I heartily urge you to read columnist John Kass’s diatribe on the likely outcome of the elections next Tuesday. It rolls on and on, unified by the metaphor of this quotation from President Obama:

“I’ve got to get home because Michelle is on the road,” the president explained. “So I’ve got to be home to tuck in the girls and walk the dog. And scoop the poop.”

I think that Mr. Kass’s column is amusing and interesting but I don’t think it presents a complete picture. In my view President Obama has systematically and routinely allowed ”the experts” to guide policy decisions, to our and his detriment. The political experts like David Axelrod guided his campaign. The economic experts like Treasury Secretary Timothy Geithner, Director of the White House National Economic Council Lawrence Summers, and Chair of the Council of Economic Advisers Christina Romer guided the economic policies. Military experts like Gen. David Petraeus guided the policy in Afghanistan. And the Congressional experts, the Congressional leaders, lead the way on healthcare reform, financial reform, and the stillborn bills on energy, transportation, and so on.

Of course a leader must rely on his advisers for information but a balance must be struck between that reliance and delegating the responsibilities of decision-making and crafting of policy to them. One of the problems is inherent in the nature of expertise today. Experts who have legitimate expertise in very narrow specializations with naturally human exaggerations of self-worth bootstrap their legitimate expertise into universal expertise in all areas even vaguely related to their actual areas of knowledge. The experts are not as expert as we think.

The experts are not even as expert as they apparently think. Surely the military experts are aware of this since the military even has a phrase to describe this: “the fog of war”. Evidence of the phenomenon is clearest in the notorious and now rued claim by the president’s economic experts that, if the stimulus package were passed, unemployment would be kept below 8.1%.

Further, the experts are not emotionless automata dispensing The Truth but human beings, complete with foibles, prejudices, agenda, and blind spots.

Worst of all, the experts are not merely experts but courtiers, retained not only for their expertise but, apparently, for their loyalty and reluctance to bring bad news.

So I guess in a sense Mr. Kass is right. The change of fortunes of Democrats is the fault of President Obama, if only for his excessive reliance on experts who are incapable of giving him the reliable information he so desperately needs. The alternative is even worse to contemplate: that fortified with complete and accurate information he has made of series of major miscalculations.

Just to be sure that my views are clear I blame the Congress, the Congressional leadership. And it is the Congress and Congressional leadership that will be punished and will almost certainly have changed when all of the votes have been counted.

The Economist conducts a post-mortem of the first two years of President Obama’s term, wondering how did it come to this?

How is it possible, just 21 months later, that the Democrats are expecting a thrashing next week and the Republicans look poised to take control of the House of Representatives, and maybe even the Senate? The main answer is that the same economic storm that propelled Mr Obama into office has played havoc with his presidency. But there is more to it than that. To see why, it helps to break the story into three parts: the legacy he collected from George Bush, the distraction of health reform and the resulting fracture between the American people and the man in whom they had invested so much hope.

On coming into office the Obama Administration largely continued along the path blazed by the predecessor Barack Obama had reviled during the campaign and continues to blame for the problems at hand. TARP was the policy crafted by George W. Bush’s Secretary of the Treasury, Henry Paulson. Its successor, HAMP, is no bold departure from that policy. Rather, it’s a development of it, another grab at the same ring.

The bailouts of GM and Chrysler were begun with the lifelines thrown under the Bush Administration and reached their fruition under the Obama Administration. To be sure President Obama’s approach has incorporated features that might not have been followed by his predecessor. So, for example, in the handling of the two auto companies the UAW’s interests have been carefully safeguarded.

The stimulus package enacted into law in spring of 2009 was not the only attempt at fiscal stimulus since the beginning of the economic downturn, it was merely the largest. See here for an interesting analysis on why the stimulus package wasn’t as effective as its advocates hoped:

I argue here, however, that the structure of a fiscal stimulus is crucially important and that the package Congress adopted was far from ideal, regardless of the merits of the Keynesian model. Whether countercyclical fiscal policy is beneficial is a more difficult question, but it is not the critical issue if a stimulus package is properly designed. In fact, the Administration could have created a package that stimulated the economy in the short term while improving economic performance in the long term. This package, moreover, would have been immune to criticism from Republicans. The stimulus adopted was a missed opportunity of colossal proportions.

That the Administration and Congress chose the particular stimulus adopted suggests that stimulating the economy was not their only objective. Instead, the Administration used the recession and the financial crisis to redistribute resources to favored interest groups (unions, the green lobby, and public education) and to increase the size and scope of government. This redistribution does not make every element of the package indefensible, but even the components with a plausible justification were designed in the least productive and most redistributionist way possible.

I think these defects are obvious and were obvious from the outset; it’s good to have a little support from an economist on that.

The benefits of what will no doubt be the keystone legislation of President Obama’s first term, healthcare reform, remain to be seen; healthcare costs continue to rise and, if the recent announcements of insurance companies are any gauge, will continue to do so at an appalling rate.

The attention that was lavished on healthcare reform at the expense of other legislatives goals however important is key to understanding how it came to this. There’s pretty good evidence that the pursuit of healthcare reform did, indeed, come at the expense of other goals:

For some of the shortcomings of financial regulatory reform, Mr. Baird blames the disillusioning battle over ObamaCare. “When the House had to pass the Senate version of health care unchanged, some members asked why should they invest the mental effort in mastering the details” of financial reform. Mr. Baird found parts of the bill mind-numbing.

which lends credence to the idea that President Obama is more concerned about his place in history than about the conditions of the present.

That’s not entirely fair. Healthcare costs are an enormous burden on local, state, and the federal governments. With healthcare cost reduction many more things are possible; without it nearly everything becomes much more difficult. But somehow the need for cost reduction got lost in the pursuit of expanded coverage. The irony of this is that cost reduction would itself allow for expanded coverage while of itself expanded coverage increases costs.

Also key, as The Economist notes, are the expectations that President Obama raised in his winning presidential campaign. Clearly, the change that President Obama has delivered has either been insufficient or of the wrong sort to satisfy an increasingly restive American public. Just four years after turning Congress over to Democratic control, the electorate appears ready to return control of the House to Republicans and, at the least, narrow Democratic control of the Senate.

I also think that you have to look at what the beneficiaries of the policies of the last three years, banks and GM, have done with their reprieves. The banks, impelled by the same arrogance and fecklessness that created the financial crisis, have created a crisis in foreclosures. The message is clear: the shape that saving the financial system took, far from inducing the banks to take a lesson, has not deterred them from taking excessive risks. This is moral hazard with a vengeance.

GM has used its borrowed time to produce a product that few will buy at a price at which the company can make a profit without government subsidy and which won’t materially reduce our use of fossil fuels:

The administration’s objectives – reducing carbon emissions and U.S. dependence on foreign oil – are legitimate. But $5 billion wasted on electrics is $5 billion that cannot be used to meet these goals. And then there’s the private capital that Obama’s policy is attracting to this losing proposition.

J.D. Power suggests, sensibly: “Rather than rushing to commercialize [battery-electric vehicles], the industry might be better served to pursue continued fuel economy improvements in [internal combustion engines] and the mass production of [conventional hybrids].”

For a president who claims to make policy based on “facts and science and argument,” lavishing subsidies on electric cars is an intellectual scandal. The J.D. Power study is hardly an outlier. It jibes with similar work by Deloitte Touche, Boston Consulting Group, Roland Berger Strategy Consultants, professor Henry Lee of Harvard’s Belfer Center for Science and International Affairs, and the Massachusetts Institute of Technology’s Energy Initiative.

Last year the National Academy of Sciences’ National Research Council concluded: “Subsidies in the tens to hundreds of billions of dollars. . .will be needed if plug-ins are to achieve rapid penetration of the U.S. automotive market. Even with these efforts, plug-in hybrid electric vehicles are not expected to significantly impact oil consumption or carbon emissions before 2030.”

It’s clear that Americans’ patience is wearing thin but what do they want? The typical answer is that Americans’ wants are conflicted but I don’t think that’s the case. I think that what most Americans want is what happens in a Hollywood movie of the Hayes era: hard work and pluck are rewarded, the villains are punished, the good guy who made bad choices dies in the third reel, and it all takes place in 105 minutes. That’s not conflicted it’s merely unrealistic.

In my view we have been on the wrong path for a very long time and returning to the right one will take a commensurately long time. Perhaps we should keep in mind that there are no substitutes for hard work, prudence, and frugality, that we can’t achieve prosperity by redistribution because redistribution will always and inevitably be redistribution not from the rich to the poor but from one group of the rich to a different group of the rich (if not from the poor to the rich), that it’s a much smaller world than it used to be and we can’t protect our inefficient industries from overseas competition, that keeping corporate dinosaurs on life support expends resources that can be put to better use elsewhere in the economy, and that without a vibrant, energetic business environment there will be no jobs let alone job growth.

Yves Smith is really very upset with President Obama:

I’m so offended by the latest Obama canard, that the financial crisis of 2007-2008 cost less than 1% of GDP, that I barely know where to begin. Not only does this Administration lie on a routine basis, it doesn’t even bother to tell credible lies. .And this one came directly from the top, not via minions. It’s not that this misrepresentation is earth-shaking, but that it epitomizes why the Obama Administration is well on its way to being an abject failure.

Her explanation for this is that the president believes that public relations can solve every problem.

I don’t think that’s right. I think he doesn’t know any better. I think he’s not particularly well-informed or curious about areas far afield from his core interests, relies on informants, his informants are afraid or otherwise not motivated to tell him the truth, and he is ill-served by his subordinates.

Here’s one idea of what to do the next time one of the big banks comes looking for help from the federal government:

Punish the bondholders, sack managements, turn operations over to the FDIC, investigate fraud and prosecute.

Read the whole thing.

Proof that day is not far away can be seen in the testimony in the recent Senate hearings on the foreclosure crisis:

We can either have a rational resolution to the foreclosure crisis or we can preserve the capital structure of the banks. We can’t do both.

Actions taken to date have not removed “toxic assets” from the banks’ balance sheets. Doing that would have revealed the awful shape that the banks are in. They’ve just kicked the can down the road.

Pursuant to a backchannel discussion the Outside the Beltway associate bloggers have been conducting I’m going to engage in a little thought experiment. How would I change the federal budget given plenipotentiary authority (which God forbid!) and freed from political constraints?

I believe that it’s frivolous to enter into such a discussion as a mere mathematical exercise, detached from considerations of what sort of country you would like this to be, so I’ll start there. I would like a country that, while zealous in maintaining its own security, intervenes less in other countries. I would like a country in which gaming the system is less important than creativity and effort. I would like a country in which large institutions, whether those of government, business, labor, or any other facet of society, have less influence over our daily lives than they do now. I would like a country that balances a commitment between people undertaking responsibility for their own lives and destinies and not allowing people to fall into desparate circumstances due to age, illness, infirmity, or just plain bad luck. I would like to see a country that supports robust economic growth by creating a reasonably level playing field rather than by attempting to pick winners and losers. Hopefully, the choices reflected in this post will be consistent with those objectives.

Let’s deal with the revenue side first since it’s the easiest. I would abolish all forms of federal taxation in favor of a consumption tax somewhat along the lines of the FairTax. All goods and services would be subject to the tax and the tax, would be taxed at the same rate, and would be prebated in such a way as to ensure progressivity of the tax. Whether the tax would be handled as a straightforward sales tax or a VAT would be a logistical decision that I’m not prepared to express an opinion on right at this moment. I suspect there would be good reasons for it to be handled as a VAT.

The spending side is much thornier. Here’s how current spending breaks down:

There’s an old principle of optimization that your best targets for optimization are where there’s something to optimize. Obviously, “Other”, which includes interest on the debt, the porkbarrel spending referred to as “earmarks”, and all other expenses of government is not a particularly fruitful target. This is not to say that I wouldn’t like to eliminate certain programs, e.g. agricultural subsidies. It’s only to point out the obvious, that we can’t make great headway just by cutting earmarks.

I should also mention that although waste, fraud, and abuse are perennial objects of ire there is no line item on the budget for waste, fraud, and abuse. You address them where you find them and, frankly, although I think they need to be addressed when found I doubt that there’s nearly enough there to get us where we need to go.

The three best targets are defense, pensions (federal employee pensions and Social Security), and healthcare.

I would cut defense spending by reducing our overseas commitments, re-unifying the Air Force and Army, and reducing the size of the air force and the standing army. I would leave the Navy largely untouched. I would eliminate programs that don’t contribute directly to the conditions in which we find ourselves today (I could name names on this but doing so would bring this post to too great a length). Withdrawing from Afghanistan or (my preference) reducing our objectives in the country to minimalist objectives and cutting the force there back to between 20,000 and 50,000 would probably save $100 billion on its own. I would eliminate or reduce the size of our bases in Europe, the Middle East, and Asia. The target level of spending should be between 2 and 3% of GDP. As I’ve said elsewhere I would assess the actual pragmatic value of our involvement in NATO and reduce our commitment there appropriately. Europe is capable of taking care of itself and too many of our NATO allies have reduced their spending on defense below 2%, a level too small to satisfy their commitments to the alliance.

Federal employee pensions should be entirely a defined contributions plan rather than the hybrid plan it is now. Essentially, the FERS annuity should be abolished in favor of a defined contributions plan. The minimum changes that should be made to Social Security are that the Social Security retirement age should be raised and there should be something intermediary between disability and ordinary Social Security for those performing physical work and, consequently, unable to work until full Social Security retirement age. It might be sufficient to redefine disability.

My preference would be to means-test Social Security as well. I’m not sufficiently conversant with the numbers to be sure whether it would be required if the SSRA were raised.

The most difficult of the knotty problems is healthcare. The greatest gift that the U. S. federal government could give to the world and American state and local governments would be to reform our healthcare system in such a way as to reduce costs. Let’s be very explicit about this. There is no mystery. We spend a multiple of what any other country in the world spends for healthcare on a per capita basis because prices are higher here.

This post is limited to breaking the laws of politics. We can’t break the laws of mathematics or physics. We can’t go back in time and undo all of the policy errors of the last 50 years. Or the last century for that matter. How do we reduce healthcare costs going forward?

It would be nice if we could implement a system here similar to the French system. If I could do it, I would reduce prices here to levels commensurate to those paid in other OECD countries and implement a French-like system. I’m not certain that even that would be enough.

I could go into a more substantial analysis here of more market-based systems as opposed to less market-based ones. As long as the providers’ oligopoly is in place and the insurance companies are in the picture, I’m skeptical that healthcare costs can be reduced sufficiently. I’m also skeptical that good public health can be maintained without leaving the providers’ oligopoly in place.

I’ve nattered on for long enough about this for one blog post. Feel free to submit your own preferences or to critique mine. If you elect the latter, please be gentle and courteous.

There’s a recurring theme that I’ve been seeing lately from left blogosphere bloggers and commenters with a similar viewpoint. It doesn’t ring true to me but I’ve got an open mind and am willing to listen to the case. Essentially, it goes something like this. President Obama has gone to extraordinary lengths, bent over backwards, to compromise with obstinate Congressional Republicans. The manifest weaknesses of the various pieces of major legislation and the present enthusiasm gap are consequences of this futile effort

As far as I can see this notion relies on a sort of post hoc propter hoc sort of logic. President Obama faces opposition from the Republicans. The legislation are nasty hashes, pleasing no one. Consequently, the legislation is the result of President Obama’s willingness to compromise with Congressional Republicans.

Frankly, I don’t see it. From the early days of his administration in which it was noted that elections have consequences through the rapid passage of the stimulus package and the torturous deliberations over the healthcare reform bill, I think a different dynamics was in operation. In the case of the stimulus package President Obama got exactly what he wanted, something he said repeatedly.

In the case of healthcare reform I think that President Obama left the details of the law to the experts, in this case Congressional Democrats, who had views, drives, and agenda of their own. Si monumentum requiris, circumspice.

I can also think of a couple of other explanations but they’re even less charitable. I must say I also find the idea that what was achieved was what was politically possible fantastical. What was passed was passed with scarcely a Republican vote. This is what was politically possible?

As I say, I have an open mind. Can someone make the case that President Obama has gone to extraordinary lengths to enlist the support of the Congressional Republican leadership to me? Not a few lonely Republican outliers like Susan Collins or Olympia Snowe—pursuit of their votes is clearly a figleaf, an attempt to make something appear to have bipartisan support which in actuality has nothing of the sort. And not Congressional moderates, the “Blue Dogs”—that’s an intra-party squabble and it doesn’t support the case at all.

Youth wants to know.

I don’t know about you but I’m about ready for the election. Enough, already. I’m up to here with political advertisements on television and, worse, political robo-calls. The latter are proving almost completely ineffectual. the former concentrate irritatingly on the personal and professional shortcomings of opponents. What do Bill Brady or Pat Quinn actually plan to do in concrete terms if they win the election for governor? If you depend on television ads as I presume most people do, you have no idea but you do know how awful they think their opponent is.

What I want to draw your attention to is an extremely interesting, different approach to political communication emphasizing a visual content.

It’s nearly 15 minutes long but it’s worth watching. The title of the post containing this video is “The other side of the White House white board”. It takes as its point of departure another visual presentation, this time by White House Chairman of the Council of Economic Advisers Austan Goolsbee which appeared on the White House web site.

In this post I am not attempting to analyze the factual content of the two videos. As Mr. Hennessey observes, to be certain of the outcome if the White House had not taken the steps it did requires a counterfactual. We will never know. Make your own judgements. I’m concentrating on the medium, not the message.

In his counter-video Mr. Hennessey takes Dr. Goolsbee’s presentation and performs a bit of jiu-jitsu. Using the unifying visual metaphor of flipping the board over he presents his counter-argument. He then analyzes not merely the facts that Dr. Goolsbee presents but how Dr. Goolsbee’s visual presentation influences the viewer’s response to the facts. He follows this with alternative presentation approaches—redrawing the scale of the chart that Dr. Goolsbee employs or displaying the same data in a different way.

The presentation has several effects. First, it effectively contradicts or even refutes Dr. Goolsbee’s thesis that the actions taken by the Obama Administration have turned the economy around. Second, despite Mr. Hennessey’s explicit refusal to ascribe motive to Dr. Goolsbee’s decisions as to what data to show and what to withhold, there is a clear imputation that Dr. Goolsbee and, implicitly, the White House is making its case dishonestly.

Both of these presentations show marked signs of the trend I have commented on previously here and called “visualcy”. Dr. Goolsbee’s video presents in simple, graphical terms the White House’s case: that the policies of the Bush Administration had a negative effect on the economy, that the actions of the Obama Administration have reversed those effects, that the economy has improved. Mr. Hennessey’s counter-video “samples” Dr. Goolsbee’s video to draw the opposite conclusions: that the Bush Administration’s policies helped the economy, that the actions of the Democratic Congress have injured the economy, and that the actions of the Obama Administration have not been adequate to staunch the bleeding. Mr. Hennessey further draws into question Dr. Goolsbee’s sincerity by his explanations of how the Goolsbee presentation is structured.

What we are seeing here may well be the next generation of political communication. It is at the very least a striking illustration of how visual presentation can digest large amounts of data into a form that is easily understood and convincing.

The The NOAA Weather Service has issued a High Wind Warning for most of the Midwest including the Chicago area:

…DAMAGING WINDS POSSIBLE TODAY…

…HIGH WIND WARNING REMAINS IN EFFECT FROM 7 AM THIS MORNING TO
8 PM CDT THIS EVENING…

A HIGH WIND WARNING REMAINS IN EFFECT FROM 7 AM THIS MORNING TO
8 PM CDT THIS EVENING.

* TIMING…THIS MORNING THROUGH 8 PM THIS EVENING.

* WINDS…WILL SHIFT TO SOUTHWEST THIS MORNING AND INCREASE
TO 30 TO 40 MPH…WITH GUSTS UP TO 60 MPH.

* IMPACTS…NON SECURE OBJECTS MAY BECOME AIRBORNE. FALLING TREE
LIMBS AND POWER OUTAGES ARE LIKELY…WITH TRAFFIC SIGNALS ALSO
EXPECTED TO BE AFFECTED RESULTING IN SIGNIFICANT TRAVEL
DELAYS. TRAVEL WILL ALSO BECOME DIFFICULT…WITH HIGH PROFILE
VEHICLES BECOMING DIFFICULT TO CONTROL.

They’re talking about an “Edmund Fitzgerald”storm-level storm:

The weather service warned that the winds could cause major problems across the area, including falling tree limbs, structural damage, downed power lines and widespread power outages. At 7 a.m., Commonwealth Edison already was reporting 26,500 customers without power across the region, up sharply from the 5,600 reported only an hour earlier. The utility’s western region was hardest hit, with 11,000 without electricity.

City aviation officials warned of delays and cancellations at O’Hare and Midway airports. As of 7:15 a.m., at least 26 departing flights had already been canceled at O’Hare International Airport. The FAA instituted a ground stop at other airports on Chicago air traffic.

The massive storm, packing lightning and heavy downpours, is the result of a low-pressure system that the western Great Lakes and upper Midwest region has not experienced in decades.

“The storm system will be one of the most powerful we have seen in this part of the country in more than 70 years,” said Jim Allsopp, a meteorologist for the National Weather Service. “This is a big deal.”

Although it’s just a little before 8:00am as I write this, it’s still nearly as dark as night outside. Oddly, it doesn’t appear that we’re getting a lot of rain yet.

I just can’t get over that. San Francisco’s spending on city pensions has increased by 66,733% in just ten years:

In fiscal year 1999-2000, the city spent about $300,000 on its retirement system. In fiscal year 2009-10, it was $200.5 million. Benefits alone — not salaries, just benefits — for current and retired employees this year are budgeted at $993 million. Spending on retirees’ health care and pensions is conservatively projected to triple within five years.

I don’t care what their politics is. What can they possibly have been thinking?