Barack Obama has been patting himself on the back now that General Motors has pulled off the largest public offering in history, slamming Republicans who were opposed to the bailout and manufacturing 2012 campaign fodder.

But read this, and you will be informed enough to see right through this success story.

So, let me make sure I understand. Someone invested in a company to use the entire proceeds plus $2 billion more to repay creditors and repay shareholders when the company’s need for cash is so great. The lack of logic is concerning. Perhaps a political motive to repay government funds trumped sound business judgment?

These red flags and perceptions of impropriety during the GM bankruptcy and emergence from bankruptcy are mind-boggling. If this company were not owned by the U. S. government, I am certain the SEC would begin an investigation of the company.

There is no doubt GM, at least in name, is still around because of the Obama administration’s efforts but there is also little doubt that GM would still be around today, albeit after going through a more traditional bankruptcy process.

The difference is, the taxpayer and the original shareholders wouldn’t have taken it up the tailpipe and Barack Obama wouldn’t have another campaign sound bite.

Moreover, the structure of the deal has left GM in a precarious position, forcing them to report what may be unsubstantiated profits while in contrast Ford Motor Company, having truly survived the Great Recession is accelerating under it’s own power and without taxpayer assistance.

Ford is investing in engineering, innovation and design to stay competitive, all of which require enormous amounts of capital. If GM can’t use the proceeds of their IPO to do the same they may soon find themselves slapping Cadillac badges on dressed up Chevy’s again while competitors from Japan, Germany and Korea drink their milkshake.

First, contrary to popular administration folklore, GM did not survive bankruptcy. The name did, but that is all that happened. A new company acquired the name and assets of GM, and is now the company being called GM. I wonder if the GM commercials tracing its history back to the older GM without a disclaimer is being honest with those of us who own it — the American taxpayer.

GM’s profit of $2 billion in this most recent quarter is a little puzzling as well. I can imagine that the financial systems of a large company are difficult to control. But the disclosure statement by GM about its internal controls or lack thereof concerns me.

“We have determined that our disclosure controls and procedures and our internal control over financial reporting are currently not effective. The lack of effective internal controls could materially adversely affect our financial condition and ability to carry out our business plan.”

…but other than that, it’s all good [raises thumb].

Our economy may not be heading for a double dip but GM may very well be and not despite the government’s effort…because of it.

If I were the President of Harvard University, I might wanna have a word with Matt Yglesias.

Matt – a prominent leftyblogger who’s gone on to write for a bunch of liberal rags – has a BA from Harvard.  Like a lot of leftybloggers, he profited from the leftyblog audience’s hive mentality and got promoted far beyond even his Peter Principle value, to say nothing of his actual perception.

And it’s gotta be undercutting the value of that expensive Harvard sheepskin.  Especially when he’s writing bilge like this, about planning ahead for the new GOP majority in Congress:

But the specific thing I would worry about isn’t gutting of health care legislation or endless investigations. It’s the economy. Anne Kornblut reports that the White House understands the basic political dynamic: “Even more important, senior administration officials said, Obama will need to oversee tangible improvements in the economy.”

So I know that tangible improvements in the economy are key to Obama’s re-election chances. And Douglas Hibbs knows that it’s key. And senior administration officials know that its key. So is it so unreasonable to think that Mitch McConnell and John Boehner may also know that it’s key? That rank and file Republicans know that it’s key? McConnell has clarified that his key goal in the Senate is to cause Barack Obama to lose in 2012 which if McConnell understands the situation correctly means doing everything in his power to reduce economic growth. Boehner has distanced himself from this theory, but many members of his caucus may agree with McConnell.

And Yglesias’ conclusion (emphasis added)?

Which is just to say that specifically the White House needs to be prepared not just for rough political tactics from the opposition (what else is new?) but for a true worst case scenario of deliberate economic sabotage.

Truly, truly dreadful.

The left; not only do they believe their ends justify their means, they believe everyone else believes it too.

In late 2008, Rahm Emanuel made famous the phrase “Rule one: Never allow a crisis to go to waste.” It was an unabashed entreaty to liberals frustrated by years of pent up designs to advance the socialization of America. Obama, Reid and Pelosi wasted no time while a stupefied citizenry watched the unfolding of a theretofore unimagined agenda.

Less than two years later another crisis has presented itself, the nature of which is surely an exception to Rahm’s axiom; a crisis within.

Within the party that is.

A handful of survivors of the electoral razing of the democratic party are not unlike those famous Japanese soldiers hiding in tunnels on remote isles months after V-J Day…

In 1944, Lt. Hiroo Onoda was sent by the Japanese army to the remote Philippine island of Lubang. His mission was to conduct guerrilla warfare during World War II. Unfortunately, he was never officially told the war had ended; so for 29 years, Onoda continued to live in the jungle, ready for when his country would again need his services and information. Eating coconuts and bananas and deftly evading searching parties he believed were enemy scouts, Onoda hid in the jungle until he finally emerged from the dark recesses of the island on March 19, 1972.

Some liberal democrats are figuratively living on Lubang, off the grid, not recognizing that Americans have soundly rebuked the extreme leftist agenda inflicted on them.

Liberals made clear Tuesday what they want from the bipartisan deficit commission — more help for the poor and middle class and bigger corporate tax increases.

Americans made clear that what they want is for their government to get out of the way, to cease disincenting those that would otherwise be spending, borrowing and investing in ways that create jobs for everyone, especially for the poor and middle class.

Mathematically, you can’t increase taxes enough on corporations or the wealthy to make even the slightest dent in the deficit let alone the national debt.  Eventually, either by choice or by force, the federal government will have to cut spending and by extension, entitlements.

Moderate and conservative commission members, who compose the bulk of the panel, have been more circumspect. After co-chairmen Erskine Bowles and Alan Simpson offered their proposal last week — focused 2 to 1 on spending cuts over tax increases — the commission’s three Republican House members tentatively welcomed their approach.

The Tea Party may have given rise to a Regressive Movement in America, where once and for all, a majority will press the federal government and those it has enslaved by decades of sedimentary entitlements to do more with less, across the board.

…but not without a fight from the hardy few on Lubang.

But liberals were outraged. They tend to favor activist government, help for the needy and higher taxes on wealth to pay for it. Moderates and conservatives are more inclined to reduce government services to cut government debt and are less willing to raise taxes.

Adam Green, co-founder of the Progressive Change Campaign Committee, said: “Democrats should fight loudly and clearly — because the public overwhelmingly wants Democrats to fight that fight.”

Not anymore Adam. The war is over. You can go home now.

Jeff writing at National Debt Busters writes about the history of the national debt:

How do the Presidential Administrations compare?

President George Washington through President Gerald Ford, Presidents 1-38, 1791-1976

Debt Increase: $707,142,528,417.78

President James Earl Carter, 39th President, 1977-1980

Debt Increase: $276,666,000,000.00

President Ronald Wilson Reagan, 40th President, 1981-1988

Debt Increase: $1,672,127,712,041.16

President George Herbert Walker Bush, 41st President, 1989-1992

Debt Increase: $1,462,282,943,480.50

President William Jefferson Blythe Clinton, 42nd Presidnet, 1993-2000

Debt Increase: $1,609,557,554,365.20

President George Walker Bush, 43rd President, 2001-2008

Debt Increase: $4,899,100,310,608.44

President Barack Hussein Obama, 44th President, 2009-present

Debt Increase: $3,031,935,408,476.43 (as of 10/28/2010 report on TreasuryDirect.gov)

Obama is on track to triple Bush’s already-criminal debt load – and that’s if Obamacare’s bill comes in where they project it will, which it will not.

The new GOP House has its work cut out for it.

Let’s all make sure they get to it.

What are Minnesotans’ great strengths?

We have so many; we’re resourceful (who else could live in such a cold place)?  We’re smart – our test scores show it (although North Dakotans would seem to be smarter, by that measure); we’re communitarian, even without the heavy hand of government to drag it out of us.

We’re self-starters; we’ve created things as varied as sandpaper and the artificial heart; the homing torpedo and instant cake mix; the supercomputer and solid dish soap…

…and while government has had its role in many of those achievements, Minnesotans should stand up and take credit where it’s due; government at the very best merely got out of the way.

But look at Mark Dayton’s entire campaign.  Everything about it reads like a return to the 1970’s, from the goals – resurrecting and perpetuating programs like Local Government Aid – through the “eat the rich” language.

Just as our companies, and our families, have had to change to meet the challenges that happen as times change, so must our government.

There is one candidate that will make government adapt to the same changing times we all face.

Tom Emmer has run a campaign that has not only focused on the positive – he even chided Ed Morrissey and I for calling Dayton “the opposition”, a stark contrast to the deeply, cravenly slimy campaign that Dayton has run – but looks to the best of Minnesota’s character.  His budget doesn’t scapegoat classes; it calls for some shared sacrifice on the way to a much, much better goal.  Mark Dayton’s campaign appoints others to be “Happy To Pay For A Better Minnesota”; Emmer puts the onus on all of us – and presents us all with the opportunity, not only to escape California/Greek/New York style stagnation and bankruptcy, but to share in honestly-earned rewards.

Tom Emmer has run a principled campaign; he presents the state with a tenable plan to balance its budget while taking care of the people who need taking care of, and asking a little more out of those who don’t – like city governments.

He appeals to Minnesotans’ better natures – our strength, our communitarian spirit, our intelligence, our vision.  Not our passive-aggressive venality.

It’s just one of the reasons I’m voting for Emmer.  But it’s an important one.

Four more to go before Monday.  Stay tuned.

As Daniel Henniger notes in the Journal, the rescue of the miners was  a victory of the free market:

It needs to be said. The rescue of the Chilean miners is a smashing victory for free-market capitalism.

Amid the boundless human joy of the miners’ liberation, it may seem churlish to make such a claim. It is churlish. These are churlish times, and the stakes are high.

In the United States, with 9.6% unemployment, a notably angry electorate will go to the polls shortly and dump one political party in favor of the other, on which no love is lost. The president of the U.S. is campaigning across the country making this statement at nearly every stop:

“The basic idea is that if we put our blind faith in the market and we let corporations do whatever they want and we leave everybody else to fend for themselves, then America somehow automatically is going to grow and prosper.”

One of Minnesota’s gubernatorial candidates has the same precise message.

Uh, yeah. That’s a caricature of the basic idea, but basically that’s right. Ask the miners.

If those miners had been trapped a half-mile down like this 25 years ago anywhere on earth, they would be dead. What happened over the past 25 years that meant the difference between life and death for those men?

Short answer: the Center Rock drill bit.

This is the miracle bit that drilled down to the trapped miners. Center Rock Inc. is a private company in Berlin, Pa. It has 74 employees. The drill’s rig came from Schramm Inc. in West Chester, Pa. Seeing the disaster, Center Rock’s president, Brandon Fisher, called the Chileans to offer his drill. Chile accepted. The miners are alive.

Longer answer: The Center Rock drill, heretofore not featured on websites like Engadget or Gizmodo, is in fact a piece of tough technology developed by a small company in it for the money, for profit. That’s why they innovated down-the-hole hammer drilling. If they make money, they can do more innovation.

This profit = innovation dynamic was everywhere at that Chilean mine. The high-strength cable winding around the big wheel atop that simple rig is from Germany. Japan supplied the super-flexible, fiber-optic communications cable that linked the miners to the world above.

A remarkable Sept. 30 story about all this by the Journal’s Matt Moffett was a compendium of astonishing things that showed up in the Atacama Desert from the distant corners of capitalism.

Samsung of South Korea supplied a cellphone that has its own projector. Jeffrey Gabbay, the founder of Cupron Inc. in Richmond, Va., supplied socks made with copper fiber that consumed foot bacteria, and minimized odor and infection.

Chile’s health minister, Jaime Manalich, said, “I never realized that kind of thing actually existed.”

The profit = innovation dynamic was everywhere at the mine rescue site.

So by all means, Democrats – keep focusing on killing that spirit off.

Picture yourself on a snow-covered lake, gliding smoothly on your new snowmobile at 60 mph and about five miles out you begin to feel the growing sensation of pain and regret as your bladder balloons from the two Grain Belt Premiums you pounded at the last pit stop.

Your two buddies are out ahead of you and without a clue as to the escalating emergency you are about to be a party to.

In your distraction, you miss the snowdrift that your buddies navigated around and when your sled hits it you are airborne. As time slows, as it always does in times like these, gliding through the air with the greatest of ease, you think to yourself  “This is going to hurt.”

You land hard and fast, slightly tipped to the left but a second later realize that your forward momentum has continued unabated. All limbs are onboard and your sled appears to be no worse for the wear.

…and then you feel the warmth.

At first you are pleased because your manbrain usually associates warm feelings down there with great anticipation.

…but when the warmth moves down your thigh and starts to creep out back? Not…so…much.

And so it goes with the liberals among us.

Having peed their pants with stimulus, government make-work projects, census jobs and the like, the only remedy is to keep peeing your pants so as to fend off the chills that come when your wet snowsuit becomes a cold wet snowsuit.

…and George Soros is chief Pisser.

Billionaire investor George Soros said the U.S. economy should pursue more fiscal stimulus instead of joining international efforts to reduce budget deficits.

Soros said spending cuts are the “wrong consensus” in the current economic environment. He said the global economy is still not at equilibrium, even though financial markets are functioning again, and U.S. fiscal restraint is limiting the recovery.

My neighbor, a liberal, thinks the government is spending too much and getting too big. My liberal colleagues (as few as they are) also associate “stimulus” with “failure”. Even democratic legislators are disassociating themselves with Obama and stimulus spending to save the shredded remnants of their political careers.

But George Soros persists with this notion of a continued flow of urine as a prescription for restoring our financial future as a nation.

Why?

The U.S. has been “driven to quantitative easing because the political debate has been won basically by the Republicans, who argue for balancing the budget and no more stimulus.”

…because it wasn’t his idea.

Piss off George.

As this is written, Tom Emmer has just finished announcing Part One of his budget plan – the one that the DFL and the Chanting Class has been wondering about for the past two months.

To paraphrase James Carville, Part One is about the jobs, stupid.

Emmer is going to…:

1. Lower The Corporate Income Tax. This will enable new businesses to get profitable faster, and allow large companies to stay that way – forestalling layoffs, enabling job additions, and addressing business’ #1 complaint about doing business in Minnesota, our top-in-the-nation business and corporate tax rates.
2. Increase The “Angel” Investor Credit. “Angel” investors – people who are willing to take long shots on new companies that don’t yet have established sales, assets or revenues.  They are what get new companies off the ground, and allow them to survive and make payroll until they turn a profit – are in many ways the lynchpin of the new economy.  Of all “new economies”, really.  Angel Investors were the underpinning of much of the high-tech revolution that transformed our economy, and our lives really, for the past fifty years.  Currently, investors can deduct 25% of their investment (up to $125,000 from a $500,000 investment); Tom Emmer will increase that credit.
3. Accelerate The Refunds From The Sales Tax Exemption On Capital Purchases.  Minnesota allows a refund of sales taxes on capital equipment –  in the tax cycle after the equipment is purchased.  Emmer will front-load that – essentially lopping sales taxes off of capital equipment, making it easier – 7% easier – for companies to buy the equipment they need, when they need it to be easiser, when they buy the equipment; freeing up 7-and-change-percent of the company’s revenue to do more important things – like hire people.

By the way – as noted above, Minnesota currently has a Sales Tax exemption for capital purchases. Someone tell alleged “smart guy” and “political expert” Tom Horner, who seems to believe that’s not the case.

From the Emmer press release:

The GOP candidate noted that all of the tax relief measures in his plan have received bipartisan support in the legislature and were endorsed by the 21st Century Tax Reform Commission in its 2009 report. Also, small and large companies alike will benefit from two of the three tax cuts in the Emmer Jobs Agenda, ensuring benefits to the broadest range of Minnesota employers, including those which make little or no profits.

More on this as the week progresses.

Over the next two weeks, we’ll see Emmer’s plan for reforming education and state regulatory processes.

Washington tries to put more junk in the SBA’s trunk.

The pre-recession economy saw more than its fair share of credit alchemy as lenders ignored equity.  With bank loans to small firms dropping 5.6% to $670 billion from heights of $710 billion as recently as June of 2008, the Administration has become increasingly desperate to get credit into the hands of business.  The only problem?  The companies that need the credit can’t afford to accept it:

Bankers say the problem isn’t scarce credit, it’s lack of demand from creditworthy firms in a weak economy. The result may be more loans given to distressed firms and higher losses. While bank regulators don’t compile default rates, the biggest lenders have charge-offs of 4 percent to 14 percent tied to small businesses. Eliot Stark, managing director at Capital Insight Partners Inc., said their credit record resembles “junk.”

“The highest demand for loans is from the companies least qualified, the companies that have really struggled because of the economic downturn,” said Stark, a former Comerica Inc. executive whose Chicago-based investment bank helps community lenders raise capital. The way lawmakers see it, “everyone’s a good borrower, and that’s just not the case.”

Washington’s lending advice is currently as practical as a baseball coach telling his hitter he can swing away – but under no circumstances will he be allowed to get out. 

Worse is D.C.’s legislative panacea of having the Treasury Department make preferred stock investments in “small” banks (those with assets of $10 billion or less) in order to stimulate loans.  $30 billion in capital will be transferred to small banks in hopes that most of these lenders will leverage the funds to help create new small business loans – a figure that some in Washington estimate could be as high as $30 billion.  Despite assurances from Treasury that the program will earn $1.1 billion over 10 years for taxpayers, the legislation sounds like TARP for Hervé Villechaize-sized lenders.

Considering the bailout investment program targets largely community banks which account for most of the 240 banks that have failed since 2009, it becomes even harder not to see the effort as an attempt to inflate a TARP into yet another credit bubble.  Which may be precisely the point:

Small borrowers are higher risks because their size leaves less room for error, bankers say. Half fail within their first five years, according to the SBA, and the recession eroded the value of hard assets such as property and equipment to pledge as collateral, said Alfred Osborne, senior associate dean of the UCLA Anderson School of Management in Los Angeles.

“We can create lots of jobs making bad loans,” NFIB chief economist William Dunkelberg said. “We did that during the housing bubble.”

As the United States becomes more socialistic, the grandaddy of socialist nations, Sweden, owes its ongoing success to a gradual rejection of socialism:

In The Capitalist Welfare State, Lund University economist Andreas Bergh explains how Sweden has managed to increase economic productivity despite its large public sector.

Bergh says that despite popular mythology, Sweden is not a socialist success story but instead owes its economic growth to the lowered tax rates and deregulation of the early 1990s, which allowed innovation and investment to flourish. Bergh also discusses how Sweden’s national voucher program revitalized the country’s educational system and warns that Americans who are hoping to emulate Swedish success by growing the public sector are learning the wrong lessons from Sweden.

It’s not a capitalist haven, yet, but there’s a reason Sweden didn’t fail before Greece.

Katie Kieffer on Obama’s feminist face in bringing Wall Street to heel:

There are three women on Wall Street who have literally gone wild. No, they didn’t strip off their matronly suits on a GGW spring break tour bus. Rather, they are on a mission to strip Congress, small businesses and individual Americans of proper authority, rights and freedoms and replace these with their own rules and regulations for how to play the financial game on both Wall Street and Main Street.

These three women, who graced the May 24 cover of TIME Magazine and were touted as the “Sheriffs of Wall Street,” are an embarrassment to my sex. Rather than advancing equality between the sexes, their self-centered political agendas do the following:

1. Send the message that women do not understand finance or business, and this makes them insecure. So, they use their authority to control and regulate finance and business.
2. Reinforce the notion that the only way men will take women seriously is if they exert “control” over men.
3. Teach young women to prioritize power over finding solutions.
4. Dismiss equality entirely and send the message that women should referee men and dole out red cards – not play the soccer game with them.

Let me introduce you to these women, one by one. You can decide if they are on a mission to “protect consumers” or if they are on a quest to disprove an imagined bureaucracy of male chauvinists on Wall Street. If the latter is their goal, then the bigger question is whether cracking down on business and the financial industry is a good way to achieve this goal.

Read the whole thing.

The mystery, wrapped in an enigma, smothered in secret sauce that has been Elena Kagan might be granted a little more clarifying light with the release of her Princeton and Oxford theses:

I’ve got two teenagers.  Both are looking for work, more or less; Bun washes dishes at a restaurant one day a week, so she’s got sometihng, but it’s very, very hard to find anything much better.  Zam isn’t even having that much luck.

In other words, it’s as bad as when I was 17 and 18.

The problem is, by the time I was 21jobs were everywhere, and the economy was on puree. I had more jobs that I knew what to do with by my junior year of college.

That’s just not going to happen with this recession.  White Castle’s CEO reports that just one provision in Obamacare is going to utterly gut low-income hiring:

Jamie Richardson, a White Castle executive, says, “We’ve been working on this internally from a number of different perspectives. One [provision] that has [us] the most concerned is the $3,000 penalty that kicks in when an employee’s portion of a premium exceeds 9.5% of Household Income.” Richardson elaborates, “In present form, this provision alone would lead to approximate increased costs equal to over 55% of what we earn annually in net income (based on [our] past 4-year average). Effectively cutting our net income in half would have [a] devastating impact on the business — cutting future expansion and more job creation at least in half. Sadly, it makes it difficult to justify growing where jobs are needed most — in lower income areas.” And that’s all from just a single provision in a 2,700-page act.

I love this next quote:

The Obama administration’s economic policy seems to involve dividing businesses into two categories: too big to fail, and too little to matter.

Alternately:  “too big to fail” and “future employees or wards of government”.

The US economy has been “exporting” (i.e. losing the price war to retain) manufacturing, programming and customer service jobs for years now.

Now, we’re “exporting” management.

Vegas developer Steve Wynn is thinking about moving his offices to Macau

“The governmental policies in the United States of America are a damper, a wet blanket,” Wynn said. “They retard investment; they retard job formation; they retard the creation of a better life for the citizens in spite of the rhetoric of the president.”

…Wynn said Wednesday he was concentrating his efforts on Macau and would skip potential opportunities in Las Vegas.”I don’t think the Las Vegas market at the moment beckons a large investment,” Wynn told Bloomberg “The economic outlook in the United States, the policies of this administration, which do not favor job formation, do not encourage investment at all.”

Think the Chinese aren’t going to raid the US for companies that are mobile enough to take advantage of tax havens like Macau?

Larry Kudlow breaks with current conservative orthodoxy by claiming that not only are we in a recovery, but in fact it’s a pretty good one:

Sometimes you have to take out your political lenses and look at the actual statistics to get a true picture of the health of the American economy. Right now, those statistics are saying a modest cyclical rebound following a very deep downturn could actually be turning into a full-fledged, V-shaped, recovery boom between now and year-end. Conservatives shouldn’t trash it.

I’m aiming this thought especially at many of my conservative friends who seem to be trashing the improving economic outlook — largely, it would appear, to discredit the Obama administration.

The real point, of course, is that you don’t have to trash what’s going on right now to trash the Administration:

At this point it’s impossible to project a long-lived economic boom, such as we had following the deep recession of the early 1980s. For one thing, tax rates will rise in 2011 for successful earners and investors, quite unlike the Reagan cuts of the 1980s. So it’s possible that entrepreneurs and investors are bringing income, activity, and investment forward into 2010 in order to beat the tax man in 2011. This would artificially boost this year’s economy, stealing from next year’s economy.

Recall that when Hillary Clinton took her Rose Law Firm bonus in December 1992, rather than January 1993, she knew full well that her husband Bill would raise the top tax rate in 1993. So the fourth quarter of 1992 grew at nearly 4.5 percent, but the first quarter of 1993 saw less than 1 percent growth. The temporary growth spurt for all of 1992 was 4.3 percent, but activity dropped to 2.7 percent the following year.

In other words, “Irrational lack-of-suicidal-depression?”  The economy is getting its spending done while it can still afford to?

We won’t know for sure until next year – but the Administration’s sandbagging on numbers for next year indicates they’re both preparing the field for a bad 2011 and wanting to claim that things are “better than expected” in time for the 2011 races.

And – today’s putative “V” notwithstanding – this could turn out pretty bad:

It could happen again in 2010 and 2011. Although the Obamacons deny it, tax-rate incentives matter a lot.

And at some point, monetary policy will tighten, with higher interest rates on top of higher tax rates. That, too, could slow growth markedly next year. And then there’s the dozen tax hikes in the Obamacare health takeover, and a possible VAT attack from Paul Volcker, all of which will work against growth in the out-years.

Clearly, we are not operating a supply-side, free-market model today. What I wish for is sound money and lower tax rates, which would promote sustainable economic growth. Instead, we’re getting easier money and higher tax rates, which could mean a temporary boom today and disappointingly slow growth after that.

There is one big hope, here:

But then again, who knows? Maybe the tea-party revolution overturns the obstacles to future growth and the boom is sustained. Free-market populism and a return to Reaganism, along with an anti-federal-spending coalition that is the most powerful force in politics today, could right the economic ship.

That’s the big question; does the American people have the attention span to spend 2-6 years to amputate the tentacles the Obama Administration is shooting into the economy?

As much as many of my colleagues and clients revere the dissertations of Larry Kudlow, I think he may be extrapolating a wee bit too much at this early juncture.

Sometimes you have to take out your political lenses and look at the actual statistics to get a true picture of the health of the American economy. Right now, those statistics are saying a modest cyclical rebound following a very deep downturn could actually be turning into a full-fledged, V-shaped, recovery boom between now and year-end. Conservatives shouldn’t trash it.

I’m aiming this thought especially at many of my conservative friends who seem to be trashing the improving economic outlook — largely, it would appear, to discredit the Obama administration.

To assert that Republicans may deny that Obamanomics is working at their own peril misses at least a few critical points. It’s also premature.

Capitalism recovers, that’s what it does. Free enterprise by definition, finds a way over, around or through whatever obstacle is thrown at it; be it world wars, epidemics, market bubbles and even an administration hell bent on putting it on a short leash.

The economy is showing signs of recovery no doubt, but it lacks a few factors key to a V-shaped recovery and I think Mr. Kudlow, with all due respect, is suffering from premature jubilation.

Let’s begin with the March employment numbers recently released by the Labor Department. Those numbers were solid. People say small businesses are getting killed by taxes and regulations from Washington, but the reality is that the small-business household employment survey has produced 1.1 million new jobs in the first quarter of 2010, or 371,000 per month. If that continues, the unemployment rate will drop significantly.

But it probably won’t continue, Larry.

On the contrary, politically speaking, unemployment will ultimately be the Achilles heel of the Obama administration.

I could stop right there.

Growth of the GDP and the Dow may serve to buoy consumer sentiment but high unemployment will continue to weigh heavily and a couple months’ reversal does not a trend make.

Much of the “recovery” to date is simply a regression to the mean of sorts, which is to say that much of the crisis was manifested in a national overreaction, by employers cutting inventory and staff more severely than was necessary and by the stock markets overselling. The recovery thus far is simply employers and the markets seeking equilibrium.

For a V-shaped recovery there will need to be found a new rung on the ladder and right now I don’t see it.

Past recoveries, at least of the V-shaped ilk, had catalysts. In the case of the Great Depression, it was World War II, the and the young entrepreneurs that survived it.

More recently, In the nineties, it was computers, the internet, and the wireless industries who created jobs and at the same time bolstered productivity.

After the recession of 2001-2002 it was the housing boom then bubble and the leveraging-up that it afforded the consumer eager to fill those homes with stuff. Alas, maybe that one was a false recovery in retrospect.

This time around, that catalyst has failed to materialize. Apple’s release of the new iPad isn’t quite enough, not to mention the fact that sales have been sub-par. This era of “green jobs” the president keeps talking about is a distraction at best; political bullshit at worst. Moreover there are still factors that could hold us at this rung on the ladder and possibly even knock us down one or two in what could be the dreaded “W” recovery.

The biggest fear among business leaders, save a protracted 30’s style depression, is 70’s style inflation, which will hide in the wings until the consumer starts spending. To say that Obamanomics is working at this point belies that fact that the extreme monetary policies implemented to pull our system from the brink have not yet been retracted to any semblance of normalcy.

Our economy is still lying in a gurney with a big federal IV bag pushing meds into it’s wrist and the patient, now trying to get up out of bed, is a bit dazed. Soon she will realize she can only walk so far down the ICU hallway without taking it with her lest she pull the needle out.

Assuming we get our economy out of the ICU, we have escalating energy costs, due in part to the weak dollar, and soon to be multiplied by a return of demand as the global economy struggles to recover.

Also there are to be continued and excruciatingly persistent pressures on real estate values, which have always been an emotional, if not substantive, source of consumer confidence and optimism as well as the de facto basis for most personal wealth and the ability to obtain credit. Once real estate values begin to recover in earnest, which is to say an increase in the proportion of non-distressed transactions, there will be a wave of baby boomers, nearing retirement and divesting themselves of homes too large, too expensive and that represent too much of their illiquid net worth. They will take advantage of the $500K capital gains deduction before Obamanomics forces closure of the loophole.

Next up, we have the President’s health care “reform”; nobody wants it but everybody will have to pay for it. To what extent this will undermine the economy is not known but insurers and providers alike are scrambling to figure out what needs to happen when the first elements of the assault come ashore in September. Many large employer’s cost estimates do not bode well for jobs growth.

Lastly, we have the nearly unbearable weight of a federal government hell-bent on gorging itself under the guise of a crisis, the long-term deleterious effects of which have long since reached a fatal tipping point. Taxes must go up and anyone that thinks higher taxes lead to sustained economic recovery surely isn’t paying them and is suffering from the same form of delusion that put Obama in the White House.

So Larry, it’s too soon to be calling this a “V”, and I’m glad to see that later in your piece, that you agree:

…at some point, monetary policy will tighten, with higher interest rates on top of higher tax rates. That, too, could slow growth markedly next year.

…hence the “W” moniker.

…then there’s the dozen tax hikes in the Obamacare health takeover, and a possible VAT attack from Paul Volcker, all of which will work against growth in the out-years.

Clearly, we are not operating a supply-side, free-market model today. What I wish for is sound money and lower tax rates, which would promote sustainable economic growth. Instead, we’re getting easier money and higher tax rates, which could mean a temporary boom today and disappointingly slow growth after that.

We have become an economy unto ourselves; an economy driven by service industries and consumption and right now consumers are not yet convinced that the Obama administration has solved everything and that they should go back to what they were doing. Even if they if they did, they haven’t the means or the desire to do so and are not yet prepared for what is coming.

As long as unemployment stays high and the consumer suffers malaise, Republicans, if they so chose, will have plenty of legitimate economic fodder to lob at the Obama administration for years to come.

Among the DFL’s “Happy To Pay For A Better Minnesota”-chanting clacque, you rarely see much sympathy for tax cuts; suffice to say that once Obamacare kicks in, we won’t see any for a long, long time.

But when it comes time to try to save jobs, suddenly, even the hardest-core DFLers get religion; Governor Pawlenty just signed a series of tax exemptions intended to try to keep the Saint Paul Ford plant open.  The plant is scheduled to close next year; the law would incent Ford to retrofit the very old plant to build vehicles other than the Ranger pickup.

St. Paul Mayor Chris Coleman, who’s often been at odds with Gov. Tim Pawlenty over cuts in state aid to cities, applauded the governor for signing the bill later this morning.

Said the mayor:

“This legislation gives Saint Paul the means to do our part in protecting the workers at the Ford Plant. As Ford continues to look at their options, this bill stands as evidence that the City of Saint Paul, and its world class workforce, are ready to work with them in any way we can to keep this plant open.”

That’s right, Mayor Coleman.  Just imagine how many businesses would come to Saint Paul if all our taxes were lower!

Les Lucht, a good friend and Ford employee, writes at Ademocracy to thank everyone involved:

Little background on the plant is over 90 years old, The machines are over 25 to 30 years old.
It would cost about 1 billion to clean up the site. And the City and State will lose more than 90 millions dollars in taxes. Beside other business nearby will close additional taxes loss of one to two millions in loss of taxes. Plus another 750 unemployed employees, loss of more tax dollars.

Southern state have got federal aid to get job there. mainly auto companies. And to keep them.

I’m opposed to state subsidies on principle, and a tax cut that Peter gets but Paul doesn’t is pretty much a selective subsidy.  But Lucht is right; the market for big auto plants is like the market for stadiums; governments at all levels have skewed the market by being in the game so very deeply.

What is “Prosperity?”

10,000 years ago when our anscestors were hunter-gatherers, it was a field or a stretch of forest or river that some other family of hunter-gatherers hadn’t pretty well plundered already. You – and, hopefully, your tribe – would have the means to keep up their strength until spring brought a new, less-meager bounty staved off starvation for another year.  Maybe.

Back then, the worst thing that could happen was another tribe moving in and deciding that you, Clan Urk, were going to be Happy To Pay For A Better Clan Thag.  The results meant moving long and far to find more forage.  Or dying.  Or both.

500 years ago, when 999 out of 1000 of our forefathers were subsistance farmers?  Wealth was some extra potatoes or sauerkraut or wheat stored away that nobody else had a claim to, in case there was a drought the next year.  It was the knowledge that your family, and ideally your village, could ride out some of the hard times without starving to death.

The great  impediment to properity for most of our peasant anscenstors?  The nobles who claimed a percentage of what you, the peasant, grew and stored. in exchange for the privilege of having their protection (and the plague, rabies, accidents, wars, cholera, typhus and dropsy).  Their cut came off the top; if your cut wasn’t enough to feed the family?  Well, peasants could always create more kids.

Today?  The topline definitions of “prosperity” have moved quite a bit in the past five to 100 centuries, but in one way or another it’s still the same as it was for both groups of anscestors; make life less tenuous.  Whatever “tenuous” means. 

Of course, we moderns have less to worry about in terms of starvation, plague and dropsy than our hunter-gatherer and feudal forebears. 

The nobles?  Well, they’re still out there, and they’re still a problem.

Why do you work?  Wouldn’t life be a lot more fun if you got to hang out, drink and play Wii all day?  Of course – until you starved!  That’s why, eventually, most people (yes, except the odd trust fund baby) needs to actually work in some way or another to support themselves, whether digging ditches or underwriting bonds.

How prosperous one is is largely – not entirely, but mostly – a function of choices one makes.  Ones’ future hinges to a sometimes depressing extent on choices one makes when one is not old enough to be making life-altering choices.  Decide to knuckle down and get straight “A”s, maybe with the help of a family that encourages it?  Decide to party your way through (or out of) high school?  They’ll likely lead one down different paths by the time one is thirty. 

But once one is on a path – neurosurgeon or night stocker, programmer or truck driver – ones work is what one does to feed oneself and one’s family, to provide shelter and clothing and internet and private school for the kids and that yacht in the Seychelles. 

And whatever one does, whatever ones’ abilities, whatever one did to get to where they are in life, “prosperity” today means the ability to make ones’ life as secure as one can, given the talent they have and the work they do. 

Now, government does have a purpose in ensuring prosperity.  A prosperous city, state and nation need everything from enforceable contracts to safe streets to the rule of laws rather than men to a work force and entrepreneur class that is capable of building the things and institutions needed to prosper.  Those mean courts, law-enforcement, defense, some form of education, and all the kinds of infrastructure that enables commerce, from roads and harbors to currency and a legal system – even the prevention of starvation and epidemics.  The sorts of things a government very well should be doing, within limits.

But a big chunk of our society doesn’t recognize the concept of limited government; to many, government has no limits.  And a government that has no limits – that decides that its job is to provide an income (not “prosperity”, mind you), health insurance, cradle to grave social security and the engineering that society “needs” – is taking a huge, utterly discretionary bite out of your prosperity.  Government becomes another mouth, or two or three, in everyone’s family.  It becomes Clan Thag, competing with all your Clan Urkers for the resources that are out there, making Clan Urk’s – your family’s – existence that much more tenuous.

So I want government to promote, rather than retard, real prosperity.

“But Mitch – what do you mean real prosperity?”

Prosperity that one controls oneself.  Clan Urk doesn’t have to ask Clan Thag for permission to hunt and gather; your group of peasants keeps the grain they grow, rather than giving it to your good-for-nothign duke who hasn’t done a damn useful thing in his life since he got back from Yale.  Because prosperity that exists at someone else’s discretion isn’t prosperity; it’s being a pet.

So that’s what I believe in.

Gosh – I am an extremist!

So is Obama and his money-and-power grab on the permanent ascendant in American politics?  Or is it an ugly, profoundly-damaging flash in the pan?

Flash, says Ross Douthat in the NYTimes:

Before the 2008 crash, it seemed like this new liberalism might be poised for a long run of domestic policy triumphs: First health care, then climate-change legislation, then card check and immigration reform and so on down the list. But in the wake of the Great Recession, our rendezvous with fiscal retrenchment has been accelerated, and the chances for a rolling series of progressive victories have diminished apace. Barring an extraordinary economic boom, the American situation will soon require the slow and painful restructuring of the welfare state that liberals have spent decades building.

And I think we can pretty safely bar a big economic boom.

This environment may or may not lead to a revival of D.L.C.-style centrism among the Democrats, but at the very least it’s hard to see it proving congenial to further adventures in sweeping social legislation.

As much as the GOP struggles with its own internal contradictions – between fiscal hawks, moderates and social conservatives – pale compared to the war between the Kossacks and the moderates, which has effectively led to a near-purge of moderates.

Which helps explain this past weekend’s scorched-earth assault on the free market:

I’ve talked to liberals who seem to understand this: The reckoning is coming, they allow, and the theory of health care reform has always been to get everybody inside the barrel before it goes over the falls. (I’d lay good money that this is Peter Orszag’s view of the matter.) But seen in this light, the health care victory looks less like the dawn of a bold new era, and more like the final lurch forward before a slow retreat. you might say; now they have to hope that it turns out better for them, and for America, than it did for Napoleon.

Which is where we come in.

I took a rare trip to a Minneapolis strip joint the other evening.

I was sitting at the bar drinking a vodka/sour when I saw a prominent DFL legislator getting a lapdance from Maria, a cute latina who’s been working there for a couple of months.  He was enjoying it in the way that DFLers always express enjoyment – by complaining and demanding.

“Tell me your little hermano needs to have his croup looked at, and could I preese herp he see a docta!”, he yelled, not a trace of mirth in his face.

“Er”, Maria said,  “Sure.  You gonna tip me?”

The DFL legislator shouted “Everybody!  Pony up so that I can tip Consuela, here!”

Maria got up and walked away.

“Hah, hah, hah” yelled the prominent DFL legislator.  “Your Hermano or whatever his name is will never see a doctor!”

He got up and finished his drink, and started staggering toward the door.  I followed him, intending to ask what his problem was.

We walked out onto Washington Avenue and walked toward the parking ramp.  I was walking to catch him when he stopped by a drunk sitting on the sidewalk leaning against the wall of a plumbing supply store.  He leaned down and grabbed the bum’s bottle of Mad Dog and took a long, greedy swig.  He then tossed the bottle into the street.  “When you win elections, you get to keep your booze.  When I win, I get to take your booze!  Hahahaha!”

He staggered away as the bum looked, nonplussed. 

“I rule the woooooorld!”, he bellowed as he walked through the door of the ramp.  “I can do anything I waaaaaaaant!”

I bring this episode up only because Charlie Quimby of Across the Great Divide is working so tirelessly to improve America’s supply of metaphorical observations. He was writing about a tweet by Kevin Watterson, who is a communications guy for the House GOP Caucus.

Quimby:

That means he is a government employee who works for people who derive at least part of their livelihood from the government, and he draws a pay check from the tax payers.

Right.  Because as libertarian as I am, even I would balk at privatizing the legislature.  Perhaps I should aim higher?

I digress:

So it’s curious that he would tweet something like this:

Sat on a bench in Target for 20 wating for pharma 2 open. Guy next to me the whole time gets up & opens it. Imagine when he’s a govt worker.

Got that? A guy who’s a government worker observes a private-sector employee and uses him to impugn government workers.

I’m trying to figure out what the problem is.  Is it that Quimby believes government workers (and future ones!) should all march in solidarity with each other?  That a government employee has no right to criticize his fellow employees or future colleagues (much less the legislation that our current pack of nutslaps are trying to pass into law?)   That a government worker should lead the lesser proles by example?

What was Watterson’s offense?  That he, a “government worker”, doesn’t want to waste time (yaaay, Kevin!), and sees, correctly, that government healthcare will be an even more catastrophic time-suck than it is today in the not-too distant future?

I’m not going to argue that government at any level is a total paragon of efficiency, enterprise or long-term decision-making.

(And yet they’re the ones Quimby’s side wants running your family’s healthcare!)

But the people arguing the loudest for defunding the public sector seem to believe that government is incapable, while the private sector is a model of efficiency, creativity and adaptation that will save America from the cesspool of creeping socialism.

Got that? Watterson sits apparently inert waiting for a private business to open — presumably at the time it has established its business hours — and uses the occasion to demean any government employee who might do the same.

Yep.

And better yet, Watterson is right to do it. 

Because Kevin, today, can go to the sluggard’s manager and complain, and likely get results; ever tried to complain to government about government?

Because Kevin today can voice his disgust at Target by turning on his heels and going to WalMart, DVS, Cub, Walgreens and dozens of other pharmacies who are happy not only to fill his prescription but will do it when they say they will, if Target won’t.  (And so Target will, too – or they’ll leave the business).  What imperative is there for government to improve service?  To whom is government accountable?  Fellow bureaucrats, themselves accountable to more layers of bureaucrats.

Watterson was right. 

Next week: My evening with three prominent DFL legislators at a dog fight.

In the immortal words of some Oscar-winning song or another, It’s Hard Out There For A Pimp.

Even a poverty-pimp who’s held a sinecure largely on the basis of “elite” business connections that’d make Ken Lay blanche with embarassment.

That’d be Barney Frank.  The guy’s got a tough row to hoe, and I think the strain is catching up with him:

“It’s like the Salem witch trials, and healthcare is the witches,” Frank said. “There is mass hysteria.”

That’s right.  Obamacare is an innocent victim, caught up in mob hysteria (because what is the only thing mass movements do, when they’re not electing pretty-boy empty suits  to the Presidency?), supported only by a political party that came into this term with a near-epic mandate (although get back to us in November). 

Just like those witches.

I’ll give him some credit.  He got it half right.  At least Obamacare deserves to be lit on fire.

President Obama polishes a turd:

“We proved that this government — a government of the people and by the people — still works for the people,” the president said late Sunday, beginning his sales pitch from the White House one hour after Congress passed the sweeping measure.

It works “for the people” – 55% of whom oppose the bill.  That’s two percent more than his final vote total in ’08.

He’s like the Cheshire Cat; “”For the people” means what I say it means.  Ummm, no more and, aaaahm, let me be perfectly clear, no less!”

On the one hand, I don’t know that anybody quibbles about Lori Sturdevant being a bought-and-paid-for (figuratively) tool of the left – someone who is the mirror opposite of the “extremist” conservatives she clutches her pearls and complains about during the course of every single legislative session.  She’s pretty well thrown in with the radical dogmatic left; there’s really no need to argue about it.

Except that she’s still employed by the Strib; there, she writes as a “general” columnist, which might tell the uninformed reader that she’s actually passing on unvarnished, “objective” information, rather than shilling for the DFL.  Sturdevant is no more detached or “objective”  in covering politics than David Brauer or Brian Lambert.

But how would the casual Strib reader know this?

Simple; most of them don’t.  Which is just fine by whomever is paying the bills.

Oh, yeah –Sturdevant favors single-payer healthcare, as she makes perfectly clear in her weekend mash note to Roseville senator John Marty, who I’d say has served as a sort of dimestore Paul Wellstone, except that the left and Sturdevant would likely think of that as a compliment.

The possibility that Americans would join hands and buy health care all together has found no traction in Washington.

[Aside:  Notice with Sturdevant how “bipartisanship” is always something warm and fuzzy like “joining hands” when it’s a DFL initiative like socialized medicine, but some sort of climate of mean hatred when it’s something like tax cuts?]

But at the DFL-controlled Minnesota Legislature, the idea has been quietly marching through committees, three in the Senate, one in the House.

If something is “quietly marching” – just like Martin Luther King! – then  it must be a great idea, right?

Well, no – the DFL, which never met a spending program that didn’t make a tingle run up its leg, has a supermajority in the Senate and an almost-veto-proof margin in the House.

The Minnesota Health Plan is propelled in the Senate by former and current DFL gubernatorial candidate John Marty, a seven-term legislator from Roseville. Marty recognizes that with GOP Gov. Tim Pawlenty in office, a single-payer health plan has no chance to become law this year.

But health care politics will change rapidly in the next few years as the status quo becomes increasingly untenable, the senator predicted.

The whammy here is that the system by definition can only get less tenable – because it is perfectly tenable today.  Sturdevant, being a bobble-headed repeater of DFL talking points, likely doesn’t know it, but John Marty does, and is lying; 92% of Minnesotans have insurance already, of one kind or another.  And insurance in Minnesota, regulations aside, is fairly affordable compared to states like New York or New Jersey.  And of the 8% who don’t have insurance, the vast majority either don’t want it, which should be their right, or are part of a relatively tiny minority who actually can’t get any insurance.

His plan will gain adherents because it would cure more of what ails the costly health care system. It would insure everyone, cover all medical needs, provide the purchasing clout needed to reform the way medicine is practiced, and thereby drive down premium costs.

If I can perform no other service in this debate, I want to make sure you, gentle reader, who is likely to go to a healthcare protest,can read behind the code words Sturdevant just used.

• “Insure everyone” – even if you don’t want it, orif you like the plan you have now just fine!  Even if you move here strictly for the free health care (with no intention of paying anything meaningful into the system).
• “cover all medical needs” – they do mean all medical needs; viagra for 68-year-old real estate agents; chemical dependency treatment; sex change operations; since John Marty and the extreme left wing of the DFL is involved, abortions will be part of the package at some point or another.
• “provide the purchasing clout needed to reform the way medicine is practiced” – which is a nice, benign way of saying “provide a monopoly that can dictate prices to doctors”.  Who, inevitably, leave the business.  Which, inevitably, constricts the supply of care.  Which either means the state raises what they pay, or start rationing the care that is available.  Which is precisely what has happened in every single state, county or nation that has ever socialized healthcare.
• “drive down premium costs” – in the same way that union healthcare plans “drive down co-pays” – by passing the costs on to other people.  And when it’s government involved, you know where the buck stops starts, right?

Sturdevant:

Marty pegs the savings in total state health care spending, public and private combined at 20 to 25 percent.

Provided the conditions of the “pegging” stay static – which never, ever happens.

That claim faces a mountain of skepticism, even from his fellow DFLers, because he is talking about “government-run health care.” But his notion isn’t to put the Legislature in charge. It’s to create a quasi-governmental agency with a board selected by nonpartisan county commissioners, empowered to contract with local and regional providers of health care services and manage their care.

Sturdevant, knowing she can’t dazzle you with brilliance, is baffling the gentle reader with – well, Sturdevant.Again with the code words:

• “Quasi-governmental agency” – Being “quasi-governmental” is like being “quasi-pregnant”.
• “nonpartisan county commissioners” – Please.  County commissioners are as non-partisan as, well, Lori Sturdevant.
• “Empowered to contract with providers and manage their care” – A phrase that is so carefully crafted as to be almost dazzling in its misleading brilliance.  But if this board is “empowered” to compete against private health insurance companies, they do it with government subsidies, which drive down the apparent cost (because everyone’s premiums appear cheaper if someone else is paying for them!) and increase at least the initial fund of money available.  Which puts the private companies at a disadvantage and eventually drives them from the market.  Which leaves the “quasi”-public plan as the main player in the market.  Which, as more people flock to use the artificially-low-priced services, costs the taxpayers more.  Which means the board will “negotiate” lower prices with providers.  Which means providers leave the business (as they have in Canada, Sweden, the UK, France and every other place where socialized healthcare has been attempted). Which means that either the wait for services grows longer (as they have in Canada, Sweden, the UK, France…), or the “board” gives in and pays out higher prices, but then either has to make up the difference by charging higher premiums (which nobody can afford by themselves because, remember, you’re paying for Honest Eddie’s little blue pills and Dave’s sex change as well as little Raymond’s appendectomy), or raising taxes – which won’t solve the problem right away anyway, since replaceing doctors and nurses takes years, and doesn’t work if you’ve made medicine a wretched government job anyway.

Sturdevant:

That should sound familiar to the 13 rural (and Republican-dominated) counties of PrimeWest Health, a county-based health care purchasing system for low-income people that’s been turning in impressive cost savings in recent years.

But if it sounds familiar, it’s just the voices in the listener’s head, because there is virtually no similarity.

While PrimeWest Health may well run into exactly the same pathologies that we noted above, and for exactly the same reasons – like the Massachusetts health system did – it is at least something that makes more sense than Marty and Sturdevant’s fantasy; it attempts to solve the real problem (uninsured low-income people) rather than the imagined one (insuring everyone for everything).

That, indeed, has been the greatest danger of the healthcare debate lately; aided and abetted by people like Al Franken in last week’s rally, and Lori Sturdevant in the media, the left-voting crowd in Minnesota is chanting less “public option now!” and more “it’s just like free enterprise!”, without knowing just how wrong they are.

“An area in the Healthcare debate where Republicans and Democrats agree!”, NPR’s “Marketplace Money” trumpeted last night.

“Only in the most trivial possible way, I’m gonna guess“, I thought, turning the radio up.

Am I ever wrong about these things?

Naturally, the Democrats favor a form of “competition” that has all the “competition” regulated out; essentially, the Tic version of the idea looks more like “privately-administered socialized healthcare”, only marginally less noxious than Obamacare itself.

The Republican plan would allow insurance companies to sell across state lines, more or less the say car, boat and motorcycle insurance works today.

Naturally, it’s sparking debate; conservatives welcome competition…:

Proponents of the idea say that the tangle of state regulation drives up costs, particularly in states with heavy mandates, and that a quick and easy way to reduce prices would be to allow people in states where insurance is expensive, like New York or Massachusetts, to buy policies in low-cost states like Minnesota.

Mr. Shadegg, who sponsored legislation to allow insurance sales across state lines in 2005 and has championed the idea ever since, likes to illustrate the lack of competition by pointing to how different the market is for automobile insurance.

“If you turn on the television station at night,” he said, “you see Allstate and Geico and Progressive and State Farm pounding each other’s heads in. ‘Drop your policy and come get a policy from us, and we’ll do two things — we’ll save you money and give you better service.’ You never see that kind of advertisement for you and I to go out and buy health insurance.”

But Mr. Shadegg adamantly opposes the Democrats’ take on the idea. He dislikes their requirement that states pass laws to create health care “compacts,” and he rejects the Democrats’ efforts to impose tight new federal regulations on insurers. Replacing many knots of state rules with a big knot of federal rules would defeat the purpose, he said.

Democrats: “But if you allow people to choose their own insurance, some of them will choose insurance that costs less and has fewer regulations!”.

No, really:

President Obama and leading Democrats, however, warn that without new regulations, private insurance companies would race to set up shop in states with lax regulation, minimal benefits requirements and the fewest consumer protections.

The nerve of those peasants – picking out the insurance they need and can afford, rather than insurance that’s larded up with all sorts of costly mandated coverage that just might not apply to them.

“If you go to full interstate shopping, you are going to need some consumer protection,” said Senator Ron Wyden, Democrat of Oregon, a supporter of the idea. Still, Mr. Wyden said he believed that compromise with Republicans is possible. “There is a lot to work with here,” he said.

In addition to bringing better, less expensive insurance to more people (even left-leaning “All Things Considered” noted that while Minnesotans might not see much benefit because our insurance is already relatively cheap, over half of the people in New York and New Jersey could find better insurance cheaper under this plan.

Presuming they can do with fewer benefits and less regulation, anyway…

A year and a half ago, pundits speculated that Barack Obama, if elected President, would either work to move the country far to the left in pursuit of a liberal ideology and to satisfy decades of pent-up liberalism or govern from the center in the interest of furthering his personal ambitions and extending the pinnacle of his political career.

The first year of the Obama Presidency ended all speculation. Ideology trumped ambition, and it’s been a disaster for the President and for Democrats.

January 20th marked the beginning of his second year and also served as a demarcation between the pre-Brown and post-Brown era for the Obama Presidency.

This week offers peril and opportunity for the President to elucidate his New New Way Forward, if like many Democrats recently, Obama acknowledges the Coakley defeat as the comeuppance that it was.

Mr. Obama’s campaign-style speech here capped one of the most bruising weeks of his year in office. The President traveled to this swing-state manufacturing town ostensibly to deliver a speech about jobs and the economy, but instead he repeatedly veered off-script to interject pledges to battle his political foes over health care and other issues “so long as I have breath in me.”

Sadly for alert Democrats and in an inconceivable dream scenario for Republicans, instead of shifting gears from health care reform to job-creation; to align Washington with the rest of America, Obama opted this week to cement his station as an ideologue. Without regard for fairness, public sentiment or for that matter, securing a second term, the President declared war on the banking industry, sending the market into a minor (thus far) sell-off, undermining sentiment tied to economic recovery, and positioning himself within a new Democratic sub-minority, of, well, he and Nancy Pelosi. Even Barney Frank has said “Uncle.”

Save for later the discussion of the fact that his edict fails to recognize the corruption and culpability of Fannie Mae and Freddie Mac, both being spared, and the fact that we already have procedures in place such as increasing reserves and FDIC premiums to protect the system and “punish” banks for taking on excess risk. I’ll also forego the well-worn but valid discussion of the of the fact that much of the risk-taking at issue was forced upon them by government policy and that some of the corporations and practices Obama named specifically had nothing to do with the financial crisis.

[Treasury Secretary Timothy] Geithner is concerned that the proposed limits on big banks’ trading and size could impact U.S. firms’ global competitiveness, the sources said, speaking anonymously because Geithner has not spoken publicly about his reservations.

He also has concerns that the limits do not necessarily get at the root of the problems and excesses that fueled the recent financial meltdown, the sources said.

Lawrence White, a professor at New York University’s Stern School of Business and a former regulator, said Obama’s proposals were “a solution to the wrong problem.”

Ironically, these policies may result in the transfer of some pretty good jobs from Wall Street to Europe.

The new rules would ban the use of a bank’s own capital for hedge fund or private equity investment, or for trading unless it was directly connected to client activity.

However, some foreign banks believe they could escape the ban by switching their operations from Wall Street to London or continental Europe.

What Obama’s proclamation does represent is a presidency inexorably out of sync with America; especially the meaty middle, whose voice was heard load and clear in Massachusetts this week. A years’ experience has done little for a man who has never held a real job, owned a business, or exhibited a basic comprehension of the fundamentals of economics or a genuine acknowledgment of the gift that is free enterprise.

Mr. Obama’s display of anger with big financial institutions and insurers may not reassure voters who are dubious about his proposed solutions to the country’s economic problems.

Barack Obama has essentially been out of touch his entire, calculated, and increasingly apocryphal political career and may soon find his presidency floundering having sailed his most avowed mission to reform America’s health care system into a tsunami of taxpayer revolt.

Despite the fact that his policies have been soundly rejected and support within his own party is eroding, Obama’s political capital and popularity aren’t completely exhausted. The opportunity remains to move quickly to realign his presidency with the pressing needs of an American citizenry that haven’t yet completely lost hope in him.

most continue to like and respect the man they gathered around televisions to watch sworn in as president on a cold noon hour a year ago, and most still hold out hope for his presidency. Yet many also worry that, in his quest to mobilize government to solve the nation’s problems, he may have moved too far too fast.

If Obama’s upcoming State of the Union address focuses on restoring full employment, judicicious enhancements to the regulations that govern our financial system, and a renewed confidence in America’s ability to recover, rebuild and prosper once again, Obama’s may find his stock rising again.

“In his State of the Union, Obama has to slim down his ambitions. It should be short and simple and focus on jobs.”

“Obama has to decide whether he wants to be a transformational president, which looks optimistic at this stage, or merely an effective president,” says Bruce Josten, head of government affairs at the US Chamber of Commerce

Odds are, Obama will continue on his latest vector: vilifying banks, demonizing those who would dare seek an honest profit, penalizing employers, mushrooming the federal government and broadening an ongoing orgy of government spending under the guise of economic timulus, which is almost as dirty a word now as health care reform.

In short, Mr Obama’s nightmare January could easily slip into a nightmare February. “Unless and until the president changes the way his White House, works, things are going to continue to go badly for him,” says the head of a Democratic think-tank.

In turn, this will continue to fuel the tea party movement, mobilize the middle, neuter the left and manifest a Jimmy-Carteresque dreamscape only the most opportunistic Republicans could envision before last Tuesday night.

Only Obama’s teleprompter knows which path the President will chose.