Tuesday, February 10, 2009

The Economy Will Remain Broken Until Washington Is Fixed

Glenn Reynolds, over at Instapundit, links to a Politico article on how the Democrat activist organizations are starting to attack the Republican Congressional leadership in an effort to turn around public perception on the Stimulus Bill. Fine... that's politics after all, but I don't understand Reynolds' comment that he's "tired of it." Tired of what? The GOP leadership? Or, attacking the GOP leadership? I think many Americans were hoping that Hope and Change meant hoping for true bipartisanship, for putting country above party, and for changing the way things were done... but despite all the hope nothing has changed. Certainly the Democrats haven't changed.

The Democrats own the Stimulus Bill. Speaker Pelosi and the House Democrat leadership wrote the bill, and Senator Harry Reid and his fellow Democrat senators put together the Senate version. Democrats will control the conference committee that ends up deciding what the final outcome will be. As Obama, Pelosi, Reid, MoveOn, DailyKos, etc., are so fond of reminding us, they won. They are going to use their control of the Legislative and Executive branches of the government to ram this spending colossus through and nothing is going to stop them... not public opposition, not the CBO report that shows doing nothing is a better strategy, and certainly not the greatly outnumbered Republicans. Chances are the eventual bill won't even be made public until after Obama signs it.

It wouldn't be such a big deal if we were just talking about the fate of one or the other political parties, which after all are really just associations of like-minded folks banding together to move things in the direction they want. Who gives a fig? However, the Stimulus Bill is more than just partisan politics. We're talking somewhere north of $800 billion dollars here. Do you realize just how much money that is?

Here's some comparisons that will help you wrap your mind around the enormity of the $800+ billion we're going to print and spend, and obligate ourselves:
  • We could select 16,000 random folks (yes, 16,000!) in each of the 50 states, and give them a million dollars
  • We could give 10% of the population of New York City a million dollars each
  • We could give every man, woman, and child in the country a new computer, a new iPhone, a new digital camera, and a 42" LCD HD TV... and still have enough money to pay their cable bill for a year
  • We could give every American family a three-month paid vacation, at the average salary

Does anyone really believe that the way to get out of debt is to indebt oneself even more? Of course not. The first thing a smart person does when facing a shortfall is to cut spending, not raise it. After all, if spending like a drunken sailor would get us out of our difficulties, we would never be here in the first place.

The Financial Times had a great article on the cause of our current economic woes, and the possible solutions. What I don't understand is, if Tim Geithner is the financial genius who is uniquely qualified to fix the problem, then why didn't he cover these points in today's press conference... you know, the one that drove the Dow down several hundred points, because investors realize the Obama Administration doesn't have a clue about how to proceed and is flailing desperately. What was their solution? Let the bad banks fail, and stop throwing good money after bad. Yes, bank investors will lose money. That's what happens when you invest in a business that makes bad decisions.

All of the political posturing we've seen over the last week is just so much kabuki theater. The truth is really rather simple: the Dems want Republican support so that everyone owns this stinker of a bill... and no single party can be held responsible.

Sunday, February 08, 2009

What I Did This Weekend...

I went to the Seattle Startup Weekend 2 held at Google's Seattle office over in Fremont to pitch an idea... and got 27 votes and a dozen folks to help me make it happen. After two days of hard work, we actually have a catchy domain name and a prototype website.

What's the idea? Bringing consumers and service providers together, using geolocating to improve efficiencies by utilizing available bandwidth. In layman's terms, we allow service providers to take advantage of opportunities near their current location while they're otherwise unoccupied. Think of a plumber, for instance, who has to travel for a half-hour to do a two-hour job, then has a couple of hours until his next appointment. If a plumbing service call opportunity a mile or two away from his current location comes to his attention, he can choose to take that service call without additional travel time. A consumer's example would be, say, a need to haul a load of yard debris from last weekend's cleanup to the dump... but it would take several pickup truckloads, the dump's ten miles away, and the minimum dump fee is $15. Why not post a job for someone to come and haul your stuff away, for a maximum fee of $25? Some enterprising landscaper who is working in the neighborhood already has half a dump-truck load... and can spend 30 minutes picking up another four trash piles (you and others in the vicinity), and make a quick $100. You save money and time, and the landscaper collects an extra $100 for the same actual overhead. Win-win.

It was a lot of fun, with some frustration at the intermittent Internet service and blowing circuit breakers. We ended up spending almost all of Sunday at Peet's Coffee and Dad Watson's (both offering free Wi-Fi to customers), returning to Google at the end of the day to report on our group, watch what others had done and show off our own work.

Thursday, February 05, 2009

Grace Under Pressure

By now I'm sure everyone knows about US Air Flight 1549, the Airbus A320 that took off from New York City's LaGuardia Airport enroute to Charlotte, North Carolina but ended up floating in the Hudson River after encountering a flock of geese shortly after takeoff. The jet lost both engines due to ingesting geese, and was too low (3200' and 90 seconds into the flight) to make it back to LaGuardia. I've embedded a CBS report featuring a simulation of the flight, including radio transmissions plus some security camera footage showing the jet landing in the river.

Captain Sullenberger, the pilot-in-command, has been singularly recognized for his coolness in the face of emergency, and his presence of mind in rapidly exploring and then discarding all of the alternatives as unviable until only one remained... landing in the Hudson River. As he explained it to the NTSB during his deposition concerning the incident, he didn't want to crash catastrophically in the dense New York metropolitan area, couldn't make it to a runway, and so the only choice left was to land in the river.

I don't want to take anything away from Captain Sullenberger, who I think exemplifies Hemingway's definition of courage as 'grace under pressure.' However, the NTSB's full audio of all ATC transmissions does show Sullenberger's stress as reflected in his voice, and his anguish at realizing the impossibility of making a safe landing at Teterboro Airport (just to the west of the river). To his credit, once Teterboro is no longer possible, Sullenberger focuses on his only remaining choice, landing in the Hudson, and then works with his aircrew to put the plane down safely. Great credit goes to Captain Sullenberger, but also to his aircrew including copilot Jeffrey Skiles (who was busy trying to restart the engines and implementing other emergency procedures while Sullenberger flew the plane), and flight attendants Doreen Walsh, Sheila Dail and Donna Dent who prepared the passengers for the crash landing and then helped to evacuate the jet quickly and safely. All of them deserve every bit of praise for miraculously saving the lives of all 155 passengers onboard.

Another unrecognized actor in this drama is the air traffic controller handling the flight. I can't find his name, but he is trying everything he can to help the pilot... clearing traffic, suggesting alternatives... and then his voice is filled with resignation and despair as he loses the plane on his radar and knows that it has gone down. Another controller steps in to relieve him shortly thereafter, and understandably so. I would have given anything to have been a fly on the wall and have seen his reaction once he learned that everyone survived. Listening to the audio gives one a glimpse of how it must feel to be a first-hand witness to a tragedy. I know I had to sit and digest what I heard for a minute or so, even with the benefit of knowing how the story turned out.

Captain Sullenberger and his crew are heroes, ordinary people who rise above circumstances, who keep their heads in a crisis and calmly do the right thing. Yes, we admire grace under pressure in, say, a Super Bowl quarterback, but football isn't life or death where one wrong choice means the deaths of hundreds or maybe thousands... and you can always call a timeout and go to the sidelines for advice. Our true heroes are found in airline cockpits, and military cockpits, on the battlefield, or in ambulances and firetrucks, running towards danger rather than away from it. I think as a country we forget this too often, and it takes a 9/11 or a US Air Flight 1549 to remind us of what we should gratefully acknowledge on a daily basis.

Everyone who risks their life in the service of others is a hero. More important, every hero who gives his life for our country is bestowing a priceless gift to the rest of us. How often do we think of their sacrifice? How often do we honor it by giving of ourselves, by being better citizens and better people... by "earning this?"

Sunday, February 01, 2009

The Stimulus Bill Won't Work... and Obama Knows It

After passing the House of Representatives last week without a single Republican 'aye' (and 11 'nays' from Democrats), the American Recovery and Reinvestment Act of 2009 is on the way to the Senate for approval.

However, there are already signs that support for the stimulus bill is waning, particularly among Democrats. And no wonder, because as the public learns more about what is actually in the bill, public support has dropped to 42%, or to put it another way, the majority of the public is against the stimulus bill in its current form while expecting it to be enacted.

The lack of public support for the stimulus bill, which turns out to be a $900 billion funding package for a hodge-podge of Democrat-supported pet programs, most of which have very little to do with economic stimulus and a lot to do with rewarding Democrat supporters and entrenching Democrat control of the federal government, has grown as more of the bill's provisions have been publicized. The American public isn't so stupid as to believe that funding abortions overseas, or providing billions of dollars to Democrat-supporting activist groups such as ACORN, or spending hundreds of millions of dollars on condoms, will pull us out of the deep recession we find ourselves in. Nor do they believe that a spending bill that spends less than half of the appropriated money in the next two years will have a significant impact on the economy. In short, the public is starting to see through the smoke and hand-waving, and that is not good news for Obama or the Democrat Congress... which brings us to why support from Congressional Republicans is wanted.

Obama is not stupid. He knows that he owns the economy now and voters will hold him and the Democrats responsible if things haven't turned around by 2010, and if he doesn't get a full recovery by the end of his first term he will not be re-elected. I'm sure that Obama would prefer that Congressional Democrats had written a cleaner bill. And, I'm also sure that Obama is deathly afraid the stimulus bill won't work... and without Republican support he will own that failure. You see, if Republicans also vote for the bill, then its failure can't be used against the Democrats. This is why Obama went to Capital Hill last week, not to prove his ability at generating 'bipartisanship' but to get the needed political cover for this mess of a bill. It didn't happen. And, Obama needed that cover because the stimulus bill is about everything except stimulating the economy. It's not going to work.

Here's why: the bill is predicated on the assumption that government spending is a net positive, that each dollar spent by the federal government results in more than a dollar of GDP growth. In other words, there's a multiplier effect. Obama's economic advisors are stating that the multiplier is 1.6 or above, meaning that each dollar spent will create $1.60 in additional spending. Other economists aren't so sure, arguing that the multiplier may at best be 1.0 and most likely it will be even less, meaning that the stimulus bill will drive us even deeper into recession as it takes money out of the economy that would otherwise be used by the public for investments and spending. Who is right? It seems obvious that, if deficit spending would prevent a recession, then we would have a booming economy given that the federal government has been spending money like a drunken sailor. No, the result of this pork bill will be another $1 trillion added to the national debt, massive inflation as the money supply (the amount of cash in circulation at a given time) is almost doubled, and a devastating impact on the national economy as the country spends several decades paying this money off. Think about it: how can the government boost the economy when the government is taking money from the public and then passing it back out?

This is why many economists are in favor of an immediate payroll tax reduction; the money stays in the hands of the public who will pay down debt and buy consumer goods with it, boosting the economy and raising the tax revenues. So why are the Democrats opposed to this program, which will have no administrative costs, and has repeatedly been proven to have a large multiplier effect? Perhaps because they vociferously opposed the Bush 2003 tax cuts which caused the economy to boom, just as the 1983 Reagan tax cuts caused the economy to boom... and perhaps because once the public gets used to having more money in their paycheck it will be politically difficult, if not impossible, to raise taxes. The argument reflects what's wrong with American politics in a nutshell: the majority party can't do what works because they've opposed it before solely for political reasons, and they don't have the courage to admit they were wrong.

Surprising everyone, the Republicans stood firm on principle (and good politics) and told the Democrats to take a hike. Obama's "I won" comment, and Speaker Pelosi's deliberate exclusion of Republican input, didn't help, but really, what was the upside to supporting the bill? If it passes and it works, Democrats will get all of the credit, and the Democrats don't need a single Republican vote in either house to pass it. If it passes, and fails, Republican support means it's off the table as a campaign topic. However, since there was no Republican support, the onus is on the Democrats and many in Congress will live or die, electorally speaking, on whether the American public views the stimulus bill as a success or failure. Unfortunately for the country, the Democrats have chosen to write and pass a bill that doesn't address the problem.

Now, the stops are all out. The Democrat PACs are gearing up to intimidate Republican senators from blue-leaning states, and you better believe that Obama and his political advisors are behind it. They also know that several Democrat senators from red-leaning states are very worried about political survival if they vote for the stimulus bill. If Obama can't get 50 votes in the Senate, he is in for a very rough four years. Even it the bill passes, if he can't get at least a half-dozen Republican votes, then the Democrats will own the bill... and woe betide them if it fails.

You see, the goal here was to use the recession and the fear-mongering that the press has been generating around it to ram through three decades of Democrat pet programs, several of which would aid Democrat support groups and help to ensure electoral success for the next several decades. This was never about stimulating the economy, it was about building an impregnable Democrat majority, with the help of the Republicans. But the Democrats were too greedy, and the plan is unraveling. I wonder if we're going to look back in four years, after what seemed like a repeat of the Carter Administration, and see that it all started to fall apart these first few weeks.