Politics in the Age of Silver Bullets and One-Trick Ponies

Note:  My latest blog was originally published on August 22, 2013, in Politics in Minnesota where it and other good political news can be found.

“Simple solutions from simple people.”  This is how one of my graduate school professors used to deride flavor-of-the-month or single-minded ideas proposed by many politicians, interest groups, and advocates for a cause.  He was correct.  There is a penchant in business, and now in politics these days, to believe that there are a simple solutions to our problems and that all that  needs to be done is to do one thing and poof, the problem is solved.  The reality is that there are no silver bullets and those who believe they exist are at best one-trick ponies who are conflating marketing and ideology with governance and public policy.

            The world of business and marketing is all about silver bullets.  Marketing is selling simple solutions to our complex problems. Can’t lose weight?  Try this pill or this diet.  Unpopular? buy this car, use this toothpaste, or wear this overpriced clothing with a logo on it.  Conversely, managers and leaders look for the silver bullet to solve a problem, sell a product, or save a company.  They believe there is a “killer app,” feature, or marketing solution that will do it all.

            Even the art of management has been reduced to silver bullets and one trick pony ideas. Just consider some of the titles of leading business books over the last few years.  There is the One Minute Manager, apparently a guide for those lacking time to think.  Then there is Emotional Management for Project Managers–a book for those who do not or cannot think and need to do it with emotion.  Conversely there is The Intuitive Mind: Profiting from the Power of Your Sixth Sense and A Sixth Sense for Project Management–books with titles that seems to conjure up your inner clairvoyant or ESP to be a successful manager.  And then there are silly titles such as The Lazy Project Manager, Winnie-the Pooh on Management, The Zen Leader, and of course Managing for Dummies, Project Management for Dummies, and Leadership for Dummies.  I guess you do not have to be an Einstein, or even close, to be a successful manager.

            We also have six sigma, balanced scorecard, dashboards, and strategic management.  All these are supposed to be tools that solve all of our management problems. MBA programs drool over Machiavelli’s Prince and Sun Tzu’s The Art of War as models of successful management, believing that good leaders are like ruthless military or political leaders and that you need to have a my way or highway approach to management.  And then there are those dreary books by Jack Welch, Donald Trump. and other former corporate CEOs telling you how you can replicate what they did, even though GE actually underperformed according to many analysts (and did not pay taxes and had a record of serious pollution) or that’s Trump’s success comes the old-fashioned way (he takes over his father’s successful real estate company) and his companies have filed for bankruptcy four times.  For that he deserves to be fired!  Instead, he has his own show telling others how to manage their businesses.

            All of these books, programs, and leaders promise the same thing–some simple technique that will make you an effective manager.  They all seem to say that the gateway to success is adopting their simple single technique and it alone will transform you into a great manager and improve the performance of your business, non-profit, or government agency.  It is a surprise that they do not claim it will cure baldness or help you lose  20 pounds–much like the old quack miracle elixirs of the old days.

            It’s bad enough that business is so simple minded, but politics has increasingly turned down that road.  Yes there has always been zealots who told what Plato called the “big lie”–proposing a single comprehensive solution to solving all of our complex social, economic, or political problems.  Hitler of course was the most extreme–the Jews were the problem and their extermination was the solution.  But less extreme than that, over the course of American history racial minorities, communists, and more recently, welfare queens, immigrants, and gays and lesbians have been singled out as the cause America’s budget deficits, economic woes, or decline in morality, thereby demanding simple solutions such as elimination of welfare, building armed walls around our borders, or banning same-sex marriage.

            It is not enough to single out one group to persecute as a cure for our political problems, There are also the silver bullet solutions, often proposed by those of the political right these days. (Remember when they criticized liberals as simply wanting to throw money at a problem?)  Cutting taxes is the best example.  It seems no matter what the problem is, cutting taxes is the solution for some.  Unemployment too high?  Cut taxes.  Spending too much or deficits too high?  Cut taxes.  Government waste?  Cut taxes.  Government running a surplus (as it was during the end of the Clinton era)?  Cut taxes.  Need to lure business to the state?  Cut taxes.  Cutting taxes cannot be the answer to all these questions or problems.  Cutting taxes is not public policy idea, it is a marketing gimmick.

            During the 2012 presidential debates Herman Cain proposed “9-9-9" as his tax plan.  He was quickly followed by Rick Perry and Newt Gingrich who also proposed catchy but generally meaningless and impractical tax ideas.  Michele Bachmann talked of wanting to reenact Reagan’s tax cuts, whatever she meant by that.  None of these ideas were really well thought out, researched, or evidence-backed theories.  They were simple-minded slogans to sell a candidate or a cause, not solve a problem.  They are ideas proposed by zealots who have confused sloganeering and ideology with thoughtful public policy deliberation.

            Look beyond taxes to see other examples of this.  The gun debate is a great example.  More guns mean less crime and more personal security for the NRA types.  Privatization and choice is the solution to failing schools or bloated uncompetitive bureaucracies.  Deregulation will cure business competitiveness.   And, until very recently, arresting more people for longer periods of time is the solution to our drug problem.  Less anyone think that Republicans, Tea Partiers,  and conservatives have a monopoly on being one-trick ponies with silver bullets. Spending more money alone will not solve underachievement problems with students, and banning guns will not solve all the problems surrounding crime, suicide, and domestic abuse.

            Legal philosopher Lon Fuller once declared that many of society’s problem are “polycentric.”  By that he meant there was not one center or problem but that often social ills have many interconnected causes and problems, demanding complex solutions with many parts. The reality is that except in the movies where a silver bullet kills the zombie or gets the bad guy, there are no silver bullets.  There are no single solutions or one-size fits all fixes that can solve all of our problems.  For those interested in improving governance and making more effective public policy, this is an important point worth remembering.

Obama’s Christmas Present

Christmas came early for Barack Obama as Republican prospects to pick up the presidency took a major hit this week. A series of events again demonstrated that Obama cannot win but the Republicans certainly can also lose the presidency.

Miscalculating the Payroll Tax
The most glaring event of the week was the misplaying of the House GOP vote on the extension of the payroll tax. In principle they may have been correct that a one year deal is preferable to a two month extension but they needed to act but did not. Perhaps they thought Obama would again capitulate like he did in August with the debt deal but the politics was very different then as opposed to now. In August failure to reach agreement meant a government shutdown, making Obama look hapless. This time no deal meant tax increases on the middle class and that would have stuck to the Republicans. Moreover, even the Senate Republicans–including Mitch McConnell and John McCain–pressured the House to assent to the deal. The House GOP here simply overplayed their hand and lost.

Obama the Economist Populist
Contributing to the miscalculation is the traction Obama has received in running as an economic populist. He has given two major speeches in the last few months describing himself as a man for the people. The first was his $450 billion jobs speech a few months ago and the other was his recent Osawatomie, Kansas speech. In both he talked of the need to help the middle class. Both were fine speeches, but talk is cheap.

Obama rightly so should be criticized as the Democrat who abandoned the middle class and the poor. He continued the Bush policy of bailing out the banks and he has put more emphasis on stabilizing the financial sector than he did in helping home owners and the working class. While his original stimulus bill did help, I argued after the 2010 elections that his failure has been to appear to side more with the banks than the people. Given how much he took from Wall Street in 2008 to finance his campaign, no surprise here.

But Obama has been lucky. Occupy Wall Street and the “We are the other 99%” campaign have helped him. Both shifted focus to the Republicans in Congress and running for president that there is a clear class divide in America. Previous blogs of mine have attested to this fact and the growing economic divide in America over the last 30 years. Congressional refusal to raise taxes, a Republican presidential debate revealing no candidate willing to raise one dollar in taxes for every ten dollars in spending cuts, and the failure of Congress to enact Obama paltry $450 billion jobs bill all make it clear that they do not care about the American people (had they enacted the bill they could have disarmed the president and still pointed to how they supported the president on all his major economic programs but they still failed).

The point is that Obama can look like an economic populist because of the failures of Congress and the GOP to offer a credible alternative and to play politics in a way that makes them look like they care for anyone besides the top 1%. Obama is winning because of the implosion of the Republicans.

The Dismal Presidential Choices
Obama is also benefitting from a Republican presidential field that is not a varsity or junior varsity but the freshman team. It is a team running increasingly further and further to the right. A team that is further to the right than the Reagan Party–it is the Palin Party still as I wrote about several times t his year. It is a party that has flirted with several conservatives–Bachmann, Perry Cain, Gingrich, and now maybe Paul as the preferred choice over the more moderate but lackluster and passionless Romney. They seem out of touch with America in their talk of tax cuts, privatization, and return to the gold standard.

Now with little more than a week before Iowa, the race is definitely up in the air. Recent polls confirm what I asserted in an interview last week that Paul, Gingrich, and Romney will be the order in Iowa come January 3. But even if Paul does not win, his ascendency is a problem for the Republicans. If he does well in Iowa is libertarianism will play even better in New Hampshire and Romney needs to worry about a relative poor showing there on his part. This year with the Republican primaries and caucuses allocating delegates not by winner-take-all but proportionally, unless there is a quick kill by one candidate in January, look to a long primary and a potential brokered convention.

So What Does All this Mean for Obama?
Obama is now in much better shape in the polls for reelection than he was a few weeks ago. Polls have his approval rating up to 49% and it now exceeds is disapproval rating. He has a 7 point lead over Romney and much larger leads over the other Republican candidates. Congress’s approval is under 10% and public approval of the Tea Party has weakened. There are small signs of economic improvement but certainly no indication of real growth or significant decreases in unemployment in 2012. The economic news and prospects should doom him and the Electoral College road to reelection is complicated, but Obama now has a clear lead in Florida.

But compared to the Republicans running for president and those in Congress, he looks good. Obama can run for reelection on a slogan of “No matter how bad I am look at the alternative.”

Merry Christmas President Obama! Your present came wrapped with Republicans in a box they are building themselves in.

The Republican Choice: Why Gingrich?

Is Newt for real? This is the question increasingly asked as polls indicate that former House Speaker Newt Gingrich has taken the lead among the Republican presidential contenders. The simple answer may be yes, boding badly the for campaign of Mitt Romney who has struggled for months to be the inevitable last choice candidate once all the others have faded. But Newt’s rebirth and Romney’s campaign strategy are linked, pitting inevitability against reliability.

Don’t Hate Me Because I’m Mitt

Mitt Romney has had an identity problem from the get go. Best summed with the label “Multiple Choice Mitt,” Romney faces an initial problem that no one knows where he really stands on the issues. He is a former moderate Massachusetts governor who supported reproductive rights, gay rights, and he signed into law a health care bill essentially identical to Obamacare. Romney is a skilled businessperson and politician who saved the 2002 Olympics. He knows how to get things done. This should be his political narrative for his presidential campaign. But it’s not.

In 2008 Mitt ran away from this narrative. He pandered to the conservative base of the party, renouncing his moderate positions. Yet given the global economic collapse and John McCain’s avowal that he did not understand economics, had Romney stressed his business experience then he might have won the nomination. Now in 2012 as the Republican Party has moved further to the right Romney has abandoned even more of this narrative, seeking to out-duel the other presidential contenders in terms of xenophobia against immigrants, bashing gays, abortion rights, and taxes, or in renouncing health care reform. Mitt both wants to be the can do governor and businessman and the right wing extremist. No one really trusts him anymore–especially the Tea Party base–thus the moniker Multiple Choice Mitt.

But Mitt also suffers from another flaw–he is a pretty boy. Pantene shampoo famously featured a 1990 commercial with Kelly LeBrock who cooed “Don’t hate me because I am beautiful.” Mitt may be hated for that reason. He is rich, handsome, has perfect hair, and a trophy wife. All reasons to hate him because he has it all. Few can identify with him because of that. Voters bonding with presidential candidates is important. In 2004 voters preferred Bush over Kerry because the latter came across as an aloof prig.

Mitt also has another identify problem–no charisma. He is wonkish and more of a technocrat. He is reminiscent of another former Massachusetts governor–Michael Dukakis–who was similarly skilled but also boring. Politics is about passion and no one can really get passionate over Mitt.

Romney, though, has labored to make a virtue out of all of this. Be the viable second choice who outlasts everyone else in the race. Manage the best campaign, raise the most money, site the most offices, and script the best choreographed speeches. Romney’s strategy is to be the “steady Eddy”; be the one true love or candidate who is there for you after the quick romances and one night stands for the others pass by. Romney’s strategy–Mr. Inevitable.

But why Newt?

He’s not Romney. That is only part of the appeal. The other part of the appeal is that he is the last candidate standing. Gingrich appeared to flame out early before it became fashionable for the other Republican contenders to do so. Stories of infidelity, million dollar credit lines at Tiffanys, growling at the media, and a campaign staff quitting en masse; Newt was just ahead of his time. Since then we have see the other flavors of the month, as the media calls them, rise and fall. Trump. Bachmann. Perry. Cain. Each had an Andy Warhol 15 minutes but each faded as the presidential debates and vetting process grinded on. But eventually each undid themselves. Who was the last one standing? Not Romney, but Gingrich.

Most importantly, Gingrich is actually Mr. Reliable. Unlike Romney where no one knows where he really stands, everyone knows Gingrich and his views. His reliability is a political virtue compared to claims of inevitability. Gingrich was there with the Contract for America in 1994. He led the impeachment against Clinton in 1998. He carries the mantle of the Reagan brand. He is a known and dependable conservative. Yes he is full of warts, but unlike Cain and others, he admits them and says it’s time to move on. Americans hate denial or lying but can accept sinners and that is what Gingrich understands.

Conservative Republicans distrustful of Romney and not liking the other choices finally came back to Gingrich. He is more than the flavor of the month. But even if he is, it is good to be the flavor when it is your month and with it being T-minus less than a month to the Iowa caucuses. The timing is great. Gingrich leads in Iowa, South Carolina, and Florida, three of the first four contests. He is behind in New Hampshire but picked up the critical Union Leader newspaper endorsement. Romney was expected to win big in New Hampshire. He may still win but unless it is a blowout he will look vulnerable.

What is happening now with Gingrich is different than what transpired with Bachmann, Perry, and Cain. What is now occurring is the coalescing of the party around him. Cain’s endorsement is a sign, look to see others also endorse him as they leave the race early in January (except for Ron Paul who will potentially run again as the third party Libertarian candidate and complicate GOP strategy). By the end of that month look to see a race between Gingrich and Romney. Beyond January, the task will be organization, money, and momentum. Right now Romney has the first two but not the third. Gingrich has the third but not the first two. His challenge is taking his momentum and the passion around him to create the organization and money he needs to win the nomination. If he can do that, Romney is done.

Defining Obama: Presidential Image and Narrative in the 2012 Elections

In so many ways it may already be too late for President Obama. It may be too late for him to construct an alternative narrative about his successes and accomplishments that he can use on the campaign trail to support his re-election. For many Americans, the narratives have already stuck that his presidency and policies are a failure.

Two rules that every successful presidential candidate remembers are that “politics is like selling beer” and that “define or be defined.” The first rule refers to the power of political narratives, the second to the constructing your own image–creating an image–or having someone else do it for you. Both of these are rules about constructively using the media–generally in an aggressive and proactive way to do messaging.

This blog has repeatedly discussed the power of political narratives. Candidates need a compelling narrative that describes who they are, their vision for the future, and what they want their presidency to look like. The narrative is their reason for running for office (“I am running for president because...”) and the direction they want to take their presidency and the American public. George W. Bush was chided for lacking that “vision thing” and rightly so, but he still won in 1988 for other reasons (see below).

The way of persuasion is about having a narrative. We tell stories about ourselves when job hunting (the cover letter and resume), we tell stories to do fund raising (“Send money to feed the homeless”), and businesses sell products by telling stories (“Drink this soda and you too will be cool.”). It is less reason and facts that move people than it is narratives, with the best being about the future, messages that are optimistic, and those which inspire passion.

The great narratives of our time were Ronald Reagan’s “It’s morning in America” and Bill Clinton’s appropriation of Fleetwood Mack’s Don’t Stop Thinking About Tomorrow. Both were brilliant narratives about hope and the future. They were narratives that promised a better tomorrow; they appealed to America’s sense of progress, optimism, and that the future will be better than the past. Perhaps one of the most famous lines in movie history–Scarlet O’Hara’s “Tomorrow is another day” from Gone with the Wind captures the compelling nature of this American belief in a better future.

The 2008 presidential race witnessed dueling narratives of John McCain and Barack Obama. McCain’s narrative spoke of the world being a dangerous place and that we should not trust enemies. He touted his military experience to keep us safe and he sought to get America to forget that he was a Republican wanting to the keep the White House in his party’s hands after a failed eight years under George Bush. McCain’s narrative sought to channel the Reagan brand one more time but it failed. It failed to an Obama narrative of change. A narrative of hope for the future, of an appeal to a new generation wanting their turn at power. Obama simply had a great narrative. He also had the fortune of a collapsing economy that worked to his favor, and a Republican vice-presidential candidate in Sarah Palin who few thought was qualified to be president in the event of McCain’s death.

But beyond the narrative, Obama also understood the power of define or be defined. In politics, you need to define who you and your opponents are before they do that to you. Remember the famous 1990 Andre Agassi Canon commercial–“Image is Everything”–that captures the point.

Image construction is important to politics, especially if you can do it to your opponents. On Labor Day 1988 Michael Dukakis had a 18 point lead over George Bush. Bush used Willie Horton, references to the ACLU, and stories about the Massachusetts’ governor not wanting to kill someone who hypothetically raped his wife to cast him as a pinko who was soft on crime. Bush went to win the presidency by three points.

In 1992, when allegations of marital infidelity nearly wrecked Bill Clinton’s campaign, his staff used the latest technology of the day–the fax machine–to proactively counter stories. Finally, in 2004, the Bush campaign brilliantly defined John Kerry as an elitist coward who purposively injured himself three times to get out of Vietnam early. The genius in transforming a three-time Purple Heart winner into a coward was amazing; thus the power of narratives.

Again in 2008 Obama understood the charm of definition. He defined himself as the candidate of hope and change, of McCain the candidate of the old an stodgy, and he also successfully declared Ronald Reagan and his narrative to be dead. Obama brought narrative and definition together to create an amazing campaign story about himself and his opponents.

But the brilliance of 2008 rapidly faded. All that was done so well in 2008 failed Obama and the Democrats in 2010. They lost the narrative and definition. Palin mocked Obama by asking how we liked the “hopey-changey stuff?” The Republicans tied TARP to Obama and not Bush. They decried that the stimulus bill was a failure (even though it did work but was insufficient to address the real depth of recession the economy was in), and they questioned his competence and leadership. All of this has stuck. In part it stuck because there was some truth to many of the accusations, but still the Republicans were lethal after being trounced in 2008. They went on the attack from January 20, 2009 and redefined Obama as a failure.

Now think about where Obama is as 2012 is about to begin. Obama’s successes are defined as failures. The stimulus did help, TARP made money (Yes, it was a Bush program), and he did deliver on many other promises. Health care reform is decried as Obamacare and bank regulation as killing the economy. Obama’s narrative of change has degenerated into “It could have been worse” as described so many times in this blog. Obama still lacks a narrative and worse, he is defined as a failure and as unable to rescue the economy. Again, there is much evidence that this is accurate, but even if not, Obama has been defined by a narrative that he cannot escape. Obama needs to escape the economy and run against a do-nothing unpopular Congress. He needs to cast himself as an economist populist that fights for the other 99%. In short, Obama needs a complete makeover.

It will be hard to do this now that he has already been defined by the Republicans for the last four years. But even if not for the last four years, clearly in the last few months the Republican presidential debates have been influential in doing that. While Obama does his presidential thing, the GOP candidates debate and get press. They get air time attacking the president and he does not respond. The candidates collectively have succeeded in crafting an image of Obama that has stuck. While four years ago content analysis of media coverage of Obama demonstrated overwhelming positive images, were a similar study done today the hypotheses today would be of just the opposite–overwhelming images. Obama has been defined–his narrative for him written by his opponents.

Obama at least has one advantage–the image and narrative for his Republican opponents is being written and it is a negative one. Palin never had a chance to run for the presidency with over 60% of the public thinking her too dumb or unqualified to be president. Now think about the other Republican contenders–Romney as a boring multiple choice Mick–Bachmann as a religious zealot–Perry as a lightweight cowboy–Cain as a lightweight sexual predator–and Gingrich as a cranky, adulterer, arrogant, hypocrite. These are largely self-defined images reenforced by the media. Hardly the images that are winning presidential formulae.

As the Iowa caucuses loom it will be telling to see how Obama tries to remake his image and narrative. Again, it may be too late to do that but with the narratives and images of his opponents equally dismal Obama might be able to pull off a second term with a slogan reminiscent of we chanted when Richard Nixon was running for a second term: “Don’t change dicks in the middle of a screw, vote for Nixon in 72.” Better the devil we know than the one we do not. That may be Obama’s best hope for a narrative.

Bonus quiz and word association time: When I mention Obama or any of his GOP rivals, what words or images come to your mind? Let me know your suggestions.

The Clock Ticks: History, Unemployment, and Presidential Elections

Less than one year to the 2012 elections. Less than 60 days to the New Hampshire primary. Barely 50 days to the Iowa caucuses. The official presidential race is upon us. But as the clock ticks, time is running out for Obama and history is against him.

The basic problem is the economy. Only 80,000 jobs were added in October, placing the unemployment rate at 9.0%. The Federal Reserve Board projects slow economic growth next year–2-2.5%–with the unemployment rate settling in at about 8.5% by election time. Of course these numbers are bad for all those looking for jobs or businesses hoping to grow, yet for Obama it is a real problem.

Since 1932 only two presidents have ever won re-election when the unemployment rate was above 6%. In 1936 and 1940 Franklin Roosevelt won reelection with unemployment rates of 17% and 14.6%, but both of these elections should be treated as outliers or oddities. In 1936 the unemployment rate had dropped from nearly 24% to 17% and the economy was growing at an annual rate of 14%. In 1940 World War II was upon America and with patriotism high, support for Roosevelt was strong. More importantly, the economy was growing at 10% but the perception was that the president had the country going in the right direction.

In 1984 Ronald Reagan won re-election with an unemployment rate of 7.5%. Yet his victory occurred when the economy was growing at more than 11% and gas prices were tumbling from then record highs. Reagan definitely benefited from the perception that it truly was morning in America, especially after the unemployment rate tumbled from around 10% in 1982 and 1983.

But FDR and Reagan aside, high unemployment–six percent or more–is the death knell for a presidential re-election bid. In 1976 Gerald Ford ran for re-election when the unemployment rate was 7.7%–he lost to Jimmy Carter. Four years later the unemployment rate was 7.1% when Carter ran for a second term against Reagan. He lost to the tune of Reagan asking Americans if they were better off now than they were four years ago. In 1992 George Bush sought a second term with an unemployment rate of 7.5%–he lost to a Bill Clinton reminding the voters that it was “the economy stupid.” Conversely, Nixon won with an unemployment rate of 5.6% in 1972, Clinton 5.4% in 1996, Bush in 2004 with 5.5%, Eisenhower 4.1% in 1956, and Truman in 1948 with 3.8%.

Key to a presidential re-election is the actual unemployment rate. But economic, and the reality or perception that it is moving in the right direction, is also important. If there are not significant declines in unemployment along with economic growth and a perception that the economy is moving in the right direction, presidents are not given a second term.

Obama faces an economy where the best projection is of high unemployment and low economic growth. But there is more. Home values remain about 25% or more below what they were in 2008, consumer and now student debt is high, and many people have already blown through their unemployment benefits and face an uncertain future. Consumer confidence remains near historic lows, suggesting little chance that retail sales and spending for the coming holidays and into next year will revive the economy. The public just does not believe the country is headed in the right direction and few think we are better off now than four years ago.

History suggests Obama will lose. This assumes the Republicans put up a viable candidate with a compelling narrative. Yet so far that task seems elusive. Bachmann has come and gone. Perry has gaffed himself to death. Cain’s numbers place him in the GOP lead, but his negatives are escalating as it becomes more apparent that he is a misogynist who treats every woman in a demeaning fashion. Romney is boring and the Republican base does not really know where “multiple choice Mitt” stands on the issues. Gingrich is too acerbic. Congressional approval is less than 10%, with the public placing more blame on the Republicans than Obama for the gridlock in Washington. In short, the Republicans have the Democrats' disease—they are poised to snatch defeat from the jaws of victory. Obama can still win—he has money, the bully pulpit, and demographics that place perhaps as many as 200 or more electoral votes in easily into his presidential win column without too much effort. Now all he needs is the narrative for his re-election.

Obama hopes for a rerun of the 1948 Truman surprise victory over Dewey, campaigning hard as an economist populist against a hapless elitist. Yet the 1948 campaign featured an economy far better than 2012 so the parallels here might not be good.

Obama is also running on the fear factor—Hope that the American public will be afraid of an extremist Republican president presiding over a Republican Congress. Fear came be a powerful too, but 1980 demonstrated with Carter was up for re-election, fear of a crazy Reagan who would blow up the world was pushed aside by the desire for change and disgust with the status quo. Obama knows the public wants change—as he promised in 2008—but it is hard to run on that narrative when you an incumbent seeking re-election. He needs to navigate a message that promises change while staying the course with him. It’s a hard task—made only more difficult by the unemployment numbers—but Reagan and FDR did it, and now Obama needs to figure out how to channel their magic to do the same.

The Hype on Taxes: They Don’t Matter Much

Taxes impede economic growth. This is the belief among the Republican presidential contenders as they offer plans to cut taxes as a panacea to stimulate the economy. Herman Cain’s “9-9-9” assumes lower income tax rates for corporations and individuals will stimulate the economy. Newt Gingrich wants to cap top rates at 15% and Rick Perry has called for a national flat tax of 20%. Mitt Romney has a 59 point plan that includes tax cuts. Ron Paul wants a constitutional amendment to eliminate income and estate taxes. Michele Bachmann wants a return to the Reagan era tax cuts. All want to make the Bush era tax cuts permanent.

Yet do high taxes really hurt the economy as much as they believe, and will lowering them have much of an impact on stimulating it? The economic literature is clear — tax breaks to encourage economic relocation or investment decisions are inefficient and wasteful. Hundreds of studies reach this conclusion. When businesses are surveyed regarding factors important to their investment decisions, taxes often come in behind proximity to markets, suppliers, and the quality of the labor force. These other factors occupy a larger percentage of a business's budget than do taxes, and all of them are far more critical to long-term success than are taxes. Businesses occasionally admit this. Nearly 62 percent of those interviewed in a California study on hiring tax credits indicated that they had never or rarely affected their decision to employ individuals. Speaking at a recent chamber of commerce event, I asked business leaders whether the Obama tax cuts would encourage them to hire. Unanimously the response was no—they were unwilling to hire until such time that consumers were willing to buy their products and services.

Anecdotal stories and illustrations also confirm the tax fallacy. High tax states such as Minnesota have generally fared better in terms of economic growth, unemployment, median family incomes, and location of Fortune 500 companies, than low tax ones such as Mississippi and Alabama. In many situations high taxes, and with that, government expenditures on education, workforce training, and infrastructure, correlate positively with income, low unemployment, and business retention. One needs to look not just a one side of the equation—taxes—but the other side too—what taxes buy—to see what value businesses get out of them in terms of educated workforces and infrastructure investments. Most debates fail to do this.

Bureau of Economic Analysis statistics demonstrate how economic growth is related to tax rates. One can compare annual economic growth as measured by the percent change in the gross domestic product (GDP) percent based on current dollars to the highest federal individual tax rate and the top corporate tax rate since 1930. If taxes are a factor affecting economic growth, one should see an inverse relationship between growth of the U.S. economy and higher tax rates. The GDP should grow more quickly when top individual and corporate tax rates are lower. If taxes are a major factor deterring economic growth, lines on a graph should go in opposite directions: As tax rates go up the GDP should go down.

No such pattern emerges between high taxes and GDP growth over 80 years. During the Depression of the 1930s corporate and individual taxes rates increased, but in 1934 through 1937 the GDP grew by 17%, 11%, and 14% annually. Top corporate tax rates climbed to over 50% through the 1960s, again with no discernable pattern associated with decreased economic growth. The same is true with top tax rates on the richest which were 91% into the 1960s. Conversely, since the 1980s after Kemp-Roth and then after 2001 with the Bush era tax cuts, there is no evidence that the economy grew more rapidly than in eras with significantly higher tax rates on the wealthy and corporations. Looking at time periods when tax rates were at their highest, GDP often grew more robustly than when taxes were cut. Visually, the attached graph simply fails to demonstrate that tax rates negatively impact economic growth. (Click on the graph to get a better view of it).

Pictures are worth a thousand words, but statistics are priceless. Statistically, if a tax hurts economic growth, the correction with it is -1. If they positively facilitate growth the relationship is 1, and if they have no impact the relationship is 0. The correlation between GDP and top individual taxes is 0.29, between GDP and top corporate taxes is 0.32, and among the three it is 0.14. Statistically, there is a slight positive impact on either top individual or corporate taxes or economic growth, but overall almost no connection between tax rates on the wealthy and corporations and economic growth in the United States.

But what about taxes as job killers? Again running similar statistical tests, there is little connection. Using Bureau of Labor Statistics data on unemployment rates since 1940, the correlation among top individual and corporate taxes and the annual unemployment rate is -0.02—essentially no connection at all.

The simple claim of Perry, Cain, and others that high tax rates on the wealthy and corporations hurt economic growth and job production is false. The evidence is simply not there to support assertions that high taxes alone hurt the economy or that cutting them will have the stimulus effect asserted.

A plea for fact-based policymaking in an era of political myths

Comedian George Carlin quipped that "business ethics" was an oxymoron. The same can now be said about reasonable politics. Politics and the making of policy seems less to rest upon reasoned debate, social-science evidence, and facts than upon hope and belief. Rep. Michele Bachmann panders to ignorance when decrying vaccines as causing retardation. She, along with Herman Cain, Gov. Rick Perry, and most of the other Republican presidential hopefuls deny global warning, evolution, and a host of other well-established facts, preferring to base their candidacies and appeals on propositions lacking rational or empirical support.

Ronald Reagan famously misspoke: "Facts are stupid things." He seems to have gotten it right when it comes to political debate, pointing to how truth takes a backseat to myth or worse — lies. Two of Reagan's myths — welfare queens exploding the federal budget deficit, and supply side economics as trickling down to benefit us all – both failed truth tests. But that did not matter then or now; people bought them as simple answers to complex problems.

Today, untested or worse, crackpot or refuted ideas dominate political debate. Nationally, we hear rants about how illegal aliens are a drain on the economy and that they take jobs from Americans, when in fact the evidence suggests otherwise and that they are net contributors to our country. Taxes are assailed as job killers when evidence suggests that they are a marginal factor behind workforce quality, access to supplies and consumers, and transportation costs as more important factors affecting business location and expansion decisions. Conversely, little evidence supports the idea that tax holidays to repatriate corporate savings back to the United States will yield job production. Herman Cain more or less admits that his "9-9-9" was conceived as a bold political idea that was not based on any real evidence of its impact.

A bevy of other stupid public policies and political myths dominate the American political landscape. Wrongly we believe that welfare migration is a major problem in the country. Some contend that teaching sex education to teenagers encourages promiscuity, that we can pray away homosexuality, or that same-sex marriage hurts traditional matrimony. Never mind what the best research and facts state.

Both parties indulge

Myth-based politics does not seem confined to one party. Gov. Mark Dayton is determined to secure funding for a new Vikings stadium even though the economic evidence is overwhelming that public subsidies for this purpose are one of the worst uses of tax dollars there is as a tool for economic development. Conversely, the Minnesota Majority continues to beat the drum of voter fraud as stealing elections when the absolute best research suggests that in-person election fraud is negligible, that there is no evidence that it has affected the outcome of any recent election, and that voter-identification laws will not prevent this fraud and instead will disenfranchise many individuals.

As a professor who has taught public policy for nearly 25 years and a former government administrator and planner who worked in the world of facts, evidence and research, I find all this frustrating, especially when called upon to testify before the Legislature. Seldom have I seen facts — and not ideology or prejudice — move elected officials.

My students are not given the liberty simply to assert opinions unless they can support them with evidence. We should ask no less of our politicians and government officials. Reporters do not press candidates to substantiate their claims, and the public often gives them a free pass, letting emotion, anger or frustration guide decision-making. What results are bad laws and foolish policies that do not work, waste taxpayer money, and often make the problems worse than before.

Evidence dismissed

Recently I gave a talk to a local Rotary Club about the 2012 elections. When I finished, a minister came up to me and asked where I stood on voter-ID laws. I told him that I had researched and written on the subject extensively and that the evidence of fraud was negligible. He dismissed my statement, declaring: "I am from Milwaukee, I know about voter fraud. They bring busloads of those folks up from Chicago all the time to vote in our elections."

I shook my head in disbelief. "Those people?" He might as well as said blacks, because that is what he meant. I am not sure what disappointed me more — the racism, the dismissal of the facts or that he was a minister. Why he asked my opinion I do not know — except to confirm his prejudices. It was clear his mind was made up and no amount of facts would change it. He embodied all that is wrong with contemporary politics — one not of evidence-based policy making but one dominated by blind ideology, ignorance or willful disregard of the facts

Today's blog appeared in the Friday, October, 28, 2011 Minnpost.

Class divides America -- and conflicts reflect a broader battle

This blog originally in Minnpost on October 17, 2011.

A line in the sand of American politics is being drawn. It is a line that cut through Madison, Wis., last spring in the debate over unions. It is a line being cut through Wall Street over the role of banks and hedge-fund managers in destroying the American economy in 2008. And it is a line cutting though Washington, D.C., in Congress over how to produce jobs, regulate banks, reduce the deficit and debt, and provide health care to those who need it. That line is about class in America.

There is a basic belief in America that we are all in it together. We are one big happy middle class where the interests of the rich and poor are not in conflict. Rising tides lift all boats, as Ronald Reagan used to say. There are no class conflicts in this world. That what is good for GM is good for America, and that we live in a society where all of us can be winners with no losers in the economic marketplace. The promise of America is of a non-zero-sum game — some do not have to lose for others to win. The truth is far uglier.

America is a nation characterized by increasing class divides. In 2010 the Census reports the richest 5 percent of the population accounted for 21 percent of the income, with the top 20 percent receiving over 50 percent of the total income in the country. This compares to the bottom quintile accounting for about 3 percent of the total income.

Congressional Budget Office research found that the income gap between the top 1 percent of the population and everyone else more than tripled since 1973. After-tax income for the top 1 percent increased by 281 percent between 1973 and 2007, while for middle class or middle quintile it increased by 25 percent, and for the bottom quintile it was merely 16 percent.

Looking beyond income to wealth, the maldistribution has not been this bad since the 1920s. According to the Institute for Policy Studies, in 2007 the top 1 percent controlled almost 34 percent of the wealth in the country, with half of the population possessing less than 3 percent. The racial disparities for wealth mirror those of income. Studies such as the Survey of Consumer Finances by the Federal Reserve Board have similarly concluded that the wealth gap has increased since the 1980s.

Record numbers in poverty

Social mobility in America has ground to a halt. A 2010 Organization for Economic Cooperation and Development study found that social mobility in the United States ranked far below that of many other developed countries. Other studies, including those in 2005 and 2010 in the Economist, similarly point to declining social mobility in the United States that makes it difficult for individuals to rise from one social economic status to a better one. In fact, there is better than a 95 percent chance that children will not improve their social economic status in comparison to their parents. Finally, the latest Census figures point to a poverty rate in 2010 of 15.1 percent, representing a record 46 million people in poverty. The numbers are equally grim when one looks at women, children, and people of color in poverty — all record or near-record numbers. Few really can move on up to live the American dream.

The reality is that America is a zero sum game. There are winners and losers. What is good for corporate America is not benefitting most Americans, and it is increasingly clear that in simple terms the rich are getting richer, the poor poorer. The reality is, we are not all in it together and class divides America. We see the divide in where individuals live, what they eat, and the entertainment they consume. It is seen in who votes, runs for office, and in political contributions. It is reflected in our tax code, criminal-justice system, and educational opportunities.

Class exists. The problem is, few want to acknowledge it. And when someone talks of economic redistribution, bailing out homeowners and not banks, taxing millionaires, or blaming Wall Street and not the government for the economic problems that ail America, cries of class warfare are raised. Or worse — Herman Cain "McCarthyited" the Wall Street protesters as "Anti-American," invoking the ugliest of all political epithets to assail opponents.

Protests are symptoms

Yes, class conflict exists in America. Protests in Wisconsin over attacks on unions or on Wall Street to challenge the power of banks reflect this. But they are merely symptoms of the broader battle over a simple question: "Why government?" It is a debate over whether free-market fundamentalism prevails as a means to provide order and declare winners and losers in America versus letting the government correct the imperfections and errors that capitalism has produced. It is between saying that the direction of the country is decided by "one dollar one vote" or by "one person one vote." It a battle over whether the government serves the interests of corporations and the rich or the rest of us.

Class exists in America, as it does in all other nations of the world. Like it or not, there are diametrically opposed interests in this country and the real questions are whether the government and politicians should do anything about it and whose interests they should serve.

Presidential Politics: It’s about the money

The third quarter presidential financial reports are in and this is a good time to string together some thoughts about the candidates.

“Money is the mother’s milk of politics,” said former California Assembly Speaker Jesse Unruh.

Money is what it is all about in campaigns, especially presidential politics, as they have evolved into hundreds-of-million dollar businesses, replete with fundraisers, media consultants, travel consultants, pollsters, and a host of other specialists. The days of candidate door-knocking and Lincoln-Douglas debates are part of a quaint Norman Rockwell past. Modern presidential campaigns are won or lost with money.

Third quarter reports are in and we can learn a lot about candidate prospects by examining their fund-raising balance sheets. Of most interest, Michelle Bachmann’s along with those of Obama, Romney, and Cain.

Bachmann

Bachmann is dead financially and it confirms her descent in the polls. In the third quarter she raised $4.2 million, suggesting that her congressional money machine was not equipped to make the presidential leap. Yet her second quarter produced barely $4 million, and she spent nearly $6 M. This is embarrassing and bad news for her.

Embarrassing–She rails against government deficits and need to live within our means yet she cannot do that with her own campaign. She has proved to be a bad steward of her own money–how can we trust her with the public treasury? Her credibility on the budget is gone.

Bad News–Bachmann’s financial woes confirm her poll problems and fall from grace. Think about it–the 3Q should have been a slot machine for her. In August she was at the top of the polls and had won the Iowa straw poll. She had a massive donor list and money should have poured in. Yet it did not. Perry clearly hurt her as did her bad debate performances and gaffes. She failed to capitalize on her opportunities.

But that is not the end of it. Bachmann has not been to New Hampshire since June. She has little or no organization outside of Iowa where she continues to camp out. Her poll numbers are bad and hurt fund-raising, and now this news about the 3Q only makes it harder to generate cash.

Even if Bachmann wins Iowa in January it will not be enough to save her. Everyone expects her to do well there so she will not get much of a bounce even my winning. But assume she wins, what then? With no organization in other states she will not be able to capitalize on the win there to help her move forward. Her financial number reveal a candidate who will meet her Waterloo one way or the other in Iowa. She lacks an infrastructure in other battle ground states and thus she may be a one-state candidate.

How long will Bachmann last? I think she makes it through Iowa at most. At the least she stays in the campaign through December because she has a book coming out then. Is she counting on the book bolstering her campaign? No–Bachmann is now in it for herself. She is using her presidential campaign and her supporters for the personal benefit if herself. An active campaign makes for books sales and for money in her own pocket.

Call me cynical but it is now clear Bachmann does not care about the presidency or her supporters. She is in it for the money. Watch her make a few million on her book, leave her creditors on the hook, and she walks away from politics rich and her supporters used.

Obama and Romney

Obama raised a ton of 3Q money, dwarfing all of the GOP. Good for him–he will need it if he wants to win reelection. Money, the power of incumbency, an unpopular Congress, and the penchant of the Republicans to want to nominate a candidate so conservative that no swing voter will support them (Think Goldwater and 1964) may overshadow the 9% unemployment rate. Obama still lacks a narrative for reelection and GOP will run on the mantra of “change” against him.

Romney hangs tough with $14 million, but GOP polls continue to place him at about 25%–a spot that has not changed for months. He seems stuck, unable to gain more support as the different flavors of the month–Trump, Bachmann, Perry, and now Cain–seem to come and go. Romney may have the best shot of all to beat Obama but he generates little excitement. His problem is that he is like the guy who reminds a woman of her first husband. He has the same problem with the Republicans. He generates little excitement and affection. His boringness is why other candidates look good to the Republicans–they are searching for something more exciting and for someone who will fulfill their fantasies. Romney is out of place with the current version of the Republican Party. If he does get the nomination he will generate little excitement among the Tea Party folks. Remember, Rod Stewart is right–it is about passion–especially in politics–and Romney lacks it.

Wall Street, Obama, and Romney

If you want loyalty and a friend, get a dog. This is what Obama must be thinking about Wall Street. They were his friends in 08 when they needed him and they gave to his campaign. Now Romney is out-pacing him when it comes to Wall Street money. Why?

Wall street got what it wanted from Obama–the bailouts–and they do not need him anymore. Obama was played like a violin–he bailed them out before getting anything from them and now that they are fat with cash again they cast him aside for someone else. No surprise.

Cain and Final Thoughts

Cain might be the flavor of the month but it is good to be the flavor when it is close to the real start of the primary season, which is just a few weeks from now. His poll numbers are great but his fund-raising is lackluster at less than $3 million (which includes a ton of his own money). In the last few days the media has poured scrutiny on him–look to see more of that in the coming weeks.

His 9-9-9 will come under huge analysis. Cain admits that 9-9-9 was conceived of as a bold idea. Bold it is, smart it is not. It is not based on any real economics but instead it captures the attention of those who want quick simple solutions.

Wait to people begin to think about the 9% federal sales tax. I am sure consumers and businesses will love it. Plus 9-9-9 will force massive budget cuts and fail to generate the revenue needed to address the debt. Look to see 9-9-9 lampooned soon.

The Scream! Thoughts on the Iowa Republican Debate

No question about it–the lunatic fringe has taken over the Republican Party. The August 11, Ames, Iowa Fox debate featured calls for the return to the gold standard, the right to choose light bulbs, criminal prosecution for doctors who perform abortions to save the lives of mothers, obtuse readings of the Tenth Amendment, and petty and personal squabbles attacking one another and the media. All we needed was for someone to assert that the Earth was flat and that it was located at the center of the universe. It was enough to make one what to scream!

The debate lacked substantive and constructive ideas. It was devoid of facts, researched ideas, and any sense of real research across the areas of economics and law. While all the candidates were correct in contending that Obama lacked a economic plan for America, none of them offered anything of substance either based upon research and evidence regarding what works or not. It was all pure ideological pandering to a crowd, with sound bites crafted by speech writers. All seemed to think that the only solution was more tax cutting, giving businesses even more breaks than they have now. It was a collective pep rally for trickle down economics, contending that too high of corporate, capital gains, or other taxes were the cause of the economic slowdown. Cain at least was honest in saying that he was not bothered if the tax cuts to corporations resulted in them paying more dividends and not investing. So much for the veneered justification of supply-side economics as a jobs producer.

Moreover, other candidates had equally dismal and shallow assertions about economics. Paul wants to dismantle the central bank and return the US to the gold standard. Pawlenty thinks we can achieve 5% economic grown for many years if we enact his nonexistent economic plan. Bachmann thinks she can turn the economy around in 90 days. Gingrich blames it all on Dodd-Frank and Sarbanes-Oxley–repeal them and all will be fine. Huntsman and Romney simply said trust me–I was in business and I know how to create jobs.

But perhaps the most interesting part of the debate was when pressed about a bipartisan deal to cut the deficit and asked if they would sign off on a deal that would have 10:1 spending cuts to tax increases. None supported it.

None of the candidates seemed to have a sense about job creation or about a role for government investment in the economy to build infrastructure. In doing so, they forget even that Adam Smith in the Wealth of Nations called for this. Or that this is what Alexander Hamilton called for in creating the national bank and in supporting credit and manufactures. All seemed to endorse Ayd Rand economics, a libertarian free for all market place of the survival of the fittest.

But economics was not the only place where crackpot theories prevailed. Constitutionally, they were all horrible. Bachmann stated that the Constitution does not allow the government to require individuals to purchase anything such as insurance. She was unable to square that with her reading of the Tenth Amendment which gives states broad power to regulate, even traditional topics such as marriage. By her logic, states could not require individuals to purchase auto insurance and perhaps even licenses for practicing medicine or doing anything else. Moreover, despite all her defense of the Tenth Amendment, she would take away the power of states to pass legislation allowing for same-sex marriage. At one point the debate degenerated into a discussion of whether the Tenth Amendment would allow states to enact slavery or polygamy.

In 1984 a challenger to Senator Fritz Hollings demanded the senator a take a drug test and release the results. Hollings replied by stating that he would take such a test if his opponent took an IQ test and made it public. Last night’s debate gave me new appreciation for Hollings’ suggestion. Candidates for the presidency should be better informed about the world of economics, politics, and the law. We talk so much about civics education and literacy tests for citizens. Maybe candidates should be required to pass such a test as a condition for running for office.

Final Thoughts: Bachmann v Pawlenty: Pawlenty’s Sexism

The Bachmann/Pawlenty feud is the media highlight of the debate. Both came off looking petty and small. Pawlenty is correct that Bachmann has no real legislative record, Bachmann is correct that Pawlenty has switched on many issues. Leave it there. But both felt they needed to dig at one another, underscoring the deep animosity the two h ave always had toward one another, not only enhanced by their rival Iowa strategies. Yet Pawlenty came off worse. He was given a second chance to criticize Romney and again soft-peddled it. Thus, he was too weak against Romney and too aggressive and petty against Bachmann. This attack reveals a deeper sexism with Pawlenty.

Recall in 2006 his attacks against DFL Lt. Gubernatorial candidate Judy Dutcher when she blanked on a reporter’s question about E85. At one point DFL Gubernatorial candidate Mike Hatch stated about Pawlenty: “Look at how desperate he is, he is attacking a woman.” Hatch took heat for that statement but in retrospect he seems prescient. Pawlenty’s sexism is his inability to confront and challenge men, preferring to pick on others he perceives as weak, such as women. This is the the wimp factor.

Conversely, Bachmann competed for the dumbest answer of the night. When asked to defend her legislative record against Pawlenty's criticisms, she replied: "I introduced the Lightbulb Freedom of Choice Act so people could all purchase the lightbulb of their choice." I am not sure what is worse, that this is the sum of the legislative record that she is proud of, or that she wants to give individuals more choice to select light bulbs than gay people to marry or women to control their reproductive choices.

The Winners are...?

Who won?

Gingrich had real policy answers even if they are wrong. He was correct to trash the super-committee as a lack of leadership and at least his comments about Sarbanes-Oxley and Dodd-Frank, even if wrong, were real ideas.

Romney wins since no one attacked him and escapes with no bullet holes.

Huntsman has the single best answer of the night. When asked about his support of civil unions he said he stood by his position. But more importantly, when criticized for accepting Obama’s request he become ambassador to China, Huntsman replied: "I’m proud of my service to this country. If you love your country, you serve her. During a time of war, during a time of economic hardship, when asked to serve your country in a sensitive position where you can actually bring a background to help your nation, I’m the kind of person who’s going to stand up and do it, and I’ll take that philosophy to my grave." If we had more answers and people like that our country would not be in the shape it is today.