1. the companies will still be managed by an apparently inept and inefficient bureaucracy,
2. will still be bound to pension and health costs for retired workers which are beyond the ability of the current business model to support,
3. will have 112 different car and truck models through 15 brands – Toyota has three brands, Honda two,
4. must adhere to state franchise laws that insulate dealers from any real changes – GM has about 7,000 dealers. Toyota has fewer than 1,500. Honda has about 1,000,
5. has negotiated union contracts that impose astronomical health and pension costs, make innovation harder, reduce production flexibility – $7,000 of the cost of each car is attributable to union benefits.

It doesn’t matter whether the Big 3 are ‘an essential part of our industrial base,’ as Rahm Emanuel asserts. Does anyone think throwing $34 Billion of taxpayer money will be enough?  Does anyone expect the companies to radically change their business models?  Heaven forbid, turn a profit?

In reality, the bailout is payback for the $450 million raised by unions for the card-check and for benefit of the Democratic party and new Big Three CEO-in-Chief, Barrack Obama.

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Start with the terms “Left” or “Right”.  One historical version attributes these terms to the days of the French revolution – the atheistic, murderous French Revolutionaries were from the Left Bank of the Seine, and their implacable enemies were on the Right Bank of the Seine.  Other stories attribute the terms to the fact that the term left wing originates from the French Revolution, when radical Montagnard deputies from the Third Estate generally sat to the left of the president’s chair.  The moderate Feuillants generally sat to the right.  It is still the tradition in the French Assemblée Nationale for the representatives to be seated left-to-right (relative to the Assemblée president) according to their political alignment.

How about “liberal,” “conservative,” “progressive,” “reactionary,” “revolutionary,” “radical,” and “moderate” – Karl Marx’s writings and those who largely accepted the Marxian view created the lexicon of political shades we currently use.  Marx used the labels to describe society’s economic progression, presumably and inevitably toward a Communist system.  Notably for our current state, Karl Marx identified socialism as the stage between capitalism and communism.   (In fact some have described the incoming Obama administration as the interim stage between Capitalism and Communism foreseen by Marx.)

For the purpose of this post, it is illuminating to contrast the definitions we currently apply with the Classical Liberalism which believed that the state should minimize its intervention in society.  These are clearly not the terms currently in use.  When did the Orwellian change in the definition occur?  By the end of the 19th century, liberals began to assert that, in order to be free, individuals needed access to food, shelter, and education, and government protection from exploitation.  This became the foundation for the current use of the term “liberal” – thus, as applied in the US, the term is used to refer to modern liberalism rather than classical liberalism.

Conservatism has been much harder to define.  Edmund Burke maintained that classical conservatism has no ideology; instead it was a collection of reasoned positions on many issues.  Thus the dissolution of classical conservatism into Liberal conservatism, Conservative liberalism, Libertarian conservatism, Fiscal conservatism (reflective of Burke’s classical definition), Cultural Conservatism and even Green Conservatism.

It is thus no small wonder that the “conservative” movement spends so much time defining itself.  So, let’s look to another source for the foundations of current conservative thought.  How about our founding fathers?

Jefferson is most often used to reference conservative ideology.  But he was a man to whom many labels might apply; he was a classical liberal – believing in absolute freedom from the state, he was a radical, a reactionary, a revolutionary and as President, he ultimately governed as a moderate.  In the context of his time, Jefferson was all of the above.  It is important to consider that neither he nor any of the Founders used terms like “liberal” or “conservative”.  Instead of a specific ideology, Jefferson wrote of specific principles by which he believed the country should be governed, and by which men should abide.  He was for limited government; he was a strong advocate of state rights, and he supported a strong nation-state (remember as President in 1801, Jefferson sent the Navy to quell the Barbary (and Muslim) pirates), he was vehemently opposed to a national bank, and he was elected as President in 1800 on a platform opposed to taxes.  Jefferson died on the 4th of July, 1826.

So where does this lead us “conservatives”?  Like the title of this post – “back to basics”.  Before anyone puts a stamp on ‘”conservatism” which promotes their agenda (Green, Liberal, Libertarian, etc.), conservatives need to define the principles by which they propose our political leaders govern, and cogitate on the manner by which we respond to today’s front-page news.

Speaking of foundational influences, the new President-elect has stated the influence of Abraham Lincoln on his thinking.   But as is the norm these days – Obama is a “cafeteria Lincoln-ite”.  Obama complains that he “cannot swallow whole the view of Lincoln as the Great Emancipator” because “as a law professor and civil rights lawyer and as an African-American, I am fully aware of his limited views on race.”  It is not clear what Lincoln’s “limited views” were, but in his crusade toward emancipation,  Lincoln refused every single compromise on slavery that might have prevented the death of 500,000 citizen soldiers.  Over time, Lincoln has become an icon of the left, for many valid reasons – none of which should be ascribed to conservatism.  For a good read, try Sam Dickson’s “Shattering the Icon of Abraham Lincoln”.  According to Dickson, the Lincoln myth has been sold to both conservatives and liberals, but in his own words, “Lincoln was a demagogic politician who maneuvered with consummate skill on all sides of many burning issues of the day”.

Thus, before buying into the Obama as Lincoln theme floating in the liberal realm (of course they are alike – “two thin men from rude beginnings, relatively new to Washington but wise to the world”), conservatives should go back to basics and consider Jefferson, and not Lincoln, as an inspiration while our country and economy lurches and limps toward the next administration.

Thomas Jefferson

• The democracy will cease to exist when you take away from those who are willing to work and give to those who would not. 

• It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world.

• I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.

• My reading of history convinces me that most bad government results from too much government.

• To compel a man to subsidize with his taxes the propagation of ideas which he disbelieves and abhors is sinful and tyrannical.

• I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.

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Jerrold Nadler (D-NY) introduced H.RES. 1531, which attempts to block the office of the President to pardon anyone in his last days in office.

Forget that little issue of the Constitution: Article II, Section 2 gives the president “Power to grant reprieves and pardons for offenses against the United States, except in cases of impeachment.” 

Forget the fact that Wild-Bill  granted pardons and clemency to 456 people while in office, and Dubba-Ya has yet to break 180.    Ignoring the ignoramus, with any luck, President Bush will include Border Patrol agents Ignacio Ramos and Jose Compean in his final list.

And by the way, after reading the Nader piece, Bush may want to extend some preemptive pardons and spare us all the spectacle of a collection of show trials regarding “illegal” wiretapping” or “torturing.  After the bailout mania, we may all be suffering from too much watching “Moonbats on Parade” already.

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The court ruled that a Jiffy-Lube owner had no right to enforce a dress-code on its employees, as this code offered no accommodation to a Rastafarian employee.  The Rastafarian faith urges followers to let their hair grow unbridled. Apparently the long, matted strands called dreadlocks to express a oneness with nature.

More importantly, the court ruled that the Jiffy-Lube owner can be sued over enforcement of its policy.

I guess that means Manny can now play for the Yankees withot fear of cutting his dreadlocks.  Too bad Johnny Damon was not a Rasta-man.

Expect a flood of new religions to arise, each with their own set of rules which employers must accomodate (the New Age Flip-Floppers, the Exposed Belly-ists…. and on.. and on….)

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The comments will be reviewed as suggestions for topics for posting.

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But the respite will not linger.  December 2nd is the date that the Big Three need to present an “acceptable” plan to Congress in order to earn another bailout and the next ill-fated stimulus package is being negotiated (defining how the newly-elected will pay back their support groups with tax payer handouts).  As expected, the line for more handouts is starting to form, as city transit agencies are due to come, cup in hand to the Hill this week.  Beyond economics, the world is watching the terrorist attacks in India, the fact remains that pirates now hold at least a dozen ships, shoppers are trampling to death fellow human-beings to save $50 on the newest gadgets, and the constant rumblings from Iran continue.  As Peggy Noonan says, there are many disturbances still ahead.

So before the holes start springing in the economic dike, this is a good time to re-group and see what we have created.  In a post last week, a discussion ensued about how the government is perpetuating a moral hazard of undefined scale and scope.  Moral hazard is an economic concept founded in the insurance business.  The premise is that people will take greater risks, or engage in more risky behavior than otherwise, because they believe they will not bear the full consequence of their actions.  And while much has been made of the Wall Street / Detroit bailouts ($4.3 Trillion, so far), the next group of over-spenders is getting ready to put out their hands – and taxpayer will soon be asked to stem the impending failure of state governments to meet required balanced budgets.

Some 41 states are facing budget shortfalls.  According to the Center on Budget and Policy Priorities, the current total gap is expected to be $24.3 billion, and will continue to grow as economic growth slows.  The shortfall is expected to double for fiscal year 2009, to close to $48 billion. And unlike the federal government, most states cannot run a deficit (by the force of constitutionally bound balanced budget requirements) or borrow to cover expenditures.

One reason for the budget woes; state revenues have been negatively impacted by reduced state sales tax revenue, reduced property tax revenues, and as the employment situation deteriorates income tax revenues will weaken.  Further pressure will be felt as local governments will seek relief from the state government to offset reductions in local education budgets.

As a result, cuts will occur at the state level for public health programs, for elementary and secondary education, and to impose workforce reductions.  Some states will tap “rainy-day funds” to make up shortfalls, but even these measures may fall short. At the end of FY06 reserves averaged 11.5% of state spending.  This number has declined to 7.5% as the economy enters the FY09 recession.

How have states managed their income statements?  Of course it varies by state, but using California as an example – during FY08, the state spent $13 billion more than it has received in revenue, spending $108 billion, while bringing in $95 billion as of March 29, 2008.  Is this a new phenomenon?  Hardly – there has been a 32 percent increase in California’s spending from 2003 to 2008, with revenues falling far behind.

California is spending $10.5 billion annually to fund benefits for illegal immigration, according to the Federation of American Immigration Reform.  On an aggregate basis, the total K-12 school expenditure for illegal immigrants costs states nearly $12 billion annually, and when the children born here to illegal aliens are added, the costs more than double to $28.6 billion.

And while California has budget shortfalls of large scale proportion, 41 other states have the same issues on a smaller scale.  The politician’s response so far – hope.  That is, they hope to find “efficiencies” in consolidation of some departments, or hope to out-source certain functions, and last the always popular “across-the-board” cuts.

There is no doubt that states have been spendthrifts over the past four to six years.  And the inertia from this spending will need to be slowed now that the inevitable economic downturn drags down revenues.  And unlike the current cycle of governmental actions (guarantees, capital infusions, et. al.), the state budget problems will be felt on a very local level.  Education funding will be cut, affecting school programs and administration.  Infrastructure maintenance will be reduced.  And to make matters worse, individual cities are also facing huge deficits, causing cities to find ways to increase revenues (see NYC tax on plastic bags).

Over the next six months Americans will see the results of years of out-of-control spending at the state and local levels.  And we will face the consequence of the failures of our elected officials to act as fiduciary stewards of our state and cities.  The split between Republican and Democratic governors is about even – 22 (R) to 28(D) – and each state has their own reasons for success or failure (immigration funding, managed health care debacles, etc.), but in the end, the governors and legislatures have spent our taxes like a sub-prime borrower.  The bill will soon come due.  And has become the practice of the day – the failed managers (CEOs, Mayors, Governors, and just about every other failed enterprise), will make their way to DC for a taxpayer bailout of their economic malfeasance.  As for the rest of us – in the words of an Obama-mentor (at least before his fall from grace) – “the chickens have come home to roost”.

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Question Two – Is there anyone in government, Republican or Democrat, who has a clue about basic economics?  Senator Charles Schumer said on ABC’s “This Week” that the new stimulus package has to be “between five and seven hundred billion dollars”.  Is that the most informed estimate we can get?  A variance of $200 billion dollars?  Why not $200 billion, why not $1 trillion?  And one of the newly minted economic team of president-elect Obama, opined with great gravitas “that the number needs to be large enough to startle the thing into submission”.  Frankly, I am already startled – into incredulity.

Question Three – Can anyone explain how, taking a dollar from one segment of the population and giving it to another group of the population, stimulates the economy.  That is, the Treasury taxes everyone (or those who pays taxes!), then gives that dollar to some others.  Moving the dollars from one house to another does not stimulate anything.  Does anyone remember the promises made at the time the first (now paltry) $150 billion package was announced?  By any measure, looking at today’s economy – that stimulus package failed. 

The $150 billion stimulus was a failure because it merely shifted income from one sector of the economy to another.  The government cannot create new purchasing power or dollars; it can only change the allocation of dollars.  Productivity growth requires an increasing amount of capital, not by injecting previously extracted funds.   To create the rebates, then, government had to take money away from another part of the economy.

Of course, those arguing for another package are offering that 1) the short-term failure of the package is, well, too short sighted.  “Granted, GDP data did not show any meaningful economic growth from the stimulus”, they say, “Fiscal demand policy takes a longer time to take effect”.  Or, 2) we obviously needed more.  This is the same argument every soon-to-fired sales manager tells his boss: “Yes we are losing money on each package, but we can make it up with volume!”

So we are left with a ballooning federal deficit, spurred by ineffective stimulus packages, yet to be proven bailouts to large corporations (and all along I thought it was the Republicans who favored big business), and the declaration that, according to “Obamanomics”, the nation has little choice but to boost government spending, something Obama said conservative and liberal economists agree on.  This post and this blog reference respected economists and research that does NOT support the idea of government spending as the only solution to the current economic turmoil.

In the absence of anything stemming the current tsunami of handouts, bailouts and giveaways, there are a few bright spots.  The tax increase on the rich may have to wait (given the current economy, no tax increases should occur and there may be less “rich” anyhow), the “cap-and-trade” tax on fossil fuels should be delayed, and we even hear that Obama may delay his election promise to repeal Bush’s “tax cuts for the rich”.  Conservative economists and monetarists have always known that any tax increase in the middle of a recession is an anathema.  It may end up that “Obamanomics” only works when there is earned income available to redistribute.

Imagine that.

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Narcissistic declarations aside, Obama came into national prominence, and ultimately success, having spent almost as much time running for office as he had holding a national political office.  In fact, besides the Chicago connections Obama hesitantly renounced during the campaign (Rezko, Ayers, Wright, et. al), he remains a governing cipher.  His voting record was proof of his far-left credentials, but his campaign promises were much more centrist.  As the change mantra was offered, in voice and in song, it’s all starting come into focus.  Finally, the questions conservatives asked during the campaign – What? When, How? – may be answered.

John Podesta, Clinton’s former White House chief of staff, is heading the transition effort.  Illinois Rep. Rahm Emanuel, a former top Clinton adviser, is Obama’s chief of staff.  Former Clinton appointees Eric Holder and Janet Napolitano appear in line for Cabinet posts. (Both of these carry the baggage of the Clinton years, but more on that later).  Even Governors from the old Clinton-days got swept up in the wave as Bill Richardson was announced as Obama’s pick for Secretary of Commerce. 

And in the coup de grace, Obama has signaled plans to name former first lady Hillary Rodham Clinton as secretary of state.  Even the HuffPos are up in arms.

The lone outsider is Ellen Moran, who will be director of communications at the White House.  She was executive director of the Washington group EMILY’s List — a group that backs female candidates who support abortion rights. She also has worked for the AFL-CIO.  See, there are in fact liberals who are pro-abortion.

The economic team was announced today, including New York Federal Reserve President Timothy Geithner as his Treasury Secretary nominee and former Harvard President Lawrence Summers as the director of the National Economic Council.  Both Geithner and Summers are free-traders, and yes, served in the Treasury Dept under Clinton (full disclosure: Summers was on the CEA under Reagan as well).  As a matter of importance, Geithner was a leader in arranging the first of the string of bailouts – the rescue and sale of Bear Sterns.

So the cast is being created.  The “Clintonistas” seem to be leading the race, but the new “Obamaites”, and even the centrists are gaining ground.  As the economy is heading towards a deep recession, the time for judgment is approaching – we are starting the see the Who?, now on to the When? And How?

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Regardless of age, and more importantly for this blog, it is relevant that Inouye is in the top third of liberals in the Senate (National Journal Rating of 71.7), and his voting record includes:

• Voted YES on continuing federal funds for declared “sanctuary cities”. (Mar 2008)
• Voted YES on allowing illegal aliens to participate in Social Security. (May 2006)
• Voted NO on banning partial birth abortions except for maternal life. (Mar 2003)
• Voted YES on granting the District of Columbia a seat in Congress. (Sep 2007)
• Voted NO on banning lawsuits against gun manufacturers for gun violence. (Mar 2004)
• Voted YES on preserving habeas corpus for Guantanamo detainees. (Sep 2006)
• Voted with Democratic Party 96.9% of 293 votes. (Sep 2007)
• Voted NO on confirming Samuel Alito as Supreme Court Justice. (Jan 2006)
• Voted NO on confirming John Roberts for Chief Justice of the Supreme Court. (Sep 2005)

In terms of earmarks – don’t expect any change.  Inouye will most likely pick-up right where Byrd leaves off.  In 2005, Inouye, as the No. 2 Democrat on the Senate Appropriations Committee, helped bring home more than $432 million – or $339 for each Hawaiian, the second-highest amount that year (behind Ted Stevens R-Alaska who lost his reelection bid).  Ranking third at $262 per resident was West Virginia, home to the longtime top Democrat on the Senate panel and its current chairman, Robert Byrd.   This past session the earmark table reads:

1. Sen. Ted Stevens (R-AK: 238.5 million
2. Sen. Thad Cochran (R-MS): $226.6 million
3. Sen. Robert Byrd (D-WV): $224.9 million

4. Sen. Daniel Inouye (D-HI): $222.2 million

Source: Taxpayers for Common Sense

The more things change…..

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He was elected Majority Leader in 2006, and was not responsible for Republican’s loss of 30 House seats in 2006 and not entirely on the hook for the 20 more now. Nonetheless, the losses occurred on his watch.

Americans wanted change, and elected the least qualified president-elect since Jimma Carter.  Republicans respond with more of the same.

Now Republicans will see if Boehner can hold any sway over the smallest minority in years.  In fact, it is possible that Republicans could regain seats in 2010 merely as a result of excesses by the Democrat Congress and presidency.  But the truest test will be if Boehner can give Republicans AND Conservatives inspiration for the party.  Status Quo and minority status – or bold and aggressive leadership and growth.  The next two years will define the GOP leader’s career.

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