Tell Me Why

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From a Los Angeles Times story posted online on Nov. 29, concerning the alleged terrorist Mohamed Osman Mohamud, who allegedly tried to assassinate hundreds of men, women, and children at a Christmas celebration in Portland, Oregon, for the alleged reason that he “hated Americans”:

“Officials said Mohamud was born in 1991 in Mogadishu, capital of Somalia, at the start of the African country's civil war.

“He and his parents, Mariam and Osman Barre, came to America when he was 5 as part of a diaspora that brought tens of thousands of Somali refugees to U.S. cities. About 6,500 Somalis are said to live in the Portland area.

“Few details were available about Mohamud's early years. It wasn't known when he became a naturalized American citizen. . . . In 2008, the family settled in the newly built Merlo Station Apartments [in Beaverton OR], which provides housing for low-income families.”

Yes, that’s it, isn’t it? Suddenly, and for no apparent reason, tens of thousands of people from a politically primitive area of the world refugee out to . . . where else? America. No one knows why.

Thousands of them “are said” to have congregated in Oregon, of all places. No one knows why. Of course, they take advantage of “housing for low-income families.” I would, too.

But a press release (May 29, 2008) hailing the existence of Merlo Station Apartments should be read by everyone who believes that unrestricted immigration is an aspect of free enterprise:

“Merlo Station Apartments received financing from a variety of sources, including a $6.5 million Low-Income Housing Tax Credit equity investment from Enterprise [Community Investment], $9.5 million in permanent financing from U.S. Bank, which includes $5.8 million in tax exempt bonds, a $3.6 million loan subsidized by Oregon Affordable Housing Tax Credits, $700,000 from the city of Beaverton and $2.2 million from Washington County Community Development through the federal HOME Investment Partnerships Program, along with permit fee waivers of $226,000 from the city of Beaverton. The project also received predevelopment grants from Washington County Community Development and Home Depot, as well as predevelopment loans from the Federal Home Loan Bank and the Community Housing Fund. TriMet provided a discount on the land price.”

All this do-gooding for 128 apartments.

But to return. Some or all of the Somalis, including the young man in question, became American citizens. No one knows when, or why, or how. “It wasn’t known.”

Is this a good thing?




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The Mice That Roared

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The noise from Europe is tremendous, deafening. Faced with the collapse of the system of state socialism to which Europeans of all classes once eagerly committed their wellbeing, both the man in the street and the mobs in the street now demand their rights. But their rights to what?

For some, it’s the right not to pay for their education. For others, it’s the right to retire at the age of 60 (if not earlier). For a union leader from Portugal, whose government has gone broke by borrowing money to cover the cost of welfare benefits and labor-friendly laws, it’s the right not to be “sent . . . into poverty and misery” by wage cuts to civil servants, cuts averaging an enormous . . . 5%.

The Europeans are not rebelling against the feckless, spendthrift state; they are rebelling in favor of it and of what they want it to do for them. Witness an AP interview with a Spanish man in the street who “supported the growing outrage over salary and pension cuts and wondered why billions were being thrown instead at governments and banks. ‘People have to fight for their rights,’ ” he said. In other words, it’s the people’s right to receive money from the government, without ever needing to “throw” any of that money back, even to keep outraged creditors from cutting off the supply of cash.

This counter-revolution of the entitled is a sad commentary on human life under the conditions of socialized education. The denizens of Europe angrily but dimly perceive that they have somehow been bamboozled by their governments. Yet the politicians, the labor unions, the Eurocrats, the teachers in all those schools that Americans have been taught to regard as superior to our own, even the socialized clergy, specialists in smarm, have always told the populace that government handouts were “rights.” That sounded good, and it was accordingly believed. It continues to be believed.

So now, if we can judge by all available news accounts, the inhabitants of Europe lack any ability to distinguish real rights — such as the right not to have one’s money taken by the state and “invested” in the solemn farce of a planned economy — from the supposed “right” to be supported by the same predatory state.

In short, Europeans have lost their ability to reason. But they didn’t lose it this November. They lost it a generation ago, when they were educated to believe that all would be well, if only they referred all decisions to the state. And the biggest joke is that this state they worship, both at its national shrines and among the ever-proliferating cubicles of Brussels, is staffed by people who were educated in the same way as the rest of the population. The Europeans are rebelling against themselves. Their banner is: “Nonsense corrupts, and absolute nonsense corrupts absolutely.”




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Tracks of a Lame Duck

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These are parlous times. The pesthouse known as the U.S. Congress is conducting a lame duck session still controlled by the party that lost decisively in the recent elections. The hapless citizens of this country face weeks of despair before the hope for change takes over. Two proposals before Congress illustrate first the despair, and then the hope.

The first is the innocuously named, little noticed Public Safety Employer-Employee Act, on which Senate Majority Leader Harry Reid (D-NV) has announced he will push for a cloture vote. Reid owes his victory in his race against Sharron Angle to Big Labor, which dumped untold millions into his campaign, millions that he used with lethal effect to destroy Angle’s credibility (with her assistance, to be honest). The bill he is pushing is the unions’ return payment.

Under this bill, the federal government would essentially nullify right-to-work laws, making it far easier for police and firefighters not just to unionize but also to get union-shop contracts (which require all employees to join the union, whether they like it or not). Worse, the bill would force all contract disputes into binding arbitration. The arbitrators would of course be under no obligation whatsoever to consider a city’s economic difficulties when rendering decisions. Labor’s pound of flesh would be taken from the hapless citizenry.

One can only hope that the Republicans can block this pernicious piece of crap.

Turning to a more hopey-changey topic, two estimable Republicans, Rep. Geoff Davis (KY) and Sen. Jim DeMint (SC), have introduced a brilliant piece of legislation. This bill has the appropriate name of the Regulations from the Executive in Need of Scrutiny (or “REINS”) Act. The REINS Act aims to rein in the regulatory agencies that function as independent, undemocratic, law-making entities, issuing an ever-growing number of regulations that automatically have the force of law.

Under the REINS Act, all new major regulations would have to be approved by a simple majority vote in the House and Senate, before being signed by the president. “Major” regulation is defined by the act as meaning either a regulation that is estimated by the Office of Information and Regulatory Affairs of the Office of Management and Budget to have an economic impact of $100 million or more, or a regulation that will cause a major increase in prices or have a significant impact on the economy.

This enactment would significantly change the rules of the game, which are now defined by the 1996 Congressional Review Act, under which any major regulatory ruling becomes law unless Congress passes a joint regulation opposing it and the president signs that resolution.

Considering the huge costs of the regulations churned out by the government’s regulatory agencies, and the burgeoning number of such agencies (with Obamacare creating 183 new entities, and the Dodd-Frank financial reform bill creating hundreds of new regulations, all on its own), the REINS Act is a beautiful thing — supposing that it can pass the next Congress.




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Revolt Against the Junk Touchers

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As libertarian populist moments go, this one has everything: crying kids, pissed-off passengers, grabby agents, genital encroachment, and an all-purpose bit of slang that became a slogan overnight.

“Don’t touch my junk”: one could hardly devise a more libertarian sentiment, at least in the modern register. It's a bit disappointing that it took federally-mandated molestation to finally get people to the point of saying, “Enough!”, but there is certainly some comfort in knowing that such a point still exists. While Americans on the whole have been prepared to trade many of their liberties for security; while they have with only mild grumbling stripped off shoes and belts, dumped out shampoo and baby formula, and tossed away fabric scissors and Zippo lighters, yet there remains something up with which they will not put: the touching of the aforementioned “junk.”

What’s more depressing is that this fight even needed to be fought. It’s hard to find anyone willing to defend the high-school hernia-check approach, and harder still if you exclude those people—i.e., Congressmen — who don’t have to be subject to such treatment. Many even among the TSA staffers find all this cupping and diddling “disgusting and morale breaking” — not really surprising when you think about a job experience that’s gone from mildly berating herds of travelers to trying to distinguish the right folds on the type of passenger that Southwest requires two tickets for.

With the high-volume holiday travel weekends coming up soon, it’s clear that this policy is going to have to change; mounting stress on both sides of the plexiglass will lead eventually to either a boycott among passengers, a walkout among TSA staff, or some combination of the two. My worry is that, with concern so squarely focused on crotches, any compromise that gets TSA hands back out of passenger pants will defuse the issue, leaving the wider import of “junk touching” — invasive searches not only of person, but also of property — unchallenged.

Certainly we all would prefer to complete our plane flights without submitting our genitals to inspection. But concentrating on that “junk” alone means that outrageous stories of “touching” such as the harassment of Jacob Appelbaum will continue to be underreported. Appelbaum, a spokesman for Wikileaks, was returning from international travel when he was pulled aside and had his laptop and cellphone seized without a warrant or charge of any sort. Whatever your thoughts on Wikileaks, it should be sobering that the government claims the right at re-entry checkpoints to carry out searches that would be blatantly unconstitutional in any other context.

If you fly internationally, your electronic devices and data are subject to government search and seizure. For many people, this would be a far more invasive procedure than even a full cavity search, yet as it lacks the immediacy of a uniformed stooge grabbing for the short and curlies, it is not perceived as a threat. Additionally, many people still seem to buy the line that if the government is seizing someone’s computer, then there must be some reason for it, rather than a petty grudge, a political vendetta, or merely a mistaken identity, whereas every person in line at the airport can see there is no reason for a TSA agent to fondle a terrified 3-year-old or drench a cancer survivor in his own urine.

The outpouring of TSA jokes (check the Twitter hashtag #TSApickuplines for one rich vein) shows both the opportunity and the danger of this moment. There is a very clear and attainable victory to be won by channeling populist anger and pushing back against the most obviously invasive practices of our security statists. But if in freeing ourselves physically from the government’s icy grip their more insidious abuses of privacy are not likewise exposed and repudiated, we will have gained nothing: they’ll still have us by the balls.



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Words from On High

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Thomas Babington Macaulay, the great classical liberal poet and historian, often spoke of the “insolence” of the British kings. At first it seems an odd expression. Almost always, insolence is associated with inferiors acting disrespectfully to superiors. Macaulay may well have intended an irony: to him, an arrogant public official was, simply by virtue of his arrogance, rendering himself inferior to the people over whom he wished to tyrannize.

But perhaps Macaulay was simply identifying a psychological characteristic that is obvious but needs to be made explicit: the empty pride of politicians, or any other people, who mistake their office for themselves.

Amid the multiform responses of President Obama to his disastrous defeat at the polls on Nov. 2 were some much trumpeted invitations to G.O.P. leaders to come to the White House for discussions with him. For a year after his inauguration he had refused all meaningful talks with them. Then he had staged televised “discussions” in which he treated them as if they were the backward students of a tetchy master. He pontificated, he filibustered, he rolled his eyes and pointed his finger; he did everything except respond to them as equals.

Then, flying back from his strangely pointless post-electoral trip to Asia, he told reporters that he was looking forward to talking things over with the Republicans. Well, isn’t that nice? But no, not the way he said it. He announced that when he sat “down with Mitch McConnell and John Boehner this week,” he expected “that there are [i.e., would be] a set of things that need to get done during the lame duck [session of Congress], and that they are not going to want to just obstruct, that they’re going to want to engage constructively. . . . Then we’re going to have a whole bunch of time next year for some serious philosophical debates. And they should welcome those debates next year.”

I tried to set that quotation up so it would be as syntactically and grammatically correct as possible. I realize that I did not succeed completely, but you have to understand how hard it is to do that with the oral statements of the current Great Communicator. Nevertheless, several things are clear.

First, Obama spoke blithely of meeting “this week,” which is something the Republicans had not agreed to do, and something that they never did agree to do, before Obama flew off on another flippin’ trip.

Second, he posed a false and invidious alternative: the Republicans would either “engage constructively” with him — in other words, agree substantially with his own program — or they would “just obstruct.” The posing of such false alternatives is Obama’s stock in trade. He does it constantly. He is incapable of imagining that anyone who dissents from (“obstructs”) his legislative ideals could possibly be working toward a “constructive” end.

Third, he told his opponents what their own ends should be: they should welcome wasting their time on “philosophical debates” with him.

Suppose you have a falling out with the president of the local PTA or the chairman of your condo association. Then there’s an election, and your side wins. How would you feel if he then announced to the world, without your agreement, the time when you were going to meet with him, publicly admonished you not to become obstructive, and stipulated the plans and even the emotions you should have. Would you say that was insolent? I would. And I might find some other adjectives for it, too.




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California's Other Deficit

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As the resurrected governor of California, Jerry Brown, readies himself to take control of the state for his third term, news of yet another deficit comes out of Sacramento.

The Legislative Analyst’s Office has just released a report that shows that the unemployment benefits fund is now running a $10.3 billion deficit. The causes are the ongoing recession in jobs (caused in turn primarily by California’s viciously anti-business climate) and the decision of last year's the state legislature to raise unemployment benefits. So far, the feds have loaned money to the state to cover the deficit, but next year they are set to charge California $362 million in interest for that loan. The Legislative Analyst’s Office has proposed that the state cut benefits — and raise unemployment taxes on business.

This is very problematic. The unemployment taxes paid by California businesses are already among the highest in the country, and jacking the rates up even further will only result in yet more businesses fleeing the state. In addition, Brown and the Democratic legislature — elected by a tsunami of public employee union money — are not likely to be willing to cut unemployment benefits.

No, it is obvious that Brown and his myrmidons will turn to Obama and beg for bail-outs. The rest of the country will be pressed to cover for the fiscal follies of California (as well as New York and Illinois, no doubt). My advice to the citizens of the other states is to tell the fiscal drunkards in California what the pub keeper in My Fair Lady told Eliza Doolittle’s drunken father when he asked for money: “Not a brass farthing!”




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Barbarians at the Gate

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Four things struck me particularly about this Wednesday's news from London, regarding the attack on Tory party headquarters by students, faculty, and unionists protesting the government's planned increase in college fees.

1. News reports emphasized, above everything else, the factoid that "only a minority" of the protestors who blockaded the building actually managed to do physical harm. The emphasis, in other words, was on the lack of responsibility of people who participate in a mob but don't personally do its dirty work. According to CNN, the protest was "largely peaceful." So was the storming of the Bastille, from a statistical point of view; most of the revolutionaries probably just milled around. The violence in London, says the AP, "appeared to be carried out by a small group as hundreds of others stood and watched." Enough said.

2. University education is not what it used to be. According to the Associated Press, the leader of a group of protesting faculty members opined that "the actions of a minority, out of 50,000 people, is regrettable." It is also regrettable that teachers can't make subjects and verbs agree.

3. Instead of viewing college fees as investments in their own future income, the protesting students viewed them as attempts to turn colleges into resorts of "the rich" (i.e., themselves, a few years down the road). Students also pictured the use of fees to cover Britain's immense education deficit as a case of "the previous generation passing on its debts to the next." The president of the National Union of Students said that his group "will not tolerate" that. These students demand, instead, that their own debts be passed on to the next generation. It should be noted that the costs of education would be reduced to a minimum if colleges would simply refuse to accept students who couldn't pass a rudimentary test in logic.

4. What is to keep such dramas of entitlement from happening in America, at that dreadful moment when we have to start paying our debts?




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The Fed's Easy Money

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The Federal Reserve has heeded calls for more “quantitative easing.” It will create still more high-powered (bank-reserve) money by buying more government bonds. That is a bad policy.

Perhaps untypically, the current recession is not of a sort that more easy money would remedy. A liquidity shortage is not the problem, and worries about actual deflation are curiously short-sighted. Already the banking system could multiply the stock of ordinary bank-account money on the basis of the stock of reserve money already greatly expanded by the Federal Reserve. That could and would happen if bankers and borrowers had confidence in business and regulatory conditions.

Two words used above need explaining. “Recession” means more here than just the downward phase of the business cycle. Even after the economy has hit bottom and has begun recovering, it is still in recession as long as subpar business conditions drag on. This is the popular use of the word. The word “untypically” draws a contrast between the current recession and most earlier ones. Those apparently did trace to a slowdown or reversal of money-supply growth.

Actually, too loose a Federal Reserve policy seems to have figured in the background of the current recession, along with artificial pro-home-ownership policies that contributed to a speculative housing bubble. The latter was a real factor — “real” in a sense contrasting with “monetary” and more fully explained below.

Now, notoriously, businesses and consumers are hanging onto money and near-moneys (cash and equivalents) instead of spending them at a rate that would restore prosperity. The velocity of money — the income to money-supply ratio — has fallen, whatever one plausibly counts as money. This demand to hold money has strengthened only passively, however. Individuals and companies, by and large, are not deliberately restraining their expenditures to build up cash balances they consider inadequate. Instead, they are postponing expenditures for lack of attractive opportunities. Meanwhile, they are left holding cash and equivalents by default.

These sources of uncertainty are real, not just monetary. Real factors explain why some countries are economically advanced and others economically backward.

But why this postponement? Worry about how long a recession will drag on is an old story.  Now, moreover, uncertainty prevails about how government policies will raise business costs and erode job and profit prospects. Health care, financial regulation, cap and trade, various “green” pressures and subsidies, taxes, deficits and debt, widespread economic ignorance, and a perceived hostility toward big business are causes for concern. One hears about this crippling uncertainty from all sides (as from business executives interviewed by Charles Gasparino).

These sources of uncertainty are real, not just monetary. Real factors explain why some countries are economically advanced and others economically backward. These real factors determining production and growth include more than just material ones such as labor supplies and skills, natural resources, and technology. They also include entrepreneurial alertness, competitiveness, mobility of labor and other resources among employments and places, taxes and regulations, and various other institutions and policies that promote or impair intersectoral and intertemporal economic coordination. Real factors determine the “natural rate of unemployment,” the frictional unemployment that persists even during prosperity.

Now, a sound old tenet of monetarism — the monetarism of Warburton, Friedman and Schwartz, Brunner and Meltzer, and others — is that monetary policy cannot remedy real impediments to prosperity and growth (except perhaps only temporarily and unsatisfactorily, as noted below). Far from celebrating any wondrous potentials of monetary policy, monetarism warns about the damage that bad policy can cause and often has caused. It warns against destructive stop-and-go oscillation between fighting unemployment and (belatedly) fighting inflation. Monetary policy should concentrate steadily on what it can do, on preserving the value of money.

Admittedly, a sufficiently expansive monetary policy could offset a fallen velocity of money, even of the present fear-based passive sort. People’s willingness to accept and just hold money is not unlimited. The Federal Reserve could make the economy so awash with money that people would spend it even though they worried about real conditions and because they feared inflation. Banks would activate their ample idle reserves, so creating more money.

The equivalent of Milton Friedman’s metaphor of helicopters dropping bale upon bale of freshly printed money could reinforce the great potential for money creation and spending expansion that already exists. But how unsatisfactorily! More monetary expansion would threaten severe price inflation, causing distortions and discoordinations of its own. At worst the dollar would collapse as foreign central banks unloaded their great holdings of US bonds.

Finding the proper dosage and timing of aggressive monetary expansion would be a hopeless challenge. Already it is hard to see how the Federal Reserve might find an “exit strategy” from its swollen balance sheet.

In summary, easy money (like fiscal “stimulus,” by the way) is no cure for “real” defects of economic structure and policy. Bewailing the lack of jobs, though amply justified, is no diagnosis and no remedy. Lack of a politically easy way to undo bad policies is no excuse for making things worse.




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The Limits of Victory

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American voters rebuked the president’s impatient leaps toward statism by ending his party’s control over the House of Representatives. This is important: Obama’s ability to force ill-conceived bills into law is gone.

Yet voters showed restraint, even in their rebuke. Some of the candidates who had been the most strident critics of the president did not win their elections.

Much attention was paid to the race for the U.S. Senate seat in Delaware, a seat left open when Joe Biden became vice president. Biden had tried to stage-manage events so that his son could take over in a few years. Roughly stated, the scheme was to arrange the election of an ancient and amiable Republican “moderate,” who would keep the senate seat warm for Biden fils. Local voters, sensing and resenting the scheme, booted the seat-warmer and chose one Christine O’Donnell in the GOP primary. If nothing else, she and her supporters should be applauded for foiling Biden’s dynastic ambitions.

Statist media types insisted that Ms. O’Donnell was a “face of the Tea Party” movement for the 2010 elections, but this was an exaggeration. Although she did have the support of one large Tea Party group, Rush Limbaugh, and (relatively late in the process) Sarah Palin, O’Donnell never seemed comfortable making the case for limited government. In fact, she never seemed comfortable at all. She stumbled into several statements that made her sound like an inexperienced religious fundamentalist.

O’Donnell is a particular sort, fairly common on the coasts and in college towns. She’s a contrarian who lives by the feud with “liberals” and establishment elites. Rather than ignoring their barbs, she engages statists on their ground — bickering over trivia rather than making affirmative arguments. Example: during a critical televised debate, O’Donnell artlessly (though correctly) made the point that the phrase “separation of church and state” does not appear in the constitution. Her opponent, an effective rhetorical mechanic, was able to make her precision sound like small-mindedness. He won the election easily.

When the unions figure out that their precious pension systems are underfunded (nay, bankrupt), they’re going to march up and down the Strip with Harry’s head on a pike.

Much attention was also paid to the race for the U.S. Senate seat held by shady cretin Harry Reid. Sharron Angle, another “face of the Tea Party” and a former state legislator from Reno, mounted a credible challenge to the sitting Senate majority leader. In front of smaller groups (including FreedomFest last July), Angle made an effective case for limited government. But, like O’Donnell, she wasn’t very smooth in front of cameras.

More importantly, Reid counted on his sleazy Big Labor masters in the Las Vegas area to mobilize the minions. On election night, a talking head on one of the cable television channels boasted that Labor “really flexed its muscles” for Reid. Asked which unions, particularly, got out the vote, he said, “SEIU, AFSCME, and, uh, the AFL-CIO.” In other words, two government-employee unions and an umbrella organization that includes . . . government-employee unions.

Reid’s retention of his seat (and his party’s retention of a narrow majority in the Senate) was a triumph of sullen government clerks. When these people figure out that their precious pension systems are underfunded (nay, bankrupt), they’re going to march up and down the Strip with Harry’s head on a pike.

The real face of the Tea Party, an election-eve winner who will likely make life difficult for Reid and others, is Kentucky’s senator-elect Rand Paul. The son of Texas Rep. Ron Paul (and, like his father, a medical doctor), the new Gentleman from Kentucky has already been battle tested. During his campaign, he stuck to his critique of the “public accommodations” language in the Civil Rights Act. This was a courageous and coherent criticism of a troubling section of black-letter law. Paul made it and won. He should do a lot to keep the statists of both major parties honest.

But the key to keeping the statists in check will be the House of Representatives, not the Senate. And the new speaker of the house will be Ohio Rep. John Boehner. Not known as a small-government idealist, the new speaker did make some heartening comments in the hours after the GOP reclaimed the House. He restated his opinion that Obamacare is a “monstrosity” that he would like to overturn.

The manner in which he tries to do this will be important. The whole law needs to be revoked and rescinded. Parliamentary compromises and budgetary tricks aimed at trimming the edges will not be enough to save the country from the mischief that this perverse “reform” is already causing.

Lastly, it’s worth noting the president’s press conference on the day after the midterm elections. Living up to his burgeoning reputation for being thin-skinned and petulant, he hemmed and hawed on the matter of his role in his party’s congressional losses: “Some election nights are more fun than others. . . . We lost track of the ways we connected with the folks who got us here in the first place. . . . I've got to do a better job, like everybody else in Washington.”

In moments of adversity, Obama’s rhetorical skills vanish. He sounds and looks like a man who’s been graded on a curve his whole life.

Sixteen years earlier, in similar circumstances, Bill Clinton called a press conference and took responsibility more directly and emphatically for his party’s losses. After that press conference, he changed the course of his presidency, proceeding pragmatically through a reelection and second term. But Barack Obama is no Bill Clinton.




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A Nice Surprise

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Unnoticed by the mainstream media in the flurry of election coverage was a quiet victory in Arizona. There voters approved Proposition 107, which bans racial quotas and other preferences by state government, Arizona thus becomes the fifth state to do so (after California, Michigan, Nebraska, and Washington).

And the vote wasn’t even close — Prop. 107 got nearly 60% of the vote.

I would have hoped that by now every state would have outlawed reverse discrimination (more appropriately characterized as “revenge quotas”). But I try to savor victories as they come.




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