To My Democratic Friends...

Passing Health Care Reform was, for your team, a historical achievement. But the President has been mostly unable to sell it to the American people. Partisans left and right hope|fear that the reform will become much more popular once enacted, but that is not likely -- Health Care Reform was far more controversial at inception than either Social Security, or Medicare. More likely, it will become even more polarizing and more bitterly fought over every election cycle on the state and federal level. As such it will be, at best, unevenly implemented.

The tragedy is that there were no shortage of "good ideas" (for example: better aligning incentives by severing insurance from employment or promoting alternatives to fee-for-service), that could have more sustainably passed with some bi-partisan support and, in-turn, built credibility toward more ambitious reform.

To hear your economists, the Stimulus program was too small to possibly succeed, but just large enough to be a political disaster for its backers.

After the financial crisis, there was a national consensus that "too big too fail" and "public risk, private reward" had to end. It is really hard to argue that Dodd-Frank accomplished either. On the contrary, the largest banks today, control more of the economy than ever, and the Government is still subsidizing bankers' bonuses.

Obama argues he is pursuing a savvy, subtle, long-game, foriegn policy. Certainly, running around the Middle East trying to impose Democracy wasn't brilliant. On the other hand, there has to be some sensible middle ground between that and policy that seems oddly complacent in the face of a world that is, in many respects, more dangerous now than it was four years ago.

To take one example: Moderate Muslims, are fighting with Islamicists for the future of their societies. According to the New York Times, "One of the principal goals of the extremists... is to pressure these transitional governments to enact and enforce strict laws against blasphemy. These laws can then be used to purge secularists and moderates." With that in mind, it is hard to see the administration's response to the youtube video protests as either savvy or subtle.

Mitt Romney ran to the left of Teddy Kennedy and to the right of Gingrich and Perry. He is a tactician, not an ideologue. As a tactician, he tracked to the right in the primaries, and back to the center in the general. In the face of conservative pressure in the primaries, he refused to jeopardize his general electibility by dis-owning "RomneyCare". While that should have given conservatives pause, it should re-assure, moderates and liberals. As President, he can be expected to be more like Clinton than Obama: refusing to jeopardize his re-electability playing to the unpopular passions of his base (in Romney's case, for example by dismantling the safety net or bomb, bomb, bombing Iran).

Finally, a Romney win will strengthen moderate Republicans in the way that Clinton's victory strengthened, for a time, "Third Way" Democrats. This would be a good thing.

The Leopard and the Fox

Tonight's debate was a strange one. Romney, stuck precisely to the strategy he telegraphed, and the President had no response. It was like watching a great running back clinching a Super Bowl.

For Romney supporters, this debate was fun. "Look, I got five boys. I'm used to people saying something that's not always true, but just keep on repeating it and ultimately hoping I'll believe it" -- Zap! "you don't just pick the winners and losers; you pick the losers." -- Pow! ": Jim, the president began this segment, so I think I get the last word, so I'm going to take it." (after the Obama tried to get in the last word with "Jim, I — you may want to move on to another topic, but I would just say this to the American people...") -- Bam! "You've been president four years" -- Kapow! "we've gone on a lot of topics there, and so it's going to take a minute to go from Medicaid to schools... to oil, to tax breaks, then companies going overseas. So let's go through them one by one." -- Shazam! Obama supporters are critiquing Romney's lack of specifity, but he drowned Obama in a sea of First, Second and Thirds.

What is most strange, however, is that not long into the debate, neither the President, nor for that matter the moderator, seemed to want to be there. They seemed almost drugged. The President conveyed the clear sense that this debate didn't matter.

That may be the case. The debates closer to the election may matter much more or the number of votes sway-able by gaffe-free debates may be minimal. Or maybe Obama came prepared with a set of canned answers and was unready for the surprising level of back and forth the moderator allowed.

The First Debate

Strangely, Romney is being described as a strong debater. That hardly seemed to be the case in the primary debates, after which the anybody-but-Romney of the month received large bursts.

Romney's strength, and weakness, is that every word out of his mouth feels prepared and tested. Obama appears much stronger extemporaneously. In general, voters prefer boldness and authenticity. In this election, voters may appreciate a candidate who takes his homework seriously.

More strangely, Romney has telegraphed his debate strategy: "casting President Barack Obama as someone who can’t be trusted to stick to the facts or keep his promises". Unless the Romney campaign is more of a rolling calamity than suspected, this will prove to be a bit of psychological gamesmanship. Romney almost certainly understands that to win the debate he needs to visibly rattle the President.

In the end, the premise of the Romney's campaign is his competence and preparation. If an over-confident Obama veers off his own prepared script, a prepared Romney will be ready.

The Conservative Mind

David Brooks argues there used to be two kinds of conservatives: "economic conservatives" and "traditional conservatives", who sought "to preserve a society that functioned as a harmonious ecosystem, in which the different layers were nestled upon each other". He believes Russell Kirk’s essay, “Ten Conservative Principles,” gives the flavor of this traditional conservatism.

1. The conservative believes that there exists an enduring moral order.
2. The conservative adheres to custom, convention, and continuity.
3. Conservatives believe in what may be called the principle of prescription... that is, of things established by immemorial usage
4. Conservatives are guided by their principle of prudence.
5. Conservatives pay attention to the principle of variety.
6. Conservatives are chastened by their principle of imperfectability.
7. Conservatives are persuaded that freedom and property are closely linked.
8. Conservatives uphold voluntary community, quite as they oppose involuntary collectivism.
9. The conservative perceives the need for prudent restraints upon power and upon human passions.
10. The thinking conservative understands that permanence and change must be recognized and reconciled in a vigorous society

Brooks believes "traditional conservatism has gone into eclipse." He knows this because Republicans "almost always use the language of market conservatism" as opposed to "the language of social order" and because few conservatives would "be willing to raise taxes on the affluent to fund mobility programs for the working class [or] use government to actively intervene in chaotic neighborhoods [or] who protest against... cut[ting] domestic discretionary spending to absurdly low levels."

His claims are mostly strange. For example, conservative politicians are probably not wrong to calculate that one wins votes by advancing personal freedom rather than social order. More fundamentally, there is a large jump from Kirk's principles to support for raising taxes to fund activist government programs. Or rather: it seems foolish to believe that the government we have is capable of pursuing activist policies in the spirit of "traditional conservatism".

A traditional conservative, in other words, would be less concerned with raising taxes and more concerned with school choice, federalism and de-unionizing government workers. Brooks reminds us that, by his own lights, he is not any sort of conservative.

Rolling Calamity

Peggy Noonan made waves describing the Romney campaign as a "rolling calamity." Romney defended his campaign noting "We've got a campaign which is tied with an incumbent president to the United States."

Romney's comments, while, perhaps, the best thing to say in the circumstances, reflect what is missing in his campaign. It is, of course, true enough that, in general, it is hard to beat incumbents -- especially well liked ones. For Romney supporters, however, this is not at all an ordinary, "in-general", election or incumbent. That Romney sees it that way is disconcerting.

Whatever their intention, Noonan's comments were seriously damaging. As Cass Sunstein notes, people are less persuaded by new information than by "turncoats", who can prompt the reaction “if someone like that disagrees with me, maybe I had better rethink.”. As such, the temporary boost the President had in the polls last week may have had less to do with the 47% comment, and more to do with the prominent and persistent "Republicans Turn on Romney" headlines.

Rope-A-Dope

To make a bold prediction: Romney will see a mild ~3% boost after the GOP convention. He will then -- and this is not usual -- likely see another 5% boost after the *Democrat* convention.

Romney's general campaign -- as opposed to his primary one -- has been built on a very defensive strategy. He has to win the votes of people who voted for Obama, and so is reluctant to attack Obama in a manner that criticizes their choice in '08. His choice of VP, the convention focus on his compassion and his strong support for the women in his life, was crafted not so much to convince swing voters directly to vote for him, rather to convince them that negative attacks on his business record, and attitude towards women, are dishonest. If Obama chooses now to make such attacks the centerpiece of his convention -- and what else can he do? -- he will squander his likeability advantage boosting Romney in the polls.

To make another bold prediction: I don't see how a President who wants to win re-election doesn't drop Biden from the ticket. A new, surprise, VP candidate could be a game-changer.

Social Security

While Medicare Reform is now politically front and center, Social Security is only slightly less in trouble.

Factor in the Fed's recent embrace of inflation, and it's impact on both Social Security costs, and retiree's defined benefit pensions (those retiring at 60 now -- in a best case scenario -- should expect their pension, if not inflation indexed, to lose 75% of it's value if they live to 100) and the PBGC's looming insolvency, and our retirement system is in dramatic need of repair. And that is before you question the honesty of government reported inflation numbers...

Private accounts are not sensible reform: Pushing unsophisticated investors into the arms of Wall Street doesn't end well either for retirees (who lose their shirts) or capital markets (which require informed and competent investors to rationally function).

A more sensible reform would be the proposal posted previously: Instead of [individuals] holding [bank] accounts that are, in effect, loans to Chase, subsidized by the government [/FDIC] individuals should be able to open accounts that are, in effect, loans to the Government. With the tweaks that accounts ought be capped at $250K, max account size and account interest ought be indexed to inflation and individuals ought to be able to deposit pre-tax dollars and defer all taxes until they withdraw the money.

This would go a long way to protecting the middle class as people could more effectively save both for retirement and economic downturns. It would also, likely, be a safer way to finance debt as domestic individual savers have proven themselves a more stable financing pool than alternatives. Finally, it removes a systematically risky wall street subsidy.

It likely wouldn't please democrats who want to conflate a middle class, savings based, retirement system with a "safety-net" entitlement for the poor.