All Blog Posts from Coop's Corner

With his walrus-like smile and portly gait, Frank Luntz resembles that genial out-of-town uncle who's a family favorite with the kids and the dogs over Thanksgiving (which very well may be the case, by the way.) But when it comes to his day job, advising clients on the political use of language, Luntz is a stone cold killer.

Starting with his polling work for the GOP's Contract with America,, Luntz has been giving Democrats fits for years. Even more so since the Democrats regained the White House following the 2008 elections. You can see his influence in the language which dominated the health care reform debate. His influence is also apparent in the impasse over financial regulation reform.

Video: Frank Luntz on Voter Anger Continue »

A multi-billion dollar hair cut.

Goldman Sachs lost nearly 13% of its market valuation Friday after the Securities and Exchange Commission filed a fraud complaint against the most powerful and best-managed company on Wall Street. Now, the question is whether it's also one of  the most corrupt.

It all depends on whether the government can prove its blockbuster charges. The complaint essentially accuses Goldman of misleading investors in 2007, when its salesmen marketed a new investment product but allegedly failed to disclose that a hedge fund with an interest in shorting was involved in selecting the contents. If that's not a big no-no, it qualifies as bad form.. (Snooze alert: At this point, you can add "synthetic collateralized debt obligation" to the glossary of terms that nobody has the foggiest idea about.)

In its two-page rebuttal, Goldman rejected all of the allegations laid out in the SEC complaint.

For the Obama administration, which wants Congress to tighten curbs on big banks, the lawsuit couldn't have come at a better time. The public's already disgusted with Wall Street and the SEC charges only deepen the perception that the plutocrats have rigged the game in their favor. At the same time, the filing creates a delicate political moment for the GOP. Senate Republicans, who have pledged to oppose the so-called Dodd bill, don't want to be seen as carrying water for the financial industry, Not in this climate. Yet, hey don't want to hand the White House another big legislative victory, especially on the heels of losing the legislative battle over health care reform.

But let's return to the political context for another day. The allegation that Goldman was playing a crooked game is a huge story. Here's Robert Khuzami, Director of the SEC's Division of Enforcement:

"Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party," he said.

The SEC claims that Goldman duped investors into believing that the CDOs were a good money-making proposition and that the people managing them also believed that.  In other words, as Reuters' Felix Salmon put it, the venture "was being structured by the biggest short-seller in the entire sub prime market."

The rest of the details are in the report and they make for a fascinating read. But there's a bigger context to the charges. This is one of those seminal points in American history that they teach you about. If found guilty, Goldman will lose more than the fine it will pay. Writing in Rolling Stone a few months ago, Matt Taibbi famously described Goldman as a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.

Goldman and the defenders of the financial establishment bristled at that description. They said it was an exaggeration and entirely unfair. Up to a point. The 4th Estate has a propensity for over-simplifying complicated situations - not to mention taking the occasional cheap shot. But what if the vampire squid portrayal turns out to be true? And a crooked vampire squid, at that. Plus, if one domino falls, you know that others surely will follow. If Goldman was conning investors how many other banks were up to the same thing? We have to reserve judgment until the facts are all in. This much, though is clear: Nothing less than the honor and integrity of the U.S. financial system is going to be at stake.

Not all people who identify themselves as Tea Partiers are ethnocentric wingnuts who get their information about the world spoon-fed to them by televised talking heads. But apologists for this movement are going to have a hard time explaining away the fact that a sizable minority qualify for that very description.

The latest CBS News/New York Times poll presents a picture of an aging cohort of pessimistic white folks, rattled by economic and cultural changes which have rocked their increasingly Twitter-fied, multicultural and multi-polar world (one led by a charismatic black guy who can swoosh 3 pointers with the best of them.) And their unhappiness with the verdict of the 2008 presidential election has led them down the rabbit hole.

More from the Poll:

Tea Party Supporters: Who They Are and What They Believe
Most Tea Partiers Believe Too Much Made of Problems Facing Blacks
Tea Partiers View Palin, Beck and Bush Favorably
Tea Party Activists Small but Passionate Group
"Birther" Myth Persists Among Tea Partiers, All Americans
Most Tea Party Supporters Say Their Taxes Are Fair

Read the Complete Poll on Who They Are (PDF)
Read the Complete Poll on What They Believe (PDF)

Judge the poll data for yourself but for me the clincher was the birther issue. An astounding thirty percent of the people who identified themselves as tea partiers still believe that President Obama was born in another country, while another 29% still don't know. Don't know? I'm not sure which is worse: being paranoid delusional or potentially paranoid delusional but too lazy to find out the facts.

Everything else flows from this bogus controversy. It so happens that I have it on good authority that the birthers were dropped off on Planet Earth from an asteroid penal colony near the farthest rung of Saturn. Prove it, you say? Au contraire; first they prove they're not from outer space and then perhaps I'll reassess my suspicion. Yes, that's how insane it is.

Some other gems:

• 75% don't believe that the president shares the values of most Americans. Fascinating. I'd pay money to sit down with these folks to learn more about their belief system. They must think of Obama as something of a cross between Eldridge Cleaver and a Maoist Mao-Mao. As for the over-achieving, doting wife and those ridiculously cute kids? Obvious stage props to divert attention from the revolutionary hordes massing on the other side of the Rio Grande.
• 88% say the economic stimulus has had no impact on the economy. Two possibilities here. Either they aren't paying attention or they the tea partiers are so ideologically blinkered that it really doesn't matter what the facts are. By any measure except one - jobs - the economy is demonstrably stronger than it was when George W. Bush left the White House. We can argue about economic theory but data remain immune from ideology and they are beyond contestation.
• 92% say that Obama is moving the country toward socialism. I'll wager two means of production and one Saul Alinsky union card that most of these folks never read Das Kapital and wouldn't know a Hegelian dialectic from the man in the moon. Obama, a bourgeois intellectual who has surrounded himself with mainstays of corporate capitalism, has a plan to take us to the socialist paradise? Yeah, and I suppose the New York Mets are a lock to win the World Series this year.
• 54% identify as belonging to the GOP while 41% claim to be Independents. Just 5% are Democrats. This isn't surprising. Nor is it any shock to learn that 57% have a favorable view of George W. Bush. It apparently did not register that the Great Recession began under Dubya's watch (as did the haphazard Wall Street bailout.)
• Asked what they liked least about Obama, 19% simply don't like him. Another 11% say he is turning the U.S. more toward socialism, and 10% mentioned health care reforms. (9% said he was dishonest.) I'm not sure how far to extrapolate but 89% of these folks are white and a majority feel that too much has been made of the problems facing blacks.

At least they're being honest.

Sometimes it's hard to wrap your head around this economics thing. All those numbers and statistics and theories - supply side this, yield curve that - and don't get me started on how to factor in present value - it's enough to put a major hurt on the average person's head.

So I suppose we should cut Fox commentator Sarah Palin some measure of slack for misrepresenting the workings of the United States tax system. Speaking at a Boston rally sponsored by the "Tea Party Express," Palin railed against the ultimate cost of the administration's various programs.

"There's no way to pay for any of this except to see your taxes rising and the states or the Fed will have to raise taxes, taking us further into debt," she said. For the record: When it comes to taxes, Ben Bernanke can't do "diddly" (to borrow the colorful description popularized recently by Mississippi Gov. Haley Barbour. It's possible that she meant to say "Feds," though given how the Fed and its chairman have assumed bugbear proportions in the conspiracy narrative popular with the tea party crowd, I doubt it.

It was only happenstance but Palin was trotting out her end-of-the-world scenario just as the Dow Jones was about to pierce the 11,100 mark - and this, just days after the index inched past 11K. Truth be told, the market rally appears long in the tooth, though I've been waiting for the pullback which never comes. Regardless, the stock market often - though not always - sniffs out economic recoveries and recessions months before the rest of the world catches on. Stock prices follow earnings and earnings are improving. Another encouraging harbinger: The latest Continue »

As one speaker followed the next to the podium, the platitudes came fast and furious. Even by C-SPAN standards, this had all the makings of a snooze-fest. Then Sarah Palin took her turn at the Southern Republican Leadership Conference and it was lights out.

I'll leave it to the sociologists among you to figure out why she's catnip - both to the right and the left - but Chris Cillizza has a provocative post today dissecting Palin's use of sarcasm as a rhetorical device and it's well worth a read.

What Palin's speech -- and the reception it enjoyed in the room -- was that in a certain segment of the Republican base she is absolutely revered. Her sarcasm played deftly to the outrage/anger that many people at SRLC clearly felt and the reviews in the room were over-the-top supportive of Palin. But, the sarcasm-laden speech also seemed to typify the fact that Palin is more comfortable playing to those who already love her rather than to reaching out to those who take a more skeptical stance."

Here's the disconnect between Palin's public persona and what everybody says she wants from political life. Cillizza correctly notes that sarcasm rarely plays well in American politics, especially at a period in U.S. history where independent voters often swing elections. At this point, though, Palin seems more inclined to take the Ann Coulter-Laura Ingraham route to fame and influence than to try and win over middle-of-the-road Democrats and Republicans. (She reads her poll numbers and they are not good, touching historic lows, even among Republicans.)

Also, check out Marc Ambinder's piece which suggests that class resentment and a desire to pay back liberal interest groups for ridiculing her starting back in 2008:

Palin believes her vice-presidential campaign, like her conservative agenda generally, was screwed over by the Beltway crowd. She also knows that such rhetoric touches her audience's anti-elite trigger points. But Palin's sarcasm often joins up with a less desultory sentiment: personal victimhood. She was wronged, and her post-election political rebirth on the public speaking circuit, with all the adulation of the crowds that's come with it, seems to be, above all, about getting revenge.

That wouldn't be altogether shocking, though settling scores is one thing;  winning elections is something else. For now, it seems that Palin wants to pursue the former while also making a few shekels on the side.

(Here's a spliced YouTube clip of some of her zingers from the conference:)

If the math is accurate, then this blockbuster story in the Wall Street Journal may very well impact the national political debate when the November elections roll around..

The piece reports that the projected cost of the government bailouts "is shrinking to just a fraction of previous estimates." Maybe the government is being overoptimistic but the Treasury Department now expects the final tab for its sundry bailouts to come in at around $89 billion. That's hardly chump change, but as the Journal notes, that would still be less as a percentage of GDP than the cost of the savings-and-loan rescue in the 1990s.

"Just a year ago, the Congressional Budget Office and Office of Management and Budget estimated that the overall bailout would cost more than $250 billion. Last month, though, Treasury Secretary Timothy Geithner said the rescues will amount to "less than 1%" of gross domestic product." Not that many critics are paying much attention. For months, Geithner has been a whipping boy for opponents of the White House's rescue plans.

The wildcard here is the health of a rebounding economy. If growth stalls and the housing market again declines, all bets are off. (That's a scenario where Republicans likely win big at the polls during the midterm elections.) But if the financial landscape continues to brighten and the costs of the bailout turn out to be manageable, the White House will earn credit for its management of the crisis. The bailouts fed populist rage and spurred the rise of the tea parties. Still, the Journal recounts that of the $245 billion that Uncle Sam invested in various U.S. banks, the Treasury has already received $169 billion back and now estimates making a profit of $8 billion. By year end, Citigroup and General Motors may also be off the government lifeline.

Even AIG, the mother of all financial basket cases, is looking less like an endless financial sinkhole. The New York Fed, which is about to get repaid $51 billion, also expects to pick up another $32 billion from AIG securities. A year ago, that scenario would have sounded like a pipe dream.

Somebody finally got the memo: Dow 11,000 notwithstanding, things will have to change. Won't they?

Against a backdrop of ballooning deficits, soaring entitlement costs and an ageing population, the new conventional wisdom is that hard choices are around the corner. Of course, that doesn't mean anything's going to happen but there's a new meme in the neighborhood. In the last week, three influential voices in economic matters have sounded off on why big course corrections are due sooner, rather than later.

Otherwise, Greece, here we come.

Federal Reserve Chairman Ben Bernanke said that it's going to come down to a question of cutting entitlements or jacking up taxes. Here's the money quote:

The arithmetic is, unfortunately, quite clear. To avoid large and unsustainable budget deficits, the nation will ultimately have to choose among higher taxes, modifications to entitlement programs such as Social Security and Medicare, less spending on everything else from education to defense, or some combination of the above. These choices are difficult, and it always seems easier to put them off--until the day they cannot be put off any more. But unless we as a nation demonstrate a strong commitment to fiscal responsibility, in the longer run we will have neither financial stability nor healthy economic growth.

Former Fed Chairman Paul Volcker used an address to the New York Historical Society to float the possibility of a value added tax (If there's a need to raise taxes, he said, then we should raise taxes.)

Congressional Budget Office head Doug Elmendorf offered the gloomiest assessment, concluding that the nation's fiscal path is simply "unsustainable."

If Messrs. Bernanke, Volcker and Elmendorf intended to seed a debate in advance of an action by the President and Congress, call this one Mission Accomplished. (Though they got an earful for their troubles. Here's a sampling:)

• The Heritage Foundation shot down Volcker's trial balloon as "the liberal solution for unsustainable deficits that threaten the stability and very future of our economy."

• Larry Kudlow, who worked for Volker more than three decades ago, slammed his former boss's idea as nuts. " The last thing we need right now is more tax hikes. There are a dozen new tax hikes already squirreled away inside President Obama's health-care law. Medicare payroll taxes are going to be imposed on capital gains and dividends. Investor taxes are going way up when the Bush tax cuts expire at the end of this year. And to top it all off, half the states in the country are raising taxes."

• National Review's Daniel Foster titled his post "Doug Elmendorf's Brain in a Vat."

The federal budget deficit in the first half of fiscal 2010 was $714 billion. That's about $67 billion less than the year-earlier period, but that's a reflection of a sharp drop in outlays for the Troubled Asset Relief Program as well as a fall in spending for federal deposit insurance. That was the good news. Here's the not-so-good news on spending:

• Unemployment benefits: Up $39 billion, or 83 percent
  

• Medicaid: Up $17 billion, or 15 percent
  

• Social Security: Up $23 billion, or 7 percent
  

• Medicare: $12 billion, or 6 percent
  

• Net interest on the public debt: Up $26 billion, or 31 percent

If the economy's growth accelerates, those numbers become more manageable. In a discussion of Greece's predicament, Paul Krugman notes that the U.S. ran up a federal debt equal to 122 percent of gross domestic product. "Yet investors were relaxed, and rightly so: Over the next decade the ratio of U.S. debt to G.D.P. was cut nearly in half, easing any concerns people might have had about our ability to pay what we owed. And debt as a percentage of G.D.P. continued to fall in the decades that followed, hitting a low of 33 percent in 1981."

But what if the economy doesn't move into 5th gear any time soon? What if we're stuck in 2nd for an uncomfortably extended period? President Obama has appointed a Continue »

Let me stipulate from the start that month-to-month temperature readings are not very useful. They offer one data point among many, and it's the job of scientists to sift through the accumulated facts and, without passion, arrive at a reasonable conclusion based on the evidence.

But we live in the real world, where political charlatans and radio and cable television blowhards often don't let facts interfere with a good yarn - especially if it translates into votes or higher ratings. I mention this because it was only a couple of months ago that global warming skeptics seized upon February's heavy snowstorms in Washington D.C. to declare point, set, match.

"It's going to keep snowing in DC until Al Gore cries "uncle," South Carolina Senator Jim DeMint. Virginia's Republican Party used the same snowstorm to compile a mocking Continue »

So much for the naive assumption that our political class had agreed on the general narrative surrounding the bloody mid-19th century insurrection called the American Civil War.

In declaring that April will be Confederate History Month, Virginia Governor Robert McDonnell rekindled a dormant controversy about the legacy of the civil war and its proper historical setting. But this was less a mad dash, a la Pickett's Charge than a calculated play to shore up conservative support in a state where the memory of the Confederacy is honored.

The reaction to McDonnell's proclamation predictably split along the left-right axis. Writing in The Atlantic, Ta-Nehisi Coates titled his post "Proud of Being Ignorant." (Coates wasn't talking about himself. FireDogLake played up the role of the Sons of Confederate Veterans in convincing McDonnell to sign the declaration. And Alan Colmes said the entire affair "seems less like a jovial visit to reruns of "The Dukes of Hazard" and more like a true endorsement and celebration of the Confederacy

A couple of items in the proclamation are worthy of attention:

"WHEREAS, April is the month in which the people of Virginia joined the Confederate States of America in a four year war between the states for independence that concluded at Appomattox Courthouse;"

Was it really a "war between the states for independence?" Somewhere, I remember a dispute over slavery - as well as Abe Lincoln being keen to prevent secessionists from destroying the Union. In rearranging the facts, McDonnell has turned the Civil War into a southern struggle for political liberty. Some will make that argument, to be sure. But it's a revision of the historical record.

"WHEREAS, this defining chapter in Virginia's history should not be forgotten, but instead should be studied, understood and remembered by all Virginians, both in the context of the time in which it took place, but also in the context of the time in which we live, and this study and remembrance takes on particular importance as the Commonwealth prepares to welcome the nation and the world to visit Virginia for the Sesquicentennial Anniversary of the Civil War, a four-year period in which the exploration of our history can benefit all;"

That's a very carefully-worded phrase. Not to turn this into something along the lines of biblical exegesis but it McDonnell's bullet point leaves a lot to interpretation. In particular, the suggestion that "this defining chapter in Virginia's history" should be recalled "in the context of the time in took place" (as well as the present) speaks volumes. Without making too loud a fuss, it defines McDonnell as a relativist willing to take a more sympathetic view of the south's decision to break away from the U.S. A. ("You can't condemn the Confederacy because the rebels inhabited a different time and place. Etc.")

There's obviously an argument to be made for that interpretation but the bullet points of a proclamation don't even begin to make the case. This is like Twitter; it's the start of a conversation, not the end point. Yet in very few words, McDonnell sent a feel-good message to the state's conservative base. And what about the blacks? Well, what about them? The Washington Post quotes McDonnell saying that he left out a reference to slavery because "there were any number of aspects to that conflict between the states. Obviously, it involved slavery. It involved other issues. But I focused on the ones I thought were most significant for Virginia." He didn't need to elaborate. The message was sent.

It's noteworthy that McDonnell's predecessor, James S. Gilmore III, a Republican, did include the anti-slavery words in the text, while Govs. Mark Warner and Tim Kaine declined to issue the proclamations altogether. But McDonnell, eager not to get upstaged by state Attorney General Ken Cuccinelli II, turned to a playbook that other southern white politicians have used to their political advantage over the decades.

My prediction: It won't be long before the specifics get lost in another mind-numbing debate over states rights, the role of the federal government and race.

UPDATE Late this afternoon, McDonnell issued a Continue »

Maybe the planets are out of alignment, or someone spiked the water supply. But how to explain a very strange sequence of events over the last two days? First, a conservative economist publicly scolded his ideological comrades for trashing the Obama economy. Then a right-wing United States Senator defended Republican bete noir Nancy Pelosi at a meeting with his (decidedly right wing) constituents. And, of course, the proverbial cherry on the sundae came when Butler defeated Duke for the NCAA crown. (OK, that one was wishful thinking, but dreams die hard.)

In normal times, this wouldn't merit more than casual comment. But these are decidedly not normal times. After a bruising fight over health care reform legislation, left and right in this country are so polarized that they are more likely to eye each other as the detested enemy than as members of a loyal political opposition.

So when Larry Kudlow, Mr. Free Market Capitalism himself, warns that the right's drumbeat of dismissal of positive economic data has put "conservative credibility" on the line, it's worthy of attention.

I'm watching many of my friends on certain cable stations attempt to trash the March employment numbers released last Friday. Don't do it, folks. The numbers were solid. In fact, while everyone keeps saying that small businesses are getting killed from taxes and regulations out of Washington, the reality is that the Labor Department's household survey has produced 1.1 million new jobs in the first quarter of 2010, or 371,000 per month. If that continues, the unemployment rate will be dropping significantly.

For comparison's sake, read this blog post the Republican National Committee put up on its Web site following Friday's employment numbers. Under the heading "Unacceptable," the blog paints the White House's jobs policy as feckless and generally paints a picture of an economy in crisis. That may have resonated more loudly in April 2009 but a year later, the data suggest a different outlook - and that's where Kudlow believes his ideological comrades are getting it wrong. Kudlow has hardly morphed into a Keynesian. For instance, he still frets about the potential impact of tax and regulatory policy pursued by the Obama administration. But those are future worries. More immediately, he says, there's an upbeat story to tell:

The current reality is that a strong rebound in corporate profits (the greatest and truest stimulus of all), ultra-easy money from the Fed, and some very small stimuli from government spending are all working to generate a cyclical recovery in a basically free-market economy that is a lot more resilient than capitalist critics would have us believe. So conservatives should not lose their cool and blow their credibility over a cyclical rebound that is backed by the statistics.

That was just the warm-up act for this stunner from Oklahoma Senator Tom Coburn, who defended Pelosi as "a nice person" and went on to lecture the crowd not to drink the kool-aid served up by cable television - in particular, Fox News.

"Come on now. [Pelosi] is a nice. How many of y'all have met her? She is a nice person. She's a nice person. You know, let me give you a little lesson here. I hope you will listen to me. Just because somebody disagrees with you doesn't mean that they're not a good person. And I want to tell ya, I've been in the Senate for five years and I've taken a lot of that because I've been on the small side, both in the Republican Party and the Democrat Party. Just because I don't agree with them, it doesn't mean I'm bad. It means I have a legitimate point of view that's different than theirs. And what we have to have is make sure we have a debate in this country so that you can see what's going on and make the determination yourself. So, don't catch yourself being biased by Fox News that somebody's no good. The people in Washington are good. They just don't know what they don't know."

So far, no response from Fox. The network doesn't have a history of turning the other cheek so I assume that one of their talking heads is going to have something to say about the affair before too long. (In the meantime, you can find conservative reaction from Riehl World View, National Review and Weekly Standard as well as the full gamut of opinion to Coburn's call for civility.

None of this suggests that Coburn is about to turn into the liberals' favorite conservative (the position has remained open since former title holder John McCain abdicated in time for his 2008 presidential run.) But if a step back from the brink is a harbinger of a different tone to the D.C. conversation, then more power to him.