Commentary Magazine


Topic: U.S. Securities and Exchange Commission

Get Your GM Stock!

Get out your checkbook — GM’s IPO is just around the corner. This report explains:

The Treasury is seeking to sell roughly $6 billion to $8 billion of its GM stock through the IPO, with other sellers taking the entire deal to a total of roughly $10 billion to $12 billion.

The government paid $40 billion for its stake, and risks political fallout if the share price sinks due to releasing too many shares at once on the market. That could send a signal the Obama administration won’t recoup its investment.

Yes, contrary to the administration’s spin, there is a strong likelihood of the shareholders not even coming close to getting their money back. In the short term, the numbers could look particularly grim:

Linda Killian, a principal of Renaissance Capital LLC in Greenwich, Conn., which specializes in IPO research, estimates GM’s valuation at $50 billion to $70 billion, yet added that the chances of the government breaking even are “low.”

Because the IPO should take place at a discount to the market price, the government is likely to show a big loss in realized proceeds on its sales on IPO day. If the IPO is priced at the $50 billion level, that would equate to a U.S. loss of approximately 38% on the first batch of shares it sells.

But not to worry; the former car czar, Steve Rattner (who’s about to enter a settlement regarding a kickback arrangement with the New York State pension fund and “accept a multi-year ban from the securities industry and pay a fine of more than $5 million”), says that our losses will only be in the “single-digit” billions. I’ll hang on to that rosy scenario.

The real problem is that GM is not all that attractive so long as it remains a subsidiary of Obama, Inc.

“Would I jump at the GM deal? Probably not,” said Jack Ablin, chief investment officer of Harris Private Bank in Chicago. He said the “overhang of government ownership” results in a “management straitjacket” that could require GM executives to “get permission every time they want to extend a bonus to somebody.”

Robert Pavlik, a senior partner at investment advisers Banyan Partners LLC in Palm Beach Gardens, Fla., said he “wouldn’t put my clients’ money into it” because GM still carries the “stigma” of both bankruptcy and government ownership as well as recent top-management turnover.

“What’s going to drive their sales? The Chevrolet Volt? I think that’s going to turn out to be more of a publicity stunt than anything else,” Mr. Pavlik said.

This raises at least two troubling issues. First, the UAW is also going to get some of its (that is, its members’) money back in the IPO. It has a 17.5 percent stake in the company. So where is that money going — directly into the pension plan, or is the union taking some off the top? You know, for political contributions, union bosses’ salaries, and the upkeep of its swank golf course.

But the bigger issue is this: by stepping into the car business, the government is now in the position of hawking GM stock, singing the praises of the GM Volt, and persuading investors to put their money in this company as opposed to other businesses. There is something unseemly in all that. The administration finds itself in a classic case of conflict of interest. On the one hand, it is the federal regulator/pension guarantor/SEC monitor, and on the other, it is running the GM “road show” to sell, sell, sell GM. It is the natural and inevitable result of a move that should have never been made — namely, the injection of the U.S. government into the car industry.

All of that, plus the potential for billions in losses, should remind us why the Obama car bailout is a lemon.

Get out your checkbook — GM’s IPO is just around the corner. This report explains:

The Treasury is seeking to sell roughly $6 billion to $8 billion of its GM stock through the IPO, with other sellers taking the entire deal to a total of roughly $10 billion to $12 billion.

The government paid $40 billion for its stake, and risks political fallout if the share price sinks due to releasing too many shares at once on the market. That could send a signal the Obama administration won’t recoup its investment.

Yes, contrary to the administration’s spin, there is a strong likelihood of the shareholders not even coming close to getting their money back. In the short term, the numbers could look particularly grim:

Linda Killian, a principal of Renaissance Capital LLC in Greenwich, Conn., which specializes in IPO research, estimates GM’s valuation at $50 billion to $70 billion, yet added that the chances of the government breaking even are “low.”

Because the IPO should take place at a discount to the market price, the government is likely to show a big loss in realized proceeds on its sales on IPO day. If the IPO is priced at the $50 billion level, that would equate to a U.S. loss of approximately 38% on the first batch of shares it sells.

But not to worry; the former car czar, Steve Rattner (who’s about to enter a settlement regarding a kickback arrangement with the New York State pension fund and “accept a multi-year ban from the securities industry and pay a fine of more than $5 million”), says that our losses will only be in the “single-digit” billions. I’ll hang on to that rosy scenario.

The real problem is that GM is not all that attractive so long as it remains a subsidiary of Obama, Inc.

“Would I jump at the GM deal? Probably not,” said Jack Ablin, chief investment officer of Harris Private Bank in Chicago. He said the “overhang of government ownership” results in a “management straitjacket” that could require GM executives to “get permission every time they want to extend a bonus to somebody.”

Robert Pavlik, a senior partner at investment advisers Banyan Partners LLC in Palm Beach Gardens, Fla., said he “wouldn’t put my clients’ money into it” because GM still carries the “stigma” of both bankruptcy and government ownership as well as recent top-management turnover.

“What’s going to drive their sales? The Chevrolet Volt? I think that’s going to turn out to be more of a publicity stunt than anything else,” Mr. Pavlik said.

This raises at least two troubling issues. First, the UAW is also going to get some of its (that is, its members’) money back in the IPO. It has a 17.5 percent stake in the company. So where is that money going — directly into the pension plan, or is the union taking some off the top? You know, for political contributions, union bosses’ salaries, and the upkeep of its swank golf course.

But the bigger issue is this: by stepping into the car business, the government is now in the position of hawking GM stock, singing the praises of the GM Volt, and persuading investors to put their money in this company as opposed to other businesses. There is something unseemly in all that. The administration finds itself in a classic case of conflict of interest. On the one hand, it is the federal regulator/pension guarantor/SEC monitor, and on the other, it is running the GM “road show” to sell, sell, sell GM. It is the natural and inevitable result of a move that should have never been made — namely, the injection of the U.S. government into the car industry.

All of that, plus the potential for billions in losses, should remind us why the Obama car bailout is a lemon.

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David Stockman on the American Economy

David Stockman, who was President Reagan’s first OMB director, gave an interview to the Wall Street Journal’s Alan Murray. I certainly don’t agree with everything Stockman says. He has almost nothing to say about how to create growth in the economy. And Stockman’s betrayal of President Reagan (when he published The Triumph of Politics: Why the Reagan Revolution Failed) was troubling then and remains troubling today. (In the interview, Stockman addresses the SEC criminal charges that were made against him, charges that were later dropped.)

Still, Stockman is not a stupid man, and his analysis of America’s precarious fiscal situation, while alarming, is worth listening to.

David Stockman, who was President Reagan’s first OMB director, gave an interview to the Wall Street Journal’s Alan Murray. I certainly don’t agree with everything Stockman says. He has almost nothing to say about how to create growth in the economy. And Stockman’s betrayal of President Reagan (when he published The Triumph of Politics: Why the Reagan Revolution Failed) was troubling then and remains troubling today. (In the interview, Stockman addresses the SEC criminal charges that were made against him, charges that were later dropped.)

Still, Stockman is not a stupid man, and his analysis of America’s precarious fiscal situation, while alarming, is worth listening to.

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The New Political Division

Peter writes,

This Social Security gambit, which will fail politically (as has so much of what Obama and his aides have tried), is simply more evidence that the core premise of the Obama campaign — that he would transcend the usual divisions in American politics, that he would elevate our discourse and reach across the aisle in an unprecedented way, and that he would act reasonably and responsibly in facing America’s challenges — was a mirage. It was an effective optical illusion, but it was, in fact, an optical illusion. And every week, it seems, it is being revealed as such.

I certainly agree that the gambit will fail. And one of the main reasons Obama has and will fail “to transcend the usual divisions in American politics,” is, I think, that the usual divisions aren’t there this election cycle. They may never be there again.

John Fund had a fascinating article in Saturday’s Wall Street Journal about the pollster Scott Rasmussen. The White House was stunned by Scott Brown’s Senate victory in Massachusetts last winter. Rasmussen, he writes, thinks a principal reason,

lies in a significant division among the American public that he has tracked for the past few years — a division between what he calls the Mainstream Public and the Political Class. …

Before the financial crisis of late 2008, about a tenth of Americans fell into the political class, while some 53% were classified as in the mainstream public. The rest fell somewhere in the middle. Now the percentage of people identifying with the political class has clearly declined into single digits, while those in the mainstream public have grown slightly. A majority of Democrats, Republicans and independents all agree with the mainstream view . … “The major division in this country is no longer between parties but between political elites and the people,” Mr. Rasmussen says.

Timothy Carney in the Washington Examiner writes that,

The current GOP fault line is not exactly conservatives vs. moderates or new guard vs. old guard. For 2010, the rivalry is the Tea Party wing against the K Street wing. To tell which kind of Republican a candidate is, see how the Democrats attack him: If  he’s branded a shill for Wall Street, he’s from the K Street wing. If he’s labeled an extremist outside the mainstream, he’s a Tea Partier.

More tellingly, study their campaign contributions. K Street Republicans’ coffers are filled by the political action committees of defense contractors, drug companies, lobbying firms, and Wall Street banks. A Tea Party Republican is funded by the Club for Growth or the Senate Conservatives Fund, which is run by the Republican leadership’s least-favorite colleague, Jim DeMint.

The K Street wing is business as usual, whereas the tea parties represent the new politics that has, for thirty years and more, been slouching towards Washington to be born. The election of Chris Christie, Scott Brown, and Bob McDonnell is a sign of the growing power of tea-party politics. The SEC suit against New Jersey is a sign that the old rules are changing, as is the spate of news stories about the power of public-employee unions and their excessive compensation that is bankrupting states.

Politicians, like generals, prefer to fight the last war. The politicians who have figured out that the election of 2010 is being fought along new lines will still have jobs after November 2nd. But the Democrats under Obama have a big problem. They are the party of the political elite and big government. They can’t remake themselves in two months. That’s why they are in such terrible trouble.

Peter writes,

This Social Security gambit, which will fail politically (as has so much of what Obama and his aides have tried), is simply more evidence that the core premise of the Obama campaign — that he would transcend the usual divisions in American politics, that he would elevate our discourse and reach across the aisle in an unprecedented way, and that he would act reasonably and responsibly in facing America’s challenges — was a mirage. It was an effective optical illusion, but it was, in fact, an optical illusion. And every week, it seems, it is being revealed as such.

I certainly agree that the gambit will fail. And one of the main reasons Obama has and will fail “to transcend the usual divisions in American politics,” is, I think, that the usual divisions aren’t there this election cycle. They may never be there again.

John Fund had a fascinating article in Saturday’s Wall Street Journal about the pollster Scott Rasmussen. The White House was stunned by Scott Brown’s Senate victory in Massachusetts last winter. Rasmussen, he writes, thinks a principal reason,

lies in a significant division among the American public that he has tracked for the past few years — a division between what he calls the Mainstream Public and the Political Class. …

Before the financial crisis of late 2008, about a tenth of Americans fell into the political class, while some 53% were classified as in the mainstream public. The rest fell somewhere in the middle. Now the percentage of people identifying with the political class has clearly declined into single digits, while those in the mainstream public have grown slightly. A majority of Democrats, Republicans and independents all agree with the mainstream view . … “The major division in this country is no longer between parties but between political elites and the people,” Mr. Rasmussen says.

Timothy Carney in the Washington Examiner writes that,

The current GOP fault line is not exactly conservatives vs. moderates or new guard vs. old guard. For 2010, the rivalry is the Tea Party wing against the K Street wing. To tell which kind of Republican a candidate is, see how the Democrats attack him: If  he’s branded a shill for Wall Street, he’s from the K Street wing. If he’s labeled an extremist outside the mainstream, he’s a Tea Partier.

More tellingly, study their campaign contributions. K Street Republicans’ coffers are filled by the political action committees of defense contractors, drug companies, lobbying firms, and Wall Street banks. A Tea Party Republican is funded by the Club for Growth or the Senate Conservatives Fund, which is run by the Republican leadership’s least-favorite colleague, Jim DeMint.

The K Street wing is business as usual, whereas the tea parties represent the new politics that has, for thirty years and more, been slouching towards Washington to be born. The election of Chris Christie, Scott Brown, and Bob McDonnell is a sign of the growing power of tea-party politics. The SEC suit against New Jersey is a sign that the old rules are changing, as is the spate of news stories about the power of public-employee unions and their excessive compensation that is bankrupting states.

Politicians, like generals, prefer to fight the last war. The politicians who have figured out that the election of 2010 is being fought along new lines will still have jobs after November 2nd. But the Democrats under Obama have a big problem. They are the party of the political elite and big government. They can’t remake themselves in two months. That’s why they are in such terrible trouble.

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WEB EXCLUSIVE: A Short History of the Recess Appointment

President Obama’s recess appointment of Dr. Donald Berwick to be head of the Centers for Medicare & Medicaid Services escalates the abuse of the recess appointment power one step further.

The Constitution gives to the president the power to nominate and, “by and with the Advice and Consent of the Senate,” to appoint high government officials, such as ambassadors, judges of the Supreme Court, and department heads (Art. II, Sec. 2). This is a classic example of the checks and balances the Founding Fathers put into the Constitution to ensure that the power of each branch of government was limited by the powers of the other two branches.

To finish reading this COMMENTARY Web Exclusive, click here.

President Obama’s recess appointment of Dr. Donald Berwick to be head of the Centers for Medicare & Medicaid Services escalates the abuse of the recess appointment power one step further.

The Constitution gives to the president the power to nominate and, “by and with the Advice and Consent of the Senate,” to appoint high government officials, such as ambassadors, judges of the Supreme Court, and department heads (Art. II, Sec. 2). This is a classic example of the checks and balances the Founding Fathers put into the Constitution to ensure that the power of each branch of government was limited by the powers of the other two branches.

To finish reading this COMMENTARY Web Exclusive, click here.

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Why Israel Can’t Rely on American Jewish “Leaders”

Rabbi Jack Moline, who organized the spin-a-thon for the White House attended by a group of rabbis, has circulated an e-mail summarizing the meeting. It is, to be blunt, embarrassing.

As to the build-up, Moline lets on that no one predisposed to say nasty things about Obama was invited, nor was anyone who didn’t vote for him. (“We also wanted people who had not engaged in the kinds of behaviors I mentioned in my introduction, which is to say people who had been positively predisposed to President Obama once the election was over, but found themselves troubled by what had transpired over the subsequent year.”) How comfy for the White House to be assured of a hand-selected group of those Jews who ignored all signs of Obama’s antipathy toward Israel (20 years in Rev. Wright’s church isn’t nothing) and who voted for Rashid Khalidi’s pal. In other words, these are Jews prone to disregard evidence of Obama’s hostility toward the Jewish state.

As to the substance, Moline got this response to a query as to why a Jerusalem housing permit was more important than stopping an Iranian nuclear program:

I can tell you that our hosts bristled, and they objected mightily to the comparison. Amb. Ross, who is the person in charge of Iran policy, made it clear that nothing is off the table when it comes to the objective of preventing Iran from becoming a nuclear power. The goal, however, is not to secure a short-term delay, but to remove possibility that efforts at creating a nuclear arsenal will resurface. That requires isolating Iran in the world community. Two years ago, Mr. Emanuel said, the United States was virtually isolated in the Middle East and Iran enjoyed the sympathy of much of the world. Today that situation is reversed, but both Russia and China are dragging their feet, hoping that the US will relieve them of the need to participate in sanctions and other isolating activities. (I might add here that yesterday afternoon, the announcement was made that Russia and China have signed onto sanctions.) The President spends a huge amount of time every day working on the problem of Iran, and is making progress. Ultimately, the goal is to see the fissures in Iranian society open to create a climate for systemic change.

Let’s count the inanities in that one. First,  Dennis Ross is in charge of Iran policy but hasn’t apparently been able to stop multiple officials from clearly signaling that military force is off the table. Second, it’s false that Iran enjoyed the sympathy of the world (there were multiple sanctions passed for Iran’s violations of UN agreements) or that the U.S. was isolated in the Middle East. For starters, we had a warm and robust relationship with Israel. And we had useful dealings with many of the moderate states, including Jordan, which was not induced by the president to issue provocative statements about Israel. Third, Moline certainly got the sanctions wrong — Russia has been exempted and the sanctions are of minimal value. The administration — of course — concealed Russia’s carve-outs from the assembled group. (Swell to hide the ball from the rabbis, nu?) And lastly, Obama may be working hard but there’s no credible plan to thwart the Iranian nuclear program, as Robert Gates pointed out earlier in the year when he sent up a warning flag.

Next up was the building issue, in which Ross, now the facilitator in chief who has chosen to disregard past lessons learned about Palestinian intransigence, tries to snow the rabbis with this howler:

As for building in Jerusalem, Amb. Ross very calmly pointed out that US policy on building in any territory captured in 1967 has not changed since the Johnson administration. The US has objected officially to all such activity which is defined by policy as settlements. He also noted that the last four high-level US officials to visit Israel were greeted by announcements of new settlement activity, going back to Sec’y of State Condoleeza Rice during the Bush administration. He emphasized that he understood that there were reasons in Israeli domestic politics that may have influenced those decisions, but it was no way to treat an ally out to make a point of support. Amb. Ross said that the matter of settlements and the matter of Palestinian provocations are avoidable distractions. A simple code of conduct that would move talks forward could prevent both, and the administration has been pressing both sides to adopt one.

Ross chose not to mention the Sharon-Bush agreements, on which the Obama team reneged, or to acknowledge that no other administration has made an international incident out of Jerusalem building. And it’s pure gall to chastise Israel that their conduct is “no way to treat an ally.” Apparently Ross was so desperate to return to one final round in government that he is now willing not only to join an administration hostile to Israel but also to join in the Israel-bashing.

Moline then reports on the list of forehead-slappers. There was this: “The Obama administration has been consistent in its support of Israel.” Oh really? Condemning the Jewish state is consistent support? Leaking the potential for an imposed peace deal is consistent support? Repeatedly snubbing Bibi is consistent support? And holding up the Cairo speech as evidence of their support, as Moline reports, is bizarre. It is this speech in which Obama cast the Palestinians in the role of enslaved African Americans, posited that Israel’s legitimacy rests on the Holocaust, soft-pedaled Iran’s nuclear ambitions, and chose to largely ignore 60 years of wars and rejectionism by the Palestinians and by Israel’s neighbors.

Then there is this one: “There has been no change in US policy toward Israel in the United Nations.” Whoa! We failed to veto an anti-Israel resolution. We joined the Israel-bashing Human Rights Council and let Israel’s prime antagonist onto the Commission on the Status of Women. And we apparently told the Palestinians that we wouldn’t veto a future resolution of condemnation if Israel continued to build in its eternal capital.

Moline reports that the administration’s representatives explained the order of their priorities: stopping Iran’s nuclear program, getting out of Iraq, and the Israel-Palestinian “peace process.” Unclear then, why every administration figure who speaks in public, including the president in Cairo, emphasizes the latter and gives short-shrift to Iran. Unclear then why the president has voiced a que sera, sera view of sanctions, carved out Russia from UN sanctions, and spent the last 17 months not promoting regime change, not adhering to deadlines, and not imposing crippling sanctions on the Iranian regime.

Moline said the major responses from the rabbis were to urge Obama to visit Israel, to express some concern of there being a double standard for Israel and to tell Obama that they were not “confident from the President himself that he feels Israel in his kishkes.” Not confident? Well, when you handpick the audience and don’t have knowledgeable representatives willing to take on the administration’s fabrications, that’s what you get. And finally, Moline gets very upset — more upset than at the president — for critics questioning the motives and actions of Rahm Emanuel.

This is what passes for “leadership” in American Jewry. A kabuki dance is orchestrated by an Obama fan to gather other Obama fans to air the mildest criticism and to avoid challenging the factual representations of an administration that is the most hostile to the Jewish state in history. As one Israeli hand who definitely isn’t going to be invited to any meetings with this president put it: “They may be fine rabbis, but they are out of their league here.” And by not directly and strongly taking on the president, they are, in fact, enabling the president’s anti-Israel stance. It is, come to think of it, more than an embarrassment; it is an egregious misuse of their status and it is every bit as dangerous as the quietude of American Jews in the 1930s.

Rabbi Jack Moline, who organized the spin-a-thon for the White House attended by a group of rabbis, has circulated an e-mail summarizing the meeting. It is, to be blunt, embarrassing.

As to the build-up, Moline lets on that no one predisposed to say nasty things about Obama was invited, nor was anyone who didn’t vote for him. (“We also wanted people who had not engaged in the kinds of behaviors I mentioned in my introduction, which is to say people who had been positively predisposed to President Obama once the election was over, but found themselves troubled by what had transpired over the subsequent year.”) How comfy for the White House to be assured of a hand-selected group of those Jews who ignored all signs of Obama’s antipathy toward Israel (20 years in Rev. Wright’s church isn’t nothing) and who voted for Rashid Khalidi’s pal. In other words, these are Jews prone to disregard evidence of Obama’s hostility toward the Jewish state.

As to the substance, Moline got this response to a query as to why a Jerusalem housing permit was more important than stopping an Iranian nuclear program:

I can tell you that our hosts bristled, and they objected mightily to the comparison. Amb. Ross, who is the person in charge of Iran policy, made it clear that nothing is off the table when it comes to the objective of preventing Iran from becoming a nuclear power. The goal, however, is not to secure a short-term delay, but to remove possibility that efforts at creating a nuclear arsenal will resurface. That requires isolating Iran in the world community. Two years ago, Mr. Emanuel said, the United States was virtually isolated in the Middle East and Iran enjoyed the sympathy of much of the world. Today that situation is reversed, but both Russia and China are dragging their feet, hoping that the US will relieve them of the need to participate in sanctions and other isolating activities. (I might add here that yesterday afternoon, the announcement was made that Russia and China have signed onto sanctions.) The President spends a huge amount of time every day working on the problem of Iran, and is making progress. Ultimately, the goal is to see the fissures in Iranian society open to create a climate for systemic change.

Let’s count the inanities in that one. First,  Dennis Ross is in charge of Iran policy but hasn’t apparently been able to stop multiple officials from clearly signaling that military force is off the table. Second, it’s false that Iran enjoyed the sympathy of the world (there were multiple sanctions passed for Iran’s violations of UN agreements) or that the U.S. was isolated in the Middle East. For starters, we had a warm and robust relationship with Israel. And we had useful dealings with many of the moderate states, including Jordan, which was not induced by the president to issue provocative statements about Israel. Third, Moline certainly got the sanctions wrong — Russia has been exempted and the sanctions are of minimal value. The administration — of course — concealed Russia’s carve-outs from the assembled group. (Swell to hide the ball from the rabbis, nu?) And lastly, Obama may be working hard but there’s no credible plan to thwart the Iranian nuclear program, as Robert Gates pointed out earlier in the year when he sent up a warning flag.

Next up was the building issue, in which Ross, now the facilitator in chief who has chosen to disregard past lessons learned about Palestinian intransigence, tries to snow the rabbis with this howler:

As for building in Jerusalem, Amb. Ross very calmly pointed out that US policy on building in any territory captured in 1967 has not changed since the Johnson administration. The US has objected officially to all such activity which is defined by policy as settlements. He also noted that the last four high-level US officials to visit Israel were greeted by announcements of new settlement activity, going back to Sec’y of State Condoleeza Rice during the Bush administration. He emphasized that he understood that there were reasons in Israeli domestic politics that may have influenced those decisions, but it was no way to treat an ally out to make a point of support. Amb. Ross said that the matter of settlements and the matter of Palestinian provocations are avoidable distractions. A simple code of conduct that would move talks forward could prevent both, and the administration has been pressing both sides to adopt one.

Ross chose not to mention the Sharon-Bush agreements, on which the Obama team reneged, or to acknowledge that no other administration has made an international incident out of Jerusalem building. And it’s pure gall to chastise Israel that their conduct is “no way to treat an ally.” Apparently Ross was so desperate to return to one final round in government that he is now willing not only to join an administration hostile to Israel but also to join in the Israel-bashing.

Moline then reports on the list of forehead-slappers. There was this: “The Obama administration has been consistent in its support of Israel.” Oh really? Condemning the Jewish state is consistent support? Leaking the potential for an imposed peace deal is consistent support? Repeatedly snubbing Bibi is consistent support? And holding up the Cairo speech as evidence of their support, as Moline reports, is bizarre. It is this speech in which Obama cast the Palestinians in the role of enslaved African Americans, posited that Israel’s legitimacy rests on the Holocaust, soft-pedaled Iran’s nuclear ambitions, and chose to largely ignore 60 years of wars and rejectionism by the Palestinians and by Israel’s neighbors.

Then there is this one: “There has been no change in US policy toward Israel in the United Nations.” Whoa! We failed to veto an anti-Israel resolution. We joined the Israel-bashing Human Rights Council and let Israel’s prime antagonist onto the Commission on the Status of Women. And we apparently told the Palestinians that we wouldn’t veto a future resolution of condemnation if Israel continued to build in its eternal capital.

Moline reports that the administration’s representatives explained the order of their priorities: stopping Iran’s nuclear program, getting out of Iraq, and the Israel-Palestinian “peace process.” Unclear then, why every administration figure who speaks in public, including the president in Cairo, emphasizes the latter and gives short-shrift to Iran. Unclear then why the president has voiced a que sera, sera view of sanctions, carved out Russia from UN sanctions, and spent the last 17 months not promoting regime change, not adhering to deadlines, and not imposing crippling sanctions on the Iranian regime.

Moline said the major responses from the rabbis were to urge Obama to visit Israel, to express some concern of there being a double standard for Israel and to tell Obama that they were not “confident from the President himself that he feels Israel in his kishkes.” Not confident? Well, when you handpick the audience and don’t have knowledgeable representatives willing to take on the administration’s fabrications, that’s what you get. And finally, Moline gets very upset — more upset than at the president — for critics questioning the motives and actions of Rahm Emanuel.

This is what passes for “leadership” in American Jewry. A kabuki dance is orchestrated by an Obama fan to gather other Obama fans to air the mildest criticism and to avoid challenging the factual representations of an administration that is the most hostile to the Jewish state in history. As one Israeli hand who definitely isn’t going to be invited to any meetings with this president put it: “They may be fine rabbis, but they are out of their league here.” And by not directly and strongly taking on the president, they are, in fact, enabling the president’s anti-Israel stance. It is, come to think of it, more than an embarrassment; it is an egregious misuse of their status and it is every bit as dangerous as the quietude of American Jews in the 1930s.

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Turnout Blues for Democrats

Hotline has some more bad news for the Democrats:

Turnout among Dem voters dropped precipitously in 3 statewide primaries on Tuesday, giving the party more evidence that their voters lack enthusiasm ahead of midterm elections.In primaries in NC, IN and OH, Dems turned out at far lower rates than they have in previous comparable elections.

How bad?

Just 663K OH voters cast ballots in the competitive primary between LG Lee Fisher (D) and Sec/State Jennifer Brunner (D). That number is lower than the 872K voters who turned out in ’06, when neither Gov. Ted Strickland (D) nor Sen. Sherrod Brown (D) faced primary opponents. Only 425K voters turned out to pick a nominee against Sen. Richard Burr (R-NC). The 14.4% turnout was smaller than the 444K voters — or 18% of all registered Dem voters — who turned out in ’04, when Gov. Mike Easley (D) faced only a gadfly candidate in his bid to be renominated for a second term. And in IN, just 204K Hoosiers voted for Dem House candidates, far fewer than the 357K who turned out in ’02 and the 304K who turned out in ’06.

It looks like ObamaCare didn’t do much to rev up the base. Well, maybe people are just turned off politics, cynical, and disgusted with all politicians. Uh — no. The GOP is fired up and ready to go:

By contrast, GOP turnout was up almost across the board. 373K people voted in Burr’s uncompetitive primary, nearly 9% higher than the 343K who voted in the equally non-competitive primary in ’04. Turnout in House races in IN rose 14.6% from ’06, fueled by the competitive Senate primary, which attracted 550K voters. And 728K voters cast ballots for a GOP Sec/State nominee in Ohio, the highest-ranking statewide election with a primary; in ’06, just 444K voters cast ballots in that race.

It is reminiscent of the 2008 race. Then, too, Obama drove hordes of voters to the polls. This time, it just happens to be hordes of voters for the other party who want to check the radical agenda Obama hid in 2008.

Hotline has some more bad news for the Democrats:

Turnout among Dem voters dropped precipitously in 3 statewide primaries on Tuesday, giving the party more evidence that their voters lack enthusiasm ahead of midterm elections.In primaries in NC, IN and OH, Dems turned out at far lower rates than they have in previous comparable elections.

How bad?

Just 663K OH voters cast ballots in the competitive primary between LG Lee Fisher (D) and Sec/State Jennifer Brunner (D). That number is lower than the 872K voters who turned out in ’06, when neither Gov. Ted Strickland (D) nor Sen. Sherrod Brown (D) faced primary opponents. Only 425K voters turned out to pick a nominee against Sen. Richard Burr (R-NC). The 14.4% turnout was smaller than the 444K voters — or 18% of all registered Dem voters — who turned out in ’04, when Gov. Mike Easley (D) faced only a gadfly candidate in his bid to be renominated for a second term. And in IN, just 204K Hoosiers voted for Dem House candidates, far fewer than the 357K who turned out in ’02 and the 304K who turned out in ’06.

It looks like ObamaCare didn’t do much to rev up the base. Well, maybe people are just turned off politics, cynical, and disgusted with all politicians. Uh — no. The GOP is fired up and ready to go:

By contrast, GOP turnout was up almost across the board. 373K people voted in Burr’s uncompetitive primary, nearly 9% higher than the 343K who voted in the equally non-competitive primary in ’04. Turnout in House races in IN rose 14.6% from ’06, fueled by the competitive Senate primary, which attracted 550K voters. And 728K voters cast ballots for a GOP Sec/State nominee in Ohio, the highest-ranking statewide election with a primary; in ’06, just 444K voters cast ballots in that race.

It is reminiscent of the 2008 race. Then, too, Obama drove hordes of voters to the polls. This time, it just happens to be hordes of voters for the other party who want to check the radical agenda Obama hid in 2008.

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RE: Showboating Against Wall Street Greed

Maybe the Democrats overplayed their hand. The Washington Post editors are grimacing:

The broader implication raised by senators at Tuesday’s hearing — that Goldman somehow rigged the market in subprime mortgages, and that this led to the meltdown — does not strike us as a terribly useful or even accurate analysis of the crisis. Yes, in its capacity as a market-maker, the firm sold complex derivatives to market players who wanted to bet on a rosy view of housing long after Goldman had turned more pessimistic. To that extent, Goldman’s interest in short-term revenue clashed with what, in hindsight, was society’s need for a whistle-blower. For the most part, though, these were large, sophisticated institutional investors who had the opportunity to conduct the same analysis of economic data that Goldman did. They knew that there was someone on the short side of every trade. And Goldman had no legal obligation to trade in the same direction as these clients did. Indeed, if it had, then Goldman could not have started hedging its own bets on housing early, as it did. The firm would have lost billions, and it might have wound up needing an even bigger bailout by U.S. taxpayers than it actually got. It could have ended up like Citigroup, which tried to ride the bubble until it was too late and had to be propped up with hundreds of billions of dollars in federal cash and credit guarantees.

As the editors note, the senators seemed outraged — offended even — by the entire notion of short-selling, although even senators must understand at some level that short-selling is, in essence, the way information is transmitted to the marketplace that the herd is going in the wrong direction. (“Perhaps the housing bubble would have been mitigated if more shorts had piled in earlier.”) But the senators would not be deterred from their attacks, in part because the underlying merits of the actual case against Goldman are looking more suspect.

Others observe:

The SEC claims that Goldman’s Fabrice Tourre misled ACA into thinking Mr. Paulson’s firm would be going long on subprime, just like ACA. It’s not clear that this would have mattered, but Mr. Tourre flatly denied the allegation under oath yesterday.

The SEC also claims Goldman should have disclosed that Mr. Paulson’s firm suggested some of the particular mortgage-backed securities on which the two sides in the transaction would bet. Yet Mr. Tourre testified that the pool referenced in the transaction performed no worse than similar pools of subprime loans not included in the transaction.

In sum, it appeared to be another bad day for the SEC’s specific case against Goldman. But lawmakers seemed intent on finding the firm generally guilty of meeting institutional demand for subprime housing risk.

Well, you can see why the senators would rather talk about greed — or anything other than the merits of what seems to be a flaky case with highly suspicious timing.

Once again, lawmakers are betting the voters are easily bamboozled and can be lured into an anti-business, anti-bank fury. They may be right. But if the Post’s editors are any guide, they may have underestimated the public’s ability to see through their histrionics.

Maybe the Democrats overplayed their hand. The Washington Post editors are grimacing:

The broader implication raised by senators at Tuesday’s hearing — that Goldman somehow rigged the market in subprime mortgages, and that this led to the meltdown — does not strike us as a terribly useful or even accurate analysis of the crisis. Yes, in its capacity as a market-maker, the firm sold complex derivatives to market players who wanted to bet on a rosy view of housing long after Goldman had turned more pessimistic. To that extent, Goldman’s interest in short-term revenue clashed with what, in hindsight, was society’s need for a whistle-blower. For the most part, though, these were large, sophisticated institutional investors who had the opportunity to conduct the same analysis of economic data that Goldman did. They knew that there was someone on the short side of every trade. And Goldman had no legal obligation to trade in the same direction as these clients did. Indeed, if it had, then Goldman could not have started hedging its own bets on housing early, as it did. The firm would have lost billions, and it might have wound up needing an even bigger bailout by U.S. taxpayers than it actually got. It could have ended up like Citigroup, which tried to ride the bubble until it was too late and had to be propped up with hundreds of billions of dollars in federal cash and credit guarantees.

As the editors note, the senators seemed outraged — offended even — by the entire notion of short-selling, although even senators must understand at some level that short-selling is, in essence, the way information is transmitted to the marketplace that the herd is going in the wrong direction. (“Perhaps the housing bubble would have been mitigated if more shorts had piled in earlier.”) But the senators would not be deterred from their attacks, in part because the underlying merits of the actual case against Goldman are looking more suspect.

Others observe:

The SEC claims that Goldman’s Fabrice Tourre misled ACA into thinking Mr. Paulson’s firm would be going long on subprime, just like ACA. It’s not clear that this would have mattered, but Mr. Tourre flatly denied the allegation under oath yesterday.

The SEC also claims Goldman should have disclosed that Mr. Paulson’s firm suggested some of the particular mortgage-backed securities on which the two sides in the transaction would bet. Yet Mr. Tourre testified that the pool referenced in the transaction performed no worse than similar pools of subprime loans not included in the transaction.

In sum, it appeared to be another bad day for the SEC’s specific case against Goldman. But lawmakers seemed intent on finding the firm generally guilty of meeting institutional demand for subprime housing risk.

Well, you can see why the senators would rather talk about greed — or anything other than the merits of what seems to be a flaky case with highly suspicious timing.

Once again, lawmakers are betting the voters are easily bamboozled and can be lured into an anti-business, anti-bank fury. They may be right. But if the Post’s editors are any guide, they may have underestimated the public’s ability to see through their histrionics.

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Flotsam and Jetsam

Ben Smith sounds skeptical about this ad campaign: “If Alexi Giannoulias pulls this one off, it’ll be one for the annals of political history: He’s trying to cast the failure of his family’s bank — which he ran as recently as four years ago and which failed Friday, the latest casualty of the bad loans in the run-up to the financial crisis — as a reason to sympathize with him and vote for him.”

What — you’re skeptical that the SEC can investigate itself ? “The Securities and Exchange Commission’s (SEC) investigative office said Sunday it had begun an investigation into whether charges against Goldman Sachs were politically timed.”

Michael Rubin is skeptical about the Obami spin that we need an ambassador in Damascus because Syria’s ambassador here doesn’t accurately relay information to Bashar Assad. “We have an embassy in Damascus, and we can pass messages anytime we so choose. If the State Department seriously believes the Syrian ambassador in Washington doesn’t report things back to Damascus (too busy, as he is, taking trips to Oklahoma and California), then Secretary Clinton can make clear to Damascus through other means that it’s time Syria sent responsible diplomats. But the fact is that Bashar al-Assad wants an American ambassador because it would symbolize his rehabilitation. The only question that Secretary of State Hillary Clinton and President Barack Obama should answer is whether they think that rehabilitation is warranted at this point in time.”

Americans remain overwhelmingly skeptical about the benefits of ObamaCare: “Support for repeal of the recently-passed national health care plan remains strong as most voters believe the law will increase the cost of care, hurt quality and push the federal budget deficit even higher. The latest Rasmussen Reports national telephone survey finds that 58% of likely voters nationwide favor repeal, while 38% are opposed. … Sixty percent (60%) of voters nationwide believe the new law will increase the federal budget deficit, while just 19% say it will reduce the deficit. Fifty-seven percent (57%) think the law will increase the cost of health care, while 18% believe it will reduce costs.”

James Capretta is skeptical of HHS Secretary Katheleen Sebelius’s spin on ObamaCare: “The chief actuary for Medicare has released a memorandum providing cost estimates for the final health legislation passed by Congress and signed by the president. Amazingly, the HHS secretary tried to suggest that the memo confirms that the legislation will produce the favorable results that the legislation’s backers have touted for months. That’s nothing but spin. In truth, the memo is another devastating indictment of the bill. It contradicts several key assertions by made by the bill’s proponents, including the president. For starters, the actuary says that the legislation will increase health care costs, not reduce them — by about $300 billion over a decade. … The actuary also says that the financial incentives in the bill will lead many employers to stop offering coverage altogether.”

Skeptical of the chances for a “Palestinian nonviolent movement“? You should be: “Proponents hope civil disobedience, part of a strategy they call the White Intifada, also will flummox Israeli authorities in their efforts to crack down on protesters waving banners rather than shooting automatic rifles, and cast Israeli soldiers as oppressors. Unlike Ghandi [sic] or the Rev. Martin Luther King, Jr., however, the Palestinians who support this approach for the most part don’t appear to be embracing nonviolence as a philosophy. Rather they see it as part of a calculated strategy to achieve Palestinian goals.”

The Gallup poll bolsters skeptics (like me) who doubt Obama’s ability to turn out young voters for a midterm election: “Younger voters remain less enthusiastic about voting in this year’s midterm elections than those who are older, underscoring the challenge facing the Democratic Party in its efforts to re-energize these voters, who helped President Obama win the presidency in 2008.”

Mark Hemingway is right to be skeptical that the new head of the Service Employees International Union wants the union to be “less political.”

Ben Smith sounds skeptical about this ad campaign: “If Alexi Giannoulias pulls this one off, it’ll be one for the annals of political history: He’s trying to cast the failure of his family’s bank — which he ran as recently as four years ago and which failed Friday, the latest casualty of the bad loans in the run-up to the financial crisis — as a reason to sympathize with him and vote for him.”

What — you’re skeptical that the SEC can investigate itself ? “The Securities and Exchange Commission’s (SEC) investigative office said Sunday it had begun an investigation into whether charges against Goldman Sachs were politically timed.”

Michael Rubin is skeptical about the Obami spin that we need an ambassador in Damascus because Syria’s ambassador here doesn’t accurately relay information to Bashar Assad. “We have an embassy in Damascus, and we can pass messages anytime we so choose. If the State Department seriously believes the Syrian ambassador in Washington doesn’t report things back to Damascus (too busy, as he is, taking trips to Oklahoma and California), then Secretary Clinton can make clear to Damascus through other means that it’s time Syria sent responsible diplomats. But the fact is that Bashar al-Assad wants an American ambassador because it would symbolize his rehabilitation. The only question that Secretary of State Hillary Clinton and President Barack Obama should answer is whether they think that rehabilitation is warranted at this point in time.”

Americans remain overwhelmingly skeptical about the benefits of ObamaCare: “Support for repeal of the recently-passed national health care plan remains strong as most voters believe the law will increase the cost of care, hurt quality and push the federal budget deficit even higher. The latest Rasmussen Reports national telephone survey finds that 58% of likely voters nationwide favor repeal, while 38% are opposed. … Sixty percent (60%) of voters nationwide believe the new law will increase the federal budget deficit, while just 19% say it will reduce the deficit. Fifty-seven percent (57%) think the law will increase the cost of health care, while 18% believe it will reduce costs.”

James Capretta is skeptical of HHS Secretary Katheleen Sebelius’s spin on ObamaCare: “The chief actuary for Medicare has released a memorandum providing cost estimates for the final health legislation passed by Congress and signed by the president. Amazingly, the HHS secretary tried to suggest that the memo confirms that the legislation will produce the favorable results that the legislation’s backers have touted for months. That’s nothing but spin. In truth, the memo is another devastating indictment of the bill. It contradicts several key assertions by made by the bill’s proponents, including the president. For starters, the actuary says that the legislation will increase health care costs, not reduce them — by about $300 billion over a decade. … The actuary also says that the financial incentives in the bill will lead many employers to stop offering coverage altogether.”

Skeptical of the chances for a “Palestinian nonviolent movement“? You should be: “Proponents hope civil disobedience, part of a strategy they call the White Intifada, also will flummox Israeli authorities in their efforts to crack down on protesters waving banners rather than shooting automatic rifles, and cast Israeli soldiers as oppressors. Unlike Ghandi [sic] or the Rev. Martin Luther King, Jr., however, the Palestinians who support this approach for the most part don’t appear to be embracing nonviolence as a philosophy. Rather they see it as part of a calculated strategy to achieve Palestinian goals.”

The Gallup poll bolsters skeptics (like me) who doubt Obama’s ability to turn out young voters for a midterm election: “Younger voters remain less enthusiastic about voting in this year’s midterm elections than those who are older, underscoring the challenge facing the Democratic Party in its efforts to re-energize these voters, who helped President Obama win the presidency in 2008.”

Mark Hemingway is right to be skeptical that the new head of the Service Employees International Union wants the union to be “less political.”

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Conflict — What Conflict?

Some might find it off-putting that the “most ethical administration ever” (or is that the Congress?) would see its White House counsel Greg Craig representing the administration’s juiciest and most fortuitous target, Goldman Sachs. How can this happen? Politico reports:

“A former White House employee cannot appear before any unit of the Executive Office of the President on behalf of any client for 2 years—one year under federal law and another year under the pledge pursuant to the January 2009 ethics E0,” said a White House official.

The official also said that the White House had no contact with the SEC on the Goldman Sachs case. “The SEC by law is an independent agency that does not coordinate with the White House any part of their enforcement actions.”

Well how do we know there was no coordination? In fact, the entire Goldman strategy is that this was a political set-up from the very beginning:

An attempt to discredit the Securities and Exchange Commission by painting the case as tainted by politics because it was announced just as President Barack Obama was ramping up his push for financial regulatory reform, including a planned trip to New York on Thursday.

“The charges were brought in a manner calculated to achieve maximum impact at point of penetration,” a Goldman executive said.

Among the points Greg Palm, co-general counsel, plans to emphasize on the call is “how out of the ordinary the process was with the SEC,” the executive said. The SEC usually gives firms a chance to settle such charges before they are made public. Goldman executives say they had no such chance, and learned about the filing while watching CNBC.

So if the White House was meddling, or doing so with intermediaries, and this is central to Goldman’s defense, what is Craig doing litigating against the U.S. government?

Some might find it off-putting that the “most ethical administration ever” (or is that the Congress?) would see its White House counsel Greg Craig representing the administration’s juiciest and most fortuitous target, Goldman Sachs. How can this happen? Politico reports:

“A former White House employee cannot appear before any unit of the Executive Office of the President on behalf of any client for 2 years—one year under federal law and another year under the pledge pursuant to the January 2009 ethics E0,” said a White House official.

The official also said that the White House had no contact with the SEC on the Goldman Sachs case. “The SEC by law is an independent agency that does not coordinate with the White House any part of their enforcement actions.”

Well how do we know there was no coordination? In fact, the entire Goldman strategy is that this was a political set-up from the very beginning:

An attempt to discredit the Securities and Exchange Commission by painting the case as tainted by politics because it was announced just as President Barack Obama was ramping up his push for financial regulatory reform, including a planned trip to New York on Thursday.

“The charges were brought in a manner calculated to achieve maximum impact at point of penetration,” a Goldman executive said.

Among the points Greg Palm, co-general counsel, plans to emphasize on the call is “how out of the ordinary the process was with the SEC,” the executive said. The SEC usually gives firms a chance to settle such charges before they are made public. Goldman executives say they had no such chance, and learned about the filing while watching CNBC.

So if the White House was meddling, or doing so with intermediaries, and this is central to Goldman’s defense, what is Craig doing litigating against the U.S. government?

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Flotsam and Jetsam

CATO points out: “When you run down this list of elements in the Obama plan and the Romney plan, they are all identical… Both the Romney plan and the Obama plan are essentially a government takeover of the health care sector of the economy.”

A new poll points to Harry Reid’s vulnerability: “U.S. Sen. Harry Reid must pick up far more support from crossover Republicans and independents to win re-election, according to a new poll that shows him losing to the GOP front-runner in a full-ballot election with eight contenders and a ‘none of these candidates’ option. The survey of Nevada voters commissioned by the Review-Journal shows Reid getting 37 percent of the vote compared with 47 percent for Republican Sue Lowden, who would win if the election were today, while the slate of third-party and nonpartisan candidates would get slim to no backing.”

Another poll points to an electoral thumping in November for the Democrats: “Republicans have slightly increased their advantage over Democrats in the generic Congressional ballot, from 46-43 last month to 47-42 now.”

Chris Christie points out: “We are, I think, the failed experiment in America—the best example of a failed experiment in America—on taxes and bigger government. Over the last eight years, New Jersey increased taxes and fees 115 times.” He seems serious about waging a war on spending, bloated pensions, public unions and regulatory excess.

Rep. Pete King points to Obama’s Israel animus: “No American ally is more trusted or reliable than Israel. Throughout the darkest days of the Cold War, and now in the war against Islamic terrorism, Israel has stood with the United States every step of the way. Israel shares our democratic principles and always has the courage to do what has to be done. The value of this unique alliance has been shared by all our Presidents — Democrats and Republicans alike. This is why I strongly believe it has been so wrong for President Obama to continually escalate and publicize his differences with Israeli Prime Minister Benjamin Netanyahu. This is no way to treat such a long-time ally.”

A Senate Republican points out an Obama nominee’s non-judicial temperament: “A top Senate Republican hammered liberal law professor Goodwin Liu’s writings as ‘vicious, emotionally and racially charged’ at his confirmation hearing Friday – igniting the first real test of whether Republicans will be able to block the most controversial of President Barack Obama’s lower court judicial nominees. Sen. Jon Kyl (R-Ariz.) slammed Liu’s testimony against Samuel Alito during his confirmation hearings for the Supreme Court.” This same nominee “forgot” to submit over a hundred documents.

A new survey points to an uneven economy recovery: “U.S. consumer sentiment took a surprise negative turn in early April due to a persistently grim outlook on income and jobs, a private survey released on Friday showed. A slip in economic expectations to its lowest in a year likely stemmed from consumers hearing negative information on government programs and a perception that the recovery is too slow, according to Thomson Reuters/University of Michigan’s Surveys of Consumers. … The surveys’ overall index on consumer sentiments slipped to 69.5 in early April — the lowest in five months. This was below the 73.6 reading seen at the end of March and the 75.0 median forecast of analysts polled by Reuters.”

Ben Smith points to inconvenient facts for New York Democrats: “A few weeks before playing a central role in fraud charges against Goldman Sachs, hedge fund titan John Paulson invited colleagues to a fundraiser for Senator Chuck Schumer — ‘one of the few members of Congress that has consistently supported the hedge fund industry’ — according to a copy of the invitation… Schumer is credited by some with helping to kill a Democratic push to tax carried interest, which would have put a dent in the massive earnings of a small number of ultra-wealthy money managers. With Goldman, and perhaps Paulson, in the SEC’s sights, some of the taint may rub off on their allies — and both of New York’s senators are among them. Schumer’s junior colleague, Kirsten Gillibrand, is the single top recipient of contributions from Goldman Sachs employees.”

The Wall Street Journal editors point out there’s no meeting of the minds on the START deal: “Signed with some pomp last week in Prague, the pact with Russia makes modest reductions to the number of strategic warheads and delivery systems. Though those cuts are worth a close look, we’re much more concerned with the impact that new START will have on America’s ability to develop and deploy the best missile defenses available. Starting with the Reagan-era Strategic Defense Initiative, the Kremlin has sought to tie America’s hands on missile defense. The Kremlin says that this is precisely what it has negotiated with START. The Administration says it didn’t. They can’t both be right.”

CATO points out: “When you run down this list of elements in the Obama plan and the Romney plan, they are all identical… Both the Romney plan and the Obama plan are essentially a government takeover of the health care sector of the economy.”

A new poll points to Harry Reid’s vulnerability: “U.S. Sen. Harry Reid must pick up far more support from crossover Republicans and independents to win re-election, according to a new poll that shows him losing to the GOP front-runner in a full-ballot election with eight contenders and a ‘none of these candidates’ option. The survey of Nevada voters commissioned by the Review-Journal shows Reid getting 37 percent of the vote compared with 47 percent for Republican Sue Lowden, who would win if the election were today, while the slate of third-party and nonpartisan candidates would get slim to no backing.”

Another poll points to an electoral thumping in November for the Democrats: “Republicans have slightly increased their advantage over Democrats in the generic Congressional ballot, from 46-43 last month to 47-42 now.”

Chris Christie points out: “We are, I think, the failed experiment in America—the best example of a failed experiment in America—on taxes and bigger government. Over the last eight years, New Jersey increased taxes and fees 115 times.” He seems serious about waging a war on spending, bloated pensions, public unions and regulatory excess.

Rep. Pete King points to Obama’s Israel animus: “No American ally is more trusted or reliable than Israel. Throughout the darkest days of the Cold War, and now in the war against Islamic terrorism, Israel has stood with the United States every step of the way. Israel shares our democratic principles and always has the courage to do what has to be done. The value of this unique alliance has been shared by all our Presidents — Democrats and Republicans alike. This is why I strongly believe it has been so wrong for President Obama to continually escalate and publicize his differences with Israeli Prime Minister Benjamin Netanyahu. This is no way to treat such a long-time ally.”

A Senate Republican points out an Obama nominee’s non-judicial temperament: “A top Senate Republican hammered liberal law professor Goodwin Liu’s writings as ‘vicious, emotionally and racially charged’ at his confirmation hearing Friday – igniting the first real test of whether Republicans will be able to block the most controversial of President Barack Obama’s lower court judicial nominees. Sen. Jon Kyl (R-Ariz.) slammed Liu’s testimony against Samuel Alito during his confirmation hearings for the Supreme Court.” This same nominee “forgot” to submit over a hundred documents.

A new survey points to an uneven economy recovery: “U.S. consumer sentiment took a surprise negative turn in early April due to a persistently grim outlook on income and jobs, a private survey released on Friday showed. A slip in economic expectations to its lowest in a year likely stemmed from consumers hearing negative information on government programs and a perception that the recovery is too slow, according to Thomson Reuters/University of Michigan’s Surveys of Consumers. … The surveys’ overall index on consumer sentiments slipped to 69.5 in early April — the lowest in five months. This was below the 73.6 reading seen at the end of March and the 75.0 median forecast of analysts polled by Reuters.”

Ben Smith points to inconvenient facts for New York Democrats: “A few weeks before playing a central role in fraud charges against Goldman Sachs, hedge fund titan John Paulson invited colleagues to a fundraiser for Senator Chuck Schumer — ‘one of the few members of Congress that has consistently supported the hedge fund industry’ — according to a copy of the invitation… Schumer is credited by some with helping to kill a Democratic push to tax carried interest, which would have put a dent in the massive earnings of a small number of ultra-wealthy money managers. With Goldman, and perhaps Paulson, in the SEC’s sights, some of the taint may rub off on their allies — and both of New York’s senators are among them. Schumer’s junior colleague, Kirsten Gillibrand, is the single top recipient of contributions from Goldman Sachs employees.”

The Wall Street Journal editors point out there’s no meeting of the minds on the START deal: “Signed with some pomp last week in Prague, the pact with Russia makes modest reductions to the number of strategic warheads and delivery systems. Though those cuts are worth a close look, we’re much more concerned with the impact that new START will have on America’s ability to develop and deploy the best missile defenses available. Starting with the Reagan-era Strategic Defense Initiative, the Kremlin has sought to tie America’s hands on missile defense. The Kremlin says that this is precisely what it has negotiated with START. The Administration says it didn’t. They can’t both be right.”

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Did ObamaCare Help the Democrats?

ObamaCare is the law of the land (for now), the president is out selling it to a skeptical public, and the Democrats are still heading for an election wipeout. The supposed cure-all for the Democrats’ electoral woes — the passage of “historic” legislation that the country was going to learn to love — has proven to be anything but. Hotline reports:

Today, 4 of the 10 most vulnerable Senate seats are open seats held by Democrats, while just 2 are GOP-held open seats. At least 2 of those Dem seats (DE and ND) are leaning toward a GOP pickup. New polling suggests that Dems have a better shot at winning in OH than MO, but these polls simply reflect the current environment. Once the candidates and campaigns begin to engage, we may see those numbers start to bounce around a bit more. At this point, Democrats hold 8 of the top 10 most vulnerable seats, with the potential — should former HHS Sec. Tommy Thompson jump into the WI race or ex-state Sen. Dino Rossi challenge Sen. Patty Murray (D-WA) — for the GOP to expand the playing field even further. Our expectation at this point: a GOP pickup of 5-8 seats.

And the same factors that pointed to a wave election — antipathy toward an ultra-liberal agenda, a brewing populist uprising, Democrats’ ethics problems, a tepid economy, high unemployment, and the nagging enthusiasm gap between Democrats and Republicans — persist or have intensified. As The Hill notes: “Almost every Democratic strategist acknowledges the party will lose seats in Congress this fall. The question is whether the loss will be moderate or severe, or even enough to give Republicans control of the House.” So far, generic polling suggests the Democrats haven’t been helped at all by ObamaCare.

Just as many of us predicted, passage of ObamaCare did not end the health-care debate. The debate instead has continued to rage and spread to states as governors and attorneys general decide whether to sue to block its imposition and how to handle the crushing costs it will impose if the courts do not invalidate it. The discussion has now embroiled private industry, which is engaged in a fight with the Obami over write-downs. ObamaCare’s passage has continued to fuel the Tea Party movement, which is finding new respect among the mainstream media. And we can expect that with each sweetheart deal that is uncovered, and with news of continued premium increases, there will be another round of  recriminations, adding fuel to the anti-Democrat furor.

We won’t know if the Democrats would have been worse off had ObamaCare failed. But for now there’s little evidence that it’s helped them.

ObamaCare is the law of the land (for now), the president is out selling it to a skeptical public, and the Democrats are still heading for an election wipeout. The supposed cure-all for the Democrats’ electoral woes — the passage of “historic” legislation that the country was going to learn to love — has proven to be anything but. Hotline reports:

Today, 4 of the 10 most vulnerable Senate seats are open seats held by Democrats, while just 2 are GOP-held open seats. At least 2 of those Dem seats (DE and ND) are leaning toward a GOP pickup. New polling suggests that Dems have a better shot at winning in OH than MO, but these polls simply reflect the current environment. Once the candidates and campaigns begin to engage, we may see those numbers start to bounce around a bit more. At this point, Democrats hold 8 of the top 10 most vulnerable seats, with the potential — should former HHS Sec. Tommy Thompson jump into the WI race or ex-state Sen. Dino Rossi challenge Sen. Patty Murray (D-WA) — for the GOP to expand the playing field even further. Our expectation at this point: a GOP pickup of 5-8 seats.

And the same factors that pointed to a wave election — antipathy toward an ultra-liberal agenda, a brewing populist uprising, Democrats’ ethics problems, a tepid economy, high unemployment, and the nagging enthusiasm gap between Democrats and Republicans — persist or have intensified. As The Hill notes: “Almost every Democratic strategist acknowledges the party will lose seats in Congress this fall. The question is whether the loss will be moderate or severe, or even enough to give Republicans control of the House.” So far, generic polling suggests the Democrats haven’t been helped at all by ObamaCare.

Just as many of us predicted, passage of ObamaCare did not end the health-care debate. The debate instead has continued to rage and spread to states as governors and attorneys general decide whether to sue to block its imposition and how to handle the crushing costs it will impose if the courts do not invalidate it. The discussion has now embroiled private industry, which is engaged in a fight with the Obami over write-downs. ObamaCare’s passage has continued to fuel the Tea Party movement, which is finding new respect among the mainstream media. And we can expect that with each sweetheart deal that is uncovered, and with news of continued premium increases, there will be another round of  recriminations, adding fuel to the anti-Democrat furor.

We won’t know if the Democrats would have been worse off had ObamaCare failed. But for now there’s little evidence that it’s helped them.

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RE: RE: ObamaCare Hits Home

This report begins to tally up the immediate hit on American employers from ObamaCare:

In the wake of Washington’s health-care overhaul, some companies are taking big one-time charges for anticipated costs, fanning tension with the administration over the legislation’s impact on corporate America.

Three companies that were among vocal opponents of the legislation have warned they would see an immediate impact on their earnings as a result of the loss of deductions on tax-free subsidies they receive for providing retiree prescription-drug benefits.

On Thursday, Deere & Co. said it would take a $150 million one-time charge in the current quarter related to the loss of deductions. Earlier in the week, Caterillar Inc. reported a $100 million charge and AK Steel recorded a $31 million charge.

Beginning in 2006, companies have received a 28% federal subsidy, up to $1,330 per retiree, tax-free, to help pay for prescription-drug coverage. Until now, companies could deduct the subsidy from their taxes, essentially getting a second benefit from the money. Under the new law, companies will no longer be able to deduct the subsidy, but it remains tax-free.

Although the changes don’t go into effect until 2013, companies say they have to take the charge to earnings now, to reflect the loss of the future tax deductions. In all, the S&P 500 companies will take a combined hit of $4.5 billion to first-quarter earnings, estimates David Zion, an analyst with Credit Suisse. [emphasis added]

That is right — $5.4 billion from a single tax change, money that can’t be invested in new plants or used to hire new workers. The administration’s reaction? Commerce Secretary Gary Locke says, “It is simply not responsible to suggest that the new health-care law is bad for business.” These companies have a legal obligation to accurately assess earnings, so what would Locke have them do — conceal the hit and risk lawsuits from shareholders and prosecution by his colleagues at the SEC? It’s absurd to suggest that businesses that will suffer from the mandates, fines, and taxes imposed should essentially shut up about the adverse consequences of the legislation.

Robert Gibbs adds to the air of dismissiveness, saying, “Companies not only get the subsidy tax-free, but they then deduct the amount. Our bill simply closes the loophole.” Yes, by White House standards, raising taxes by $5.4B is no more than a loophole. If you have the sense that no one in the White House has much sympathy for or understands private industry, you are right. If they did, we would not now be facing a gargantuan tax hike — and more to follow with the expiration of the Bush tax cuts.

This report begins to tally up the immediate hit on American employers from ObamaCare:

In the wake of Washington’s health-care overhaul, some companies are taking big one-time charges for anticipated costs, fanning tension with the administration over the legislation’s impact on corporate America.

Three companies that were among vocal opponents of the legislation have warned they would see an immediate impact on their earnings as a result of the loss of deductions on tax-free subsidies they receive for providing retiree prescription-drug benefits.

On Thursday, Deere & Co. said it would take a $150 million one-time charge in the current quarter related to the loss of deductions. Earlier in the week, Caterillar Inc. reported a $100 million charge and AK Steel recorded a $31 million charge.

Beginning in 2006, companies have received a 28% federal subsidy, up to $1,330 per retiree, tax-free, to help pay for prescription-drug coverage. Until now, companies could deduct the subsidy from their taxes, essentially getting a second benefit from the money. Under the new law, companies will no longer be able to deduct the subsidy, but it remains tax-free.

Although the changes don’t go into effect until 2013, companies say they have to take the charge to earnings now, to reflect the loss of the future tax deductions. In all, the S&P 500 companies will take a combined hit of $4.5 billion to first-quarter earnings, estimates David Zion, an analyst with Credit Suisse. [emphasis added]

That is right — $5.4 billion from a single tax change, money that can’t be invested in new plants or used to hire new workers. The administration’s reaction? Commerce Secretary Gary Locke says, “It is simply not responsible to suggest that the new health-care law is bad for business.” These companies have a legal obligation to accurately assess earnings, so what would Locke have them do — conceal the hit and risk lawsuits from shareholders and prosecution by his colleagues at the SEC? It’s absurd to suggest that businesses that will suffer from the mandates, fines, and taxes imposed should essentially shut up about the adverse consequences of the legislation.

Robert Gibbs adds to the air of dismissiveness, saying, “Companies not only get the subsidy tax-free, but they then deduct the amount. Our bill simply closes the loophole.” Yes, by White House standards, raising taxes by $5.4B is no more than a loophole. If you have the sense that no one in the White House has much sympathy for or understands private industry, you are right. If they did, we would not now be facing a gargantuan tax hike — and more to follow with the expiration of the Bush tax cuts.

Read Less

A Crack in the College Cartel?

Say one thing for recessions: they force companies, governments, and institutions (not to mention individuals) to look for ways to be more efficient and to decrease costs. That’s why productivity always soars in a recession.

Today’s New York Times reports that people are increasingly fed up with the high costs and high-handed ways of American colleges. It’s about time. As the Times reports: “‘One of the really disturbing things about this, for those of us who work in higher education,’ said Patrick Callan, president of the National Center for Public Policy and Higher Education, ‘is the vote of no confidence we’re getting from the public. They think college is important, but they’re really losing trust in the management and leadership.’”

College tuition has risen far faster than inflation. In the 1960s, I paid $2,200 a year to attend a first-rate university. From the month I graduated to December 2009, there was an inflation of slightly over 550 percent. So tuition today, net of inflation, should be on the order of $12,500. It’s $37,005, almost three times higher. Why?

Well, high-prestige colleges have market power and can charge more. But even second- and third-tier institutions in terms of prestige have been able to jack up their tuition far beyond inflation because there is a cartel in operation. Entrance into the marketplace by new competitors is very restricted, and colleges and universities are not subject to antitrust laws, so they are free to conspire to set prices. In effect, they do. But all cartels require an enforcement mechanism, and in this case, it is the accrediting agencies that often prevent colleges from competing by means of price. They often require ever more elaborate plants and facilities, like a large library even if the institution is located in a city with a large, easily accessible municipal library. Unnecessary courses are often required, even if the student can demonstrate competence in the subject. Colleges often cannot fully use the new communications technologies that would greatly lower costs, and they often cannot employ great ideas like the wonderful college-level courses offered by, for example, The Teaching Company.

If colleges were able to compete freely in terms of prices — still better, if they were required to compete, like profit-seeking corporations — those prices would come down wondrously. In fact, today’s New York Times has a perfect example of that near the article on the public’s growing resistance to college costs. It’s a full-page advertisement by Fidelity, the huge brokerage and mutual fund company, offering stock trades for $7.95 each and bragging that that’s cheaper than the prices charged by its largest competitors.

From the first beginnings of what would become the New York Stock Exchange, in 1792, members were required to charge the same fees, no competing by means of price. In the 1970s, trading 100 shares could easily cost you $70.00. Trading 1,000 shares cost 10 times as much, even though the cost to the firm of executing the trade was the same. But May 1, 1975, (May Day in Wall Street history) was the day the SEC required the NYSE to stop fixing prices. They immediately declined drastically and, despite inflation, have been declining ever since. That is by far the most important reason behind the huge increase in stock exchange volume in the last 35 years and the ever-higher percentage of American families owning securities in their own right. The brokers had to undergo an agonizing restructuring, and many did not survive. But I notice few tears being shed for Wall Street these days.

It will take a lot of pressure to kill the higher-education cartel, but it will do a lot of good if the effort succeeds.

Say one thing for recessions: they force companies, governments, and institutions (not to mention individuals) to look for ways to be more efficient and to decrease costs. That’s why productivity always soars in a recession.

Today’s New York Times reports that people are increasingly fed up with the high costs and high-handed ways of American colleges. It’s about time. As the Times reports: “‘One of the really disturbing things about this, for those of us who work in higher education,’ said Patrick Callan, president of the National Center for Public Policy and Higher Education, ‘is the vote of no confidence we’re getting from the public. They think college is important, but they’re really losing trust in the management and leadership.’”

College tuition has risen far faster than inflation. In the 1960s, I paid $2,200 a year to attend a first-rate university. From the month I graduated to December 2009, there was an inflation of slightly over 550 percent. So tuition today, net of inflation, should be on the order of $12,500. It’s $37,005, almost three times higher. Why?

Well, high-prestige colleges have market power and can charge more. But even second- and third-tier institutions in terms of prestige have been able to jack up their tuition far beyond inflation because there is a cartel in operation. Entrance into the marketplace by new competitors is very restricted, and colleges and universities are not subject to antitrust laws, so they are free to conspire to set prices. In effect, they do. But all cartels require an enforcement mechanism, and in this case, it is the accrediting agencies that often prevent colleges from competing by means of price. They often require ever more elaborate plants and facilities, like a large library even if the institution is located in a city with a large, easily accessible municipal library. Unnecessary courses are often required, even if the student can demonstrate competence in the subject. Colleges often cannot fully use the new communications technologies that would greatly lower costs, and they often cannot employ great ideas like the wonderful college-level courses offered by, for example, The Teaching Company.

If colleges were able to compete freely in terms of prices — still better, if they were required to compete, like profit-seeking corporations — those prices would come down wondrously. In fact, today’s New York Times has a perfect example of that near the article on the public’s growing resistance to college costs. It’s a full-page advertisement by Fidelity, the huge brokerage and mutual fund company, offering stock trades for $7.95 each and bragging that that’s cheaper than the prices charged by its largest competitors.

From the first beginnings of what would become the New York Stock Exchange, in 1792, members were required to charge the same fees, no competing by means of price. In the 1970s, trading 100 shares could easily cost you $70.00. Trading 1,000 shares cost 10 times as much, even though the cost to the firm of executing the trade was the same. But May 1, 1975, (May Day in Wall Street history) was the day the SEC required the NYSE to stop fixing prices. They immediately declined drastically and, despite inflation, have been declining ever since. That is by far the most important reason behind the huge increase in stock exchange volume in the last 35 years and the ever-higher percentage of American families owning securities in their own right. The brokers had to undergo an agonizing restructuring, and many did not survive. But I notice few tears being shed for Wall Street these days.

It will take a lot of pressure to kill the higher-education cartel, but it will do a lot of good if the effort succeeds.

Read Less

The Cornhusker Highjack and the Constitution

Senator Ben Nelson of Nebraska was handsomely bribed to vote for cloture on the health-care bill. While most states will have to pick up much of the tab for new enrollees in Medicaid beginning in 2017, Nebraska will not. Instead, the federal government will pay for that state’s increased costs.

Such bribery has a long history in Congress, but so far as I know (and I’d be delighted to hear of other, earlier instances), bribes always came in the form of highways, post offices, bridges to nowhere, and other infrastructure, or in offers of higher office for the person being bribed. They were not in the form of a special deal allowing a particular, not impoverished state to have a lower share of costs in an ongoing federal program. There are, of course, plenty of the old-fashioned sorts of bribes in this bill. Connecticut will get a new hospital at federal expense, for instance.

But is it constitutional for the federal government to give some states a better deal on a national program than it does other states? It is not obviously unconstitutional, as, say, having a lower federal income tax rate for Nebraska would be, since Art. I, Sec. 8, requires that “all Duties, Imposts and Excises shall be uniform throughout the United States.” However, one could argue that Nebraskans will be getting what amounts to a rebate on federal taxes through the back door of lower state taxes.

Another constitutional provision, in Art. IV, Sec. 2, provides that the “Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in Several States.” But this clause has always been interpreted to apply to state action vis-à-vis citizens of other states, forbidding them to discriminate against nonresidents, such as forbidding nonresidents to be admitted to the state bar. The privileges and immunities clause in the Fourteenth Amendment applies specifically to states.

Yet another provision, in Art. I, Sec. 9, requires that “No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another.” The health-care bill’s constitutional underpinning is the commerce clause of Art. I, Sec. 8, giving Congress the power to “regulate Commerce with foreign Nations and among the several States.” Narrowly interpreted, the ports clause is simply a limitation on that power, forbidding the federal government from, say, requiring that all imports of steel flow through the port of Charleston. More broadly interpreted, it can be construed to forbid the federal government from using its powers under the commerce clause to discriminate among the states.

How would the Supreme Court rule here? Well, first one has to ask who would have standing to sue. Individuals almost certainly would not under the first two arguments above, as an individual’s interest is too small. But states might well have standing to sue with regard to the ports clause. How a state so suing would fare is anyone’s guess. A strict constructionist would throw the case out of court. Nebraska, after all, doesn’t have any ports in the 18th-century sense (although it does have a navy). But it is not too great a stretch to say that the bribe that Nelson received violates the clear spirit of the ports clause — that powers under the commerce clause must be applied equally in all states. It was just this type of reasoning that led the Supreme Court to rule in the 1920s that tapping a telephone line required a search warrant under the Fourth Amendment, which, of course, nowhere mentions telephones.

Senator Ben Nelson of Nebraska was handsomely bribed to vote for cloture on the health-care bill. While most states will have to pick up much of the tab for new enrollees in Medicaid beginning in 2017, Nebraska will not. Instead, the federal government will pay for that state’s increased costs.

Such bribery has a long history in Congress, but so far as I know (and I’d be delighted to hear of other, earlier instances), bribes always came in the form of highways, post offices, bridges to nowhere, and other infrastructure, or in offers of higher office for the person being bribed. They were not in the form of a special deal allowing a particular, not impoverished state to have a lower share of costs in an ongoing federal program. There are, of course, plenty of the old-fashioned sorts of bribes in this bill. Connecticut will get a new hospital at federal expense, for instance.

But is it constitutional for the federal government to give some states a better deal on a national program than it does other states? It is not obviously unconstitutional, as, say, having a lower federal income tax rate for Nebraska would be, since Art. I, Sec. 8, requires that “all Duties, Imposts and Excises shall be uniform throughout the United States.” However, one could argue that Nebraskans will be getting what amounts to a rebate on federal taxes through the back door of lower state taxes.

Another constitutional provision, in Art. IV, Sec. 2, provides that the “Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in Several States.” But this clause has always been interpreted to apply to state action vis-à-vis citizens of other states, forbidding them to discriminate against nonresidents, such as forbidding nonresidents to be admitted to the state bar. The privileges and immunities clause in the Fourteenth Amendment applies specifically to states.

Yet another provision, in Art. I, Sec. 9, requires that “No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another.” The health-care bill’s constitutional underpinning is the commerce clause of Art. I, Sec. 8, giving Congress the power to “regulate Commerce with foreign Nations and among the several States.” Narrowly interpreted, the ports clause is simply a limitation on that power, forbidding the federal government from, say, requiring that all imports of steel flow through the port of Charleston. More broadly interpreted, it can be construed to forbid the federal government from using its powers under the commerce clause to discriminate among the states.

How would the Supreme Court rule here? Well, first one has to ask who would have standing to sue. Individuals almost certainly would not under the first two arguments above, as an individual’s interest is too small. But states might well have standing to sue with regard to the ports clause. How a state so suing would fare is anyone’s guess. A strict constructionist would throw the case out of court. Nebraska, after all, doesn’t have any ports in the 18th-century sense (although it does have a navy). But it is not too great a stretch to say that the bribe that Nelson received violates the clear spirit of the ports clause — that powers under the commerce clause must be applied equally in all states. It was just this type of reasoning that led the Supreme Court to rule in the 1920s that tapping a telephone line required a search warrant under the Fourth Amendment, which, of course, nowhere mentions telephones.

Read Less




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