Thursday, October 16, 2014

What Republicans Should Do If They Win the Senate

Republicans are clearly favorites to retake the Senate. Based on current polling, they would pick up nine seats. It's time to start thinking about what an Republican-controlled Congress should do.

Those that have given it thought, and it's not many, seemed to either be focused on legislation that will make Obama look bad when he uses the veto (say, a strict border bill) or legislation that he actually might sign (e.g. piecemeal Obamacare fixes).

They are missing the bigger opportunity. There's a decent chance we will get a Republican president in two years. Why not pass a flurry of long-sought-after big ideas? Yes, Obama will veto all of them, but they will be "shovel ready" for a Republican president. All he (or she) has to do is pull them off the shelf and sign them. Imagine what a productive first 100 days it could be!

This sort of opportunity does not come around too often. I checked, and in the last 100 years, these circumstances have presented themselves only twice, for Warren Harding in 1921 and George Bush in 2000.

No one is talking about this. This could even become central to the Republican primary process - i.e., which bills would you sign? I only hope Boehner and McConnell don't completely spit the bit.
  So, what should Republicans pass? Here's my list:

(Starting with a big one)

1. An optional, alternative flat tax for all individuals and corporations of 20%, plus eliminate the estate tax. Optional so that all people who whine about losing, say, their mortgage deduction can still opt for the old, hideously complex system. However, when they see their neighbors filling out a post card and spending 5 minutes on their return and not paying an accountant thousands, they will quickly rearrange their lives to take advantage of the new system. The economic benefits would be breathtaking.

Here's the kicker: sunset the IRS in the same bill. Give it 5 years, by which point everyone will be expected to convert to the new system.

The Dems will howl about fairness, but everyone, of all political stripes, hates the IRS, and now we know it's corrupt, as well. There are no small fixes anymore. The only way to abolish it is to have a system that's so simple that you don't need a huge agency to oversee it. Roll responsibility for collections into some small Treasury division and call it something else. Five years also gives the 120,000 people who work at the IRS ample chance to find other work. Taxpayers will save the $11 billion it takes to run it (think of the irony of spending $11 billion in the name of collecting taxes).

This also solves the problem of crony capitalism, since the source of most of that is in the form of tax code exemptions. This angle will help sell the idea across the political spectrum. Also, wouldn't it be great to say, "Senator X voted to keep the IRS?"

2. Connie Mack's "Penny Plan." This requires the government to cut 1 penny out of every dollar until the budget is balanced. This might take 6 or 7 years. If Congress can't agree on where cuts should fall, then automatic, across the board cuts are mandated. Wonderfully simple and marketable. What household hasn't been forced to cut a penny in recent years? If we have to, the government should have to.
3. The regulatory state is out of control and has led to an unconstitutional shift in power to the executive branch. This must be stopped. Require all federal agencies to conduct a third party cost-benefit analysis on any proposed regulations. Any regulation exceeding a $100 million net cost to the economy would require explicit legislative approval.

4. Repeal and replace Obamacare. I won't write much about this one since it's well covered by others, but the "replace" part should include selling insurance across state lines and tort reform. As an aside, I get wild with anger when I hear Republicans like Susan Collins say things like, "we've moved passed" the idea of repealing Obamacare. Holy crap! If our Republican senators can't repeal a law that remains wildly unpopular, what in the hell can they do?

5. Approve Keystone. A no brainer - good for jobs, good for the economy, and a bonus: unions will like it.

6. Abolish Freddie and Fannie and all other government meddling in the housing market.
7. Dramatically increase the punishments/penalties for Medicare and disability fraud.
8. Make it legal for companies to hire interns under age 25 for specific, limited periods for no salary. (Not a huge one, but close to my heart.)

9. Get the Senate to pass the border bill that's already passed in the House.

10. Create an annual "Congressional Entrepreneurship Award." Who's creating the only jobs right now? Who's coming up with the new technologies that may be the only way we achieve enough growth to offset the $100 trillion in funded and unfunded liabilities we have? Entrepreneurs. And while politicians are constantly getting things named after them (for giving away other people's money), Hollywood types get a different awards show every week, journalists are feted with Pulitzers, academics with Nobels and a 100 other things, what kind of official recognition do entrepreneurs get? Nothing, and they take much bigger risks than anyone else as well. Guys like Elon Musk and Jeff Bezos might be the most important people in the world right now in terms of their lasting impact. Or how about Elizabeth Holmes, who has created a way to dramatically reduce the cost of a blood test? The prevailing wisdom is that these accomplishments are somehow sullied by the attendant remuneration. That's an attitude that must be changed, and governmental recognition would help.

Bonus round: one thing NOT to do, which is screw in any way with the internet.

National Pulse Index Update

The latest polls show the wind at the backs of Republicans nationwide. This is significant, because, being up a net 176 point since I started looking at the numbers in May, it's arguable that they have less upside.

Still miles to go before anyone sleeps.

For an explanation of all this, click here.

Friday, September 26, 2014

National Pulse Index Update

Here's the latest. Marginal wind behind the Republicans' backs, but volatility has been decreasing. Calm before the storm?

See the last post for an explanation.

Thursday, September 18, 2014

The National Pulse Index

Every two years, we here at the Naked Dollar trot out our proprietary political model called the National Pulse Index.The purpose of this index isn't so much to predict elections as it is to see which party, nationally, has the political momentum. who has been winning the news cycles. The model does this by aggregating polling changes in every available race, at every level. (For a complete explanation, see below.)

This is a daily graph going back to early May. (Sorry, I can't seem to make it show dates - curse you, Excel!) Lines going up mean the Republicans have momentum, down the Democrats. You can see that there's been a whisper of Dem momentum of late,and a couple of really big Republican moves earlier. Overall, Republicans are net +58 polling points since the start (although the graph looks like an oscillator, it is not.)

I will update this a few more times before election day so we can see which way the wind blows.


I used to run a quant hedge fund. What a quant does is take lots of data and make sense out of it. So, how to use this approach to capture the ebb and flow of an election cycle at the national level? Is the national mood swinging Democrat or Republican?

The approach I came up with four years ago is a simple metric, and the purpose is to use data - not the media or the water cooler - to track short term swings in political momentum. As it happens, it's a quick way to determine if the media narrative has any merit.

Essentially, the Index aggregates polls from everywhere, from presidential down to the House level. The idea is to pull in a huge and continuous sample, exploiting the wisdom of crowds. Specifically, the Index compares each new poll with the previous poll from the same race. The other day, for instance, Fox News reported that Terry Branstad, who's running for re-election as Governor of Iowa as a Republican, was up by 13 points. While this may seem like good news for Republicans, the previous Quinnipiac poll actually had him up by 23. I assign this a "minus 10" for the Republicans.

Each day, as new polls come out, they are compared to the previous polls from the same races. The numbers are added up to get a net score for the day. Then, I use a moving average of the last five days to smooth out the data. This gives us a very good picture as to which side has the momentum.

Allow me to make my case for why this works.

1. On any given day, this will capture the aggregate opinions of up to 20,000 people, whereas an individual poll (that might get one side or the other excited) can have as few as 300 people.

2. There really is a national "mood," and it really does matter which way it's moving. Opinions are infectious. It matters in Ohio what people are thinking in Alabama. They may not be perfectly in sync, but they do tend to move in the same direction at the same time. Thus, if Governor Jerry Brown just went from 20 points up to 30 points up, it doesn't mean anything for Brown - he's still going to win easily - but it does mean the mood in California is moving in a certain direction. This makes it likely the mood is moving in the same direction elsewhere.

3. Aren't some of these polls partisan and/or sloppy? Absolutely, but the Index takes them all, because the very next poll will likely net it out. Bad polls tend to get balanced out, in other words. To the extent that they don't, they probably have useful information, which is why one doesn't want to make judgments about which polls to use, and which not to.

4. What about the Generic Ballot polls, the ones where people are asked whether they intend to vote for a Republican or a Democrat? Don't those show the national pulse? Yes they do, but they don't come out every day, and they survey far fewer people (as few as 700).

Thursday, September 11, 2014

The Growing Trend of Hate Crime Hoaxes

Perhaps it started way back with Tawana Brawley. When it was reported that "KKK" and "N*gger" were written on her body in human feces, I remember thinking that it just didn't sound right. Not that bad things, including hate crimes, don't happen, but this just sounded like a cliche, or someone's fantasy of a hate crime. And it was, of course. It was a 15-year old's attempt to get out of trouble for being late.

Later, motivations would change. Maybe a decade after Brawley, a black student at my very own high school, Milton Academy, had a nasty note thrust under his door. Lots of n-words, of course, and this: You don't belong here in our world. I remember thinking, people just don't speak like that, or even think like that, any more. This is a liberal Massachusetts prep school we're talking about. I smelled a hoax, and I suggested as much to the school. Of course, it was, but they didn't figure that out until after hand-wringing town halls and the involvement of the Massachusetts Attorney General.

Lately, the trend has accelerated. Just this month, someone posted "Whites Only" and "Coloreds" signs over water fountains at Sweet Briar College. They also made threatening phone calls, saying things like, "First Ferguson, now this!" The school president was prepared to come down hard, until it turned out that the perpetrator was black. Then it became a teachable moment about hate and bigotry, and perhaps we should we should even thank the young woman for raising our consciousnesses.

Last year, two students perpetrated a series of stunts at Oberlin, including flying Nazi flags and painting swastikas on classroom walls. The very liberal school was not-so-secretly excited to have perpetrators of right-wing hatred so palpably in their midst, and classes were abruptly cancelled for a "Day of Solidarity," during which everyone got to express their feelings. It turned out that the bandits were two Occupy types frustrated by the lack of anything evil and right-wing to rail against. Oops, this didn't fit the school's narrative at all.

The solution? The school president, who I am embarrassed to say is a college classmate of mine, tried to cover it up. He failed, and was fired. 

(Hahahahaha. That last part was a joke. He's still there, and probably got a big raise.)

There have been many other incidents. There was the (black) Columbia professor who hung a noose outside her office door to deflect attention from the fact the school was about to fire her. There was the University of Wyoming woman who posted fake rape threats to herself on Facebook and the two lesbians who spray-painted "Kill the Gays" on their garage door. There was the Central Connecticut State University woman who put fake, anti-gay hate messages to herself under her door, prompting an anti-hate rally at which, conveniently, she spoke. And who can forget the Duke lacrosse incident.

There are many, many more. Perhaps my favorite was at Vassar college last year when someone spray-painted things like, "F*ck N*ggers," and "Hey, Tranny, you know your place" on walls around campus. The offending writings were discovered by the college's Bias Incident Response Team. The ensuing investigation revealed that the incidents were actually committed by...wait for it...the Bias Incident Response Team.

It seems that we conservatives just aren't mean and hateful enough. There are college freshman out there who are in danger of not having properly raised consciousnesses, and if we're not going to play our part, the left will just have to do it for us.

Wednesday, August 20, 2014

The GOP Presidential Field Could Be Huge

Here are the names of all the Republicans that I hear are considering a run. Some are widely known, others might come as a bit of a surprise:

Ted Cruz
Rand Paul
Mitt Romney 
Chris Christie
Mike Pence
Scott Walker
Jeb Bush
Bobby Jindal
Rick Santorum
John Bolton
Rick Perry
Paul Ryan
John Kasich
Mike Huckabee

Did I miss anyone? Let me know.

This is a HUGE potential field, and it will coalesce into the establishment versus the conservatives. It will require some sorting out, but I am told the GOP learned its lessons from 2012 that nineteen debates is a horrible idea.

Tuesday, July 22, 2014

The Romney Drumbeat Begins

Word has it, in certain circles, that, despite protestations to the contrary, Mitt Romney is definitely interested in a third run at the White House. Indeed, his surrogates are already floating the idea. Two weeks ago, Romney insider Emil Henry wrote a piece for Politico outlining how Romney could win. (Full disclosure: Emil is an old friend.)

The piece only addressed Romney's chances in the general election, however, not the primaries. But here, there may also be a strong case. You see, unlike 2012, there is a huge crop of principled conservatives that could potentially run. Cruz, Rubio, Paul, Jindal...these people terrify Wall Streeters and the country club crowd, not to mention most of the Washington Republican establishment. The moderates are desperate for an alternative, and that seems to have boiled down to three choices: Chris Christie, Jeb Bush, and Romney.

The problem is that Bush and Christie each has a lot of hair. Christie has Bridgegate and, perhaps more seriously, a festering scandal about the allocation of bond proceeds. And he's wicked fat.

Bush has family issues. His wife has been busted for smuggling luxury goods through customs and reportedly has substance abuse problems. His daughter has been to jail for crack use. And, let's face it, "Bush" isn't a strong brand right now.

This leaves Romney, ever the eagle scout.

The scenario is simple: the establishment rallies behind Romney while conservatives divide themselves between their guys. It could end up being an easy win, and, as I've outlined before, it would be a mistake. The GOP loses with moderates, and it wins with conservatives. Winning the presidency for the Republicans is a matter of turning out the base, not winning independents.

Is there is a compromise candidate out there, one who appeals enough to both sides? Scott Walker comes to mind, although he needs to get re-elected in Wisconsin first. He is also a tad bland. I admire the hell out of the guy, but he doesn't light up the room.  

Why not Kasich?

Another is John Kasich, governor of Ohio. I wonder why there hasn't been more talk about Kasich. There are twenty Republicans you can bet on for 2016 with the London bookmakers, including the likes of Susana Martinez and Dr. Ben Carson, but not the Governor of Ohio. In many ways, though, he is a dream candidate. 

Tall and presidential looking, exceedingly articulate, Kasich is the former Chair of the House Budget Committee - back when we actually ran a surplus. In Ohio, he turned an $8 billion dollar deficit into a $1.5 billion dollar surplus, all while lowering taxes. And did I mention he's from Ohio?

Kasich, like Walker, needs to get re-elected in the fall. But keep an eye out after.

Sunday, July 6, 2014

Well, That Didn't Take Long - Here Comes Elizabeth Warren

As I said in my last post, the Democrat nomination process will be more interesting than everyone thinks. It is now being reported that Obama has reneged on his promise to the Clintons to support Hillary (in exchange for Bill's full-throated support in 2012), and that he is promising Elizabeth Warren the full support of the Obama machine. If Warren is enticed to say yes (the country needs you, I need you), 2016 will basically be a replay of 2008 with the two Democrat machines squaring off.

One can only imagine the depths of anger in Camp Clinton. They must be furiously hitting the phones, making sure their people stay in line, promising whatever. And what an unnerving time for party loyalists, the kind who are looking for ambassadorships. Where to place their chips? It was all so easy until now.

In my last post I speculated that the Clintons would reach out to Warren and offer the Secretary of the Treasury post. C'mon, Elizabeth, you can spare our party a battle it doesn't need and get to be one of the most powerful people in the world at the same time...One can hear Bill laying on the sales job with his unctuous charm.

It wouldn't surprise me if that call was being made today.

Friday, July 4, 2014

Election 2016: Early Democrat Handicapping

Hilary's a shoe-in, right? 


I have been saying for a while that Hillary is vulnerable, but now that seems to be a more widely held notion. To be blunt, she is not her husband. She possesses none of his personal charm or on-the-fly political instincts, nor is she as facile a liar. She makes things up to establish empathy with her audience that stand zero chance of holding up to scrutiny (Bill does this too, but his fabrications are always harder to disprove). 

Remember when Hillary claimed she had to duck beneath sniper fire in Bosnia? Or how about when she claimed, at the time she was running for the Senate from New York, that she was a life-long Yankee fan? Suuuure, a feminist who grew up in Chicago and went to college in Massachusetts and then lived in Arkansas was secretly following the Bombers every move. 

So, here's quiz question: When you're running for office and someone hands you a hat from the hometown team, what do you do? You freakin' put it on! Anyone knows that. When someone handed Hillary a Yankee hat at a press conference, she held it out to the side like it was toxic. Probably didn't want to mess with her helmet hair.

She is stilted, and more than that, thin-skinned. We saw that in a recent interview with more-than-friendly reporters. On top of all this, there are legitimate questions about her health. 

In sum, she is a highly flawed candidate, but making things worse, for her, is that Democrats love finding the hot new thing. In fact, it is being reported that the Obama machine is quietly trying to lay the groundwork for another Obama, likely Elizabeth Warren. It's no secret, particularly after the publication of Ed Klein's Blood Feud, that Obama doesn't care for the Clintons (and vice verse).

No, Hillary will not be coronated, not unless the Clinton machine finds a way to buy off all potential challengers. (Since there aren't many - the Dems have a weak bench - this is a possibility. They might dangle Secretary of the Treasury in front of Warren).

What do the betting markets say?

                                Odds of Winning Nomination

Hillary Clinton                              61%
Elizabeth Warren                          7%
Joe Biden                                      7%
Andrew Cuomo                             4%
Deval Patrick                                2%
Rahm Emanuel                             2%
Deval Patrick                                2%
Martin O'Malley                            2%

(Note: this doesn't add up to 100% as there are many others at 1% or less.)

The following are buy, sell, and hold recommendations relative to each person's current odds.

First, holy cow, Hillary's only at 61%? Wouldn't you have guessed about 85? Seems like the markets are as skeptical as I am. I was all ready to rate Hill as a strong sell, but at 61, I'll call her a hold. Let's remember she will have more money than Croesus to play with, and many favors owed to her and Bill.

Elizabeth Warren at 7% is the new darling of the far left. She doesn't just say she hates Wall Street, she really does. Compare this to Hillary who has collected over $3 million from Goldman Sachs in the form of contribution, speaking fees, etc. Warren, like Hillary, also gives the Dems a shot at another "first," as in the first woman president. Strong buy.

Joe Biden...seriously? Strong sell.

Andrew Cuomo has tacked hard to the left in New York lately, striking a deal with Bill De Blasio and the SEIU (a hard left labor union). This either means he is worried about being re-elected this fall or he's tidying up his bone fides with the left, nationally, signalling a presidential run. Personally, I don't see any incipient "draft Cuomo" movement out there, and I don't think he would play well at all on a national stage. Strong sell.

Deval Patrick didn't particularly shine as Governor of Massachusetts, but there are close ties to Obama and he gives a god speech. At 2% Patrick is a buy.

Rahm Emanuel: see Joe Biden. Strong sell.

Martin O'Malley, the Governor of Maryland, is popular on the left and has been quietly working hard beyond Maryland's borders. Could be a sleeper. Buy.

I'll throw one more in the mix. My college classmate, Amy Klobuchar, the Senior senator from Minnesota, is another interesting sleeper, and currently trading at less that 1%. She checks all the boxes for liberals but has appeal to the middle as well. She comes across as genuine and nice, and enjoys high ratings in her home state. Only issue is that she might be too nice to take on the Clinton machine. Still, at less than 1%, she's a strong buy.

Thursday, June 26, 2014

Obama and the Death of Honest Journalism

Not even the left tries too hard to argue that the mainstream media is ideologically impartial, not anymore. That reporters are overwhelmingly liberal is nothing new, of course. They vote that way and they cover news that way. Even Harvard, studying coverage of the 2008 election, was forced to conclude there was considerable bias in favor of Obama. (How it must have pained them to reach that conclusion.) 

But the problem is reaching farcical proportions.

Sure, there's Fox News and talk radio, but they mostly preach to their own choirs. They don't have the ability to create what one observer calls the "drumbeat." Without the drumbeat, scandals soon whither and die. More on that in a moment.

What most don't realize is that media bias is most pernicious in what they don't report. Stories that don't advance their world view are simply ignored, or relegated to page A17. It's clever, really, because it's harder to be accused of malfeasance for something you didn't do.

Which brings us to the Obama administration and its incestuous relationship with the Fourth Estate. There certainly has been lots to write about. In fact, sometimes it's hard to keep track of all the scandals surrounding this White House. Here's a list that is by no means complete, and you'd be forgiven if you've forgotten some:

  • IRS used as a political tool and subsequent cover up
  • Benghazi and false story about an internet video
  • Spying on the AP
  • Spying on reporter James Rosen 
  • Fast and Furious
  • Obamacare roll-out
  • HHS Secretary Sebelius soliciting money from companies HHS regulated
  • Eric Holder (likely) committing perjury in front of Congress (see James Rosen, Fast and Furious)
  • GSA spending on wild parties and Vegas boondoggles
  • VA mismanagement and neglect of veterans
  • Opining on local criminal matters before they are settled (Robert Gates, Treyvon Martin)
  • Solyndra
  • EPA chief Lisa Jackson using a fake email personality to avoid scrutiny
  • Violation of War Powers Act invading Libya without Congressional advise and consent
  • Swapping al Qaeda thugs for U.S. deserter without Congressional advise and consent
  • Release of identity of CIA station chief in Kabul
  • Flood of illegal immigrants across southern boarder
  • Refusal by Justice Department to enforce laws it doesn't like
  • Use of executive orders to make law

I submit that maybe a third of these would have ended the presidency of a Republican. The media would have created the drumbeat. The New York Times would have found some angle to keep these stories on the front page until special prosecutors were hired and the presidential scalp was acquired. This is how the drumbeat works. Remember how the death of every single U.S. soldier in Afghanistan or Iraq was always the first item on the nightly news. It was relentless, and incredibly effective at driving down poll numbers for Bush. Arguably, the war fatigue that the coverage created got Obama elected. The drumbeat did its job.

But the absence of a drumbeat can be even more effective. Did you know that three times as many servicemen have been killed in Afghanistan under Obama as under Bush? Well, you wouldn't, would you, because it's never reported. No drumbeat.

Remember Valerie Plame? She was a mid-level CIA office worker at Langley. Her name was leaked and it was front page news for weeks. Most Americans learned her name. She and her husband were featured in a glamorous photo shoot in Vanity Fair. A total non-issue, but major drumbeat. Damage was done to the Bush white House.

Have you ever heard the name of the CIA station chief in Kabul? Now, there's a real spy, and that's a name that needs to be a secret, except that the White House leaked the name just last week. Haven't heard the story? That is exactly my point. No drumbeat.

Oh, when a story that breaks that liberal reporters find inconvenient, they will dutifully write about it, but one or two perfunctory efforts on A17 and they're good, and likely the angle is about Republican overreach and scandal-mongering.

The IRS scandal is a perfect example. The New York Times, and others, should be ashamed of the way they have handled this incredibly important story. Paul Wehner of Commentary sums it up perfectly:

Here’s a thought experiment. Assume during the George W. Bush administration the IRS had targeted, Planned Parenthood, the Center for American Progress, and a slew of other liberal groups. Assume, too, that no conservative groups were the subject of harassment and intimidation. And just for the fun of it, assume that press secretary Ari Fleischer had misled the press and the public by saying the scandal was confined to two rogue IRS agents in Cincinnati and that President Bush had declared that there was “not even a smidgen of corruption” that had occurred.

Let’s go a step further. Assume that the IRS Commissioner, in testifying before Congress, admitted that the emails of the person at the heart of the abuse of power scandal were gone, that the backup tapes have been erased and that her hard drive was destroyed. For good measure, assume that the person who was intimately involved in targeting liberal groups took the Fifth Amendment.

Given all this, boys and girls, do you think the elite media–the New York Times, Washington Post, The News Hour, and the news networks for ABC, CBS, NBC, and CNN–would pay much attention to it?

Answer: They wouldn’t just cover the story; they would fixate on it. It would be a crazed obsession. Journalists up and down the Acela Corridor would be experiencing dangerously rapid pulse rates. The gleam in their eye and the spring in their step would be impossible to miss. You couldn’t escape the coverage even if you wanted to. The story would sear itself into your imagination.

Bingo, my friends.

Did you know that one of the articles of impeachment for Richard Nixon was his trying to use the IRS as a weapon against political enemies? The IRS wouldn't do it, but just the trying was deemed an impeachable offense; and damn straight it was.

But Obama didn't just try, he did it. We don't yet have a smoking gun, but that's because the IRS and the White House are in full cover-up/obstruction mode. This is where the media - the mainstream media - is supposed to get busy. Just yesterday we learned that the IRS violated the law by not reporting the "lost" emails to the National Archivist. Front page news, right? Not at the Times, but they did find room for their 1,498th story on gay rights so far this year.

This is despicable behavior, but worse, it's dangerous for our democracy. When a president - any president - is conditioned to believe that he can get away whatever he wants because the media will have his back, then he will keep pushing the envelope in every way. We see this happening as we speak.

Sorry, you must stop paying for this:

It is no longer acceptable for conservatives to subscribe to the New York Times, the Washington Post, the Boston Globe, or any of the other apologists for a presidency that has left the rails. If you are subscribing just to "see what the other side thinks," I submit you couldn't avoid finding out what they think shy of holing up in a Unabomber shack for a few years. If you have to, go online so you don't have to pay. If you like the crosswords, I don't care. There are lots of crosswords out there.

We must stop feeding our enemies.