TIA Daily • September 2, 2010
Instead of a double dip, we're in for a "growth recession" in which the economy grows at a rate too slow to restore the pre-recession standard of living.
Top News Stories
- Day of Reckoning
- The DeMint Caucus
- Re-Fusing Fusionism
- Growth Recession
- Looters
- "Filthy Human Children"
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Top News Stories
Commentary by Robert Tracinski
1. Day of Reckoning
The evidence is growing that November 2 won't just be Election Day. It will be a day of reckoning, in which Democratic politicians will get kicked out across the country—out of Senate seats, out of the House, out of governorships, and out of state legislatures—in a massive nationwide protest against the out-of-control growth of government.
The "generic" ballot lead for the GOP—the voter's preference for any given Republican over any given Democrat—has now increased to an unprecedented 10 points. In congressional seats where the Republicans were favored, their lead is growing, and even in seats where the GOP candidate was considered marginal, they are becoming improbably plausible.
And President Obama—a politician unjustly famed for his "eloquence," who once boasted to congressional Democrats that they didn't have to worry about the voters because "you've got me"—is giving "lame speeches" that do nothing to turn around his party's fortunes in the final months of the race.
A massive Republican victory this fall is absolutely necessary because of the message it will send. What we need is a Biblical-style apocalypse for the Democrats—a plague of boils would be nice, but we'll have to settle for a wipeout at the polls—as an unmistakable public repudiation of the policies of the left. That will clear the way, of course, for a battle within the right, which is already under way. See the next item below.
"Bigger Than 1994," Sean Trende, RealClearPolitics, September 2
There has been a flurry of political stories in recent weeks about the electoral difficulties Democrats face this fall. It seems Washington is finally catching on to the fact that the Democrats' hold on the House is in dire jeopardy, and that a 1994-style, 52-seat pickup is a real possibility.But this should not come as a surprise, as the data have been pointing to Democratic losses in the 50-seat range in the House for some time now....
In reality, barring some major and dramatic turnaround in the political landscape, the 50 seat GOP wave has now in many ways moved closer to the floor for Democratic losses. With the economy continuing to flounder and with fewer than 60 days until Election Day, the potential for a once-in-a-century type of wave that would lead to GOP gains in the 60-90 seat range is increasing.
The latest Gallup generic ballot tracking finds that, among registered voters, Republicans are leading by ten points, 51 percent to 41 percent. Three of the four highest leads for the GOP since Gallup began tracking the generic ballot in 1942 have been measured in the past month alone (and Republicans won the House seven times during those intervening years, with as many as 246 seats which would be a 68 seat pickup today).
Moreover, this is a poll of registered voters. This poll only partially accounts for a massive 25-point "enthusiasm gap" between the parties....
Right now, the idea of gains in excess of 60 seats for the GOP is unthinkable to many. Gains of that magnitude haven't happened in over 80 years. But unthinkability is not evidence. What actual evidence we have reminds us that no political party has hit the trifecta of a lousy economy, an opposition at its nadir (in terms of seat loss), and an overly ambitious Presidential agenda in over 80 years. All these macro factors are pointing to a massive GOP blowout, and they will not be changing between now and November.
2. The DeMint Caucus
The big queasy feeling a lot of us may have had about voting for Republicans in order to punish the Democrats is the concern that we will just get the same wishy-washy establishment types back in office, who will go with the flow of Washington and do nothing to shrink the size of government. But this year has also seen significant action in the party primaries.
In particular, something big and important has been happening in the Senate races this year, and it will have enormous ramifications for what happens in Congress next year.
Earlier this week, I linked to an article describing how South Carolina's Jim DeMint is trying to build a caucus of relatively radical small-government Republicans in the Senate. With the defeat of Lisa Murkowski by Joe Miller in Alaska's primary, the potential number—I think it is the likely number—of this radical DeMint Caucus has grown to seven, by my count, which is a big bloc for the Senate.
(My count: incumbents DeMint and Tom Coburn, plus Sharron Angle in Nevada, Joe Miller in Alaska, Rand Paul in Kentucky, Ron Johnson in Wisconsin, and Mike Lee in Utah. Let me know if you think there is anyone else I should add. What about Ken Buck in Colorado?)
The article below expands on this theme, and particularly how DeMint-supported candidates have been deposing the Senate Republican leadership built up by more-moderate Senate Minority Leader Mitch McConnell. If Republicans take control of the Senate—which I also think is likely—DeMint is going to become a kind of Shadow Majority Leader, putting pressure on McConnell from the right.
In the current environment, and backed by an even bigger and more effective radical caucus in the House, this DeMint bloc could wield outsized influence. And look also to the next round of Senate races in 2012, when a whole group of Democrats who sailed into office in 2006 based on dissatisfaction with George W. Bush get bounced right back out.
"Tea Party Raids McConnell Kitchen Cabinet," Timothy P. Carney, Washington Examiner, August 27
Sen. Lisa Murkowski's apparent defeat in Alaska's Republican primary isn't just a defeat for the Republican establishment and the National Republican Senatorial Committee....The Alaska result is above all a blow to Senate Minority Leader Mitch McConnell. As with the primary defeat of Utah's Bob Bennett in the spring, challenger Joe Miller's likely win replaces a close McConnell confidant with an unaccommodating conservative.
McConnell, since becoming minority leader in 2007, has built his own "kitchen Cabinet," consisting of two or three official "counsels"—senators, handpicked by him, who attend GOP leadership meetings along with the elected party leadership. Both Bennett and Murkowski are in this inner circle. And both lost their primaries this year to conservatives running against Washington.
Murkowski was one of McConnell's rising stars.... She has a moderate voting record, but she isn't at the left end of the GOP. Ultimately, she is a loyal Republican who isn't terribly ideological. This was the profile for McConnell's "counsels."...
Bennett's replacement—former gubernatorial aide Mike Lee—promises to be something beyond just a "balky Republican senator." Lee's stump speech sounds like a lecture on the Constitution, and how nearly everything Washington does is outside of its legitimate authority. He takes pretty seriously the oath of office to defend the Constitution, and it wouldn't be surprising to see him filibuster a harmless Republican measure that isn't explicitly authorized by Article I, Section 8....
One Republican operative, comparing these future senators with the upper chamber's current gadflies, said Lee and Miller will make Jim DeMint and Tom Coburn look like lapdogs.
If Miller and Lee set the tone of the incoming freshman class, that could ensure that Colorado's Ken Buck, Nevada's Sharron Angle, and Kentucky's Rand Paul—if they win—never fully assimilate to the Old Boys (and Girls) Club.
3. Re-Fusing Fusionism
There has been a lot of confusion about Glenn Beck's big rally on August 28. The confusion derives from how Beck advertised the event: its purpose and focus was kept deliberately vague ahead of time, so as to be a surprise for those who attended. It wasn't clear whether it was a patriotic rally to recognize military heroism (which most of the publicity focused on, from what I could tell), or whether it was another big Tea Party protest against big government. And it turned out to have more the character of a religious revival, with Beck calling on his audience to "turn to God."
The message was a little more muddled than that, since Beck also appealed to traditional American individualism, asking his audience, rhetorically, "Are we so pessimistic that we no longer believe in the individual and the power of the individual?"
The way the rally was advertised limits the significance to be drawn from the size of the crowd—somewhere just under 100,000 people, which seems realistic from the aerial photos I saw—because those people showed up out of personal loyalty to Beck rather than because they knew exactly what they were showing up for. So I suppose the rally was clearly about "faith" in that sense.
But Beck is a major voice on the right today, and his radio show—I assume his television show, too—has taken a sharp religious turn this year. So it is important to cut through the confusion and find out exactly what he thinks he is doing.
This turns out to be pretty easy. I tuned in to the first 15 minutes of his radio show Thursday morning, and Beck himself pointed out a blog post—see the main link below—which he described as perfectly summing up his intentions.
Beck is trying to become an activist, not just on the political level, but on the cultural level, stirring up a revival of traditional American values, summed up in the blog post below as "building solidarity and cultural confidence in America, its Constitution, its military heritage, its freedom"—all wrapped up in a package deal with religion, which Beck puts forward as the foundation for everything else.
I have written about how we have recently seen the un-fusing of the "fusionist" philosophy that sought to promote this package of traditional America values as the basis for the right, with a religious agenda as the dominant element. In effect, Beck is trying to re-fuse fusionism.
I don't think Beck would think of himself as promoting "fusionism" particularly—it's a term that has gone out of fashion—but he is promoting the same phenomenon, which I have admit goes back to America's founding: the idea that American individualism, patriotism, and love of liberty requires a foundation in religion.
I have argued that this foundation failed, that William F. Buckley-style "fusionism" ended up being a one-way street which promoted the religious right's agenda while all too often leaving pro-free-marketers high and dry. Its real purpose was to harness the energy of American patriotism, individualism, and free markets to promote religious intrusion into politics.
That is tempered, below, in an update to the blog post in which the author (who goes by the nome de blog "Lexington Green") accepts that the Tea Party movement should make common cause with "secular libertarians" and not use religious issues to exclude them. From what I've heard of Beck's show, I suspect he might say the same.
But Beck's religious tent revival act will serve to embolden those who want the religious right to mount a hostile takeover of the Tea Party movement.
"I Think I See What Glenn Beck Is Doing," "Lexington Green," Chicago Boyz (blog), August 31
The Glenn Beck rally is confusing people.Why?
He is aiming far beyond what most people consider to be the goalposts....
Someone who asks what the rally has to do with the 2010 election is missing the point.
Beck is building solidarity and cultural confidence in America, its Constitution, its military heritage, its freedom. This is a vision that is despised by the people who have long held the commanding heights of the culture. But is obviously alive and kicking.
Beck is creating positive themes of unity and patriotism and freedom and independence which are above mere political or policy choices, but not irrelevant to them. Political and policy choices rest on a foundation of philosophy, culture, self-image, ideals, religion. Change the foundation, and the rest will flow from that. Defeat the enemy on that plane, and any merely tactical defeat will always be reversible.
Beck is unabashed that God can be invoked in public places by citizens, who vote and assemble and speak and freely exercise their religion. They are supposed to be too browbeaten to do this. Gathering hundreds of thousands of them to peaceably assemble shows they are not. But showing that the people who believe in God and practice their religion are fellow-citizens who share political and economic values with majorities of Americans is a critical step....
Beck is prepping the battlefield for a generation-long battle....
UPDATE: One commenter, Richard40 who attended the rally said "As a conservative secular libertarian, I felt a bit left out...." He said Beck could have included him by having a non-religious person on stage, and by saying "our only requirement is you believe in the founding principles of America, and wish to return to those principles." He noted further, correctly in my view, that "The key to the Tea Party coalition is to stay unified on issues where conservatives and libertarians agree, like spending, deficit, size of government, and honest government, but allowing a big tent, that respects differences on social issues...."
The Tea Party is one circle on the Venn Diagram.... The totality of the coalition which is growing, which I think of as The Insurgency, is made up of several components. The unifying element is exactly the political and economic factors Richard40 mentions.
4. Growth Recession
Earlier this year, I warned that we could face a "double dip" recession, caused by the depressive effects of the "stimulus." About a month ago, I pointed to new economic figures indicating that we have (just barely) avoided the double dip. That trend continues. See the main link below about slight growth in manufacturing that has managed to outweigh a renewed depression in the housing market.
That's the good news. The bad news is that it looks like we'll have very slow growth for the indefinite future. The economic forecast is for stagnation.
Jack Wakeland put together some of the more recent figures, with this comment:
"The double dip that we almost had is something that happened in May and June: a double dip recession in housing. The double dip recession in that sector threatened to pull the whole economy into a double dip because the recovery has been so slow and so weak. Slow but steady industrial growth (when manufacturing faltered several times over the past six months, other forms of industrial production made up for it) kept the growth rate in positive territory (barely) in the 2nd Quarter of 2010.
"Here are the overall GDP numbers (my read of the quarterly bar graph of real GDP changes from the Bureau of Economic Analysis plus their quarterly GDP numbers).
[The first column of GDP numbers is in nominal dollars, the second in inflation-adjusted 2005 dollars.]
2nd Quarter 2010 +1.6% (annualized rate) 3.6438 trillion 3.2979 trillion
1st Quarter 2010 +3.6% (annualized rate) 3.6116 trillion 3.2847 trillion
4th Quarter 2009 +5.2% (annualized rate) 3.5693 trillion 3.2548 trillion
3rd Quarter 2009 +1.6% (annualized rate) 3.5287 trillion 3.2152 trillion
2nd Quarter 2009 -0.7% (annualized rate) 3.5086 trillion 3.2025 trillion
1st Quarter 2009 -5.8% (annualized rate) 3.5124 trillion 3.2082 trillion
2009 Totals: 14.119 trillion 12.881 trillion
4th Quarter 2008 -6.7% (annualized rate) 3.5478 trillion 3.2484 trillion
3rd Quarter 2008 -4.0% (annualized rate) 3.6212 trillion 3.3059 trillion
2nd Quarter 2008 +0.6% (annualized rate) 3.6180 trillion 3.3398 trillion
1st Quarter 2008 -0.6% (annualized rate) 3.5821 trillion 3.3348 trillion
2008 Totals: 14.369 trillion 13.229 trillion
4th Quarter 2007 +2.9% (annualized rate) 3.5728 trillion 3.3409 trillion
3rd Quarter 2007 +2.3% (annualized rate) 3.5400 trillion 3.3171 trillion
2nd Quarter 2007 +3.2% (annualized rate) 3.5021 trillion 3.2985 trillion
1st Quarter 2007 +0.8% (annualized rate) 3.4474 trillion 3.2723 trillion
2007 Totals: 14.062 trillion 13.229 trillion
"If you do the arithmetic, you'll find that real economic output, as estimated by GDP, remains 1.3% below the peak historical level achieved in the 4th Quarter of 2007.
"With immigration down from about 1.5 million per year to about 0.9 million per year, the US population is probably still growing at about 1.2 to 1.5% per year. Real GDP growth of 1.2 to 1.5% per year is required to maintain our nation's per capita income, our standard of living. The net 1.3% contraction in real GDP over the past two-and-a-half years translates to a 4 to 5% reduction in US per capita income during this recession, which is entering its 11th quarter."
Jack also pointed my attention to two other factors that will slow down the recovery: a brain drain as skilled immigrants leave the US, and a "brawn drain"—Jack's coinage—as unskilled immigrants stop coming.
The result of all of this is that, instead of getting a double dip, we're in for the paradoxical prospect of a "growth recession"—a prolonged period in which the economy grows at a rate so slow that it is unable to keep up with the growth of the population and thus unable to restore the overall pre-recession standard of living.
No wonder small investors are bailing out of the stock market. These aren't the big investors, so their actions will not drive the economy. But they are rationally responding to a prolonged period in which we can expect that the recovery of the economy may well be too slow and anemic to reward the extra risk of investing in stocks.
"Manufacturing Index in US Increased More than Forecast in August," Courtney Schlisserman, Bloomberg, September 1
Manufacturing in the US expanded at a faster pace than forecast in August as factories added workers and cranked up production.The Institute for Supply Management's factory index rose to a three-month high of 56.3 from 55.5 in July, the Tempe, Arizona-based group said today. Readings greater than 50 signal growth....
Stocks rallied as US and China manufacturing figures tempered concern the global economic recovery will wane without more government stimulus. Production gains may partially compensate for a slowdown in consumer spending and sluggish housing market that are causing the world's largest economy to cool in the second half of the year....
Economists at BofA Merrill Lynch Global Research in New York today cut US growth forecasts for the rest of this year and next. The world's largest economy will expand at an average 1.65 percent annual pace from July through December and grow 1.8 percent in 2011, a half point less than previously estimated.
"The two most important monthly indicators—private payrolls and core retail sales—have stalled," the economists headed by Ethan Harris wrote in a note to clients. "At the same time, the post-tax-credit housing hangover has been worse than expected, and even the business equipment recovery shows signs of faltering. Our sense is that the growth recession is already here and it is likely to linger through the first half of next year."
5. Looters
I would like to wish my readers a happy Atlas Shrugged Day, an unofficial holiday marked on September 2, the date that keeps recurring as a literary device to help the reader keep track of the pacing of the plot in Ayn Rand's epic novel. (It is also, according to legend, the date in 1946 when she began writing it.)
Much of the novel has proved prophetic, and here is one other item: her use of the term "looters" to describe the government officials (and politically connected businessmen) who use government intervention to gorge themselves on unearned wealth.
Today, the excessive—in some cases, unbelievably lavish—pay given to government employees is fast becoming a major political issue. Below, the author of the delightfully named book Plunder! sketches out the full scale of this system of looting.
"How Severe Is US Pension Debt?" Steven Greenhut, Cal Watchdog, August 27
As the economy boomed, few people worried much about the debt that local and state governments were amassing to pay for increasingly generous pension and health-care benefits for public employees. Now that budgets are tight thanks to a down economy, the issue is big news—made even bigger by the outrageous pay and benefit plans received by officials of the small, working class city of Bell, Calif., where the now-ex-city manager stands to receive a pension valued at $30 million....Even bigger news is the size of the pension debt—estimated in California alone at $500 billion, according to a recent Stanford study. The nationwide debt is more than $3 trillion....
But in recent weeks, I've noticed a counter-offensive from defenders of the status quo, especially from public-sector union officials who are trying to depict public concern as unfair attacks on public employees....
The retirement systems make investments and if the rate of return is high, then the debt is low and vice versa. But increasingly the systems are making riskier investments to cover up for all the enhanced pension promises made over the years. Politicians have repeatedly made the retirement formulas more generous, and often have done so on a retroactive basis. By "enhancing" the formulas mid-stream, the investment funds have additional pressure to take bigger risks, which explains in part why the California Public Employees' Retirement System invested in leveraged housing developments at the height of the housing bubble. If such "roll of the dice" investments pay off, then there's more money for public employees and less political pressure to reform the pension system, and if they don't, the taxpayers are on the hook. It's the ultimate privatization of gain and socialization of risk.
The unfunded liabilities have gotten so large, however, that it appears unlikely that a rebounding economy will provide high-enough rates to cover up the problem....
In the bankrupt city of Vallejo, Calif., approximately 75 percent of the city's budget went to police and fire, which left little room for anything else. Because the union-dominated City Council would not reduce current pensions even in the face of bankruptcy, the city was left with slashed police and fire budgets—even as police captains earned $300,000 compensation packages.... The [Sacramento] Bee...opined: "County government is becoming a pension provider that provides government services on the side."
Public safety and firefighter unions argue that they deserve their "3 percent at 50" (3 percent of their final year's pay times the number of years worked, available at age 50) pensions because they die shortly after retirement—some claim that the typical cop or firefighter only lives five to eight years after retiring. CalPERS has debunked this myth (as has the Oregon retirement system) and finds that the longest living categories of public sector employees are police, followed by firefighters. They live on average into the low- to mid-80s. According to the Bureau of Labor Statistics, neither police nor firefighting are in the top-10 most-dangerous jobs. And the high disability rate is evidence mainly of abuses in the system. The Sacramento Bee reported a few years back that 82 percent of manager level officers in the California Highway Patrol retired on disability—a number that spiked after CHP shut down its fraud division.
6. "Filthy Human Children"
The Discovery Channel headquarters may seem an odd target for an eco-terrorist attack—until you reflect on the real meaning of environmentalism.
Following the discredited doctrines of Malthus, environmentalism preaches that humans are a blight on the planet whose rising population threatens unbridled destruction. And the Discovery Channel network runs the TLC and Discovery Health channels, which devote whole swaths of their daytime programming to inspirational stories about pregnancy and birth—i.e., the creation of new humans.
This is the simple chain of reasoning followed to its logical end result by the armed man who took hostages at the Discovery Channel offices, denouncing the network's encouragement of the breeding of "filthy human children" and demanding that it replace those shows with "programs encouraging human sterilization and infertility." Sounds like a ratings winner to me.
I'm trying to maintain a sardonic sense of humor about this episode, especially because it ended well. The police granted the gunman's demand: they reduced the human population—by one.
But keep that phrase "filthy human children" in mind whenever you encounter any of the propaganda of the environmentalists, particularly their Malthusian claptrap about "overpopulation." The Discovery gunman provides a glimpse of the profound malevolence of this movement's real soul. It is a reminder that their real attitude toward human life is that they are against it.
"Suspect in Maryland Hostage Situation Published Angry Online Manifesto," CNN, September 1
Lee was described by authorities as an environmental protester who had posted online rants against Discovery in the past.An angry manifesto posted by Lee on a website called SaveThePlanetProtest.com repeatedly refers to humans as "filth" and demands that the Discovery Channel "stop encouraging the birth of any more parasitic human infants."
"Civilization must be exposed for the filth it is," the 1,149-word statement says.
"Humans are the most destructive, filthy, pollutive creatures around and are wrecking what's left of the planet with their false morals and breeding culture," it continues.
The statement also blasts immigration, farming, weapons of mass destruction, automotive pollution, "and the whole blasted human economy."...
"The world needs TV shows that DEVELOP solutions to the problems that humans are causing, not stupify the people into destroying the world. Not encouraging them to breed more environmentally harmful humans," the manifesto says....
Lee appeared to be inspired by the writings of environmentalist author Daniel Quinn, according to statements made in the manifesto and on Lee's MySpace page. Quinn is best known for the novel, "Ishmael," for which he won the 1991 Turner Tomorrow Fellowship. The fellowship was established to encourage authors to seek "creative and positive solutions to global problems," according to Quinn's website.
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