Author Archives: Flight of the Conchords
“There is no future. There is no past. Do you see? Time is simultaneous, an intricately structured jewel that humans insist on viewing one edge at a time, when the whole design is visible in every facet.”
My mind often turns to the subject of politics, and who will win the presidency this year. Perhaps a better question is not who will occupy the oval office, but what challenges they will face. Either way, I want to attempt to divine the future of American politics, without all the media bias.
As things stand, the Republican nomination is a battle between Mitt Romney and Newt Gingrich, with Rick Santorum hoping Gingrich will choke on his own bile, and Ron Paul hoping someone will pay attention to him. Mitt Romney is generally considered the favorite, with a lead in Florida and Intrade odds of 88% for the nomination.
As I see it, Mitt Romney will win Florida next week. My guess on the margin is 8 points. If Ron Paul comes in third, Santorum will feel some compulsion to drop out. Either way, Santorum will exit the race sometime during the month of February, when it becomes apparent that he has no money and no hope. His actions at this point could very easily reshape the race. Endorsing Gingrich would potentially unite the conservative wing of the party, leading to an upset victory over Romney. But I suspect that Santorum will not endorse Gingrich. Like much of the establishment, Santorum understands that Gingrich’s baggage is a real threat to the party come November, and Santorum places a high value on party loyalty. A more likely outcome is Santorum endorsing Romney. This endorsement would effectively end the race, much more definitively than a Gingrich endorsement. This has the added benefit of uniting the party further in advance of the Convention and general election. In addition, this endorsement would give Santorum a much better shot at a cabinet position.
However, I think the most likely outcome of all is a non-endorsement. Santorum’s entire future in politics is directly tied to the success of his chosen candidate – if, for whatever reason, that chosen candidate fails to win the nomination, then his political career is completely finished. If he chooses no candidate, then he has a potential future in either a Gingrich or Romney administration, though at somewhat lower odds than if he had endorsed the eventual winner. Thus a non-endorsement is a risk averse strategy, and if there’s one group of people in this world who are risk averse, it’s politicians. I’d give a non-endorsement odds of about 50%, a Romney endorsement odds of 35%, and a Gingrich endorsement odds of 15%. This leaves 0% for Ron Paul – though the two agree on abortion, they disagree on literally every other issue, most notably Iran.
This non-endorsement will leave the race in a state of flux. Romney and Gingrich will trade primaries for a time, each collecting around 40% of the vote to Ron Paul’s 20%. But voters are smart people – even Republican voters. They recognize that Gingrich has far more liabilities than Romney, and that Gingrich polls about 10 points worse against Obama than Romney does. Republicans will have little choice but to bite their tongues, hold their noses, and vote for Romney. Romney will win the majority of contests in March, including most of the Super Tuesday delegates. By the end of March, Newt will read the writing on the wall and throw in the towel.
This leaves Ron Paul. Contrary to media reports, Ron Paul is not in the race to win delegates. He is in the race to remind people he exists. Had Ron Paul pulled off a win in Iowa, the media could no longer justify denying him the airtime he deserves. But that didn’t happen, so he’s back to being the thirteenth floor of American politics.
Ron Paul’s true strength is in his threat to run as a third party candidate. Much like Sarah Palin, good old Ron Paul has already decided against a run. But admitting to such removes all of his political power. Instead, he will hold the threat over the heads of Republican leaders, who are fully aware that his candidacy will hand the presidency to Obama. (Current polling: 45 Obama-33 Romney-18 Paul.) As I see it, Paul’s main goal is introducing Libertarian ideas to the party platform. This will include a pledge by Romney to audit the Federal Reserve, but will fall short of a commitment to the gold standard. Ironically, I can also see the teetotaling Romney introducing a pledge to end marijuana prohibition. The policy is only kept in place by vested interests (law enforcement and CIA), who would lose billions of dollars under legalization. These interests have been extremely effective at restraining Obama, a candidate who “inhaled frequently” yet has come down on medical marijuana patients harder than Bush ever could. But Romney is a man who lives and dies by balance sheets, not white papers. He understands the insanity of spending tens of billions of dollars on enforcement while forgoing tens of billions of dollars in potential tax revenue.
Thus, marijuana legalization will be included in a major party platform for the first time. Though controversial, this inclusion is critical to the party in two ways. First, it invigorates the youth vote, who, when paying attention to politics at all, usually shun the Republicans. Second, it recognizes the growing influence of libertarianism on the Republican Party. Social conservatism is a dying philosophy, as millions of Americans grow up realizing that discrimination against homosexuals and minorities is wrong. The millennial generation is the least religious one to date, with nearly a third claiming no religion. I fully expect to see religious teenagers become a minority group before 2020. This demographic shift will correspond to an ideological shift in the Republican Party towards social liberalism, while remaining economically conservative – perhaps much more so.
This leaves the question of a running mate. All of Romney’s primary opponents are completely unsuitable for the position. Gingrich is far too full of himself to serve beneath Romney, and far too hurt by the negative campaigning that derailed his campaign in Iowa. Santorum, aside from a history of questionable statements, has his own Google problem that won’t jibe with Romney’s highly polished image. Ron Paul is anathema to everything the party establishment believes. Rick Perry can’t get through a speech without forgetting his lines, falling asleep, sounding drunk, or all of the above. Jon Huntsman is a Romney clone. Michele Bachmann has crazy eyes. Herman Cain is a joke. Tim Pawlenty is literally a piece of white bread.
So who does this leave? Almost no one. The primary is, in many ways, an audition for the vice presidency, but none of the serious contenders seem to want to try out for the part. My conclusion is that Romney will choose Senator Marco Rubio of Florida. Rubio is a favorite of the Tea Party, boosting Romney’s credibility with the conservative and libertarian wings of the party. Rubio is Hispanic and was raised by Cuban immigrants, which should shift attention away from Romney’s strict immigration policy. And most importantly, Rubio hails from Florida, giving Romney a built-in advantage in America’s largest swing state.
For his part, Obama will stick with Joe Biden as his VP. Much of the elite liberal media has been calling for Biden and Hillary Clinton to trade jobs in 2012. I suspect these reporters are the ones who supported Clinton in 2008, and want to see her become president in 2016, just to prove that she would be more competent than Obama. This is a terrible and petty reason to propose such a change, and of course, no one in the White House takes the idea seriously.
With the platforms decided, the VP candidates nominated, and the primaries settled, only one thing remains: the general election. There exists one tremendous wild card: Americans Elect. AE will have an independent candidate on the ballot in all 50 states, and will determine that candidate through an internet primary. Like in all online votes, Ron Paul is favored to win. However, the AE primaries will occur in April, while Paul is still collecting delegates and threatening his own nonexistent run. Thus he will ask to be removed from consideration. This leaves a handful of serious candidates, including Buddy Roemer, Jon Huntsman, Bernie Sanders, and Dennis Kucinich. It’s hard to speculate on an online primary amongst undeclared candidates for a previously nonexistent party’s nomination. But I’d guess the nomination goes to either Huntsman or Roemer, who have the distinct advantage of actually running for president. Of the two, only Roemer would actually accept the nomination, so he becomes the candidate. Roemer would draw a few marginal votes from both parties, though more from Republicans. Kucinich, if nominated, could have a Nader effect by drawing votes from disillusioned Democrats. But this whole discussion reveals the fundamental flaw in the Americans Elect model: drawing its candidates from the same pool of politicians it hopes to reform. This is destined to fail, since asking one of these politicians to betray his own party’s nominee by running against him for president is akin to asking him to commit political suicide. To succeed, the candidate should be chosen from a list of ordinary, well-qualified Americans without a political or partisan history.
Anyway, without the starpower of Ron Paul, I don’t see a third party candidacy having much impact on the race. It will all come down to the state of the economy in November 2012. I foresee this being much better than it is today, with unemployment around 7.5%, housing starts up at least 10%, and the Dow approaching lifetime highs. There are, of course, two economic wildcards: the Chinese housing bubble and the Euro debt crisis. I’d say the odds of one of these crises reaching a boiling point in 2012 is about half. Sure, Greece will default, but this is a fait accompli so obvious that it’s already priced into every conceivable market. In an election year, the Fed is prepared to backstop the Euro at all costs, through its “Eurodollar swaps” – a fancy term for giving out unregulated loans.
The real game changer is China. But the Chinese have every incentive to keep the economic growth lie going. Under Obama, they have received appeasement of their currency overvaluation, not to mention a blind eye to the deplorable working conditions in Chinese factories. While I doubt Romney will do anything to champion the cause of human rights in China, he will happily start a trade war with China over their currency manipulation, a move that would be a minor annoyance to America, but a huge blow to China. Thus the charade of Chinese solvency continues until 2013, at which point all hell breaks loose and the recovery vanishes. But by that time, Obama has already won reelection. The final electoral vote tally is 284-264, with Obama taking all the Gore state, plus Ohio, Colorado, and New Hampshire. Governor Scott Walker is recalled in Wisconsin, replaced with some Democratic union lackey.
The Obama administration will have much less trouble passing legislation, with Democrats taking back a majority in the House, while forfeiting their meaningless majority in the Senate. While Nancy Pelosi is the minority leader today, I can see the Democrats handing the speakership off to the less-controversial Steny Hoyer. Mitch McConnell will take over as Senate majority leader.
Though the economic crisis will define the first year of Obama’s second term, the most important issue will ultimately be Iran. During the Obama presidency, Iran will finally develop and test a nuclear weapon, despite the covert war full of assassinations and computer worms that has raged for years. Israel will desperately push the United States to take out the Iranian threat with yet another war, though the complaint will fall on deaf ears. Indeed, the Obama administration will secretly applaud the theater parity that will, for the first time ever, define Israeli-Arab relations. The unpopular Mahmoud Ahmadinejad will lose the presidency in 2013.
Ultimately, Obama’s inaction in Iran, although a wise policy decision, will prove politically unpopular, given the amount of propaganda issued in favor of war. Republicans will reclaim the presidency in 2016, leaving Reagan as the only president in modern times to willfully hand the presidency to his chosen successor. Contrary to popular belief, the Republican Party has many rising stars, including Paul Ryan, Rob Portman, and Adam Putnam. But the candidate who will ultimately win the nomination, and the presidency, is none other than America’s favorite governor, Chris Christie, who will become the first obese president in over a century.
Time to invest in McDonald’s stock.
Welcome back to my lair! I’ve been very inactive, but I hope to write more as my life regains a little clarity.
I’ve been following the debt ceiling debate very closely over the last month, and I’ve been incredibly disappointed. The discussion has focused entirely on spending cuts and tax hikes, as if these are the only two ways to solve the problem. Some magic combination of tax hikes and spending cuts, or maybe just spending cuts, is expected to be a panacea, if only those damn politicians could reach an agreement! Everything is presented as a dichotomy: raise the ceiling or default. An economy crushing tax hike or nothing. Paying entitlements or ending Social Security and Medicare as we know it. The list goes on and on. This method of thinking is inherently flawed, and the lack of nuance will ensure that President Obama does not sign any deal until 11:59 PM on August 1.
But that’s not what I’m here to discuss. I’m here to propose the ultimate compromise – a plan that absolutely no one in the mainstream media has mentioned. A plan that would not raise taxes. A plan that would not cut spending. A plan that would avoid default. A plan that would keep America running beyond the 2012 elections, without even having to raise the debt ceiling one dime.
I’m talking about raiding the Social Security trust fund.
This is a measure that sounds, by all accounts, extreme. Until you understand the economics behind it, of course. The Social Security trust fund is a giant pot of treasury bonds – about $2.6 trillion worth. Those treasury bonds represent decades of surpluses – each year, Social Security collects about $100 billion more in taxes than it pays out in benefits. Instead of putting the extra cash in a pot, the cash is exchanged for treasury bonds, which go in the trust fund. The extra cash is then treated as any other tax revenue, and spent along with the general fund. So the precious trust fund that has become the third rail of American politics is nothing more than a stack of IOUs. But if you think about it, so is cash.
Here’s the key realization. The treasury bonds in the Social Security trust fund are both assets and liabilities. The economists in the room nod their heads, and the rest look up like lost puppies. What exactly does this mean?
-Assets: the bonds, while not money, represent a claim to real money, just like any other bond. Any treasury/municipal/corporate bond can be sold for its face value, discounted by the annual interest rate. Anything that can be exchanged for money is an asset.
-Liabilities: the bonds make up just over one sixth of that $14.3 trillion debt limit we’re approaching. They are money the government owes someone. That someone happens to be itself.
Let’s be realistic. When’s the last time your friends called you up for a night on the town, and you said “Gee, I’d love to, but I just owe myself too much money”? Never. Because owing yourself money doesn’t mean a damn thing in the practical sense. The money isn’t there. Poof! We spent it.
But if the money isn’t there, how can we steal it? One of two ways:
- Declare a default on the entire trust fund. This is an actual default, and as such, is bad. It would allow the government to issue $2.6 trillion in new treasuries, which at the current rate of deficit spending, would last about 2 years. No one is really affected, because the money has already been spent. Both the assets and liabilities on the SSTF balance sheet are erased with one stroke of the pencil.
- Sell the treasuries in the trust fund. This would not be a default, and as such, is good. By selling the treasuries to the market, the government would turn $2.6 trillion in IOUs into $2.6 trillion worth of actual money, which it could then use to fund some beautiful deficit spending, again for about two years. The downside of this is, while not an actual default, it still floods the market with bonds, pushing interest rates up. But interest rates are the lowest they’ve ever been, barring the depression era. They could use a nudge in the right direction – up. I’ll let Patrick explain this one.
So, if it’s this easy, why haven’t we done it before? First, because the seniors will crucify any politician that tries. Old people are generally stupid and greedy – their love of government handouts blinds them to the fact that the trust fund doesn’t mean a goddamn thing, and defaulting on it won’t change their benefits in any way. The second reason is a little more practical – interest bearing bonds are a better investment than plain cash. But when you realize that the government owns both sides of the balance sheet, the interest rates don’t mean a damn thing either. The interest rate is nothing more than an accounting trick – the government can declare the rate to be whatever it wants, as long as the surplus or the general fund can pay for it. Getting more money sounds awesome – unless you’re also the one paying it.
The third reason is the most practical of all – it’s illegal. Current law forbids Treasury from raiding the Social Security trust fund. (Federal pension funds weren’t so lucky, as Tim Geithner has been raiding them this exact same way since May.) Of course, current law can be changed, but thanks to fallacies 1 and 2, it’s a bit tricky.
As always, there’s a workaround. Public law 104-121 allows the Treasury to pay out Social Security benefits even in the event of a default. The Treasury is allowed to “redeem prior to maturity amounts in any Federal fund which are invested in public debt obligations… [for the purpose of] payment of benefits or administrative expenses.” So raiding the trust fund is OK, as long as the money is used to pay benefits. This is what will have to be done anyway in a few years, when benefits exceed revenues and the trust fund starts losing money. Did I say a few years? I meant now. Thanks for that FICA cut, Obama!
So, what this means is that the government can use the Social Security FICA revenue to pay its deficit, while selling treasuries from the trust fund to pay out benefits. Patrick? Thanks. This would cut the deficit by about $800 billion a year, meaning we would need to cut other spending or raise taxes by $400-500 billion. (Easy enough when spending is $3.7 trillion a year.) But it would also be a better band-aid, lasting 4 years instead of 2. And best of all, no legal wrangling. Every politician can get what they want: full payment of Medicare and Social Security benefits, no tax hikes, no debt ceiling increase. A dealmaker’s dream, if you ask me.
Welcome, one and all, to my new blog. I hope to turn these humble bits of binary data into a bastion of free speech, a virtual boudoir, a bildungsroman, a bulletin for boys bad in bed, a burlesque against high society, a broadcast of beauty, a bounty of briefings, and beyond. Too much to ask of a boolean bit? Perhaps. But if you enjoy reading these posts a fraction as much as I enjoy writing them, my mission is successful.
I anticipate several types of posts over the coming months. Campus commentary will issue scorn against various blunders and task forces, and on rare occasion, praise of the Administration. Political punditry will shed light on current events. Game notes will provide advice for aspiring pickup artists, as well as personal experiences, though nothing too personal. Speaking of personal, my personal reflections on miscellania will punctuate the rest. And when I’m so inclined, I’ll spam you with links.
So… why Flight of the Prince? Because the Flight of the Conchords domain was already taken at WordPress, Blogspot, and Tumblr? Well, yes. But it also reflects a few other things. It shows that I am a Prince, or at least have a high sense of self worth. It references my studies at what was once the highest-ranked school in America. It shows that I love trolling that student newspaper of record. And, most importantly, it references chapter 28 of Harry Potter and the Half-Blood Prince. In that chapter, Snape commits the awful crime of Dumbledorecide, then flees the school that gave him everything. That sums up my life pretty well.
In the meantime, I leave you with a word of warning. While I may be vitriolic, untraditional, and all sorts of nasty adjectives, I will do my best to keep the tone as civil and respectful as possible. I expect any readers or commenters to do the same. Threatening speech or racism will not be tolerated. When in doubt, refer to the IT policy. Reading it just might save you.
Oh, and Justice for Calvo.