WEDNESDAY,  DECEMBER 10,  2008

BULLETIN AT 9:09 P.M. ET:  The House has passed the auto bailout bill, 237-170.  But it faces an uncertain future in the Senate, where many Republicans are determined to stop it.

AUSTRALIA VIEWS ILLINOIS

Posted at 8:36 p.m. ET

We often find that reporters for the foreign, English-speaking press have keen insights into American politics.  Here, Anne Davies of Australia's Sydney Morning Herald comments on the president elect and his connection to the uplifting politics of the state of Illinois:

THE best-case scenario for Barack Obama is that stunning corruption allegations against the Illinois Governor, Rod Blagojevich, are a major distraction for his transition team as he attempts to convince Americans he has the right plan for a flagging US economy.

At worst, the scandal will spiral out of control, throwing up myriad questions, including the big one: How is it that Obama can be so ignorant of the political quagmire from which he hails?

You know, a lot of people are asking that question.  Maybe he was too busy thinking in grand terms about saving the human race.

Obama also said he had no knowledge of the scheme to sell his spot in the Senate.

But what about his staff and those close to him? His chief of staff, Rahm Emanuel, his senior adviser and close friend, Valerie Jarrett, and his senior political adviser, David Axelrod, have all swum in the murky waters of Chicago politics for years.

But not The One.  He doesn't swim in murky waters.  He walks.  Jarrett was considered a serious candidate to be appointed senator, but the governor wanted compensation in return for the appointment:

There was a long discussion, taped by the FBI on November 10, and several more on November 11, about schemes involving the State Employees Union. Blagojevich believed that a union official, with whom he talked, was acting as Jarrett's emissary.

A day later, on November 12, Jarrett pulled out of the Senate race, telling the Chicago Tribune by email she was no longer interested. Had she in fact been approached, been so horrified by Blagojevich's proposal, that she had no other option but to pull out? If so, who did she discuss this proposal with? Did she contact the FBI?

Or, did she tell Obama?

Fox News in Chicago suggested that Emanuel may have been the one who tipped off investigators about the Governor's attempts to "monetise" the Senate appointment. When did he do so, and why?

Questions like this can linger long after inauguration.  If any "bad" facts about the investigation come out, and Obama's name is dragged through, the psychological effect on a public seeking "change" can be very bad.

Obama is not close to Blagojevich, according to the local media. But the revelations about the depth of corrupt conduct in Illinois have left the public gasping. Some are now asking how Obama could have emerged so squeaky-clean, and without any knowledge of the dark side of Chicago politics.

If he didn't really know what was going on, how can he deal with tough international adversaries from Russia, China, North Korea and Iran?  Oh, I know:  Unconditional negotiations.  That takes care of everything.

December 10, 2008.      Permalink          

HITCHING A RIDE - AT 7:30 P.M. ET:   Dec. 10 (Bloomberg) -- A $14 billion automaker bailout measure neared a vote in the U.S. House tonight even as Republicans said the plan lacks enough support to pass in the Senate.

The legislation calls for the appointment of a so-called car czar who could force General Motors Corp. and Chrysler LLC into Chapter 11 bankruptcy if the companies don’t come up with a restructuring plan by March 31. GM and Chrysler have said they need the aid to keep operating through March 31.

COMMENT:  If this thing should pass, the car czar should be someone who's passionate about cars, not just numbers.  What Detroit needs is the equivalent of Steve Jobs, who concentrates on products that people love.  My fear is that they'll appoint a finance guy, which only gets us through the next month.

WHAT'S IN A WORD? - AT 6:35 P.M. ET:  Fox News reports that the three major TV networks' morning shows were rather light on identifying the governor of Illinois as a Democrat this morning.  The Today Show didn't mention that minor fact during the entire first half hour of its programming.  Other shows mentioned it only in passing.

COMMENT:  Republicans have long complained that there is a double standard when scandals are reported.  Republicans are identified clearly and frequently.  Democrats less so.  In general, I've found the complaint to be true.

A CLASSIC - AT 5:50 P.M. ET:  This is what happens when an AP headline writer is thinking about the holiday office party instead of his work:

Alaska Governor's Office Sent Suspicious Powder

It did?  Governor Palin's office sent out suspicious powder?  Well, of course the real story is that her office was sent suspicious powder.  But in a case like this, where there's confusion, the headline should have read:

Alaska Governor's Office Received Suspicious Powder

That clarifies it.  Journalism 101. 

PATHETIC, AT 4:03 P.M. ET:  From AFP:  President-elect Barack Obama wants Illinois Governor Rod Blagojevich to resign after his arrest in a corruption probe, a spokesman said Wednesday.  Robert Gibbs, the incoming White House press secretary, said "yes" when asked if Obama believed Blagojevich should now step down.  "The president-elect agrees with Lieutenant Governor (Pat) Quinn and many others that under the current circumstances it is difficult for the governor to effectively do his job and serve the people of Illinois," he said.

COMMENT:   How pathetic that the president-elect didn't walk out to a bundle of microphones and make the statement himself, forcefully and unequivocally.  You don't have a spokesman say that you want a governor to resign, and say it only in reply to a question.  Not a good start to handling this scandal.

STUNNER, AT 3:48 P.M. ET --  From ABC News:  Chicago Rep. Jesse Jackson Jr., D-Ill., is the anonymous "Senate Candidate No. 5" whose emissaries Illinois Gov. Rod Blagojevich reportedly offered up to $1 million to name him to the U.S. Senate, federal law enforcement sources tell ABC News.

COMMENT:  We stress that this is a news report, and there has not been official confirmation.  If true, though, this can open an entirely new, and more important, can of worms.  The name "Jesse Jackson," even with "junior" attached, is far more famous and politically consequential than the name of the governor of Illinois.  The overriding question, of course, is how close President-elect Obama or his aides got to any of this.

THE SILVER LINING?- AT 9:12 A.M. ET:  From The Politico:  Leading Illinois Democrats are moving toward holding a special election to fill President-elect Barack Obama’s vacant Senate seat, to wrest the decision away from Illinois Gov. Rod Blagojevich — accused Tuesday in a blistering criminal complaint of trying to peddle Obama’s seat to the highest bidder.  A special election would ensure the seat remains vacant for months. Democrats also worry it could give Republicans a clear shot to pick up a vacancy they had been certain of retaining.

COMMENT:  Republicans should pounce, and put all needed resources into this.  A special election is the way to go, removing the taint from any appointment.  Republicans will probably run Mark Kirk, a great congressman from the Chicago suburbs.  He has a real shot, now that the Democratic Party in Illinois is tainted with corruption.  (What else is new?)  It would be spectacular to replace Obama with a member of the opposition.

POLITICAL WEIRDNESS - AT 8:38 A.M. ET:  From The New York Post: New York Democrats want Gov. Paterson to pick Caroline Kennedy over Andrew Cuomo to succeed Sen. Hillary Rodham Clinton, according to a new poll released yesterday.  The Marist College survey found Dems prefer Kennedy over Cuomo by 31-21 percent.

COMMENT:  And her qualifications are..?

SPARE THE ROD?

Posted at 8:24 a.m. ET

Jake Tapper, at ABC News, probes the relationship between President-elect Obama and the illustrious governor of Illinois, Rod Blagojevich. This is murky, but so far there's no smoking gun:

Asked what contact he'd had with the governor's office about his replacement in the Senate, President-elect Obama today said "I had no contact with the governor or his office and so we were not, I was not aware of what was happening."

But on November 23, 2008, his senior adviser David Axelrod appeared on Fox News Chicago and said something quite different.

While insisting that the President-elect had not expressed a favorite to replace him, and his inclination was to avoid being a "kingmaker," Axelrod said, "I know he's talked to the governor and there are a whole range of names many of which have surfaced, and I think he has a fondness for a lot of them."

(UPDATE: An Obama Transition Team aide says that Axelrod misspoke on Fox News Chicago.)

(UPDATE #2: Axelrod this evening issued a statement saying. "I was mistaken when I told an interviewer last month that the President-elect has spoken directly to Governor Blagojevich about the Senate vacancy. They did not then or at any time discuss the subject.")

Those are updates from hell.  They're troubling.  Note that Axelrod said initially, my emphasis, "I know he's talked to the governor..."

David Axelrod is one of the most careful operators in politics.  How did he know?  How convincing is his denial now?

...there are indications that Mr. Obama and his team refused to go along with the "pay to play" way Blagojevich is accused of operating, offering only "gratitude" if the governor appointed his friend Valerie Jarrett to take his U.S. Senate seat, much to the governor's chagrin.

But there remain questions about how Blagojevich knew that Mr. Obama was not willing to give him anything in exchange for the Senate seat -- with whom was Blagojevich speaking? Did that person report the governor to the authorities?

Good questions, good questions.  During the campaign Tapper was one of the straight shooters.  He remains straight.

And, it should be pointed out, Mr. Obama has a relationship with Mr. Blagojevich, having not only endorsed Blagojevich in 2002 and 2006, but having served as a top adviser to the Illinois governor in his first 2002 run for the state house.

And he never suspected anything about Rod?

On the Chicago TV show "Public Affairs with Jeff Berkowitz" on June 27, 2002, state Sen. Obama said, "Right now, my main focus is to make sure that we elect Rod Blagojevich as Governor, we..."

"You working hard for Rod?" interrupted Berkowitz.

"You betcha," said Obama.

"Hot Rod?" asked the host.

"That's exactly right," Obama said.

Not words to live by.

In the Summer of 2006, then-U.S. Sen. Obama backed Blagojevich even though there were serious questions at the time about Blago's hiring practices.

At the time, numerous state agencies had had records subpoenaed, with U.S. Attorney Patrick Fitzgerald telling authorities he was looking into "very serious allegations of endemic hiring fraud" with a "number of credible witnesses."

There have always been questions about whether Obama's ambitions blinded him to the nature of some of his connections.  These questions will now re-surface.  During the campaign, Obama partisans ridiculed as "guilt by association" any mention of some shady types in Obama's past.  It's hard to make that charge when the governor of the state is involved.  Obama's connections with Hot Rod seem to go back quite some time, were willful, and occurred even after ethical concerns about the governor made it into the public print.

Stand by.  The issue is how deeply the press is willing to probe. 

December 10, 2008.      Permalink          

MR. ELECT

Posted at 7:20 a.m. ET

Ronald Reagan was called "the Teflon president."  Criticism seemed to miss him, or roll off him.  He had the knack of emerging from crises relatively unscathed. 

Barack Obama has been the Teflon candidate, and president-elect.  However, something has happened in the last day that may change or at least affect his near-Divine image:  Mr. Obama has been reminded of where he comes from, and "I didn't know" becomes increasingly hard for the public to take.

The governor of Illinois, Rod Blagojevich, has been arrested on a variety of corruption charges.  The list of charges is likely to increase.  Obama is an Illinois senator, his transition team based in Chicago.  Mr. Obama now says he didn't have any contact with the governor, who, under law, will appoint his successor in the U.S. Senate.  But David Axelrod, one of Obama's closest aides, said several weeks ago that Obama did speak with the governor about the Senate appointment.  Now the Obama compound says that Axelrod "misspoke."  David Axelrod is not known for "misspeaking."

It's important because one of the charges against the governor is that he tried to solicit bribes in return for the Senate seat.  Is it conceivable that no one in the Obama camp got wind of any of this?  The AP notes:

WASHINGTON (AP) - President-elect Barack Obama hasn't even stepped into office and already a scandal is threatening to dog him.

Obama isn't accused of anything. But the fact that Illinois Gov. Rod Blagojevich, a fellow Democrat, has been charged with trying to sell Obama's now-vacant Senate post gives political opponents an opening to try to link him to the scandal. A slew of questions remain. The investigation is still under way. And the ultimate impact on Obama is far from certain.

He pointedly distanced himself from the case Tuesday, saying, "I had no contact with the governor or his office, and so I was not aware of what was happening" concerning any possible dealing about Blagojevich's appointment of a successor. 

We should note that Mr. Obama is not charged with anything, and that nothing the governor said on the FBI wiretap tapes that led to his arrest contains anything damaging about the president-elect.  Still, we have one more case of an association that is bound to embarrass Mr. Obama - coming after Rev. Wright, Bill Ayers, Tony Rezko, and the entire Chicago political establishment. 

The serious nature of the crimes listed by federal prosecutors raises questions about the interaction with Gov. Blagojevich, President-elect Obama and other high ranking officials who will be working for the future president," said Rep. Eric Cantor of Virginia, the new GOP House whip.

Added Robert M. "Mike" Duncan, chairman of the Republican National Committee, "President-elect Barack Obama's comments on the matter are insufficient at best."

Chances are that Obama will weather this without too much damage.  The in-the-tank press has not crawled out of the tank.  But the imagery is awful.

And then there's something else, as reported today by Mike Allen in The Politico.  This is a beaut: 

President-elect Obama says he plans to use all three of his names when he takes the oath of office in January, giving voice to an unusual name that was rarely heard during the campaign expect by critics.

In his first post-election newspaper interview, with reporters from the Chicago Tribune and Los Angeles Times, Obama was asked: “Do you anticipate being sworn in as Barack Obama or Barack Hussein Obama?"

He replied: “I think the tradition is that they use all three names, and I will follow the tradition, not trying to make a statement one way or the other. I'll do what everybody else does.”

In fact, all presidents have not used their middle names when taking the oath of office. Jimmy Carter famously went as “Jimmy Carter.” Ronald Wilson Reagan took the oath as simply “Ronald Reagan.”

Bad move by Obama.  As Mike Allen notes, he isn't really following a tradition.  He has a choice.  During the campaign, Republicans who used Obama's middle name were called racists and fearmongers.  Obama didn't seem to have a middle name.  Now he will use it in the oath.  The hypocrisy just flows, and, while the in-the-tank crowd will give him a pass, other Americans will notice. 

Image is critical to a president.  The "governor thing" and the "name thing" are not helpful to Obama at the moment. 

The wild card here is the governor.  He's going down.  He may want to take Obama with him by making wild charges, accurate or not.  Or he may claim to "have" something on Obama.  Look, the guy is scum.  And there may be a book contract in this.

December 10, 2008.      Permalink          

TUESDAY,  DECEMBER 9,  2008

NO SURE THING - AT 11:31 P.M. ET:  From The Washington Times:  The White House and senior congressional Democrats reached an agreement on the outlines of a $15 billion taxpayer bailout plan for troubled Detroit automakers General Motors Corp. and Chrysler LLC, though the bill to implement the rescue package still faces an uncertain reception on Capitol Hill.

COMMENT:  Uncertain is right.  Many Republicans are raising principled objections to the plan, and demonstrating that the party will not blindly back anything wanted by "big business."  The GOP is tougher on the car executives than are the Democrats. 

ACCOUNTABILITY

Posted at 8:20 p.m. ET:

There were some Congressional hearings today, focusing on fixing blame for the economic mess.  It's important that we know the full story. 

The Wall Street Journal, certainly a free-enterprise paper, today ran a fine piece by Jonathan Macey of Yale, insisting that corporate executives and boards of directors take their share of the blame.  That is correct.  Free enterprise is the best economic system ever developed, but it requires wise stewardship and responsibility.  When trust is breached, we who favor the market system should be the first, not the last, to demand that those responsible be dealt with appropriately.  Macey:

The failure of the General Motors board of directors to fire CEO Richard Wagoner provides a rare glimpse into the inner-workings of big-time corporate boards of directors. The sight is not pretty.

When Mr. Wagoner took the helm eight years ago the stock was trading at around $60 per share. The stock had fallen to around $11 per share before the current financial crisis. It's now below $5 per share.

In 2007, Mr. Wagoner's compensation rose 64% to almost $16 million in a year when the company lost billions. The board has been a staunch backer of Mr. Wagoner despite consistent erosion of market share and losses of $10.4 billion in 2005 and $2 billion in 2006. In 2007 GM posted a loss of $68.45 a share, or $38.7 billion -- the biggest ever for any auto maker anywhere.

And we see this same pattern repeated everywhere.  In Hollywood they call it "failing upward."  No matter how many flops a Hollywood executive has, he gets more money at his next job because they think he's learned from his experience.

The average pay for chief executives of large public companies in the United States is now well over $10 million a year. Top corporate executives in the United States get about three times more than their counterparts in Japan and more than twice as much as their counterparts in Western Europe.

And the corporations don't often get their money's worth.  Weak, acquiescent boards of directors are part of the problem:

Like parents unable to view their children objectively, boards reject statistical reality and almost always view their firms as above average. Because directors participate in corporate decision-making, they inevitably take ownership of the strategies that the corporation pursues. In doing so, directors become incapable of evaluating management and strategies in a detached manner.

And...

Once an opinion, such as the opinion that a CEO is doing a good job, becomes ingrained in the minds of a board of directors, the possibility of altering those beliefs decreases substantially. All too often, it is only when an outsider takes an objective look does anybody realize the obvious: That the directors of a company are generally the last people to recognize management failure.

Finally...

Little if anything has changed at GM since dissident director H. Ross Perot dubbed his board colleagues "pet rocks" for their blind support of then CEO Roger Smith. The broader problem is that there are far too many pet rocks on the boards of other U.S. companies.

Criticism like this has been voiced many times over the last thirty years, especially when the auto industry was discussed.  But each time the corporate machine got by, protected by well-oiled PR operations.  Maybe this time the corporate sector will learn.  Or maybe not.

December 9, 2008.      Permalink          

GRAY LADY ON LIFE SUPPORT - AT 5:42 P.M. ET:  From Financial Times:  The New York Times is considering potential asset sales and is in discussions with lenders as it prepares for sharply curtailed advertising spending across the media sector in 2009.  Advertising revenue fell sharply at the paper in November as consumer confidence plunged. Entertainment, property and automotive advertising categories were among the worst hit.

COMMENT:  We've been critical of The Times here, but this is grim.  There are still many good people at the paper, and the future doesn't look good.

THE SILVER LINING - AT 5:35 P.M. ET:   From Financial Times:  Global oil demand will collapse next year and commodities will not return to the highs they reached this summer in the foreseeable future, two authoritative reports said on Tuesday as they forecast a long and painful worldwide recession.

COMMENT:  The lower oil price is good news for Americans, but other predictions are painful.  The story goes on, "The stark conclusions came as the World Bank’s chief economist predicted that the world faced “the worst recession since the Great Depression."

ORWELLIAN

Posted at 8:15 a.m. ET

This'll give you the creeps.  Gideon Rachman, in the Financial Times, predicts a push for a world government.  We'd better wake up before the push comes to shove:

I have never believed that there is a secret United Nations plot to take over the US. I have never seen black helicopters hovering in the sky above Montana. But, for the first time in my life, I think the formation of some sort of world government is plausible.

When does the next space rocket leave?

The European Union has already set up a continental government for 27 countries, which could be a model. The EU has a supreme court, a currency, thousands of pages of law, a large civil service and the ability to deploy military force.

So could the European model go global? There are three reasons for thinking that it might. 

First, it is increasingly clear that the most difficult issues facing national governments are international in nature...

...Second, it could be done. The transport and communications revolutions have shrunk the world so that, as Geoffrey Blainey, an eminent Australian historian, has written: “For the first time in human history, world government of some sort is now possible.”

But – the third point – a change in the political atmosphere suggests that “global governance” could come much sooner than that. The financial crisis and climate change are pushing national governments towards global solutions, even in countries such as China and the US that are traditionally fierce guardians of national sovereignty.

But there is hope for us yet:

But let us not get carried away. While it seems feasible that some sort of world government might emerge over the next century, any push for “global governance” in the here and now will be a painful, slow process.

There are good and bad reasons for this. The bad reason is a lack of will and determination on the part of national, political leaders who – while they might like to talk about “a planet in peril” – are ultimately still much more focused on their next election, at home.

But this “problem” also hints at a more welcome reason why making progress on global governance will be slow sledding. Even in the EU – the heartland of law-based international government – the idea remains unpopular.

And here's the money quote:

International governance tends to be effective, only when it is anti-democratic.

Yes, and that's the heart of the problem.  Do we really want to be run by the "freedom-loving" countries in the UN?

Finally...

The world’s most pressing political problems may indeed be international in nature, but the average citizen’s political identity remains stubbornly local. Until somebody cracks this problem, that plan for world government may have to stay locked away in a safe at the UN.

And, knowing the UN, they'll lose the combination.  Which is good luck for us.

We, as Americans, had better stay on top of this.  We're weakened in this financial crisis, and vulnerable to all kinds of schemes. 

December 9, 2008.      Permalink          

ET TU SONY?  - AT 7:36 A.M. ET:  Dec. 9 (Bloomberg) -- Sony Corp., the world’s second-biggest consumer-electronics maker, plans to eliminate 16,000 jobs in the largest reduction announced by a Japanese company since the credit crunch drove the world into recession.

COMMENT:  Sony faces serious problems because the company has lost a chunk of its customer appeal.  While the Play Station is a winner, its TVs no longer have the edge they once did, and Sony doesn't have a market-defining product like the Walkman.  Apple's iPod is king. 

TV RATINGS REPORT - AT 7:16 A.M. ET:  From The Washington Times:  Viewership for President-elect Barack Obama's weekly YouTube "fireside chats" has tanked, dropping more than 50 percent since his initial video three weeks ago.  "I've heard a lot of puffed-up rhetoric about how this is going to change the face of politics and how it's going to be FDR's fireside chats. The data doesn't back it up," said David Burch, marketing manager for TubeMogul, which tracks YouTube video views.

COMMENT:  If this were Hollywood, they'd just hire a new president-elect.

ALREADY?

Posted at 7:06 a.m. ET

Well, it didn't take long:

WASHINGTON (AP) - The first sign of cracks in President-elect Barack Obama's foreign policy team of rivals emerged on Monday as his choices for secretary of state and U.S. ambassador to the United Nations visited the State Department.

As Secretary of State-pick Hillary Rodham Clinton and U.N. envoy-choice Susan Rice separately visited the diplomatic agency's headquarters in Washington's Foggy Bottom neighborhood, persons familiar with the transition said that Rice wants to install her own transition team inside the department.

Such a move by an incoming U.N. ambassador is rare, if not unprecedented, because the job is based at the United Nations in New York, where Rice already has a small transition staff, the sources familiar with the incoming administration.

Watch Obama on this one.  He must immediately step in, inform Rice that the secretary of state is senior, and that Rice should go arrange the furniture in the posh apartment that our UN ambassadors have at the Waldorf.  Bad move by Rice.  Looks pushy, with some sour grapes on top.

During the presidential campaign, some Clinton aides saw Rice's early decision to back Obama as a betrayal because of her previous role as a high State Department official during President Bill Clinton's administration. Rice's desire to place her own team in Washington could fuel speculation that those tensions will carry into the new administration.

Well, I guess Rice figures she'll stake her claim early, because Hillary will certainly be staking hers.  This could get very juicy.

Technically, the job of U.N. envoy falls under the authority of the secretary of state, although some previous U.N. ambassadors have held cabinet rank. The last U.N. ambassador to be part of the president's cabinet was Richard Holbrooke, who had a famously icy relationship with then-Secretary of State Madeleine Albright during the Clinton administration.

Albright, who was President Clinton's first ambassador to the United Nations, was a mentor to Rice. But the two had a falling out when Albright, America's first female secretary of state, lined up behind Hillary Clinton for the Democratic presidential nomination and Rice backed Obama.

Lots of falling out with Ms. Rice.  The sound you hear is the knife sharpener sharpening the Clinton arsenal.

Also Monday, Clinton was to meet privately with Sen. John Kerry, D-Mass. and the incoming chairman of the Senate Foreign Relations Committee, according to a Democratic official. Kerry, once a contender for the secretary of state job, will oversee Clinton's confirmation. Kerry has pledged to hold "swift and fair" confirmation hearings.

A meeting between Clinton and Kerry.  Which one curtsies first?

And so a new era begins.  So much change.  All harmony, no conflict.

December 9, 2008.      Permalink