David Brooks, while assuming that the poll numbers will carry Obama down the street to the White House, thinks the nation is on an inevitable political swerve from the big-spending Right to the big-spending Left:

Over the past decade, liberals have mounted a campaign against Robert Rubin-style economic policies [of free-trade and balanced budgets], and they control the Congressional power centers. Even if [Obama]’s so inclined, it’s difficult for a president to overrule the committee chairmen of his own party. It is more difficult to do that when the president is a Washington novice and the chairmen are skilled political hands. It is most difficult when the president has no record of confronting his own party elders. It’s completely impossible when the economy is in a steep recession, and an air of economic crisis pervades the nation.

David, you’ve got a lot of ‘splainin to do.

First, I will concede that the Democratic Party is much more xenophobic and jingoistic on trade than it was during the Clinton years (see the recent votes on CAFTA and the trade agreement with Korea).  The party’s adherence to balanced budgets is a bit unknown, since the GOP has also found it shamefully convenient to buy political advantage through wasteful spending (the bad, the ugly).

However, it is fair to say that while the record shows that Sen. Obama is an obedient servant of the Democratic leadership, it is not fair to say that Barack Obama himself is as obedient.  While he was starting his political career in Chicago, he frequently bucked the South Side Chicago political machine in the pursuit of his own political ambitions, paying no heed for the establishment’s requests that he “wait his turn.”

To curry favor with the Left, he has established a starkly partisan voting record on the Hill, but since his nomination, he has morphed toward a more centrist view (see the FISA vote, his new-found “discovery” of the Second Amendment).

Brooks is right though.  With a wobbly economy and no shortage of government promises, if financial reality coexists with campaign promises (either Obama’s or McCain’s) the National Debt is set to explode.

I’m nearing the end of Alan Greenspan’s The Age of Turbulence and came across his criticism of the Kyoto Protocol, an agreement environmentalists tend to adore, but which will inevitably have undesirable economic consequences for much of the world’s poor.  (My emphasis is added below)

There is no effective way to meaningfully reduce emissions without negatively impacting a large part of the economy. Net, [a capt-and-trade system] is a tax.  If the cap is low enough to make a meaningful inroad into CO₂ emissions, permits will become expensive and large numbers of companies will experience cost increases that make them less competitive.  Jobs will be lost and real incomes of workers constrained.  Can a national parliament vote to impose costs on constituents when the benefits of its actions are spread across the globe, wholly independent of where the CO₂ savings come from?

More generally, can a democratic government stand against an accusation that whatever savings in CO₂ emissions are pressed on its constituents, they are likely to be more than wiped out by increased emissions coming from developing countries that were not included in the agreement reached in Kyoto in 1997?  And can developing countries be asked to forgo creating the carbon emissions associated with economic development?  Should access to “free” pollution permits be shut off only after a large number of countries have become developed?  I doubt very much that a Kyoto-type accord will bring world agreement on some penalty for the emissions of greenhouse gasses.  Spewing CO₂ into the atmosphere is as much a violation of property rights as my dumping refuse into my neighbor’s yard.  But protecting such rights and assessing the costs of an infringement are exceptionally difficult because monitoring the cost is not feasible.  Our recent difficult history with international agreements requiring broad acceptance, whether in the World Trade Organization, the United Nations, or any other world forum, makes me pessimistic.  Cap-and-trade systems or carbon taxes are likely to be popular only until real people lose real jobs as their consequence.

We can summarize Greenspan thusly:

1. The Cost: Reducing emissions by fiat (either by cap-and-trade or by a carbon tax) will cost polluters money.
2. The Benefit: The benefits are a public good, indivisible and non-exclusionary.  Thus, non-participants will benefit no matter what.
3. The Politics: The public is unlikely to bear the costs of a system whose benefits are diffused and even visited upon non-participants.

Both John McCain and Barack Obama support some sort of carbon tax.  Though it is politically popular to show that one is “doing something” about a popular political issue, it will be interesting to see how the candidates respond to the details.  What happens when a carbon tax renders entire American industries unprofitable?  What happens when energy-intensive manufacturing jobs, often staffed by the lower- and lower-middle class, must lay off workers simply to pay for carbon permits?

If lower- and lower-middle class workers must face hardship while high-paid tax accountants and lawyers face minimal costs increases, are we really implementing a just tax system?  These are difficult questions to answer and though I know public opinion favors “doing something” to combat global warming, I suspect much of that support will wilt when it becomes clear that people of modest and meager means will face real hardship.

With Sen. Clinton consoling herself to her extended tenure at the end of Pennsylvania Avenue she appreciates less, it wouldn’t take terribly long for the media to end its Obama love-in.  Both the New York Times and Washington Post editorial boards have blasted Obama for reneging on his promise to participate in the public campaign financing system he previously supported— that is, supported until he realized he stood to gain tens of millions of dollars by renouncing it.

The New York Times editorial board dripped acid in reminding us of Sen. Obama’s numerous previous indications that he would participate in public financing campaign.  These promises were all well and good, but

That, of course, was before Mr. Obama discovered his prodigious talent to stir private donors on the Internet and ended up raising hundreds of millions of dollars in small-bore contributions.

The Washington Post’s editorial board was equally unsympathetic to Sen. Obama’s about-face:

Mr. Obama had an opportunity here to demonstrate that he really is a different kind of politician, willing to put principles and the promises he has made above political calculation. He made a different choice, and anyone can understand why: He’s going to raise a ton of money.

Change you can believe in has turned into dollars you can believe in.  Even these smaller donors whom Sen. Obama suggests represent the public probably better represent America’s well-off, writes Jay Mandle in the Post:

In a study of $100 contributions to state campaigns in six states during 2005, the Campaign Finance Institute found that more than half of donors earned between $75,000 and $250,000 a year. The median U.S. income that year was $46,000. While it’s tricky to extrapolate to the presidential race, it is unlikely that campaign giving has suddenly become a common pursuit of working-class families.

Who needs principles when your supporters will sop up any specious sophistries you ladle out to them?

“Broken?”  That’s certainly not what he was saying to Larry King last year:

Larry King: Senator Clinton, by the way, has decided to reject public financing for her campaign. Are you going to do the same?

Sen. Barack Obama: Well, you know, this is something that, obviously, we are going to have to take a careful look at. I’m a big believer in public financing of campaigns. And I think that for a time, the presidential public financing system works.

Unfortunately, because funding has diminished relative to the cost of campaigns, I think you will see a lot of people opt out. And even as I support public financing, I think it’s very important for Democrats to be competitive in the general election. That’s a decision we are going to have to make.  (My emphasis)

In response to the Midwest Democracy Network’s Political Reform Questionnaire Obama suggested requiring presdential candidates to accept the public financing system.  He even noted that McCain had already pledged to do so and that if nominated he would “aggressively pursue an agreement with the Republican nominee to preserve a publicly financed general election.”

Question I-B:
If you are nominated for President in 2008 and your major opponents agree to forgo private funding in the general election campaign, will you participate in the presidential public financing system?

OBAMA: Yes. I have been a long-time advocate for public financing of campaigns combined with free television and radio time as a way to reduce the influence of moneyed special interests.
I introduced public financing legislation in the Illinois State Senate, and am the only 2008 candidate to have sponsored Senator Russ Feingold’s (D-WI) bill to reform the presidential public financing system. In February 2007, I proposed a novel way to preserve the strength of the public financing system in the 2008 election. My plan requires both major party candidates to agree on a fundraising truce, return excess money from donors, and stay within the public financing system for the general election. My proposal followed announcements by some presidential candidates that they would forgo public financing so they could raise unlimited funds in the general election. The Federal Election Commission ruled the proposal legal, and Senator John McCain (r-AZ) has already pledged to accept this fundraising pledge. If I am the
Democratic nominee, I will aggressively pursue an agreement with the Republican nominee to preserve a publicly financed general election. (My emphasis)

David Brooks in the New York Times sums up what has changed since then:

And the only thing that changed between Thursday and when he lauded the system is that Obama’s got more money now.

Sen. Obama is quickly learning that popularity is easier when one constrains his rhetoric to vagueries of “hope” and “change.”  When one must engage in the dirty of work of actual statecraft—voting on bills (as opposed to pulling the favorite voting “present” cop-out), or defying one’s supporters (the Obama record is scarcely bipartisan)— one has more of a record to hold to account.  Policy fodder for one’s opponents is a byproduct of serious leadership.  Sen. Obama has provided relatively little fodder so far because he has blessed himself each step of his political career by dodging difficult issues.  Campaign ethics and finance, one of the precious few areas in which the Senator from Illinois has made progress in the Senate, is now coming back to haunt him as his ideals conflict with his political convenience.

Can vague promises of change and bipartisan hand-holding really come to fruition in January? I have long held that disagreement is a healthy part of our diverse democracy, but Sen. Obama says we need not be divided. A President Obama, upon entering the White House, will quickly learn, much to his astonishment, that genuine, honest people can sharply disagree.  Exporters will not be so enthused to renegotiate NAFTA and people with 401(k)s will not be too happy to pay a higher capital gains tax.

Robert Samuelson’s column in the Post writes that

any feel-good fallout from electing Obama would soon fade. He’d have to earn popular support, and this would be made harder by a problem of his own making: He’d have to disavow much of his campaign rhetoric. The reason is that his campaign is itself a contradiction.

On the one hand, he projects himself as the great conciliator. He uses the metaphor of his race to argue that he is uniquely suited to bridge differences between liberals and conservatives, young and old, rich and poor — to craft a new centrist politics. On the other hand, his actual agenda is highly partisan and undermines many of his stated goals. He wants to stimulate economic growth, but his hostility toward trade agreements threatens export-led growth (which is now beginning). He advocates greater energy independence but pretends this can occur without more domestic drilling for oil and natural gas.

The 2006 mid-term elections finally tripped-up six uninterrupted years of the Senate and House walking in lockstep with the White House.  And now after eight years of a controversial president in the White House, GOP fatigue is certainly understandable.  Nonetheless, buying into lofty, vague rhetoric may serve  well as free political therapy, but it strikes of political naïvité.

There are typically two reactions to anti-Americanism: one reaction seeks to understand the antipathy and the other dismisses it as the inevitable result of being a superpower.  It is truly hard to understand the feelings, usually diverse and contradictory that drive contempt for America.  Much has been said of an Obama presidency redeeming America in the oft-veiled eyes of the Muslim world.  After all, if America is willing to elect a black man whose father was a Muslim, perhaps America isn’t the Great Satan after all.

Not so fast, says Edward Luttwak in an op-ed in the New York Times.  This audacity of hope of a messianic foreign policy transformation of an Obama White House ignores the fact that through a strict Koranic reading, Sen. Obama is shameless apostate who must (I kid you not!) be assassinated.

As the son of the Muslim father, Senator Obama was born a Muslim under Muslim law as it is universally understood. It makes no difference that, as Senator Obama has written, his father said he renounced his religion. Likewise, under Muslim law based on the Koran his mother’s Christian background is irrelevant.

Sen. Obama has spoken of his sincere devotion to Christianity and to his church in Chicago.  However, this devotion is what condemns him:

His conversion, however, was a crime in Muslim eyes; it is “irtidad” or “ridda,” usually translated from the Arabic as “apostasy,” but with connotations of rebellion and treason. Indeed, it is the worst of all crimes that a Muslim can commit, worse than murder (which the victim’s family may choose to forgive).

With few exceptions, the jurists of all Sunni and Shiite schools prescribe execution for all adults who leave the faith not under duress; the recommended punishment is beheading at the hands of a cleric, although in recent years there have been both stonings and hangings.

Thus in the Muslim world, Sen. Obama may be more considered more heinous than Sen. McCain or—dare I say it—George W. Bush, himself!

In America, this should make no difference, but a President Obama would not automatically help America’s image as some of his supporters have claimed.  For some, it would be an offensive move by our democracy to an elect a man who has supposedly known their religion and freely rejected it.  The vast majority of Muslims will care little about Sen. Obama’s religious views one way or the other.  Vocal clerics, however, have never been known for their laissez-faire attitudes on faith.  For them, an Obama presidency would be a slap in the face.

One can never be a Senator, a millionaire and a “regular guy”.  Senator, you’re no Joe Six-pack.  But where did these pitiful scenes of Sen. Obama bowling, Sen. Clinton downing shots, and Pres. Bush crashing his bike originate?  The Post clues us in:

Presidential candidates have strived relentlessly downward in social class ever since the 1840s, when William Henry Harrison created what historians now call the “common-man myth.” While most of his peers campaigned from their estates, Harrison traveled the country and spoke under a banner depicting a log cabin and a bottle of hard cider. He won the presidency by a landslide, and his campaign model became the new standard.

There’s the old polling questions of which candidate would you prefer to have a beer with.  Who cares?  Being a good drinking buddy and running the Executive Branch require completely different qualities.

Americans often believe that cheap gas is a constitutional right. With gas prices as high as they are these days, driving one’s SUV around one’s car-dependent suburb is becoming expensive.

To allay this pain at the pump, both Sen. Clinton and McCain have proposed suspending the Federal gas tax for the summer, a measure expected to draw praise from these motorists. Sen. Obama, however, has rightly described the gas tax suspension as a gimmick that won’t lower gas prices at all. Here are the various reasons why the gas tax suspension is a bad idea:

Ineffective Economic Gimmickry

The problem with this tax suspension, as many notable economists have explained, is that oil refiners and distributors will simply raise prices as the tax drops with hopes that nobody will notice. Furthermore, reduced prices may encourage higher consumption, thus boosting prices back up again.

Today on ABC’s This Week, host George Stephanopoulos asked Clinton “Can you name one economist, one credible economist, who supports this suspension?” (watch the exchange)

Clinton responded,

Well, you know, George, I think we’ve been for the last seven years seeing a tremendous amount of government power and elite opinion behind policies that haven’t work for the middle class and hard-working Americans.

Pressed further to name one supportive economist, Clinton dismissed the need to listen to economists about economic policy:

I’m not going to put my lot in with economists because I know that if we did it right… we would design it in such a way that it would be implemented effectively.

Apparently Sen. Clinton believes she knows better than professional economists about fuel markets. This is another instance where careful, professional economic thought is cast as “elitist” when it doesn’t tell the masses what they want to hear, specifically, that we can have our cake and eat it too.

Failure to Reduce Dependence on Oil

Though Sen. Clinton supports suspending the gas tax, she then goes on to complain about the nation’s dependence on foreign oil. Just how exactly does Sen. Clinton plan to reduce this dependence while opposing drilling in Alaska and making gas cheaper? It is impossible. Though bashing Saudi oil barons has been in vogue for several years, we must recognize that these same barons provide us with what we want: cheap oil. Without increasing domestic production or reducing domestic demand, suspending the gas tax is likely to increase consumption of foreign oil.

Encouraging Environmentally Destructive Behavior

Sen. Clinton cannot support reducing greenhouse gas emissions and support cheap gas. The latter exacerbates the former and in the unlikely event that a gas tax suspension does indeed lower gas prices, such prices will only encourage increased consumption and thus increased greenhouse gas emissions.

Dismissing the “elite opinion” of economists, Sens. Clinton and McCain float this suspension as a populist appeal to middle- and lower-class voters for whom the rise in gas prices has been particularly painful.

Politically, though, these differing positions on the Democratic side highlight a difference in the support base of the two candidates. Clinton’s base, skeptical of the “elite opinion” of economists on issues of free trade and technological innovation, are having trouble affording the drive-everywhere lifestyles to which most suburban Americans are accustomed. Furthermore, despite the green leanings of the Democratic Party, much of Clinton’s base cannot or will not sacrifice to support environmental causes.

Obama’s base, which skews toward the wealthy, has the means to buy hybrids and live in pricey, close-in enclaves where public transport is better and where good jobs are not too far away. Though Obama denies that a tax holiday will lower prices (and he’s likely right on that), it’s far easier for him to say that without alienating his base.

For consumers who actually believe the tax holiday will lower prices, Obama’s refusal to lower the tax smacks of elitism. For those of us educated with some minimal understanding of economics, our “elite opinion” is in Obama’s favor.

One of the most disappointing moments in the recent Democratic debates came when Sens. Clinton and Obama nearly tripped over each other in a contest to denounce the North American Free Trade Agreement (NAFTA). Threatening a unilateral withdrawal from NAFTA upon her increasingly unlikely election, Sen. Clinton admitted that some regions of the country do benefit from NAFTA, while others, primarily in the rust belt, suffer. Sadly, Sen. Clinton fails to explain why the economic interests of those who benefit, including American consumers, should take a back seat to the economic interests of a few rust belt manufacturers.

A recent article in the Post explains that many economists estimate that NAFTA has benefited the United States, particularly Texas:

Overall, the Texas economy has profited from NAFTA, studies have found, with manufacturers taking advantage of cuts in Mexican tariffs to send more electronics, industrial machinery, chemicals and instruments south, according to a 2006 Federal Reserve Bank of Dallas study. The same report found that the export of Texas lumber and furniture declined after NAFTA.

Though Clinton and Obama both promise to “renegotiate” NAFTA, it is unlikely that any renegotiation could reasonably be called a free-trade agreement. Both Canada and Mexico have their share of upset constituencies that would demand more protection in any deal, as would American textile mills and manufacturing unions.

American consumers benefit from cheaper goods and American farmers, particularly corn farmers, benefit from export opportunities to Mexico. One group with a particularly strong interest in protectionism is organized labor. As U.S. manufacturing output has increased steadily over the decades, the number of American employed in manufacturing has dropped. Though output is up, labor unions benefit not one bit from output increases, since their economic lifelines come from the dues of employees. Clearly the anti-trade rhetoric of Sens. Clinton and Obama will woo the hearts of union leaders.

Though Sen. McCain steadfastly supports NAFTA even in front of skeptical audiences in the rust belt, it is unlikely that a possible Democratic win in November would number the days of NAFTA. Shortly after the February debate in the video above, Canadian news outlet CTV reported that a senior Obama staff member quietly reassured Canada’s ambassador to the U.S. that Obama’s words were just to please the crowd:

The staff member reassured Wilson that the criticisms would only be campaign rhetoric, and should not be taken at face value.

The Obama campaign stood by the NAFTA-bashing, of course, but did not deny that his campaign had contacted the ambassador.

I am impressed with Sen. McCain’s defense of NAFTA, since it takes a good deal of courage to support something unpopular. His courage on this matter, though, is only admirable because he is right in his assessment on the long-term benefits of trade. Free trade is always a politically fragile issue since the benefits are subtle (decreases in costs of consumer goods), whereas the resulting job losses, even if only for a few, are obvious and painful.

Despite Ross Perot’s famous prediction that NAFTA would result in a “giant sucking sound” of U.S. jobs fleeing to Mexico, the unemployment rate in the U.S. actually declined after the agreement’s ratification. Furthermore, the biggest competitor for U.S. manufacturing jobs is not Mexico, but China, which lies outside the scope of NAFTA.

Nonetheless, NAFTA-bashing, though popular with the more xenophobic section of the electorate, is widely considered by economists to be a net benefit to America. This is probably why the Obama campaign official quietly reassured the Canadian ambassador that the senator had no plans for withdrawal.

The Clinton campaign, as I have noted, also double-talks on trade issues. It was recently revealed that Mark Penn, one of Sen. Clinton’s senior advisors, also consulted the Colombian ambassador about how to secure a U.S.-Colombia free-trade pact. Upon public revelation of this seeming double-dealing, Penn resigned. All for election-year politics. George Will explains:

Mark Penn’s sin was to be caught doing something sensible, surreptitiously. That is the only way Democrats can do sensible things regarding trade when their party is pandering to organized labor. Penn’s downfall makes him a member of a species that many Democrats insist is large and about which Democrats theatrically grieve: Penn is a casualty of free trade.

Penn’s consultations with the Colombian ambassador were to no avail. House Speaker Nancy Pelosi promised today to change House rules to kill the bilateral deal—a deal that she helped negotiate! The New York Times explains:

What Democrats do not want, many of them say, is a vote that would force lawmakers to choose between the labor and working-class opponents of the measure, who say that trade has cost American jobs and led to wage stagnation, and the Wall Street and manufacturing interests that favor the deal.

Interestingly the article notes that both Sens. Clinton and Obama oppose the deal (publicly, at least), “in part because labor groups say that President Álvaro Uribe of Colombia has not done a sufficient job of cracking down on anti-labor violence committed by right-wing groups.”

George Will fires back:

Colombia’s unions, however, document that the number of murders of their members has sharply declined. Edward Schumacher-Matos, visiting professor of Latin American studies at Harvard, notes that “it was far safer to be in a union than to be an ordinary citizen in Colombia last year”: The murder rate of unionists was less than one-eighth the murder rate of Colombians generally.

Sen. Clinton’s opposition to free trade is in markèd contrast to her husband’s position on trade. Though one should not expect her to adopt unswervingly the views of her husband, it is doubtful that her NAFTA threats are sincere. She is pandering to her a core constituency of union members, whom she needs to turn out in significant numbers in Pennsylvania’s upcoming primary. Be it with Mexico, Canada, or Colombia, the Democratic Party has turned against the nation’s overall best interest in trade. The Washington Post’s editorial board, certainly no bastion of conservatism, put it well:

Are [Clinton and Obama] unaware of the real statistics on NAFTA’s effects? Voters are left to wonder, and to ponder which would be worse: that the candidates are sincere and misguided or are insincere and lacking the courage to speak honestly.

Good question.