Could She Reach the Top in 2012? You Betcha

FRANK RICH NY TIMES
“THE perception I had, anyway, was that we were on top of the world,” Sarah Palin said at the climax of last Sunday’s premiere of her new television series, “Sarah Palin’s Alaska.” At that point our fearless heroine had just completed a perilous rock climb, and if she looked as if she’d just stepped out of a spa instead, don’t expect her fans to question the reality. For them, Palin’s perception is the only reality that counts.

Palin is on the top of her worlds — both the Republican Party and the media universe. “Sarah Palin’s Alaska” set a ratings record for a premiere on TLC, attracting nearly five million viewers — twice the audience of last month’s season finale of the blue-state cable favorite, “Mad Men.” The next night Palin and her husband Todd were enshrined as proud parents in touchy-feely interviews on “Dancing With the Stars,” the network sensation (21 million viewers) where their daughter Bristol has miraculously escaped elimination all season despite being neither a star nor a dancer. This week Sarah Palin will most likely vanquish George W. Bush and Keith Richards on the best-seller list with her new book.

If logic applied to Palin’s career trajectory, this month might have been judged dreadful for her. In an otherwise great year for Republicans she endorsed a “Star Wars” bar gaggle of anomalous and wacky losers — the former witch, Christine O’Donnell; the raging nativist, Tom Tancredo; and at least two candidates who called for armed insurrection against the government, Sharron Angle and a would-be Texas congressman, Stephen Broden, who lost by over 50 percentage points. Last week voters in Palin’s home state humiliatingly “refudiated” her protégé, Joe Miller, overturning his victory in the G.O.P. Senate primary with a write-in campaign.

But logic doesn’t apply to Palin. What might bring down other politicians only seems to make her stronger: the malapropisms and gaffes, the cut-and-run half-term governorship, family scandals, shameless lying and rapacious self-merchandising. In an angry time when America’s experts and elites all seem to have failed, her amateurism and liabilities are badges of honor. She has turned fallibility into a formula for success.

Republican leaders who want to stop her, and they are legion, are utterly baffled about how to do so. Democrats, who gloat that she’s the Republicans’ problem, may be humoring themselves. When Palin told Barbara Walters last week that she believed she could beat Barack Obama in 2012, it wasn’t an idle boast. Should Michael Bloomberg decide to spend billions on a quixotic run as a third-party spoiler, all bets on Obama are off.

Of course Palin hasn’t decided to run yet. Why rush? In the post-midterms Gallup poll she hit her all-time high unfavorable rating (52 percent), but in the G.O.P. her favorable rating is an awesome 80 percent, virtually unchanged from her standing at the end of 2008 (83 percent). She can keep floating above the pack indefinitely as the celebrity star of a full-time reality show where she gets to call all the shots. The Perils of Palin maintains its soap-operatic drive not just because of the tabloid antics of Bristol, Levi, et al., but because you are kept guessing about where the pop culture ends and the politics begins.

The producer of “Sarah Palin’s Alaska,” Mark Burnett (whose past hits appropriately include both “Survivor” and “The Apprentice”), has declared that the series is “completely nonpolitical.” It is in fact completely political — an eight-week infomercial that, miraculously enough, is paying the personality it promotes (a reported $250,000 a week) rather than charging her. The show’s sole political mission is to maintain the fervor and loyalty of the G.O.P. base, not to win over Palin’s detractors. In the debut episode, the breathtaking Alaskan landscapes were cannily intermixed with vignettes showcasing the star’s ostensibly model kids and husband, her charming dad, the villainous lamestream media (represented by Palin’s unwanted neighbor, the journalist Joe McGinniss), and the heroic Rupert Murdoch media (represented by an off-screen Bill O’Reilly).

Palin fires a couple of Annie Oakley-style shots before we’re even out of the opening credits. The whole package is a calculated paean to her down-home, self-reliant frontiersiness — an extravagant high-def remake of Bush’s photo ops clearing brush at his “ranch” in Crawford, which in turn were an homage to Ronald Reagan’s old horseback photo ops in his lush cowpoke digs in Santa Barbara. With a showbiz-fueled net worth widely estimated in the double-digit millions, Palin is as Hollywood in her way as Reagan was, but you won’t see any bling or factotums in “Sarah Palin’s Alaska.” She tells the audience that she doesn’t have “much of a staff” to tend to her sprawling family and career. “We do most everything ourselves,” she says, and not with a wink.

Thanks to the in-kind contribution of this “nonpolitical” series, Palin needn’t join standard-issue rivals like Mitt Romney, Newt Gingrich, Haley Barbour and Tim Pawlenty in groveling before donors and primary-state operatives to dutifully check all the boxes of a traditional Republican campaign. Palin not only has TLC in her camp but, better still, Murdoch. Other potential 2012 candidates are also on the Fox News payroll, but Palin is the only one, as Alessandra Stanley wrote in The Times, whose every appearance is “announced with the kind of advance teasing and clip montages that talk shows use to introduce major movie stars.” Pity poor Mike Huckabee, relegated to a graveyard time slot, with the ratings to match.

The Fox spotlight is only part of Murdoch’s largess. As her publisher, he will foot the bill for the coming “book tour” whose itinerary disproportionately dotes on the primary states of Iowa and South Carolina. The editorial page of Murdoch’s Wall Street Journal is also on board, recently praising Palin for her transparently ghost-written critique of the Federal Reserve’s use of quantitative easing. “Mrs. Palin is way ahead of her potential presidential competitors on this policy point,” The Journal wrote, and “shows a talent for putting a technical subject in language that average Americans can understand.”

With Murdoch, Rush Limbaugh, Glenn Beck and Sean Hannity on her side, Palin hardly needs the grandees of the so-called Republican establishment. They know it and flail at her constantly. Politico reported just before Election Day that unnamed “party elders” were nearly united in wanting to stop her, out of fear that she’d win the nomination and then be crushed by Obama. Their complaints are seconded daily by Bush White House alumni like Karl Rove, Michael Gerson, and Mark McKinnon, who said recently that Palin’s “stock is falling and pretty rapidly now” and that “if she’s smart, she does not run.”

This is either denial or wishful thinking. The same criticisms that the Bushies fling at Palin were those once aimed at Bush: a slender résumé, a lack of intellectual curiosity and foreign travel, a lazy inclination to favor from-the-gut improvisation over cracking the briefing books. These spitballs are no more likely to derail Palin within the G.O.P. than they did him.

As Palin has refused to heed these patrician Republicans, some of them have gotten so testy they sound like Democrats. Peggy Noonan called her a “nincompoop” last month, and Susan Collins, the senator from Maine, dismissed her as a “celebrity commentator.” Rove tut-tutted Palin’s TLC show for undermining her aspirations to “gravitas.” These insults just play into Palin’s hands, burnishing her image as an exemplar of the “real America” battling the snooty powers-that-be. To serve as an Andrew Jackson or perhaps George Wallace for the 21st century, the last thing she wants or needs is gravitas.

It’s anti-elitism that most defines angry populism in this moment, and, as David Frum, another Bush alumnus (and Palin critic), has pointed out, populist rage on the right is aimed at the educated, not the wealthy. The Bushies and Noonans and dwindling retro-moderate Republicans are no less loathed by Palinistas and their Tea Party fellow travelers than is Obama’s Ivy League White House. When Palin mocks her G.O.P. establishment critics as tortured, paranoid, sleazy and a “good-old-boys club,” she pays no penalty for doing so. The more condescending the attacks on her, the more she thrives. This same dynamic is also working for her daughter Bristol, who week after week has received low scores and patronizing dismissals from the professional judges on “Dancing with the Stars” only to be rescued by populist masses voting at home.

Revealingly, Sarah Palin’s potential rivals for the 2012 nomination have not joined the party establishment in publicly criticizing her. They are afraid of crossing Palin and the 80 percent of the party that admires her. So how do they stop her? Not by feeding their contempt in blind quotes to the press — as a Romney aide did by telling Time’s Mark Halperin she isn’t “a serious human being.” Not by hoping against hope that Murdoch might turn off the media oxygen that feeds both Palin’s viability and News Corporation’s bottom line. Sooner or later Palin’s opponents will instead have to man up — as Palin might say — and actually summon the courage to take her on mano-a-maverick in broad daylight.

Short of that, there’s little reason to believe now that she cannot dance to the top of the Republican ticket when and if she wants to.

The Tao of Moonbeam
By TIMOTHY EGAN NY TIMES
In choosing the oldest man ever to run the young state of California, voters decided that a grumpy penny-pincher is just what they need at a time when the state is so broke it cannot fix park benches or investigate burglaries.

Jerry Brown — welcome back! The man who eschewed the governor’s mansion to sleep on a mattress on his apartment floor when he ran California a long generation ago should feel right at home in the poorhouse of Sacramento 2010. Here’s what your outgoing governor, Arnold Schwarzenegger, had to say while trying to keep the lights on and foreclosure buzzards at bay:

“Our wallet is empty. Our bank is closed. Our credit is dried up.”

The only thing not in short supply, it seems, is California schadenfreude. The Golden State has become the American France — everyone professes to despise it, but loves to go there.

Consider: even in the last year, when 2.2 million Californians were out of work, the state added more new residents than the entire population of Pittsburgh. And about 335 million visitors came. The message from the seven out of eight Americans who do not live in California is: we love you, and enjoy watching you suffer.

The 72-year-old Brown brings a perfect background to the triage operation he will undertake in the first week of January, when he will begin a long-interrupted third term as governor.

Rich Pedroncelli/Associated Press Jerry BrownFirst, he has that missionary zeal for lost causes. Remember, he was studying to be a priest at a Jesuit seminary when his father became governor in 1959 and ushered in the glory years of California as a nation-state. Over the next half-century, young Brown lived a half-dozen lives — Yale Law school, two terms as governor, three runs for president, mayor of Oakland, attorney general — and the state entered a ragged period of self-doubt. During the greed-is-good era of the late 1980s, Brown found himself ministering to the sick and dying at Mother Teresa’s hospice in Calcutta.

Second, business-minded outsiders may sound good on paper, but they don’t work well as politicians. Schwarzenegger promised to bring his Hollywood deal-maker’s muscle to Sacramento. In the end, he was without allies, and he leaves California in tatters. This year, Brown destroyed his opponent, the profligate billionaire and political neophyte Meg Whitman, with an ad that showed her mouthing the same “run the state as a business” homilies as the failed Governator.

“We need someone with insider’s knowledge,” Brown said, with Zen clarity, “but an outsider’s mind.”

Also, unlike Schwarzenegger, Brown is not dyeing what little hair he has left or pumping up his pecs to impress the babes. California needs someone to act his age, and Brown has settled into his senior years without illusions.

“Old people have a lot of good ideas,” he said on the campaign trail, another bit from the Tao of Moonbeam.

Third, Brown has long been a tightwad. O.K., he does live in a $1.8 million home in Oakland Hills with his wife and confidante, Anne Gust Brown, a former Gap executive. But he’s never lost the Costco-buyer’s view of the world. During one of his runs for president, he called for a Constitutional amendment forcing a balanced federal budget. He was an angry, mildly kooky Tea Partier before there was an angry, very kooky Tea Party.

“The truth is, I don’t like to spend money — not my own, and not the taxpayers’,” he said during the campaign. “If you want frugality, I’m your man.”

He reinforced this view during his first press conference after routing Whitman, who spent $141 million of her own money — more than any person in American history has ever spent on a single political race. He noted that the voters were in a sour mood, even turning down a proposal to raise car license fees by $18 to fund state parks.

“My message is get ready for hard surfaces and benches,” said the governor-elect. The only real promise Brown made was not to raise taxes without a vote of the people. For a Democrat, that’s a meal of porridge and tap water.

What can Brown do with an immediate $25 billion budget hole? What he’s always done: the unpredictable. He can, for instance, ask state employee unions to make major concessions in their pensions — part of a system that’s risen 2,000 percent in 10 years — medical co-pays and other benefits. These are his allies. They have nowhere else to go. There will be no federal bailout of California. Default would bring down the American bond market.

Brown won’t have to deal with the lowest-paid state workers, those represented by the powerful Service Employees International Union, because they already signed a new three-year deal. It’s the bigger unions, who’ve featherbedded their salaries and benefits while average Californians have seen their incomes decline, that he should target. In a bankrupt state, it’s crazy for prison guards to be making $100,000 a year with overtime.

Finally, Brown will enter office with minimal expectations. The best thing he said on the campaign trail was that the job of governing California is a career-killer — so voters might as well elect somebody whose career is at an end. Wise words. The youngest, and soon, the oldest governor of California fits the bill.

Post-Tea-Party Nation

DAVID FRUM NY TIMES
Republicans lost the presidency in 2008 in large part because of the worst economic crisis since World War II. Republicans have now regained the House of Representatives for the same reason. In the interval, Republicans ferociously attacked the Obama administration’s economic remedies, and there certainly was a lot to attack. But the impulse to attack, it must be recognized, was based on more than ideology; it also served important psychological imperatives. Not since Jimmy Carter handed the office to Ronald Reagan — arguably not since Herbert Hoover yielded to Franklin Roosevelt — had a president of one party bequeathed a successor from another party so utter an economic disaster as George W. Bush bequeathed to Barack Obama. And while the Bush administration took wise and bold steps to correct the disaster, the unpopularity of its Troubled Asset Relief Program bequeathed the Obama administration a political disaster alongside the economic disaster.

It’s an uncomfortable memory, and until now Republicans have coped with it by changing the subject and hurling accusations. Those are not good enough responses from a party again entrusted with legislative power. If Republicans are to act effectively and responsibly, we need to learn more positive and productive lessons from the crisis.

Lesson 1: The danger of closed information systems. Well before the crash of 2008, the U.S. economy was sending ominous warning signals. Median incomes were stagnating. Home prices rose beyond their rental values. Consumer indebtedness was soaring. Instead, conservatives preferred to focus on positive signals — job numbers, for example — to describe the Bush economy as “the greatest story never told.”

Too often, conservatives dupe themselves. They wrap themselves in closed information systems based upon pretend information. In this closed information system, banks can collapse without injuring the rest of the economy, tax cuts always pay for themselves and Congressional earmarks cause the federal budget deficit. Even the market collapse has not shaken some conservatives out of their closed information system. It enfolded them more closely within it. This is how to understand the Glenn Beck phenomenon. Every day, Beck offers alternative knowledge — an alternative history of the United States and the world, an alternative system of economics, an alternative reality. As corporate profits soar, the closed information system insists that the free-enterprise system is under assault. As prices slump, we are warned of imminent hyperinflation. As black Americans are crushed under Depression-level unemployment, the administration’s policies are condemned by some conservatives as an outburst of Kenyan racial revenge against the white overlord.

Meanwhile, Republican officeholders who want to explain why they acted to prevent the collapse of the U.S. banking system can get no hearing from voters seized with certainty that a bank collapse would have done no harm to ordinary people. Support for TARP has become a career-ender for Republican incumbents, and we shall see what it does to Mitt Romney, the one national Republican figure who still defends TARP.

The same vulnerability to closed information systems exists on the liberal side of U.S. politics as well, of course. But the fact that my neighbor is blind in one eye is no excuse for blinding myself in both.

Lesson 2: “The market” (the whole free-market system) must be distinguished from “the markets” (the trading markets for financial assets). Perhaps it’s because the most influential conservative voice on economic affairs is The Wall Street Journal. Perhaps it’s because conservatism disproportionately draws support from retirees who store their savings in traded financial assets. Perhaps it’s because a booming financial sector is uniquely generous with its campaign contributions. Whatever the reason, the intellectual right accords a deference to the wants and wishes of the financial industry that is seldom accorded to agriculture, manufacturing, transport or retailing.

But it’s not always true that what’s good for Goldman Sachs is good for the economy, or vice versa. Nor is what “the markets” want the same as what free-market economics require. Finance plays with other people’s money: financial disasters damage people and businesses who never participated in the fatal transaction. For that reason, financial firms are justly regulated in ways that other firms are not. And yet nearly 80 years after the creation of the Securities and Exchange Commission, influential conservatives — including The Wall Street Journal editorial board — argued that trillions of dollars of derivatives trading should be exempt from regulation.

Lesson 3: The economy is more important than the budget. During the recession of 1981-82, Democratic politicians demanded that a Republican president set a balanced budget as his top priority. Ronald Reagan disregarded this advice. He held firm to his tax cuts: once the economy returned to prosperity, there would be time then to deal with the deficit.

Today, the positions are reversed. The big Republican idea of 2010 was Congressman Paul Ryan’s budget road map, which offered a serious plan to address Social Security and Medicare shortfalls. But what’s the most striking fact about Ryan’s budget plan is precisely that it is a budget plan — it’s a document concerned with government finance, not the crisis in the economy. How will balancing the budget in the 2020s and 2030s, which is when the plan has most of its impact, create jobs and save homes in the here and now? This was the kind of problem that preoccupied the supply-siders of the 1980s and should again preoccupy Republicans today.

If Republicans reject Obama-style fiscal stimulus, what do they advocate instead? A monetarist might recommend more money creation, even at the risk of inflation: “quantitative easing,” as it’s called. Yet leading voices in the Republican Party have convinced themselves that the country is on the verge of hyperinflation — a Weimar moment, says Glenn Beck. But if fiscal stimulus leads to socialism, and quantitative easing leads to Nazism, what on earth are we supposed to do? Cut the budget? But we won’t do that either! On Sean Hannity’s radio show, the Republican House leader John Boehner announced just before the election that one of his first priorities would be the repeal of the Obama Medicare cuts.

Lesson 4: Even from a conservative point of view, the welfare state is not all bad. G. K. Chesterton observed that you should never take a fence down until you understand why it had been put up. We should remember why the immediate post-Depression generations created so many social-welfare programs. They were not motivated only — or even primarily — by “compassion.” They were motivated as well by the desire for stability.

Social Security, unemployment insurance and other benefits were designed as anti-Depression defenses, “automatic stabilizers” as economists called them. When people lost their jobs, their incomes did not drop by 100 percent, but by 30 percent or 40 percent: they could continue to pay rent, buy food and sustain society’s overall level of demand for goods and services. State pensions created a segment of society whose primary incomes remained stable regardless of economic conditions. The growth of the higher-education sector and of health care had a similar effect.

This shift to a more welfare-oriented economy helps explain why business cycles in the second half of the 20th century were so much less volatile than they were in the 19th century. And fortunately enough, this shift put a floor under the economic collapse of 2008-09. Retirees who lost their savings had to cut back painfully. But at least their Social Security checks continued to arrive. People who lost their jobs might lose their homes. But they continued to buy food and clothing. And the industries that sold those basic necessities continued to function — unlike in 1929-33, when the whole economy collapsed upon itself.

Those who denounce unemployment insurance as an invitation to idleness in an economy where there are at least five job seekers for every available job are not just hardening their hearts against distress. They are rejecting the teachings of Milton Friedman, who emphasized the value of automatic stabilizers fully as much as John Maynard Keynes ever did. Conservatives should want a smaller welfare state than liberals in order to uphold maximum feasible individual liberty and responsibility. But the conservative ideal is not the abolition of the modern welfare state, and we should be careful of speaking in ways that communicate a more radical social ideal than that which we actually uphold and intend.

Lesson 5: Listen to the people — but beware of populism. Listen to the people and politicians who gather under the label “the Tea Party,” and you are overwhelmed by the militant egalitarianism of their message, the distrust of elites, the assertion that the Tea Party speaks for ordinary Americans against a privileged ruling class.

Non-Tea Party Americans may marvel that any group can think of itself as egalitarian when its main political goals are to cut off government assistance to the poorest and reduce taxes for the richest. But American populism has almost always concentrated its anger against the educated rather than the wealthy. So much so that you might describe contemporary American politics as a class struggle between those with more education than money against those with more money than education: Jon Stewart’s America versus Bill O’Reilly’s, Barack Obama versus Sarah Palin.

For that reason, conservatives in recent years have ridden populist waves more successfully than liberals have done. Yet conservatives will not find it much easier than liberals to govern a society where so many people feel themselves cheated — and where so many refuse to believe that the so-called experts care for the interests of anyone beyond their narrow coterie and class. In the face of such disbelief, how to champion free trade? How to reduce America’s very high corporate income tax? How to lower the trajectory of health care spending? How to sustain international commitments? How to upgrade educational standards?

The U.S. political system is not a parliamentary system. Power is usually divided. The system is sustained by habits of cooperation, accepted limits on the use of power, implicit restraints on the use of rhetoric. In recent years, however, those restraints have faded and the system has delivered one failure after another, from the intelligence failures detailed in the 9/11 report to the stimulus that failed to adequately reduce unemployment, through frustrating wars and a financial crash. The message we hear from some Republicans — “this is no time for compromise” — threatens to extend the failures of governance for at least two more years. These failures serve nobody’s interest, and the national interest least of all.


David Frum is the editor of Frumforum.com.

Year zero for Obama – and his enemies
Andrew Sullivan

Sunday London Times
Radical plans to cut the deficit and restore a semblance of fiscal sanity offer a chance to halt America’s poisonous polarisation
The Sunday Times Published: 14 November 2010Recommend (3) Like all blindingly obvious solutions to seemingly intractable problems, the publication last week of a plan to balance America’s budget hit Washington like a bombshell.

For a delirious moment the partisan posturing ended and two men — Alan Simpson, a former Republican senator from Wyoming, and Erskine Bowles, a former chief of staff to Bill Clinton — provided a clear road map to fiscal sanity. Like the British government’s fiscal plan, it was about three-quarters spending cuts to one-quarter tax rises.

But unlike the coalition’s platform, the proposal would not kick in until 2012 (to protect the fragile economic recovery). But it would slash the deficit to 2.2% of GDP in 2015 and create a surplus by 2037. From 2012 to 2020 it would save $4 trillion in currently projected debt.

Its genius lies in leaving nobody off the chopping block for spending cuts and disguising the tax increases by removing so many loopholes that it actually lowers tax rates. On spending, the elderly would face later retirement, means-tested pensions and cost controls in their healthcare; the military would lose several weapons projects and a third of its overseas bases; the federal government would shed 10% of its workforce and 15% of its budget. From new fees for museums and national parks to freezing federal salaries for three years, it is a long gruelling list of austerity measures.

On taxes, the core proposal is the removal of almost all deductions — from mortgage tax breaks to child tax credits. The revenue raised this way is then used both to cut the debt and to reduce basic income tax rates — so the lowest rate drops from 10%-15% to 8%, and the middle rate from 25%-28% to 14%.

The corporate tax rate, meanwhile, drops from 35% to 26%. That’s the spoonful of sugar. What you have is a combination of Clinton’s deficit reduction and Ronald Reagan’s 1986 tax reform — both of which, one might add, were achieved in periods of divided government and both of which are now rightly regarded as those presidents’ signal domestic achievement.

For fiscal conservatives like me, the report is a wet dream. Just getting past the inane rhetoric of the Republican right (which is always promising spending cuts but never actually getting specific) and the defensive silence of the Democratic left (whose many interest groups are dependent on government largesse) is a tonic. But, of course, it’s the politics that is fascinating and potentially transformative for the near and far future.

The report, it seems to me, offers an almost perfect pivot point for his next two years You would think the Republican party, fresh from an election victory based on seriousness about the debt, would leap at this compromise. It gives them Democratic cover for big spending cuts — and cuts income tax rates at the same time. And there were several positive responses.

The editors at National Review were mildly enthused; the economics writer all but endorsed it: “Given a choice between an ideologically pure programme that never is enacted and a problematic one that gets the job done, albeit imperfectly, I’ll take real deficit reduction over theoretical deficit reduction every time.”

Conservative writers, from Ross Douthat at The New York Times to Greg Mankiw, former economic adviser to George W Bush, were positive. But the more hardline Grover Norquist dismissed the plan as “merely an excuse to raise net taxes on the American people”. Mark Meckler, co-founder of the Tea Party Patriots, a “fiscally responsible” offshoot of the wider movement, also dismissed it as “a non-starter” for raising any revenues at all.

The hostility was far more pronounced on the left. Nancy Pelosi, the Democratic former Speaker of the House of Representatives, flatly called the proposed spending cuts “unacceptable”. Jane Hamsher, the leading liberal blogger, assailed the endeavour as the “cat food commission” because she claims it will force the elderly into poverty. Paul Krugman, Nobel prize-winning economist and newspaper columnist, dismissed the plan as “unserious” because it doesn’t raise tax rates on the rich; Brad DeLong, the influential centre-left blogger, called it “a hideous unforced error”.

And Barack Obama? This was his commission, his idea and, of course, his budget in the next two years, subject to passage in the soon-to-be-Republican House of Representatives. He was in Asia when the bombshell hit and will presumably wait until December 1 and the final report to make a formal response.

The report, it seems to me, offers an almost perfect pivot point for his next two years. If he were to make the commission’s proposals his core message and crusade from now on to fix the long-term debt, he would accomplish three vital things.

First, he would put the Republicans on the defensive by embracing a real plan to cut spending that balances the budget long before the only Republican plan out there (that of Congressman Paul Ryan). He would force them to counter with their own proposals for cutting defence and entitlements — exposing either their cynicism (they never planned to, you know, actually cut anything) or their radicalism (because if you refuse to raise any taxes, your spending cuts are going to have to be catastrophic for many).

Second, he would appeal to exactly those independents who drifted back to the Republicans in the last election because of their fears of out-of-control spending.Third, a long-term and credible plan to bring America’s budget back to sanity would do more to boost business and market confidence than any short-term fix could. It would help end the sense of instability that has so far inhibited hiring.

Obama, strategist that he is, planned for this moment. It will be a defining one for many. Are the Democrats going to allow the Republicans to capture the deficit-cutting mantle? Do the Republicans hate Obama more than the debt? Will the Tea Party and its supporters get behind anything that is endorsed by this president — or are they not truly fiscal conservatives? And how can Obama win back the centre, having delivered universal healthcare to his base?

The politics of debt reduction could (and many predict will) end in a partisan impasse, another indication that polarisation and cynicism are just too great for a grand compromise on this scale. Or it could lead to a breakthrough — for Obama and the Republicans to share credit for something that would help both of them in the next election and would help America for decades. The future of American politics, one senses, starts now.

American Account: America takes a big step in the right direction
The power shift following the mid-term elections is probably the first step in bringing the country’s deficit under control
Irwin Stelzer The Sunday Times

“The people have spoken, the bastards,” said a minor politician after losing his bid for a seat in the California Senate almost 50 years ago.

President Barack Obama undoubtedly shares that sentiment as he plans to face a Republican-controlled House of Representatives and a Senate that now has enough Republican members to filibuster to death anything they don’t like.

But at least the three uncertainties we mentioned last week — the Tuesday elections, the Wednesday decision by the Federal Reserve Board’s monetary policy gurus, and the Friday jobs report — have been removed. And the new certainties bode well for the economic outlook.

The power shift in Washington is probably the first step in bringing the deficit under control. Republicans are pledged “to follow the will of the American people” and shrink spending and the reach of government. There will be no second stimulus. But we won’t know whether an Osborne-style axe will be taken to entitlement spending — the real driver of the long-term deficit — until the president’s committee lays out its recommendations in a few weeks.

The Republicans would like to repeal the costly healthcare bill but cannot so long as the Democrats control the Senate and the White House. So they will try to starve of funds the portions of the bill they find most offensive. In their sights is the provision that forces everyone to have insurance or pay a fine, the provision loved by insurance companies that see profits rolling in from healthy, young newly insureds. The president will fight such moves, but spending bills must originate in the House of Representatives, giving the Republicans the ability to deny any presidential wish that involves spending money.

Republicans are pledged to shrink spending. There will be no second stimulus. But we still don’t know whether an Osborne-style axe will fall The president has already indicated that he is prepared to negotiate his refusal, so far, to extend the Bush tax cuts to families with incomes of more than $250,000 a year.

Sources at the top of the Republican Senate leadership tell me privately that they expect the bargaining with Obama to result in permanent tax cuts for families earning less than $250,000 annually, a two-year extension of the cuts for higher-income families, and restoration of the estate tax with a $3.5m exemption indexed to inflation.

They also expect — hope might be a better word — to co-operate with the president to pass the trade agreements with Panama, Colombia and South Korea over opposition from his own party.

That sort of thing will make the headlines. But what many foreign observers overlook is the battle that will be fought below the radar. Regulatory and administrative agencies are busily writing the regulations to implement the healthcare and financial reform laws, and to set new environmental rules. These agencies are firmly in the grip of Obama, and more regulation is an area in which the president ne regrette rien, to borrow from Edith Piaf.

Unable to get his very leftish appointees approved even by the then-overwhelmingly Democratic Senate, Obama has given Dr Donald Berwick — famous for his statement, “I am romantic about the NHS; I love it” — a recess appointment, no confirmation required. Elizabeth Warren and Carol Browner have been made special assistants to the president — no confirmation needed here either.

This trio is shaping the rules for the healthcare, financial services and energy industries. Those rules will reflect the president’s faith in greater regulation. Whether control of these agencies’ purse strings will enable the Republican majority in the House to derail the regulatory express remains to be seen.

We also found out last week that the Federal Reserve Board’s monetary policy committee will pump $600 billion of new cash into the economy in the next eight months. Ben Bernanke, the Fed chairman, feels that persistent high unemployment makes this necessary, and lots of excess capacity and a low level of inflation make this economic shot-in-the-arm possible. Significantly, he says that this cash injection will support share prices “and higher stock prices will boost consumer wealth ... [and] spur spending”. That sounds suspiciously like the famous “Greenspan put”, which signalled to investors that he would not allow the stock market to decline. Little wonder that share prices took off and reached the highest level since the collapse of Lehman Brothers two years ago.

Not everyone believes that Bernanke has got it right. Companies are already awash in idle cash, and mortgage rates are so low that lower still won’t do much to stimulate homebuying. More important, Bernanke’s relaxed attitude towards inflation flies in the face of soaring commodity prices, and rising food and clothes prices. But the Fed chairman says: “We are confident that we have the tools to unwind these policies at the appropriate time.” The sell-off of the dollar and the soaring price of gold suggest that investors do not share that confidence in his ability to unload his $3 trillion portfolio when the time comes without upsetting markets. That dollar drop, of course, will give a further fillip to already-growing exports.

We now also know that the jobs market is improving. Last month 159,000 new private-sector jobs were created, far offsetting the 8,000 cut in the government sector. Together with the 254,000 workers who dropped out of the labour force — the bad news — this was enough to stabilise the unemployment rate at 9.6%. Job losses in August and September turn out to be 100,000 fewer than originally reported. And both average hourly earnings and average weekly hours worked rose. Not the best of all possible worlds — it will take 250,000 new jobs every month to keep the unemployment rate where it is now — but a positive sign nevertheless.

The jobs report is only one bit of good — well, better — news. The service sector continues to grow, and the manufact- uring sector, buoyed by rising exports, is showing surprising strength. Consumers are unzipping their purses in response to bargain offers, and company profits are coming in better than expected.

All in all, not a bad week — except, of course, for Obama and the Democrats.

Irwin Stelzer is a business adviser and director of economic policy studies at the Hudson Institute

Quantum Computing Reaches for True Power

By JOHN MARKOFF NY TIMES
In 1981 the physicist Richard Feynman speculated about the possibility of “tiny computers obeying quantum mechanical laws.” He suggested that such a quantum computer might be the best way to simulate real-world quantum systems, a challenge that today is largely beyond the calculating power of even the fastest supercomputers.

Since then there has been sporadic progress in building this kind of computer. The experiments to date, however, have largely yielded only systems that seek to demonstrate that the principle is sound. They offer a tantalizing peek at the possibility of future supercomputing power, but only the slimmest results.

Recent progress, however, has renewed enthusiasm for finding avenues to build significantly more powerful quantum computers. Laboratory efforts in the United States and in Europe are under way using a number of technologies.

Significantly, I.B.M. has reconstituted what had recently been a relatively low-level research effort in quantum computing. I.B.M. is responding to advances made in the past year at Yale University and the University of California, Santa Barbara, that suggest the possibility of quantum computing based on standard microelectronics manufacturing technologies. Both groups layer a superconducting material, either rhenium or niobium, on a semiconductor surface, which when cooled to near absolute zero exhibits quantum behavior.

The company has assembled a large research group at its Thomas J. Watson Research Center in Yorktown Heights, N.Y., that includes alumni from the Santa Barbara and Yale laboratories and has now begun a five-year research project.

“I.B.M. is quite interested in taking up the physics which these other groups have been pioneering,” said David DiVincenzo, an I.B.M physicist and research manager.

Researchers at Santa Barbara and Yale also said that they expect to make further incremental progress in 2011 and in the next several years. At the most basic level, quantum computers are composed of quantum bits, or qubits, rather than the traditional bits that are the basic unit of digital computers. Classic computers are built with transistors that can be in either an “on” or an “off” state, representing either a 1 or a 0. A qubit, which can be constructed in different ways, can represent 1 and 0 states simultaneously. This quality is called superposition.

The potential power of quantum computing comes from the possibility of performing a mathematical operation on both states simultaneously. In a two-qubit system it would be possible to compute on four values at once, in a three-qubit system on eight at once, in a four-qubit system on 16, and so on. As the number of qubits increases, potential processing power increases exponentially.

There is, of course, a catch. The mere act of measuring or observing a qubit can strip it of its computing potential. So researchers have used quantum entanglement — in which particles are linked so that measuring a property of one instantly reveals information about the other, no matter how far apart the two particles are — to extract information. But creating and maintaining qubits in entangled states has been tremendously challenging.

“We’re at the stage of trying to develop these qubits in a way that would be like the integrated circuit that would allow you to make many of them at once,” said Rob Schoelkopf, a physicist who is leader of the Yale group. “In the next few years you’ll see operations on more qubits, but only a handful.”

The good news, he said, is that while the number of qubits is increasing only slowly, the precision with which the researchers are able to control quantum interactions has increased a thousandfold.

The Santa Barbara researchers said they believe they will essentially double the computational power of their quantum computers next year.

John Martinis, a physicist who is a member of the team, said, “We are currently designing a device with four qubits, and five resonators,” the standard microelectronic components that are used to force quantum entanglement. “If all goes well, we hope to increase this to eight qubits and nine resonators in a year or so.”

Two competing technological approaches are also being pursued. One approach involves building qubits from ions, or charged atomic particles, trapped in electromagnetic fields. Lasers are used to entangle the ions. To date, systems as large as eight qubits have been created using this method, and researchers believe that they have design ideas that will make much larger systems possible. Currently more than 20 university and corporate research laboratories are pursuing this design.

In June, researchers at Toshiba Research Europe and Cambridge University reported in Nature that they had fabricated light-emitting diodes coupled with a custom-formed quantum dot, which functioned as a light source for entangled photons. The researchers are now building more complex systems and say they can see a path to useful quantum computers.

A fourth technology has been developed by D-Wave Systems, a Canadian computer maker. D-Wave has built a system with more than 50 quantum bits, but it has been greeted skeptically by many researchers who believe that it has not proved true entanglement. Nevertheless, Hartmut Neven, an artificial-intelligence researcher at Google, said the company had received a proposal from D-Wave and NASA’s Jet Propulsion Laboratory to develop a quantum computing facility for Google next year based on the D-Wave technology.

Barack Obama, Phone Home

By FRANK RICH NY TIMES
AFTER his “shellacking,” President Obama had to do something. But who had the bright idea of scheduling his visit to India for right after this election? The Democrats’ failure to create jobs was at the heart of the shellacking. Nothing says “outsourcing” to the American public more succinctly than India. But the White House didn’t figure this out until the eve of Obama’s Friday departure, when it hastily rebranded his trip as a jobs mission. Perhaps the president should visit one of the Indian call centers policing Americans’ credit-card debts to feel our pain.

Optics matter. If Washington is tumbling into a political crisis as the recovery continues to lag, maybe the president shouldn’t get out of Dodge. If the White House couldn’t fill a 13,000-seat arena in blue Cleveland the weekend before the midterms, maybe it shouldn’t have sent the president there. If an administration charged with confronting a Great Recession knew that its nominee for secretary of the Treasury serially cut corners on his taxes, maybe it should have considered other options. Shoulda, woulda, coulda. Well, here we are.

True, the big things matter more than the optics. Unfortunately, they are a mess too.

You can’t win an election without a coherent message. Obama, despite his administration’s genuine achievements, didn’t have one. The good news — for him, if not necessarily a straitened country — is that the G.O.P. doesn’t have one either. This explains the seemingly irrational calculus of Tuesday’s exit polls. Voters gave Democrats and Republicans virtually identical favorability ratings while voting for the G.O.P. They gave Obama a slightly higher approval rating than either political party even as they punished him. This is a snapshot of a whiplashed country that (understandably) doesn’t know whose butt to kick first. It means that Obama can make a comeback, but only if he figures out what he has to come back from and where he has to go.

The president’s travails are not merely a “communications problem.” They’re also a governance problem — which makes them a gift to opponents who prefer no governance at all. You can’t govern if you can’t tell the country where you are taking it. The plot of Obama’s presidency has been harder to follow than “Inception.”

Health care reform remains at the root of this chaos. Obama has never explained why a second-tier priority for him in the 2008 campaign leapt to the top of his must-do list in March 2009. For much of the subsequent year spent fighting over it, he still failed to pick up the narrative thread. He delayed so long in specifying his own priorities for the bill that his opponents filled the vacuum for him, making fictions like “death panels” stick while he waited naïvely for bipartisanship to prevail. In 2010, Obama and most Democrats completed their transformation of a victory into a defeat by running away from their signature achievement altogether.

They couldn’t talk about their other feat — the stimulus, also poorly explained by the White House from the start — because the 3.3 million jobs it saved are dwarfed by the intractable unemployment rate. Nor could they brag stirringly about a financial regulatory reform effort that left too many devilish details unresolved, too many too-big-to-fail banks standing and nearly all the crash culprits unaccountable.

With a cupboard this bare, Blame Bush became the Democratic message by default. But a message that neither boasts of any achievements nor offers any specifics for the future is a political suicide note.

Blame Bush was also a part of the G.O.P. message this year. When Republican candidates weren’t trashing Obama, they routinely deplored the spending excesses of their own Bush-era Congress and ripped into the villainous Bush- Paulson TARP as if their leaders hadn’t all signed on to it. The rest of the G.O.P. message — typified by the “Pledge to America” peddled by John Boehner — was as incoherent as the Democrats’. Traditional Republican boilerplate — lower taxes, less spending, smaller government — was chanted louder and louder, to pander to the Tea Party rebels, but with zero specifics of how it might be carried out. The midterm strategy was appropriately labeled “80-20” by the House majority leader in-waiting Eric Cantor — 80 percent attacks on Democrats, 20 percent proposing a G.O.P. plan.

But there was no plan. Even in victory, most Republicans can’t explain exactly what they want to do besides cut taxes and repeal health care (a quixotic goal, given the president’s veto pen and the law’s more popular provisions). A riotous dissection of this empty agenda could be found on election night on MSNBC, where a Republican stalwart, Representative Marsha Blackburn of Tennessee, called for “across the board” spending cuts. Under relentless questioning from Chris Matthews, she exempted defense and entitlements from the ax, thereby eliminating some 85 percent of the federal budget from her fiscal diligence.

Pressed about Social Security and Medicare, Blackburn would only promise to have an “adult conversation” with Americans on the subject. That’s the new Republicanese for punting. The G.O.P. budget guru, Representative Paul Ryan of Wisconsin, also called for a “conversation” in a specifics-deficient op-ed manifesto in The Financial Times last week. Boehner and Mitch McConnell, in their postelection press conference, declared no fewer than 11 times that they were eager to “listen” to the American people. At the very least they are listening to a message guru like Frank Luntz.

Were they to listen to Americans, they’d learn that they favor budget cuts mainly in theory, not in fact. A Wall Street Journal/NBC News poll this summer found that three-quarters of Americans don’t want to cut federal aid to education — high on the hit list of most fiscal hawks — and more than 60 percent are opposed to raising the Social Security retirement age to 70. Even in the Republican-tilted electorate of last week, exit polls found that only 39 percent favored extending the Bush tax cuts to all Americans, including those making $250,000-plus. Yet it’s a full Bush tax cut extension that’s the entirety of the G.O.P. jobs program in 2010. This will end “uncertainty” among the wealthiest taxpayers, you see, and a gazillion jobs will trickle down magically from Jackson Hole.

Obama has a huge opening here — should he take it. He could call the Republicans’ bluff by forcing them to fill in their own blanks. He could start by offering them what they want, the full Bush tax cuts, in exchange for a single caveat: G.O.P. leaders would be required to stand before a big Glenn Beck-style chalkboard — on C-Span, or, for that matter, Fox News — and list, with dollar amounts, exactly which budget cuts would pay for them. Once they hit the first trillion — or even $100 billion — step back and let the “adult conversation” begin!

Better still, the president should open this bargaining session to the full spectrum of his opposition. As he said at his forlorn news conference on Wednesday, he is ready to consider policy ideas “whoever proposes them.” So why not cut to the chase and invite Congressional Tea Party heavyweights like Jim DeMint, Rand Paul and Michele Bachmann to the White House along with the official G.O.P. leadership? They will offer the specifics that Boehner and McConnell are too shy to divulge.

DeMint published a book last year detailing his view that Social Security be privatized to slow America’s descent into socialism. Paul can elaborate on his ideas for reducing defense spending and cutting back on drug law enforcement. Bachmann will explain her plans for weaning Americans off Medicare.

Maybe some of the big Tea Party ideas will be as popular as the Tea Partiers claim them to be. We won’t know until Congress tries to enact them. Nor will we know Obama’s true measure until he provides a coherent alternative of his own about how he intends to put Americans back to work and keep them in their homes. If he has such a plan, few, if any, Americans have any idea what it is.

To do this, he’ll have to break out of the White House bubble he lamented again last week. He can no longer limit interactions with actual working Americans to photo ops on factory floors or outsource them to a “Middle Class Task Force” led by Joe Biden. He must move beyond his Ivy League-Wall Street comfort zone to overhaul his economic team. If George Bush could announce Donald Rumsfeld’s replacement the day after his 2006 midterm thumping, why is the naming of Lawrence Summers’s much-needed successor receding into eternity?

In the 1946 midterms, the unpopular and error-prone rookie president Harry Truman, buffeted by a different set of economic dislocations, watched his party lose both chambers of Congress (including 54 seats in the House) to a G.O.P. that then moved steadily to the right in its determination to cut government spending and rip down the New Deal safety net. Two years after this Democratic wipeout, despite a hostile press and a grievously divided party, Truman roared back, in part by daring the Republican Congress to enact its reactionary plans. He won against all odds, as David McCullough writes in “Truman,” because “there was something in the American character that responded to a fighter.”

Surely there are dozens of supporters reassuring Obama with exactly this Truman scenario this weekend. But if he lacks the will to fight, he might as well just take his time and enjoy the sights of Mumbai.