Bailout package fails in the House:
141-94 Democrats
66-132 Republicans
207-226 Total
Ms. Pelosi needed 11 additional members of her own party to pass this and she couldn’t do it. The knives are going to come out on both sides and I think there is going to be some blood spilled on both sides. I shall be curious to see how Mr. McCain and Mr. Obama react to this.
Monday, September 29, 2008
Friday, September 26, 2008
Congress Trek II: Wrath of the Voter
If there is one thing one must always remember about politicians, it is that they are always trying to make sure you reelect them. One of the best ways to do this is to make sure they look like they are doing something to solve problems and that someone else is causing the problems (preferably from the opposite party).
Take this little mortgage kerfuffle. There is a problem as banks are in a bit of a bind and they need some relief. So something does need to be done. We have this bill proposed by Henry Paulson, so we know that the President will support it and sign it. There has been enough parading in front of the news to note that House Democrats, Senate Democrats and some Senate Republicans support the bill. No one has been talking about a filibuster so obviously at least 10 Senate Republicans support this and probably more. So why don’t we have a law yet?
House Republicans have been saying that they don’t like this and they won’t support it. So what? Last time I checked, the House didn’t have any special rules like the Senate where a minority could hold up the majority and Democrats have a reasonable majority. Yes, maybe some of the Blue Dogs are balking, but there are a few liberal Republicans in the house who tend to vote with the Democratic majority and create a counterbalance to the Blue Dogs. If the bill passes 218-217, it still passes and those that opposed it will just have to suck it up. So I ask again, why doesn’t Ms. Pelosi just ram it through and leave Mr. Boehner looking like the powerless man that he is?
There are two reasons:
First, the Democrats are reluctant to push through a bill that a lot of Republicans oppose and that President Bush supports. This would tie them to Bush’s unpopularity and undermine their attempts to link Republican candidates to Bush (like Mr. McCain). They don’t need that statistic floating out there 5 weeks before the election.
Second, although its not getting quite the headlines as the process is, there is still a majority of Americans that oppose this bill. Last poll I saw had about 57% opposed to any bailout of Wall Street. It might be necessary, but regular Americans want to see greed and incompetence punished and they don’t want to foot the bill. So, again with the election only 5 weeks away, Democrats don’t want to be the ones shown as working against the will of the people (even though the will of the people might be wrong) because they will receive the voter’s wrath and could lose their majorities in Congress.
Now we have a game of high stakes chicken. I rather doubt that House Republicans are going to move because they believe they have nothing to lose. Everyone will scream and complain, but the majorities will probably be forced to act because of the crisis frenzy that has been whipped up. Now, whether House Republicans get punished for being obstinate or House Democrats get blamed for defying the will of the people is something I’m not sure anyone knows right now, and that is what has everyone in government so jumpy at the moment.
Take this little mortgage kerfuffle. There is a problem as banks are in a bit of a bind and they need some relief. So something does need to be done. We have this bill proposed by Henry Paulson, so we know that the President will support it and sign it. There has been enough parading in front of the news to note that House Democrats, Senate Democrats and some Senate Republicans support the bill. No one has been talking about a filibuster so obviously at least 10 Senate Republicans support this and probably more. So why don’t we have a law yet?
House Republicans have been saying that they don’t like this and they won’t support it. So what? Last time I checked, the House didn’t have any special rules like the Senate where a minority could hold up the majority and Democrats have a reasonable majority. Yes, maybe some of the Blue Dogs are balking, but there are a few liberal Republicans in the house who tend to vote with the Democratic majority and create a counterbalance to the Blue Dogs. If the bill passes 218-217, it still passes and those that opposed it will just have to suck it up. So I ask again, why doesn’t Ms. Pelosi just ram it through and leave Mr. Boehner looking like the powerless man that he is?
There are two reasons:
First, the Democrats are reluctant to push through a bill that a lot of Republicans oppose and that President Bush supports. This would tie them to Bush’s unpopularity and undermine their attempts to link Republican candidates to Bush (like Mr. McCain). They don’t need that statistic floating out there 5 weeks before the election.
Second, although its not getting quite the headlines as the process is, there is still a majority of Americans that oppose this bill. Last poll I saw had about 57% opposed to any bailout of Wall Street. It might be necessary, but regular Americans want to see greed and incompetence punished and they don’t want to foot the bill. So, again with the election only 5 weeks away, Democrats don’t want to be the ones shown as working against the will of the people (even though the will of the people might be wrong) because they will receive the voter’s wrath and could lose their majorities in Congress.
Now we have a game of high stakes chicken. I rather doubt that House Republicans are going to move because they believe they have nothing to lose. Everyone will scream and complain, but the majorities will probably be forced to act because of the crisis frenzy that has been whipped up. Now, whether House Republicans get punished for being obstinate or House Democrats get blamed for defying the will of the people is something I’m not sure anyone knows right now, and that is what has everyone in government so jumpy at the moment.
Liberalism VS. Monopoly
There has been much terminology bandied about over the last few years and I feel compelled to point out one particular thing. Despite what folks in the conservative media tell you, there is nothing wrong with liberalism (in the definition of large government solutions to problems).
Our country operates in the capitalist system. Now, as anyone who has ever taken an economics course will tell you, left to its own devices, a capitalist system will always end in monopoly in one fashion or the other. Liberalism and Conservatism are the idealistic forces that pull against corporate monopoly and state monopoly respectively. In most cases, a free market has a natural tendency to drift towards corporate monopoly. In fact, this was one of the major problems with the American economy in the late 19th and early 20th century and took liberal actions from people like Theodore Roosevelt and other fair minded individuals to pull the economy away from this morass. Organized labor was another factor that helped break up the power of corporate monopolies.
Unfortunately, leftward monopoly (stateism) is equally harmful. Franklin Roosevelt was able to use the crisis of the Great Depression to try and make the government the largest producer of jobs and capital (spend our way back to health). This didn’t work either (with the exception of the TVA) and only increased demand brought on by World War II kick started the economy back up and gave corporations some of their power back.
One of the main reason that the 1950’s and early 60’s were so good for people was that market forces operated in a good balance. Labor was strong but not overwhelming management with frivolous power grabs and demands. The government offered security nets to low income and the elderly in the early forms of Medicare, Medicaid, Social Security, and Welfare. These programs worked because they existed solely as safety valves. Competition kept prices low so that most people didn’t need these programs, keeping government expenditures low, while the Social Security eligible population was also very small and did not stay on the public dole for long as the lifespan of these people was shorter than it is now.
Then things went south under Johnson and continued during Nixon. Johnson expanded all these programs, assuming more state control over the economy as prices rose. Nixon exacerbated the problem by introducing price controls and adding more bloat to the government as they offered more nanny-state services to people. When the price controls were lifted, inflation skyrocketed as market equilibrium returned, forcing further government seizure to protect the people as businesses went under due to the whiplash.
Steadily, government agencies have sought to absorb more and more power, reducing competition and making problems worse as prices always rise in the face of monopoly, with bloat (corporate or government) reducing the efficiency of services provided. Some of this is philosophically driven (believing that the state can control things better than market forces), while some is people trying to improve things in the short term and making things worse in the long.
We are now approaching the point where total state control is possible for certain industries. We are currently watching to see if the government will assume the majority stake in the mortgage market and since the early 1990’s, there has been a movement to nationalize the health care industry.
Health care is a special case as excessive malpractice awards by juries have spiked the insurance premiums paid by doctors and more complicated development of drugs has led to higher medication costs. To survive these price spikes, doctors clump together in the form of mini-corporations (HMOs), further reducing competition. However, this also allows insurance companies to spike premiums even higher as the collective wealth of an HMO allows for even higher malpractice awards (i.e. you’ll get much more money by suing Coke that you would by suing a local drink firm like Faygo). What’s more, with fewer doctors available to recommend their new drugs to, drug companies waste extra money on advertizing and convincing doctors to use their product. This extra capital is then made up by jacking the price of the drug another couple of bucks a pill. Nationalizing health care would take insurance out of the equation and give a single source seller for drug companies, but it would introduce all the problems of monopoly and it is unlikely that costs would decrease. Instead, the costs would be shared by everyone and many people would take advantage to make sure they are “getting their fair share,” increasing overall costs and driving up price. Greater competition, a cap on malpractice awards, and the elimination of drug company solicitation would go a long way to bringing prices down and making health care affordable to all.
Parsing all this together, it is my belief that government sponsored solutions are important and even necessary, especially to protect those who would have no other resource. However, total state control is just as bad as total corporate control. Competition is the only thing that keeps prices low and allows people the luxury of creating higher demand, which in turn creates greater profits and higher wages. We would do better to push back against the recent stateist tendencies and return to a more balanced mix of free market with government safety nets for the downtrodden.
Our country operates in the capitalist system. Now, as anyone who has ever taken an economics course will tell you, left to its own devices, a capitalist system will always end in monopoly in one fashion or the other. Liberalism and Conservatism are the idealistic forces that pull against corporate monopoly and state monopoly respectively. In most cases, a free market has a natural tendency to drift towards corporate monopoly. In fact, this was one of the major problems with the American economy in the late 19th and early 20th century and took liberal actions from people like Theodore Roosevelt and other fair minded individuals to pull the economy away from this morass. Organized labor was another factor that helped break up the power of corporate monopolies.
Unfortunately, leftward monopoly (stateism) is equally harmful. Franklin Roosevelt was able to use the crisis of the Great Depression to try and make the government the largest producer of jobs and capital (spend our way back to health). This didn’t work either (with the exception of the TVA) and only increased demand brought on by World War II kick started the economy back up and gave corporations some of their power back.
One of the main reason that the 1950’s and early 60’s were so good for people was that market forces operated in a good balance. Labor was strong but not overwhelming management with frivolous power grabs and demands. The government offered security nets to low income and the elderly in the early forms of Medicare, Medicaid, Social Security, and Welfare. These programs worked because they existed solely as safety valves. Competition kept prices low so that most people didn’t need these programs, keeping government expenditures low, while the Social Security eligible population was also very small and did not stay on the public dole for long as the lifespan of these people was shorter than it is now.
Then things went south under Johnson and continued during Nixon. Johnson expanded all these programs, assuming more state control over the economy as prices rose. Nixon exacerbated the problem by introducing price controls and adding more bloat to the government as they offered more nanny-state services to people. When the price controls were lifted, inflation skyrocketed as market equilibrium returned, forcing further government seizure to protect the people as businesses went under due to the whiplash.
Steadily, government agencies have sought to absorb more and more power, reducing competition and making problems worse as prices always rise in the face of monopoly, with bloat (corporate or government) reducing the efficiency of services provided. Some of this is philosophically driven (believing that the state can control things better than market forces), while some is people trying to improve things in the short term and making things worse in the long.
We are now approaching the point where total state control is possible for certain industries. We are currently watching to see if the government will assume the majority stake in the mortgage market and since the early 1990’s, there has been a movement to nationalize the health care industry.
Health care is a special case as excessive malpractice awards by juries have spiked the insurance premiums paid by doctors and more complicated development of drugs has led to higher medication costs. To survive these price spikes, doctors clump together in the form of mini-corporations (HMOs), further reducing competition. However, this also allows insurance companies to spike premiums even higher as the collective wealth of an HMO allows for even higher malpractice awards (i.e. you’ll get much more money by suing Coke that you would by suing a local drink firm like Faygo). What’s more, with fewer doctors available to recommend their new drugs to, drug companies waste extra money on advertizing and convincing doctors to use their product. This extra capital is then made up by jacking the price of the drug another couple of bucks a pill. Nationalizing health care would take insurance out of the equation and give a single source seller for drug companies, but it would introduce all the problems of monopoly and it is unlikely that costs would decrease. Instead, the costs would be shared by everyone and many people would take advantage to make sure they are “getting their fair share,” increasing overall costs and driving up price. Greater competition, a cap on malpractice awards, and the elimination of drug company solicitation would go a long way to bringing prices down and making health care affordable to all.
Parsing all this together, it is my belief that government sponsored solutions are important and even necessary, especially to protect those who would have no other resource. However, total state control is just as bad as total corporate control. Competition is the only thing that keeps prices low and allows people the luxury of creating higher demand, which in turn creates greater profits and higher wages. We would do better to push back against the recent stateist tendencies and return to a more balanced mix of free market with government safety nets for the downtrodden.
Thursday, September 25, 2008
How's that Knife Feel?
In case anyone might have missed it, Mr. Clinton is still very angry at Mr. Obama.
Yesterday, Mr. McCain pulled a little stunt where he announced that he was “suspending his campaign” to deal with the financial crisis. Of course, Mr. McCain could have gone back at any time, but by putting on a show and saying that he is sacrificing time with the voters, he tries to make himself look more Presidential. Good trick.
Mr. Obama promptly stepped in it, not by dismissing it as the stunt that it was, but by saying that he would be available should the Democratic leadership need him. A man running for President and is the head of his party should be the one dictating, not waiting for others to call when they think he’s needed. People don’t like cheep stunts but they hate gutlessness more. Mr. Obama should have called Mr. McCain’s bluff and been much more forceful about how he is directing things and not pulling stunts.
Then, on top of Mr. Obama’s misstep yesterday, Mr. Clinton goes on Good Morning America and promptly kicks him in the teeth. Mr. Clinton goes out of his way to remind everyone that Mr. McCain offered a series of ten townhall debates in the summer, so it looks less like Mr. McCain is afraid of debating Mr. Obama if he does in fact miss tomorrow’s debate (the VP debate is another matter). Mr. Clinton then goes and points out that Republicans have tried to reform the crisis several times over the past few years but that they were thwarted by Democratic members of Congress (with him being thwarted as well since he tried to fix the problem, he claims). Mr. Clinton is lying through his teeth about his attempts to fix the problem, but it does point out bills to try and fix the problem that were floated in 2003, 2005, and 2007 (Elizabeth Dole was the primary sponsor of all three) and were killed by both Democrats and Republicans who were getting massive amounts of money from Fannie Mae and Freddy Mac for their personal and political gain.
Mr. Obama is probably appreciating the knife in his back; especially after just a couple of weeks ago he came to New York to kiss Mr. Clinton’s feet to get him to campaign for him. Mr. Clinton has not forgotten what Mr. Obama stole from him when he defeated Ms. Clinton in the primaries and pointed out the buffoonery of Mr. Clinton when he tried to support her. Mr. Clinton is now going out of his way to sabotage Mr. Obama (while Ms. Clinton looks like the loyal soldier) to ensure that Ms. Clinton will be rolled in as the savior of 2012, sweeping him back into the power and glory that he loves and desperately wants back.
Yesterday, Mr. McCain pulled a little stunt where he announced that he was “suspending his campaign” to deal with the financial crisis. Of course, Mr. McCain could have gone back at any time, but by putting on a show and saying that he is sacrificing time with the voters, he tries to make himself look more Presidential. Good trick.
Mr. Obama promptly stepped in it, not by dismissing it as the stunt that it was, but by saying that he would be available should the Democratic leadership need him. A man running for President and is the head of his party should be the one dictating, not waiting for others to call when they think he’s needed. People don’t like cheep stunts but they hate gutlessness more. Mr. Obama should have called Mr. McCain’s bluff and been much more forceful about how he is directing things and not pulling stunts.
Then, on top of Mr. Obama’s misstep yesterday, Mr. Clinton goes on Good Morning America and promptly kicks him in the teeth. Mr. Clinton goes out of his way to remind everyone that Mr. McCain offered a series of ten townhall debates in the summer, so it looks less like Mr. McCain is afraid of debating Mr. Obama if he does in fact miss tomorrow’s debate (the VP debate is another matter). Mr. Clinton then goes and points out that Republicans have tried to reform the crisis several times over the past few years but that they were thwarted by Democratic members of Congress (with him being thwarted as well since he tried to fix the problem, he claims). Mr. Clinton is lying through his teeth about his attempts to fix the problem, but it does point out bills to try and fix the problem that were floated in 2003, 2005, and 2007 (Elizabeth Dole was the primary sponsor of all three) and were killed by both Democrats and Republicans who were getting massive amounts of money from Fannie Mae and Freddy Mac for their personal and political gain.
Mr. Obama is probably appreciating the knife in his back; especially after just a couple of weeks ago he came to New York to kiss Mr. Clinton’s feet to get him to campaign for him. Mr. Clinton has not forgotten what Mr. Obama stole from him when he defeated Ms. Clinton in the primaries and pointed out the buffoonery of Mr. Clinton when he tried to support her. Mr. Clinton is now going out of his way to sabotage Mr. Obama (while Ms. Clinton looks like the loyal soldier) to ensure that Ms. Clinton will be rolled in as the savior of 2012, sweeping him back into the power and glory that he loves and desperately wants back.
Anatomy of a Crisis
Why are we in the mess we are in? Well, like most crises, the history goes back about 15 years with a couple of additions along the way making it what it is now.
In the wake of the Republican sweep of Congress in 1994, Mr. Clinton knew that he had to do something to revive his own base to ensure his reelection in 1996. He seized on a report that was published noting that minority home ownership was significantly lower than the white majority. This is due to the fact that a majority of minorities are poor and banks generally don’t give mortgages to poorer people who are unlikely to pay back the loans. Mr. Clinton authorized the Justice Department to lean on Freddy Mac and Fanny Mae to increase the quota of low-income mortgages, up to 50% of the total that they deal with. These quotas were eventually put into law in 1997, when Democrats made up some of their losses in the House and Senate.
One economist equated this type of lending as picking up nickels in front of a bulldozer. You make profits slowly, but as long and liquidity and credit hold out (i.e. as long as the bulldozer doesn’t move) you’re okay. God help you if there is a credit crunch.
Things were going along dangerously, but smoothly until a new piece of legislation was passed in wake of the Enron scandal. Congress passed a law stating that companies had to report asset holding at their current value than at the projected value. Now, for Enron, this makes sense. It does not make sense for mortgages. A mortgage means that a bank has shelled out a bunch of money for property and you are required to pay them back or the bank takes possession of the property. Banks look at the long term and would report that they spent $100,000 but would be gaining $200,000 (loan plus interest) over the course of 30 years. So a bank would often list the long term value of the mortgage. Now, they have to report what the current value of the mortgage is, which is based on the value of the property and the credit rating of the person paying the mortgage. In other words, banks are reporting much lower assets and these assets are heavily dependent on the housing demand outweighing the supply.
So, now we have a ton of risky mortgages out there with banks reporting much lower assets (thus hurting their own credit rating). But then the housing market bubble bursts and the value of property goes way down. People who had been putting off paying anything (even the interest on the mortgage) suddenly find themselves owing much more than their property is worth, so they bail and the house is foreclosed on. Now the bank has a bunch of properties that it can’t sell to even responsible buyers for the value that they shelled out for it. Thus bank credit dries up. Banks then have to lean on insurance firms to cover their assets (AIG, etc.). The sudden cashing in of insurance causes the insurance firms to crash because they don’t have enough capital to cover everything at once (as is traditional in most insurance firms). So now banks have no credit available to them, no assets, and no insurance capital to keep them solvent. Thus, firms go belly up.
So, what the government is now offering is to take all of these low value mortgages off the bank’s hands in exchange for a large influx of cash. So the government will now own a ton of mortgages and since they make the money, they don’t care about reporting assets. They can afford to wait things out, wait for demand to creep back up and sell the foreclosed houses and give the people who are in trouble (but haven’t been foreclosed on) more time to pay back their loans. Once things are stabilized, the government will then start slowly selling back solvent mortgages to banks and make a killing. One paper has estimated that the government stands to gain between $1 and 2.3 trillion on their $700 billion rescue operation. Of course, the politicians in Congress will not return that money to the taxpayer. They will simply report that as income, write off the $700 billion into the deficit and increase spending programs based on the projected spending.
If the package goes through, people should start lobbying the government to either take this mortgage revenue to either pay down the deficit or send us all nice big royalty checks of several thousand dollars per taxpayer that we should be owed for getting into this business in the first place.
In the wake of the Republican sweep of Congress in 1994, Mr. Clinton knew that he had to do something to revive his own base to ensure his reelection in 1996. He seized on a report that was published noting that minority home ownership was significantly lower than the white majority. This is due to the fact that a majority of minorities are poor and banks generally don’t give mortgages to poorer people who are unlikely to pay back the loans. Mr. Clinton authorized the Justice Department to lean on Freddy Mac and Fanny Mae to increase the quota of low-income mortgages, up to 50% of the total that they deal with. These quotas were eventually put into law in 1997, when Democrats made up some of their losses in the House and Senate.
One economist equated this type of lending as picking up nickels in front of a bulldozer. You make profits slowly, but as long and liquidity and credit hold out (i.e. as long as the bulldozer doesn’t move) you’re okay. God help you if there is a credit crunch.
Things were going along dangerously, but smoothly until a new piece of legislation was passed in wake of the Enron scandal. Congress passed a law stating that companies had to report asset holding at their current value than at the projected value. Now, for Enron, this makes sense. It does not make sense for mortgages. A mortgage means that a bank has shelled out a bunch of money for property and you are required to pay them back or the bank takes possession of the property. Banks look at the long term and would report that they spent $100,000 but would be gaining $200,000 (loan plus interest) over the course of 30 years. So a bank would often list the long term value of the mortgage. Now, they have to report what the current value of the mortgage is, which is based on the value of the property and the credit rating of the person paying the mortgage. In other words, banks are reporting much lower assets and these assets are heavily dependent on the housing demand outweighing the supply.
So, now we have a ton of risky mortgages out there with banks reporting much lower assets (thus hurting their own credit rating). But then the housing market bubble bursts and the value of property goes way down. People who had been putting off paying anything (even the interest on the mortgage) suddenly find themselves owing much more than their property is worth, so they bail and the house is foreclosed on. Now the bank has a bunch of properties that it can’t sell to even responsible buyers for the value that they shelled out for it. Thus bank credit dries up. Banks then have to lean on insurance firms to cover their assets (AIG, etc.). The sudden cashing in of insurance causes the insurance firms to crash because they don’t have enough capital to cover everything at once (as is traditional in most insurance firms). So now banks have no credit available to them, no assets, and no insurance capital to keep them solvent. Thus, firms go belly up.
So, what the government is now offering is to take all of these low value mortgages off the bank’s hands in exchange for a large influx of cash. So the government will now own a ton of mortgages and since they make the money, they don’t care about reporting assets. They can afford to wait things out, wait for demand to creep back up and sell the foreclosed houses and give the people who are in trouble (but haven’t been foreclosed on) more time to pay back their loans. Once things are stabilized, the government will then start slowly selling back solvent mortgages to banks and make a killing. One paper has estimated that the government stands to gain between $1 and 2.3 trillion on their $700 billion rescue operation. Of course, the politicians in Congress will not return that money to the taxpayer. They will simply report that as income, write off the $700 billion into the deficit and increase spending programs based on the projected spending.
If the package goes through, people should start lobbying the government to either take this mortgage revenue to either pay down the deficit or send us all nice big royalty checks of several thousand dollars per taxpayer that we should be owed for getting into this business in the first place.
Monday, September 15, 2008
The Western Deciders
In the past couple of weeks in the election, there has been a renewed sense of confidence among Republicans and a smell of fear among the Democrats that they could actually lose this election. Some of this is due to the energization of the Republican base by the selection of Ms. Palin, but I think more of it is coming from ordinary people just starting to pay attention and deciding that they prefer Mr. McCain’s policies to Mr. Obama’s. At least, that’s what I like to tell myself to keep up the belief that the American people are still predominantly issues voters.
Despite Mr. Obama’s belief that he could redraw the election map, I’m seeing very little evidence that this election will be any different from the last two. Most states are settling in to their old red state-blue state pattern, with four states in particular making up the real swing states in the election. The media would have you believe that the election will turn on Ohio, Pennsylvania, and Michigan, but it is more likely to spin on Virginia, Colorado, Nevada, and New Mexico. Granted, if Mr. McCain flips Michigan or Pennsylvania or if Mr. Obama flips Ohio, that would effectively end the race due to the tightness of things; but as of yet, I’m seeing no evidence that these three states will deviate from their 2004 result.
The state of the race at the moment is that Mr. Obama will carry all the states that Mr. Kerry won and Iowa. This puts his Electoral College total at 259. Mr. McCain would win all the states that Mr. Bush won, leaving out the four toss-up states mentioned above. This would put his Electoral College total at 247. My opinion of the four toss-up states is as follows:
Virginia (13): This would be another state that Mr. Obama would like to win and officially end the election. However, despite the more liberal population of the DC suburbs, Mr. McCain has consistently polled in front by 2-3 points. Although this is within the margin of error, a consistent showing indicates that he is ahead. What’s more, polls cannot capture the large military vote that is registered in Virginia and will likely break for Mr. McCain. Although it may take a while to show on election night, I would be surprised if Mr. McCain did not win Virginia barring a major shift in the political winds. This would improve Mr. McCain’s standing to 260 EC votes.
Nevada (5): Nevada is almost identical to Virginia, with the one caveat being that Mr. Bush only won Nevada 51-49 in 2004, while he won Virginia by nearly 8 points. However, Mr. McCain has consistently polled ahead by 2 or more points in the averages and being from neighboring Arizona might help his standing in the state (the Yucca Mountain issue not withstanding). Like Virginia, I would tentatively put this state in Mr. McCain’s column, raising his EC vote total to 265.
Colorado (9): Colorado has a very tight Senate race that is going to drive turnout. The state has Republican roots, but it has been trending Democratic, especially as the mountaineering ranchers are replaced by environmentally conscious folks fleeing the urban sprawl of California. There have been one or two outlier polls, but for the most part, Mr. Obama has been consistently ahead by about 3-4 points. There could be a shift, especially if Republicans pump up turnout for the Senate race but at this time, I would tentatively place this state in the Democratic column. This increases Mr. Obama’s EC total to 268 votes.
New Mexico (5): If the three previous states swing as I have postulated, then it is New Mexico that would decide things. That would be rather interesting given that the state swung to Mr. Gore by 366 votes out 598,605 cast in 2000 and to Mr. Bush by 5,988 votes out of 756,304 cast in 2004. Mr. Obama had been polling ahead prior to the conventions by about 2-3 points, but recent polls taken after the convention have shown Mr. McCain taking the lead by a point or two. If Mr. Obama wins the state and everything else plays out as stated, he will win the election with 273 electoral votes. However, if Mr. McCain wins New Mexico and the rest of the states play out as postulated, he would win the election with 270 electoral votes. What’s more, Mr. Obama would then be subject to not only second guessing about not selecting Ms. Clinton as his running mate, but Bill Richardson as well. The selection of the popular governor would certainly have cemented New Mexico into the blue column for this election.
But we are still fifty days out and many things could change. Perhaps a big state like Pennsylvania or Virginia will flip, rendering all these arguments moot. Perhaps not. One other little thing to the remember. Although offical victory is 270 points, a little manipulation of the toss-up states with New Hampshire thrown in the mix, could produce a 269-269 tie. In this event, the race gets decided by the House and each state delegation would get one vote. By my last count, the Democrats have majorities in 26 state delegations, which would give Mr. Obama the Presidency. In effect, if things play out as I mentioned above and Mr. McCain wins New Mexico, Mr. Obama would literally fall 1 vote short of victory as even a tie would give him victory.
Despite Mr. Obama’s belief that he could redraw the election map, I’m seeing very little evidence that this election will be any different from the last two. Most states are settling in to their old red state-blue state pattern, with four states in particular making up the real swing states in the election. The media would have you believe that the election will turn on Ohio, Pennsylvania, and Michigan, but it is more likely to spin on Virginia, Colorado, Nevada, and New Mexico. Granted, if Mr. McCain flips Michigan or Pennsylvania or if Mr. Obama flips Ohio, that would effectively end the race due to the tightness of things; but as of yet, I’m seeing no evidence that these three states will deviate from their 2004 result.
The state of the race at the moment is that Mr. Obama will carry all the states that Mr. Kerry won and Iowa. This puts his Electoral College total at 259. Mr. McCain would win all the states that Mr. Bush won, leaving out the four toss-up states mentioned above. This would put his Electoral College total at 247. My opinion of the four toss-up states is as follows:
Virginia (13): This would be another state that Mr. Obama would like to win and officially end the election. However, despite the more liberal population of the DC suburbs, Mr. McCain has consistently polled in front by 2-3 points. Although this is within the margin of error, a consistent showing indicates that he is ahead. What’s more, polls cannot capture the large military vote that is registered in Virginia and will likely break for Mr. McCain. Although it may take a while to show on election night, I would be surprised if Mr. McCain did not win Virginia barring a major shift in the political winds. This would improve Mr. McCain’s standing to 260 EC votes.
Nevada (5): Nevada is almost identical to Virginia, with the one caveat being that Mr. Bush only won Nevada 51-49 in 2004, while he won Virginia by nearly 8 points. However, Mr. McCain has consistently polled ahead by 2 or more points in the averages and being from neighboring Arizona might help his standing in the state (the Yucca Mountain issue not withstanding). Like Virginia, I would tentatively put this state in Mr. McCain’s column, raising his EC vote total to 265.
Colorado (9): Colorado has a very tight Senate race that is going to drive turnout. The state has Republican roots, but it has been trending Democratic, especially as the mountaineering ranchers are replaced by environmentally conscious folks fleeing the urban sprawl of California. There have been one or two outlier polls, but for the most part, Mr. Obama has been consistently ahead by about 3-4 points. There could be a shift, especially if Republicans pump up turnout for the Senate race but at this time, I would tentatively place this state in the Democratic column. This increases Mr. Obama’s EC total to 268 votes.
New Mexico (5): If the three previous states swing as I have postulated, then it is New Mexico that would decide things. That would be rather interesting given that the state swung to Mr. Gore by 366 votes out 598,605 cast in 2000 and to Mr. Bush by 5,988 votes out of 756,304 cast in 2004. Mr. Obama had been polling ahead prior to the conventions by about 2-3 points, but recent polls taken after the convention have shown Mr. McCain taking the lead by a point or two. If Mr. Obama wins the state and everything else plays out as stated, he will win the election with 273 electoral votes. However, if Mr. McCain wins New Mexico and the rest of the states play out as postulated, he would win the election with 270 electoral votes. What’s more, Mr. Obama would then be subject to not only second guessing about not selecting Ms. Clinton as his running mate, but Bill Richardson as well. The selection of the popular governor would certainly have cemented New Mexico into the blue column for this election.
But we are still fifty days out and many things could change. Perhaps a big state like Pennsylvania or Virginia will flip, rendering all these arguments moot. Perhaps not. One other little thing to the remember. Although offical victory is 270 points, a little manipulation of the toss-up states with New Hampshire thrown in the mix, could produce a 269-269 tie. In this event, the race gets decided by the House and each state delegation would get one vote. By my last count, the Democrats have majorities in 26 state delegations, which would give Mr. Obama the Presidency. In effect, if things play out as I mentioned above and Mr. McCain wins New Mexico, Mr. Obama would literally fall 1 vote short of victory as even a tie would give him victory.
Tuesday, September 09, 2008
Money Questions
My apologies for not updating in so long. My updates might be a little less frequent due to the new position I have taken at my company. I usually updated during the down times at work or over lunch. There have been a lot fewer down times in this new position, which is good for keeping me engaged, but bad for blogging.
Anyway, the election is fully set now with the McCain/Palin ticket vs. the Obama/Biden ticket. Most polls I have seen are showing a modest boost for Mr. McCain, though this could vanish the further we get from the convention. As of yet, I’ve not seen enough of a shift in the key state polls to suggest absolute panic on Mr. Obama’s part. He’s still leading in Colorado, Iowa, New Hampshire, and New Mexico. He’s also still very close in Virginia and Florida, though word is that he has pulled the advertising budget in these states.
It is actually this little bit that is suggesting a small stink of fear from the Left in what I’ve read. Although Mr. Obama is still pulling in a significant amount of money, his rates seem to have been declining and he seems to be having to work harder to get it. This forces him off the trail while Mr. McCain can stay on it due to his having $84 million in taxpayer funds. What’s worse is that Mr. Obama’s continued draw on donors is pulling away money that the DNC needs to fund its Congressional candidates.
Money isn’t everything, but if Mr. Obama loses certain states by narrow margins, or if Congressional Democrats lose races by small amounts, there will be a question as to whether just one more ad buy wouldn’t have put them over the top.
Likely there will be little movement in the polls, barring a major mistake by someone, until after the debates are over. Most people are just now waking up to the race again and they will make up their minds fully when they’ve compared Mr. McCain and Mr. Obama side by side on whatever issues matter to them.
I’ll do my best to keep tabs on things and offer my own two-cents now and again.
Anyway, the election is fully set now with the McCain/Palin ticket vs. the Obama/Biden ticket. Most polls I have seen are showing a modest boost for Mr. McCain, though this could vanish the further we get from the convention. As of yet, I’ve not seen enough of a shift in the key state polls to suggest absolute panic on Mr. Obama’s part. He’s still leading in Colorado, Iowa, New Hampshire, and New Mexico. He’s also still very close in Virginia and Florida, though word is that he has pulled the advertising budget in these states.
It is actually this little bit that is suggesting a small stink of fear from the Left in what I’ve read. Although Mr. Obama is still pulling in a significant amount of money, his rates seem to have been declining and he seems to be having to work harder to get it. This forces him off the trail while Mr. McCain can stay on it due to his having $84 million in taxpayer funds. What’s worse is that Mr. Obama’s continued draw on donors is pulling away money that the DNC needs to fund its Congressional candidates.
Money isn’t everything, but if Mr. Obama loses certain states by narrow margins, or if Congressional Democrats lose races by small amounts, there will be a question as to whether just one more ad buy wouldn’t have put them over the top.
Likely there will be little movement in the polls, barring a major mistake by someone, until after the debates are over. Most people are just now waking up to the race again and they will make up their minds fully when they’ve compared Mr. McCain and Mr. Obama side by side on whatever issues matter to them.
I’ll do my best to keep tabs on things and offer my own two-cents now and again.
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