Tuesday, June 14, 2016

Puerto Rico, Congress and the rule of law.

Late last week, in a remarkably bi-partisan manner, the House of Representation passed the Puerto Rico Oversight, Management, and Economic Stability Act. If the legislation makes its way through the Senate and onto the President's desk, it would establish a financial control board to govern the finances of the Commonwealth of Puerto Rico--similar to how municipal financial crises have been handled over the past half century. A moratorium would be established on the repayment of more than $70 billion of Puerto Rico debt until the new financial control board determines what needs to be done.

The legislation achieved support across the aisle in part because it involves no appropriation of federal funds, and thus does not provide a bailout for Puerto Rico from taxpayer funds. Instead, it lays the groundwork for a "bail-in," by which whatever financial relief is made available to Puerto Rico government will come from holders of Puerto Rico bonds who will "voluntarily" provide financial relief to the Commonwealth by forgoing all or a portion of what is due to them.

Few of the actors on the ground seem to be particularly happy with the proposed solution to the Puerto Rico crisis, which is touted along with the bi-partisan support for the legislation as further evidence of its fairness. To Puerto Rican activists, the Congressional imposition of an undemocratic financial control board is a usurpation of Puerto Rican sovereignty and marks a return to colonial rule by Congress. To investors that hold Puerto Rico bonds, the legislation lays the ground work for the unilateral abrogation of legal contracts and constitutional protections upon which financial markets rely.

But both of these perspectives are flawed at the most fundamental level. The proposed Congressional action does not suggest a return to colonial rule for the simple reason that Puerto Rico is a colony. And the proposed legislation does not grant any new power to Congress to intervene in Puerto Rico's contractual relationships and unilaterally dictate the terms of a restructuring of Puerto Rico debt, as Congress has always had complete authority to do so. The Puerto Rico financial crisis is unlike any other state or local government financial crisis--or Greece for that matter--because Puerto Rico is unlike any other state or local government. Indeed the Puerto Rico financial crisis is not a financial crisis at all, but evidence of two deeper problems that that the House legislation fails to address. First, the Commonwealth of Puerto Rico is a colony of the United States, and does not want to be. Second, Congress is responsible for the administration and welfare of the territories, but it does not want to be.

A bit of history and background are important to understanding how Puerto Rico and Congress got into the current situation. Puerto Rico is war booty, won by the United States--along with the Philippines and Guam--under the Treaty of Paris that marked the end of the Spanish-American War in 1898, whose status under the U.S. Constitution has remained unchanged in the intervening century. Under Article 4 of the U.S. Constitution--in what is referred to as the Territories Clause--Congress is responsible for the administration of the territories. Territory is America-speak for colony. The United States has had many territories over the years. Some, like the Philippines, have gone on to become independent, while others petitioned for and were ultimately granted statehood.

In 1952, the people of Puerto Rico proposed, and Congress and the President approved, a constitution giving home rule to the Commonwealth of Puerto Rico. In the Spanish version of that constitution, the name given is Estado Libre Asociado de Puerto Rico--or literally the Associated Free State of Puerto Rico. However, as the Supreme Court has repeatedly ruled, neither the granting of home rule, nor adding commonwealth or associated free state to its name, changed the status of Puerto Rico as a territory, nor lessened the authority of Congress over its affairs. While in the eyes of many, the approval of the Puerto Rico constitution changed everything, in the eyes of the Supreme Court, it actually changed nothing.

This week, the Supreme Court once again affirmed the Constitutional status of Puerto Rico as a ward of Congress. At issue was the Puerto Rico Recovery Act that would have allowed Puerto Rico to bypass Congress and unilaterally set the terms of a restructuring of its debts. During oral arguments earlier this year, Justice Sonia Sotomayor seemed intent on ignoring the essential fact of Puerto Rico's territorial status and its exclusion by Congress from the federal bankruptcy code when she suggested that Puerto Rico must have the latitude to restructure its debts. “It is inherent in state sovereignty that states have to have some method, [of addressing issues of insolvency]” Justice Sotomayor argued, conflating the rules governing states with what she seemed to feel should also apply to Puerto Rico.

In a similar vein, Justice Ginsburg asked, “Why would Congress put Puerto Rico in this never-never land? That is, it can’t use Chapter 9 [bankruptcy], and it can’t use a Puerto Rican substitute for Chapter 9.” But Congress did not put Puerto Rico in never-never land, the Constitution put Puerto Rico in the hands of Congress. Under current law, and as consistently affirmed by the Supreme Court, Congress is the bankruptcy court for Puerto Rico. It is the sovereign parent with full power and responsibility for the welfare of Puerto Rico. That may be never-never land in the eyes of Justices Ginsburg and Sotomayor, but it was not never-never land in the eyes of James Madison. And this week, in a 5-2 decision--with Justices Sotomayor and Ginsburg dissenting--the Supreme Court once again reaffirmed the plenary authority of Congress over Puerto Rico, as set forth in the Territories Clause.

This week's ruling by the Supreme Court cast a light on the failings of the legislation that passed the House just days earlier. As satisfying as it might be in this era of anti-Wall Street hostility to solve the Puerto Rico debt problem with money taken from bondholders, the House legislation will do little or nothing to fix the constitutional dilemma that is the underlying problem: Puerto Rico is a colony of the United States but does not want to be, while Congress is responsible for the administration and welfare of the territories but prefers to ignore its responsibility.

For decades now, Congress has failed in its essential Constitutional responsibility for the welfare of the territories, most notably in the case of Puerto Rico. Members of Congress sat on their hands as one Puerto Rico administration after another pursued policies destructive to the long-term health and fiscal sustainability of the Commonwealth, for their own political gain. In the early 1990s, pro-statehood politicians on the island advocated for the elimination of the Section 936 tax provisions that had been essential to the economic development of the island and that sustained an estimated 165,000 manufacturing jobs--and as much as 40% of the island's GDP. For years, Puerto Rican activists advocated for the closure of the Roosevelt Roads naval base and, in particular, military operations on the island of Vieques as part of their anti-colonial political advocacy. Political leaders of both major parties circumvented the balanced budget requirement of the 1952 English language constitution approved by Congress, choosing to follow a legal interpretation of the Spanish language version of the same constitution to sanction their layering on massive debts for operating purpose. And politicians of both political parties as well conspired in undermining the solvency of the worker pension fund that now stands as the most underfunded public pension fund in the country.

And all the while, Congress took one step after another--some by commission and others by omission--that undermined the viability of the Puerto Rico economy, giving little heed to the long-term implications of its actions, much less its Constitutional obligation. It conspired in the elimination of Section 936 of the IRS code, it approved the closing of Puerto Rico military facilities, it turned a blind eye to the underfunding of the Commonwealth pension system, and it looked the other way as one Puerto Rico governor after another circumvented the balanced budget requirements of their own constitution and built up debts they knew they could not afford.

Against this background, the Puerto Rico debt crisis is about constitutional principles and the rule of law as much as it is about fiscal mismanagement. Article VI, Section 8 of the Puerto Rico constitution approved in 1952, states that "In case the available revenues including surplus for any fiscal year are insufficient to meet the appropriations made for that year, interest on the public debt and amortization thereof shall first be paid, and other disbursements shall thereafter be made in accordance with the order of priorities established by law." This is a provision that was draft at the Puerto Rico constitutional convention, approved by Congress under its responsibilities set forth in the Territories Clause, signed by the President, and ratified by the people of Puerto Rico.

That kind of constitutional establishment of priorities only matters in bad economic times, such as Puerto Rico is experiencing today. After all, as long as things are going well and there is plenty of money to go around, such constitutional protections do not come into play. That is why we have constitutions, after all, to set forth the rules when problems arise, when people don't agree.

The problem of Puerto Rico dates back to the vision of James Madison for how the new republic was going to manage its territories. Last week, the House choose the easy path out of the current crisis by defining the problem narrowly as a debt crisis. Debt is an easy problem to solve in the short term, particularly when you have the power to change the rules with the stroke of a pen, as Congress does in the case of the territories. But the path that the House has chosen is fraught with unintended consequences. Should it choose the easy path forward of forcing a write-off of debts by bondholders, investors will be on notice that no territorial obligations will be secure going forward. If Congress chooses to undermine the sanctity of contracts and the rule of law and point the finger of blame at the bondholders, rather than in the mirror where true accountability lies, it will only undermine the long-term finances of all of the territories.

There is a solution that would uphold the rule of law and affirm constitutional governance, and it is a simple one. The laws securing each of the bond contracts should be upheld. As provided by Article 8 of the Puerto Rico constitution, those bonds that are general obligation bonds should be repaid from the first claim on all revenues as established therein. The bonds that are payable from a first claim on sales taxes should be repaid as those bond contracts require, so long as the sales tax revenues are sufficient to repay them. And so on down the line. Bonds whose claims are weaker, or that by law compete with the limited resources that will be left over, may not get repaid at all. That is what those bondholders agreed to, and the risk they undertook. This would not be a Congressional bailout, but rather an affirmation of the rule of law and the sanctity of contracts upon which so much else depends.

Congress is not obligated to repay any bondholder, Puerto Rico is. But if after paying the bondholders what they are contractually owed--under terms established in its own constitution--the Commonwealth cannot meet the health and safety needs of its people, Congress remains responsible to provide for the basic welfare of those citizens. Congress aided and abetted this problem as the building blocks of this crisis were put in place, one year after another, and it cannot now look in shock and horror at the mess that has come to pass on its watch, and change the laws and demand that others pay the bill.

The fundamental problem that underpins the Puerto Rico debt crisis rests in the fact that Puerto Rico is a colony of the United States, decades after America has lost interest in being a colonial overlord. But until that basic fact of Puerto Rico's territorial status is changed--and the constitutional options are statehood or independence--Congress must do more than just lay off the consequences of its own failure on others. Justice Sotomayor may have been wrong on the law, as Justice Thomas suggested in his terse opinion for the majority, but with respect to public policy she is right. Both Puerto Rico and its bondholders must have a set of rules upon which both parties can rely when things do not work out. And in the present crisis, people should not ignore the fact that one of the main instigators of how things turned out was Congress itself.

Artwork by Jay Duret. Find him at jayduret.com.

Wednesday, May 25, 2016

Tumbling down the rabbit hole.

So Se Pyong, North Korea’s ambassador to the United Nations in Geneva, said it all the other day: There is no meaning, no sincerity to a word that Donald Trump says. Yet, somehow, this essential point that has penetrated the anti-reality shield that protects North Korea from the rest of the world seems to be lost on many Republicans, who have been flocking to support the New York billionaire.

I get it, Donald Trump is not Hillary Clinton, and that might be enough. After all, to a large share of the electorate, she is a liar and a shapeshifter and a believer in the nanny state. She is pro-tax and anti-growth, pro-choice and anti-gun, and stands against everything that Republicans stand for--except perhaps military interventionism--and that might be enough. Driven by the hatred of the other that has become the central psychosis of our politics, there has been an urgency to find their champion in the man who is the presumptive nominee of their party, but if they believe that Donald Trump stands for anything they believe in, they are deluding themselves.

Things were easier early on, when his support hovered around 20% of the GOP primary electorate and his campaign was built around a nativist appeal to beleaguered white folks who heard in his rantings about Mexicans and Muslims and building walls a man who offered an antidote to all that ails them. It was an ugly message, and one that even then was built around a lie: he never had any intention of doing what he said he would do. As So Se Pyong noted, there was no meaning to it, his rants were just words. Just words that he knew would stir the crowd.

In an ugly, anti-Washington year, Donald Trump has been the man for the moment. There is nothing quite so easy as penning a right wing rant--just probe for the soft spot of your audience and keep pounding away on it--and Trump is a demagogue of the purest sort. He bathes in the emotions of the crowd, his rhetoric ramps up as the fervor in the crowd grows, with no regard either for consistency or fundamental decency--much less how much if any of it he would ever actually do. The sky is the limit as long as his audiences never stop and pause to ask themselves who is this guy, really? 

As his support in the Republican Party has grown--built as much as anything around the oldest of all political maxims, the enemy of my enemy is my friend--Donald Trump has become a human rorschach test. People who want to support him--whomever they might be--can find support for their views somewhere in his words. He has not, he is not, for anything or against anything. He is the consummate Zen politician, always in the moment. He has been for cutting taxes and for raising taxes. He has been for raising the minimum wage and eliminating the minimum wage. He has been in favor of guns in schools and opposed to guns in schools. He was against political contributions, and now he is in favor of them. He has been on both sides of most any issue, often on the same day, sometimes within the same sentence. A stance. A beat. A moment of reflection. A new stance.

Remarkable. And like conspiracy buffs who can find evidence somewhere on the Interweb that will support whatever their pet theory might be, any group of Republicans can find somewhere in Trump's words just enough data points that will allow them to embrace him as their own. But just as the alien landing at Roswell, New Mexico never actually took place, and just as the World Trade Center was not brought down by a government plot, and just as the moon landing was not a hoax staged by NASA, whatever any of those Republicans might want to attribute to Donald Trump is not real. They cannot know what Donald Trump would do as President for the simple reason that Donald Trump does not know what Donald Trump would do as President. It is all just words in the moment, nothing more.

This week, Donald Trump dipped into the well of conspiracy theories past and conjured up the suicide of Clinton aid Vincent Foster. When Fox personality Bill O'Reilly suggested that this might be a bit over the top, even for Trump, and undermine the oft-stated commitment of the presumptive Republican nominee to pivot to a more presidential bearing, Trump retorted "I have no choice. When she hits me on things, I have no choice." 

Trump's response was the perfect corollary the comments of So Se Pyong. Trump's campaign staff has tried and failed to tamp down on their candidate's use of Twitter, because Twitter is who Donald Trump is. He is the 144 character candidate. There is no deeper meaning to what he says. There is nothing of substance his words. He has no commitments. There is no sincerity to his stance on any issue. When it is time to say something, he says it. When he is hit, he hits back. All with little thought to what might transpire tomorrow, or even what he might say in the next sentence.

Republicans who have searched for, and think they have found, their own reasons to support him should have no illusions. There was no alien landing at Roswell, notwithstanding whatever they might read on the Interweb. And Donald Trump is not who they might want to think he is, regardless of what he might have said at one point or another, or some assurances he might have offered them. He is, instead, what Ted Cruz said he is: a pathological liar who doesn't know the difference between truth and lies. He is a narcissist at a level the country has never seen. And in the words of Jeb Bush, he has neither the temperament nor the strength of character to serve as president.

So struggle with your hatred of Hillary as you must, but Donald Trump cannot be your answer.

Artwork by Jay Duret. Find him at jayduret.com.

Wednesday, May 11, 2016

The party of Donald Trump.

It's like that horror film sequel. Ripley (played by Sigourney Weaver) slowly awakens from a deep slumber. Something is wrong. Then, with a rising sense of terror she looks down at her abdomen, something is moving inside. The fear grows. She knows what it is. Something terrible from her past; an alien life form has taken up residence inside her. This time, the alien life form she has struggled against has won. It has invaded and destroyed the host from the inside. The climactic moment comes as the alien bursts forth, its terrifying face telling her that her worst fears have been realized, just as she wakes up to realize that it was all a dream.

But this is not a dream. Donald Trump actually is going to be the Republican Party nominee. After all the hateful rhetoric, the childish taunts, the abject self-aggrandizement, the New York billionaire won the nomination far earlier than anyone expected, and the Republican establishment was powerless to stop him.

It has been a long week for the Party of Lincoln. It was just last Tuesday that Trump trounced Ted Cruz in the Indiana primary and accepted the mantle of presumptive GOP nominee for the presidency. And it was just a week ago that Ted Cruz ended his campaign with a parting shot that summed up what many have come to believe about Trump.

"This man is a pathological liar. He doesn't know the difference between truth and lies... The man cannot tell the truth, but he combines it with being a narcissist. A narcissist at a level I don't think this country has ever seen... Everything in Donald's world is about Donald. And he combines being a pathological liar, and I say pathological because I actually think Donald, if you hooked him up to a lie detector test, he could say one thing in the morning, one thing at noon and one thing in the evening, all contradictory and he'd pass the lie detector test each time. Whatever lie he's telling, at that minute he believes it."

This is the Donald Trump that leaders across the GOP leaders have come to know. In the first few days, the pushback against the reality that Trump would stand at the top of their ticket was fierce. Who will follow Trump off the cliff? asked George Will. (A major loser, responded Trump). I Will Not Vote For Donald Trump. Ever. Wrote Erick Erickson, the influential managing editor of the conservative Redstate blog, going so far as to demand that Republicans owe an apology for impeaching Bill Clinton.

“Republicans owe Bill Clinton an apology for impeaching him over lies and affairs while now embracing a pathological liar and womanizer. That apology will not be forthcoming. In fact, for years Republicans have accused the Democrats of gutter politics and shamelessness. Now the Republicans themselves have lost their sense of shame.”

The first family of the Republican Party were unanimous in their shunning of Donald Trump, as George H.W. Bush and George W. Bush each announced that they would neither support Trump nor attend the Republican National Convention in July. For his part, Jeb Bush excoriated the man whom he had pledged to support during the primary debates as lacking the temperament or strength of character to serve as president.

The days that followed were a negotiation of sorts, as one conservative after another raised questions about whether Trump was one of them, and whether they could support a man whose conduct has been so far beneath what they purported to expect of their nominee. House Speaker Paul Ryan led the charge not of those who rejected him outright, but those who believed that they could bring him to heel. Ryan pointed out the range of policy matters on which they disagreed, suggesting that he needed to see Trump meet him part way on issues like Medicare and Social Security, which Trump has pledged to protect, and other conservative issues.

Whether Ryan and others recognized it or not, they were in a negotiation. Trump knows that he won, and has proven to be loath to capitulate on the issues that Ryan cares about, particularly entitlements, and the more odious matters like the Muslim immigration ban and the Mexican wall. He knows that the base of the party that brought him this far would turn on him if he backed down in the face of the GOP elders. He alternately threatened that he neither needed nor wanted Paul Ryan's support and then suggested that he wanted to work with the Speaker and the GOP leadership. He gave them a ray of hope, and then he hunkered down.

Then came the trump card, so to speak. Early this week, a new Quinnipiac University poll suggested that the presidential races between Hillary Clinton and Donald Trump in the three most crucial states, Florida, Ohio and Pennsylvania, are too close to call. The same day that the Q-poll was released, an analysis of tracking poll data released by Gallup suggested that Republicans and voters leaning Republican support Donald Trump by a 64-31 margin.

In the wake of the release of this new data, you could feel the wind going out of the anti-Trump forces in the GOP. The House GOP caucus pushed back against their leader, undermining whatever leverage the Speaker thought he might have in future negotiations with the man who will be his party's candidate.

The great Republican crackup predicted by the influential evangelical and former George W. speechwriter Michael Gerson is looking less and less likely. What changed is the sudden realization across the Republican Party that all is not lost. Two weeks ago, the prospect of Donald Trump winning the nomination was cause for glee among Democrats. One week ago, the chasm that Trump appeared to face in the fall seemed unbridgeable, and Republican leaders turned their sight on efforts to salvage the Senate, if they could, and protect their stronghold in the House of Representatives.

Then this week, the skies parted and new polling data emerged suggesting that Donald Trump has a chance to win in the fall. Indeed, the Gallop data paints a very similar picture between the two parties. Trump's 2-to-1 favorable-to-unfavorable ratio among their target Republican and Republican leaning voters is comparable to Hillary Clinton's 70% favorable to 26% unfavorable support among Democrats and Democrat leaners. Gallup tracking data painted a similar picture in other areas, with polling results indicating that 71% Republicans say that they are likely to vote for Trump, compared with 21% who say they will not, while 73% of Democrats say that they are likely to vote for Hillary, as compared with 21% who say they will not.

Last week's revolt of older party leaders--the Bushes, Mitt Romney, Lindsay Graham--who said they would never endorse Trump was all about demeanor and temperament. He is a pathological liar and narcissist, as Ted Cruz put it. Then there were those for whom it was the lack of fealty to conservative principles. Together, they looked at the alien creature that had taken over their private club with revulsion. They thought that, perhaps, if they shunned him, he might just go away. They thought it was their party, that somehow he might be shamed into line.

But it was not to be. Just like he crushed sixteen contestant getting to Indiana last week, Donald Trump has won his showdown with the GOP establishment this week, and the party has capitulated. It is Donald Trump's party now, and he can do with it what he will, on his terms. The electorate, it seems, is way ahead of the leadership. They have moved beyond temperament and principles. And probably for good reason. Our political culture has thrown temperament to the wind for several decades now. It is a nasty business, and to suggest that calling people names is grounds for disqualification to serve seems to have been rendered quaint in light of the unrelenting nastiness that we have come to expect.

As for principles, well, the most important principle that the Republican electorate has focused on for years now is defeating Democrats, defeating Barack Obama in whatever he stands for, and now, above all, in defeating Hillary Clinton. That is the core principle on which the GOP stands today, and all else is beside the point.

Wednesday, May 04, 2016

Democracy bites.

In last week's Sunday New York Times, a top story above the fold, In New Age of Privilege, Not all Are in Same Boattrumpeted the new Gilded Age. "That segment of the population," says the former CEO of Norwegian Cruise Lines of their über elite passengers, "wants to be surrounded by people with similar characteristics." He was referring to The Haven, the exclusive section of the company's newest ship Norwegian Escape, where NCL's wealthiest passengers travel in a world of their own and have little, if any, contact with the rest of the ship. Further on, the article tells us, Delta Airlines picks up its highest end customers in a Porsche to ferry them to their connecting flights in Atlanta and New York.

In the Silicon Valley, Tech visionary and billionaire Peter Thiel is part of a libertarian crowd that harbors similar escapist fantasies. Thiel imagines building floating cities in the ocean, just for the elite of the tech world. It sounds eerily like The Haven, a place where he and his friends--and their billions and billions of dollars--could escape from the oppression and drudgery of life in America. "An opt-in society,Thiel has suggested, "ultimately outside the US, run by technology." 

Juxtaposed against those images of the new era of American wealth is the rise of Donald Trump. Trump's success in trampling sixteen challengers to the Republican nomination on a platform of economic nationalism has turned the GOP on its head. Four years ago, with his makers vs. takers rhetoric and his disdain for the less affluent, Republican Presidential candidate Mitt Romney ran unabashedly as the candidate of the billionaire class. This time around, determined to control the election outcome in the wake of Romney's loss four years earlier, a cohort of billionaire major donors committed over a billion dollars to make sure that they put a President into the White House that would support their interests.

But from the moment Donald Trump descended down the escalator at Trump Tower to face the media and announce his candidacy, it was apparent that this year was not going to go according to plan. It was one thing to see young voters in the Democratic Party flock to the siren call of a democratic socialist--after all, that is what young voters have done for generations--but it was something else again to see middle-aged, white Republicans, suburban and rural alike, flocking to the banner of Trumpian economic resentments.

From the perspective of an increasing number of Americans of both political parties, the economic system is rigged. Globalization has pitted American workers in a wage competition death match with lower paid workers across the world, suppressing domestic wages while boosting corporate profits to historically high levels. New technologies that offered the prospect of increasing labor productivity and wages have instead proven to exacerbate the problem as traditional industries have been disrupted and jobs lost. Instead of increasing wages, in a globally competitive labor environment where capital is mobile and abundant, the application of new technologies has facilitated the out-migration of jobs and enhanced the return on capital, further exacerbating the concentration of income and wealth.

The titans of the Silicon Valley are ecstatic about their vision of the tech-enabled world that lies just beyond the horizon. Advanced robotics, artificial intelligence, 3D printers and biotechnology offer a future that will accelerate the disruption of service and manufacturing industries alike. It is a future, in their minds, that reduces the need for mundane work and increases the opportunities for unconstrained creativity. Yet looming behind this utopian vision lies the inevitability of the continued elimination of existing jobs and pressure on real wages for the average American worker, accelerating the stratification of incomes and wealth. According to the Federal Reserve Bank, 47% of Americans could not come up with $400, in cash or from credit cards, in an emergency. For that half of America, no glowing vision of the future could make up for the prospect of losing the source of livelihood they now have.

Pressed to respond to the neo-Luddite fears of a future that will only worsen the economic pressures that have been steadily encroaching on American middle class incomes, tech guru Marc Andreessen argues the oppositeTechnology will solve any environmental crisis created by economic growth, and the steady economic growth in countries from Asia to South America, and increasingly to Africa, attests to the absolute good created by the combination of exploding technological innovation and economic globalization. He offers neither sympathy nor a solution for the adverse economic impacts of the combination of technology and globalization on those employed in sectors of the economy that have been or inevitably will be disrupted and destroyed, but rather sees the benefits that those forces have provided to society as a whole.

Arguments against fears about the continued adverse impacts of technology and globalization tend to focus on positive aggregate data and trends, as Andreessen suggests, while the people who show up at Trump rallies are individuals whose own lives and families have been adversely affected by economic pressures and job losses. Trends don't vote while individuals do, and there lies the rub for those who envision a future of greater freedom and creativity--but fewer jobs. For the nerds in the Silicon Valley, the future glows like a shining city on a hill. “We have this theory of nerd nation," Andreessen commented, "of forty or fifty million people all over the world who believe that other nerds have more in common with them than the people in their own country."

The problem for the billionaires of the Silicon Valley--as for their brethren on Wall Street--is that they are dependent on a legal infrastructure that extends protections to intellectual property, supports the aggregation of consumer data for little or no compensation by private companies and provides a supportive regulatory regime--to say nothing of the backbone of the Internet itself, a publicly build, publicly funded asset that upon which private fortunes have been built. Then there is the reality that many, if not most, Silicon Valley fortunes represent the present value of future advertising revenues selling stuff to the rest of us. That is to say that, like the rise of China, the prospects of dot-com, data mining and other tech enterprises depend upon a continued robust American consumer market.

In other words, while the leaders of the tech world--like those vacationing in the rarified quarters aboard The Haven--might long for some far away place free of politics and other intrusions into their world, their fortunes have been built with the support of and they remain dependent upon the government and people they disdain, and the rise of Trump is a further indication that the democratic society that has offered them unbounded opportunities and in which they have prospered is filled with people who right now believe that they and their families are not part of that bright future and will never live in that shining city on the hill.

This year's election looms to be different from prior years. There are no easy solutions to the problem that we now face that a large share of the American electorate believes the economy is rigged against them, and certainly Donald Trump has not offered any. But by securing the Republican nomination, Trump has assured that the economic resentments that used to be largely confined to parts of the Democratic Party are going to be central to the message of the Republican candidate as well. The argument that American support for free trade and globalization, augmented by the technology revolution, has produced the greatest good for the greatest number--and only incidentally for the wealthiest Americans--is increasingly falling on deaf ears. The resentments expressed by voters who support Donald Trump, as well as Bernie Sanders, may be misplaced--as Marc Andreessen suggests--but the practical reality is that in a democracy a disaffected majority has every right to upend the status quo, even if they don't actually have a better solution in mind. 

Wednesday, April 27, 2016

Rigged game.

Conservative talk radio icon Mark Levin screamed it out last week, to all who would listen: Donald Trump is taking conservatives for a ride. And this week, GOP voter screamed back: We don't care! The New York billionaire, whose political philosophy can best be summed up as narcissistic pragmatism, cleaned up in the five states that voted this week, winning 54 to 63% of the vote in the three-way contests. Ted Cruz, the movement conservative that more closely shares Levin's worldview, barely broke out of the teens.

Lest one write off the results to the liberal northeast, Trump initially turned heads in this year's contest when he swept South Carolina and unexpectedly bested Cruz across the fertile conservative heartland of the deep south. Levin was not saying anything that we have not heard before, but at some point conservatives are going to have to look in the mirror and consider that their electorate might not be who they thought they were. Trump is on the verge of seizing the GOP presidential nomination, and it is about time that people stop suggesting that he is little more than a blowhard and consider that he might have some serious political chops.

Trump is, after all, about to win the Republican nomination, and only in the past few weeks has the man assembled anything resembling a professional political staff. He has taken on and systematically disposed of fourteen rivals, from a group that included nine state governors and four U.S. Senators and was decreed early on in the process to constitute the most formidable slate of Republican contenders for the presidency ever assembled. It goes without question that almost every one of those who he defeated had a greater claim on the nomination--in terms of substance and credentials--than he did. Seriously. Rick Santorum turned out to be an afterthought in this year's Republican field and never moved from the JV debate table to the main stage, but he was a Senator from a major industrial state who won eleven states in the GOP primaries just four years ago. For his part, Jim Gilmore was a successful Attorney General and Governor of a major state, and he was never even invited to the JV debates. Yet while Santorum and Gilmore were each serious public figures with solid political bona fides, neither were more than an afterthought in this race.

People mock candidate Trump at their peril. Jeb Bush tried to dismiss Trump's methods as the taunts of a child in a sandbox, but Trump's attacks, however childish they might have seem in the moment, resonate because they strike a nerve. Jeb did lack a sense of energy and passion for the job. Marco Rubio was too young and inexperienced. Similarly, Trump's "lyin' Ted" barbs at Cruz for mixing his religion in with political rhetoric touches on many people's distrust of candidates who intermingle the two.

Trump's most recent narrative, however, has been inspired. The game is rigged. As of this week, Donald Trump has won 52% of the delegates that have been awarded through primaries and caucuses while winning only 42% of the votes cast, yet he has successfully attacked the Republican National Committee for rigging the rules of the game. Against him. Perhaps even more to the point, he painted Ted Cruz--whose share of the delegate count was roughly equal to his popular vote share--as the establishment insider on whose behalf the game has been rigged.

Few may recall--the dynamics of the campaign have evolved so quickly--but Trump launched the rigged game narrative at the moment of his greatest weakness. He had just lost the Wisconsin primary and been shut out by Cruz in caucuses and state conventions in North Dakota, Wyoming and Utah. Trump, the man who touted himself as a can-do CEO, was caught flatfooted, standing helplessly in the klieg lights as Ted Cruz wrested delegate majorities away from him in Louisiana and Colorado. Nothing was rigged, Trump was simply being pummeled by a Cruz political organization that understood the rules of the game and had built an organization--including over 280,000 volunteers across the country--designed to fight and win the battle for delegates on a state by state basis, exactly it has been done from time immemorial. Trump, as best one could tell, had no organization, he had no volunteers on the ground of any note. He had his family, and not a whole lot else.

Yet out of lemons, Trump made lemonade. It is all a rigged game, he pronounced. And this time it was the Cruz team that looked on helplessly, as the media bought Trump's rigged game narrative, hook, line and sinker. Like Trump's attacks on Jeb Bush and others, the rigged game narrative worked because it resonates with the underlying anti-establishment anger that has been the subtext of this year's presidential cycle. Trump's slogan may be Make America Great Again, but from the day he joined the race last June, Trump has fed off of the anger and resentments of a large share of the Republican electorate who believe that our economy and political system are rigged against them and their families. Forget the fact that Trump has actually benefitted from the primary rules, and has won a greater share of delegates than his share of the votes that had been cast, Trump's supporters easily embraced his cri de guerre that the nomination process was rigged against him--and against them.

Three graphs help explain the anger of the Republican base voters that have cast aside traditional conservative shibboleths in favor of Trump's economic populist rhetoric. First, there is the oft-mentioned statistic that American worker wages are the same today in real terms as they were four decades ago. As presented here, while US gross domestic product (GDP) per capita and world GDP per capita have both grown steadily in real terms (adjusted for inflation) since 1973, American worker earnings have not. Stated more simply, the era of globalization, free trade and technological change have benefitted billions around the world, just not the American family.

A second graph, below, illustrates how even the flat worker earnings illustrated above masks differences across the population over time. Illustrated here are the changes in real family incomes over time, aggregated by the level of education of the head of the family household. As shown here, over the past quarter century--a period during which American workers have found themselves increasingly in competition with lower cost workers across the globe, in the wake of the globalization of corporate supply chains and free trade agreements that give foreign made industrial and consumer goods relatively unfettered access to US markets--educational attainment has become essential for families wanting to sustain their incomes in real terms, and to prosper. As this shows, particularly since the financial collapse in 2008, families with heads of households with less than a college degree have seen substantial declines in family incomes.

Finally, while both Donald Trump and Bernie Sanders have tapped into voter resentments toward a Washington establishment that is seen as doing the bidding of donors and lobbyists, often at the expense of working Americans, Bernie Sanders has added a sharp anti-corporate rhetoric. This third chart illustrates the 17% decline in wages and salaries as a percentage of GDP since the 1970s, as compared with near doubling of after-tax corporate profits over the same period, to current historically high levels.

Those who continue to be puzzled by Donald Trump's appeal should take heed. As suggested by the data summarized in these three graphs, the system has been rigged. Rigged may be a harsh term, as United States globalization and free trade policies have engendered the steady growth in global GDP per capita that has lifted economies around the world and reduced the share of the world population living in extreme poverty by over 50%. But from the standpoint of domestic politics, our economic and trade policies have been pro-trade, have been pro-capital, and have punished labor. Stated another way, they have been pro-donor, anti-voter. Forty years ago, Howard Beale screamed out, 'I'm as mad as hell, and I'm not going to take this anymore.' Perhaps we should only be surprised that it took this long.

The Cruz strategists were caught off guard by Trump's pivot and the power of his rigged game gambit. After all, it was Trump who had benefitted disproportionately by the rules--who had received more delegates than votes--yet he was the one whining. It was Cruz who was following the rules, yet it was the Cruz campaign that was being pilloried for stealing delegates, for undemocratic practices, and--in the greatest irony of all--for being the point person of an establishment plot to steal the nomination. Ted Cruz, after all, is the movement conservative who has little or no following among the establishment cabal of DC donors and lobbyists. But for the emergence of Donald Trump, this might have been Ted Cruz's year. Cruz was supposed to be the outsider in the race in an outsider's year. Trump, as Mark Levin tried to convince primary voters in advance of Tuesday's vote, is a fraud.

Donald Trump might be a fraud, and he certainly is no movement conservative. But he has proven to be a dexterous politician who continues to grow and adapt. In the wake of his loss in Wisconsin, Trump hit bottom. Paul Ryan emerged as the insider white knight that might save the party from implosion, while Ted Cruz became the favorite in the eyes of many to win a contested convention. Trump's response was swift. He sacked his political team, replaced them with long-time Republican insiders, and launched his rigged game attack on the Republican National Committee. Three weeks ago, many across the GOP pronounced Trump's demise in the face of Cruz's Wisconsin victory and deft political moves at state delegate conventions. Now, less than three weeks later, the campaign conventional wisdom has been upended again. Where just weeks ago Ted Cruz was on the cusp of being anointed as the front-runner for a nomination that Trump was seen as sure to lose on the first ballot, today Trump has reestablished his dominant position as the presumptive Republican nominee.

Hillary Clinton is the next person up against Donald Trump, and she had best bring her "A" game. For months now, she has found herself playing defense against Bernie Sanders, whose attacks mirror Trump's rigged game narrative, and as of yet she has not figured out an effective response. This week, with an eye to the fall campaign, Hillary tested out a mocking attack on Donald Trump. Donald Trump does not know the American people, she suggested. He needs to stop flying around in that big jet, going from his palatial home in Florida and his penthouse in New York, and get to know the American people.

Sixteen Republicans who took their best shot against Trump can tell Hillary that mocking him as an out-of-touch plutocrat is a non-starter. If he has done nothing else over the past nine months, Donald Trump has proven that he has his finger on the pulse of a large swath of the electorate. He may be rich, but voters don't care about that. Franklin Roosevelt and John F. Kennedy were rich. And so, incidentally, are Bill and Hillary Clinton.

When Donald Trump says it is a rigged game, it resonates with voters because that is what they experience in their daily life. And they are not just making it up, it is all there in the data. For decades now, American policies have helped the rest of the world grow and prosper--to lift all boats as it were--while little of it trickled down to the average American family. As sixteen candidates before Hillary have already learned, when you make fun of Trump, it only alienates you from voters who have come to believe that he is the one who--as Bill Clinton would say--feels their pain. He will be a tougher foe that polls suggest, and Hillary and her advisors should learn from those who went up against him and failed. He is no fool, and did not get as far as he has by accident.

Artwork by Jay Duret. Find him at jayduret.com.

Friday, April 15, 2016

Be careful what you wish for.

The Emerson College poll released this week confirmed once again why the Republican Party is so eager to topple the Donald Trump bandwagon. Among the poll sampling of 1,043 likely voters that mirrored the turnout profile from the 2012 general election, the New York billionaire and reality TV star was viewed unfavorably by more than 60% of the electorate. Matched against his favorable rating of 34.5%, the Emerson College poll suggested that Trump has a "fav-unfav" rating of negative 26.1.

The fav-unfav rating, like the right track-wrong track rating, has long been a key metric in political polling. A high net favorable rating is a strong indicator of electoral performance, a high net negative bodes the opposite. Opposition research is critical in politics for the simple reason that it is often easier to increase the negative perception of your opponent than to increase the positive perception of yourself.

Over the past month, the Never Trump movement has catalyzed around Ted Cruz as its knight in shining armor to take down the Donald, or at least to keep him from winning a first ballot nomination in Cleveland. The motivations behind the Never Trump movement are myriad; its coalition partners begin with establishment Republicans and major donors and extends in any and all directions from there. There are those who simply believe that if nominated, Trump will be pummeled in the fall by Hillary. There are those who dread the down ballot impact, the prospect of losing the Senate, and--God forbid--the House. There are the movement conservatives who decry the fact that Trump is not a conservative in good standing, or perhaps not even a Republican at all. There are the neoconservatives who fear Trump's appeal to isolationism and apparent willingness to cede regional hegemony to Russia and China. And then there are those who simply believe that, on his own merits, Donald Trump is an odious candidate.

With Trump's loss to Cruz in Wisconsin, the Never Trump movement had come close to accomplishing its purposes. In the intervening days, it has become the new conventional wisdom that even with strong performances in New York and states across the northeast over the next several weeks, Donald Trump cannot achieve a first ballot victory in Cleveland, and that if he fails to win on the first ballot, he has no prospect of winning the Republican nomination.

Just as it is on the cusp of achieving its goal, participants in the Never Trump movement are about to come face to face with its unintended consequences. And thus will be born the Never Cruz movement. Even as the GOP establishment moved against Trump, the fear of an empowered Ted Cruz must have loomed in the darkest reaches of their fevered imaginations. Never Trump was a practical imperative, but Never Cruz remains the deeper, far more personal passion. Senate Majority Leader Mitch McConnell, for example prefers not to have Trump on the ticket--he wants to hold onto his job, after all, and losing the Senate would cost him dearly. But President Ted Cruz? Dante Alighieri could have imagined no greater torment for McConnell and his caucus.

The irony buried in the cross tabs of the Emerson College poll is that in Ted Cruz, the GOP may have turned to a candidate that may yet make Donald Trump look like the safer choice. While the Emerson College poll suggests that Trump is viewed unfavorably by 60.6% of the likely voters, Cruz is viewed unfavorably by 70.3%. Where Trump is viewed favorably by 34.5% of the likely voters, Cruz is viewed favorably by only 22.3%. Trump's fav-unfav rating of negative 26.1 looks positively sunny compared to Ted Cruz's rating of negative 48.0. 

RealClear Politics, which tracks these things over time, Donald Trump's average favorable/unfavorable rating is –35.1, or somewhat worse than the Emerson College rating. If you look back over the nine month arc of the primary season, Trump's rating has been consistently negative. When he first announced his candidacy, he came out of the gate at a negative 49, and since then hast tended to hover in the range of –15 to –35.
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Not so with Ted Cruz. He started out the gate in slightly positive territory, and over the ensuing months hovered in slightly negative terrain, –5 to –15, for most of the campaign. This seemed to be a remarkably positive rating for a man who was uniquely reviled among his peers in the U.S Senate. As one Republican commentator suggested when asked about Cruz's relatively sanguine net unfavorability rating, give it time, voters just haven't gotten to know him yet. Indeed, over the past month or so, as Cruz has moved to center stage, his net negative rating has steadily declined into the –25 to –35 range. At –48, the Emerson College rating could be an outlier, or it could be a signal of worse things to come for the Texas senator.

Even as they have endured the turmoil of their own nomination fight, Republicans have been salivating at the prospect of running against Hillary Clinton in the fall. Clinton is widely viewed as a weak general election candidate, for reasons that have become evident in Bernie Sanders' successful challenge. She has problems with trust and honesty--two factors reflected in the fav/unfav metric--and, like Cruz, her standing in the public eye has deteriorated over the course of the campaign. A year ago, Clinton's fav/unfav ratings were consistently strong, in the range of positive 15 to positive 35. Then, in the face of continued attacks from the GOP over her email and Benghazi, and not doubt in large measure due to Sanders' (+5.3 fav/unfav, btw) unrelenting assault on her character, her fav/unfav rating as gone south, and now has settled into solidly negative terrain, in the range of –10 to –15.

But, notwithstanding Hillary's problems, the success of Never Trump and the rise of Cruz appear to have distinctly benefited Democrat prospects in the fall, if prediction betting sites are to be believed. For months, predication sites held steady at giving the Democrats a 60-65% chance of winning in the fall. With the advent of Never Trump and the rise of Ted Cruz, even as Hillary's negative rating settled into negative territory, the odds turned steadily stronger in Democrats favor. Since the beginning of March, the odds of a Democrat victory in the fall have increased steadily to nearly 75%. It should be small comfort to Democrats, however, that they appear to have the upper hand while their candidate is viewed increasingly unfavorably across the voting public.

Over the past several months, the focus of the GOP establishment has been on stopping Donald Trump. Those efforts bolstered Ted Cruz's prospects of winning the nomination, and since the beginning of March, the likelihood of Cruz winning the nomination, as measured by online prediction sites, rose from 15% to over 40%. But as the stop Trump phase of the primary campaign comes to an end, a new story line will likely emerge. It has been barely a month since the Never Trump forces coalesced, and yet very soon many of those who joined the fray under the banner of Ted Cruz to stop Donald Trump will turn against their white knight. This is the fairy tail scenario that John Kasich--with his +10.8 fav/unfav rating--believes will carry him to the nomination. A Kasich victory in Cleveland seems unlikely, but so does the prospect of anyone but Trump or Cruz winning the nomination, lest total havoc ensue.

Over the past week or so, the prospects of Ted Cruz winning the nomination, as measured by online prediction sites, soured a bit, falling to 31%. Donald Trump, meanwhile, got some of his mojo back. After falling to below 50% in the wake of his Wisconsin defeat, the likelihood of a Trump nomination as suggested by prediction sites is back up to 60%. For his part, Kasich is at 8%, while Paul Ryan, who tried best this week at a Shermanesque disavowal of his interest in the nomination, is at 83 to 1, or barely 1%. Marco Rubio is hanging in there at less than 1%, or 166-1 odds. Mitt Romney, for those who care, is at 250-1.

While Donald Trump's high negatives have been a continuing topic of conversation over the course of this election season, fav/unfav ratings have not been discussed as a determinative factor as much as they were earlier on in the campaign. Perhaps that is because the focus on Trump and his remarkably high negatives distracted attention from the strongly negative fav/unfav ratings garnered by other candidates. But as the spotlight has swung to Ted Cruz, his net negative fav/unfav rating has crept up into Trumpian territory.

In contrast with her prospective GOP rivals, Hillary Clinton's negative fav/unfav rating, as bad as it is, just doesn't yet seem to be as much of a factor. It is an odd way to view a campaign, but as the online prediction sites seem to suggest, Hillary's prospects of winning in the fall can remain high even as her fav/unfav rating remains negative, as long as the candidates that she is prospectively running against are viewed more negatively by the voting public than she is.

Artwork by Jay Duret. Find him at jayduret.com.

Friday, April 01, 2016

Slip sliding away.

This weekend marks the halfway point in the presidential primary season. It began with the Iowa caucuses on February 1st and ends when California and four other states weigh in on June 7th, when one-eighth of the total number of delegates will be awarded. In most presidential years, states clamor to move to the front to the pack, where Iowa and New Hampshire garner all the media attention and seem to be the most important states in the nominating process. But this time around states at the end might turn out to be the pivotal ones. Two weeks ago, Hillary Clinton and Donald Trump seemed on the verge of locking up their respective party nominations, but now appears that we may not going to know who the winners are until all the voters have had a chance to weigh in, or even until the party conventions in July.

At the halfway point in the primary season, both political parties are in uncharted territory. Four of the five remaining candidates have significant flaws. Donald Trump's negatives are off the charts. Based upon the most recent Bloomberg Politics poll, he is viewed unfavorably by 68% of the national electorate, against favorable rating of 29%. Ted Cruz is not far behind, with an unfavorable/favorable rating of 55% to 32%. On the Democrat side, Hillary Clinton's failure to put away a 74 year-old socialist Jew from Vermont is manifest in her own unfavorable/favorable rating of 53% to 44%, in contrast with Bernie Sanders' standing as the only remaining candidate viewed positively by the American electorate with ratings of 52% favorable vs. 41% unfavorable.

After putting together a winning streak, winning or tying six primaries in a row in mid-March, Hillary has lost the last five contests, and now looks to be pummeled by Bernie Sanders in Wisconsin this Tuesday. The polling there is ominous. According to the most recent Fox Business poll of Wisconsin voters, Sanders leads Clinton by almost 50 points among voters 45 years old and younger. She might remain the presumptive Democrat nominee, but her lead is getting smaller and smaller in the voted delegate column, and she knows better than anyone else that the Superdelegate count--where she holds a commanding lead--is ephemeral. She had the Superdelegates eight years ago. Until she didn't.

Part of Sanders' success rests on the simplicity of his message: the political and economic system is rigged in favor of the wealthy, and it is time that we did something about it. As the certainty of her winning the nomination has faded, Clinton has become increasingly tetchy in the face of Sanders' narrative that she has been corrupted by Wall Street and corporate money. But railing against Bernie's "lies" as she did this week will only exacerbate her problem. The simple truth is that luring big money has been an essential element of Clintonism--think Johnny Chung, Mark Rich and the Lincoln Bedroom--and Bill Clinton boasted that winning over Wall Street to the Democratic Party was a major success of his New Democrat movement, even if the price paid was Wall Street deregulation and the 2008 financial collapse. The money, for better or worse, is part of the Clinton brand.

It has become conventional wisdom to suggest that Hillary Clinton does best when her back is against the wall, but another way of saying that is that she does best when she is losing. Suffice it to say, that is a risky strategy. If she loses big in Wisconsin, and her poll numbers continue to erode in New York as they have been, by the end of the month her lead in the voted delegate count could shrink to the point where California will actually matter. And no one should be fooled by the notion that the Superdelegates provide a buffer. At the end of the day, it will be next to impossible for Hillary to win the nomination if she loses the voted delegate count. It would be just too un-democratic.

At the midpoint in a movie script, the plot takes a major turn, and this appears to be the case as we reach the halfway point in the Republican race. For the better part of the past year, it has become a routine media riff to predict why the [fill in the blank] comment by Donald Trump will be his undoing. He insulted Megan Kelly. He insulted John McCain. He insulted Mexico. He insulted the entire Muslim world. Yet time and time again, the New York businessman turned reality TV star proved his resilience as his poll numbers rose each time the media predicted his demise.

But the man who has single handedly turned an entire primary season into a reality show may have finally succumbed to reality. This week, he may have finally done it. He may have finally made enough missteps that even his loyal base may begin to see through the facade of a man who has no earthly business being President of the United States. First, he had an interview with the Washington Post. It was a banal non-event, and certainly nothing that on its own would have a material impact on the race. He said nothing that he had not said at his rallies. But that was the point. Given the chance to pivot, to begin to demonstrate in front of the mavens of modern journalism that he is a serious man, he could not rise to the occasion. Behind closed doors he doubled down on why it mattered what size his hands are. He could not say what he would do about ISIS, only that it was critically important that when faced with Marco Rubio's genitalia innuendo, he had to strike back.

Then there was an interview with the New York Times. Perhaps chastened by his performance days earlier with the Post, Trump stayed on message and his foreign policy answers were actually interesting. He makes a strong case for the value of strategic unpredictability in international affairs, but what was evident once again was that every response was off the cuff. Given the opportunity to demonstrate the sound gravitas of his realpolitik worldview, it was just Donald Trump, riffing with the media as he has been riffing for the past nine months.

Then it all came to a head in a town hall interview with Chris Matthews. Faced with the question from Matthews as to whether a woman who has an abortion should be punished in the event that abortion was made illegal, Donald Trump looked visibly perplexed. He stumbled for an answer, before finally concluding that if abortion is murder, the woman who conspires in that murder must face punishment. It was not the successive days of cleaning up his answer that was notable, but rather the fact that after nearly a year running for president, as in his interviews with the Post and the Times, Donald Trump was still making up his answers as he went along.

Over the past week, the price of Trump's lazy, extemporaneous approach to politics started to become more tangible. The Republican primary season has been a riveting reality show, and as such it should have been no surprise that a reality star might excel at the give and take, the punch and counterpunch. But the truth is that the primary season that we follow every day is just one step in how the delegate selection process works. There are, as it turns out, each state holds its own convention, or similar process, to select the actual delegates that will attend the national party conventions, and each of these delegates are individuals whose political views and commitments may not reflect the will of the primary or caucus voters in that state. But even more to the point, the Democratic and Republican Parties are private organizations that make their own rules, and as in any game, the rules are important.

Last week, Ted Cruz schooled Donald Trump on the real world of Republican Party politics. Trump won the Louisiana primary back on March 5th, but last week Cruz emerged from the Louisiana delegate selection process with the largest share of the actual delegates. Perhaps most important, Cruz won five of the six seats assigned to Louisiana on the important rules committee for the national convention. Each state, as it turns out, has its own convention and own rules around delegate selection. Delegates who may be bound to Trump on the first ballot will quickly abandon him on subsequent ballots. And, perhaps most important, the rules will not be established until the first days of the convention, by a rules committee to be determined through actions at each state convention, and unsullied by the results of the primaries and caucuses earlier on in the process.

And it gets worse. This week, in the face of a concerted "No Trump" backlash, Donald Trump appeared to retreat from his vow to support the ultimate Republican nominee, if it is not him. Trump's words threw into doubt the status of the 50 delegates Trump won when he swept the South Carolina primary in February. South Carolina rules require a party loyalty pledge and Trump's petulance could cost him those critical 50 delegates and move his first ballot delegate count in the wrong direction.

At the midpoint in this saga, Donald Trump appears to be suffering what could be a cataclysmic reversal, one that could rewrite the direction of a drama that has kept us glued for so many months. The reversals in delegate commitments that Trump has experienced were not accidental. The campaigns that are being run by Ted Cruz and Donald Trump are complete opposites. Ted Cruz is a dedicated and cunning politician who understands that victory in politics is about blocking and tackling. It is more about work that goes on behind the scenes involving thousands of people than it is how one man performs in front of a camera. The Cruz team has spent more than a year paying painstaking detail to the rules of the game in every state and the critical players in every county. They know exactly what they are doing, and they know that Donald Trump does not.

The irony is that Donald Trump is supposed to be the businessman. It is the cornerstone of his campaign narrative. He will fix America, he will make America great again, because he can set goals, define a strategy, build a team and execute a plan--in short do all those things that people in business do that people in government do not. But this week it has all been laid bare. As it turns out, there is no strategy. There is no team. And there is no plan. There is just Donald Trump, riffing away as the cameras roll. And as we learned this week, the more serious the issues get, the more specific the questions, the more he is adrift.

Time will tell if Trump can recover, one more time, and, perhaps more important, if he has the potential to be more than he has demonstrated to date. But we have reached the midpoint in the script, and this is where the protagonist is supposed to suffer a reversal, and on the Republican side it appears that he has.

For both the Democrats and Republicans, Wisconsin will be a pivotal day. As we pass the halfway point, both party frontrunners are struggling to sustain their advantage, both are vulnerable. As much as people have been girding themselves for a Clinton vs. Trump matchup--in particular the candidates themselves--it is still possible that the candidates in the fall will be Bernie Sanders and Ted Cruz. That would be an unbelievable outcome. Unbelievable, but not beyond the realm of possibility.

 Artwork by Jay Duret. Find him at jayduret.com.

Friday, March 11, 2016

Ted Cruz's long game.

It was not much more than a week ago that Republican insiders were having animated public discussions about how Donald Trump could be deprived the GOP nomination. The consensus was straightforward. Unlike the consensus a few weeks earlier--that Kasich and Cruz needed to drop out of the race to clear the field for a Trump-Rubio death match--the new consensus was that that they should all stay in the race. This time, the goal was not finding someone who could beat Trump to the 1,237 delegates needed for a first ballot victory in Cleveland in July, but instead simply to deny Trump a first ballot victory.

If Trump could be denied an outright majority of the delegates, the new strategy suggested, he could be defeated on the first ballot. Then cooler and wiser minds could prevail, and the GOP establishment could select someone else to lead the ticket in the fall. Lost in all of the scheming by Republican insiders, however, was any thought that one or more of those candidates might have their own plans in mind, or have priorities that might go beyond whether or not Donald Trump won the nomination. While Marco Rubio would have been delighted to have others pushed out of the race on his behalf, John Kasich made clear that he intended to live or die on the results in the Ohio primary. Ted Cruz, meanwhile, had no intention of being guided by whatever the GOP establishment might cook up. 

It turned out that this new consensus strategy didn't last much longer than the previous consensus strategy. Last week, Mitt Romney declared Donald Trump to be a fraud, a phony and a danger to America's future, and beseeched the GOP primary voters to reject Trump and vote for someone--anyone--else. The irony was lost on no one--except apparently Mitt Romney--that four years after he sat in a private luncheon of wealthy donors and made his infamous 47% speech, a speech where he assaulted the character of nearly half of the American electorate, Romney thought he had the moral authority to guide the electoral choices of those very same Americans, who now constitute the core of Donald Trump's support.

Then, just days after Romney's speech, a coterie of billionaires and GOP luminaries met in secret to plot their own anti-Trump strategy. The secret cabal--whose proceedings were live tweeted by conservative commentator Bill Kristol--included Speaker of the House Paul Ryan and Senate Majority Leader Mitch McConnell, along with political operatives from many of the campaigns that Trump has vanquished, all with the aim of launching an ad blitz to point out to voters Trump's less-than-sterling credentials to be the GOP nominee.

Romney's speech was indeed a searing indictment of Donald Trump, but he said nothing that Trump voters have not heard before, and at the end of the day his speech and the gathering of billionaire donors had exactly the impact on the race that one might have expected. It validated the central premise of Donald Trump's campaign: the donor class of the GOP have been having their way for decades now, and election after election have used the votes of the GOP base to win power and pursue policies that were good for the donor class but have left the average GOP voter in the dust.

On the Tuesday following Romney's speech and the weekend meeting of the Illuminati, the voters gave a defining middle finger to Mitt and the GOP establishment. Tuesday was perhaps Trump's biggest day of the campaign. Unlike Super Tuesday, when his sweep was blemished by a loss to Cruz in Texas, this Tuesday was a defining, contemporaneous romp in the deep south and mid-west that in normal times--and were he a normal candidate--would have left the hearts of Republican big-wigs atwitter.

While Trump was the big winner on Tuesday, it was a big night for Ted Cruz, as well. Cruz--no doubt the most cunning of the GOP candidates--is playing a more complex game than the rest, and therefore the importance of the results on Tuesday for his plans may have been lost on many. Cruz's objectives are twofold: either topple Trump in a convention strategy, or come out of the 2016 race best positioned to lead the conservative wing of the party for a run against President Clinton in 2020--with visions of a weakened president, à la President Bush 1992. Simply put, one way or the other, Ted Cruz plans to be the next Republican president of the United States.

Cruz has skillfully risen to the top of the anti-Trump contenders, and GOP anti-Trump schemers should have no doubt that he will oppose any convention deal that puts anyone but himself at the top of a down ballot vote. The leaders of the cabal will have to choose between him and Trump--truly a choice of the devil you know vs. the one you can only imagine--but there will be no nomination for Marco Rubio, for John Kasich or for Paul Ryan, as no doubt some still imagine. Should one of those names be put in nomination, Cruz will retreat to the moral high ground and lead the cries demanding that the election not be stolen by the establishment from the candidate that won the most votes.

The vote this past Tuesday was a triumph for Cruz because it marked the death knell of Marco Rubio. Rubio hurt himself with his puerile antics attacking Trump in the run up to Super Tuesday. Since then, his vote totals have waned and this past Tuesday he did not win a single delegate. Should he lose his home state of Florida this coming Tuesday, as polls widely suggest, he will not only be out of the race, but his brand as the future of the Republican Party will be in tatters, leaving Cruz standing alone as the 44 year old Cuban born senator of the future.

Despite sharing the anti-establishment lane in this year's GOP competition, Trump and Cruz are starkly different. While Cruz has touted his hard earned anti-Washington bona fides, his campaign is straight from the Republican Party playbook. His stump speech and voter targeting has adhered with absolute fidelity to Grover Norquist rules. He pounds on the Second Amendment, religious liberty, reigning in entitlements and reducing the debt. He attacks federal intervention in education, gay marriage, and eminent domain. At the same time, he has offered a tax plan that is music to the ears of his largest donors in the hedge fund and oil and gas worlds. His proposal to replace the current progressive income tax system with a 10% flat income tax and a 16% value added tax would constitute a massive shift in the distribution of the income tax burden from the wealthiest Americans to the rest of the population.

In contrast, Donald Trump has turned his back on almost every issue that Cruz--and Norquist--deems sacrosanct.

Faced with the impending nomination of Donald Trump, many across the GOP have been migrating through the five stages of emotional response to a tragic event suggested by Swiss psychiatrist Elizabeth Kübler-Ross: denial, anger, bargaining, depression and acceptance. By and large, the long denial phase ended with Trump's victories on Super Tuesday. The anger, the bargaining and the depression are evident in different forms. The anger has been widespread, the bargaining in the myriad strategies to forestall what increasingly looms as inevitable. And then there is the depression, manifest in bemoaning the inevitable breakup of the GOP. 

Donald Trump will likely be the nominee of the Republican Party. And despite the indictments of his character and his capacity to serve, come November he will have the support of 95% of the Republican establishment. Bill Kristol pronounced that he would rather see Hillary Clinton in the White House than Donald Trump, and many Republicans have voiced support for a third party conservative to preserve the integrity of the conservative movement, but that anger will subside and many, if not most, will find their way and their rationales for supporting the xenophobic narcissistic New York billionaire.

It might be a difficult path, but they will have help. First, there is Ted Cruz. If the choice is Ted Cruz vs. Donald Trump in Cleveland in July, the leadership of the party would ultimately prefer to have Donald Trump as their nominee. It will not matter that Cruz is a strict adherent to core Republican principles, while Trump is not. It is not business, it is strictly personal. They may each be narcissistic megalomaniacs, each in their own way, but Trump, at least, is a man you can deal with. His brand is to negotiate, while the Cruz brand is to never negotiate. It will be an easy choice, particularly for Mitch McConnell, the Senate Majority Leader who Cruz has taken special pleasure in defying and humiliating over the years.

And then there is Donald Trump's silver bullet. Hillary Clinton. Senator Mike Rounds (R-S.D.) followed the path first blazed by New Jersey Governor Chris Christie, when he declared that Donald Trump would be a better choice for president than Hillary Clinton even if he had failed to disavow the endorsement of former Klan leader David Duke. Hillary Clinton is powerful motivation for Republicans to make it to the polls, even for a man that has been so widely excoriated as unacceptable by so many, for so long.

Barring some surprises on Tuesday night, the nomination of Donald Trump to be the Republican nominee for president will enter a new phase. This will be the acceptance phase. It will not be easy, there will be a lot of words that will have to be walked back and hatchets that will have to be buried--he might be a fraud, a phony and a danger to America's future but he will be their guy. Soon, faced with the reality that a third party run--be it by disgruntled conservatives or neocons--would only assure defeat in the fall, the elders of the party will start to make quiet arguments about why Trump is not so bad, not compared to Hillary at least. Even Senator Ben Sasse (R-Neb.) will likely fall into line, or at least will quietly recede into the background. And Trump will try hard to mute some of this rhetoric, and to behave a bit more... presidential.

Meanwhile, as Marco Rubio quietly slinks back to his home in West Miami, Ted Cruz will gear up for the next phase. He knows that Hillary will crush The Donald in the fall, leaving him as the ultimate winner of the 2016 GOP campaign, the unchallenged leader of the conservative movement, prepared for his next run--the one that he always thought was the one that would put him in the White House--against President Hillary Clinton in 2020.

Artwork by Jay Duret. Find him at jayduret.com.

Friday, March 04, 2016

The coddling of repugnant bigotry.

We are now in truly uncharted waters. This week, on Super Tuesday, Donald Trump won across all demographic groups. He won by thirty points in liberal Massachusetts, and twenty points in deep south Alabama, making the choice of Donald Trump to be the GOP nominee perhaps the only thing that Massachusetts and Alabama have agreed on since Appomattox Courthouse.

While much was made of Trump's stumbling, attenuated disavowal of the endorsement by former Ku Klux Klan Grand Wizard David Duke, voters--particularly those in my native state of Massachusetts--simply did not seem to care. Republican leaders, on the other hand, have been particularly exercised by what appeared to be Trump's flirtation with the KKK.

House Speaker Paul Ryan voiced the rebuke expressed by many across his party. "If a person wants to be the nominee of the Republican Party, there can be no evasion and no games. They must reject any group or cause that is built on bigotry. This party does not prey on people’s prejudices. We appeal to their highest ideals. This is the party of Lincoln."

Starved of attention and struggling to assert himself into the political debate, 2012 Republican presidential nominee Mitt Romney chimed in, tweeting out that the "coddling of repugnant bigotry is not in the character of America."

But for the seriousness of the issue, watching GOP leaders reaching for the moral high ground would have been comical. After all, the coddling of repugnant bigotry is not only in the character of America, it has been a core political strategy of the GOP for the better part of thirty years.

The coddling of repugnant bigotry used to be the purview of the Democratic Party. The party of Thomas Jefferson was, of course, also the party of slavery and Jim Crow and states' rights--all those things that for so long the Grand Old Party stood against. The Republican Party remained the party of civil rights, right up through the passage of the Civil Rights Act of 1964 and the Voting Rights Act of 1965, for which it provided nearly unanimous support, while the Democratic Party was riven with dissent and the southern wing of the party stood firmly with its segregationist traditions.

Then, in the wake of his narrow victory over Hubert Humphrey in 1968, President Richard Nixon seized the moment to entice alienated southern white Democrats from their ancestral political home to the Republican Party. The appeal to those voters was explicitly racial; with its embrace of the segregationist south, the GOP set aside the mantle of the Party of Lincoln, it compromised its core principles of limited government and individual liberty, in favor of the progeny of Jim Crow.

Nixon's Southern Strategy and Ronald Reagan's ensuing outreach to white working class "Reagan Democrats" honed the GOP appeal to the racial and cultural resentments that abounded in the 1970s and 1980s in the wake of the civil rights movement, the Vietnam War protests and the broader cultural upheaval of the 1960s. They transformed the nation's political landscape. The last time a Democrat won a majority of the white vote was Lyndon Johnson in 1964.

While the GOP and the conservative movement rallied over the ensuing decades around Ronald Reagan's lofty language about liberty and freedom, the core election day get out the vote strategy became rooted in the leveraging of voter resentments and fears. Ronald Reagan political strategist and Karl Rove running buddy Lee Atwater described the nakedly racial nature of the Republican tactics in a 1981 interview"You start out in 1954 by saying, 'n--ger, n--ger, n--ger.' By 1968, you can't say 'n--ger'... so you say stuff like forced busing, states' rights and all that stuff. You're getting so abstract now [that] you're talking about cutting taxes, and all these things you're talking about are totally economic things and a byproduct of them is [that] blacks get hurt worse than whites.... You follow me — because obviously sitting around saying, 'We want to cut this,' is much more abstract than even the busing thing, and a hell of a lot more abstract than n--ger, n--ger."

The coddling of repugnant bigotry was a gift of Richard Nixon and Ronald Reagan to the modern GOP. It underpinned Richard Nixon's language around law and order. It was the purpose behind Ronald Reagan's folksy anecdotes about welfare queens driving Cadillacs and "big bucks" buying T-bone steaks with food stamps. Then came the Willie Horton ad in 1988 and the smearing of John McCain for miscegenation in 2000. Then there were the voter referenda in 2004 defining marriage in state constitutions, used to drive up anti-gay evangelical white vote. And the racial slurs of Barack Obama go without saying; the photos of Obama as an African witch doctor; Rush Limbaugh's celebrated playing of "Barack the Magic Negro." And, of course, there was the birther movement.

The protests of Paul Ryan, Mitt Romney and others notwithstanding, the coddling of repugnant bigotry has been integral to the success of the modern Republican Party. It was the price Richard Nixon and Ronald Reagan paid to rebuild the power of the GOP in the electoral college, and all it cost the party was its soul.

In the wake of KKK-gate, Conservative pundit and former Congressman (R-FL) Joe Scarborough went off on a rant that garnered national attention. "It’s breathtaking. That is disqualifying right there... Is [Trump] really so stupid that he thinks Southerners aren’t offended by the Ku Klux Klan and David Duke? Is he really so ignorant of Southern voters that he thinks this is the way to their heart?"

Echoing Scarborough's outrage, long-time GOP political consultant Ed Rogers wondered out loud. "Was he trying to send a signal specifically to the Southerners he thinks are racist when he initially would not disavow the KKK? I always resent it when Northerners like Trump think of Southerners as naturally racist. But so far, it doesn’t appear that Trump is being penalized for having made that assumption. It’s all very discouraging."

When I asked a senior GOP campaign operative on one of the presidential campaigns what he thought of Scarborough's and Rogers' indignation at the notion that racial tactics were still salient in today's new south, he replied simply, "clearly Joe and Ed don't get out enough. Once you are outside the cities, not much has changed."

Voters in Massachusetts and Alabama--worlds apart culturally and politically--both ranked "tells it like it is" as the most important characteristic in the person they chose to vote for. One underpinning of the Trump phenomenon is the view across the electorate that their political leaders are not being straight with them, and Paul Ryan's words provide a case in point: "There can be no evasion and no games. They must reject any group or cause that is built on bigotry. This party does not prey on people’s prejudices. We appeal to their highest ideals." They were noble words, but they are also deliberately disingenuous. Everyone knows that there are games and evasion in politics. Everyone knows that political parties prey on people's prejudices. The voters who are rising up against the political establishment are not stupid, they are just tired of politicians treating them as if they are.