Posts Tagged ‘economy’

First impressions of the second debate

Tuesday, October 16th, 2012

Obama was much more animated and his supporters will be happier tonight.

I think Romney was more impressive but I am a partisan. What surprised me was a focus group collected by Frank Luntz that decided that Romney won overwhelmingly. These were Obama voters in 2008. Their comments were very interesting. One woman supported Obama because of his comments about contraception. She was pretty much alone.

Obama said some things that will be in RNC ads next week.

1. He said that oil and gas leases were increased on public land during his administration. That is not true and Romney called him on it. Chris Wallace checked the facts and Romney was correct.

2. He said that Romney would raise taxes on the middle class and he had cut them. I don’t think anyone believed him. Romney did a good job, better than the first debate, in explaining his proposals.

3. The was only one question on Libya and Obama lied about what he said the day after the attack. That was foolish and we will see the Rose Garden statement many times before the election. He mentioned terrorism but the connection with Benghazi was not made. For weeks after, Obama and his underlings, especially Susan Rice the first black UN ambassador, kept offering the styory of the anti-Muslim video.

4. The concerns about Candy Crowley as moderator were well based. She cut off Romney multiple times and Obama talked right past the clock. He ended with 7 more minutes of time. In addition, contrary to the agreement, Candy Crowley inserted herself into the questioning and supported Obama in his assertion that he had described the attack on the Benghazi consulate as terrorism. She later, after the debate was over admitted her mistake. That will be a topic untii, the election.

5. There was a dumb question about an “assault weapons ban.” Romney did well to note that automatic weapons are already illegal, a detail that escapes most Democrats, like Diane Feinstein

All in all, I thought Romney did well and Obama improved his performance from last time, although at the cost of a number of falsehoods that will provide fodder for the large Romney ad budget in the next two weeks.

Joe Biden and the debate

Friday, October 12th, 2012

A clownish Joe Biden mugged, groaned and interrupted Paul Ryan for 90 minutes last night. It was an odd spectacle but, apparently, just what the Democrats wanted. He lied about the Libya story and now Bill and Hillary Clinton may be thinking rebellion. Biden strongly suggested that the State Department was to blame for the murders because they did not ask for more security, in spite of the testimony before Congress the day before. If Hillary thinks she sees the bus coming, she may jump ship and it won’t be pretty.

With tensions between President Obama and the Clintons at a new high, former President Bill Clinton is moving fast to develop a contingency plan for how his wife, Secretary of State Hillary Clinton, should react if Obama attempts to tie the Benghazi fiasco around her neck, according to author Ed Klein.

Biden also lied about Iran and their nuclear ambitions. He dismissed the danger of doing nothing. He said they do not have a “delivery system.” They have a delivery system named Hezbollah. Iran may not have an intercontinental ballistic missile that can reach the US, yet. If Iran were to choose to attack the US, a container ship and a US port are much more likely to be involved than a new missile. Certainly, Israel is within reach as are the countries of Europe. Saudi Arabia is within reach. The Sunni-Shia rivalry is sufficient motive but the other reasons should not be ignored. Iran is ruled by a sect of suicidal maniacs.

Ryan capably described the Romney-Ryan tax proposals and his Medicare plan. I expected the abortion question and I thought it was well handled. Biden, of course, lied about the administration’s rules for health insurance coverage of contraception and abortion. That is not a big issue for me as I am pro-choice but the dishonesty is annoying. The “47% issue” and Ryan’s mention of a “30% who are takers” will not bother many people who agree and the offended are likely Obama voters no matter what happens.

It will be interesting to see what the result will be. The left, of course, is excited by the nasty tone Biden adopted.

On their $5 trillion tax cut, Romney/Ryan really need to either start naming the loopholes they’d close to pay for it or just admit they can’t make it revenue neutral without whacking the middle class. The VP was appropriately relentless on this point. Even I’m starting to feel sorry for them every time someone brings up this little flaw in their plan. I suspect I’m not alone in realizing that this country simply can’t afford to elect people promising a tax cut of this magnitude who, when it comes to paying for it, essentially say “trust us, we’ll find a bipartisan solution.”

The “$Five trillion tax cut” has been thoroughly debunked, including Stephanie Cutter’s retreat from the claim.

But, as I pointed out, Gov. Romney has already taken capital gains and dividends-for example-off the table. Now, here’s the revealing part: Larry said, and I know many in the investment community, including Mitt, feel exactly the same way, “I don’t consider those loopholes.”

So, here is a lefty who wants to raise taxes on investment income and capital gains. I don’t see enough responses pointing out that this income has already been taxed as ordinary income. Mitt Romney and most investors had salary income, taxed at the rates of the time, which they saved and invested. The capital gains and dividend income is income that was already taxed once. The left simply does not understand this.

Ryan kept his cool and Biden played the fool. An Althouse was impressed as I believe many women were impressed.

As I said, I’m tired of the yelling. I found the debate really hard to watch, but I kept watching because I was committed to live-blogging. Even still, I got catatonic. There was a point when I didn’t write anything for 20 minutes and then I said:
Biden has been yelling at Martha Raddatz for the last 15 minutes (as the subject is war). It’s so inappropriate!

The previous post had been:
The stress level is rising. Biden is so angry. Why is he yelling? Ryan needs nerves of steel not to lose his cool. I’m impressed that Ryan, when he gets his turn, is able to speak in an even, natural voice. It’s hard to concentrate on the policy itself, because the emotional static is so strong.

That shows how I felt: pain. So here’s my question. Ratings were down, I see, but when were the ratings taken? In the beginning? How did the ratings drop off over the course of the 90 minutes?

I have seen many comments about people, especially women, turning off the debate because of Biden’s rudeness and blustering. The ratings were down and the question is when were the ratings surveyed ? Of course, last night was also a big sports night. I think Ryan did better than the initial impressions suggest.

If Obama uses the Biden debate tactic as a model for next Tuesday, the election may well be over.

Reflections on the debate

Saturday, October 6th, 2012

The reverberations are still going on after the Wednesday debate. The theme coming from the Obama campaign is that Romney did not tell the truth about his policies. Most of the discussion on the non-campaign left is like Bill Mahers’ who said “It looks like he took my million and spent it all on weed.”

One of the most peculiar reactions was at the U of Wisconsin the next day. Hundreds of UW students were filing into an Obama on-campus campaign rally and were asked by a Breitbart writer if it was unfair that Obama couldn’t use his Teleprompter in the debate. Amazingly, most of the students agreed. What would a Teleprompter do ? Would they stop the debate for a few minutes while Obama’s handlers thought of a good response?

The polls will take a few more days to show the response but already something is going on. A poll of Illinois’ 10th Congressional district last August was ignored but another poll now suggests that Illinois might be in play in this election.

There is a new poll out of Cook county that should make President Obama, Robert Gibbs, David Axelrod, and the rest of the Obama reelection team nervous. In Illinois’ most populous and most Democratic county things are not looking so good for team Obama. In Cook county, home of Chicago, Obama only leads Mitt Romney 49 to 37. This is bad for Obama because he needs as big of a lead as he can get from Chicago Democrats in order to hold off the fact that he will lose the rest of the state, and in some areas of Illinois by a lot. Things are so bad for President Obama in Cook county that the suburban areas are breaking for Romney 45-38(the City of Chicago still goes to Obama 60-29).

The next debate is supposed to be on foreign policy and it is interesting to speculate on what Obama will do to recoup his loss this week. First debates have been weak for previous presidents. Reagan was criticized for looking old and a bit out of touch in his first debate with Mondale.

Still, there have been a long line of incumbent presidents who bombed their first debate.

Reagan, H.W. Bush, Clinton and Bush all had middling to bad receptions after the first debate as an incumbent seeking re-election.

Advice for Obama will be plentiful next time.

If Obama wants to seal this election win from behind a podium, the ball is in his court alone. He’s got to recover and rebound in the next debate.

Still, Obama needs to get a Red Bull into his system for next time, because former incumbents with a bad second debate — Ford, H.W. Bush, and Carter come to mind — don’t tend to get their second term.

I expect him to try to be more aggressive. Foreign policy is not a good area for him but, no doubt, we will hear about Osama bin Laden and Romney’s inexperience. He runs a risk of further weakening the traditional Democrat support from Jewish voters (See above about Illinois) if they get into the Israel and Iran situations. Romney has to avoid looking as though he wants war with Iran and I expect Obama to bring this up. Still, Romney has good points about the failure of Obama to support the people of Iran when they were demonstrating against their own government, and the disclosures about intelligence that came from the White House.

The second debate is Romney’s chance to close the deal and how he conducts himself will be critical. So far he and his campaign have done a very good job. I was not one who complained that he was not aggressive enough. Charles Krauthammer thinks he should have given a foreign policy speech sooner, after Benghazi, and maybe that is right but he plans one Monday and the tide seems to be turning right now.

I’ll bet the audience for the VP debate this week will be larger than usual as Paul Ryan makes his national appearance for those who haven’t been following the election closely until now. I expect he will do very well. Biden is an old school politician but he lied his way through the debate with Sarah Palin and she did not point them out. Ryan is another numbers gut, like Romney, and won’t let him get away with it.

It’s apparently Ryan.

Friday, August 10th, 2012

I am a big fan of Paul Ryan and hope that Romney choose him as VP tomorrow.

The Ryan budget is here.

Health care–
Provides a refundable tax credit – $2,300 for individuals and $5,700 for families – to purchase coverage in any State, and keep it with them if they move or change jobs.
Provides transparency in health care price and quality data, making this critical information readily available before someone needs health services.
Creates state-based health care exchanges, so individuals and families have a one-stop marketplace to purchase affordable health insurance without being discriminated against based on pre-existing conditions.

Equips states with tools like auto-enrollment programs and high-risk pools, so affordable health coverage can be accessed by all.
Addresses health care’s growing strain on small businesses, by allowing them to pool together nationally to offer coverage to their employees.
Encourages the adoption of health information technology and assists states in establishing solutions to medical malpractice litigation

The critical factor here is price transparency. All health care now is discounted with the discounts secret. Even Medicare is discounted and the discounts are concealed from patients.


It preserves the existing Medicare program for those currently enrolled or becoming eligible in the next 10 years (those 55 and older today) – So Americans can receive the benefits they planned for throughout their working lives. For those currently under 55 – as they become Medicare-eligible – it creates a Medicare payment, initially averaging $11,000, to be used to purchase a Medicare certified plan. The payment is adjusted to reflect medical inflation, and pegged to income, with low-income individuals receiving greater support. The plan also provides risk adjustment, so those with greater medical needs receive a higher payment.
The proposal also fully funds Medical Savings Accounts [MSAs] for low-income beneficiaries, while continuing to allow all beneficiaries, regardless of income, to set up tax-free MSAs.
Based on consultation with the Office of the Actuary of the Centers for Medicare and Medicaid Services and using Congressional Budget Office [CBO] these reforms will make Medicare permanently solvent
Modernizes Medicaid and strengthens the health care safety net by reforming high-risk pools, giving States maximum flexibility to tailor Medicaid programs to the specific needs of their populations. Allows Medicaid recipients to take part in the same variety of options and high-quality care available to everyone through the tax credit option.

The Medicare option has been denounced as “vouchers” but it also allows price negotiation using honest prices.


Preserves the existing Social Security program for those 55 or older.
Offers workers under 55 the option of investing over one third of their current Social Security taxes into personal retirement accounts, similar to the Thrift Savings Plan available to Federal employees. Includes a property right so they can pass on these assets to their heirs, and a guarantee that individuals will not lose a dollar they contribute to their accounts, even after inflation.
Makes the program permanently solvent – according to the Congressional Budget Office [CBO] – by combining a more realistic measure of growth in Social Security’s initial benefits, with an eventual modernization of the retirement age.

This is similar to the Bush attempt to reform Social Security. Again, keeping the benefits unchanged for those (like me) who cannot modify our plans, is wise and will add only minor costs.

Survival literature.

Tuesday, July 10th, 2012

I notice today that Wretchard at The Belmont Club has a post on refugees. It includes a lot of comments on survival skills. Basic requirements include guns and ammo so someone else doesn’t take your survival stores away from you. Water is important, as is water treatment supplies when you run out of stored water. The Mormons, as in so many other things, are the experts on survival skills. In the late 70s, the last time there was so much interest in survival methods, I had a Mormon office manager. She taught me a number of good facts about the way to survive a disaster. One is to have a supply of hard red wheat.

Our wheat comes in six-gallon buckets (or pails… another name for the same container.) The net (contents) weight of the grain is 45 lbs. for the conventional grain, and 40 lbs. for the organic grain. When you store grain at home, it needs to be protected in a couple of ways. First, it needs to be protected from a variety of little critters who’d like to get to it before you do. Weevils, for example. And isn’t this interesting: Chances are you’ve never seen weevils in the white bread or crackers you bought from the store. That’s because weevils put no stock in media campaigns from white-flour milling conglomerates; rather, they know what’s good for them, and they’d come after your grain from miles around if you let them. And mice have good nutritional judgment, too. Not that there’s ever been a mouse in your house, but if there was… you wouldn’t want it having access to your grain. Secondly, grain needs to be kept dry. The grain we sell is all dried to a very low moisture level that’s optimal for storage and baking and guarantees that you get the most grain for your money. You need to protect your grain from picking up excessive additional moisture, which can be drawn from the atmosphere. The buckets our grain comes in provide full protection against storage risks. They have airtight gasket-sealed lids, Mylar liners, and oxygen absorber packets that remove the oxygen from the air in the bucket after we put the lid on. The O2 absorbers leave an atmosphere of nitrogen in the bucket, because air consists almost entirely of oxygen and nitrogen. (The oxygen absorber packets themselves are completely food-safe, being made of powdered iron and salt, which are kept separate from the product itself.) Our buckets safely lock out pests, and biological processes are put “on hold” in the Mylar protected, oxygen-free nitrogen atmosphere, so your grain enjoys complete peace and quiet until you want to use it. Note: If you don’t already have a bucket lid removal tool, they make lid removal easy (see lower section of this Web page.) Super Pail packaging is the “gold standard,” the ultimate protection for your grain!

45 pounds of wheat may not be enough depending on the size of your family. The Mormons are encouraged to have a year’s supply stored.

Next you need a grain mill. It’s probably best, for survival purposes, to have this not electrical unless you have a generator available. If you are hard core, maybe the country living mill is for you. It would certainly give the kids something to do.

Hopefully, we won’t need a hand cart to transport our belongings.

In the 1970s, the last time I gave this much thought to survival skills, I was much younger and had a sailboat. The boat was stocked with some food and had room to store a lot more, especially freeze dried food. I used freeze dried as extra supplies on long races in case we had a dismasting or other disaster.

The boat I had in 1979 was a Yankee 38, a great cruising boat although a bit heavy for racing.

This is Bullet, the #1 hull of the Yankee 38 and almost identical to my boat.

My spinnakers were all red, white and blue. Otherwise this is identical to my boat. I took it to Mexico several times but not to Hawaii as it was too heavy and rolled badly in a heavy down wind run.

Here is the Choate 40 that I took to Hawaii in 1981 and which would have been a great escape boat in a disaster.

The interior was rather stark and did not have as much storage as the 38 but it had a huge interior volume and could store plenty of food and water. It had 100 gallons of water tankage.

Anyway, I can’t handle these boats anymore so that option is probably not there. I thought Lake Arrowhead would be a good hideout but I couldn’t tolerate the altitude so, in my decrepitude, I guess I will wait here with my hand gun for them to come get me.

Of course, Romney could still win the election.

Congress is a criminal enterprise.

Friday, November 18th, 2011

Mark Twain once said, ” There is no true criminal class in America with the possible exception of Congress.” It’s time to withdraw the qualifier. It is now apparent that, with a few rare exceptions, Congress is a criminal enterprise and the Obama Administration is, as well. Here is the story of part of it.
“To entrench Fannie’s privileged position, Morgenson and Rosner write, Johnson and Raines channeled some of the profits to members of Congress — contributing to campaigns and handing out patronage positions to relatives and former staff members. Fannie paid academics to do research showing the benefits of its activities and playing down the risks, and shrewdly organized bankers, real estate brokers and housing advocacy groups to lobby on its behalf. Essentially, taxpayers were unknowingly handing Fannie billions of dollars a year to finance a campaign of self-promotion and self-­protection. Morgenson and Rosner offer telling details, as when they describe how Lawrence Summers, then a deputy Treasury secretary, buried a department report recommending that Fannie and Freddie be privatized. A few years later, according to Morgenson and Rosner, Fannie hired Kenneth Starr, the former solicitor general and Whitewater investigator, who intimidated a member of Congress who had the temerity to ask how much the company was paying its top executives.”The latter item is just to show that the corruption was bi-partisan. The quoted text above was written by Robert Reich, the left wing former Clinton Labor Secretary.

Johnson was the man chosen by Obama to vet his possible VP choices. When his history came to the public’s attention, he quickly withdrew. He had no financial background at the time he became the chief of Fannie Mae. He was a pure political animal.

The most telling recent blow is the bankruptcy of MF Global, a commodity trading firm run by Job Corzine, former governor of New Jersey. It appears that he stole $600 million of investor’s money. Another commodity trader has now closed her fund and returned her customer’s money. Here’s why: “The reason for my decision to pull the plug was excruciatingly simple: I could no longer tell my clients that their monies and positions were safe in the futures and options markets – because they are not. And this goes not just for my clients, but for every futures and options account in the United States. The entire system has been utterly destroyed by the MF Global collapse. Given this sad reality, I could not in good conscience take one more step as a commodity broker, soliciting trades that I knew were unsafe or holding funds that I knew to be in jeopardy.

I do not agree with some of her theories, she appears to be a “birther,” for example, but that doesn’t matter. If Obama is a legal citizen, his corruption is just as bad.

“A firm, led by a crony of the Obama regime, stole all of the non-margined cash held by customers of his firm. Let’s not sugar-coat this or make this crime seem “complex” and “abstract” by drowning ourselves in six-dollar words and uber-technical jargon. Jon Corzine STOLE the customer cash at MF Global. Knowing Jon Corzine, and knowing the abject lawlessness and contempt for humanity of the Marxist Obama regime and its cronies, this is not really a surprise. What was a surprise was the reaction of the exchanges and regulators. Their reaction has been to take a bad situation and make it orders of magnitude worse. Specifically, they froze customers out of their accounts WHILE THE MARKETS CONTINUED TO TRADE, refusing to even allow them to liquidate. This is unfathomable. The risk exposure precedent that has been set is completely intolerable and has destroyed the entire industry paradigm. No informed person can continue to engage these markets, and no moral person can continue to broker or facilitate customer engagement in what is now a massive game of Russian Roulette.”

The bankruptcy petition may have been responsible for freezing the accounts but criminal law should deal with this. Corzine should spend years in prison. Here is a depressing comment: “If Obama doesn’t win next year, watch for a January 19, 2013 pardon.”

Cokie Roberts blurts out the truth

Sunday, August 7th, 2011

I watch the Sunday talk shows, usually flipping back and forth between them. I was struck today by a comment made by Cokie Roberts on ABC’s This Week. In the discussion of the S&P downgrade of US Treasury bonds, she was arguing with a tea party affiliated Congressman from Utah named Chaffetz and she made the following statement: (The comment begins at 8:55)

The reason why they (S&P) like France and England is because they have parliamentary government, because the majority gets what it wants. There is no divided government where both parties have to agree.

I thought that an astonishing but revealing statement. First, Britain and France have not been exemplars of fiscal probity the past 50 years, with the exception of Margaret Thatcher’s era. She even mentioned that England now has an austerity program. Also, she didn’t mention that Obama had undivided government for two years and spending increased 24%. In fact, there has been no national budget for two years, probably because the Democrats did not want to expose their plans prior to the 2010 election.

Her second comment was also revealing:

The problem is with the US Constitution.

There, in a nutshell, is the Democrats’ complaint. The Constitution restricts the ability of one political party to spend at will without regard of the consequences. God knows we have had excessive spending since 1965 in this country with the Constitution intact. But, for Democrats, that has not been enough. I don’t think I have seen a more revealing comment.

Why I liked Coolidge and why we are not recovering

Friday, June 3rd, 2011

I spent the past six months reading about Calvin Coolidge. I was interested in why the 1920s were a period of great prosperity and why the severe recession/ depression of 1920-1921 was so short. At its peak, there was 25% unemployment. Gross domestic product dropped by 6.9% in one report.

The recession of 1920–21 was characterized by extreme deflation — the largest one-year percentage decline in around 140 years of data.[2] The Department of Commerce estimates 18% deflation, Balke and Gordon estimate 13% deflation, and Romer estimates 14.8% deflation. The drop in wholesale prices was even more severe, falling by 36.8%, the most severe drop since the American Revolutionary War. This is worse than any year during the Great Depression (adding all the years of the Great Depression together, however, yields more severe deflation). The deflation of 1920–21 was extreme in absolute terms, and also unusually extreme given the relatively small decline in gross domestic product.[2]

The Harding-Coolidge administration took office in March 1921 and the recession was over in months. Why ? Governments were smaller then and had less influence on the economy. The Wilson Administration has been widely described as the equivalent of a fascist regime with its war time controls and economic meddling. Again from the Wikipedia article:

Interpretations of the end

Austrian School economists and historians argue that the 1921 recession was a necessary market correction, required to engineer the massive realignments required of private business and industry following the end of the War. Libertarian Austrian School historian Thomas Woods argues that President Harding’s laissez-faire economic policies during the 1920-21 recession, combined with a coordinated aggressive policy of rapid government downsizing, had a direct influence (mostly through intentional non-influence) on the rapid and widespread private-sector recovery.[12] Woods argued that, as there existed massive distortions in private markets due to government economic influence related to World War I, an equally massive “correction” to the distortions needed to occur as quickly as possible to realign investment and consumption with the new peace-time economic environment.

Daniel Kuehn’s recent research demonstrates that Woods gets many of the facts of the 1920-21 recession wrong.[13] The most substantial downsizing of government was attributable to the Wilson administration, and occurred well before the onset of the 1920-21 recession. The Harding administration raised taxes in 1921 by expanding the tax base considerably at the same time that it lowered rates. Kuehn also points out that Woods underemphasizes the role the monetary stimulus played in reviving the depressed economy. Since the 1920-21 recession was not characterized by any aggregate demand deficiency, fiscal stimulus was entirely unwarranted.
[edit]

I would tend to doubt the “recent research” that tries to include Keynes’ theories in the explanation. The issue of Fascism is more interesting. The National Recovery Administration was probably the most openly fascist bureaucratic organization that the US government ever instituted. It was eventually overturned by the Supreme Court, prompting Roosevelt’s “court packing” scheme. (A very sympathetic version by PBS).

What then, led to the Depression and what is leading to the present frightening echo of 1933? Here is a very frightening chart.

Here is a chart showing the price/earnings ratios of cyclical stocks vs “defensive stocks.” What it shows is that cyclical stocks, that can be expected to respond to economic conditions, are very, very cheap. That looks like most people do not expect recovery any time soon. Why ?

This is a very frightening chart. It has been for months as no prior recession has shown this deep a fall in employment and this slow a recovery. Now, if you look at the end of the red line, you see that employment is not recovering at all. The line is flat.

Calvin Coolidge has been criticized in history for his pro-business sentiments expressed in words. He is alleged to have said, “The business of America is business.” In fact, that is not an accurate quote but the sentiment he expressed was similar. He was also quoted as saying something like “A man who builds a factory, builds a temple and those who work there, worship there.” He has been widely criticized for those statements, as if praising business was immoral.

What we have now is a president who makes statements like, “So if somebody wants to build a coal-powered plant, they can; it’s just that it will bankrupt them because they’re going to be charged a huge sum for all that greenhouse gas that’s being emitted.”

We have a president who tells would-be entrepreneurs that “I do think at a certain point you’ve made enough money.”

Does anyone still wonder why the economy under a president who seems hostile to business is failing while the economy under a president who supported it and wasn’t ashamed to say so, boomed.

Some have blamed Coolidge for the 1929 crash but it is pretty clear that the problem was similar to the problem of the real estate bubble in 2005. The Federal Reserve kept interest rates too low for too long. In 1928, Coolidge did not feel he had the right to intervene with the Fed and Benjamin Strong who was the president of the New York Fed died in October of that year. The Dow doubled in 1929. That was the speculative blow-off that ended in the crash. In 2005, Alan Greenspan still believed that a real estate bubble was preferable to a correction from the 1990 internet bubble. George Bush may have had more ability to intervene but all the safety mechanisms, which had not existed in 1929, still failed.

We are on the path to another Depression. One small indication. I do reviews of workers compensation claims. One would expect that, early in a severe recession, claims would go up as workers anticipate layoffs and try to file claims. There was a bit of that but it is over. Employment in California is down so far that the State Compensation Insurance Fund is laying off doctors and closing offices. Claims are way down because employment is falling rapidly. Workers may be afraid to file claims now.

Coolidge Summing up

Sunday, May 15th, 2011

Coolidge believed that the wedding of government and business would lead to socialism, communism or fascism. Hoover considered Henry Wallace a fascist for supporting the McNary-Haugen bill. Hoover, ironically, was to bring on the Depression by progressive measures that might have been called a form of fascism. The farm bill would be re-introduced under Hoover and die. Only during the New Deal would it find enough support to become law. The summer of 1927 was peaceful and prosperous. It was the summer of Babe Ruth’s 60 home runs. The Yankees would win the World Series and end up with a winning percentage of 0.714, still unsurpassed. In September, Gene Tunney defeated Jack Dempsey in the fight marked by the “long count.” The “Jazz Singer” came out that fall, the first talking feature picture. Charles Lindbergh flew the Atlantic in May of 1927. He and Coolidge were much alike yet different. Both were shy and diffident but Lindbergh was happy to cash in on his fame while Coolidge refused all offers after he left office.

Coolidge arranged for Lindbergh to return to the states aboard a US cruiser, Memphis, where he was met by a crowd and by cabinet members, then there was a huge parade through New York City. Lindbergh and his mother stayed with the Coolidges at the temporary White House where Dwight Morrow, close friend of Coolidge from Amherst, introduced the young aviator to his daughter Ann. Aviation stocks, along with many others, soared and the Dow Jones Average by year end was at 200, the record high.

In his December 6, 1927 State of the Union message, he mentioned an economic slowdown and asked for the same things he had been requesting; sell Muscle Shoals, help farm cooperatives and keep spending down. In May of 1928, he complained to reporters about Congressional spending. “I am a good deal disturbed at the number of proposals that are being made for the expenditure of money. The number and the amount is becoming appalling.” He managed to get another tax cut passed including a cut in the corporate tax rate. The surplus that year was $398 million.

(more…)

The Presidency of Calvin Coolidge- II

Sunday, May 8th, 2011

Coolidge was more concerned with domestic issues than foreign policy. This had been true of most US presidents since the Civil War until 1917 and it was part of Harding’s “Return to Normalcy” plan. Coolidge knew little about other countries although he was not an isolationist. The true isolationist policy of the US was in the 1930s under Roosevelt who canceled a Hoover sponsored economic summit in Britain as soon as he was inaugurated. Only in 1939 and 40 was Roosevelt converted to the internationalist that is remembered by his supporters and biographers, internationalists themselves. I will have more to say about the slanders of Harding and Coolidge by the political left and the historians later.

Coolidge’s domestic agenda was dominated by a few issues. The first was the emergence of the “Farm Bloc” in Congress. The McNary- Haugen bill was the first of the “farm relief” bills and would dog Coolidge through his presidency as he vetoed it but it kept coming back as the farm bloc grew stronger. The background of the bill is well stated in the Wikipedia article:

World War I had created an atmosphere of high prices for agricultural products as European nations demand for exports surged. Farmers had enjoyed a period of prosperity as U.S. farm production expanded rapidly to fill the gap left as European belligerents found themselves unable to produce enough food. When the war ended, supply increased rapidly as Europe’s agricultural market rebounded. Overproduction led to plummeting prices which led to stagnant market conditions and living standards for farmers in the 1920s. Worse, hundreds of thousands of farmers had taken out mortgages and loans to buy out their neighbors property, and were now unable to meet the financial burden. The cause was the collapse of land prices after the wartime bubble when farmers used high prices to buy up neighboring farms at high prices, saddling them with heavy debts. Farmers, however, blamed the decline of foreign markets, and the effects of the protective tariff. They demanded relief as the agricultural depression grew steadily worse in the middle 1920s, while the rest of the economy flourished.

As the 1920s went on and Europe recovered, the rationale for the bill was less and less credible. Eventually, it would be the basis for the Roosevelt farm policy and has survived in some form until the present. The basic mechanism of the bill was to establish high tariffs for foreign farm products. The high tariffs on manufactured goods were the worst aspect of Republican policies in the 1920s and contributed to the financial instability that led to the crash in 1929. Europe could not sell to the US because of the tariffs and so could not generate the revenue to repay the war loans. That is an oversimplification but it was a factor. The farm bill would add price supports (equal to the tariff on imports) on farm exports to keep prices high. The government organized cooperatives would sell to foreign buyers at the lower world price and the difference would be collected as a tax or “equalization fee” on domestic sales of each export commodity. This would keep US food prices higher than the world price. We see something very much like this in sugar subsidies and in the ethanol tariff the prevents fuel companies from buying cheap Brazilian ethanol.

Coolidge supported a different approach which included rural electrification, modernization of farming with better hybrid seeds and better business methods. I should add that my own family were farmers in Illinois during this period. One farm family sent their son to agricultural college in the 1920s to the amused derision about going to college to learn how to farm from my grandfather. He returned home, revolutionized farming methods in Illinois with fertilizers, hybrid seed and crop rotation and his children now own most of the farmland where my ancestors once lived. Few Congressmen knew anything about farming and Coolidge’s approach did not stop them from sponsoring the tariff bill every year or two. He vetoed it twice.

Another major issue was the Ku Klux Klan. This was more of a problem for Democrats with their base in the “solid South” but it affected Republicans, as well. The Klan in the 1920s was unrelated, except in name, to the organization founded by Nathan Bedford Forrest after the Civil War. The “second Klan” did include some Republicans and was more concerned with immigration and anti-Catholic and anti-Jewish bigotry, both related to immigration. It had been founded in Atlanta in 1915 by Colonel William Simmons. Its attraction was in its pro-farmer and pro-poor native born Americans sympathies. It was anti-Wall Street and had more geographic diversity with active members in Oregon and California as well as in Maine and New York. A Texas Senator and an Indiana Senator were members and a number of governors, including in California and Oregon, had received Klan support. It had about 4 million members at its peak. The GOP convention had a proposed anti-Klan plank in the platform and that would be a fight when the time came.

Prohibition was a disastrous progressive experiment whose pathologies were becoming apparent in 1924. Coolidge said that Congress had passed the law and he would support it but he also added, “Any law that inspires disrespect for other laws– the good laws– is a bad law.” A number of organizations were formed to oppose the Volstead Act as the corruption and lawlessness grew. In support, there was actually a Prohibition Party, which held its convention on the day before the GOP convention and nominated candidates for president and vice-president. As previously noted, a number of Progressives had returned to the Republican Party in 1920 and they also constituted a Prohibition wing of the party. Hiram Johnson had shown how powerful they could be by denying Charles Evans Hughes the presidency in 1916.

Coolidge was more pro-civil rights than Harding had been but it has been largely forgotten in this country that the Democrats were the party of segregation. Woodrow Wilson had segregated the civil service in 1914 after it had been integrated since 1865. Coolidge gave the Commencement Address at all-black Howard University on June 6. He spoke of the progress of American blacks since the Emancipation Proclamation. He noted that, “in 1863, there were four million black Americans, 12 thousand of whom owned their own homes.” “In a little over half a century since, the number of business enterprises operated by colored people has grown to nearly 80,000, while the wealth of the negro community has grown to nearly $ 1,100,000,000.” He continued with a list of material and intellectual progress made since that point. He added, referring to the war, “The propaganda of prejudice and hatred which sought to keep the colored man from supporting the national cause completely failed. The black man showed himself the same kind of citizen, moved by the same patriotism, as the white man.”

The 1924 Convention opened in a placid mood on June 10. Coolidge was in control. Henry Cabot Lodge was a simple delegate and powerless. The country and the party had moved on. The power of the bosses was much diminished from 1920 and many of them were dead. Radio was breaking down the regionalism of the country just as it would eventually dilute regional accents. The Convention was the first to be broadcast on radio, a concept that did not even exist in 1920. The final platform did not mention the Klan but did congratulate the party for the improvement in economic conditions since 1920. They came out in favor of higher agricultural tariffs but not the McNary- Haugen bill. There was no mention of Prohibition or race relations. There was widespread concern that LaFollette would make a third party race on the Progressive ticket.

The Leopold-Loeb murder case competed with the Convention for public interest and newspaper coverage. The only uncertainty was the vice-presidential nomination. There were many names considered. Coolidge, through an intermediary, approach William Borah to determine his interest in joining the ticket. Borah, certain of his superior talents compared to Coolidge asked, “At which end?” Another bit of Washington gossip at the time was that Borah was the real father of Alice Roosevelt Longworth’s only child, daughter Pauline. Alice was none too discreet and Borah had a reputation for womanizing so the child was often called ” Aurora Borah Alice,” among the cognoscenti.

Coolidge favored a former Senator from Iowa and federal judge named William S. Kenyon. Kenyon had been a member of the Farm Bloc and a very astute opponent of Harding within the party. He was a progressive but had supported Taft in 1912 and was considered a “regular” although he was pledged to Hiram Johnson at the 1920 convention. Harding had offered him a federal judgeship to get rid of him from the Senate and Kenyon accepted but then became the judge who threw out the Tea Pot Dome oil leases and criticized Harding about the affair. Kenyon was a Coolidge supporter and would have made an interesting VP nominee. The Progressives would be pleased and might be lured from LaFollette if he ran. Unfortunately, Kenyon was not interested. The next candidate was Lowden, who was an excellent reform governor of Illinois and a serious presidential candidate in 1920. He also declined. The convention finally turned to Charles G Dawes, a banker who had an international reputation (and a Nobel Peace Prize) for his “Dawes Plan” for trying to deal with the reparations nightmare.

Dawes nomination was another example of serendipity as the man asked to nominate him agreed to do so because he wanted to run for the Senate in Nebraska and this would give him a chance to be heard in Nebraska on a national broadcast. A W Jefferis was a Nebraska delegate and not particularly a friend of Dawes. The radio in 1924 was a technological wonder and instant fame followed such an opportunity. Dawes was a bit of an independent politically. He had recovered from financial wipe-out in the Panic of 1893 and was Comptroller of the Currency under McKInley in 1901, which position he resigned to run unsuccessfully for the Senate. He served in the Army during World War I as head of the General Purchasing Board and ended the war as a brigadier general. He then took charge of the body responsible for liquidating the American supplies remaining in France at the end of the war. He became famous for his testimony before a House Committee on War Expenditures. The Republican majority was attempting to show that the Democratic Administration had been profligate in purchasing, if not dishonest. Dawes, of course, had been in charge of the purchasing and was outraged in spite of his Republican credentials. He became infuriated with the committee members’ ignorant questions and allegations of profiteering. His scathing and witty answers to the committee made him famous with the public. He was headline news the next day.

Dawes was a man of many talents. He played several instruments and composed music, including a piece in 1911 that eventually, with words, became the song “It’s All in the Game,” in the 1950s. After the 1920 election, he turned down the Secretary of the Treasury position but accepted the new position of Director of the Bureau of the Budget. The Coolidge tax cuts and the Dawes budget controls resulted in the government showing a budget surplus in each year of the Harding-Coolidge presidency. The Bureau of the Budget continued to control government expenditures until reorganized by John Kennedy in 1961. In 1923, Dawes was asked to join a Committee of Experts to rescue the German economy. The result was the Dawes Plan and the 1925 Nobel Peace Prize. Dawes was an outstanding choice for the vice-presidency. Coolidge, who hated to campaign, was greatly complemented by Dawes who enjoyed it.

Meanwhile, the Democrats imploded at their convention over issues like Prohibition and the Klan. The early favorite was Wilson son-in-law William McAdoo. He had an attractive resume but two glaring problems. He was supported by the Klan, although not a member, and he was a “dry.” His principal opponent, Senator Oscar Underwood of Alabama was a “wet” and a fierce opponent of the Klan. He privately believed racism was responsible for much of the poverty of the South. The Klan was powerful in the Democratic Party and Underwood had opposed Women’s Suffrage and Prohibition, both positions unpopular in 1920. Al Smith, Governor of New York, had not entered primaries and knew that the convention decision would depend on the issues of the Klan and Prohibition. Smith’s Catholic religion would also be a huge factor in the election if he were nominated, as he was in 1928. The Convention was to be held in New York, which encouraged Smith’s ambitions.

One of the first nominating speeches, by Forney Johnson of Alabama, speaking on behalf of colleague Underwood, threw down the gauntlet on the Klan. Like Underwood, Johnson was a fierce opponent of the Klan and his speech tore the convention apart. Live radio coverage magnified the effect. A motion to condemn the Klan failed by a single vote. The one positive development was Franklin Roosevelt’s nominating speech for Al Smith, the “Happy Warrior.” It marked Roosevelt’s return to the public scene after his polio rehabilitation. He had been the VP nominee in 1920. After 50 ballots, delegates talked of returning home without a nominee. Smith allies hooted from packed galleries and on the 100th ballot he led with about third of the delegates. Eventually,
on the 103rd ballot, the delegates turned to John W Davis, a distinguished lawyer and former Congressman and his VP nominee, Charles W Bryan Governor of Nebraska. Bryan was the younger brother of William Jennings Bryan, perennial Democratic nominee, famous for his populist politics and his “Cross of Gold” speech.

The Bryan brothers, ever hopeful.

The Democrats were crushed in the election but personal disaster struck Coolidge. On June 30, while playing lawn tennis with his brother, Calvin Jr developed a blister on his toe from playing without socks. He was 16 years old. The blister became infected and he died on July 7, 1924. His father never recovered. My son, who is diabetic, developed a similar blister on his toe when wearing firefighter boots. He works 72 hour shifts and, by the time he finished his shift and went to an urgent care center, he had positive blood cultures. He was hospitalized for several weeks and had a one year recovery including skin grafts and multiple surgeries. He is now back at work but, even with modern antibiotics and other measures, he was very ill and took a long time to recover. Calvin Jr was not diabetic but there were no antibiotics available and sepsis was a fatal complication.

Dawes and Coolidge had dinner together during the boy’s illness. Dawes had lost a 21 year old son to drowning in 1912 and understood the president’s concern although he did not realize the seriousness of the illness yet. As he left, he looked into Calvin Jr’s room. “As I passed the door of Calvin’s room, I chanced to look in. He seemed to be in great distress. The president was bending over the bed. I think I have never witnessed such a look of agony and despair that was on the president’s face.” We forget what the days before antibiotics were like. In the very early days of the development of penicillin, one of Howard Florey’s first patients was a policeman who had pricked his finger on a rose thorn. He was dying of streptococcal sepsis, the same infection that undoubtedly killed Calvin Jr. The amount of penicillin they had been able to isolate was very small. They treated the policeman and he improved but then they ran out of the drug. They tried everything including extracting it from his urine but could not get enough and he died.

Calvin Jr with hanging tobacco leaves.

The president agonized about his lost boy. He signed a book for friend who had also lost a son. “To my friend, in recollection of his son, and my son, who by the grace of God have the privilege of being boys throughout eternity.” Calvin Jr had had a previous serious illness, at age six years old, and required surgery to drain an empyema, a collection of pus in the chest following pneumonia. His father was very worried then, as well, but things turned out well. There is another story of this time in Coolidge’s life. Colonel Starling, the president’s Secret Service bodyguard, on his way into the White House, saw a small boy standing outside the railing looking in. “I asked him what he was doing up so early. He looked up at me, his eyes large and round and sad. I thought I might see the president,” he said. “I heard that he gets up early and takes a walk. I wanted to tell him how sorry I am that his little boy died.” “Come with me, I’ll take you to the president,” I said. He took my hand and we walked into the grounds. In a few minutes, the president came out and I presented the boy to him. The youngster was overwhelmed with awe and could not deliver his message so I did it for him. The president had a difficult time controlling his emotions. When the lad had gone and we were walking through Lafayette Park, he said to me: “Colonel, whenever a boy wants to see me, always bring him in. Never turn one away or make him wait.” There has been considerable speculation, based on some evidence, that the boy’s death left Coolidge in a prolonged depression that affected his presidency.

To be continued