Tuesday, September 28, 2010

Is President Obama Getting It?

Andrew Sullivan is asking President Obama to expose further the 'policy fraud' of GOP - no entitlement reduction while continuing unpaid tax cuts for rich. I would add few more things to this core argument.

People are going to ask - 'but President you have spend borrowed money on Stimulus, what about that?' President Obama needs to tell people the reality here - most Economists argued and supported the Stimulus; there were substantial tax cuts for common people in that and investments for future. He should ask which of this any President would not do when faced with the calamity what America faced in 2009? In fact it was President's concern for deficits which reduced the legitimate size of the stimulus.

President Obama should continue that, faced with the collapse of our financial system, President Bush ordered TARP which he along with Congress supported. Tell Americans that they are 'adult enough' to understand the necessary evil of TARP and that it has returned tax payers money back. The solution to address the 'greed of Wall Street' was not to have TARP and force misery on millions of more Americans; but Financial Regulation Reform Bill which again the party of NO opposed.

People will ask Obama then what about Health Care Reform Bill and it's cost - he needs to tell them that it is budget neutral as long as GOP does not unravel the precise 'Spinach' of that bill; the provisions which are expected to control the cost. In fact he should point out passing of Health Care Reform Bill as the exhibit A where he and Dems are ready for the 'temporary unpopular' decisions for the longer term success. The stones people are throwing at Obama and Dems for passing Health Care Reform Bill, use that as the 'badge of honor'; spin it on public.

Tell Americans that time to face the unresolved tension of 'uncontrolled entitlement with unfunded tax cuts' is now. Tell Americans that Senate GOP has proven that 40 members of any single party are enough to run the agenda of 'NO' and Dems, like any defeated party, would follow the same and that will reduce GOP House nothing but to a gridlock and unending frivolous investigations. Ask Americans whether that will give the 'businesses confidence' which we are all searching for and will that make rest of the world continue to hold our bonds?

In the end it is the responsibility of an elected President to fight what is going to 'ruin this country' for sure - the GOP agenda which throws any fiscal discipline on the pyre of non-sense and Obama Hate.

Update - Pearlstein has a great column about what to expect in GOP dominated Congress and how exactly business confidence will not be a sure thing when Sen. DeMint is ruling the Capitol.

Sunday, September 26, 2010

Iran and Middle East

Ever since Daniel Drezner wrote about covert operations to sabotage Iranian nuke program and possibility of success at that, this article by Sanger in NYT is one more corroboration of what is going on here and how mainstream media is noticing all this turmoil. Situation is so much in flux and still developing that it is hard to make much sense easily. So here are my some unorganized thoughts:

1. Is it the success of these covert operations which is making Obama Administration to explore ways to reopen talks with Iran? Does it mean the 'air strike option' is off the table for now? That is what seems so and no one would fault Obama Administration for not pursuing military options immediately. As usual the problem with these covert operations is verification of its success publicly. In absence of that, the reactions and responses of Israeli government will be the litmus tests.

2. Timing of news about covert operations surfacing in national Media is interesting - not only it is election time in USA; in the ongoing Middle East talk this will strengthen the hand of Obama Administration. Obama Administration needs all that since the expiry of West Bank settlement moratorium can blow up the ongoing peace talks.

3. All this is quite delicate, Obama Administration cannot overplay the success of covert operations here. That may push Iranian government to become more hard line. But it may also prompt Saudis to halt their purchase of American Weapons, since Saudi anxieties are directly linked to Iranian nukes. Obama Administration wants Saudis to dole out oil money so that domestic Military Suppliers can lessen the blow of reduced budgetary support from Federal Government. Indeed it is tricky.

All this is still developing.

Thursday, September 23, 2010

Tax Cuts - Predictable Trajectory, Dems Doom Ensured

With Senate declaring that it would not take any tax cut bill, things are going as per the script - that our politicians would not have balls to take this issue to the hustings. My first reaction is same as like Jonathan Chait.

But on the second thought, I do see a point that if indeed some Democrats are adamant and foolish enough to back ineffective tax cuts for rich, what can you do? It is bit better not to have those 'tax cuts' for rich done right now. But then in the end it all hangs on whether Dems supporting elapsing tax cuts for rich will indeed filibuster a bill after election when these suckers of rich bring a bill to give them the pay back. So far, nothing encouraging and signs are that these Dems along with the President will simply fold. Rich always wins, that is the reality; shame on Congress.

Agreed that President Obama wants Americans to compare Dems with GOP instead of Lord Almighty. But with this kind of non-sense politics played by Dems, why even Liberals should vote Democrats? Yup we know the morons, GOP would rule us, screw us as like how George Bush II screwed us and make our life miserable further. But then what about using Dem base like a 'condom' by these Dem Politicians - use it and throw? At some point the cost of 'taking you for granted' outweighs TINA ('there is no alternative') factor. For Democratic base, we have reached that point and have crossed the line. So it is very, very unlikely that Dem base would rise and back Democrats in Congress. These Dem Politicians deserve this even if it means more losses for the Liberal cause in days to come and more misery to we all Americans. That is how Democracy works - cost of using 'electorates' as a dedicated vote bank is higher than what that electorate is ready to endure.

Wednesday, September 22, 2010

Larry Summers

In this regard I would probably share thoughts expressed by Joshua Green at The Atlantic. But here are few of my own observations:

1. In the larger scheme of the things - where American Political Brawl dramatically affects everything else - Summers departure in itself is not a big deal, especially for an average American. It is hard to decide which departure is more consequential - Summers from NEC or General McChrystal from Aghan War Theater. In political and obvious historical terms, it is the later. Contemporary Economic affairs are impacted by so many factors and so many players that relevance of one single individual is quite restricted (including the President).

2. Summers had been the primary 'propelling head' for Obama Administration so far and there is no doubt that he must have supplied solid number of creative ideas as well as feedback / inputs in those 2 years at White House. That his reputation as a 'brainy chap' is intact. All those 'ruffling of feathers', that in a way enhances his reputation as thinking prowess. He may be nearest to Richard Feynman as far as brilliance in Economics goes (though Paul Krugman is giving competition in his own good ways).

3. In fullness of time, Summers contribution along with Bernanke and Geithner in saving American Financial System will be fully recognized and respected by History. Other two might have more to do than him, but that matters less.

4. It is in the case of 'stimulus' where things may not be shiny for Summers. Christina Romer famously overestimated the impact of the stimulus or was not vigilant enough to point out that the stimulus was not of sufficient size. But Summers could have 'qualified' those projections and it seems he missed that bus. Clearly that is the reason, among Public and in Politics, he might have got such a muted reaction for his departure from White House.

5. More consequential for Americans is who do President Obama places in his position. Seems like Geithner is secured and doing a good job. Summers departure offers a good opportunity for President Obama to place someone who is 'perceived' more business friendly; quite logical to undertake this politically low hanging fruit.

6. I suspect, few years down the line chances of we seeing Larry Summers written 'tombs' about this financial crisis are quite bright. With his expertise, accomplishments and brain power; discipline of Economics for sure will benefit from all those regurgitation.

Sunday, September 19, 2010

Amazing India Bashing

Jerusalem Post publishes an amazing article bashing India for the alleged atrocities committed by CRPF and Indian Army in Kashmir. These allegations have been appearing consistently and in absence of strong refutation by Indian Government, there is every reason to believe that some of these allegations may be true too. Indeed Indian Government in Delhi is well advised to investigate all these atrocities and stop any such means used for quelling the Kashmir revolt under progress.

But no matter the veracity of these claims, what comes prominently from this article is an attempt to blame India when Islamic experts try to point out culpability of Israel in it's own dealings with Palestine. Indeed it is stupid to ask why world is not 'signaling India' whenever world tries to point suppression by Israel. These two issues are separate and it is best to treat them separately. If India is committing grave injustice & suppression; indeed those need to be stopped, investigated and punished. But that should not have any bearing on Arab-Israel conflict because Israel indeed should face music for whatever good or bad it does to Palestine.

Interesting question is whether any such louder assertions by Israeli Media will prompt India to warm up further with Iran. At the end of the day it is all about permanent interests only.

Sen. DeMint, what am I hearing?

"We spent too much, we borrowed too much. And frankly, if we get the majority again, even if it's just in the House, and we don't do what we say, I think the Republican Party is dead."

-- Sen. DeMint on CNN

Really? It is hard to believe a GOP senator is saying this. But you know what, chances are that GOP will keep on insisting tax cuts when they are in power. In any case November 2010 elections will ensure that Congress has moved to voodoo economics of Tax Cuts no matter who has the majority. Then to reduce deficit we will have Sen. Ron Paul obstructing any entitlement spending like Social Security, Medicare, Medicaid, Race to Top, etc. Sen. Sharron Angle will then introduce 'phasing out of Social Security'. We know what happens then - blood bath as Dems will have to protect such wrong headed cuts. In absence of 'rationalization of taxes', chances of a grid lock in Congress are high. At that point any uncertainty today due to expiration of Bush Tax Cuts will be nothing compared to the 'brawl' in Congress. Businesses will be facing harsher reality of political fracas, possibly impacting economic recovery too.

But in the end, this political brawl is necessary. For more than 3 decades American Politics is nothing but unresolved conflict of what people want (entitlements) and what people are ready to pay (taxes). Republican Party has institutionalized one of the worst kind of policy measures - tax cuts without reining in entitlements. It is like 'gravity' - American Economy is bound to go to toilet, pulling down this nation unless collectively American Political System resolves this mess.

Prosperity of Clinton times and Housing Boom during Bush times were not sustainable, that has been pretty clear now. Clinton regime sowed seeds of financial deregulation and allowed investment banking led Dot Com boom which bust followed by CDO poker chip games of Wall Street in Bush times. So we cannot take these two periods as an example to argue to that American Economy can grow in sustainable manner while Political Gridlock is there. Market may like that in the short term and that is what Wall Street is expecting after November 2010 elections. But we know for sure that the way American Capitalism is set - which Tea Party is loath to change - short term benefits always trumps longer term vision. You can at best get temporary booms, but unless the fundamental domestic political problem of America - what to expect and what to pay for - is resolved; we are going nowhere.

President Obama has not so far shown any systematic efforts in tackling this 'necessary straight talk'. Half measures of Health Care Reform and anemic support for letting tax cuts for rich expire; it can take you only so far. So if Sen. DeMint wants to undertake this 'necessary straight talk', it is great; that can be a positive aspect of otherwise rowdy uprising of Tea Parties.

American Housing Market

Many experts and economists with credibility are predicting that house prices will decline in coming months as all temporary incentive programs wind down. Originally the thinking behind introducing these measures was that by now employment would start backing up resulting in higher housing prices and sell. But employment has not picked up and the flow of foreclosure houses is unabated; hence the downward pressure. Calculated Risk is one the most respected blogs in this matter and for a while it has been maintaining that we are likely to see this downward movement in housing market by late October - November time frame. Discredited former Fed Chief Greenspan cautions about down housing market and Prof. Robert Shiller is also warning about such a downward draft.

But if you look at this news on Bloomberg, it is a surprise that things many not develop that way. It may be bit okay news there than what many warned. But of course, it is early and we will have to wait before things shape up clearly here. (Needless to say, I do not have any economic expertise to explain any such deviation apart from the obvious observations that underlying employment market is recovering, people were waiting for buying houses and affordability of houses has improved.)

Saturday, September 18, 2010

Tax Cuts for Rich

Looks like even Sen. Boxer of California is also backing extension of tax cuts for rich! The only explanation seems to be that all these Congress people are protecting 'tax cuts for rich' on the eve of election so that these rich people do not get angry and their campaign donations do not get dry. I can understand why GOP would back tax cuts for rich because GOP is always pro-rich and anti-poor. But for Dems to join that party when evidence of ineffectiveness of these tax cuts to boost economy is overwhelming, is really amazing and jaw dropping. Dems have got one more way to discourage their base.

I originally thought politicians would play the 'sound byte' game till election and then would pass those tax cuts for rich anyways in the lame duck session. But now looks like these politicians do not even want to wait till election and want to please their rich patrons right now. What is disgusting is there is simply no willingness also to take this issue of tax cuts for rich to the hustings. Knowing that majority backs tax cuts on rich to expire, our politicians are rushing to avoid this topic as an election issue and passing those tax cuts before the election in 'hush hush' manner. No wonder people feel Congress is sold out.

President Obama seems to be the only politician who is willing to talk some sense here in urging to let tax cuts for rich elapse. But he also does not go far enough - the real deal would have been simply extension of tax cuts for middle class for few years, elapsing tax cuts for rich right now and eventually taking out tax cuts of middle class too in next few years as economy gains its footing and middle class recovers enormous losses encountered during the Bush decade, unlike the rich class who managed to protect its worth relatively well during the same period. But President is not offering anything like that. Even worse, when cacophony of 'uncertainty of tax cuts derailing economy' is getting louder and Congress members rushing to doors; it is doubtful how long President Obama will be able to hold his line. It is not like he is threatening to 'veto' any such extension. It seems he does not believe making a political stand on a principle and what is right for the country in face of crumbling Congress. One wishes our President was strong enough to lead this fight, but we have been disappointed quite often and again things look quite dark in this case too.

Alas, what is new - rich always win. What this means is 'anger about politicians as a class, disapproval of Congress' all that will continue unabated pointing further turmoil in American Politics.

Thursday, September 16, 2010

Disingenuous Peggy Noonan

"How come even when Republicans are in charge, even when they're dominant, government has always gotten larger and more expensive? It's always grown!"
-- Noonan in WSJ

Does anyone remember Peggy asking these questions when George Bush II was President and when he was poking a hole after hole in the federal budget with total fiscal insanity while Darth Vader Cheney whispering in Duby's ear that 'deficit does not matter'? Where was she? Why is Noonan falling in love with Tea Party now that GOP is trying to be a free rider on Tea Party?

"Local Tea Parties seem—so far—not to be falling in love with the particular talents or background of their candidates. It's more detached than that."

-- Noonan in WSJ

Come on Peggy, go and ask your Father or Husband or Son if he ever masturbates? With Christine O’Donnell as GOP / Tea Party candidate, we are talking that kind of non-sense. All these Tea Party candidates are 'so moron' that they do not know the basic arithmetic - want to have their entitlements and tax cuts but still want to reduce the deficit! Peggy you may be fooled by Tea Party, but at least 40% of America still has senses to see through all such non-sense.

Peggy Noonan is conveniently forgetting the 'fiscal Armageddon' proposed by these Tea Parties and GOP - tax cuts with unlimited entitlements! That is what their policy is and it is a disaster in waiting.

Sunday, September 12, 2010

Tax Cut Way-out?

Looks like between Leader John Boehner and President Obama, there is more common ground than 'smoking' - passing middle class only tax cuts. More encouraging was Newt Gingrich urging rest of the Republicans to come on board too.

This is a classic way for Leader Boehner and Republicans to show that they are the 'responsibility party' when they are ready to separate the issue of tax cuts to rich (above $250K annual income) from tax cuts for middle class. Anytime any political party is ready to give 'less crack' to American People, that is good. If GOP sticks this line, I suspect it will bode well among 'independents'.

It seems to me, couple of public speeches and one presser where President Obama declaring that he can have a separate debate about how to utilize $700B over 10 years in tax cuts for rich to stimulate Economy; all that is having a desired effect. One just wonders whether President Obama would do more of this 'political street fighting' in order for Americans to get some better deal. If it helps Dems, that is just a collateral consequence. The 'chicken run' mentality of Dems is very clear in this debate. Even though their argument is right (deficit funded tax cuts for rich do not stimulate Economy), Dems simply do not do the argument and preemptively go for 'compromise'. In that regard Peter Orszag's call in his NYT article to extend all tax cuts for two years was the poster example of 'chicken run Dems'. It was one of the worst 'political calls' from the Dem side, considering just few weeks back Orszag was writing Obama's budget. Horrible, horrible political instincts. No wonder Dems get routinely 'screwed' in American Politics even though in so many cases they are on the right side of History.

But there is no point going ahead in this regard. It is possible that we might see a bizarre spectacle in this regard - even Senate GOP may come around this idea but we have few Senate Democrats who insist on tax cuts for rich! What do you think morons like Nebraska Senator Nelson and North Dakota Senator Kent Conrad are? We will see if any sense prevails here. For all sides it is much easier to play 'these games' rather than do anything concretely and then come 'lame duck' session post-November election, these same politicians would pass tax cuts for rich anyways. Though signs are encouraging, we cannot believe unless we see it is done finally in a right way, we cannot trust our politicians (Dems and GOP, both included).

Update - Peter Orszag is arguing that his column in NYT was misinterpreted. May be. But the point is coming off of Obama Administration just few weeks back and knowing fully that GOP wants to insist on a wrong policy of extending tax cuts for rich, for him to even mention it was - shall we say 'betrayal'? I almost feel that guy is 'traitor' to progressive cause notwithstanding all the great work he has done in Health Care Reform. While being in Politics to have such 'poor' political instincts and being careless in expressing those views that is simply inexcusable, expensive to the original cause for which you are in Politics - to help progress American Society. After Tom Daschle, I feel Peter Orszag is one more disgusting story of Obama Presidency.

Friday, September 10, 2010

Pathetic Parker

(There is no more pleasure than pulling down a Pulitzer Prize winning columnist.)

In her blind love to Conservative ideas, she never musters the courage to say that majority Americans are not right to expect 'not to have a mosque' near Ground Zero. On top of it she is all into a lecture about how Muslims should ignore that obscure pastor in Florida for threatening to burn Koran under the grab of our Bill of Rights.

Yes, we Americans do have Bill of Rights. But that does not mean we do not have collective responsibility (either via legal means or via political means, the political means seem to have succeeded so far in this case) to be vigilant when someone is trying to propagate hatred and injury to our own interests abroad.

Fortunately, President Obama seems to have finally arisen to the challenge.

Thursday, September 09, 2010

Freedom, Liberties and Democracies

P. V. Narasimha Rao government of India was unable to stop Babri Masjid demolition on December 6, 1992 and India got a solid blot on its credentials. The lame argument for allowing the buildup of ‘demolish Babri Masjid’ movement was so called freedoms in Democracies. But we all know what a heavy price India paid for that nasty and cynical politics.

Looks like events in USA are moving in that direction of tumultuous politics. So it was right for India to call American Government to stop this non-sense of ‘burning Kuran’ in Florida by one obscure church.

Problem is as his wont, like past Indian PM Rao, President Barack Obama would not preemptively stop this proposed incident. Laws in India allow the Central Government to arrest folks who are planning such unrest on purpose. I am not sure whether any such statues exist so that Attorney General can stop this incidence taking placing beforehand. But it is hard to believe that Federal Government would not find ways to stop this foolish event taking place. In any case it would be impossible for rest of the world to believe that American government could not stop this wrong event by law. Nobody would care for ‘American rule of law’ which in the end fail to safeguard basic respects towards other religions.

Fred Kaplan of Slate has already called the bluff of GOP Politicians in this regard. But the way dirty politics is played by GOP in this season, none of Sarah Pallins of the world would come forward to call out this ‘Kuran burning’. On the other hand, all those politicians are waiting for President Obama to try to stop this forcefully so that they can further inflame Christian vote banks against President Obama by further insinuating Obama the Muslim myth.

But these are the perils of governance and being the elected ruler. In spite of the short term political damages, President Obama needs to do everything possible to stop this stunt of ‘Kuran burning’. That is his core responsibility as the leader of this Democracy. Lame arguments of liberties and freedoms do not hold when people are intent to use these freedoms mischievously to generate hatred, harms to American Soldiers and total spoiling of body politics of America.

If President cannot stop this non-sense, he better be ready to say bye-bye to Middle East Peace, any resolution of Iran issue in near term and any military success in Afghanistan and Pakistan.

All signs so far point towards failure by President Obama and American State.

Update – Looks like Defense Sec. Robert Gates has more weight than President Obama. That is understandable in completely polarized environment of today’s America. But the good thing is finally there is some sense prevailing with that obscure church in Florida.

I need to correct my earlier reference to Sarah Palin as I come across the news that she indeed repudiated burning of Koran. Good for Sarah and good for America. That is well done Sarah Palin and all kudos to her.

It was also heartening to read that AP and FOX had decided not to cover the actual Koran burning. Some sense demonstrated by American Media.

What all these things show is in absence of strict legal statutes; American Political System is finally waking up to the realities of its responsibilities in new Global Order. You cannot claim any mantle of leadership, as Hillary wants it so desperately, if collectively your political system is refusing to throw away the narrow insular view of domestic politics. In absence of stronger legal provisions, going forward American Politics would need to be lot more vigilant and sensitive to sentiments of rest of the world as well as be more attuned to its own interests spread all over the world. In 21st century no country can think to bulldozer its ways with this kind of callousness, leave aside weakened America.

Monday, September 06, 2010

American Labor

Harold Meyerson is 'anti-business' when he talks how American workers are not in any position to bargain with their employers! That is not what I intend to say, but just waiting for one of the Republicans to pick up along this line.

Meyerson has put some impeccable numbers - American GPD down by 1% but employment dropped by 5% during the same period while employee contribution of health care costs increased. (I can personally vouch for these conditions along with mandatory income cut which has happened to so many workers in this recession.) Meyerson talks about productivity improvements as the reason along with weaker political bargaining position of American Labor.

I also suspect as usual American Corporations would have done lot of 'outsourcing' too. But I must agree, it is just a speculation and I do not have any data here. I want to simply point out that Meyerson does not mention this as a possible reason.

Anything good likely to happen in this regard for American Labor? I doubt, with GOP surge in Congress after November 2010. Few excesses of Labor privileges (State employees who get 'gold plated' benefits while many unemployed in general public foot their bills via State and Local taxes) will continue to hinder benefits for a larger pool of workers. These excesses will be exploited by GOP and as a result remaining Americans are unlikely to see any perceptible improvements in their employment conditions.

That is just the unfortunate reality of today's America.

Sunday, September 05, 2010

Sharad Pawar's New York Office

It is quite perplexing why Sharad Pawar is opening NCP Inc. (North America) office in New York. Apart from raising money for his political party Nationalistic Congress Party, which is simply a minnow and waiting to be merged with Sonia's Congress Party, it is hard to see any worthwhile purpose this organization in New York would serve. Further, it will not be very easy to utilize money raised in North America in Indian Elections because, as like how President Obama is waging a war to limit influence of foreign corporations in American elections after the misguided Citizens United verdict of Roberts court; political opposition of NCP will make it politically hard to do so.

The whole gang of NCP is so corrupt, starting with Sharad Pawar and Praful Patel; one just wonders that Pawar's this new office in New York does not become a conduit for money laundering in both ways - corrupt money of some of these NRIs as well as ill gotten money in India! Agreed that NCP and Sharad Pawar can generate huge amount of money via corruption in India to finance their elections so they would have much less incentive in laundering money from North America. But over years with Pawar, one gets used not to assume anything at all.

Sharad Pawar has miserably failed in controlling food grain prices in India. Poor people in India are essentially driven out of food grain market while hoarding and rotting of food grains in government grain storage continue abated. Instead of Pawar focusing fully on that crucial problem, opening his party's office in New York to cater needs of NRI does not sound right priorities. (It is politically an easy route to continue a non-Congress Agriculture minister to absorb ire of people in times of food inflation is a different matter. It may be shrewd politics by Sonia and Dr. Singh; but at the end of the day it is an abduction of duty - to do whatever it takes to provide food to starving Indian poor folks - by the Congress High Command.)

Further, apart from his Agriculture Portfolio in Union Cabinet if Pawar has time, he could focus on rooting out corruption in Cricket ignored by ICC; which flairs up from time to time. But to expect Sharad Pawar to root out corruption in Cricket is to expect a fox to guard a hen house.

Overall this exercise of opening an office in New York simply sounds one more politically tone deaf act by this credibility compromised Indian politician. It is hard to imagine legitimate grievances of Non Resident Indians in USA can be effectively addressed by partisan efforts. Those grievances are best handed through official channels of Ministry of External Affairs of India and State Department of American Government. Any attempt to find a partisan role in that is like unnecessarily bringing Indian domestic politics to foreign shores unless one has some ulterior motives.