Matt Bai quotes Chris Rock in today’s New
York Times:

“Only
Pres Obama could prevent a depression, end a war, get bin Laden, bring
unemployment below 8 percent, then be told he can’t run on his record.”

    Mr. Obama deserves
a second term. Here’s why:

     He has shown Quiet Courage: The signature of his presidency is his ability to make very difficult decisions, often in the face of his advisors telling not to do what he ultimately decided to do. Let’s look at four examples:   

• Health Care: Healthcare insurance for everyone via an expansion of private insurance was probably the exact sweet spot in this environment. Also give the President high marks for the use of the individual mandate, a long-time Republican idea to ensure personal responsibility. Including both the

private option and the mandate showed that the President was willing to respect Republican ideas and utilize traditionally preferred Republican methods in implementing health care reform. Rather than proceed with a safer legislative agenda, Obama went for healthcare with full knowledge that by doing so he may have cost himself a second term in the White House.

• Auto Bailout: Mr. Obama made this decision in the face of divided opinions from his team of advisors and it provided a positive effect on the economy. While Mr. Romney said “we should let Detroit go bankrupt,” even the conservative financial publication “The Economist,” has tipped their hat to the Administration on the bailout, saying:

    “Given the panic that gripped private purse-strings,” the magazine wrote in an editorial. “It is more likely that GM would have been liquidated, sending a cascade of destruction through the supply chain on which its rivals, too, depended.” 

    The industry is now profitable, hiring aggressively
and expanding, which indicates it was a good call.

• Foreign
  Policy: Mr. Obama deserves credit for his role
  in bringing Osama Bin Laden to justice. That was not an easy call, and most of his advisors were against
  taking the risk of sending Seals into Pakistan to get him. Al Qaeda has
  been greatly damaged by Mr. Obama’s policies, although it is still capable of
  inflicting damage. He also deserves high marks for his successful coalition building, resulting in buckling
  sanctions on Iran and the toppling of the Qaddafi dictatorship, despite a
  chorus of boos from his loyal opposition.

• Hurricane
  Sandy: Although the
  presidential race is too close to call, Mr. Obama left the campaign trail to his opponent to focus on getting
  the federal government geared up to assist the states in the northeast that
  were damaged so severely. This was his
  “Katrina” moment, and he did the right thing even though his
  politician’s instincts (and his handlers) probably screamed: “go to Ohio.”

President Obama has shown
himself to be a courageous decision-maker. He made the right calls on the big
questions. Sadly, his public defense
of his administration’s goals and signature legislative achievements was far too quiet.
He failed to bring the country along with his agenda.

Rather than use his
political capital to educate and re-assure the American people, Mr.Obama barely fought back at all
and as a result, lost the messaging war. The office of the Presidency
deserved a stouter defense. When you have a bully pulpit, you should use it
assertively, not apologetically.

There are some important
disappointments with Mr. Obama:

• The Economy: Has clearly improved over where it was when he took
  office. We have seen steady and consistent positive job growth for 31
  straight months. Likewise, the GDP growth rate has been positive for the
  last 13 months, after not growing in five of Obama’s first six months in
  office.

But,
we still have high unemployment, particularly long-term unemployment; middle
class income has stagnated for 10 years and US companies are not investing in
their US operations. Mr. Obama has articulated some government programs to
partially address unemployment, but they have not passed into law. Given the divided government we will
likely have post-election, this may remain the new normal for the middle class
in our country.

• National
  Defense Authorization Act:
  On any list of reservations about re-electing Barack Obama is his signing of
  the National Defense
  Authorization Act (NDAA)
  which potentially reduces our rights to due process and sets up indefinite detention of American citizens with no
  burden of official charges being filed. Although President Obama is on record
  stating that he will only use these expanded powers against those who would do
  us harm, no one should be comfortable with ANY President having these powers. Mr. Romney will not repeal the Act if he
  is in power.

• Foreign
  Policy:
  The “surge” of additional troops into Afghanistan was a failure. Our remaining
  mission is rife with problems and no real solutions. Mr. Romney has said he
  would not change our exit date from active warfighting in Afghanistan. Our
  drone program in Pakistan has not made us more secure and is a growing problem.
  The decision whether to continue drone attacks in Pakistan needs to be addressed
  early in the next administration. Both candidates indicate they wish them to continue.
  Dropping bombs on sovereign nations certainly hasn’t done much to improve
  foreign relations around the Middle East.
  

• Questionable
  Decisions on Financial Institutions: President Obama’s choices for key leadership in our
  Treasury department, especially Tim Geithner as Secretary of the Treasury and Larry Summers as Director of the White House
  National Economic Council were poor choices. The Dodd-Frank financial reform law will not protect us from future bailouts. In fact, Dodd-Frank actually widened the federal safety net by granting 8 Clearing House institutions the right to tap the Federal Reserve for funding when the next crisis hits.  The HARP program
  intended to provide relief to distressed home owners has been poorly
  communicated, under-utilized, and mostly ineffective.

In
the end run, President Obama hasn’t been nearly as great as we needed him to
be, or is he evil and anti-American as others suggest.

Let’s review the bidding. If Mr. Romney wins, he has promised
to:

• Pass another trickle down tax cut on top of making the Bush tax
  cuts permanent

• Repeal Obamacare, voucherize Medicare, block grant Medicaid and
  food stamps

• Push defense spending to 4% of GDP, when no one should be pushing more defense spending

• Deregulate financial markets and environmental protections

• Offer budgets that deeply cut discretionary spending including education and the environment
  

Mr. Romney has pandered to his party since he first started running for president in 2008.Earlier in 2012, he rejected a 10 part spending cut to 1 part tax increase ratio to deal with the deficit. Despite his slide to the middle during the debates, what should bother voters most is his ability to completely
deny that agenda and gain ground in the polls. 

He argued that he didn’t really
have a big tax cut (the first debate); that the tax cut he didn’t really have
could be paid for by magic math; that his foreign policy is the same as the
President’s (the last debate); that his plan will add 12 million jobs, a number that forecasters tell us we’re
likely to see regardless of who wins.

The bottom line is that Mr. Romney has an agenda that works only if you don’t believe most of what he says.

How did we devolve to a country where someone can assert
things with virtually no backup in reality and not only be taken seriously
but be making the election very close when
his opponent is the incumbent President with a solid, if not inspiring, record?

Let’s hope undecided voters wake up by November 6th.

As outlined in yesterday’s “3 Delusions” post, we desperately
need bold solutions to our problems.  And we need leaders who boldly speak
the truth. Sadly, that doesn’t exist on today’s political spectrum.

Christopher Hitchens said in Letters to a
Young Contrarian:

“If you care about agreement and civility, then you
had better be equipped with points of argument and combativity, because if you
are not, then the ‘center’ will be occupied and defined without your having
helped to decide it, or determine what and where it is.”

That
describes neatly the tactical failure
of Mr. Obama’s 1st term. He tried a bipartisan solution; he
tried to be about civility and agreement. But, for an orator, his points of argument and his
leadership once in office were weaker than what the moment required.

Bipartisanship is a grand and useful concept. It should be the focus of the senior leaders
of both parties. The lesson to take out of Mr.
Obama’s 1st term was that Republicans chose a course of obstruction when their inaction risked collapsing the
global economy.

That was their game plan. It
lacked vision, it was risky but, it may work to defeat Mr. Obama.

It’s what
should really scare people who are paying attention. We’ll know next Tuesday.

A brief story about President Lincoln: He was trying to move his agenda to hold the Union
together.

His great
foe in that regard was the abolitionist, US Representative Thaddeus Stevens, who
called Lincoln, “the capitulating
compromiser, the dawdler.”

Stevens was a man who only
followed principle. Lincoln was someone who worked the political middle to get things
done.

Doris Kerns Goodwin says in her book about Lincoln, Team
of Rivals, that Lincoln came out against slavery in a speech in 1854,
but in that same speech he declared that denouncing slaveholders wouldn’t
convert them:

Though the cause be “naked truth itself, transformed to
the heaviest lance, harder than steel” [Lincoln said], the sanctimonious
reformer could no more pierce the heart of the drinker or the slave owner than “penetrate
the hard shell of a tortoise with a rye straw. Such is man, and so must he be
understood by those who would lead him.” In order to “win a man to your cause,”
Lincoln explained, you must first reach his heart, “the great high road to his
reason.”

Lincoln demonstrates
Hitchens’ point perfectly. He was a leader, he cared about agreement, he knew his arguments
and he was civil. Oh, and he carried the day.

Today, as in 1865, issues and ideology divide us. So, can we find a leader to create the workable
majority for the big ideas we need? 

Let’s not
just rule out big ideas, they can happen in a divided America:

·   In 1932, we elected Franklin
Delano Roosevelt and he pulled us out of the Great Depression

·   1960 brought us John Kennedy and
ultimately, Lyndon Johnson and with that, the promise of equality for black
America

·   In 1980, Ronald Regan helped
usher in a wave of economic growth, prosperity and the collapse of the Soviet
Union

All of these presidents faced opposition from true
believers. All of them worked the middle
of both parties as well as the political edges of their own party.

In his remarks in New Hampshire in June,
President Obama said this:

There are too many people out there who are struggling,
too many folks out of work, too many homes that are still under water.

Of course, we need to do better. The debate is not
whether, it is how. How do we grow the economy faster? How do we create we
create more jobs? How do we pay down our debt? How do we reclaim that central
American promise that no matter who you are, you can make it here if you try?

When we
go to the polls next week, we face a stark choice: to go forward or roll
dangerously backward; whether we continue
to accept the 3 Delusions about the economy as true; whether we will
continue to expand the American dream or whether we will see it collapse in on itself.

You know what to do, and you know how to do it.

Please, vote.

 

What’s Wrong Today:

The Deficit, the Debt, the Budget.
Discussing these complex and interrelated problems is exceedingly difficult.
Making them understandable enough to hold the voter’s attention may be
impossible.

The economic
theory, the budget process and the implications of the debt are mind-numbingly
complex, while the numbers, measured in billions and trillions of dollars, are
barely comprehensible.

We’ve
heard so often: The “out of control budget
deficit is going to bankrupt the nation and destroy our economy”, that we’ve become jaded to solutions and to
the politicians who continually beat us over the head with the warning.

So, What’s Wrong?

    We have come to accept a process
whereby we plan our fiscal year with budget deficits. We need to explode the
DELUSIONS of both parties that are preventing them from doing anything of
substance to restore fiscal sanity. Here are some delusions to detonate:

Delusion
#1: The American people are over-taxed


Reality: Americans
are the lowest-taxed people of any major country. During the
Wrongologist’s lifetime of work, there have been many rounds of tax cutting:

• The Reagan tax cuts of the 1980’s knocked
  the maximum rate down from 70% to 28% and indexed the brackets to inflation
  
• The Gingrich-inspired tax cuts on
  dividends and capital gains
• The Clinton-inspired addition of tax credits
  for dependent children) in the 1990’s
• The Bush Administration tax cuts in
  the 2000’s that further dropped the taxes on dividends and capital gains to 15%
  and expanded the credit for dependent children

Statistically, effective tax rates
for the upper-middle class quintile have been reduced exactly 50% since 1980. So, if taxes have been cut in half on a
percentage basis, while Federal spending has roughly doubled, then something’s
out of whack.

Note
that the above graph shows deficits, year by year, as a percentage of GDP. The graph illustrates the following
points:

• The largest contributor to the deficit is the reduction in tax
  revenue. This is mostly attributable to lower tax rates.
• The second largest contributor is the increase in unemployment
  payments, food stamp outlays, and people starting to collect
  Social Security.
• The Troubled Asset Relief Program (TARP) signed by
  President Bush and the job stimulus program created by President Obama have
  added little to the deficit. Both programs were temporary.

The
Republicans like to tell us that our income tax rates are nominally among the
highest in the world but they forget to mention that individuals and
corporations have all kinds of deductions written into tax law.

    Fact: Americans are NOT over-taxed relative to other countries.

Delusion
#2: Federal spending can be easily cut because the budget is filled with waste
and fraud

It is true that there are bogus line-items in the
Federal budget. And there is fraud. However, we need to make cuts in the
primary components of federal spending:

• Social Security: 20%
• Medicaid and Medicare: 20%
• Military (including veteran’s
  affairs): 20%
  
• Other social welfare benefits: 15%
• Interest on the debt: 6%
• “Everything else”: 18%

The
reality is that neither party is interested in making meaningful cuts because
Social Security, Medicare and the military are revered by both parties.

There is too much political pressure
by an aging population to imagine that Social Security and Medicare will be cut
significantly. Republicans think
cutting defense spending is political suicide with their base.

Delusion
#3: When the economy returns to “normal” we will grow our way out of
the deficit

This
is the grandest delusion of all, since our economy has NEVER sustained real growth
above 3% a year. At best, there have been three or
four years of above-par growth followed by a recession that wipes out half of
it.

Republicans keep telling us that if
we cut taxes below where they are now, then the economy will see fantastic
growth spurts, perhaps as much as 5% a year. Mr. Romney is promising 4%.

    Few
can truly believe that cutting taxes will add to growth. The
wealthy and large business already own and control more capital than at any time in history. They are parking
it, not in new and expanding businesses, but in T-bills, that now pay NEGATIVE
interest (rates below the rate of inflation). As long as they prefer to
earn NEGATIVE interest instead of making new investments in productive business
enterprises, the economy is going nowhere, even if taxes are cut to zero.

The government will only be restored to fiscal sanity
by:

1. Increasing taxes on both the middle class
and the wealthy:

• Get rid of some deductions like letting people deduct the mortgage
  interest on their vacation homes
• Raise the effective tax rate on the super-wealthy (incomes above $1
  million) from 15% to 40%
• Impose a federal capitation tax (say,
  1%?) on accumulated wealth
  above some level (say, $100 million?)
• Lower
  the floor for Luxury tax on expensive items
  (costing greater than $5k)

Get
over your squawking and screaming. The
alternative is either to bankrupt the country and/or devolve towards a Third
Country standard of living.

The
idea of cutting corporate taxes further is absurd when
most corporations have gamed the tax laws to the extent that many pay their
CEO’s more than they pay Uncle Sam. We
should tax offshore capital accumulated by corporations at the source, not when
they are repatriated.

2. Implement a (very) few big ideas about
growing the economy:

    The Federal Budget cannot be balanced
when 20+ million formerly employed tax-paying Americans are twiddling their
thumbs, either on the unemployment line or working part time at minimum wage jobs
where income taxes are not assessed.

• Let’s reject the Republican idea
  that more tax cuts will jump start the economy

• Let’s accept the Democrat’s plan of
  putting people back to work by rebuilding infrastructure (roads, ports,
  bridges, smart electric grid, Internet)

• Let’s bring jobs back to the USA by limiting offshoring. This
  requires rethinking “free” trade and implementing tariffs, domestic content
  requirements and taxes on US corporations’ offshore subsidiaries

While
raising tax RATES might help balance the budget, we’ll never be able to close
the deficit completely unless the taxpaying BASE is restored to full
employment.

Once we get the average American and
the Congress Critters to think beyond these three delusions, they can work on the
big picture of the economy, government spending and move to make BIG changes.

The time is past when politicians in
Washington can continue to believe that we can balance the budget by shifting the small change from pocket
to pocket.

This is an area where the
Wrongologist endorses Mr. Romney’s “Big Change“ trope.

Small Changes to our economy will
NOT suffice.

“…people with overlapping
delusions get along wonderfully.”

Daniel
Mackler, Toward
truth: A psychological guide to enlightenment

What’s Right Today:

What’s
Wrong Today:

The Wall
Street Journal published a letter signed by 80 CEOs, calling it a “Deficit Manifesto”, last Thursday.

The
letter, designed to pressure Congress to reduce the federal deficit, says in
part:

“Policy makers
should acknowledge that our growing debt is a serious threat to the economic
well-being and security of the United States. It is urgent and essential
that we put in place a plan to fix America’s debt. An effective plan must
stabilize the debt as a share of the economy, and put it on a downward path.”

(Emphasis by the
Wrongologist)

So,
What’s Wrong?

Who are these guys?
They are members of the “Fix
the Debt ”
coalition, who claim they know best
how to deal with our nation’s fiscal challenges. The group boasts a $60
million budget
just for the initial phase of a massive media and lobbying campaign to make sure
congress implements their view of the “correct” solution.

The Fix the Debt
coalition is using the over-reported
“fiscal cliff” as an opportunity to push their usual corporate agenda of more
tax breaks. If America’s CEOs really wanted to Fix the Debt, they would first commit to eliminating the loopholes
that have allowed large corporations to limit their taxes.

The irony is that these
coalition CEOs have been among the major contributors to the very national debt they now claim to know
how to fix. Their companies have
mastered every tax-dodging trick in the book. Who wrote America’s byzantine and crazy-quilt
tax code? Was it lefties calling for special rules for their pet political
causes? No, it was the large corporate
lawyers and lobbyists bribing the congress critters over many years.

Fix the Debt claims their agenda is not just about spending
cuts. But includes tax
reform as well: Their tax proposals use the slippery term “pro-growth reform”
to push for cuts in deductions that are likely to include credits for working
families and you guessed it, more corporate
tax breaks. Chief among these is a proposal to switch to a territorial
system under
which foreign sourced corporate earnings would
be permanently exempted (instead of being taxed when they are returned
to America).

This idea, also supported by the Bowles-Simpson
deficit commission that the Manifesto CEOs suggest as the starting
point, would make it even more
profitable for big corporations to use accounting tricks to disguise
U.S. profits as income earned in tax havens. Citizens for Tax Justice estimates that such tax haven abuse will cost the Treasury more than $1
trillion over the next decade.

All of their
plans to cut the Debt by lowering taxes for corporations and the rich to create
growth sounds like the quest for a perpetual
motion machine.

Money is
cheaper now than it has been in living memory: the debt markets are telling corporate America that they are more
than willing to fund investments at unbelievably low rates.

And yet
these CEOs continue to say “no thanks”, despite
the fact that the IRS
reports that US corporations held more than $3.1 TRILLION in offshore accounts
in 2009, the last year for which the IRS has final records.

This is a serious threat to the economic
well-being of the United States: US companies refusing to invest for the future, even when the markets (and
their country) are begging them to.

It is even worse than this: It isn’t just
that corporations aren’t investing now; they weren’t investing in the last
expansion. The corporate sector in aggregate
is disinvesting: Here is a chart from the St. Louis Federal Reserve showing Gross Private
Domestic Investment:

This
indicates that private investment has
been declining since the start of FY 2005. As you will remember, Mr.
Bush, a former CEO, was president then.

So, these Manifesto
CEOs are criticizing the size of the Federal debt, saying it stalls growth. Yet, if it wasn’t for the Federal
deficit, the economy would be a disaster. The Federal government is easing some
of that pain right now.

And this is what the Manifesto CEO dudes
are trying to derail, without any increased investment on their part.

And these big companies are the biggest
sinners.
Know why Mr. Obama and Mr. Romney fawn over small businesses? If you include all
less-than-500 employee firms as “small”, they have been the drivers of job
growth for the last decade, while the
biggest companies have shed workers.

In fact, since the 1980s, medium sized and smaller
companies have gained in share of assets, employment, and revenues
relative to the biggest companies.  

So big companies, like those in the Fix The
Debt coalition, have lost share relative to the rest of the corporate sector, yet they have the
temerity to preach to the rest of us as
if they speak from genuine accomplishment, as opposed to having been
lucky or politically savvy enough to assume the leadership of companies with
well established franchises.

Despite
whomever is elected next week, the economy remains mired in anemic growth and even
worse job growth. And Mr. Bernanke’s expansionary
monetary policy isn’t getting the job done. The problem is that the Republicans
have not allowed fiscal policy to be used by Mr. Obama

The really
huge, important and urgent issue facing the US right now is the problem of
unemployment, and specifically of long-term unemployment. That will only be fixed by
increased demand.

Cutting spending will further reduce demand and that is what will drive
the economy off of a cliff.
We have ample historical evidence to demonstrate that.

Ordinary
Americans have been sold on the false idea that deficit cuts are necessary and
salutary and this CEO “Manifesto” is more of the same.

Both the
global economy and the US economy are very fragile right now, and every central banker in the world is
begging for help from fiscal policymakers. That means higher deficits,
not lower ones.

The problem is that Pete Peterson and the
Fix The Debt cabal have been much more effective at corralling CEOs than Mr.
Obama or Mr. Bernanke are.

It is past time to get our priorities
adjudicated and a true fix underway.

What’s
Wrong Today:

For as far back as any of us can remember, political
candidates ran as loyal members of their party. That’s where a candidate found
funding as well as tactical and strategic support.

Party-centric
campaigns were the rule and they were usually successful. Candidates proclaimed their party affiliation by using companies like Super cheap signs to design bumper stickers, campaign signs and buttons; they embraced their party’s platform and worked to convince the undecideds of the essential rightness of the party’s position on the issues.

Today, that’s changed. Party branding is in many cases, elusive.

Consider
the current race in California’s 10th District. Incumbent Republican
Jeff Denham is running
against Democrat new comer, Jose Hernandez. The race is considered a toss-up in what
is a newly drawn conservative-leaning district.

This hotly contested race is supported by
outside funding from both parties and multiple visits from each party’s icons
in support of their guy. You may have heard of Congressman Jeff Denham, a successful
local business man. A 16-year member of the National Guard, Denham is a veteran
of Desert Storm (Iraq) and Restore Hope (Somalia). Jose Hernandez is the child of migrant workers who wasn’t fluent in English until he was 12. He went
on to become an Astronaut (Space Shuttle Discovery).
He worked as an engineer on digital mammography products at Lawrence Livermore
Laboratory and was a NASA employee until 2011. 
These are both accomplished guys.

Check
out the campaign signs for each contender:

First,
Jeff Denham:

Next, Jose Hernandez:

So, What’s Missing?

They
do not advertise their party affiliations.  The new normal is that no candidate wants you
to know which party they affiliate with, it
might turn you off.

Where the Wrongologist lives, there are
political signs on most lawns.  They list
the name of the candidate in large print and the office they are seeking in
small print.

In
our state, we have 12 major party federal candidates running for office, 5 congressional districts and one senate race. Only one congressional
candidate identifies with his party on his web site home page, while another
lists her party only on her “about” page. The Republican senate
candidate’s signs are blue without
party identification. The Democratic
candidate’s signs are red. No party is listed on his signs, either.

Why
are candidates hiding their party affiliations? You know that voters will discover it in the voting booth, if not
before. Candidates don’t run away from their parties in the primaries, they need
to show the party faithful how closely they hew to the party line so that the
party faithful to come to the polls and choose them over the other party guy
contesting the primary.

But
when it comes to the general election, independents, unaffiliated, or undecided
voters are likely to be as large a group of potential voters as those in their
party, or in the opposition party.

It turns out that our parties have become
really unpopular, except in the reddest or bluest of districts.

Hiding party affiliation can make a
difference wherever there are intensely fought races, with partisans in both
parties. That’s where you see candidates trying not to alienate anyone who
might otherwise be open to their message. In many cases, it is the opposition
party and fellow Super PAC travelers that make the opposition candidate’s party
affiliation clear to voters.

Today’s
candidates try to create candidate-centered campaigns.   Their effort is to create
interest in their personal story and character without overly focusing on their
ideology, since party affiliation may be enough reason to summarily reject the
candidate. It is a balancing act: the candidate needs the base to turn out on Election
Day, but they also need the swing vote in order to win, so the party-centered campaigns of the past are likely to remain a
thing of the past in our red/blue polarized nation.

What are they hiding?

It
isn’t just party affiliation that is hidden by the candidates. Today candidates slide from one side of the issue in primary to a
middle position on all but the most basic litmus issues in the general
election.

In some cases (yes, you Mr. Romney),
positions change dynamically week-to-week, venue-to-venue.

This used to be impossible, because TV
networks and cable news travel with candidates 24×7, so candidates couldn’t
change their stories without being fact-checked by the media. Although the news
cycle is still 24×7, and the networks still travel with the candidates, consistency with prior positions no longer
seems to matter, any more than does obscuring which party supports a candidate.
What’s up with that?

So, what did we lose?

We
have lost our ability to judge how a candidate really will represent the constituents.

We have also lost a little more of
the remaining shreds of credibility in our political process.

What’s Wrong Today

In the last debate, Mr. Romney claimed that the US Navy is the smallest it’s been since 1916, implying that it is regressing in terms of overall strength.

Here is Mr. Romney’s claim from the third presidential debate:

“Our Navy is old — excuse me — our Navy is smaller now than at any time since 1917. The Navy said they needed 313 ships to carry out their mission. We’re now at under 285. We’re headed down to the low 200s if we go through a sequestration. That’s unacceptable to me. I want to make sure that we have the ships that are required by our Navy.”

 

Navy Battle Group, Arabian Sea

Here is what Romney said in his VMI speech:

“The size of our Navy is at levels not seen since 1916. I will restore our Navy to the size needed to fulfill our missions by building 15 ships per year, including three submarines.”

In the last decade, the Navy budget rose 40% in real terms, but the size of the force continues to fall: ships, aircraft and sailors are down about 20% (but curiously, the number of admirals is rising.) The 313 number Mr. Romney quoted is correct. The Navy has gone through two major strategy reviews and has not deviated from that number, but its own shipbuilding plans do not approach that number and are unrealistic given the projected resources (see the CBO analysis of shipbuilding plans).

So What’s Wrong?

Was Mr. Romney’s claim accurate? The blog The Monkey Cage had a guest post by political scientists Brian Crisher and Mark Souva who recently created a measure of state naval strength for all countries from 1865 to 2011. Their paper indicates that in 1916, the US controlled roughly 11% of the world’s naval power. The US ranked third in naval strength behind the UK (34%) and Germany (19%) and just ahead of France (10%).

In 2011, they report that the US controlled roughly 50% of the world’s naval power putting it in a comfortable lead in naval power ahead of Russia (next at 11%).

As Mr. Romney indicated, the US Navy has decreased in absolute size, US warships are much more powerful now than in the past, as President Obama implied. However, neither the number of warships nor the power of our ships is what is most important for understanding military and political influence. It is relative military power that matters most. In this respect, the U.S. Navy is far stronger now than in 1916.

And the 50% share of naval power may actually understate our position relative to our competition. The ships that really matter today are aircraft carriers and nuclear submarines. The US currently has about 18 aircraft carriers. Our largest competitor navies (Russia, France, India, Italy, Spain and China) have only one carrier each in operation. 

The nuclear submarine situation is a bit less lopsided. We have 50 nuclear subs in the fleet today and the rest of the world taken together have about the same number. China has nine nuclear subs, but they rarely put to sea. That is true for all other navies with the exception of UK and France.

Romney blows a Dog Whistle and Virginia listens

US Navy Shipyard, Portsmouth VA

It is possible that Mr. Romney’s concern about the number of ships has more to do with winning Virginia than it does with concern for US naval capabilities.

Virginia is home to major Navy shipyards. That may explain why Romney’s talking points emphasize number of ships (= more ship building) rather than their capabilities.

Mr. Obama engaged in a bit of rhetorical jujutsu at the debate, calculating that he could make Romney look ridiculous on national security by turning his own talking points against him with the horses & bayonets line.

It is doubtful that the Romney campaign seriously believes US naval capabilities are directly related to number of ships.

He was simply making a political calculation that may just win him Virginia.

What’s
Wrong Today?

The
Wrongologist wrote on Friday about what to expect from the Foreign Policy
debate between Mr. Obama and Mr. Romney. He
said that we would hear about failed leadership by Mr. Obama. That Mr. Romney
would advocate a more muscular foreign policy starting with adding significantly
more military resources. So far, so good. Wrongologist was on track.

So,
What’s Wrong?

The
Wrongologist’s success with prediction ended there. Last night, Mr. Romney walked
away from many of his positions on foreign policy, embracing those of President
Obama.

That
was surprising since Mr. Romney gave a speech at the Virginia Military
Institute (VMI) on October 8th.  The
speech was touted as his “major” foreign policy address. The full text of the
speech can be found here.
He outlined several areas of difference between the Romney policies and the
Obama record. Here are a few points from the VMI speech:

• Romney
  began by saying the attack in Benghazi demonstrated that “the threats we face have grown so much worse.”

• Later
  in the speech, Romney criticized Obama for “missing
  an historic opportunity to win new friends who share our values in the Middle
  East.”

• Romney
  then turned to the topic near and dear to the voters of Florida in particular. “The relationship between the president
  of the United States and the prime minister of Israel, our closest ally in the
  region, has suffered great strains,” he said, adding that they have “set back the hopes of peace in the
  Middle East and emboldened our mutual adversaries.”

• Romney
  went on: “In Iraq, the costly gains
  made by our troops are being eroded by rising violence.” Then he said, “America’s ability to influence events
  for the better in Iraq has been undermined by the abrupt withdrawal of our
  entire troop presence,” adding that Obama tried to secure a more
  gradual drawdown but “failed.”

• Romney
  followed this with his position on Iran. It is worth quoting at some length:

I will put the
leaders of Iran on notice that the United States and our friends and allies
will prevent them from acquiring nuclear weapons capability. I will not
hesitate to impose new sanctions on Iran and will tighten the sanctions we
currently have. I will restore the permanent presence of aircraft carrier task
forces in both the Eastern Mediterranean and the Gulf region—and work with
Israel to increase our military assistance and coordination. For the sake of
peace, we must make clear to Iran through actions, not just words, that their
nuclear pursuit will not be tolerated.

• Romney
  then pledged to boost defense spending, saying, “I will roll back President Obama’s deep and arbitrary cuts to our
  national defense that would devastate our military.” He also claimed
  that the “size of our Navy is at
  levels not seen since 1916.”

• Romney
  delicately phrased his stand on Syria: “I
  will work with our partners to identify and organize those members of
  the opposition who share our values and ensure
  they obtain the arms
  they need to defeat Assad’s tanks, helicopters, and fighter jets.”

• On
  Afghanistan, Romney seemed muddled. First, he said, “I will pursue a real and successful transition to Afghan security
  forces by the end of 2014.” He denounced Obama’s “politically timed retreat that abandons the Afghan people to the
  same extremists who ravaged their country.” But Obama’s policy also
  calls for pursuing a transition to the Afghan forces by the end of 2014. In
  fact, this is the policy that Afghan President Hamid Karzai supports, even
  demands.

Finally,
Romney proclaimed, “The 21st
century can and must be an American century.”

Well, imagine the Wrongologist’s surprise
when throughout last night’s foreign policy debate, Mr. Romney embraced Mr.
Obama’s policies and then closed with a pitch to America about his desire to
bring peace to the world.

Romney’s pivot from the content of the VMI speech
was a political calculation, designed to appeal to undecided women. Romney knows that
he is closing fast in several of the swing states, and he needs the focus to be
Obama’s record on the economy.

So, he
pivots to cover the Obama positions just 14 days after VMI. That is politics.

What
persists is Mitt’s mendacity.

Romney and
his advisers, many of them Bush-Cheney neo-cons, believe that the United States
can wield the same force and influence it did during the Cold War, if only a “strong”
(?) president sits in the White House again. During the debate, Romney covered most
of this up, except for persisting in the thought to expand military
expenditures.

So, for the 2nd time in 3
debates, Romney walked away from his stated positions, shape-shifting into Moderate
Mitt.

Voters who
are undecided need to evaluate Mr. Romney, the shape-shifter. In 2012, people
are longing for a better answer; just like in 2008 when Mr. Obama was selling
the concept of different was better than more of the same.

But voters
need to focus on the question as well as the answer.

The
question for today is: Which Romney is the real Romney?

Just
asking the question should tell voters that Romney can’t be the answer

.

The third and final
debate between Mr. Obama and Mr. Romney is next Monday. It will primarily
address foreign policy, so let’s take a quick look at what the individual
candidates are likely to pitch to us.

Background

The defining
assumption of late 20th century presidents was that American power
was so great, with no obvious rivals on the horizon; that the world stood on
the eve of another American Century. This assumption ended for most practical
purposes with 9/11, two wars in the Middle East and the financial crash of
2008. Barack Obama is our first president to face a different reality.

The growing budget deficit, the decline of real
income of the middle class, the intractable unemployment, the continuing trade
deficit and two inconclusive wars have all left us less confident about our
sense of dominance in the world.

How,
if and when we are able to fix our domestic problems will greatly influence
what the role of government is in our society and what the role of the US can
be globally.   

It is possible that, even with a low growth economy, the US can remain the world’s
only superpower, at least until the point that China matches our economic might.
But we are now in a time of uncertainty and introspection regarding our role in
managing the world. Not surprisingly, there are also contrasts between Obama
and Romney on our foreign policy.

China,
Russia, Iran, Syria, Israel and Palestine, the Arab Spring, the role of our military,
how we project soft power in East Asia and Africa are the top of mind
problems/opportunities that the next president will face.

It is unclear how either candidate would
actually deal with any of these issues, since political debate is so deeply
partisan and polarized. Contending positions and narratives occupy parallel universes.
How they talk about foreign policy on Monday may be very different from how
they practice a foreign policy once in power.

The
lynchpins of US foreign policy have always been military strength and economic
strength, wrapped up in a sense of American Exceptionalism: Because we led
the world with our sheer wealth and dynamism, we were the benchmark of modernity
for the rest of the world. Now with aging infrastructure, an antiquated rail
network, inadequate seaports, a ground-control system for air travel that dates
to the 1950’s and only the vague hope that 98% of the US will have broadband Internet
by 2015, that is behind us.

Our
#1 challenge is to rebuild our economy. Without that, we cannot maintain
either of the two lynchpins described above. We need the candidates to speak to how foreign policy fits into the mission
of rebuilding the economy, since it can’t be that the economy is
subordinate to our global ambitions.

What Will We Hear on Monday?

We will hear on Monday night that “the world is a dangerous place”
and that “the terrorist threat is
worse now than it was before 9/11”. Just as we always do a few weeks
before a presidential election.

We will hear that “If we don’t lead, others will” and “I’m not ashamed of American power”. And we shouldn’t be
ashamed of our power.

We
will hear a litany of both real and imagined distinctions without differences by both
candidates, even though their broad policy outlines are similar.

Romney favors a more muscular,
military-forward approach. Obama is more pragmatic, with a nuanced view of alliances
and ideals, focusing on how to catalyze international action in support of
policy goals.

Over
the next decade, the fundamental choice we must make is how much military strength
we will keep in the face of the urgent need to refurbish our economy.

Reagan tried “guns and butter”. George W.
Bush tried “tax cuts and guns”. Neither created a reduced deficit.

We need to transform our education system
and our infrastructure or be eclipsed
by China and the rest of the BRIC countries. This will take lower
military spending, rigidly controlled health care costs, and higher taxes.  

So,
as far as our foreign policy goes, the real questions for the candidates to answer
are:

• How
  do we redefine power in a world in which American military and economic supremacy
  are ratcheting down?

• Can
  we continue our messianic foreign policy? At what price?

• Can
  we continue to project a muscular military globally? At what price?

 

Let’s
see if any of these are discussed on Monday. But, don’t count on it.

What’s
Wrong Today:

The Wrongologist will
leave it to the network and cable bloviators to tell you who won or lost the Presidential
debate at Hofstra University last night.  

But here are a few
things for you to think about:

• Mr.
  Romney mentioned in passing, as he did in the first debate, that his tax plan
  will eliminate any capital gains taxes.
  This is a keystone of his tax and economic plan.  Mr. Obama missed a chance to point out that
  this change will mean that Mr. Romney will pay
  less tax than he does today.

• On
  Benghazi, Mr. Obama could have made it clear that the force attacking the Special Mission numbered between 40 and 100.
  The attacking force had RPG’s and mortars. The
  force defending the Mission was between 8 and 25 and had light weapons.
  Had the State Department agreed to extend the tour of security personnel that
  was asked for by security staff in Tripoli, it
  would have added 3 more security staff in Benghazi. Had that occurred, our forces would still have been
  outnumbered by more than 2:1, so it is unlikely that the outcome would
  have been different.

• Mr. Romney’s stagecraft had one
  clever part. He
  often walked into Mr. Obama’s line of sight with Candy Crowley, the moderator. This diminished Mr. Obama to the
  television audience and made it difficult for Mr. Obama to keep eye contact with
  the moderator. Smart. Mr.
  Romney had one poor element of stagecraft, however, trying early and often to confront Mr.
  Obama, to cause Obama to get
  emotional and make a non-presidential action or statement. That effort
  failed. Mr. Obama has a lifetime of necessarily not reacting to ploys designed
  to cast him as the angry black man.

• Mr. Romney said during the debate
  that 580,000 women have lost jobs under Obama. According to Fact Check. org the true figure is closer to
  93,000. You would think that Mr. Obama
  knew that.

• If you want the details on Mr.
  Romney’s tax plan, you can find it here.

• Finally,
  if you were scoring at home, shame on you. You should have been watching the
  debate.