Saturday, June 23, 2012

Thoughts on the 2012 Senate Races

I'm a little surprised by how many Senate races are still in flux.  By my count, there are at least 18 races for which it's too early to call the likely winner.  Some of these 18 are more competitive than others, but let's pick apart all 34 of them to see where the battlefield lies.....

Arizona--There's still a primary on both sides to muddle through before the general election mashup to fill the seat of retiring Republican Jon Kyl.  On the Democratic side, the race is between state party chair Don Bivens and, one of this year's most intriguing recruits, Bush's former Surgeon General Richard Carmona.  It's not a sure thing who will come out ahead in this primary but the establishment is behind Carmona.  The heavy favorite on the Republican side is Congressman Jeff Flake.  The libertarian-leaning Flake is odds-on to win the general election as well.  Having no experience running for elected office, Carmona is a wild card that can't be underestimated at this stage but also has a pretty abrupt learning curve to adjust to in a short time.  In a defensive cycle for Republicans like 2006 or 2008, this race would be a toss-up, but the current political climate is divided enough that Arizona's traditional Republican lean and Flake's polish as a politician means the race leans Republicans' direction.  Leans Republican.

California--Diane Feinstein walks all over her token Republican opposition once again, probably running up the highest vote total of any Senate candidate in American history given that this is California in a higher-turnout Presidential election year.  Safe Democrat.

Connecticut--Yet another open sate race (in this case being vacated by pseudo-Democrat Joe Lieberman) where the nominees have yet to be decided in either party, although both parties have definite frontrunners.  On the Republican side, the frontrunner is wrestling CEO Linda McMahon who managed to lose in 2010 against a guy who pretended to be a Vietnam veteran but wasn't.  The political climate for Republicans will never be better than it was 2010, meaning that McMahon's chances this year are even lower.  Democrats will most likely run Congressman Chris Murphy.  Given that Murphy's political base in the least Democratic of Connecticut's five Congressional districts, he has a huge advantage here.  If the Republicans had the brains to nominate for GOP Congressman Chris Shays over McMahon, this race would be a pure toss-up, but the moderate Shays seems unlikely to win given the conservative nature of the nominated convention in CT.  Obama will likely win Connecticut by 20 points which gives Republicans a herculean mountain to climb even in the best-case scenario here, but that mountain will be even higher if they nominate McMahon as they likely will.  Leans Democrat.

Florida--Conventional wisdom in this race does not necessarily seem to be corresponding with a rising tide of poll numbers.  Two-term Democratic incumbent Bill Nelson has always been liked by everybody but popular with nobody.  Most handicappers have leaned towards Nelson's likability being enough for this race to lean his direction, despite a challenge by Republican Congressman Connie Mack, son of the former GOP Senator.  Polls, however, are showing a statistical tie in recent months, often with Nelson peaked out in the 43-44% range.  That's pretty deadly.  A case can be made that the polls are wrong, but even samples showing Obama leading by six in Florida (which seems unlikely) are showing Nelson only leading by four.  It's a long way until November but Mack is clearly benefiting from the family name while Nelson is suffering for being something of a backbencher in the Senate in a state with diverging political trendlines.  Nelson still has a chance as Mack is a question mark of a candidate with a number of potential liabilities, but if I were to bet money on the race right now, it would be on a Mack upset.  Tilts Republican.  GOP +1

Hawaii--Long-time Democratic Senator Daniel Akaka chose a good year to retire as far as his party is concerned, leaving an open seat when favorite son Obama is running for re-election and likely to run up a massive margin of victory.  Now ordinarily a Senate race in Hawaii would be a cinch for Democrats, but Republicans recruited popular former Governor Linda Lingle who is unlikely to be a pushover.  As for the Democrats, gadfly conservative Democrat Ed Case is once again making life difficult by running a primary against establishment-preferred Congresswoman Mazie Hirono, meaning that the victor is likely to emerge in the general election bruised.  If this combination of scenarios was playing out in 2010, Lingle would probably win, but in 2012, it's very difficult to imagine any situation where the Democrat won't win.  Lingle would have to get something like 40% of all Obama voters to cast a ballot for her downticket, which would be almost unprecedented.  Lingle is definitely in this, but whoever emerges from the Democratic primary has a tremendous advantage.  Likely Democrat.

Indiana--The Tea Party may have given Democrats a huge break here.  Had veteran Republican Senator Richard Lugar survived his primary, he'd have been a cinch for a seventh term.  But instead, Republicans vowed to go for right-wing hard-liner Richard Mourdock who has proceeded to put his foot in his mouth advocating for the farthest reaches of the Tea Party agenda in the weeks since winning the primary.  And while it's an article of faith that Indiana's not voting for Obama again this year, the question still begs to asked whether a state that went for Obama in 2008 is conservative enough to elect an unapologetic wingnut like Mourdock.  It's an open question, but the Democrats have their best possible candidate in moderate Congressman Joe Donnelly.  I suppose one has to operate under the theory that Mourdock has a slight advantage here as long as he refrains from saying more wildly stupid stuff in the next four months, but Democrats are clearly in the game here.  The GOP forfeited five Senate races and control of the Senate in 2010 because they ran idiots, and it's entirely possible they could do the same again this year with clowns like Mourdock.  Tilts Republican.

Maine--The unexpected retirement of moderate Republican Olympia Snowe made it seem inevitable that this seat would go to the Democrats in a Presidential year.  Within a week, that conventional wisdom shattered when former independent Governor Angus King announced he was running, quickly established a hard-to-understand lead in the polls, and scared Democratic frontrunner Chellie Pingree out of the race.  Democrats convinced themselves that the left-of-center King would caucus with them even if he won as an independent, but King is even making that interesting, suggesting he may not caucus with either party.  Such a move would render his irrelevant as a Senator, but from everything I've seen from the guy since his announcement, he may be just enough of a megalomaniac to do it anyway.  It's entirely possible that King could win, not caucus with either party, and thus give Republicans a 50-49-1 Senate majority.  For now, I'll go under the still murky assumption that he will caucus with Democrats.  Unless there's a major game change in the coming months, King is gonna win this thing handily, so the future of the Senate is in the hands of him and his massive ego.  Leans Democrat.

Maryland--The political climate in Maryland is such that it's very difficult to imagine a Republican ever winning a statewide election here again.  This is true for incumbent Democrat Ben Cardin as well, who should win a second term without lifting a finger.  Safe Democrat.

Massachusetts--Elizabeth Warren got an impressive bump in the polls after she announced she was running, so much so that it gave a lot of Democrats a false sense of comfort.  For whatever reason, half-term Republican incumbent Scott Brown bounced back rather quickly and held a small lead in a number of polls.  Since then, a series of often awkward missteps by both of them seems to have the race 50-50 again.  To say the least, I haven't been impressed with the Warren campaign's crisis-control efforts in the wake of the Native American heritage "scandal" but Brown's mouth seems to be getting him in more than his share of trouble as well.  In any midterm cycle, I would give the advantage to Brown here, as it certainly seems as though his 2010 coalition remains intact, but the tiebreaker here is likely to be Obama's strength at the top of the ticket.  Despite Mitt Romney being the former Governor of the state, it's unlikely Mitt Romney the Presidential candidate will have much home-state upside in Massachusetts, and if Obama's romping statewide by more than 20 points, the amount of crossover support Brown will need to win becomes extremely challenging.  Then again, if the political climate nationally shifts to Romney, Obama's strength at the top of the ticket in Massachusetts will be suppressed and not be as helpful to Warren.  The race is up-for-grabs but I'm narrowly tilting Warren.  Tilts Democrat.

Michigan--It's rather amazing how terrible of a candidate Republican Congressman Pete Hoekstra has been thus far, reducing what seemed like a credible challenge to two-term Democratic incumbent Debbie Stabenow.  Who knows if recent polls showing the Presidential race tied in the state are accurate, but if they are, it likely means the Senate race is narrowing as well.  It would take quite a momentum shift for Hoekstra to win this, but Stabenow has not put this race to bed yet.  Likely Democrat.

Minnesota--Democratic incumbent Amy Klobuchar is the kind of calculating moderate that has had little problem connecting with voters in a state like Minnesota and has high popularity because of it.  It was always an extreme longshot for any Republican to beat her, particularly with the sorry state of the Republican Party in Minnesota today, but whatever slim chance they had likely declined to none as it now appears certain the GOP nominee will be Ron Paul acolyte Kurt Bills, a guy who wants to end Medicare in three years and trade the greenback for a pocket full of gold coins.  He won't be winning Minnesota.  Safe Democrat.

Mississippi--In 2008, Democrats had about their best possible candidate in former Governor Ronnie Musgrove and also had a maxed-out African-American turnout due to Obama at the top of the ticket.  Yet they still fell 10 points short of taking out interim Republican incumbent Roger Wicker.  That convinced me there is no hope of any Democrat winning a Senate race in Mississippi  for generations to come.  Safe Republican.

Missouri--While I didn't go into the 2012 election cycle as pessimistic as I did the 2010 cycle, there were some races I knew were very unlikely to produce favorable results for the Democrats.  The Missouri Senate race is one of them.  I'm still not really sure what happened in Missouri to turn every nook and cranny of the state in between Kansas City and St. Louis into unwavering Republican strongholds, but it's definitely happening and the pace in which it's happening is accelerating in the Obama era.  Last year, Claire McCaskill was beset by a would-be scandal that I can barely remember the context of, and combining that with anti-Obama fever and McCaskill appears to be toast.  As pessimistic as I was about her chances six months ago, even I'm surprised by just how weak she is, polling in the mid-40s at about the same level Obama is and statistically tied with three very weak Republican challengers.  While I don't think she'll lose by the 25 points that Blanche Lincoln did in Arkansas in 2010, I could easily see her losing by double digits.  Leans Republican.  GOP +1

Montana--A race that began with as much uncertainty as Missouri remains a crap shoot four months before the election.  Democratic incumbent Jon Tester eked out a one-point victory in 2006 against a corrupt long-time Republican Senator, and now faces a seemingly more compelling challenge from Montana's at-large House member Denny Rehberg.  Most of the polls are within the margin of error, but tellingly, Rehberg seems to have a one or two-point lead in them.  It's not always a certainty that the undecided vote breaks to the challenger, but it goes that way more often than not, and Tester is in the position of needing the undecided vote to break disproportionately for him if he's gonna win, and that seems like a tall order.  I think a mistake by Rehberg is needed for Tester to pull this out.  Tilts Republican.  GOP +2.

Nebraska--I thought Bob Kerrey was correct when he got into this race as the Democratic candidate and declared that he was "probably the underdog" to fill the seat vacated by corporate Democrat Ben Nelson.  The already Republican climate in Nebraska has become more polarized since Kerrey retired from the Senate in 2000.  But I had no idea the extent to which Kerrey would be an underdog until I saw the polls only a couple weeks after his campaign rollout.  Running 20 points behind in every poll taken, it's almost as if Kerrey's history with the state has been completely excised from Nebraskans' memory.  Republicans nominated Deb Fischer, who was not the establishment choice but also doesn't appear to be a fringe Tea Party kook.  Still, Fischer's lack of experience running at the major league level could conceivably give Kerrey an opening in the event of a major gaffe, but it's still very hard for me to imagine a Democrat winning in Nebraska in this political climate.  Likely Republican.  GOP +3.

Nevada--This race is one of the toughest calls and also one of the races most dependent upon which way the Presidential election swings.  In the not so distant past, it would be pretty clear that the advantage would be with interim Senator Dean Heller against a Las Vegas Democrat like Congresswoman Shelly Berkeley.  But Nevada has undergone a sea change in the last decade, the first evidence of which came with Obama's stunning 12-point victory there in 2008.  Harry Reid's decisive come-from-behind victory there two years later was further proof that the state's service worker union is a very impressive machine capable of helping Democrats overperform polls by several points.  With that in mind, and with this being a Presidential election year, I'm leaning towards Berkeley with this one.  It's anybody's race to be sure but the last two election cycles have taught me to be on the Democrats in close races in Nevada.  Tilts Democrat.  GOP +2.

New Jersey--I'm not even aware who Democratic Senator Bob Menendez's opponent is this year, and that doesn't bode well for Republicans as if the race was poised to be even marginally competitive, I would have heard of Menendez's challenger.  A Republican victory in New Jersey is extremely difficult even under the most perfect circumstances, and nothing about the current state of the race suggests the circumstances will allow for anything other than a second full-term for Menendez this fall.  Safe Democrat.

New Mexico--The demographic shift making life difficult for Republicans in New Mexico for most of the last decade appears to have moved past the tipping point recently, with New Mexico becoming a pretty solid blue state.  It should thus be pretty easy for Democratic Congressman Martin Heinrich to hold this seat for the Dems with long-time Senator Jeff Bingaman retiring.  That would probably be correct if not for the fact that the Republicans are running former Congresswoman Heather Wilson, who has a history of defying gravity, winning consistently in a blue district.  Heinrich still has an advantage with this being a Presidential election year and Obama appearing to have an impenetrable advantage with Latino voters, but any mistakes and Wilson could easily win this.  Leans Democrat.

New York--The last I heard, Republican Congressman Bob Turner, whose Congressional district was dismantled less than a year after he took office, is the frontrunner in the race against Democratic Senator Kirsten Gillibrand.  Obviously it's a kamikaze mission, but it will be interesting to see if Turner's hold onto to the lopsided margins he accrued amongst the Orthodox Jews in his home district in Brooklyn that got him elected last year.  Safe Democrat. 

North Dakota--Just about every political horse race analyst instantly moved North Dakota to the Safe Republican column right after Democratic Senator Kent Conrad announced his retirement, but a funny thing happened on the way to the GOP coronation.  Unpopular Republican Congressman Rick Berg decided to go for an immediate promotion to the Senate after only one term in the House, while the Democrats were able to recruit former Attorney General Heidi Heitkamp.  A good half dozen polls have been released since Heitkamp's announcements a few months back, and every one of them has showed her with a lead.  Will it last in the heat of the fall campaign?  I'm still skeptical.  Right now the likability gap has elevated Heitkamp, but she will be easy to back into a corner by the Republicans demagoguing fear of an Obama ally in the Senate sucking the oxygen out of the state's oil boom.  Nationalizing the race is likely to seal the deal for Berg.  Had this contest played out in any cycle during the Bush administration, Heitkamp would likely win, but this is the kind of race where having a Democratic President hurts Democrats downballot.  Tilts Republican.  GOP +3.

Ohio--On paper, Democratic incumbent Sherrod Brown should have an easy go of it up against his lightweight, not-quite-ready-for-primetime Republican challenger Josh Mandel, who seems like amateur hour trying to compete at this level.  But the liberal Brown is several ticks to the left of the Ohio electorate and has been targeted by big Republican SuperPAC money.  The Ohio airwaves are being saturated with Brown-bashing ads, and there's some evidence that  it's dragging him down.  I'm still skeptical that Mandel, who looks like he's 15 years old, can be taken seriously as a United States Senator, but with all the forces of Karl Rove and the Koch Brothers beating the snot of his opponent, a Mandel victory is hardly inconceivable, particularly if the national environment sours with a stalled economy.  Tilts Democrat.

Pennsylvania--There was some optimism on the part of Republicans last year that they could take out Democratic Senator Bob Casey, but the GOP couldn't get any top-tier or even second-tier recruits and at this point I'm not even sure who is running.  Barring a last-minute recruiting coup or an epic gaffe by Casey, this one stays blue.  Safe Democrat.

Rhode Island--I haven't heard anything about Republicans putting up a challenger against Democratic Senator Sheldon Whitehouse.  A Republican victory in a Rhode Island Senate race would be next to impossible even in the most perfect storm, and there's no indication such a storm is brewing right now.  Safe Democrat.

Tennessee--Democrats have to be congratulated for thinking outside the box after being unable to get a top-tier recruit to challenge Republican Senator Bob Corker.  They ended up getting the actress who played Laverne on TV's "Empty Nest".  Her name is Park Overall and while she is a huge underdog against Corker in a state that has turned as bright red as Tennessee, it was still a clever recruiting ploy by Democrats and if she brings a little bit of levity to the campaign, she might just do well enough to save a few endangered Democrats in the legislature.  Safe Republican.

Texas--Pretty sad when it's an open seat, in this case vacated by retiring Republican Kay Bailey Hutchison, but the Democrats are not perceived to even be in the game.  I don't even know who Democrats are running here as all the buzz is about whether the GOP's Lieutenant Governor David Dewhurst or Tea Party challenger Ted Cruz gets to come out of the primary for the beat to slap around the Democrat in November.  Safe Republican.

Utah--Are we past the point where long-time Republican Orrin Hatch has to worry about an intraparty coup that ousts him?  I thought he had already dodged that bullet already but I'm not 100% sure.  Even if he still gets dethroned by a Tea Party upstart, however, it's a certainty that the Republican nominee will hold this seat.  Safe Republican.

Vermont--Despite being a proud Socialist, Independent Senator Bernie Sanders is enormously popular in Vermont and will win a second term in a landslide, obviously caucusing with the Democrats again when he does.  Safe Democrat.

Virginia--In a non-Presidential year, the Republicans would probably pick up the seat being vacated by retiring Democrat Jim Webb.  But in a Presidential year, one can expect Democratic turnout in northern Virginia to make the race competitive.  Both parties got their preferred candidate with former Democratic Governor Tim Kaine and former Republican Senator George Allen, and polls have them predictably deadlocked, with Kaine usually registering a tiny lead within the margin of error.  This is a race that will live or die based on the Presidential race and I happen to think Obama has a significant advantage in Virginia due to the federal workforce that will likely choose not to blow itself up by voting Romney.  And it's very hard to see how George Allen can win if Obama's winning at the top of the ticket.  Obviously, a shift of momentum nationally towards Romney changes everything, but everything I'm seeing now tells me Kaine has the advantage barring a mistake.  Tilts Democrat.

Washington--Wishful-thinking Republicans had their eye on Democratic incumbent Maria Cantwell early this cycle but things seem to be falling apart in their efforts to take her down.  Outside of three-time loser Dino Rossi, the GOP bench in Washington is very weak so they don't really have a credible opponent.  I'm not even sure who the party is leaning towards at this point which is pretty telling that Cantwell is pretty close to a shoo-in this fall.  Likely Democrat.

West Virginia--Democratic Senator Joe Manchin has a massive lead in the polls despite running in the same party as wildly unpopular Barack Obama in the Almost Heaven state, and the consensus opinion is that he'll win in a landslide in November.  This may well be true given that the strongest Republican in the state, Congresswoman Shelly Moore Capito, is once again sitting this one out, and it seems inevitable that Manchin will once again be lucky enough to run up against "to the right of the Tea Party" John Raese, the same idiot who managed to throw away what could easily have been an upset victory in 2010.  Manchin, who has spent the last two years in the Senate bad-mouthing Obama, has probably established enough distance from the President to win a full term, but if the Republicans decide to invest some resources connecting him to Obama late in the campaign as they did in 2010 and last year's special gubernatorial election, anything is possible given how radioactive Obama is the state.  Still, the safe money's on Manchin.  Leans Democrat.

Wisconsin--One of the most difficult races to make a call on this cycle is Wisconsin where Democratic Senator Herb Kohl is retiring, but as complicated as the race looks overall, it boils down to this....if Tommy Thompson prevails in the crowded Republican primary field, Wisconsin will have two Republican Senators...but if any of his three challengers to the right prevails, Democratic Congresswoman Tammy Baldwin probably has a narrow advantage.  The complications here are coming in the GOP primary.  Thompson is not sufficiently right-wing to prevail in a Republican primary in a head-to-head match, but lucky for him, there are three challengers to his Republican that are splitting the vote and all scoring double digits.  Thompson currently stands in the 30s but well ahead of his three challengers.  Primaries are always volatile in the ninth inning, however, and it's very possible one of the conservatives will consolidate the anti-Thompson vote and pull ahead.  That's only a hypothetical at this though, and right now it has to be assumed Thompson is a frontrunner for the nomination...and if he gets the nomination, he almost certainly becomes a United States Senator.  Leans Republican.  GOP +4.

Wyoming--Senator John Barrasso is a Republican and he lives in Wyoming.  That means he wins the election.  Safe Republican.


So if my current predictions play out, Republicans control the Senate with 51 seats no matter what stunt Angus King might choose to play.  A lot of people seem to think the Democrats have a good chance of holding the Senate but that really seems like a stretch as they will have to nearly run the table on the competitive seats.  What's most alarming for Democrats is that if the political climate gets significantly worse in the next four months, as it well may with what's going on in Europe, Republicans could pick up an extra five or six Senate seats beyond what I predicted, as some seats like Virginia, Massachusetts, and Nevada are really on the razor's edge with their current Democratic advantage.  Not a particularly encouraging situation.

Friday, June 08, 2012

The Fall of Public Workers and the Official Swan Song of the Middle Class

For the last three decades, the private sector middle class has been surgically decimated to varying degrees.  The blue-collar middle-class has been beaten the bloodiest, with globalization and the crushing of unions together reducing the value of laborers to the capitalists who hire them.  As a consequence, wages haven't kept up with inflation, health care plans have become less generous while still costing the employee much more, and pensions have been replaced with cynical 401K's, a synthetic pension that rises and falls with an artificially overvalued stock market which has seen zero growth in inflation-adjusted dollars for more than a decade and is poised to plummet dramatically as soon as the Eurozone collapses in a few months (or weeks or days, whatever the case may be).

It's difficult to overstate the severity of this loss of equity among middle-class households and the long-term ramifications it has on economic activity and consumerism.  And anybody paying attention knows who has reaped the reward of these concessions by the fast-diminishing private-sector middle class.....their bosses and the stockholders who hire their bosses.  Every last penny of economic growth of the last 30 years has been consolidated in the upper quintile of income earners, and even for those who are perversely fine with that from a moral standpoint, the macroeconomic consequences have been devastating and will continue to be as the nation's consumer base has become paralyzed.  They are losing their short-term disposable income through pay cuts and higher health care premiums, and even more consequentially, they're losing their long-term disposable income having forfeited a guaranteed retirement income for a wildly insecure amusement park ride on the Dow Jones roller coaster in which only a lucky few with very good timing are gonna avoid losing their shirt.

But there's been one group amongst the middle-class that hasn't yet had to visit the financial gallows, and that's public workers, all of whom benefit from strong collective bargaining agreements even if they are not direct members of a union.  Most public workers still enjoy middle-class pay with cost of living adjustments, health coverage with minimal premiums, and a pension plan.  This is not to say there hasn't been shared sacrifice amongst public workers as layoffs are widespread, cost of living adjustments have been suspended, and unpaid furlough days have been required, but in general, public workers have not been endured the wholesale forfeiture of livelihood that their unambiguously destroyed private sector neighbors have.  The consensus opinion among most politicians and the "liberal media" is that the solution to this problem is not to figure out a way to rebuild the private sector workers, but to tear down the public sector.

The drumbeat for the need to worsen the compensation packages of public employees has been escalating for a few years now, and last Tuesday, its chief proponents claimed their scalp when Wisconsin voters behaved as Karl Rove and David Koch wanted them to and retained Scott Walker in the gubernatorial recall election.  The message has been sent loud and clear that teachers, librarians, court clerks, and snowplow drivers, among many others, have been insufficiently destroyed over the same period in which corporate America has consolidated the economic growth claimed by downsizing its private-sector workers.  The solution to America's trajectory of decline, as claimed by conservative politicians, self-proclaimed journalistic wisemen, and a majority of Wisconsin voters, is for the declining purchasing power that has blighted private sector workers (or in many cases, unemployed FORMER private sector workers) to spread to public workers.  If even more people have even less money, that will be the shot in the arm the American economy needs!

I've never understood this logic, mainly because it's not logic at all.  In the interest of full disclosure, I am a public worker and have been for more than six years.  But even a decade ago when I was a small-town newspaper writer making $20,000 a year, I shook my head at the jealousy I would hear from some about overpaid civil servants.  My boss at the newspaper was a classic example, and I always thought to myself how he expected a town where every single person was a low-income worker would translate to selling newspaper subscriptions.  And therein lies the fundamental flaw of cutting worker pay at any level.  The economy can be compared in many ways to an ecosystem, where every action has a feedback loop of consequences.  When somebody's pay is cut, their purchasing power is reduced and their economic activity shrinks.  When they don't have a guaranteed pension income after retirement, the loss of future income bodes even more poorly for them to make good on their plans for retirement and the shrinkage of economic activity is even more widespread.

And that loss of economic activity is what kills the most frequently deployed justification for doing what Scott Walker just got away with and what politicians of both parties and Beltway-based commentariat want to see much more of in the future.  It's always claimed that "we can't afford to maintain these pension obligations".  In many cases, that's true on its face, but nobody ever turns that statement on its head and cites the equally prescient inverse of that claim....that we can't afford NOT to maintain these pension obligations.  Our economy depends on a measure of economic security by its proletariat, not merely the "job creators in the climate of uncertainty" whom the right insists are the only ones entitled to a permanent climate of market confidence.

The economic security of many public workers has been one of the only hedges against further bottoming out of everything from home sales to automobile sales to holiday gift purchases.  More people need that kind of security for the economy to flourish, not fewer. And the economic security enjoyed by public workers will not come close to being replaced by the hellscape that is the private sector job market.  This is particularly true in the rural areas that have become the Republican party base.  When a post office or government agency closes in small-town Missouri, that town's already-in-progress obituary gets carved into granite.  A job market that gave us jewelry factories in Rhode Island, steel mills in western Pennsylvania, and textile mills in North Carolina now gives us Dunkin' Donuts coffee pourers, Wal-Mart stock shelvers, and nursing home geriatric ass-wipers.  People who held the former jobs contributed back to the economy with their purchasing power.  People who hold the latter jobs contribute orders of magnitude less with their much more limited purchasing power.  Growing the ranks of the latter group is a bad thing for the economy, but those trying to decapitate public employees want to do just that.

And there are other consequences to telegraphing the deconstruction of those who work in public service, particularly those in the education field.  One would have to be certifiably insane to seek a career in education with the current political climate.  I wouldn't direct my worst enemy, let alone any of my children, towards borrowing $100,000 for an education degree for which they can expect smaller salaries and stingier benefits than is enjoyed by today's teachers, the blood-curdling hatred of their political opponents who exploit the fact that America is the only country in the world that educates its poor as a way of declaring most American schools are failing, and most troublingly, the loss of seniority protections that they currently enjoy because of their union.  With school funding poised to be in a permanent state of crisis, teachers without seniority protections can expect an expiration date for their services of around age 50, give or take, at which point school districts will decree they are too expensive to keep on the payroll and should be replaced by a 23-year-old.  And in addition, they're repeatedly getting the message that police officers and fire fighters are the "good public workers" who deserve a pension, but that teachers do not.  No sane person would willfully wade into such a hostile environment, and it just might be problematic a generation from now for a culture who values its cops more than its teachers when they discover the educational talent pool is completely dry.

Across the political spectrum, it seems just about everybody believes that sticking it to public workers is a no-consequence proposition.  Only good will come from all the "savings" accrued by becoming a nation of even more low-income workers, they tell us repeatedly as if somehow those savings will be passed onto unemployed factory workers.  Communities and nations full of low-income workers may be known for many things, but their robust budget surpluses typically aren't one of them. 

It struck me this week that my dad, a blue-collar guy with a ninth-grade education, was 38 years old when the first round of concessions and rollbacks hit his industry.  As for me, a college graduate and one of the alleged members of the "ruling class" of public employees, I look poised to start getting everything taken away from me three years younger than my dad did....the only difference being that my dad's starting point was twice what mine was in inflation-adjusted dollars.  When my dad and his coworkers in the meatpacking industry took it on the chin, the story for the local economy ended very badly.  As public sector workers stand in line for their beatdown, the ending won't be any better.  And all this reinforces my long-held philosophy that decline is inevitable when it arrives at your doorstep.  Once an economy arrives at the stage where everybody except the plutocrats is engaged in rollbacks and concessions, it's already too late to save the patient.  When that avalanche starts to tumble, nobody will be able to stand back up on their skis before they get to the bottom of the mountain.

Friday, June 01, 2012

Is 3% Economic Growth Even Possible Anymore?

There's nothing about 3% economic growth that is particularly impressive. Historically, it's right around average actually. But looking at recent economic data, most recently today's anemic jobs report with only 69,000 added jobs in the month of May, I am seriously wondering if it'll ever be achievable again. For most of the last four years, the specific nature of the foreclosure crisis served as an anchor, with a rising tide of foreclosures that consistently kept the economy below the water line. But home prices finally seem to showing signs of recovery and the likelihood is that the foreclosure situation (knock on wood) hit bottom and is on the mend. Of course the new dark cloud overhead is the pending armageddon in the eurozone which most economists persuasively suggest is acting as a wet blanket on investment in the United States. Even so, I'm inclined to believe there's more to it than that....

My contention is that the latest economic false dawn is the product of our new era of expensive energy which has combined with the bearish investment market to create a toxic push and pull that is not only suppressing current economic growth, but threatens to do the same with future would-be economic booms. Consider how in February, the American economy had produced more than 200,000 jobs for three consecutive months. Again, this is nothing particularly robust from a historical standpoint but compared to where we've been it seemed like the economy was finally about to get its legs. That expectation was all it took for speculators to go wild artificially inflating oil prices, and in doing so, managed to kneecap the very recovery they were depending upon. With the era of cheap oil over and most investments yielding little to no real-world return, oil is always gonna look like a safe bet to the masters of the universe whenever the global economy appears buoyant. But when the outcome of this oil market speculation drives gas prices through the roof and kills consumer confidence, is it not inevitable that the economy is always gonna be operating below its capabilities?

Of course, the "drill, baby, drill" crowd would tell us that this problem could be resolved with an all-cylinders-firing energy policy in which we extract every last drop of oil that we can possibly get from the ground, but they fail to understand that the push and pull of the energy economy renders this scenario tactically impossible. As I discussed before, the era of putting a shovel into the sand and pulling it out covered in oil is over. America still has a tremendous reserve of energy on and off our shoreline but almost all of it is "expensive oil" that requires some variation of deep water drilling or squeezing oil trapped inside rocks. It is costly to extract oil by these means and it requires $100 per barrel oil to turn a profit from the production of this oil. Whenever oil prices soar, the energy companies swoop in to start pulling tar sands from out of the ground and planning oil rigs in two-mile deep ocean water. But once the price of oil starts dropping, nobody wants to lose money by continuing to squeeze oil out of rocks. Thus, energy supply falls meaning that when demand rises, oil prices rise again, the speculator vultures circle the wagons, and the vicious cycle is repeated.

With all these things in mind, is measurable economic growth a thing of the past? Even the phony financial industry-fueled economic growth that has been the source of our faux economic growth over most of the last 25 years? I struggle to see how, particularly with so many more participants in the global economy demanding a larger share of finite energy supply. It seems as though this cycle will play out repeatedly until something breaks.