The Mitchell Report

In Case You Were Wondering

Dear Friends,

In case you were wondering what happened to The Mitchell Report, rest assured that it is alive and well. The only change is that TMR is no longer "posting" on this site, but if you'd like to become a regular reader, send an e-mail with your request, some background information, including where you live, what you do, and anything else that seems relevant. We like to know who are readers are, and what they care about.

Many thanks

RGM

What To Do Between Now and Tuesday?

The secret of teaching is to appear to have known all your life what you learned this afternoon.

Anonymous

Dear Friends,

For a great many Americans, the next 72 hours will be agonizingly long ones, filled with anxiety and fear, suffused with doubt or gloom, and characterized by epic uncertainty. 

And the challenge is: What to do between now and Tuesday?

Here's some background that can help you while away those harrowing hours -- and -- prepare for a celebrity role at the office on Monday or at your Election Night party. Or anywhere in between. And as the anonymous quote suggests, with just a little preparation you can appear to have had this knowledge for sometime.

And on that point, I'll acknowledge indebtedness to a host of very smart teachers -- political scientists, pollsters, pundits, and reporters from whom I have learned much in the lead-up to this election -- and the three institutions with whom they are associated:

o The American Enterprise Institute's Election Watch series, featuring Michael Barone, Karlyn Bowman, John Fortier, and Norman Ornstein -- the longest-running, most informative and entertaining political analysis program in town.

o A Brookings Institution and Princeton University Center for the Study of Democratic Politics project, co-directed by Brookings' Senior Fellow, Thomas Mann and Princeton professor, Larry Bartels, featuring a dozen of the nation's most distinguished political scientists and journalists who combine rigorous social science analysis and thoughtful empirical observations to make sense out of the American electoral process.

o The Pew Research Center, the preeminent polling organization whose CEO, Andrew Kohut, and associates, Scott Keeter and John Green, consistently generate the most accurate data and keen analysis.

And now, here are five ways to think about Election 2008.

o Follow the Money.

Welcome to the first $1,000,000,000 presidential campaign. Yes, that's “billion.” 

As of October 15th, the Obama and McCain Campaigns had raised $980 million -- $640 by the Obama camp and $340 by the McCain organization. 

To put this in perspective, John McCain has raised more money than John Kerry in 2004 and only slightly less than George Bush. By contrast, Obama will probably have raised more than Bush and Kerry combined by the time it's all over.

Obama's donor list of 3.1 million individuals is more than twice that of any other political candidate, and is more than the donor lists of the Democratic and Republican National Committees. 

“He's practically created a party of his own,” according to Anthony Corrado, Colby College professor and one the of nation's leading experts on campaign finance, to whom TMR is indebted for this data.

$310 million of Obama's money has come from donors who gave $200 or less and $215 million from those who gave $1000 or more. By comparison, George W. Bush raised $147 million from the $1000 + donors in 2004.

o Follow White Catholics.

“There is a long history of white Catholic voters being swing voters. If one looks at polling data over the last 20 years, white Catholics do indeed move from one party to another depending on the candidate and the issues, and they almost always end up on the winning side. A lot of analysts look at white Catholics as a key barometer of where the election is going,” according to John Green, Senior Fellow in Religion and American Politics at Pew Forum on Religion & Public Life.

William Galston, Brookings Senior Fellow and former Clinton White House domestic policy adviser, puts it quite simply: “As white Catholics go, so goes the election.”

Pew's polling data showed John McCain with a 13-point edge over Obama with White/non-Hispanic Catholics in late September; by late October, the lead had shifted dramatically giving Obama an 8-point lead. And by comparison, this was a group that supported George W. Bush in 2004 over his Catholic opponent, John Kerry.

A shift of this magnitude stems from multiple contributing factors, but one principal assumption is that White Catholics, whom Galston describes as “cross-pressured” between economic and social issues in their voting behavior, are more concerned with the economy than with abortion or same-sex marriage in 2008. And of the three states where gay marriage initiatives are on the ballot -- Arizona, Florida, and California -- only in Florida might it have any influence.

 o Follow Young Voters.

For years, young voters were the biggest “no-show” cohort in every national election, but that changed substantially in the 2004, according to the University of Maryland's youth voter research institute. 

21 million 18-29 year-olds voted in 2004, an increase of 4.5 million from the election of 2000. And turnout of eligible young voters increased by 9 percentage points, to 51.6 percent, up from 42.3 percent in 2000. 

In the 2006 midterm elections, turnout among 18 to 29 year-olds increased again, when they voted for Democratic candidates over Republicans in races for the House of Representatives (58% vs. 38%), the Senate (60% vs. 33%) and governor (55% vs. 34%).

There is no good news in these data for Republicans for next Tuesday's election.

According to Pew Center's data, the percentage of voters ages 18 to 29 identifying with the Democratic Party has increased from 48% in 2004 to 61% this year. Democrats have a nearly two-to-one margin over Republicans -- 61% to 32% -- up from a seven-point advantage in 2004. And they show a preference for Obama v. McCain by almost 2 to 1 -- 65% to 33%.

Pew data also shows that voters in the 30 to 49 year old cohort have shifted considerably since 2004, with nearly half (49%) identifying with or leaning toward the Democratic Party, up from 43% in 2004. This six-point advantage is a twelve-point shift from the comparable stage in 2004 when Republicans had a six-point advantage.

o Follow the Swing States.

First, which states “swing”? And what makes them “swing”?

Most experts agree that the “swing” or “battleground” states in 2008 are: Colorado, Florida, Iowa, Indiana, Missouri, Nevada, North Carolina, Ohio, Pennsylvania, and Virginia. Others would add Minnesota, New Mexico, and even Georgia.

What changed? And what makes them “in play” this year?

Consider this: 

o according to Pew data from 28,000 interviews, there has been a marked shift in voter identification this year -- 38% identify themselves as Democrats, 34% as Independents, and 28% as Republicans. In 2004, 35% were Democrats, 33% were Republicans, and 32% were Independents; 

o further, Pew shows that in nearly all battleground states, Democrats now hold a several point advantage over Republicans, and in some cases a double digit lead -- 5 points in Virginia, which was evenly split in 2004; 9 points in Ohio, where Democrats had just a two point edge in 2004; 

o the powerful combination of four factors that are causing shifts in nearly every demographic cohort and a growing number of states -- the credit crisis and the financial meltdown, the discrepancy in the performance of the two campaigns and the two presidential candidates, Sarah Palin, and the Obama National Bank.

o Pirate Ship v. Tight Ship

At a Brookings/Princeton seminar this week on the role of money, mobilization, and advertising in the 2008 election, Politico.com's, Mike Allen, reported that a favorite metaphor for the McCain campaign among the political cognoscenti is “pirate ship,” descriptive of its rollicking, swashbuckling character.

By contrast, there is the Obama campaign, which almost every seasoned observer rates as the most well-managed, adult, and consistently smart venture in the history of the business -- the prototypical 'tight ship.'

In fairness, much of this owes to the howling storm into which the McCain ship has had to sail -- the combination of an historically unpopular president of the same party, the Obama juggernaut, the economic earthquake, and whatever other factors have created the significant numerical advantage for generic Democrats this year.

Any analysis of the McCain campaign must begin with those harsh realities, and the recognition that if circumstances had been different, so, too, might have been the trajectory of the campaigns.

But those factors don't explain the brilliance of the Obama team's strategy and its nearly flawless execution, nor do they explain away the carelessness or the profound lability of John McCain's candidacy.

Irrespective of one's political preference, three factors have conspired in the final phase of the campaign -- those few weeks in which a close race appears to have become a potentially toxic election for Republicans of every stripe: 

o vice presidential selection: voters appear to have judged Obama's decision as thoughtful, measured, and responsible; in contrast, McCain's was viewed as impulsive and irresponsible;

o debate performance: Obama was seen as disciplined, unruffled, and “presidential” in demeanor; and by contrast, McCain's peripatetic and sometimes dismissive manner made him seem smaller, older, and too often angry;

o response to the economic upheaval: McCain's “loose cannon” response reflected poorly on his governing style and political judgment; Obama surrounded himself with the 'best and the brightest' in economic and financial matters, took their counsel, and did not make the mistake of trying to interpose himself into an ongoing political and policy debate.

There's more, certainly, and people of good judgment and goodwill will weave different narratives about this most historic of American elections.

But the goal of this TMR is to provide readers with a selection of “talking points” to enhance their performance in “spin rooms” around the country.

And that brings us to two final directives: first, remember to “fall back” tonight because daylight savings has run its course; and second, vote your heart out on Tuesday, unless, of course, you've already done that.  

On the other hand, if you've already voted, try again!

 

What Do We Do Now?

“If I am elected, I don't want to wake up on the morning of November 9 and have to ask myself, 'What in the world do I do now?'”

JFK Note to Clark Clifford, August 1960

Dear Friends,

For all but a few hundred Americans, the long political contest ends -- presumably -- one week from tonight (pause for applause.)

But for those few hundred, new challenges and two important numbers -- 77 and 100 -- present themselves the very next morning.

77: the time until Inauguration Day 2009, a fleeting presidential transition period of eleven weeks.

100: as in, "The First 100 Days,” the political trope that comes to us from FDR's presidency in the early months of 1933.

No matter which ticket prevails, the new President-elect won't face JFK's predicament. That's because each campaign has operational teams focused on these 177 days: the Obama-Biden group is led by former Clinton chief-of-staff and think tank CEO John Podesta; and the McCain-Palin team is headed up by former Nixon and Ford presidential assistant and lobbying firm CEO William Timmons.

Both teams will benefit from the considerable contributions of scores of scholars and practitioners who have collaborated on the transition and launch phases of a half-century of presidencies, and whose findings and recommendations provide a range of thoughtful options about how best to manage these two critical phases of a new presidency.

These contributors include the Center for American Progress, Center for Excellence in Government, Center for Congressional and Presidential Studies, National Academy of Public Administration, Partnership for Public Service -- and John Hamre, former Deputy Secretary of Defense and now CEO at Center for Strategic and International Studies, the American Enterprise Institute's renowned political scholar, Norman Ornstein, and many academics, including American University's, Dr. James Thurber, Colby College professor Calvin McKenzie, and others.

Among the most seasoned of these experts is Stephen Hess, senior fellow emeritus at the Brookings Institution, who has just written a remarkably readable, eminently utilitarian, and uncommonly unpretentious book (for Washington DC think tanks!) -- “What Do We Do Now: A Workbook For The President-Elect” -- from which the theme of this TMR and the JFK quotation are taken.

Hess has been engaged in every presidential transition since Eisenhower-to-Kennedy, and has been a member of two blue-ribbon panels convened to make recommendations for Reagan-to-Bush and Clinton-to-Bush.

And as the country prepares for the most important presidential transition since Hoover-to-Roosevelt or Buchanan-to-Lincoln, “What Do We Do Now” is a book every serious political junkie ought to own.

Though Hess may blanch at the comparison, he's created a kind of “Cliff Notes” or “Transitions for Dummies.” He makes serious subject matter accessible -- easy but never breezy -- and in doing so, he's given interested observers an opportunity to evaluate this presidential transition, just like symphony-goers who take musical scores to concerts to know whether the conductor and the orchestra got it right.

Thanks to the scholarship of Hess and scores of other “transitionists”, here's TMR's take on what to look and listen for -- seven not-so-secret thoughts about doing it right.

o First, quickly assemble the White House staff.

The highest priority is to assemble the White House staff, including chief of staff, personnel director, counsel, press secretary, Congressional relations chief, even a speechwriter or two.

These people make the trains run on time, they're essential for the cabinet vetting process, they're there to deal with Congress, they give the new administration one voice, and they make an important statement about who's in charge -- because a new president doesn't need cabinet appointees freelancing on policy or politics.

They are the first line of offense and defense.

o Second, identify the key national security, homeland security, and economic security nominees ASAP.

It is critical to bring on board the key actors whose jobs are central to the Constitutional commitment to “insure domestic Tranquility, provide for the common defence.”

This would include cabinet secretaries at Defense, Homeland Security, State, Treasury, and Justice. But also deputy and secondary posts in those agencies, as well as those responsible for counterterrorism and national emergency management, for example.

o Third, keep your friends close and your enemies closer.

Bring Congress into the act from the outset -- the leadership of both parties, key committee chairs, and Members who are known to have a vested interest in, knowledge of, and passion for the issues that will be central to those first 100 days.

It is always wise to consult with Congress, but it's too often given perfunctory attention and subsumed by the agenda of the new Administration. However, 2008 is not just another year and much is expected from the 44th presidency, thanks largely to the serial missteps of the 43rd.

With two wars being waged in the Middle East, a tottering national and global economy, and political instability fomenting in virtually every continent, reaching across the aisle and up Pennsylvania Avenue are not just figures of speech, they are essential steps in regaining our national strength and our international respect and prestige.

o Fourth, “Beware the Jubjub bird, and shun the frumious Bandersnatch!”

We turn to Lewis Carroll's, Jabberwocky, in search of a metaphor that will capture the importance of avoiding the avoidable errors and pitfalls -- the ones that use up precious political capital and spill blood in the waters.

For example, if you have in mind an Attorney General nominee who has broken the law -- speeding tickets are permissible, but tax liens are not -- take a pass, even if he is “best of class.”

Or, if you've promised to shut down Guantanamo, first figure out what legal and morally defensible options exist to relocate the detainees. On the other hand, if you made this a major campaign commitment, and the press presses you on this in the transition, have a good look in the mirror.

It's probably a good idea to resist the temptation to give the First Lady a substantive policy assignment, even if she is more qualified than anyone on the staff or in the cabinet.

o Fifth, be careful about bipartisanship.

Having just said that “reaching across the aisle and up Pennsylvania Avenue” is essential to the promotion of the national interest, this is a cautionary note about how best to accomplish those objectives.

It's about the much celebrated and somewhat seductive notion of bipartisan cabinet appointments.

Here are three things to bear in mind when conversation turns to the benefits of a bipartisan cabinet, and when comparison is made to JFK's appointments of Douglas Dillon at Treasury, Robert McNamara at Defense, and the offer to “Wise Man” Robert Lovett to take his choice of State, Defense, Treasury or Justice.

First, bipartisanship ain't what it used to be, and the road back is long and rocky.

Second, if the best choice for Treasury, Homeland Security, Interior, or State is a member of the other party, fine. But if the choice is being made primarily in the service of bipartisanship, that's a miscalculation of priorities.

Third, the tension and conflict in Washington DC isn't simply Republicans versus Democrats -- although there's plenty of that to go around -- it's about which branch of government has the power -- Congress or the Executive, Article I or Article II. To assume that a bipartisan cabinet will soften those R v. D battles is errant logic; and it's equally important to understand that it will be of no help with the more contentious schism between Congress and the Administration.

Additionally, it's important to acknowledge that the moment a member of the opposition party becomes a cabinet officer, it is assumed that she or he is “carrying water” for the President, so the asset becomes a limited liability or worse.

The best form of bipartisanship is regular consultation with members of both parties and between both branches of government. And in 2008, sadly, that is a very steep challenge. It's doable with great and sustained effort, but if the expectation is that the opposition will be grateful, remember those roseate predictions about American soldiers being greeted as liberators by Iraqis.

o Sixth, ignore siren calls.

There will be innumerable invitations to leap into the breach to become a “kind-of” President before Inauguration Day.

Ignore them.

They will come daily from the political press, a little less frequently from constituencies who aided in the electoral process, self-serving bundler-donors, and potentially from the sitting President who may invoke the notion that it is important for the President and President-elect to act together on questions of national security.

Ignore them and him.

Wait your turn. Take a cue from Lincoln in 1860 and FDR in 1932, both of whom (rightly) determined that they would “take office” when they “took office,” and not before -- much to the dismay and anger of Presidents Buchanan and Hoover.

o Seventh, “Break glass only in case of emergency.”

You've seen those safety warnings on trains, in buildings, and elsewhere. It's good advice for Presidents, and you could say that it's an analog to the West African proverb that President Theodore Roosevelt often quoted -- “Speak softly and carry a big stick.”

It's advice that could have made a big difference in the presidency of George W. Bush and his viceroy, Dick Cheney, lessons the next president must not ignore.

If the polls are accurate, Barack Obama may be on his way to an historically significant Electoral College and popular vote victory -- equal in impact if not necessarily electoral votes to Ronald Reagan's 1980 sweep of Jimmy Carter by a margin of 489 to 49 or to FDR's galloping defeat of Herbert Hoover in 1932 by an almost identical margin of 472 to 59.

If so, President-elect Obama will be well advised to be magnanimous in victory, respectful of those who voted for his opponent and members of Congress who lost their seats, and to demonstrate how resolve and humility can be partners in political leadership.

If by some improbable set of circumstances, the election of 2008 turns out like 1948 -- “Dewey Wins” -- then John McCain will every reason to be humble, respectful, and magnanimous.

No matter the outcome, the President-elect must be mindful that this election has been watched as closely in countries around the globe as at home, and to understand that their great hope -- as it is ours -- is that E Pluribus Unum is both this nation's enduring mission statement as well as a new commitment to global cooperation in the 21st century.

Ah, September: Moral Hazard Month

Ah, September: Moral Hazard Month
September 19, 2008
 
 
“Moral hazard” is the term economists use to describe the fact that insurance can change the behavior of the person being insured . . . The savings-and-loan crisis of the nineteen-eighties was created, in large part, by the fact that the federal government insured savings deposits of up to a hundred thousand dollars, and so the newly deregulated S. & L’.s made far riskier investments than they would have otherwise. .
The Moral Hazard Myth
Malcolm Gladwell
New Yorker Magazine
8/29/05
 
 
Dear Friends,
 
September is “Back to School Month,” and this one offers a teachable moment for Americans of all ages about a concept known as “moral hazard,” which is a slippery little devil, as we shall see.
 
It’s taken me a long time to get the gist of it, and the truth is every time I hear the term used by a commentator or policy wonk, I have to reexplain it to myself.
 
Initially, I thought it described a powerful temptation that tested one’s moral mettle -- e.g., finding a bag full of cash in your office building elevator on the day your job was eliminated; playing a round of golf and filling out your scorecard a la Bill Clinton; or being a comparatively new state officeholder and getting a call from someone you’d met once asking if you’d be his vice presidential running mate.
 
Things you know you shouldn’t do, but which are tempting -- and -- difficult to account for -- morally, that is.
 
The dictionary wasn’t helpful because every reference was about insurance -- “the loss to an insurance company resulting from possible lack of prudence or honesty on the part of policyholder.” Not to put too fine a point on it, but I’ve never used “moral” and “insurance” in the same sentence or conversation, so I was still confused.
 
But after consulting a couple friends in the think tank world, I learned that the term is used in the world of politics and public policy to characterize public policy decisions that may encourage future risky and costly private behavior for which taxpayers could be responsible.
 
Or in slightly more cynical terms, situations in which enormous and costly errors are made by the wealthy and powerful and for which little folks are on the hook.
 
Okay.
 
Take September, for example.
 
Fannie Mae and Freddie Mac; AIG, Lehman Brothers, and Merrill Lynch; and just yesterday, news that the powers-that-be are considering putting together the largest financial bailout in American history.
 
And the month isn’t over.
 
Five financial giants at the heart of America’s capital markets, all headed for extinction. Wall Street reeling, stock exchanges around the globe experiencing huge losses, investors small and large wondering whether the country is in freefall, and a President with virtually no political capital and personal credibility to help soothe the country’s jangled nerves.
 
So it has fallen to Treasury Secretary, Hank Paulson and Federal Reserve Chairman, Ben Bernanke to take the lead on a scenario that even Hollywood wouldn’t have conjured up.
 
Lehman Brothers’ CEO, Richard Fuld, had good reason to believe that the government might come to his firm’s rescue, given its bailout of Fannie Mae, Freddie Mac, and the salvage operation of Long Term Capital Management, which was organized by the New York Federal Reserve Bank a decade ago.
 
Turns out he guessed wrong. Who knew?
 
Had he known with certainty that the federal government would not be the court of last resort for a large failing financial institution, his firm (and others) might not have engaged in certain kinds of high risk investment instruments and practices. And having chosen not to do that, they might not be in Chapter 11 today.
 
Maybe, maybe not.
 
The same could be said about Merrill Lynch, but thanks to the good judgment of a new CEO who saw that gravity was rapidly evacuating Merrill’s market value, and who understood that his endgame options were evaporating precipitously, the firm stayed in the private sector, even if in the belly of the whale.
 
And I’m told that if you understand the finer details of credit default swaps (CDO’s) --- and, no, I don’t -- you’ll appreciate even more how Merrill CEO John Thain may have pulled off the most artful and legal legerdemain since Tom Sawyer got Ben to paint the fence.
 
Fannie and Freddie you know about -- sort of. Taken over by the government, which means that taxpayers are ultimately responsible for any losses that might be incurred. Counterbalancing that is the reality that if the government hadn’t stepped in, markets will still be falling, and current and future homeowners would be in a world of hurt.
 
Capping it all was this week’s AIG mega-deal, the details of which are still unfolding, but which demonstrate two verities:
 
First, size matters. If you’re going to fail be v-e-r-y big, bigger than Lehman Bros., apparently.
 
Second, that capitalism (in its slightly modified September 2008 configuration) and morality are strange bedfellows.
 
So if you’re confused about how the experts can rationalize the AIG deal and the Lehman non-deal, and which meets the moral hazard test and which does not, you’re not alone.
 
This doesn’t mean you’re right and they’re wrong. It means that when push comes to shove, the moral hazard standard gets v-e-r-y fuzzy, and then disappears from sight.
 
If you’ll pardon the leap from AIG to Abraham Lincoln, you’ll recall that when Lincoln ordered the suspension of writs of habeas corpus during the Civil War -- for which he took unmitigated political heat -- he said: "[A]re all the laws, but one, to go unexecuted and the government itself go to pieces, lest that one be violated?"
 
Now, one week in advance of the first presidential debate, we might ask ourselves about moral hazard and the McCain–Palin ticket.
 
If one believes that the CEO’s of Fannie and Freddie, Lehman, Bear Stearns, Merrill, Countrywide and other financial institutions were brazen, careless, or negligent in their management decisions -- at great cost to stockholder value and the impact on the American and global economy -- consider Senator John McCain’s selection of Sarah Palin.
 
Even if you admire Palin, find her story compelling, and believe that she’s a quick study, it’s a very long, cold ride on one of those throbbing snow machines to equate that with her being qualified to be vice president of the United States. And, using McCain’s financial advisor Carly Fiorina’s logic, she’s also unqualified to be vice president of Hewlett-Packard.
 
Yet, there she is, chosen because John McCain needed to change the dynamic in his faltering presidential run. A number of qualified candidates from which to choose, but only one who offered three things he needed most: first, red meat -- caribou presumably -- to excite the Republican base of social conservatives; second, strengthening the ticket’s appeal to women, and particularly to disaffected Hillary supporters; and third, buzz -- driving Democrats to distraction and sending the political press into overdrive to vet her in a way that McCain had clearly not done.
 
And if there’s one thing the Republican base hates more than Democrats, it’s the press.
 
But her selection by McCain is a political decision purely in his self-interest with enormously risky implications for the national interest, as this month’s historic financial meltdown and this week’s bombing of the U. S. embassy in Yemen remind us.
 
Just imagine Sarah Palin at the helm.
 
Much of the hoopla about McCain’s stunningly impetuous choice has been spun to fit the persona of that young Navy pilot who survived the horror of the Hanoi Hilton and came home to run for office, and who has built a reputation of bucking his party on key political and public policy issues. It’s a narrative of independence, courage, and audacity. It’s a modern day “Mr. Smith Goes to Washington.”
 
Fine, but this isn’t a movie.
 
And the point is that John McCain didn’t just bet his ranch, he mortgaged ours -- and with a subprime, no less.
 
And we best understand that now.
 
McCain is a big risk taker, a frequent risk taker, and a man for whom risk has been a way of life. That’s admirable in some instances and select vocations, even in the Senate, but it isn’t what we’re looking for in #44.
 
We have seen what bold and risky, strong and wrong, and our way or the highway looks like at 1600 Pennsylvania Avenue, and we have had enough.
 
After twenty-two years in the United States Navy and twenty-six in the United States Congress, one would think John McCain would understand the implications of moral hazard.
 
But apparently not.
 
While he expresses outrage at the greed and selfishness on Wall Street and pontificates on the platinum parachutes that those failed financial CEO’s are bailing out with while their stockholders and employees are left with pennies on the dollar, he ought to take a good, long, hard look in the mirror.
 
That’s if he’s still got the courage.
 
 
 
 

SARAH, PALE IN COMPARISON

“To govern is to choose.”

Pierre Mendes France

SAY GOODNIGHT, PAUL

If you're only tool is a hammer, you tend to look at all problems as nails.

Mark Twain