Has Barack Hussein Obama's Presidency Already Failed?

Why Obama’s new Tarp will fail to rescue the banks

By Martin Wolf

Published: February 10 2009 18:06 | Last updated: February 10 2009 18:06

Has Barack Obama’s presidency already failed? In normal times, this would be a ludicrous question. But these are not normal times. They are times of great danger. Today, the new US administration can disown responsibility for its inheritance; tomorrow, it will own it. Today, it can offer solutions; tomorrow it will have become the problem. Today, it is in control of events; tomorrow, events will take control of it. Doing too little is now far riskier than doing too much. If he fails to act decisively, the president risks being overwhelmed, like his predecessor. The costs to the US and the world of another failed presidency do not bear contemplating.

What is needed? The answer is: focus and ferocity. If Mr Obama does not fix this crisis, all he hopes from his presidency will be lost. If he does, he can reshape the agenda. Hoping for the best is foolish. He should expect the worst and act accordingly.

Yet hoping for the best is what one sees in the stimulus programme and – so far as I can judge from Tuesday’s sketchy announcement by Tim Geithner, Treasury secretary – also in the new plans for fixing the banking system. I commented on the former last week. I would merely add that it is extraordinary that a popular new president, confronting a once-in-80-years’ economic crisis, has let Congress shape the outcome.

The banking programme seems to be yet another child of the failed interventions of the past one and a half years: optimistic and indecisive. If this “progeny of the troubled asset relief programme” fails, Mr Obama’s credibility will be ruined. Now is the time for action that seems close to certain to resolve the problem; this, however, does not seem to be it.

All along two contrasting views have been held on what ails the financial system. The first is that this is essentially a panic. The second is that this is a problem of insolvency.

Under the first view, the prices of a defined set of “toxic assets” have been driven below their long-run value and in some cases have become impossible to sell. The solution, many suggest, is for governments to make a market, buy assets or insure banks against losses. This was the rationale for the original Tarp and the “super-SIV (special investment vehicle)” proposed by Henry (Hank) Paulson, the previous Treasury secretary, in 2007.

Under the second view, a sizeable proportion of financial institutions are insolvent: their assets are, under plausible assumptions, worth less than their liabilities. The International Monetary Fund argues that potential losses on US-originated credit assets alone are now $2,200bn (€1,700bn, £1,500bn), up from $1,400bn just last October. This is almost identical to the latest estimates from Goldman Sachs. In recent comments to the Financial Times, Nouriel Roubini of RGE Monitor and the Stern School of New York University estimates peak losses on US-generated assets at $3,600bn. Fortunately for the US, half of these losses will fall abroad. But, the rest of the world will strike back: as the world economy implodes, huge losses abroad – on sovereign, housing and corporate debt – will surely fall on US institutions, with dire effects.

Personally, I have little doubt that the second view is correct and, as the world economy deteriorates, will become ever more so. But this is not the heart of the matter. That is whether, in the presence of such uncertainty, it can be right to base policy on hoping for the best. The answer is clear: rational policymakers must assume the worst. If this proved pessimistic, they would end up with an over-capitalised financial system. If the optimistic choice turned out to be wrong, they would have zombie banks and a discredited government. This choice is surely a “no brainer”.

The new plan seems to make sense if and only if the principal problem is illiquidity. Offering guarantees and buying some portion of the toxic assets, while limiting new capital injections to less than the $350bn left in the Tarp, cannot deal with the insolvency problem identified by informed observers. Indeed, any toxic asset purchase or guarantee programme must be an ineffective, inefficient and inequitable way to rescue inadequately capitalised financial institutions: ineffective, because the government must buy vast amounts of doubtful assets at excessive prices or provide over-generous guarantees, to render insolvent banks solvent; inefficient, because big capital injections or conversion of debt into equity are better ways to recapitalise banks; and inequitable, because big subsidies would go to failed institutions and private buyers of bad assets.

Why then is the administration making what appears to be a blunder? It may be that it is hoping for the best. But it also seems it has set itself the wrong question. It has not asked what needs to be done to be sure of a solution. It has asked itself, instead, what is the best it can do given three arbitrary, self-imposed constraints: no nationalisation; no losses for bondholders; and no more money from Congress. Yet why does a new administration, confronting a huge crisis, not try to change the terms of debate? This timidity is depressing. Trying to make up for this mistake by imposing pettifogging conditions on assisted institutions is more likely to compound the error than to reduce it.

Assume that the problem is insolvency and the modest market value of US commercial banks (about $400bn) derives from government support (see charts). Assume, too, that it is impossible to raise large amounts of private capital today. Then there has to be recapitalisation in one of the two ways indicated above. Both have disadvantages: government recapitalisation is a bail-out of creditors and involves temporary state administration; debt-for-equity swaps would damage bond markets, insurance companies and pension funds. But the choice is inescapable.

If Mr Geithner or Lawrence Summers, head of the national economic council, were advising the US as a foreign country, they would point this out, brutally. Dominique Strauss-Kahn, IMF managing director, said the same thing, very gently, in Malaysia last Saturday.

The correct advice remains the one the US gave the Japanese and others during the 1990s: admit reality, restructure banks and, above all, slay zombie institutions at once. It is an important, but secondary, question whether the right answer is to create new “good banks”, leaving old bad banks to perish, as my colleague, Willem Buiter, recommends, or new “bad banks”, leaving cleansed old banks to survive. I also am inclined to the former, because the culture of the old banks seems so toxic.

By asking the wrong question, Mr Obama is taking a huge gamble. He should have resolved to cleanse these Augean banking stables. He needs to rethink, if it is not already too late.

martin.wolf@ft.com

Copyright The Financial Times Limited 2009

CBO: Obama stimulus harmful over long haul

The Washington Times

Wednesday, February 4, 2009

CBO: Obama stimulus harmful over long haul

Stephen Dinan (Contact)

President Obama’s economic recovery package will actually hurt the economy more in the long run than if he were to do nothing, the nonpartisan Congressional Budget Office said Wednesday.

CBO, the official scorekeepers for legislation, said the House and Senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing.

CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net. [The House bill] would have similar long-run effects, CBO said in a letter to Sen. Judd Gregg, New Hampshire Republican, who was tapped by Mr. Obama on Tuesday to be Commerce Secretary.

The House last week passed a bill totaling about $820 billion while the Senate is working on a proposal reaching about $900 billion in spending increases and tax cuts.

But Republicans and some moderate Democrats have balked at the size of the bill and at some of the spending items included in it, arguing they won’t produce immediate jobs, which is the stated goal of the bill.

The budget office had previously estimated service the debt due to the new spending could add hundreds of millions of dollars to the cost of the bill — forcing the crowd-out.

CBOs basic assumption is that, in the long run, each dollar of additional debt crowds out about a third of a dollars worth of private domestic capital, CBO said in its letter.

CBO said there is no crowding out in the short term, so the plan would succeed in boosting growth in 2009 and 2010.

The agency projected the Senate bill would produce between 1.4 percent and 4.1 percent higher growth in 2009 than if there was no action. For 2010, the plan would boost growth by 1.2 percent to 3.6 percent.

CBO did project the bill would create jobs, though by 2011 the effects would be minuscule.

So much for "hope over fear"

The Fierce Urgency of Pork

By Charles Krauthammer
Friday, February 6, 2009; A17

“A failure to act, and act now, will turn crisis into a catastrophe.”

— President Obama, Feb. 4.

Catastrophe, mind you. So much for the president who in his inaugural address two weeks earlier declared “we have chosen hope over fear.” Until, that is, you need fear to pass a bill.

And so much for the promise to banish the money changers and influence peddlers from the temple. An ostentatious executive order banning lobbyists was immediately followed by the nomination of at least a dozen current or former lobbyists to high position. Followed by a Treasury secretary who allegedly couldn’t understand the payroll tax provisions in his 1040. Followed by Tom Daschle, who had to fall on his sword according to the new Washington rule that no Cabinet can have more than one tax delinquent.

The Daschle affair was more serious because his offense involved more than taxes. As Michael Kinsley once observed, in Washington the real scandal isn’t what’s illegal, but what’s legal. Not paying taxes is one thing. But what made this case intolerable was the perfectly legal dealings that amassed Daschle $5.2 million in just two years.

He’d been getting $1 million per year from a law firm. But he’s not a lawyer, nor a registered lobbyist. You don’t get paid this kind of money to instruct partners on the Senate markup process. You get it for picking up the phone and peddling influence.

At least Tim Geithner, the tax-challenged Treasury secretary, had been working for years as a humble international civil servant earning non-stratospheric wages. Daschle, who had made another cool million a year (plus chauffeur and Caddy) for unspecified services to a pal’s private equity firm, represented everything Obama said he’d come to Washington to upend.

And yet more damaging to Obama’s image than all the hypocrisies in the appointment process is his signature bill: the stimulus package. He inexplicably delegated the writing to Nancy Pelosi and the barons of the House. The product, which inevitably carries Obama’s name, was not just bad, not just flawed, but a legislative abomination.

It’s not just pages and pages of special-interest tax breaks, giveaways and protections, one of which would set off a ruinous Smoot-Hawley trade war. It’s not just the waste, such as the $88.6 million for new construction for Milwaukee Public Schools, which, reports the Milwaukee Journal Sentinel, have shrinking enrollment, 15 vacant schools and, quite logically, no plans for new construction.

It’s the essential fraud of rushing through a bill in which the normal rules (committee hearings, finding revenue to pay for the programs) are suspended on the grounds that a national emergency requires an immediate job-creating stimulus — and then throwing into it hundreds of billions that have nothing to do with stimulus, that Congress’s own budget office says won’t be spent until 2011 and beyond, and that are little more than the back-scratching, special-interest, lobby-driven parochialism that Obama came to Washington to abolish. He said.

Not just to abolish but to create something new — a new politics where the moneyed pork-barreling and corrupt logrolling of the past would give way to a bottom-up, grass-roots participatory democracy. That is what made Obama so dazzling and new. Turns out the “fierce urgency of now” includes $150 million for livestock (and honeybee and farm-raised fish) insurance.

The Age of Obama begins with perhaps the greatest frenzy of old-politics influence peddling ever seen in Washington. By the time the stimulus bill reached the Senate, reports the Wall Street Journal, pharmaceutical and high-tech companies were lobbying furiously for a new plan to repatriate overseas profits that would yield major tax savings. California wine growers and Florida citrus producers were fighting to change a single phrase in one provision. Substituting “planted” for “ready to market” would mean a windfall garnered from a new “bonus depreciation” incentive.

After Obama’s miraculous 2008 presidential campaign, it was clear that at some point the magical mystery tour would have to end. The nation would rub its eyes and begin to emerge from its reverie. The hallucinatory Obama would give way to the mere mortal. The great ethical transformations promised would be seen as a fairy tale that all presidents tell — and that this president told better than anyone.

I thought the awakening would take six months. It took two and a half weeks.

letters@charleskrauthammer.com

Obama and Schoolkids

www.chicagotribune.com/news/opinion/chi-1209edit1dec09,0,7274442.story

chicagotribune.com

Obama and schoolkids

December 9, 2008

Barack Obama escaped a lengthy presidential campaign without betraying whether he wants to revolutionize the public education industry or merely wants to throw more money at it.

Two warring camps—reformers who demand more accountable schools and defenders of the complacent status quo—each came away convinced that it had Obama’s ear. He’ll settle that bragging contest, perhaps this week, when he names his choice for education secretary. We urge him to select a bold agent of change—even if doing so costs Chicago Public Schools the district’s reform-minded CEO, Arne Duncan.

Obama sent a strong message of change Sunday when he named retired Army Gen. Eric Shinseki, who clashed over Iraq policy with Secretary of Defense Donald Rumsfeld, to oversee veterans’ affairs. And he’ll send some sort of message—encouraging or discouraging—when he picks his education secretary. That person won’t dictate congressional policies or set federal funding levels. He or she will, though, oversee a bureaucracy with great power to establish and enforce priorities that affect how districts operate. 

The Bush administration exploited this post not only to help promote crucial No Child Left Behind legislation, but to follow up by making schools more accountable for how well their students do—or don’t—learn.

Will that emphasis on accountability now intensify? Or will it wither as opponents of dramatic change reclaim lost clout? President Bill Clinton skirted this underlying tension by giving lip service to reform while settling for such symbolic acts as promoting student uniforms to help ease discipline problems.

A federal government backsliding to that plateau of faux change would condemn millions of U.S. students to more years in schools where the agenda often stresses preserving the job security of the adults who staff and manage them. In those schools, the needs of schoolkids come in second.

Obama didn’t hearten reformers this fall when, speaking with CNN, he listed education as his fifth priority issue (after the economy, energy independence, health care and tax cuts for the middle class). And his choice of Linda Darling-Hammond to lead a review of education policy for his transition team sparked fears that the Stanford prof—an establishment figure who dislikes such innovations as Teach for America—might be a serious candidate for education secretary.

If Obama awards the post to Darling-Hammond or someone else reluctant to smash skulls, he’ll be telegraphing that the education industry has succeeded in outlasting the Bush push for increasingly tough performance standards in schools. That would, though, be a message of gratitude to the teachers unions that contributed money and shoe leather to his election campaign.

We trust that Obama instead will make a statement for real improvement with a Shinseki-quality selection. One good option is Joel Klein, the reformer who heads New York City’s schools and who opposes efforts to dilute accountability. 

Duncan would be an excellent and less controversial choice—and not because he and Obama are friends and basketball buddies. To the extent that Obama has spoken about reforms, he and Duncan largely see eye to eye: Both men have supported charter schools and paying teachers for performance. It’s not clear, though, whether an Obama administration will venture into more drastic and absolutely necessary realms, such as urging districts to fire inept teachers more promptly and extend tenure protections to new teachers more cautiously. Duncan could grow into a voice for those improvements to help kids.

How much reform does Obama want? Education Week, a newspaper that covers the industry, recently alluded to tensions over that question within his transition team. The easy way out would be for the president-elect to choose an innocuous nominee, perhaps former Mississippi Gov. Ray Mabus or a current governor such as Kathleen Sebelius of Kansas or Michael Easley of North Carolina. All three have education credentials. But none has a reputation for demanding whatever it would take to radically improve America’s public schools.

Barack Obama, who knows from his own story the value of an excellent education, needs to choose a secretary who will insist that every schoolchild have privileges akin to those he had.

If making that happen costs Chicago the services of Arne Duncan, we’ll wish him good fortune in making Obama’s presidency mean real change for America’s schoolkids.

Copyright © 2008, Chicago Tribune

The fight over teaching science in Texas begins

The fight over teaching science in Texas begins

Social conservatives object to curriculum draft that supports sound science

Last week the first draft of the science curriculum that would be used in Texas schools for the next 10 years was released. The size of the fight to come was quickly made evident by members of the state Board of Education who want to inject religion into the public schools.

The draft, the work of science teachers and academics, would remove language from the guidelines that govern the teaching of science that mandates that classrooms include covering the “weaknesses” of major scientific theories. The only major scientific theory the conservatives have in their bull’s eye is evolution. The draft was the opening shot in what promises to be a long and contentious debate next year.

The guide that directs science teachers to include lessons on the “strengths” and “weaknesses” of scientific theories has been part of the state’s teaching guidelines for decades. But the guide has meant little because there is no detail on what that means. The growing power of the conservatives on the State Board, however, could make that mandate explicit, especially as the board goes through rewriting the entire teaching curriculum.

The illusion of balance and even handedness, exploring strengths and weaknesses, distracts from the real goal of the conservatives. They want to open up the public classroom to religious teachings about the origins of the universe. Such teachings are about faith and man’s relationship with a greater being, the kind of teaching that is appropriate for church, but not for public schools. The business of science classes is science, not religion.

The harm is that the teaching of science to Texas public schoolchildren suffers. The state, whose future depends on an educated work force, risks diluting the grounding for its students in the very bedrock principles of science with an outlook that is more properly in the realm of Sunday school and the pulpit.

But proponents of such teaching are unbothered by the risks to sound science by including the “weaknesses” mandate. Don McLeroy, chairman of the State Board, believes there are many weaknesses to the theory of evolution. “To teach it as scientific fact presents a real problem to me.”

This same conservative faction, which now holds the upper hand on the board, has already had its impact on the teaching of English. The board majority shoved aside the best thinking of English teachers whose own curriculum proposal was ditched. And the board has seen bickering in the past over the teaching of history. The single theme running through this is an agenda that sees the world narrowly and wants that view taught in the public schools.

The draft science curriculum won’t be taken up until next year but the lines of division have been drawn for some time. And those lines have been drawn by the candidates for election to the board. The state Board of Education is not a high profile body, although it can have enormous influence on what schoolchildren are taught. That makes it imperative that voters inform themselves about the candidates vying for a place on the board and whether those candidates sound teaching of science or whether they advocate some intellectually slippery notion of “weaknesses” of one of the bedrock principles of science.

From - Corpus Christi Caller-Times (www.caller.com) - Sept. 29, 2008.

How The Current Financial Crisis Was Created

How the Democrats Created the Financial Crisis: Kevin Hassett

Commentary by Kevin Hassett

Sept. 22 (Bloomberg) — The financial crisis of the past year has provided a number of surprising twists and turns, and from Bear Stearns Cos. to American International Group Inc., ambiguity has been a big part of the story.

Why did Bear Stearns fail, and how does that relate to AIG? It all seems so complex.

But really, it isn’t. Enough cards on this table have been turned over that the story is now clear. The economic history books will describe this episode in simple and understandable terms: Fannie Mae and Freddie Mac exploded, and many bystanders were injured in the blast, some fatally.

Fannie and Freddie did this by becoming a key enabler of the mortgage crisis. They fueled Wall Street’s efforts to securitize subprime loans by becoming the primary customer of all AAA-rated subprime-mortgage pools. In addition, they held an enormous portfolio of mortgages themselves.

In the times that Fannie and Freddie couldn’t make the market, they became the market. Over the years, it added up to an enormous obligation. As of last June, Fannie alone owned or guaranteed more than $388 billion in high-risk mortgage investments. Their large presence created an environment within which even mortgage-backed securities assembled by others could find a ready home.

The problem was that the trillions of dollars in play were only low-risk investments if real estate prices continued to rise. Once they began to fall, the entire house of cards came down with them.

Turning Point

Take away Fannie and Freddie, or regulate them more wisely, and it’s hard to imagine how these highly liquid markets would ever have emerged. This whole mess would never have happened.

It is easy to identify the historical turning point that marked the beginning of the end.

Back in 2005, Fannie and Freddie were, after years of dominating Washington, on the ropes. They were enmeshed in accounting scandals that led to turnover at the top. At one telling moment in late 2004, captured in an article by my American Enterprise Institute colleague Peter Wallison, the Securities and Exchange Comiission’s chief accountant told disgraced Fannie Mae chief Franklin Raines that Fannie’s position on the relevant accounting issue was not even “on the page” of allowable interpretations.

Then legislative momentum emerged for an attempt to create a “world-class regulator” that would oversee the pair more like banks, imposing strict requirements on their ability to take excessive risks. Politicians who previously had associated themselves proudly with the two accounting miscreants were less eager to be associated with them. The time was ripe.

Greenspan’s Warning

The clear gravity of the situation pushed the legislation forward. Some might say the current mess couldn’t be foreseen, yet in 2005 Alan Greenspan told Congress how urgent it was for it to act in the clearest possible terms: If Fannie and Freddie “continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,” he said. “We are placing the total financial system of the future at a substantial risk.”

What happened next was extraordinary. For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.

Different World

If that bill had become law, then the world today would be different. In 2005, 2006 and 2007, a blizzard of terrible mortgage paper fluttered out of the Fannie and Freddie clouds, burying many of our oldest and most venerable institutions. Without their checkbooks keeping the market liquid and buying up excess supply, the market would likely have not existed.

But the bill didn’t become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn’t even get the Senate to vote on the matter.

That such a reckless political stand could have been taken by the Democrats was obscene even then. Wallison wrote at the time: “It is a classic case of socializing the risk while privatizing the profit. The Democrats and the few Republicans who oppose portfolio limitations could not possibly do so if their constituents understood what they were doing.”

Mounds of Materials

Now that the collapse has occurred, the roadblock built by Senate Democrats in 2005 is unforgivable. Many who opposed the bill doubtlessly did so for honorable reasons. Fannie and Freddie provided mounds of materials defending their practices. Perhaps some found their propaganda convincing.

But we now know that many of the senators who protected Fannie and Freddie, including Barack Obama, Hillary Clinton and Christopher Dodd, have received mind-boggling levels of financial support from them over the years.

Throughout his political career, Obama has gotten more than $125,000 in campaign contributions from employees and political action committees of Fannie Mae and Freddie Mac, second only to Dodd, the Senate Banking Committee chairman, who received more than $165,000.

Clinton, the 12th-ranked recipient of Fannie and Freddie PAC and employee contributions, has received more than $75,000 from the two enterprises and their employees. The private profit found its way back to the senators who killed the fix.

There has been a lot of talk about who is to blame for this crisis. A look back at the story of 2005 makes the answer pretty clear.

Oh, and there is one little footnote to the story that’s worth keeping in mind while Democrats point fingers between now and Nov. 4: Senator John McCain was one of the three cosponsors of S.190, the bill that would have averted this mess.

(Kevin Hassett, director of economic-policy studies at the American Enterprise Institute, is a Bloomberg News columnist. He is an adviser to Republican Senator John McCain of Arizona in the 2008 presidential election. The opinions expressed are his own.)

To contact the writer of this column: Kevin Hassett at khassett@aei.org

Last Updated: September 22, 2008 00:04 EDT

Team McCain Takes the Lead

Team McCain Takes the Lead

Two extraordinary things have happened since Thursday afternoon in a presidential election that had been largely stuck in a narrow trading range for the past few weeks.

First, Barack Obama’s convention speech — amazingly, shockingly — set out to polarize this election in ways bound to anger anyone with a conservative instinct anywhere in their political body. No Democratic class-warfare cliche went unexpressed. No cheap attack on John McCain went unmade — and made without humor, class or grace. (How could it possibly be an effective Democratic attack to accuse McCain of cowardice in confronting al-Qaeda?) Anyone viewing Obama for the first time would have seen the most typical, ordinary, unreconstructed Democratic nominee since Walter Mondale (though with far greater political skills).

Maybe I am so disappointed because I half-believed in Obama, at least at the beginning. On Thursday night, he made nothing of his historical moment. And he purposely set out to alienate people like me. It worked.

Second, McCain’s choice of Gov. Sarah Palin turns out to be brilliant. It achieves four things:

1) Every religious conservative I have talked to since the selection is more excited about John McCain than I have ever heard before.

2) Palin is a historic pick — if elected as vice president, she would most likely be America’s first female president. Though the evangelical/hunter/beauty-contest contestant is unlikely to appeal to the hardest core of Hillary’s feminist supporters, she is likely to appeal broadly to most women, who will be undisturbed that she doesn’t fit feminist stereotypes. The left’s main response to Palin’s unconventional background has been to sneer — but a sneer is not an argument.

3) Palin has a genuine middle-class story — including a husband who is a member of the steelworkers union and a snowmobile racer — that makes Joe Biden look like the Prince of the Senate he has been for most of his life.

4) Palin perfectly fits McCain’s reform Republican narrative — her efforts to oppose the corrupt Republican machine in Alaska have been impressive and popular.

Palin is relatively untested. But I don’t think that experience will be the main issue she faces. She has more executive experience than any of the other three candidates on either ticket (which is itself rather depressing). Having worked as a Senate staffer for many years, I am not convinced that hosting hearings, issuing press releases and giving floor speeches is the most relevant kind of experience for a president. Recent presidents since Ronald Reagan have been governors for a reason (among others) — because management seems more impressive than bloviation.

Palin’s main issue will be performance, not experience. Has she risen too fast, too early, to a position beyond her skills? I have met her only once, at a small lunch at the Alaska governor’s mansion last summer. I was impressed with her likable manner and sharp political instincts. But the spotlight of a presidential campaign is bright — and candidates quickly shine or wilt.

This campaign is moving quickly — and Team McCain now seems more nimble, innovative and effective than Team Obama.

Why not VP Palin?

Gary Loftis August 31, 2008Jon McCain shocked the world Friday when he selected Gov. Sarah Palin, the relatively obscure governor of Alaska, to be his vice presidential running mate. The response was immediate and polarizing — possibly McCain´s intent — but Sarah Palin may become the catalyst that shakes America out of the political coma that has kept the Congress and the Presidency from addressing those issues that are gradually reducing our nation to a dependent of the Third World.

Among the most virulent criticisms leveled against Palin is that she has no experience, which is to say no relevant experience. I did some research and found that her experience compares favorably with that of the Democrat presidential nominee…

She has been an elected state chief executive for 20 months. He has voted “Present” as a junior senator and run for president for 2 years.

She has a cumulative total of 8 years as an elected executive. He has none.

She has demonstrable expertise in energy, conservation, and government cost containment. He has “hope.”

Another area of criticism is her fitness to become Commander-in Chief of the Armed Forces, should John McCain become incapacitated. As a governor, she exercised command authority over the Alaska National Guard, so she is more familiar with the military/command relationship than either Democrat candidate. Also with a son in the Army on the ground in Iraq, “I support the troops” will be far more than political rhetoric to a VP Palin.

A third criticism is her “lack of a national standing.” Given the sorry lot of candidates with national name recognition in this election cycle, the criticism should be an accolade. For nearly four decades, American politics has been deadlocked by the same personalities in both parties. Positions on issues are the results of telephone polls, focus group research, and media interview opportunities. Nobody knows what politicians really believe except their secretaries, wives, and girlfriends. Sarah Palin is a true outsider with a real record of attacking wasteful government spending, reforming government processes, and prosecuting those who violate the public trust.

Then, there is what is referred to as “women´s issues,” traditionally including children´s welfare and abortion rights. As a middle class working mother, she is far closer to those issues that impact children than any other candidate offered by either party. Additionally, the fact that she has a special needs child means she will be sensitive to the needs of the millions of Americans who have special challenges; as a Parkinson´s Disease patient, that is a huge plus to me.

As for abortion rights, the issue has been shrouded in political untouchability for a generation. Perhaps a woman candidate who chose to give birth to a child with what many would classify as a defect may become a definitive referendum that finally determines how strongly Americans support abortion.

Finally, we come to the question of her political and personal credibility. Sarah Palin came into politics by grass roots organizing. Once there, she was appalled by the corruption she found, overthrew an entrenched state administration, and prosecuted some of the most corrupt officials in the state. As far a personal credibility goes, when you live in a small town in the far north, you get very close to your neighbors because you depend on each other to survive. The mere fact that she was elected mayor twice attests to her integrity and the respect of her peers; you can´t pretend to care when the temperature is 40 below.

So now we are back to the question: Why not VP Palin? I can´t come up with a single reason!

McCain's V.P. Choice Impacts Energy Debate

Analysis: McCain choice impacts energy debate

By H. JOSEF HEBERT – 2 hours ago

WASHINGTON (AP) — If Democrats hoped to paint Republican John McCain a pawn of Big Oil, their task has become a bit more complicated with the selection of Alaska Gov. Sarah Palin as his running mate.

While an ardent advocate for more drilling — off Alaska, off the Atlantic and Pacific coasts and in the off-limits Arctic National Wildlife Refuge — Palin also has shown she’s not shy about confronting the likes of Exxon Mobil, BP and ConocoPhillips.

As the presidential campaign moves into high gear in the coming weeks, McCain and Democratic nominee Barack Obama will duel over two overriding energy issues: whether to expand offshore oil drilling into areas long off-limits and whether to impose new taxes on the biggest, wealthiest oil companies enjoying tens of billions of dollars in windfall profits.

Palin, a popular governor in a state that for decades has been closely tied to oil, may be a political novice, but she is anything but a newcomer when it comes to these two issues. And her emergence as McCain’s No. 2 and possibly the country’s next vice president, could shift the campaign’s energy debate.

When it comes to the oil industry is Palin friend or foe?

The answer may not be black or white but shades of gray.

“No one is closer to the oil industry than Gov. Palin,” Carl Pope, executive director of the Sierra Club, proclaimed, reflecting the views of a cross section of environmental activists. They cite her eagerness to embrace expanded offshore oil development, her lawsuit against further protection of polar bears so as not to hinder oil drilling in Alaska’s ice-filled waters and her ardent support to allow oil companies into the Alaska wildlife refuge, known as ANWR.

Drilling in the refuge’s sliver of coastal tundra in northeastern Alaska — an area viewed by environmentalists as a treasured wild place that also harbors 11 billion barrels of oil — was believed to have been a dead issue. McCain opposes drilling there, as does Obama.

But that too might be changing.

The selection of Palin “places ANWR energy production front and center in the policy debate once again,” maintains Brian Kennedy, senior vice president of the Institute for Energy Research, a group that has been pushing for increased domestic oil production and has some oil companies among its sponsors.

While McCain has said he hasn’t changed his mind about ANWR drilling, he also has said that he is willing to re-examine the issue and that among those with whom he wants to consult is none other than the governor of Alaska.

When it comes to taxing oil companies, Palin’s selection might well be a doubled-edged knife for the McCain campaign.

It’s an issue that gives Palin credentials as not being a lackey of Big Oil — which many politicians in Alaska have tended to be over the years. Shortly after becoming governor in 2006, she pushed new oil taxes through the Alaska Legislature, saying the taxes proposed by her predecessor, Frank Murkowski, were too favorable to the oil companies. She was bucking Exxon Mobil Corp., BP PLC and ConocoPhillips, which strongly opposed the legislation.

The new tax brought in an estimated $6 billion last fiscal year, bulging Alaska’s treasury with an expected surplus of as much as $9 billion — enough so that Palin pushed another initiative: giving each Alaskan $1,200 to help them cope with high energy costs.

Sound familiar?

Obama has proposed taxing the windfall profits of the country’s five biggest oil companies and using the money to give Americans $1,000 to pay for high energy costs. Palin called such financial help “a tool that must be on the table” although she differs with Obama on where the money should come from.

Like McCain, Palin says a national windfall profits tax on oil companies will hinder domestic energy production. Democrats are expected to be quick to ask: If it’s good for Alaska, why isn’t it good for the country?

But Palin has bucked oil companies in other ways. She pushed for more competition for the construction of a $26 billion pipeline to bring natural gas from the North Slope to the lower 48 states by favoring the TransCanada pipeline project, backed by independent companies over one proposed by BP and ConocoPhillips. She has tangled with Exxon Mobil Corp. and other oil companies over their reluctance to develop gas fields on state land.

Republicans hope that will neutralize claims that the McCain ticket is too cozy with Big Oil and shift more of the energy debate away from oil taxes to the need for expanded offshore drilling and generally more domestic energy production — issues on which Palin has been outspoken.

Don’t expect the Obama campaign, not to mention many of the environmentalists activists, to cooperate.

“Big Oil extended its reach into the campaign of John McCain,” bemoaned Margie Alt, executive director of Environment America, a federation of state-based environmental groups, after Palin’s selection became known.

Mark Hellenthal, a GOP pollster in Alaska sees it differently. In the state “she’s viewed … as almost anti-oil. She’s probably pro-oil from a national perspective, but she’s not in the pocket of Big Oil. She’s fought them at every step.”

EDITOR’S NOTE _ H. Josef Hebert has covered energy and environmental issues for The Associated Press since 1990. AP writer Steve Quinn in Juneau contributed to this report.

John McCain isn't George Bush - and the voters know it

From The TimesAugust 29, 2008

John McCain isn’t George Bush - and the voters know it

After a backward-looking convention, the Democrats’ strategy is to make the election look like a rerun of 2000 and 2004

Gerard Baker

The Democrats had an excellent convention in Denver this week. All the stars in the party’s firmament glittered as brightly as ever: Hillary, Bill, Chelsea; the Clintons; Hillary, Bill, Hillary.

On Monday all the talk was about Hillary’s delegates; how bitter they were and how they had not really achieved closure after the primary election which - and you may not have known this - she actually won if only the votes had been counted properly.

On Tuesday Hillary herself was the star. Introduced by her elegant daughter, Chelsea, she appeared in a blazing orange pantsuit that actually shone in the lights so that when you tried to look at her all you could see was a kind of solar glare.

On Wednesday, Hillary was at it again, in a more terrestrial blue this time, taking the floor of the convention at the pivotal point of the state-by-state roll-call vote for the presidential candidate, and calling for suspension of the process and a decision by acclamation.

Later that evening, the highlight of the week was Bill. He wiped away a tear or two as delighted delegates welcomed him back into their arms. When he had finished, everybody let out a huge sigh of relief and gratitude, finally knowing that he too was now over it. He had graciously forgiven them for ruining his year by choosing not to extend the dynasty.

Oh yes, I almost forgot. Last night somebody called Barack Obama came along and gave a really good speech. My goodness, he’s a talented young man and will surely be a real presidential contender himself one day. The Clintons are going to like him.

In case we didn’t know it already we were shown this week that with the Clintons, it’s all really their story even when it’s somebody else’s story. Gore, Kerry, Obama - they may come and go but the Clintons stay for ever. Their performance was one extended recitation of that old narcissist joke: “Enough about me. What do you think about me?”

But it was not only another repeat of the old Clinton drama that gave the Democratic National Convention an oddly retro feel. There was, of course, Ted Kennedy, stricken with cancer, bravely mustering the strength to deliver one last rhetorical flourish that whispered echoes of a great Democratic past.

And there were occasional attempts by desultory groups of protesters outside to recreate the Spirit of ‘68, when a previous Democratic convention dissolved in violence and recrimination. This time, however, nobody’s heart was really in it.

But by far the clearest sign of how backward-looking this progressive party has become was its attempt to make the 2008 election a rerun of the elections of 2000 and 2004, when George W. Bush was the Republican nominee.

This is the primary strategy of the Obama campaign for the presidency - to run against Mr Bush, even though he is not on the ballot. It is a completely reasonable plan and if they can pull it off they surely ought to win. Despite the doubts about Senator Obama, his inexperience and inability to connect with ordinary Americans, President Bush remains about as popular with those same Americans as the Chinese Olympic gymnastic team.

Every speech from the podium this week sought to bind John McCain, the actual Republican candidate this year, to his predecessor. The latest television advertising features a shot of Senator McCain and President Bush embracing.

Six months ago, it would have been an implausible claim. Senator McCain, of course, ran against Mr Bush in the 2000 Republican primary and lost after a bitter fight.

From then on he became the most reliably anti-Bush figure in the whole Republican Party. He clashed with the President over tax cuts, judicial appointments, the conduct of the war in Iraq, the treatment of detainees in the War on Terror and on campaign finance reform.

When he sought his party’s nomination in the primary this year, he was attacked by almost all the other candidates for being insufficiently supportive of President Bush’s policies and core conservative principles.

But in the course of winning that primary, of course, Senator McCain had to make some accommodations with the party’s base. Yet since he won without firmly convincing conservatives that he was one of them, he has continued to close the rhetorical gap between himself and the President.

And it has paid off. Surprisingly, given his once-pariah status among Republicans, Senator McCain is now more popular among his party’s voters than Senator Obama is among his, with 90 per cent of Republicans backing their candidate, against 80 per cent of Democrats for theirs. But this very success is what Democrats now believe that they can exploit.

Next week in St Paul, Minnesota, at his own party’s convention, Senator McCain has a tricky task: to keep his party’s base - among whom President Bush is still popular - energised, while persuading the rest of the electorate that he is not in fact a Bush clone.

He may not be helped by what could be a freakish moment of meteorological fate. On Monday night President Bush is scheduled to speak to the convention at almost precisely the moment that a potentially lethal hurricane is expected to make landfall at or near New Orleans. Perhaps God is a Democrat after all.

And yet I suspect that the charge that Senator McCain is running for the third Bush term will not, in the end, stick. The Arizona senator is not George Bush, and Democrats, and I suspect voters, know that.

On the big issues that will confront the next president, in fact Senator McCain offered a sharply divergent approach. When President Bush was fiddling two years ago as Iraq burnt, Senator McCain was urging a change of strategy, one that has now borne fruit for the US.

While President Bush was gazing into Valdimir Putin’s eyes and seeing the purity of his soul, Senator McCain was giving warning of the dangers of a resurgent and authoritarian Russia. While the President was cementing a governing style that emphasised maximal partisanship, Senator McCain was building bipartisan coalitions with Democrats in Congress.

There will be plenty of warm words for President Bush next week. But Senator McCain will be quietly making the case that, if he had been president these past four years, his party and his country would be in much better shape.