On Liberty Watch

We have entered the final, hysterical phase of the Midterms. During this phase the side that is about to get shellacked makes increasingly hysterical claims in a last desperate bid to stave off the inevitable. This year it’s the Democrats and the outlandish over-the-top claim is that if the Republicans were to win, Democracy would likely perish. 

In the hotly contested sweepstakes to utter the silliest thing possible we have two well known personalities that are neck-in-neck for the lead. They are historian Michael Beschloss and film maker Rob Reiner. Their comments are worth quoting in full because they are a  marvel of idiocy.

Here is Michael Beschloss, an academic historian, speaking to the faithful on the Chris Hayes show: 

“six nights from now, we could all be discussing violence all over this country,” and “we could be six days away from losing our rule of law, and losing a situation where we have elections that we all can rely on.  You know, those are the foundation stones of a democracy.” 

He continued with this gem: “if historians are allowed to write in this country … will say what was at stake tonight and this week was the fact — whether we will be a democracy in the future, whether our children will be arrested and conceivably killed. We are on the edge of a brutal authoritarian system, and it could be a week away.”

Film Director Rob Reiner went full crackpot in his comments on Joy Reid’s TV show “The ReidOut”. Here is what Reiner said:

“Because the other side reality does not mean anything. They are only interested in power. They are only interested, and they will do anything to get the power. And they are willing to kill, literally kill, to get the power. You can’t have a conversation with them. The only thing we can do is try to hold on to the House and a couple of Senate seats. It will be very hard. If we do not do that, this might be the last election we have in a democracy.”

Add to this the long list of Democratic leaders, among them Joe Biden, Hillary Clinton, Barack Obama, who risibly insist that Democracy-Is-On-The-Ballot. 

This sort of baloney is not just the idle musings of a few lunatics. It is part of a larger strategy. That strategy, as representative Madeleine Dean (D-PA) acknowledged in a conversation with political reporter John Heilemann is to “scare the crap out of [voters] and get them to come out.”

Let’s make sure to acknowledge that Democrats are not the only ones who do this. Republicans do it too. It’s just that this time it’s the Democrats who are going to get clobbered and consequently have resorted to an attempt to scare the party faithful into coming out to pull the lever for Democrats.

That said, it seems to be fairly obvious that the Democratic Party leadership is not so foolish that it actually believes its own rhetoric. After all, they have spent millions of dollars promoting a slew of MAGA friendly candidates in GOP primaries. If they really believed all this stuff about threats to Democracy then why would they have done this? Because they thought the MAGA candidates would be the easiest to beat in the general election. And now they are faced with the very real prospect of being hoisted on their own petard. 

And speaking of Democracy and lawlessness, why is it that returning the question of abortion regulation to the political branches (i.e., state legislatures) anti-democratic? And if Michael Beschloss is so concerned that “our children will be conceivably killed” then why is he such an abortion rights fanatic?

And if bodily autonomy is so highly valued, why is it that Democrats were all in on vaccine mandates, even when the evidence was crystal clear that vaccines do not affect COVID – 19 transmissibility?

We should also ask why it is that Democrats were so willing to void lockdown orders to accommodate BLM protests, but shut down religious services in church parking lots. And why Democratic Mayors and Governors insisted on keeping schools shut when the evidence was indisputable that threat of COVID-19 to children was virtually non-existent. Or why Joe Biden’s obviously unconstitutional student loan forgiveness plan should not be debated in a Congress where Democrats control both Houses. 

We should also ask how it is possible for Democrats to insist that women are discriminated against when they are incapable of recognizing what a woman is, without pace Ketanji Brown Jackson, being a biologist. Or how it is possible to be in favor of equality before the law, without fear or favor, and still be enthralled by affirmative action. 

The simple answer is that the progressive ideology that reigns supreme in the party does not recognize the primacy of, or give deference to individuals, voluntary action, the nuclear family or the Burkean little platoons of civil society. 

Instead, progressives are all about power and control. They recognize the supremacy of voting blocs, defer to subject matter experts who agree with them, and seek to rule through Command-and-Control using the iron fist of an unaccountable bureaucracy. 

Still, the fear mongers may be half right about one thing. There may be violence after election day. But that would be if Republicans win. It is possible—although anyone reasonable hopes not—that we will see rioting by “mostly peaceful protesters” in major cities. If so what we will hear from progressives is crickets.

JFB

Well here we are 4 days away from the Midterms and the insanity that typically comes with electioneering has, by now, reached its normal fever pitch, and hopefully its zenith. The pieties which are recited endlessly and with increasing fervor by the combatants tend to be the same baloney they serve up every election season. And while the contestants may have convinced themselves that they are uniquely on the side of truth and justice, they are serving up baloney nonetheless. 

Consider some typical offerings designed to rally voters. “This is the most important, consequential, (pick your adjective)  election in your lifetime.” Well, no it isn’t. On the Wednesday after election day despite the hysteria ginned up over the elections, the sun will still rise, the sky won’t fall and the day will look a lot like every other day. 

How about this one, a remark typically intoned by candidates who are resigned to their fate: “The only poll that matters is the one on election day.”  Of course that isn’t even close to being true. Leaving aside that election day has become election week,  it is undeniably true that politicians are polling addicts. Not only do they consult poll data when considering what position to take on a given issue; campaign strategy is also highly dependent on polling. 

What is particularly interesting about this election season is wide variability in polling results across different organizations. What remains to be seen is whether any polling organization has consistently produced more accurate forecasts when compared with actual outcomes. 

Georgia on My Mind

Which brings up the two major races in Georgia; the Governor’s race and the Senate race. Georgia’s contests are a mirror image of Pennsylvania’s. In Georgia’s Gubernatorial race the Republican seeking re-election is Brian Kemp. He is facing a rematch with Stacey Abrams whom he beat by 50,000 votes in 2018.  Governor Kemp earned the enmity of Donald J Trump for his refusal in 2020 to subvert Georgia’s election laws in favor of Trump.

Stacey Abrams, perhaps a precursor to Trump in 2020, refused to acknowledge her defeat in 2018. She accused Kemp of fraud, without evidence, as the NY Times likes to say. She acted pretty much like sore loser Trump acted when he refused to admit defeat in 2020. The best you can say about Abrams relative to Trump is that she didn’t set off any riots in Atlanta.  

That said, Abrams (like Trump) has taken to making wildly implausible claims. For instance, when she finally got around to acknowledging an inflation problem, she attributed it in part to too many women having children instead of aborting them. 

Abrams thus joins the Republican nominee for Governor of Pennsylvania in tin-foil hat territory. And like the Republican Pennsylvania nominee Doug Mastriano, she is solidly behind in the polls. (Those polls that supposedly don’t matter). She, like Mastriano is behind enough that she, like Mastriano may drag down the Party’s Senate nominee to defeat. 

Interestingly, the Republican Senate nominees, both in Pennsylvania and in Georgia, were pushed by Donald Trump. Both Republicans are deeply flawed candidates, and at least one (Hershel Walker) is obviously incompetent. The other (Dr. Oz) is a snake-oil salesman. 

The Georgia Republican candidates also share two other factors in common. The first is that they are both running against incompetent buffoons. The second is that the polling in both races indicates that the contests are very toss-ups. Since Georgia election laws require the victor to have 50% plus 1, and there are minor party candidates running,  it may require a run-off on December 6, 2022 to finally arrive at a result. 

Other Thoughts

There is a lot of talk about the possibility of a “wave” election with Republicans gaining a substantial majority in the House and maybe a 2 or 3 seat pickup in the Senate.  There are a couple of things to keep in mind though. The first is that the incumbent President’s party almost invariably loses House seats in the Midterms during his first term in office. Since the Democrats have only a tiny majority (220 vs 212 with 3 absent) normally it would be expected that they will lose the majority. It is the margin that matters. 

Second, in the 2020 presidential election the Republicans picked up 14 House seats. It is extremely unusual for a party to pick up House seats while losing a presidential election when the party is the incumbent in the White House. But that is what the Republicans did and it was clearly a personal repudiation of Donald Trump, not Republicans generally. 

But that leaves open the question of how to define a Republican “wave”. In two prior off-year wave elections (1994 and 2010) the Republicans picked up 54 and 63 seats respectively. The average off-year gain for the party out of power is around 28 – 30 seats. But since the Republicans picked up 14 seats in 2020, a gain of about 35 – 40 seats would probably constitute a wave and result in a gain in the Senate of as many as 4 or 5 seats.

There will be surprises. The Republicans are poised to pick up Gubernatorial seats, perhaps in unlikely places like Oregon, Minnesota and New York. Some Senate seats that looked to be safe suddenly look vulnerable, specifically Michale Bennet in Colorado and Patty Murray in Washington State. 

Regardless, a Republican wave, if it comes, should not be viewed as any kind of mandate. It should be seen as a rebuke to the Democrats, and most particularly, the progressives. It is not a vote for any kind of Republican governing philosophy because there isn’t one anywhere in sight. 

The public is sick and tired of woke politics. They are fed up with the disaster in the public schools, with rising violent crime in the cities, with too-high inflation, with chaos on the Southern border, with identity politics, with the obsession with transactivism and with cancel culture in general. Which ever party figures out how to deal with these issues will be well positioned for the 2024 Presidential race. 

Most importantly, family and friends are more important than your vote. In the grand scheme of things, politics is not all that important. That’s worth keeping in mind when the discussion gets heated. Or overheated. 

JFB

All the signs are beginning to point to a big midterm rebuke of Biden Administration polices—and may be more. Much more. One election cycle is not the be all and end all. But this one may set the stage in 2024 for a full scale rejection of the radicalism that has taken over the Democratic Party. 

That will depend on Republicans acting like adults assuming they take power. That is always a shaky bet. And speaking of acting like adults, it assumes that ex President Donald J. Trump remains ex President Trump; that he does not run for the Republican presidential nomination, and if he does so he fails to get it. Otherwise, all bets are off.

It is fairly routine for the party that controls the White House to lose seats although not necessarily the control of the House in midterm elections. Over the last 100 years, the president’s party loses about 28 contests in the House and 4 in the Senate.  Over the last 100 years, the president’s party has picked up House seats only 3 times; in the Senate 6 times. Only twice has the president’s party picked up seats in both Houses of Congress.

In 2020 the Republicans gained a net of 12 seats even while losing the White House. That was a clear rejection of Donald J Trump’s conduct as President. Partly as a result of Republican pickups in 2020 and partly because of Democratic Congressmen taking jobs in the Biden Administration, the Democrats now have only about a 5 seat margin in the House. It is therefore a virtual certainty that the Republicans will hold the Speaker’s gavel in the next Congress.

The Republicans seem to have developed momentum over the last few days. The issues that favor them—crime, inflation and the border are at the top of voter’s minds. The issues that favor Democrats—abortion rights and climate change—are slipping rapidly down the priority scale. Plus, parents are hopping mad about the state of public schools and are in the mood to punish Democrats who side with teachers unions versus Republicans who have emphasized parental rights. 

Put it all together and there is the real possibility of a red tsunami on November 8. Expect the Republicans to pick up 30 to 40 seats in the House.  

The Senate is a bit trickier. The Republicans are poised to pick up 3 Senate seats and maybe 5—even with some relatively low quality candidates. Speaking of which, Herschel Walker is beginning to pull ahead in the polls even though he has no political experience, various (plausible) allegations of scandal have been leveled against him, and his son, a conservative activist, has denounced him. 

It is starting to look like Adam Laxalt (R) is beginning to pull away from incumbent Catherine Cortez (D)  in Nevada.  The polls have also tightened considerably in Arizona and New Hampshire.  The contest between incumbent Mark Kelly (D; AZ) and challenger Blake Masters is separated by 1 or 2 percentage points—well within the margin of error. 

After having a comfortable lead of 8 to 11 points in September, the incumbent Democrat from New Hampshire, Maggie Hassan is up only 3.4 points in the average of published polls in October. She is running against retired General Don Bolduc (R), a Trump style candidate whom the DNC backed in the primary on the theory he would be easy to beat. 

There are a couple of potential surprises lurking out there. In Colorado the DNC is working overtime to label Republican Joe O’Dea a Trump acolyte even though Trump has denounced O’Dea because of his refusal to kiss the ring. For instance he has called O’Dea a RINO (Republican in Name Only). Referring to O’Dea he said  “MAGA doesn’t vote for people with big mouths”. 

So why are Colorado Democrats trying to tie Trump around O’Dea’s neck? The only reasonable conclusion is that they believe the Democratic incumbent Michael Bennett is more vulnerable than he seems.  Similarly there have been one or two polling scares for Democratic incumbent Patty Murray in Washington State. 

Then there is Pennsylvania where the Democratic candidate John Fetterman imploded on the debate stage Tuesday night. He is obviously struggling to recover from the stroke he suffered from just before he won his primary. While any decent human being wishes him well and hopes for a full recovery, the fact remains that the debate ripped away the shield that the press protectively wrapped around him.  That is worth thinking about. 

The mainstream press was well aware of Fetterman’s condition. And they covered it up. They did so deliberately in order to influence the election. That much is obvious. It is pretty much what they did with the Hunter Biden laptop story. And so the real take-away from the Pennsylvania election is this question: what else is the press lying about? 

The press has consistently downplayed the surge in crime, especially in big cities run by Democrats. They have played footsie with the CDC and its ever changing policy dictates concerning COVID-19. They have pretended that shutting the schools down at the behest of the teachers’ unions was a costless exercise. And of course, every time there is a change in the weather they ring climate change alarm bells.   

The net of it is that in all probability the Republicans are going to win somewhere in the vicinity of 30 to 40 House seats and 2 or 3 Senate seats. Surprises will be in the upside for Republicans. That won’t mean that the voting public has signed onto Republican orthodoxy, primarily because there isn’t one. But, at least temporarily,  there is the possibility that it will put a halt on the ongoing public policy fiasco that is the Biden Administration. 

JFB

Apparently random events may not be random at all. A look under the surface may reveal a pattern that points to a larger truth.  That is especially true in politics. The politics of the Russo-Ukraine war, combined with climate hysteria in the West, speaks volumes about the sorry state of US politics and the internal contradictions of progressivism. 

Consider Russia’s war against Ukraine, the US response to it and how it is characterized by the mainstream stenographers who call themselves journalists. They are covering it like a basketball game with almost no serious thought about the geopolitical ramifications of the war and its conduct.

To recount: In February of 2022, six months after America’s chaotic withdrawal from Afghanistan, Vladimir Putin launched an invasion of Ukraine after massing Russian troops on the border.  In response, the Biden Administration issued threats of sanctions against Russia and its leaders that would take effect if Russia actually launched an invasion. 

All the while President Biden kept (1) assuring Putin that the US wouldn’t present a serious military challenge to Russia, while (2) simultaneously supplying Ukraine with military hardware, which the US gradually escalated in its reach and lethality. 

In the event Russia launched its invasion and to the surprise of “experts” Ukraine did not fold in a few days. Instead it fought back aggressively to the point where those same experts are now saying that Ukraine has the upper hand. Meanwhile the Biden Administration refuses to articulate American goals for the effort that are not immediately walked backed by White House staffers. 

Remember Biden’s ruminating about the difference between a small incursion vs an invasion? Or perhaps Biden calling Putin a war criminal (which he undoubtedly is); or how about Biden announcing on March 26, 2022 that Putin “cannot remain in power” in the Kremlin, only to have the White House announce a day later that Biden was not seeking regime change in Russia. 

Putin, who has presumably taken his measure of Biden, has doubled down on his war aims and has taken to renewing his nuclear saber-rattling.  In turn,  Biden, who routinely blurts out whatever is on his mind, offhandedly referred to the possibility of nuclear Armageddon at a Democratic Party fund raising cocktail party. Publicly (and privately if he is to be believed) Biden has warned of “serious consequences” if Putin were to order the use of a tactical nuclear weapon in Ukraine. 

The problem is that nobody on planet earth really believes that Biden would respond in kind were Putin to deploy tactical nukes in Ukraine. After all, Biden routinely folds when confronted by the slightest progressive pressure. What are the chances that he would seriously consider trading the destruction of New York for Kiev? To ask the question is to answer it.

It may very well be the case that the stakes in the conflict for Russia are large while the stakes for the United States are small. That raises several possibilities, some of them quite  unpleasant. First, as a result of differing perceptions of costs and benefits, there is the real possibility of miscalculation leading to the catastrophe of a nuclear exchange. 

Second, the presumed unwillingness of the US to risk a nuclear war with Russia over Ukraine may result in a frozen conflict that is locked in place for years to come. Third, the prospect of a long drawn out proxy war with Russia exposes the folly of the West’s war on fossil fuels. Fourth, the US political commitment to Ukraine is unsustainable over the long run given the current environment. 

The commitment to Ukraine is unsustainable because its underlying rationale is in direct conflict with the dominant strains of policy making in the US. Those strains are isolationism and progressivism. JD Vance, Republican candidate for Ohio’s open Senate seat epitomizes the isolationist right. He has said “I gotta be honest with you. I don’t really care what happens to Ukraine one way or another.” That pretty much sums up the isolationist position.

The progressive position is even more problematic, for 2 reasons. First, progressive ideology posits the United States as being irredeemably racist, sexist, borderline fascist, a threat to democracy, and worst of all, capitalist. The progressive mindset is utterly incapable of seeing beyond its own delusional rhetoric and is therefore unable to support a defense of Western liberalism in general and the United States in particular. 

Secondly, progressive policymaking is so dominated by climate hysteria that progressives are unswayed by the very real prospect of a cold dark winter in Europe as Russia shuts down its gas deliveries to the West. One likely consequence of a European continent facing a severe power shortage is a revolt by angry citizens who would be perfectly happy to drop their opposition to Russia in return for light and heat.  Another  likely consequence is a rupture between the US and continental Europe leading to a weakening or a breakup of NATO. That is a goal long sought by Putin.

A third possibility is a total collapse of Neo-liberalism which leads to a strengthening of autocracies around the world. Western liberalism is now under assault by China, Russia, Iran, their various minions, and useful idiots in academia.  And yet, the Biden Administration continues to use Russia as a go-between in negotiations with Iran, not to mention begging Saudi Arabia and Venezuela to increase oil production while  suppressing production of fossil fuels in the United States. 

The underlying problem is that progressive ideology is trumping reason, as it usually does. And as surely as night follows day, the progressive caucus has begun to voice its lack of support for Ukraine. It did so by releasing (and then un-releasing) a letter suggesting that Biden negotiate with Putin, over Ukraine’s head, to end the war. 

The progressive position in one sense is entirely consistent. The only way it makes sense for the US to support Ukraine is a whole hearted embrace (or re-embrace) of Neo-liberalism and the commitment of the resources needed for the job. That implies a large scaling up of the US Defense budget. It also implies abandoning climate alarmism, utopian income redistribution schemes, while shoring up international free-trade agreements and defense alliances like NATO. 

These policy changes are all anathema to the progressive left; some are despised by the Neo-isolationists on the right. But they are nevertheless necessary if the West is to remain free and prosperous. 

JFB

The recent meltdown in the British Gilt market that provided the rationale for the Bank of England to intervene in the markets by buying government bonds has raised the question now being asked rather uneasily by policy makers: could the same thing happen in the US ? 

Of course it can. In fact it’s a virtual certainty unless steps are taken to reform both US fiscal policy, financial regulations and US financial infrastructure. 

A dreary recitation of the numbers that describe the state of the public fisc has a tendency to fall on deaf ears, probably because various warnings have been issued for decades but disaster hasn’t arrived yet, or has been averted in the short term. But that is only on the surface. Putting off reform now just disguises the real cost of our fiscal folly and ultimately makes it more costly than it needs to be. 

The truth is we have a structural deficit that will not be ameliorated by mere tactics. Under the current policy regime unsustainable growth in debt and deficits are baked into the cake for the foreseeable future.  The deficit and accumulated debt will retard economic growth and make solving the problem more difficult. 

Consider the current state of affairs and projections for the future absent significant policy changes. According to the Treasury  Borrowing Advisory Committee (TBAC) accumulated Treasury debt has doubled since 2015 and, according to the CBO is projected to reach 180% of GDP by 2050. This will require increasing ownership of Treasury securities by the private sector reaching about 25% by 2030. (See the graphs below). 

By definition that means that funds that would ordinarily go to the private sector, where they could fund investment, are going to the public sector where they mostly finance income transfer. These income transfer programs discourage savings and therefore investment needed to finance economic growth. 

The biggest liabilities are in Social Security and Medicare. They contain unfunded promises to pay benefits of $60 and $100  trillion respectively, expressed in terms of present value. Those numbers, which dwarf accumulated Treasury debt of about $30 trillion, are off balance sheet. But off balance sheet or no, the Treasury needs cash to pay beneficiaries.  

That’s one reason why the increasing fragility of financial markets   is becoming problematic. With the rise in inflation to 40 year highs, the Fed has been aggressively raising interest rates.  They have already raised overnight rates about 3 percentage points and before the end of the year those rates will probably be around another 1 % higher. Intermediate and longer rates have also risen about 3.5 percentage points in anticipation of additional Fed tightening. 

But while rates have risen along with Treasury financing requirements, bond dealers have pulled in their horns. According to the Treasury Advisory Borrowing Committee, bank capital has fallen sharply as a percentage of Treasury market size.  

In November of 2008 during the cataclysmic events leading to the Great Recession, bank capital was about 22% of publicly held Treasury debt. Now it’s a shade under 5%. Similarly, over the same time period, primary dealer transactions in Treasuries fell from about 14% to 2% of outstanding Treasury securities. (See the accompanying graphs.)

At the same time, there has been a substantial pick up in Treasury market volatility and diminished market liquidity.  Data from JP Morgan, shown in the graphs below, illustrate a rapid rise in Treasury market volatility and corresponding fall off in market depth. 

This is where the rubber meets the road.  Theorists can argue all day long about what type of stress the market can handle. As a practical matter though, Treasury needs to sell securities to finance all the spending that Congress has ordered. And someone has to buy those very same securities. Standing between those buyers and sellers is the dealer community. 

There are 25 primary dealers in government securities. Primary dealers are authorized to trade with the Fed. They also serve as market makers and make underwriting bids at Treasury auctions. According to data published by the Federal Reserve of New York, the top quintile of dealers—5 in total—account for about 50% of dealer transactions in Treasuries. The top 10—which includes the 1^st and 2^nd quintiles—account for about 75% of the volume. 

The current weighted average maturity (WAM) of outstanding Treasury debt is about 74 months. The weighted average duration (WAD) of the debt is about 5 years. The CBO projects yearly deficits north of $1 trillion for years to come. If we take into consideration rolling over the existing debt along with financing deficits of $1 trillion plus for the foreseeable future, then we are talking about something in the neighborhood of $6 trillion worth of Treasury securities being sold through the dealer community every year for a very long time. 

Remember there are only 25 dealers and 5 of them account for about half the trading volume. That means there will be about $500 billion worth of Treasuries every month being marketed by a very small number of players. And keep in mind that bank capital as a percentage of outstanding Treasury debt has been dropping like a stone. Also keep in mind that primary dealer transactions in Treasuries now constitute a mere 2% of outstanding Treasury debt, down from 14% a little over a decade ago. Combine that with a sharp rise in volatility and with shrinking market depth and we have the recipe for a financial calamity. 

Could a meltdown like the one in Britain happen here? Sure it can. The elements that could touch it off are present. All it needs is a spark. The wise course would be to begin to reform our budgeting processes and strengthen our financial infrastructure before there is a spark. Which means that substantial policy reforms are due now, before it’s too late. 

JFB

We are about 3 weeks away from the midterm elections and to date there has been very little by way of substantive discussion of policy by the candidates. On the other hand, there has been extensive posturing, sloganeering and bad argumentation, heavily influenced by insights gleaned from analysis of focus groups.  

So let’s talk about Pennsylvania. The results from the Keystone State will be particularly interesting, but not because control of the Senate rests with Pennsylvania voters. It doesn’t. The results will be interesting because there are two elections in Pennsylvania that couldn’t be more different. The gubernatorial race pits a genuinely moderate Democrat (Josh Shapiro) against a tin-foil hat Trumpkin Republican (Doug Mastriano) who insists that the 2020 Presidential election was stolen.  

For example, Mr. Shapiro has come out in favor of a private-school choice bill that passed the Republican controlled Pennsylvania state house with only 1 Democratic vote. He is in favor of lowering corporate taxes and spending more money on police. He also disavowed at least some of outgoing governor Tom Wolf’s restrictive Covid policies. 

But Shapiro is not exactly an Eagle Scout. He and his allies spent something like $840,000 on ads designed to help Mastriano secure the Republican nomination, the theory being that Mastriano would be a relatively easy opponent to beat in the general election. Leaving aside the ethics of this, it does make all the rhetoric about the supposed threat to democracy more than a little bit suspect. 

On the other hand Mr. Mastriano appears to be a true believer. He is all-in on the laughable Trump claim that the 2020 election was stolen. This is where we get into tin-foil hat territory: Mastriano appears to actually believes this nonsense. It isn’t just posturing. At the very least this indicates that his prudential judgement is deeply flawed—and that is being charitable. If he really believes this baloney he certainly doesn’t belong in the Governor’s chair.  

Mastriano’s policy positions tend to be on the rightward cultural edge of conventional Republican politics. But his rhetoric tends toward the inflammatory; you might say Trumpian. And his rhetoric suggests that at the very least he is a bit off. One writer from the Atlantic referred to him as “a nutjob”. 

It is hard to really pin Mastriano down because he avoids direct contact with the press; his campaign is full of innuendo, and the press, which obviously favors Shapiro, interprets Mastriano’s pronouncements in the least favorable light.  So it is difficult to tell what he is really all about. That said, the available evidence suggests the Atlantic writer is probably correct: Mastriano is  nuts. 

Compare the gubernatorial race with the Senate race. Like the gubernatorial election there is no incumbent. That’s pretty much where the similarity ends. In the gubernatorial race the vacating governor is a Democrat; in the Senate race, the retiring Senator is a Republican. 

The Democratic nominee, lieutenant Governor John Fetterman, clobbered his moderate rival, Connor Lamb, in the Democratic primary. He has staked out positions on the far left of the progressive wing of the party. You might say that he is firmly in the AOC camp. 

He is, for instance, in favor of a $15 minimum wage; he is opposed to fracking, although he is trying to soft-pedal earlier remarks. According to his website he is going to hold Washington “accountable” through his 5 point “plan” which is quoted below.

Mr. Fetterman’s plan includes this gem: “All across Pennsylvania we’re seeing soaring prices, hollowed out communities, getting ripped off by corporate greed.” 

Here is his 5 point plan to fix things:

• Make more sh*t in America (This is a direct quote including the spelling).
• Cut taxes for working people
• Ban Congress from trading stocks
• Slash “out of pocket” health care costs
• End immoral price gouging

We have come to expect politicians to say stupid things. And John Fetterman has jumped into the stupid sweepstakes with gusto. 

Fetterman’s positions are so extreme or pointless or both that he and his handlers have decided to make the campaign about abortion and identity politics. He has taken to wearing a sweatshirt emblazoned with a “John Fetterwoman” Logo that is supposed to emphasize his support for abortion rights. 

Funny thing though, in the end abortion regulation is going to be decided by 50 state legislatures, not the Feds so if he is really all that interested in furthering abortion rights he would be attempting to do so at the state, rather than federal level. But he isn’t. 

Why?

Because on top of being a buffoon (see the 5 point plan above)  he is also a hypocrite. He makes a big deal about his working class sympathies, spent years as Mayor of a small working class town and best of all he routinely outfits himself in a pair of shorts and a hoodie. As the stenographers that make up the political press put it: He wears this outfit Even in winter! Well, Holy Smoke: How’s that for street cred?

So let’s talk about the publicity machine that Fetterman built over the years as a way to create a persona that bears little resemblance to the actual person. Start with the working class bit, and grant the log cabin routine is a perennial in American politics. 

John Fetterman earned his first paycheck—other than the $150 per month he earned as Mayor—when he was 49 years old. That paycheck came from his job as Lieutenant Governor. Until then he  was supported by an allowance funded by his wealthy family. Like most working class people he earned his bachelors degree from Albright College; his MBA from the University of Connecticut and his Master’s in Public Policy from Harvard’s Kennedy School. 

After his sojourn at the Kennedy School he ran for Mayor of Braddock, PA and won. There he stayed from January 2006 until January 2019 when he became Lt. Governor of PA. 

After his election as Mayor of Braddock, Fetterman launched what Wikipedia calls “a failed campaign to attract new residents to the area from the artistic and creative communities.” He also initiated other revitalization efforts. They failed as well. 

Today Braddock looks pretty much the same as it looked when Fetterman was Mayor. It has a tiny population of about 2,000 people. Median household income is about $18,500; per capita income is only about $13,100 according to US Census data. Some 35% pf the population lives below the poverty line including 54% of those under 18 years old. 

On top of all this, Fetterman suffered a stroke a few days before the primary. His campaign covered up the extent of the damage for as long as it could, but eventually the details began to emerge as they almost always do. It turns out that as a result of his stroke, Fetterman has problems processing spoken words and so he insists on using a closed captioning aid when he has the rare interview. 

NBC News reporter Dasha Burns quizzed Fetterman the other day about the state of his health now and noted that Fetterman had not released his medical records relating to the stroke. She also reported that it”…wasn’t clear [Fetterman]was understanding the part of their conversation when he didn’t have the aid of a captioning device.”

As social justice warriors are wont to do, the Fetterman campaign immediately went on the attack in an effort to intimidate anyone who would dare to question the bona fides of the candidate. They wheeled out his wife, Gisele Fetterman, who announced the interview left her “in a rage”; accused the reporter of doing a disservice to journalism for the “appalling” report which was, she maintained appalling to the entire disability community. Then for the coup de grace she urged that there be “consequences” for the reporter. 

Note that the argument quickly went from “nothing to see here; all is fine” to an argument that questions about the candidate’s health status are all of a sudden off-bounds.

That about sums it up. Candidate Fetterman is a fraud as well as being a failed Mayor, a policy buffoon and hostile to the first amendment. The only thing he’s got going for him is that he is running against—Dr Mehmet Oz.

Dr. Mehmet Oz is a celebrity celebrity doctor and political neophyte endorsed by Donald J Trump. In the Republican primary Dr. Oz beat David McCormack, a hedge fund manager, by about 1,000 votes. 

Unlike Fetterman, Oz doesn’t try to hide either his wealth or background. Disclosure forms indicate his wealth is over $100 million, and could be multiples of that. He was born in Turkey (he holds dual citizenship), went to Harvard for his undergraduate degree and the University of Pennsylvania for both his MBA and MD degrees. 

Much has been made about his wealth, largely a function of the money he makes as a reality talk show host, and his upper class tastes. The Fetterman camp, for instance, has made a big deal about Oz referring to crudités, insisting that “real” Pennsylvanians use terms like veggie platter. Why that should matter, other than a crude appeal to envy, is beyond me.  

That aside, Oz has descended into promoting medical quackery. An article published by McGill University’s Office for Science and Society documents Oz’s fall from respected surgeon to circus barker. For example, Oz has championed “energy medicine” for which he won the Pigasus Award. It is an award that, as McGill puts it, recognizes achievements in pseudoscience. 

He has hyped diet pills without any evidence they actually work. He has apparently lent credence to the idea of talking to the dead. And he has relentlessly hyped his “Dr. Oz’s homeopathic starter kit” which is based on using non-existent molecules  to treat real diseases. 

Among other things, Oz has suggested that there are dangerous levels of arsenic in apple juice (there are not); that green coffee is a miracle cure for obesity (it isn’t) and has hinted that genetically modified  foods are cancer causing (they are not). 

Lest anyone think these are mere political hits, reeking of bias, the AMA Journal of Ethics took him to task for the coffee and obesity claims back in 2017 when Oz was playing at being “America’s Doctor”. That was  well before Donald Trump—or anybody else—came up with the idea of Oz  running for the Senate.

So there you have it. Pennsylvania has a pair of wealthy frauds running for its open Senate seat; in its gubernatorial race a moderate Democrat is facing off against a Trumpian election denier. What to make of it?

My guess is that Shapiro, the moderate Democrat will convincingly trounce the election denier Republican Mastriano, for the Governor’s office. On the other hand, Oz will narrowly defeat Fetterman. If Oz wins the contest, the spread between the vote totals of Shapiro and Fetterman will capture the attention of analysts. 

To the extent that Shapiro wins convincingly and Fetterman loses (or perhaps just squeaks by) the conclusion will be that a moderate Democrat can be formidable in a blue-collar swing state. At the same time a defeat for a far-left Senatorial candidate would suggest that voters in the Keystone state are looking for moderation in their politics. 

There is a certain irony in all this. To the extent that Democrats have focused their attention on abortion, the race that matters most to them is (ore should be) the race for the statehouse. In the wake of Dobbs v. Jackson overturning Roe v. Wade, abortion regulation will be decided at the state level, not the national level, absent a Constitutional amendment. The Governor’s race is therefore more important in that respect. 

The Democrat’s focus on nationalizing abortion regulation has also left them extremely vulnerable. While 2 months ago abortion concerns were among the top priorities for voters, now those concerns have fallen to about 4^th or 5^th place, behind, inflation, crime and the economy in general. 

If, instead of running on local issues, the Democrats lose their bet on nationalizing abortion regulation, what is left for them to run on? Abortion will have lost some of its salience in the national debate and the Democratic Party infrastructure will be left in tatters. 

One last note. In some ways, the Georgia Gubernatorial and Senatorial elections are a mirror image of Pennsylvania. More on that in a future post.

JFB

Before it is washed to the sea?

And how many years can some people exist

Before they’re allowed to be free?

Yes, and how many times can a man turn his head

And pretend that he just doesn’t see?

The answer, my friend, is blowin’ in the wind

The answer is blowin’ in the wind

From “Blowin’ in the Wind” by Bob Dylan

© 1962 Warner Brothers Inc; renewed 1990 by Special Rider Music

Note that the song was copyrighted in 1962, years before Command-and-Control became the dominant ethos of political elites. Back in 1962 Dylan could ask “How many times can a man turn his head and pretend that he just doesn’t see”? He knew he was stirring some consciences while shaming others.

But since then, shame has gone out the window. As has the idea of telling or recognizing the truth. Now we have “My truth”. We have pregnant people and birthing people, not mothers. We have people “Who identify as…”. 

Remember the violence of the summer of 2020? That was when we had “mostly peaceful” protests. Or the violence of January 6, 2021? Republican wordsmiths quickly tried to re-characterize it into a patriotic rally that got a little too enthusiastic. Then there was the suppression of the Hunter Biden story shortly before the November 2020 elections, wherein the NY Times, the Washington Post, Google, Twitter and Facebook just pretended not to see.  

Then there was the breathless coverage (“the walls are closing in”) of the phony Steele dossier—a brazen lie that the Democrat—Media complex marketed for years as if it were gospel truth. Not to mention the adoring coverage Dr. Anthony Fauci received even though he is an admitted liar and his agency, the CDC, proved to be inept even on its best day.  

Add to all this the crime wave that is now engulfing the nations’ cities; a crime wave that is directly attributable to the campaign to defund the police along with the refusal by some big city prosecutors to enforce the law.  On the subject of refusing to enforce the law, let’s not forget the Biden Administration’s carte blanche refusal to enforce laws that regulate the border. 

And let’s not leave out the continuing collapse in public school enrollment coupled with a surge in homeschooling and private school enrollment. Add to that an inflation rate precipitated by out-of-control spending that has been financed in good measure by the Feds’ reckless expansion of its balance sheet. 

As if that were not enough, the Congress decided to spend even more on a green energy bill that is mostly corporate welfare. It will have a negligible effect, if any, on global warming but that was never the point.  The point was to Do Someting, no matter how stupid. Needless to say the bill passed on a straight Party line vote before heading off for Biden’s signature.  

But let’s not stop there. After deciding to hand out a minimum of $500 billion to a valued constituency (young upscale voters) via student loan forgiveness, which he had no authorization to do, a few days later Mr. Biden actually said “…me and my Democratic friends (sic) on the Hill are working to expand and protect [Social Security]”. Expand an insolvent program. Just what we need. Then before resting, he called the Republicans “semi-fascists” whatever that is supposed to mean.

Mr Biden has been busy in foreign policy too. After assuring Americans that a withdrawal from Afghanistan would not bring about a precipitous collapse in that country, the withdrawal did precisely that. The United States abandoned thousands of Green Card holders to their fate, al-Qaeda re-established itself there, and Taliban rule was re-instituted just as it was before. Mr. Biden called the evacuation an “extraordinary success”. 

In the meantime the Administration continues to be played by Iran as it seeks to re-open the nuclear deal abandoned by President Trump, originally negotiated by President Obama. For its part Iran has attempted to assassinate John Bolton on US soil, and has made it clear that it wants UN nuclear inspectors removed. And, oh yes, since Iran refuses to speak to the U.S. directly, the U.S. has to use a go-between for the negotiations. That go-between is none other than Russia.

That is the very same Russia that invaded Ukraine in February of 2022—6 months after we abandoned Afghanistan. As it now stands we have funneled over $40 billion in military aid to Ukraine. But nowhere have we heard a word about what our goals and objectives are; nor have we been told what would constitute success. We are just in the business of pouring money into Ukraine without defining what the end game is. Meanwhile, after the sanctions we placed on Russia, they are taking in substantially more energy revenue than ever before because of rising prices. 

The war appears to be frozen in place and Europe, dependent on Russia for energy, is beginning to feel the crunch which will only intensify as long as the war continues. This is a consequence of Europe’s strategic dependence on Moscow which is a direct result of its attempt to convert to a green energy economy. It is an attempt that is doomed to failure, and one that the US is foolishly trying to implement as well.

I could go on. Suffice it to say that roughly everywhere you look there is obvious policy failure. Crime is exploding, inflation is soaring, economic growth is beginning to stagnate, the schools are failing to educate. In foreign policy the US has attempted to placate rivals like Iran while leaving allies confused about our resolve. In Ukraine we allowed ourselves to be trapped in a no-win situation. And we have not yet even begun to have a serious conversation about the position of the US vis-a-vis China. 

And yet, despite the blindingly obvious failures of the progressive  policy regime, we continue to be bombarded with the same propaganda over and over again, without a hint of reflection, thoughtlessly delivered by the mainstream media. But the failures and are blatant and the defense of the indefensible gets more and more implausible, insistent and hysterical on a daily basis. 

These policy failures are all linked by a reliance on command-and-control, bureaucratic group-think and what is surely a vain attempt to rule from the top down rather than accept the reality of the impossibility of doing so successfully. All of which depends on the willful blindness of citizens who would rather conform to current fashion than to ask the hard questions.

Which sends us back to the question Bob Dylan asked back in 1962. “Yes, and how many times can a man turn his head, And pretend that he just doesn’t see?”

That is a question that still needs an answer 60 years on. 

JFB

In the run up to the November midterms, does anybody really believe that the Democratic Party generally and the Biden White House in particular, are making good faith arguments for their policy positions? If so, it may be worth considering the recent Biden decision to unilaterally cancel student loans up to $10,000  and Pell grants up to $20,000. 

For years Democrats argued (correctly, if a bit sanctimoniously) that then President Donald J Trump had no respect for the rule of law, and that he eviscerated norms necessary for the proper functioning of civil society. And what did President Biden and his party do to re-establish the rule of law and democratic norms? They continued in Trumpian fashion, to trash both the rule of law and democratic norms. 

There is for instance, no one this side of sanity who actually believes that Mr. Biden acted lawfully when he announced the cancellation  of student debt in the best tradition of Tammany Hall. It is blindingly obvious that Biden had no legal authority to do what he did. None. Zero. Nada. The hired guns who will be paid paid to argue that he does have that authority will be laughed out of court if the case ever gets there. 

Effectively, Mr. Biden just proceeded to spend about $500 billion without even a hint of Congressional authority, thus doing violence to the separation of powers that is the at the heart of our Constitutional order. In so doing, absent a stinging rebuke from the courts, he has managed to change financial market expectations for  government, for academic institutions and for consumer behavior—and  not in a good way.

What are the likely consequences of the Biden decision? Well, for one, universities will raise their prices to capture the lion’s share of the newly minted $500 billion subsidy. Government will borrow an additional $500 billion to pay for it. And student-consumers will have an incentive to delay paying off their loans on time, betting that another round of loan cancellations will be right around the corner. This will simply encourage the production of more bad behavior, which is to say moral hazard.  

And that’s just the beginning. Why would we stop at college loans? Why not cancel already heavily subsidized home mortgages? Or car loans? Or credit card debt? Or small business loans? What makes college loans so special compared to those other forms of debt? Perhaps it’s because of the urgent need for more gender studies majors. 

All of which brings us back to the question in the first sentence of this essay. Does anybody truly believe that Biden and the Democrats are making their arguments in good faith? When they passed the $1.9 trillion American Rescue Plan, they did so on a Party line vote while dismissing the idea that it would increase inflation. But by March of 2022 the Federal Reserve Bank of San Francisco released a paper that estimated the inflation impact of the American Rescue Plan was about 3 percentage points. 

By that time the Democrats, with some notable exceptions like Larry Summers who was far ahead of the curve, were arguing that inflation was merely transitory. But after having increased spending by $1.9 trillion, they then decided to raise tax rates which they implausibly claimed would raise $300 billion in tax revenue. The effect, they argued, would be to —wait for it—reduce inflation. And a few weeks after that, Biden decided to cancel about $500 billion in student loans on the books, thus increasing aggregate demand which will of course be financed by more borrowing. 

So in sum they argue that (A) $1.9 trillion in spending, financed by borrowing and the Fed’s printing press had no effect on inflation. However, they go on to argue that (B) a tax increase on the order of $100 to $300 billion will lower inflation. But (C) an increase of $500 billion in spending and borrowing to finance the student loan give-away will have no effect on inflation. Got that?

Why would anybody take these people seriously?  More to the point, how can anybody believe that they are making good faith arguments? Clearly they are not, unless the underlying assumption is that they are hopelessly, invincibly ignorant. Unfortunately there is an awful lot of evidence to suggest that there is more than a grain of truth in that proposition. 

JFB

Pretty much no matter where you look, Joe Biden and his fellow progressives have produced a string of catastrophic policy failures. In fact, a policy success—defined as something that actually produces a net benefit—is nowhere to be found. Which makes all the happy talk coming from the White House  somewhat puzzling. Unless the White House strategy represents a combination of cluelessness and prevarication. 

Consider the state of the macroeconomy. Based on the preliminary figures published yesterday, the U.S. just experienced two consecutive quarters of negative GDP growth—which is to say that the economy shrank for the first half of the year. Two consecutive quarters of negative growth is the basic definition of recession. But don’t take my word for it—take the word of Brian Deese, currently President Biden’s Chair of the National  Economic Council. 

Back in 2008 while acting as an advisor to Hillary Clinton, Dr. Deese said “Economists have a technical definition of recession, which is two consecutive quarters of negative growth.” But now that the Biden Administration is presiding over a recession brought on by poor policy, that definition doesn’t count anymore. Deese now argues that “Two negative quarters of negative growth is not the technical definition of “recession”. We are instead in “a transition”. See these Tweets.

It isn’t like this attempted sleight-of-hand is a one-off.  It is has become standard procedure for progressives as they vainly try to explain away their cascading policy failures. Take the inflation problem for instance. At first they denied that inflation was on the rise. Then when the evidence of rising inflation became indisputable they defined it as merely “transitory”. Biden’s chief of staff, Ron Klain, tweeted that inflation was a “high class problem” not something we should worry about.  

Now that inflation, and expectations for future inflation threaten to embed themselves in the American psyche, the Biden brigade has all of a sudden become a rhetorical  inflation fighter. Not that they will actually do anything to alter the destructive policies they implemented that contribute to inflation. Not at all. They continue to press on with regulatory policies that constrain supply, particularly with respect to fossil fuels, thereby placing upward pressure on production costs and prices.  

But that is not all. The supply side of the equation is only part of the story. The demand side is important as well. The first villain of the piece is the Fed which fell way behind the curve. Their failure to raise interest rates much earlier in the cycle allowed inflation and inflation expectations to take root. Just as important was the Fed’s decision to rapidly expand its balance sheet by buying trillions of Treasury and mortgage-backed securities. 

This monetization of the debt had the effect of letting Congress off the hook. Congress would no longer be constrained in its financing needs by the bond market; the Fed proved to be the ultimate price-insensitive buyer. From March 2020 to  June 2022 the Fed increased its holdings of longer dated Treasuries from just over $2 trillion to about $5 trillion. (See the Peter G. Peterson Foundation for these data.) And these figures don’t include TIPS or mortgage securities. If you want to know why the long end of the Treasury market has held up as well as it has despite soaring inflation—this is why. 

Let’s not stop with the macro-economic disaster engineered by utopian progressives. Let’s take a look at some other domestic policy “accomplishments”. There is for instance the “defund the police” movement, accompanied by progressive district attorneys in deep blue cities (San Francisco, LA, New York) who refuse (or refused) to prosecute what most people would describes as serious offenses against public order. And plenty of deep blue cities did in fact reduce their police budgets. That was quickly followed by sharp upward spikes in often violent crime and public disorder. That’s the very definition of policy failure. 

How about eduction? Using the pandemic as an excuse, the Teachers Unions in Democratic strongholds successfully advocated for public school closures and lockdowns of various kinds—with teachers salaries being paid, of course. The net effect was tremendous learning loss and mental health problems among young people, the social implications of which are only now coming to light. 

In the meantime, as more and more social science papers are published analyzing the impact of all this two things are becoming crystal clear. First, school closures and lockdowns had virtually no impact on the spread of COVID. Second, low-income students suffered the most from learning loss and mental health problems. 

In the meantime, there has been an exodus from the public schools to private ones and to home schooling. Private and parochial schools that (mostly) stayed open during the pandemic did not have statistically different COVID outcomes, but they did have learning and mental health outcomes that were generally superior to their public school counterparts.

Parents took notice both of this and something else as well. That something else was what their children were being taught in school—which was not just reading, writing and arithmetic. Children in public schools were being indoctrinated in the latest academic fads. Parents could see what was going on in the classrooms compliments of Zoom and they didn’t like it one bit. That spurred a revolt that got Glenn Youngkin elected governor in Virginia and a first time ever Republican polling advantage in education to the tune of 20 points. 

By almost any measure, progressive educational policy has been a catastrophic failure. 

Let’s not forget the Southern border. Since Biden took the oath of office, there has been a consistent and significant rise in illegal border crossings. Early in the game President Biden argued that the increase was merely seasonal. That lie was quickly exposed as illegal border crossings increased by record amounts month-by-month.  For the record, I happen to believe that we should have a much more open immigration policy and that Congress should enact one. But the President is supposed to enforce the law as it is written, not a policy regime based on wishful thinking. 

There is foreign policy as well. One year ago we were treated to the chaotic U.S. withdrawal from Afghanistan that the Biden Administration characterized as a great success. That withdrawal was carefully observed by Russia, China, Iran and a whole host of adversaries who justifiably concluded that Biden was a weak leader who could be easily pushed around. Six months later Vladimir Putin invaded Ukraine, starting the first land war in Europe since the end of WW2. 

What was the Biden Administration response? In a vain (and doomed) effort to stop the invasion the Biden Administration insisted on announcing to Putin what we would not do in response.  Further, slowly at first the Biden Administration began to send arms to Ukraine so it could defend itself. Then it imposed sanctions on Russia and some oligarchs. But the Administration has failed to enunciate an objective for all this. If the object was to stop the invasion, it failed. If the object was to dethrone Putin–that has failed as well. If the object is to defeat Russia, it’s hard to see how that is going to happen when Russia still possesses a whole lot of nuclear weapons.

Some politicians in the U.S. — House Speaker Nancy Pelosi (D. CA) comes to mind—have insisted that “victory” is the only possible outcome. Victory is, of course, undefined. President Biden himself has characterized Putin as a war criminal and opined that Putin should not remain in power in the Kremlin. As usual his staff was quickly deployed to backtrack.

Now the war in Ukraine is apparently stalemated and frozen place. If so, that leaves the U.S. in the position of constantly supplying weapons and intelligence to the Ukrainians with little hope of resolution any time soon. In the meantime Russia is making far more from its energy exports than it did before the U.S. imposed sanctions. And Russia has significantly tightened the spigots on the Nord Stream 1 pipeline to Germany, squeezing their economy and its citizens. In the meantime, some German cities, Hanover especially, have begun to ration hot water as a countermeasure. As measures like these inevitably expand, it is hard to see how the U.S. is going to maintain solidarity with its sanctions partners. 

Especially as the U.S. goes hat-in-hand to places like Venezuela and Saudi Arabia pleading with them to produce more oil even as the U.S. restricts fossil fuel production at home. Needless to say, Saudi Arabia not only refused Biden’s entreaties but also publicly humiliated Biden who had promised to make the country a “pariah state”. 

Meanwhile according to news reports Biden and China’s Xi Jinping have told aides to begin planning for an in person meeting. Even so, China is increasingly aggressive in its rhetoric about Taiwan. In the interim the Biden Administration, weak in the knees as usual, is leaning on Speaker Pelosi to cancel her planned trip to Taiwan so as not to displease Xi. 

When all is said and done, the Biden record of being on the wrong side of every question remains unblemished. It is replete with policy failure. Moreover it is difficult to identify a single policy success that truly is a success in that the benefits exceed the costs.

We have another 2 years to go with this ward heeler. The challenge we face today is to first contain the damage.  Then begins the long hard work of rebuilding our institutions, repairing the culture and re-establishing rationality and limited government. It’s going to take a while.

JFB