Will China Finance Obama's Infrastructure Jolt?

I am trying to be objective about president elect Obama's various "infrastructure jolt" proposals. David Gergen, who I have my peronsal doubts about as any great intellect, informs me Obama has appointed a team of economic advisors beyond brilliant.

Yesterday, Obama said he was going to go through the government's budget line by line and eliminate wasteful programs and spending. That would be wonderful and, of course, we have heard this before.

Our economic situation is so dire it places a lot of wind at Obama's back as did 9/11for GW. Thus, Obama is in a perfect position to strike fast and hard. The longer he is in office the normal honeymoon period begins to fray and his ability to bring about change erodes.

What continues to concern me is the enormity of the funds already being spent and about to be spent by government and the aftermath problems that will eventually ensue. We are in a deflationary environment (even art and antique cars prices are falling) but curing our problem with massive bail outs will eventually create significant inflation. Money chases production and elevates prices when the amount of money exceeds what is produced. No doubt some of these excess funds will find their way back into the stock market.

Another concern is that Obama's goal is to make Americans spend, go into the stores and do what got them into the mess in the first place. Spending two trillion dollars to jump start the economy works out to about $7/capita. What we need to become are savers not spenders. We need to restore confidence in the value of our currency - the value of a Roman coin is in its antiquity. Debase a nation's currency and you ultimately debase that society.

Lastly, it appears Obama either said whatever he said to get elected and will abandon his rhetoric to govern or is so circumscribed by our economic woes he cannot be the president he intended by bringing about all that undefined change he promised.
In the former case that would be nothing new because politicians are not above saying one thing and doing something else. In the latter, however, he could run into a tremendous amount of resistance from within his own party and among those who supported him and placed their faith in his every word.

Killing government programs means slaying entrenched oxen and that means goring some politician's pet project. Nixon tried to eliminate a WW 2 eyesore that obscured his view of The Mall when he looked out the window from the Oval Office. I forget whether Nixon accomplished this goal before he resigned but Gore Vidal in "Nixon Agnosites" inidcated he had not at the time Vidal's book was published, if memory serves me correctly.

Bureaucracy outlives all presidents who Constitutionally serve only 8 years. Bureaucrats are expert at outwaiting presidents and they have job security.

For sure desparate times provide more grease for desparate actions so Obama has a relatively free hand and a Congress that should be his captive audience but many newly elected Democrats are conservative and could be vulnerable to a very far left agenda of tax and spend and then what happens if all this taxing and spending does not work? Also what happens if new acts of terrorism and/or the Iraq and Afghanistan Wars do not co-operate? Then there is the intractable issue of Iran's nuclear goal and Russia' desire to throw their energy resource weight around.

Finally, and most ironically, China holds most of the the liquid chips and their actions will go a long way towards determining Obama's flexibility. Why? Because China is the nation that most likely can and will fund the purchase of our new debt with their excess dollars. Consequently, we will be very indebted to China and a few Middle East Sheikdoms before Obama's "infrastructure jolt" plays itself out and those theoretical 2 1/2 million people are employed. External nations who are our natural antagonists will become our largest creditors and that could go a long way towards shaping Obama's future policy responses.

The next year will be quite interesting - our entire nation's future will be because our destiny is less and less in our own hands. Getting and spending we have laid waste our power. Leading from weakness is never encouraging. (See 1 below.)

Iran reaches critical stage with respect to operating centrifuges. (See 2 below.)

With Government and politicians in the driver's seat no wonder Detroit is a car wreck. Better to be seen asking questions than listening for the answers because the latter could prove embarassing. (See 3 below.)

Stealing an election is frankly Franken. Liberal money is also pouring into Georgia to defeat Chambliss. (See 4 below.)

Projecting forward, should the war in Afgansitan heat up, as is likely, because reports suggest al Qaeada has now focused its insurgency effort in both Pakistan and Afghanistan, the question is whether the press and media will go back to reporting daily casualties now that Obama is president? In less than two months every problem will become Obama's as was the case when GW took over from Clinton during a mild recession etc. It will be interesting to see how the media and press treat Obama since he is one of theirs. I still miantain should Obama not succeed they will turn on him in order to distance themselves from their favored choice. The press have been known to eat their own so as to avoid blame. After all they have their reputation for objectivity to mainatin.

Leaving town Friday so no more memos for the rest of the week. After all that turkey you are due a reprieve.

Have a Great and Safe Thanksgiving!

Dick


1) Buyer's Remorse on the Left
By Janice Shaw Crouse

One after another, we are learning the names of the future Obama Administration. Behold, they are not new faces, nor are they the change agents that Obama's campaign rhetoric promised. Instead, we are seeing Clinton retreads and a surprising move toward the political center. Rather than the far left team of new faces and new politics that the President-elect's supporters dreamed about when they cast their ballots for the "change" they could believe in, we are seeing familiar faces and experienced pols. More than a few Obama fans are experiencing buyer's remorse as they discover that "The One" seems to be abandoning them and their policies.


When confronted with the far left's disappointment over the first appointments to be announced, one of the Transition team members responded, "An Obama White House will be focused on meeting the next challenge, not winning the next election."


Well, that response does not pass the laugh test! Or perhaps the correct translation is, "We're so sure we'll win the next election, we don't even have to take that into consideration."


Clearly, Obama intends to be more than a one-term president; even before his Inauguration, he is already starting his next campaign. He is putting his chief competition, Senator Hillary Clinton, safely inside his camp and working to dispel any evidence that he is an extremist. Rather than come in and clean house, the President-elect seems to be embracing politics as usual.


The "insult" added to previous "injury" came with an announcement over the weekend that Obama's White House will continue the political office that was held by Karl Rove in the Bush White House. During his campaign, of course, Mr. Obama vowed to keep politics out of the White House. He criticized the Bush Administration for its partisanship and accused President Bush of running a "perpetual campaign." The Obama Administration, he promised, would end what he called "politics as usual."


But he is appointing the usual -- a bevy of inside-the-beltway politicians.


Thus far, there are no new faces and no one who will obviously push for new policies. Eric Holder (nominee for Attorney General) and Rahm Emanuel (Chief of Staff) bring lots of Clinton-era baggage; Tim Gaithner (Treasury Secretary) is part of New York's big-money establishment. Tom Daschle, (HHS Secretary) is welded into the Senate's good ‘ole boy network. Further, Obama helped to protect Joe Lieberman's Senate committee chairmanship even though Lieberman crossed party lines to actively campaign for John McCain. The leftist Bible, The Nation, noted recently that "not a single, solitary, actual dyed-in-the-wool progressive" has even been mentioned for the Obama Cabinet.


The Far Left contends that Barack should be dancing with the ones that brought him to the White House. Those on the right who treasure our traditional America values of personal responsibility and freedom have far more serious cause for worry.


While Obama is filling top slots of his Administration with politicians from the center, his agenda will be thrust forward by the Schedule C minions in the lower levels of government who will be able to work under the radar to push his far left ideology. That is the bottom-up strategy that he learned as a community organizer and a strategy that links him with his primary season competitor, Hillary Clinton, who promoted the feminist goals of the Beijing Platform for Action through various task forces set up in the federal agencies following the U.N.'s Beijing World Conference on Women. Both of these leftist politicians have learned to speak the language of the masses while working behind the scenes on the policies of the radical true believers.


Thus, Obama's appointments are sending a signal that his administration will be far more hawkish than his campaign rhetoric indicated. In addition to the likely appointment of Senator Clinton as Secretary of State, there are other signs that President-elect Obama is changing his stance on the war in Iraq -- despite official assurances that his position on Iraq hasn't changed and won't change. He seems to be leaning toward retaining Robert Gates, President Bush's Defense Secretary. Also, he is leaning toward a McCain backer, General James Jones, former NATO commander, as National Security Advisor and Janet Napolitano, governor of Arizona and a supporter of the Iraq war, for heading the Homeland Security Department. These possible appointments appear to signal a weakening of his promise to withdraw troops over the next 18 months.


The possible appointment of Mrs. Clinton to the top foreign policy position also raises questions about the U.S. position on Iran and Israel. During the campaign, Senator Clinton held to a hard line regarding Iran and Senator Obama famously talked about sitting down to negotiate "without preconditions." Senator Clinton has been a steadfast supporter of Israel (not any surprise in light of her numerous Jewish constituents in New York) and some pundits think that she would aggressively pursue a Middle East peace deal if she were Secretary of State.


Beyond questions of policy, critics are concerned that Obama is shaping a third Clinton term. The sheer drama of appointing Hillary, with the added soap-opera potential of husband Bill's antics, is cause for apprehension to many of Obama's supporters who fear that his agenda will be overshadowed by the Clintons' egos.


To repeat: what Obama's critics are overlooking is that he is a former community organizer; he prefers to work under the radar, starting from the grassroots. Those who are looking at the top layer of the Obama Administration wanting to see a sign of the "second coming of Saul Alinsky" (as one blogger put it), are going to be disappointed. Those who watched First Lady Hillary Clinton set up little fiefdoms in all the government agencies to push the policies of the Beijing Platform for Action and those who observed Senator Barack Obama utilize ACORN to build a political machine that spread from Chicago throughout the nation will recognize the strategy and tactics of master manipulators.


Even though they differ on many other fronts, Barack and Hillary are kindred spirits when it comes to using the government's legendary "soft power" and the national "bully pulpit" to achieve their personal and political ends. So, while the nation is lulled into thinking that Barack is moving to the center, his minions who are actually carrying the water will be hard-core "progressives" moving the leftist agenda forward largely out of the public's sight in the mid-level management positions of the government's sprawling bureaucracy. Much of the real action will happen behind the scenes in thousands of small decisions and initiatives that will remain nearly invisible until -- like the explosion in the number of mother-only families that followed from Lyndon Johnson's War on Poverty -- the transformation of their cumulative effects begins to emerge.





2) Iran announces more than 5,000 centrifuges working, launches Kavosh-2 (Explorer-2) rocket into space


Minutes after launching a three-stage rocket carrying a research lab, Wednesday, Nov. 26, Iran's nuclear chief announced Iran now has more than 5,000 centrifuges operating at its uranium enrichment plant, flatly defying UN resolutions.

Explorer-2, a three-stage rocket, spent 40 minutes in space; the space lab aboard was parachuted to land. Military sources report that this was the first time Iran had launched a three-stage rocket like the Israeli Shavit.

It followed a test-fire earlier this month of a new surface missile, the 2,000-km Sejili.> The special features of this ballistic missile point to significant advances in Iran's solid-propellant, two-stage missile development. Military experts note that the same long-range ballistic technology applies equally to putting satellites in space and launching weapons capable of carrying nuclear warheads.

After the Sejil's launch, Tehran will no doubt start converting its arsenal of surface missiles from liquid to solid fuel and go on to develop a capability for launching space satellites both for military use and civilian research.

Two missile launches in a month indicate that Tehran has put its ballistic missile development into top gear, an extremely troubling development for Washington, Jerusalem and the European nations within range.

Last February, Iran launched Explorer-1 which almost certainly failed to reach orbit, at the same time unveiling its first space center and promising to put its first satellite in space next year. Then too analysts pointed out that the Explorer series could serve doubly for telecommunications and guiding intercontinental missiles.

Unfortunately, military sources, Israeli leaders appear to have fallen behind the alarming events rushing forward in Iran: In a single week, the UN nuclear watchdog reported Tehran had stocked enough enriched uranium to make its first A-Bomb, while US analysts expect the Iranian to be able to make three bombs by the end of 2009. The Kavosh-2 launch shows Iran may have already perfected the missile technology to deliver warheads. However, instead of addressing this peril, defense minister Ehad Barak is mired in a huge effort to hold back a military operation in the Gaza Strip, keep his Labor party from crumbling and battling the Hebron Jewish community.

3)A Car Wreck Made in Washington Can Democrats afford to let Detroit succeed?
By HOLMAN W. JENKINS, JR.
The wrong folks were in the witness chairs in last week's congressional hearings on auto doom. A fantastic moment was Massachusetts Rep. Stephen Lynch assailing Rick Wagoner about whether GM was asking China for a bailout too. The implication seemed to be that GM can't afford its inflated UAW pay packages because it's squandering money to build cars in China.

Mr. Wagoner mildly answered that GM's China operations are profitable. They actually help to underwrite the massive losses in the U.S.

Mr. Lynch showed no sign he was actually listening, having illustrated his disapproval of foreigners. He didn't ask the obvious question: If GM can make cars profitably in China, why doesn't GM import them to the U.S.?

For that matter, any of the brainpans on the Hill might have asked why Ford and GM managed to build viable auto businesses all over the world but not in North America.

You don't need the Hubble telescope to tell the answer: The UAW is present only in the U.S., not all over the world.

What you wouldn't know is that the single biggest factor in preserving the UAW's monopolistic power has not been labor law but Congress's fuel-economy rules. These effectively have required the Big Three to lose tens of billions making small cars at a loss in UAW factories. Not only were the companies obliged to forgo profits they might have earned importing such cars, but CAFE deprived them of crucial leverage to control labor costs by threatening to move jobs to a factory in Spain or Taiwan or Poland. (Let's face it, that's what other successful U.S. manufacturers do.)

All this was deliberately designed to give the UAW the means to defend uncompetitive wages in the face of a globalizing auto business. It had nothing to do with making sure Americans have high-mileage cars. Yet not a single legislator last week breathed a hint of recognition that something might be behind Detroit's woes other than an improbable series of "stupid decisions" (as another Massachusetts congressman put it) by 18 CEOs over 30 years.

There's a larger lesson here for the Obama administration. A whole lot of Rube Goldbergism is coming home to roost, in the auto business, in the mortgage market, in the health-care market, in farm policy. We need to simple-down. The economy has a giant adjustment ahead, paying off debts, going from a heavy absorber of foreign capital and goods to a rebalanced relationship with the world.

The good news is that we have a natively resilient, flexible economy capable of making these adjustments -- unless bound up in Rube Goldbergian mandates. Barack Obama, bless his heart, may or may not be ready for what's coming his way. Yet his objectives are perfectly amenable to the simple-down approach.

He asked on Monday for Detroit to deliver a "plan" somehow to reconcile, at long last, the fantasy life of Washington, with nobody losing a job, with super energy-efficient cars, and yet somehow all this being done at a profit to Detroit.

Here's a plan, but it requires Mr. Obama to play a role too, finally relinquishing such chronic free-lunchism where autos are concerned. He should simply get rid of the CAFE rules and impose a gasoline tax to move the country to a "new energy economy," if he really believes in panicky climate predictions and/or that "energy independence" would be a net improver of American welfare. And be prepared for Detroit to shift jobs offshore if the UAW won't concede competitive labor agreements.

Not acceptable? Here's an alternative plan: Buy out the UAW with taxpayer dollars and free the Big Three to staff their factories with nonunion workers the way Toyota and Honda and BMW do. Last week's Hill circus notwithstanding, the negotiation that really needs to take place now is between Democrats and their union allies. The Big Three executives are just in the way.

Of course, Mr. Obama may have ideas of his own. His climate speech last week was Rube on steroids, aimed at creating whole client sectors of the economy dependent on his favor and endlessly flowing subsidies. It would be a poor excuse indeed of an economic depression that didn't create demagogic opportunities to boss around entire patches of the economy and extract political rents for doing so. There will be plenty of scope for Mr. Obama to head in this direction if he chooses.

Then again, he might just hand the next election cycle to the GOP, assuming Republicans can figure out that they're supposed to be the party of non-Rube-Goldberg government.

4) The Battle for Minnesota Is Just Getting Started: Al Franken demands to know the identity of every voter whose absentee ballot was rejected.
By JOHN FUND

In a government warehouse in the northeast part of this city, the recount of the Senate race between GOP Sen. Norm Coleman and Democrat Al Franken is orderly and transparent. Teams of workers sort paper optical-scan ballots as campaign representatives look on. Minneapolis election director Cindy Reichert allows outsiders almost to lean over the shoulders of the counters and observe their work. At least here, everyone is "Minnesota nice."


That may soon change. Today, the state's five-member Canvassing Board meets to rule on Mr. Franken's demand that it review whether absentee ballots rejected by county officials can be added to vote totals. Those ballots are likely to determine the outcome and will be the center of challenges in the courts or before the U.S. Senate, which is the final judge of the winner. A lot rides on the result because the Minnesota race, along with a Dec. 2 runoff in Georgia, will determine if Democrats get the 60 votes they need to cut off GOP filibusters on a party-line vote.

"Things are clearly moving in the wrong direction for Franken [in the recount]," Larry Jacobs, a political scientist at the University of Minnesota, told the St. Paul Pioneer Press. He says many of the challenges filed by both campaigns against individual ballots are frivolous and will be withdrawn or dismissed by the canvassing board: "The Franken campaign is going to win or lose based on what happens with the absentees."

A review of less than half of Minnesota's 87 counties has found that at least 2,066 absentee ballots were rejected because the voter wasn't registered, didn't sign the ballot or have a witness. Late yesterday the Franken campaign claimed it had learned of hundreds of "missing ballots." Those numbers dwarf the 725-vote margin Mr. Coleman had on election night, as well as the 215-vote lead he had before the recount began, and his current lead of some 200 votes.

The problem with adding absentee ballots is state law. According to an advisory opinion issued last week by the office of Democratic state Attorney General Lori Swanson, "Only the ballots cast in the election and the summary statements certified by the election judges may be considered in the recount process." A recount manual prepared this year by the office of Secretary of State Mark Ritchie, also a Democrat, makes clear that the canvassing board only supervises "an administrative recount" that is "not to determine if absentee ballots were properly accepted."

But Mr. Franken's attorneys are now arguing that Minnesota law also requires that each county's election report include "the complete voting activity within that county." They are also invoking the Equal Protection arguments cited by the Supreme Court in Bush vs. Gore, as well as rulings from Washington State's disputed 2004 governor's race -- that contest was decided for Democrat Christine Gregoire by 133 votes after an initial count and two subsequent recounts.

Intent on harvesting absentee ballots, the Franken campaign has presented affidavits from four voters who claim their ballots were improperly rejected. It hopes to find more, now that a Ramsey County judge has agreed to a Franken demand that it have access to data from that county on whose absentee ballots had been rejected. After initially saying rejected absentee ballots shouldn't be part of the recount, the secretary of state's office now says the information should be made public.

If the absentee names are made public, a mad scramble will ensue to contact those voters and get them to demand their ballots be counted. That's just what happened in the 2004 governor's race in Washington State after King County Judge Dean Lum allowed local Democrats access to the list of provisional voters that hadn't been counted because either there was no signature or no match between the signature and the voter registration on file with officials.

Judge Lum's ruling was criticized by many election lawyers because, in the 2002 Help America Vote Act, Congress stipulated that provisional ballot votes remain private -- a provision mirrored by Washington State's constitution. But Judge Lum ruled such arguments weren't as important as the need to make sure every vote counted -- an echo of the arguments Democrats made during Florida's 2000 recount.

His ruling set off a partisan hunt for votes. Ryan Bianchi, communications assistant for Ms. Gregoire, told the Seattle Times that Democratic volunteers asked voters if they had cast ballots for Ms. Gregoire. "If they say no, we just tell them to have a nice day," he said. Only if they said yes did Democrats ask if they wanted to make their ballots valid.

Margot Swanson, a voter in Redmond who forgot to sign her ballot, told me she was contacted by phone and asked whom she voted for. When she said Republican Dino Rossi, the caller quickly hung up. "I puzzled out there might be a problem with my ballot, and I found out there was," she said. "But I would never have known from the tricky call I got."

Republicans played catch-up by belatedly using their own phone banks to call voters. But Democrats turned in some 600 written oaths from people declaring how they had intended to vote, and Republicans about 200. Those ballots were all counted, and made the difference in the race.

Games can be played with such last-minute ballots. In Washington State, one voter submitted an affidavit that a Parkinson's disease patient who could neither speak nor write was nonetheless "mentally strong" and had completed a ballot signed by her husband. But it is illegal for anyone to sign a ballot on behalf of someone else; they can only witness it. And in Minnesota, even Secretary of State Ritchie criticized the Franken campaign last week for falsely claiming that an elderly woman in Bemidji had her absentee ballot rejected because she had suffered a stroke and her new signature didn't match the one on her registration form. In fact, no ballots were rejected due to signature mismatches, according to the local county auditor.

Democrats with experience from the Washington recount are now advising Mr. Franken. Paul Berendt, a former chair of the Washington Democratic Party, was in Minneapolis this month. "What I bring to this effort," he told Oregon Public Radio from the Minneapolis recount office, "is that I understand every single step of this recount process and the things that you need to look for in order to make sure that every vote is counted."

If the strategy of adding previously rejected ballots to the Minnesota Senate recount is successful, a final outcome could be months away. In 1975, the U.S. Senate refused to accept New Hampshire's certification that Republican Louis Wyman had won by two votes. The seat was vacant for seven months, with the Senate debate spanning 100 hours and six unsuccessful attempts to break a filibuster and vote on who should be seated. The impasse ended only when a special election was agreed to, which was won by Democrat John Durkin.

Given how critical Minnesota's election is for the outcome of filibusters, don't be surprised if this recount becomes "Washington mean" when the Senate convenes in January.