fill in Line 27 of form 1040 (just taking a number out of the air as an example), you have to complete the worksheet in the instruction booklet just to see if Line 27 even applies to you.

By the time you get to state taxes, you can plug in some numbers from the federal forms, but then you have to make adjustments to conform with state law. And where on the federal taxes you have to multiply certain findings by percentages, on the state taxes you have to do so again in order to make sure you get a lower result for your credits. And there's even more worksheets.

I hate the worksheets because you plow through them only to find out that not only was it not necessary, but it wasn't even close to being necessary. But et it wrong and you go to prison for five years.

That's just for me, with a wife, some children, a house and a minor investment portfolio. I can't imagine what it must be like for someone with a more complicated financial picture. Yeah, you can pay someone to do your taxes, and I did the previous two years, but that's money out the window long before you get your refund back.

Imagine what it's like for General Electric, which reportedly filed a tax return of 28,000 pages. Does the government even bother to check the math for 28,000 pages?

But I digress. For the reasons I state above, a flat tax is an idea for which we taxpayers have sympathy. Yet it hasn't caught fire, or Steve Forbes would be completing his second term in the White House.

People simply don't want a flat tax, as it's been presented thus far. As always, the devil is in the details. The flat tax hasn't flown so far because of progressivity and deductions.

First, people in general that those with more means should pay a higher percentage of their income to the government. Some go in for class warfare and want to stick it to the rich, but that's only a few. The moderate position is that those who have more should give a little bit more but not as punishment.

Second, tax deductions have been used for decades as a way to encourage activities that society has deemed beneficial: bearing children, owning property and giving to charity. Children and charitable giving are fully deductible. Property taxes and interest on loans are deductible. Medical payments above a certain percentage of your income are also deductible, providing help in case of serious illness or injury. There is no way we want to give up those deductions.

So we'll need a modified flat tax, which includes progressivity -- say 15 percent and 20 percent -- and deductions. Perhaps the rates should go to 17 percent and 21 percent to make up for it. The healthy, childless, renting scrooges will just have to take responsibility for their life choices and pay the full share.

If McCain is able to work the adjustments into his platform, then he might have an issue that works in November.

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By the way, McCain is right to support the continuation of the Bush tax cuts while at the same time criticizing the way the super rich took advantage of them to get us into the current financial meltdown. The whole idea of the tax cuts was to put more money in the pockets of normal people and stimulate an economy recovering from a small recession and 9/11. It worked, but the eggheads on Wall Street screwed it up for all of us.

McCain is also right to call for reduction in corporate taxes. As it is, our taxes on business are the second highest in the developed world. GE, which is big in trying to develop green energy, would be better off spending it's time researching and developing environmentally friendly products than killing enough trees for a 28,000-page tax statement.

Tuesday, April 15, 2008

Lack of Alternatives Keeps Obama in Race

The bitterness, the pastor, the money man, the terrorist connections and NAFTA would have ruined the presidential aspirations of any other candidate, but they haven't destroyed Barack Obama.

These have been the roughest six weeks of his candidacy, yet he's hanging close to Hillary Clinton in pre-primary polling in Pennsylvania, and remains comfortably ahead in North Carolina. Super Delegates are not turning their backs on the Illinois senator en masse. He remains slightly ahead of Republican John McCain in general election polling.

His unfavorable rating is up, but only by a few points.

The bottom line is that no one's fleeing him, despite problems that would in an era of sanity destroy his political career. But who said there's sanity left in politics?

So why aren't his early presidential campaign supporters, those who gleefully gobbled up his inspiring messages of hope and change, running away in droves? Simple. There's no one to run to.

The entire reason that Obama climbed to the top of the heap so quickly is that the terms "hope" and "change" aren't just pat phrases brought out in every election campaign. In 2008, people really do have a strong desire to break with the past. "Politics as usual" is unacceptable. Hope and change as voiced by Obama are tangible concepts this year.

Those who want hope and change might look askance at the comments of the Rev. Jeremiah Wright, but they aren't going to suddenly throw their support at Hillary Clinton. The New York senator is the inverse of the rule. She represents what people want change from. So does John McCain, though to a lesser extent.

Most Democrats will consciously say that what they want change from is all things George Bush, from his policies to his politics to his fumbled speech patterns. That means, though, that they also want away from all things Clinton, because there is so much in common with the last two presidencies. They've essentially ruled the White House in similar ways, except the only blue dress found in the Oval Office these days will belong to Mrs. Bush. When they say they want Bush out, what they're also telling you is they don't want the Clintons back in.

McCain has been somewhat able to craft an image of being above the fray, but as a longtime senator from Arizona and prime backer of the war in Iraq, he's no alternative to Obama, either.

So Barack Obama's supporters are staying with him through the turbulence and will continue to do so come hell or high water. He can say his comment about bitter blue collar workers and their clinging to guns and religion is just one of the "fake controversies" his opponents created, and his backers are fine with that. Lord only knows what's going to come out of his mouth next, or what unusual relationship he had in his past that will be revealed. It won't really matter to those who've made him their candidate.

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Interesting statistics: according to Rasmussen Reports, Obama's unfavorable rating has been mostly 45 percent or above since November. You'd have thought that everyone was genuflecting at his televised presence, but that's not the case. In support of the first section of this post, his favorables peaked at 55 percent on Feb. 20 of this year and has fallen only 6 or 7 points since.

Clinton's unfavorables have mostly been above 50 percent except for a couple 48 percent readings on two or three days last month. She's been above 50 percent favorable only a few times, leading one to believe those days were anomalies.

McCain is now seen as 53 percent favorable and 45 percent unfavorable. His unfavorables haven't been close to 50 percent in two months, and his favorable rating has been north of 50 percent just about all year.

Monday, April 14, 2008

It's All About Iran

One sleepless night last week I crawled out of bed and flipped through television channels, landed on PBS' Charlie Rose program and watched portions of a fascinating and insightful discussion on Iraq with New York Times reporters Jonathan Burns and Dexter Filkins -- in which the newsmen got one fundamental issue wrong.

Midway through the show, Rose asked them -- paraphrasing -- just what does the war in Iraq boil down to right now?

Burns and Filkins, both deservedly honored for their reporting, answered that it was the sectarian conflict between Sunni and Shia.

In the midst of so many other interesting comments, that one judgment really stood out to me. Their answer was correct in 2005, 2006 and the first few months of 2007. It is no longer applicable, in my thinking.

Today, it's all about Iran.

With the cooperation of the Sunni Awakening groups that turned on al Qaeda in Iraq and the self-imposed cease fire by the Shiite Mahdi army, tremendous strides were made in improving security through much of Iraq last year and early this year, pocked only by some intra-Shia strife and the occasional al Qaeda bombing.

Here we are in the middle of April and the security situation is deteriorating in the Shiite areas. The Mahdi Army, whose leader, Muqtada al-Sadr, has apparently spent most of the past few years in Iran, is active again. All sorts of Shiite militant groups, from the Mahdis to smugglers and other criminals, took control of Basra -- Iraq's second-largest city -- while British troops twiddled their collective thumbs. And took control to the extent that a major push to dislodge them by government forces mostly failed.

Fighting between government troops and Shiite militants has also taken place in the teeming slums of Sadr City in Baghdad.

Things had been looking better for our venture in Iraq. Now this. Why?

For an answer, look to those who cannot afford for America to succeed in Iraq. Iran. Sure, U.S. military leaders and the Bush administration have blamed the Iranian regime for all sorts of troubles in recent years, including the incitement of violence and delivery of armaments to both Iraq and Afghanistan. It can be hard to believe anything said in Washington, D.C. these days, but there's enough circumstantial evidence to support the theory of Iran as the biggest troublemaker.

We know that Iran has been arming insurgent groups. We know they've trained many of the militant Shiite leaders. We know that al-Sadr has spent considerable time in Iran -- and is probably there now after one of his top aides was assassinated in Najaf.

The biggest thing, however, is that the hard-liners cannot, under any circumstances, let America win in Iraq. It's tempting to think in the 20th century mindset that having a peaceful, stable and Shiite-led neighbor on its western border would be to Iran's advantage. In fact it would, in time, but only if it was put there by Iran. If it's a creation of the United States, the Great Satan, right on their doorstep, the Iranian leadership will lose most of the street cred its built up in the radical Islamist world. Coupled with the prospect of NATO success in Afghanistan, Iran will be hemmed in by the infidels, who could then bring some real pressure to bear against their nuclear program.

A secure western border can wait, as far as Iran is concerned. It's no surprise that the latest fighting broke out just as things were looking up for us.

I hope for two things. First, that the rest of our leaders -- and this being an election year, our prospective leaders -- aren't as behind the curve as Burns and Filkins are. I think some of us are indeed awake, especially in our military leadership, who mention Iranian meddling frequently.

Second, that the strategy of the United States for the rest of 2008 and likely into 2009 will be limiting or eliminating the influence of Iran while at the same time consolidating last year's gains in other areas. I do not advocate going to war with them, though I'd love an opportunity for us to bloody their nose in a limited engagement, just to remind them whose boss. We absolutely have to secure the border between the two nations as best we can, with the involvement of our troops.

We also have to continue to encourage Iraqi Prime Minister Nouri al-Maliki to keep pressuring Shiite extremists who are backed by Iran. His recent, ill-fated assault on militants in Basra shows that he might also be coming to understand the darker side of a country with which he'd previously been friendly.

Monday, April 7, 2008

Candidates Fail on Economy, Electric Vehicle Future

Maybe talk radio was right about Mitt Romney, after all. With the economy slowly edging toward recession and few national leaders making sense when discussing how to turn things around, it just could be that the former Massachusetts governor was the right candidate at the right time.

A political cartoon I saw this morning puts everything into perspective. In the background, in big block letters, it says "IT'S THE ECONOMY STUPID!" In the foreground, a caricature of Barack Obama says "Is it hope?" A pant-suited Hillary Clinton asks "Is it experience?" And John McCain, with his arms drawn up slightly and fists clinched, wonders "Is it strength?"

It's a perfect illustration of our problem with Campaign 2008. None of the candidates who remain standing have a clue about how to fix the economy. Obama and Clinton want the government to spend more, as if we're not spending ourselves into oblivion already. McCain admits the economy is not his strong point, though he's cast himself as a deficit hawk in the past. His votes and statements demonstrate, however, that he really doesn't know how things work.

Romney has been a successful businessman who has turned around large and struggling enterprises. The Salt Lake City Olympics don't necessarily equate to the federal government, of course, but he more than those remaining would be best suited to tackle the problems of the day.

Hope, experience and strength are nice qualities, but economic smarts is what we need right now.

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Ever since renting a Toyota Prius for a day last year (see post of 8/21/07), I have been interested in the development of electric and/or hybrid vehicles. As I mentioned in my observations while driving the Prius, I would consider purchasing one if the price were to drop about $5,000. That hasn't happened and likely won't, and I have yet to purchase a new car.

A lot has happened in electric car research and development since August, though. Tesla, a Silicon Valley firm, has developed an all-electric roadster. Aptera, of Carlsbad, has gone one better by giving it's two-seater a gallon of gas in case the battery wears out. The Tesla looks like a regular sports car. The Aptera looks like a space vehicle.

Between hybrids and all-electric vehicles, we're getting closer to the day where we can leave our gas guzzlers in the garage. The Prius, Honda Civic hybrid and Chevrolet Malibu hybrid can all be had for $22,000 and up, more than competitive with most new cars. Perhaps the only reason why they're not flooding the market is that buying new cars is not economically sensible, yet people might be reluctant to purchase a used hybrid -- just because of unfamiliarity.

Incremental steps, but important ones, are being made. The next big step is for the prices to become economical. I'm not being cheap when I balk at a $22,000 Prius because I know I can get a gently used Camry for $8,000 to $10,000 less. The Tesla will initially sell for $98,000. The Aptera for $30,000.

Other challenges are ahead besides price.

People still like big, comfortable and powerful vehicles and they want to be able to drive them a long way. While Aptera has done a good job in keeping the customer cost comparatively reasonable, the general public won't go for a glorified Mars Rover. People want a car. Tesla made a car, but they could barely get the price under a hundred grand. There has to be some kind of meeting in the middle.

Range is also critical. People drive their cars to see grandma in another town, or they take them on vacation. As mentioned above, you'll need hotels and gas stations to install charging stations. A smart restaurant can have a charging station so someone can get juiced up while eating, and have the tab right there on his bill.

Plus, while we'll use less refined gas, we'll use more electricity. That opens a whole new set of challenges. In San Diego County, San Diego Gas & Electric has for several years now been trying to install a new major electrical transmission line to give the county its third hookup to the nationwide electrical grid. Ever-increasing demand is already quite close to what SDG&E receives from the grid, and will surpass available capacity in a few years. Rural area property-owner and those same environmentalists who want us to start using alternative energy (like electric cars) are fighting the utility tooth-and-nail. Add thousands of cars plugged in to power outlets and demand for electricity will go through the roof. Will there be enough power on a hot day of peak demand for air conditioners? Big question.

The next issues are for the owners. If you live in an older pre-electrical revolution home, as I do, then you might need a major upgrade before you can plug in a car -- on top of the microwave, refrigerator, big-screen television, computer and X-box. When I had an addition built for my 1950 house, we had to add circuits to the electrical box to handle the additional load.

If you're already green living at home, say you're using solar power for a lot of your electrical needs, will you have enough juice to power a car. Those who hate the SDG&E transmission line want us to use solar or wind energy, but there simply is not enough.

So while electric and hybrid vehicles are enticing, and getting closer to mass-produced reality, there's a lot that needs to be overcome.