Reason Magazine - Staff

Penalty Strokes

info@reason.com (Jeff Taylor) — Thu, 31 Jul 2008 15:00:00 EDT

Rumors that a certain athlete was cheating were flying thick earlier this month at the United States Olympic swimming trials. She was too fast, too good. She simply turned in much better times than anyone thought she was capable of. She might make the team for the trip to Beijing, commenters said, but her steak wouldn't last.

Sure enough, last week a member of the U.S. women's swim team tested positive for a banned substance. When one test came back positive, Jessica Hardy stayed in California while the rest of team headed for Singapore to train. Hardy says she is innocent and has filed an appeal. Meanwhile, the rumors about Dara Torres continue unabated.

The Dara Torres drama has been unfolding over the past year. Her bid for a fifth trip to the Olympics was jump-started with a win in the 100-meter freestyle at the U.S. nationals last August. Almost immediately began speculation that the 41-year-old recent mother had to be cheating.

But then the sporting world's obsession with rooting out performance enhancing drugs took a weird turn. Taking and passing drug tests did not clear Torres of the allegations. Nor did her volunteering to participate in a pilot program which tests both blood and urine for signs of doping matter. Her performance was simply decreed too good not to have been the product of cheating. This is not even guilty until proven innocent; this is guilty with no hope of parole.

ESPN columnist Pat Forde recently gave form and substance to the widespread belief in the sporting press that Torres just had to be cheating. Forde wrote that Torres' performance "made me wonder whether too good to be true is the same thing as too good to be clean."

Incredibly, Forde said that baseball's various drug scandals make him suspicious of Torres's late-career boost. The next time a 40-year-old mom gets a strikeout in a MLB game, I'll perhaps see Forde's point. But there is a bigger fiction at work.

There is much less certitude about how the human body works than those who are busy defining the limits of human potential assume. This is especially true at the relatively novel intersection of sports science, top female athletes, and pregnancy. The massive natural doses of hormones Torres received during pregnancy, ones intended to loosen the pelvic girdle and make the delivery of a child easier for every mother, may have also had the effect of leaving Torres more flexible in all of her joints.

The advantages of motherhood might be all psychological, yet very real nonetheless. Certainly the sports comeback meme routinely features a mental and emotional component.

Besides, the Official Feel Good Story of MLB this year has been the resurrection of Josh Hamilton. The former number one overall draft pick, who spent a couple years digging ditches after blowing almost $4 million on a cocaine addiction, was an All-Star just a couple weeks ago. Hamilton's sober status is confirmed with regular urine tests, the negative results of which are taken at face-value. At every opportunity, Hamilton credits his religious faith and his wife with turning his life and career around.

With that, Hamilton joins former NFL and Super Bowl MVP Kurt Warner, who came from absolutely nowhere to guide the St. Louis Rams' Greatest Show on Turf to a title. His absurd fairy-tale story was not doubted as the likely product of cheating. Athletes like Hamilton and Warner routinely tout a change in personal outlook or relationships as having a profoundly positive impact on their performance.

With these examples in mind, it seems totally plausible that Dara Torres, happy mother of a two-year-old girl, has found a focus and sense of well-being that she might not have previously. Here is where it becomes clear why Forde and other Torres doubters like to portray swimming as primarily a function of lung capacity. Admitting that the ability to focus and maintain a peace of mind might boost performance undermines the case against Torres.

Fortunately for her, swimming is not just about lungs. Body control and consistency of stroke matter. Think of all the things that can go wrong with a golf swing. Now imagine aiming to take the perfect swing several times a second. In short, perhaps the 41-year-old Torres is finally the swimmer she was always capable of being.

The Pat Forde camp flatly rejects this possibility. Of Torres beating swimmers half her age, "It shouldn't even be possible for a woman in her 40s."

Exactly. Catching a glimpse of the impossible is precisely what the ancient Greeks sought out in sport. Good luck in Beijing, Dara.

Jeff Taylor writes from North Carolina.

What Price Justice?

info@reason.com (Jeff Taylor) — Thu, 03 Jul 2008 15:00:00 EDT

You want a happy ending. You want to say that everything eventually worked, that the system got it right in the end, that the latest twist in the seven-year long anthrax attack saga is a turn for the better. Except you can't.

On June 27th former federal bioweapons researcher Steven Hatfill essentially won his dispute with a federal government that had suspected him of unleashing anthrax letters on America in the fall of 2001. While admitting no wrongdoing, the feds agreed to pay Hatfill $5.8 million. In other words, the feds admitted they screwed up. Big time.

This sounds like a victory, and it surely is for Hatfill, who was hounded by the FBI and identified by hapless Attorney General John Ashcroft as a "person of interest" in the case. But the bigger picture remains bleak.

Most striking is the fact that the masterminds behind bold acts of terrorism—Osama bin Laden and the anthrax killer—remain at large despite untold of amounts of blood and treasure spent to catch them. Moreover, the anthrax attacks, unlike the use of airliners as guided missiles, remains an eminently repeatable mode of mass mayhem. Authorities still do not know exactly how the deadly compound was formed, where, or by whom.

The investigative missteps in the anthrax case were huge and there is no sign that procedures have changed in such a way as to avoid repeat. In fact, counter-terrorism measures have only become more hair-trigger and susceptible to political or panicked influence from outside the immediate investigation.

Former FBI agent Brad Garrett, who was part of the original anthrax investigation, recently reflected on how top brass in D.C. tried to micromanage every step of the investigation. FBI Director Robert Mueller demanded and received daily briefings on the case, which predictably tried to convey "progress" even if the facts suggested otherwise. This, of course, is not investigation, but ass-covering.

Any semi-complex problem requires getting smart people together and then leaving them alone to solve it. Trust, it turns out, is a key investigative tool. But the FBI didn't trust itself or others in 2002 and there is little reason to believe that anything has changed.

Instead, the FBI turned from trust to fear, now the defining element in America's counter-terrorism toolkit—from shock-and-awe to waterboarding. Clumsy and obvious surveillance was maintained on Hatfill with hopes of cracking him. Then a wholly implausible circus of "anthrax alerting" bloodhounds was staged to further ratchet up the pressure. In all likelihood, the "results" of these dog sweeps were fabricated by the feds, then leaked to gullible reporters to further pressure Hatfill.

This mind-set does not look for evidence or leads, let alone the truth. Such activity is not investigative, but prosecutorial. Guilt has been decided, the only question is how to make the case. It is no coincidence that a unitary executive branch that claims the power to imprison without the need for independent review or verifiable evidence produced and sanctioned this approach in the anthrax case.

There are now several distinct possibilities in the anthrax mystery, all with backers on the Internet and elsewhere. One is that the feds have no clue who might have been responsible. This is possible, beyond depressing to consider. Disputes over whether the anthrax spores themselves were "weaponzied" took up an inordinate amount of investigative energy, perhaps allowing the killer to cover all tracks leading back to him or her.

Then there is the case-making theory. This is the notion that the government has a suspect or suspects, but has yet to come up with enough evidence to merit an arrest. A close cousin of this view is the "Central New Jersey" theory; the idea that the anthrax used in the attacks was cooked up in the Garden State among a narrow range of possible circumstances.

Finally, we have most tin foil-plated view, one that on my blacker days I can readily see. Namely, the anthrax attacks were undertaken by a person or persons with ties close enough to the federal government that it is effectively impossible to prosecute them. Too many secrets would spill out.

All of these possibilities are dysfunctional enough for the next occupant of the Oval Office to undertake a top-to-bottom reform of America's counter-terrorism efforts. Otherwise, justice will remain elusive and arbitrary for citizens like Steven Hatfill.

Contributing Editor Jeff Taylor writes from North Carolina.

No Passion for McCain

info@reason.com (Jeff Taylor) — Thu, 29 May 2008 15:15:00 EDT

Take a look at any early electoral map projection. You will see a solid chunk of red in most states of the Confederacy. Such projections are primarily grounded on historical performance—and as the small print always says—may not reflect future returns. Add in the wrinkle of the Bob Barr candidacy and the old rules might look archaic.

The problem for John McCain starts with his lack of popularity among Southern conservatives. He is respected, but not beloved by supporters. This contrasts sharply with the frenzy Barack Obama generates, as evidenced by his resounding primary wins across the South, none more impressive than his May 6th victory in North Carolina, where Obama pulled in nearly 900,000 of almost 1.6 million Democratic votes. In November 2004, John Kerry, with a former North Carolina senator on his ticket, only totaled 1.5 million votes in the state, losing to Bush-Cheney's 1.9 million.

There are two schools of thought on what these numbers mean. First, it is argued that Obama has basically maxed out his possible new voter total in North Carolina and across the South. Combined with moderate voters reassessing his candidacy and fatigue among his supporters, this would wash out any modest gains in new Obama votes between now and the general election. This view seems doubtful given the energy Obama generates, which puts me in the second camp; those who believe that Obama, as the official presidential nominee of Democratic Party, will touch off a massive get out the vote effort across the South.

If the latter unfolds, the McCain campaign will then have to accelerate efforts to try to peel off white votes from Obama and woo former Hillary Clinton supporters, plus an agressive get out the vote effort among Republicans. The latter would be hard, and in part explains the downright loopy run on "one term pledge" ideas for McCain.

Evangelical voters with their hearts set on, say, a Huckabee presidency/rapture would be free to vote McCain with a clear conscience in 2008. Think of it as political four-year ARM. Voters can remake the terms in 2012, guaranteed. In effect, this is an attempt to turn lack of enthusiasm for McCain into a strategic asset—lease him for four years, not eight.

But even with this gimmick, the lack of enthusiasm for McCain remains. Former Mecklenburg County Commissioner Jim Puckett recently told me that his fellow Tar Heel Republicans are simply not moved by McCain. He pointed out that the perception that North Carolina is a lock for any GOP presidential candidate overlooks that for years it was Jesse Helms supporters who were supplying the underlying campaign energy—energy that is long gone.

Into this vacuum strides freshly minted Libertarian Party banner carrier Bob Barr. The former Georgia congressman isn't exactly a household name in the region, but neither is he an unknown, owing in part to his TV appearences and frequent spots on talk radio in Atlanta and Charlotte. Might he provide someplace for disgruntled conservatives—particularly fiscal conservatives and opponents of federalizing every known public policy issue—to land in November? Perhaps. Particularly if McCain devolves into a single-issue "patriotism and torture" candidate, as presaged by the head of Georgia GOP the other day.

Referring to McCain's stint as an abused prisoner of war in Vietnam, Georgia Republican Party chairwoman Sue Everhart declared, "John McCain is kind of like Jesus Christ on the cross."

However, McCain's actual saving grace may be Obama. Conservative voters otherwise disgusted with the senator from Arizona on campaign finance, entitlements, taxes, or illegal immigration imagine a soft-on-terror Obama presidency and recoil from even casting a vote for Barr.

"Any vote not for McCain is essentially a vote for Obama," says Clay Johanson, to the easily imagined sound of Barr's LP opponents hissing and groaning. Johanson, a 39-year old technical consultant from Charlotte, is precisely the voter McCain needs to come out in order to carry his supposed red base in South—a young, techie Republican not particularly enamored of John McCain.

Should this view hold sway on Election Day, one of the oldest rules in American politics will stay in force—voters without anything to vote for can usually find something to vote against.

Jeff Taylor writes from North Carolina.

Hillary Rising

info@reason.com (Jeff Taylor) — Fri, 02 May 2008 12:00:00 EDT

One month ago Sen. Hillary Clinton (D-N.Y.) faced an uphill climb in North Carolina. A few days from Tuesday's primary, Clinton has clearly closed in on Sen. Barack Obama (D-Ill.) and there are now whispers of a Clinton win among her state-wide supporters.

The Clinton campaign continues to set the bar low, intending to spin even a close loss to Obama as proof that superdelegates cannot trust the party's nomination to such a weak candidate. However, keep in mind how Clinton managed to make up ground in a state where some polls had her trailing by as much as 20 points. The Clinton campaign has largely lucked into its recent momentum.

Clinton must first thank the state's Republican Party. It's decision to put the most strident anti-Obama ad, one with a heavy dose of the Rev. Jeremiah Wright, into the mix two weeks ahead of the primary has rebounded to Clinton's advantage. The ad was ostensibly directed at the two Democratic contenders for the governor's race, both of whom have endorsed Obama.

But a TV ad featuring Rev. Wright damning America from the pulpit presented rural white voters with an uncomfortable image of Obama while at the same time freeing Clinton from having to do that job herself. It was win-win for the Clinton team.

Incidentally, state conservatives will not soon forget John McCain's sanctimonious heartburn over the NC GOP ad. They did not like the Republican nominee much on the issues before the flap, and now they find him pandering—and soft to boot.

Better still for Clinton, Rev. Wright decided to drop by the National Press Club this week to reamplify his previous remarks. This kept the story fresh for another few days and led Obama—prodded along, rumor has it, by spot polling in NC showing the Wright issue sapping his support among well-educated white voters—to finally denounce his former pastor.

Still, the potential for huge numbers of newly registered voters to turn out for Obama next week has clearly troubled the Clinton camp. They were not likely to be turned off by the 24/7 focus on Wright. They were on a mission to vote. But the Clinton network had an answer for that.

The Institute for Southern Studies (ISS), a left-liberal outfit in Durham with a hair-trigger on all voting rights issues, claims that the answer was good ol' voter suppression courtesy of a group with connections to the Clinton campaign. A Beltway non-profit with the tongue-twisting name of Women's Voices Women Vote has made robo-calls around the state—as it did ahead of other primaries—telling potential voters that the "packet" they must sign to be eligible to vote will soon arrive in the mail.

But no such "packet" exists, and the deadline for registration has long since passed. As such, ISS finds this calling effort "misleading"—and with good reason. Turns out one of the group's executives is a frequent contributor to the Clinton campaign, amid other interesting connections:

Women's Voices Executive Director Joe Goode worked for Bill Clinton's election campaign in 1992 as a pollster; the group's website says he was intimately involved in "development and implementation of all polling and focus groups done for the presidential primary and general election campaigns" for Clinton.

Women's Voices board member John Podesta, former Chief of Staff for President Bill Clinton, donated $2,300 to Hillary Clinton on April 19, 2007, according to OpenSecrets.org.

What is a Clinton campaign without a little funny business? The size of the turnout among black voters remains the great unknown for Tuesday; anything which dampens that turnout will be to Clinton's advantage.

One above-board factor the campaign can claim credit for is turning Bill Clinton loose to do his Bubba routine among small towns of displaced blue-collar workers. The former president remains popular with the NASCAR crowd and he never fails to skewer the Bush administration, noting, for example, that he left office with a federal budget surplus.

Much less important—indeed, bordering on the insignificant, despite the spin given it by consultants with the ear of gullible reporters—is Clinton's endorsement by North Carolina Governor Mike Easley. On paper Easley is a four-time statewide winner, including two wins as attorney general before his current run as governor.

But Easley's lame-duck year has been marked by political scandal in Raleigh, with one Democratic ally after another under investigation, and the former Speaker of the House now serving time in the federal pen. Add in the fact that governor's office is institutionally weak and that Easley has no campaign for another office in the field, and Hillary gets very little bump out on the campaign trail from this backing.

However, there is no denying that whatever the cause, Clinton is on the upswing while Obama seems to be treading water and is focusing on the insider game of locking down superdelegates. Weekend events and news coverage will be crucial for both candidates. As improbable as it seemed 30 days ago, Clinton has a shot to deny Obama a big victory. This would send the Democrats a loud-and-clear message: Pick me, I can win this thing.

Jeff Taylor writes from North Carolina.

Up From the Depths

info@reason.com (Jeff Taylor) — Fri, 18 Apr 2008 12:00:00 EDT

The latest sign of trouble in America's stressed credit system can be found not in some arcane Wall Street hedge fund, but deep in Alabama. There the mundane civic chore of providing water and sewer service drove one county to the edge of bankruptcy and sent federal regulators into a tizzy.

On Tuesday, creditors, led by JP Morgan and urged on by the feds, hammered out an agreement with Jefferson County, Alabama officials to avoid default on some $3.2 billion in public sewer bond obligations. For now, the county has another 30 days to come up with a $53 million payment. As financial mishaps go, it's perhaps not the sexiest storyline. But that is precisely what should scare anyone who has followed the way local governments have thrown debt around this decade.

Much like home buyers seduced by the largest possible mortgage, local officials were wooed by bankers and bond underwriters to float the largest possible debt they could afford. Given historically low interest rates, on one level it was good advice. But it is also true that—exactly as in the mortgage making market—the bigger the debt, the bigger the commission for the banks and bond traders.

However, unlike a home purchase with a borrower and lender, the ratepayers and taxpayers who ultimately have to stand behind and payoff any deals gone bad are left out of the loop. The finances are often complex and local media outlets seldom have reason to delve into the specifics. And local officials are typically most concerned with how much they can build with the money and what constituents they can "service" with the new debt.

This is particularly true when water and sewer service, or an airport, or some other revenue-generating unit of government is set up as a separate enterprise fund. Too often this confuses lines of responsibility and obscures total public obligations to pay for things. Of course, bond sellers like the enterprise fund and dedicated revenue streams concept. They provide slightly lower interest rates in exchange for the perceived "sure thing" of dedicated revenue. And then localities often turn around and take the lower rate in order to increase the total amount they borrow. Just like house-hungry consumers who bit on low, low introductory rates.

However, this local aspect of chasing big money was glossed over in many accounts of the Jefferson County trouble, with focus instead on the change in the debt rating brought on by the failure of bond insurers. This had the effect of jumping the interest payment on the debt to $250 million a year, swamping the $138 million in revenue the system collects. But bad luck, bad timing, or even incompetence on interest rates swaps it not the only way local utilities can come up short.

A couple weeks ago my stomping ground of Charlotte, NC was confronted with a $30 million projected shortfall in water and sewer revenue. Debt payments would have to be restructured as a result—or more precisely, the local utility would be in violation of covenants made to bond holders. Such covenants or promises to maintain a certain capital position or cash flow are another way local governments have priced their debt loads for perfection in recent years.

In exchange for the promises, the utility or fund receives a lower interest rate. And what do they do with the lower interest rate? Borrow more. And who gets bigger commissions?

In Charlotte's case, the shortfall was resolved—one that was induced by mandatory water usage limits enforced by the city under threat of fine, a wonderfully top-down response to drought—by hiking water rates by 16 percent. Looking across the country, rates are also going up from Oregon to Vermont, often in response to a need to finance additional the construction of capacity.

The great unknown is the extent to which these new debt issues—together with recurring obligations—are not ready for a new credit marketplace in which risk is rapidly being reprised. The only sure thing is that those who sit at the table and make the deals will not be asked to make up any shortfall.

Jeff Taylor writes from North Carolina.

Hillary's Southern Crossroads

info@reason.com (Jeff Taylor) — Mon, 31 Mar 2008 12:00:00 EDT

Even though its current focus is on the battle for Pennsylvania, the Democratic presidential race is certain to tilt on the results of North Carolina's May 6th primary. It is there that Hillary Clinton must show that working class, Southern, white voters will balk at supporting Barack Obama come November.

Clinton is not so much trying to win the nomination outright—neither candidate will secure enough delegates to do that—as she is auditioning before the party's superdelegates to be cast as the nominee most likely to beat John McCain. This requires offering some kind of proof that Obama is—pick your focus group: too black, too scary, too liberal, or too scary-black-liberal—to win enough white votes to beat McCain.

This is where North Carolina comes in. Ringed by three states that Obama won handily just weeks ago, a Clinton win would show that Obama's race relations talk didn't work, and that not even in a state with a significant black Democratic base can he overcome the suspicion that he is a crypto-Black Panther. Not only did Obama win South Carolina, Georgia, and Virginia, he crushed Clinton in those races, displaying the twin aspects of what has made his campaign so formidable. In South Carolina it was a huge black turnout with significant new voter participation, while in Virginia he pulled in huge numbers of white votes, finishing with 48 percent. A similar pattern prevailed in Georgia, where 43 percent of the white vote went for the Obama.

Only Tennessee, which gave Clinton a 13 point win, has resisted Obama's march across the South, not counting Clinton's "home" state of Arkansas, of course.

That was then, pre-Rev. Jeremiah Wright. Has the "landscape changed," as politicos like to say, after the electorate's introduction to Wright's fiery sermons? Maybe. The trouble for Clinton is she has considerable baggage of her own.

In North Carolina, especially in small and mid-size towns denuded of 250,000 furniture and light manufacturing jobs, NAFTA might as well be the Hitler-Stalin Pact. If both Clinton and Obama had to run from the treaty in Ohio and the Rust Belt, they'll have to be in dead sprint across the Tar Heel State. And Clinton simply has more—much more—pro-NAFTA weight to carry.

She tried to shed that burden in Winston-Salem the other day by calling for a "re-negotiation" of NAFTA, which just seems to be a fancy way of saying she was wrong for ever supporting the treaty. She also promised some $2.5 billion in workforce training programs to help make up for it all, one supposes.

Meanwhile, Obama was in Greensboro patiently explaining for the umpteenth time that he is, in fact, a Christian while bashing Clinton for being too tied to special interests. Obama also beat Clinton to the state's TV airwaves, putting up 30-second spots promising not to ship jobs overseas like you-know-who.

The early commitment of ad dollars shows that the Obama camp does not put much stock in one recent poll showing him with a 20-point lead in the state. The poll's methodology almost certainly overstates the pro-Obama turnout for the primary. The consensus view is that Obama now holds a lead, but of, at most, 10 points—and possibly little as five points among likely primary voters.

Because the race is relatively close, Clinton will no doubt soon move to counter the Obama ads in the state's metro cores. When she does, it may well be with the most direct and forceful attacks on Obama the campaign season has yet seen. Hillary, in point of fact, has nothing to gain by holding back. She must, to borrow Bill's old phrase from the Ken Starr days, "just win."

To that end, the political class in North Carolina is bracing for a heavy dose of Rev. Wright's oratory, offered up by pro-Hillary ads. It might not be pretty or artful, but the rough road is the only one left open to her.

Jeff Taylor writes from North Carolina.

Oh God! Not Ayn Rand!

info@reason.com (Jeff Taylor) — Mon, 24 Mar 2008 15:05:00 EDT

Much mirth mixed with contempt on the occasion of a public university suddenly discovering a well-publicized gift with a well-known ideological component comes with -- altogether now -- strings attached.

The University of North Carolina-Charlotte was -- way back in 2005 -- one of many schools to accept a business college endowment from the BB&T Charitable Foundation. BB&T Chairman John Allison is a big fan of Ayn Rand. Not suprisingly, Allison has been using the foundation to fund courses and programs on the moral defense of capitalism. In the case of UNCC, this was to include an Ayn Rand Reading Room at the business school. Again, this was widely known years ago.

Now -- all of a sudden -- the UNCC faculty has noticed the program and is freaking out. Chancellor Phil Dubois -- in the proud tradition of edu-crats -- is waffling and attempting to plead ignorance of the whole thing. That "teaching" Rand and specifically Atlas Shrugged was not to be part of the course offering as he understood it. Whatever.

Better still is the claim from a religion professor that UNCC will look like a "rinky-dink university" for accepting the Allison gift with the Rand element intact. No, UNCC already looked rinky-dink last year when UNCC officials, including Dubois, were caught red handed whoring out the university's transportation studies department.

UNCC cooked-up a "study" ghosted by the Charlotte Chamber of Commerce and the local transit authority with the aim of deflating a drive to repeal a local transit tax that would fund light rail construction. Among the future destinations for the trains -- Dubois' UNCC campus.

Maybe an Ellsworth Toohey reading room would be more reflective of UNCC's values and interests.

McCain vs. McCain

info@reason.com (Jeff Taylor) — Mon, 03 Mar 2008 10:33:00 EST

That didn't take very long.

Scant weeks after making a "no new taxes" pledge -- quite the U-turn in itself -- Sen. John McCain has doubled back to clarify. Uh-oh.

McCain tells The Wall Street Journal in an interview today that, "I'm not making a 'read my lips' statement, in that I will not raise taxes. But I'm not saying I can envision a scenario where I would, OK?"

Gotcha. Clear as mud, senator.

McCain also adds that as President he would not bitch so much about the Federal Reserve needing to cut rates to prop up the economy and that he'd explain all of these economic details in "a couple fireside chats" to help buck up consumer confidence. Or something.

Cannot wait to hear conservative talk radio hosts spin -- or is it denounce day? -- McCain's latest zag.

Obamanomics vs. McCranky

info@reason.com (Jeff Taylor) — Wed, 20 Feb 2008 12:00:00 EST

Despite my best efforts, in the last few days I've caught snippets of strangely familiar language from John McCain. First, a clumsy attack on the Fed for failing to cut interest rates "faster" so as to stave off recession. Then, the sudden embrace of a repeatedly scorned "no new taxes" pledge.

On Monday, it hit me while watching McCain accept the endorsement of another liver-spotted former naval aviator: McCain is turning into George Herbert Walker Bush before our very eyes.

If that is true, the crucial question becomes: Is Barack Obama more Michael Dukakis or Bill Clinton? Don't laugh. The answer is far more salient to who becomes the next President than feverish declarations that Obama in the heir to JFK or that McCain is really Winston Churchill.

Let's also stipulate that Hillary Clinton should not be forgot—not until the last spark of energy is wrung from her battle-chassis will she concede, and perhaps not then. Still in her playbook—the triple-whammy cry, where she and Bill and Chelsea all cut loose. Don't rule it out.

But the GOP's electoral offering is locked in stone, and one half of the November equation is set. McCain has an absolute ceiling as a candidate above which he cannot rise. He cannot out-debate or out-speechify his opponent, and he is prickly and prone to outbursts. In short, voters absolutely must prefer him on substance, not style, for McCain to win.

So, what about that substance? Here we find McCain in favor of perpetual war in Iraq, possibly a new war with Iran, an immigration reform process loathed by conservatives, and rewriting the First Amendment to protect incumbent federal office holders, plus hatred of earmark spending and support for tax cuts, then opposition to tax cuts, now morphed into a pledge against future tax hikes. Overlay this with a general suspicion of all motives not directly tied in to government "service" and you have a candidate with something to offend very many voting blocs.

Now recall that in 1988 Bush I was a similar polyglot—East Coast blue blood, Texas oilman, Nixon Republican suspicious of "voodoo economics," loyal Veep to Hollywood shaman—but he had the considerable advantage of running for Ronald Reagan's third term. And that was enough to beat a Dukakis.

Four years later a rudderless Poppy was helpless before Bill Clinton's mix of energy, outsider myth, and rope-a-hope symbolism. Whatever we can say today about Obama, surely one of the truest things is that stylistically he is no Dukakis. If so, McCain must find some substantial difference to hold up in front of voters or go the way of GHWB and the last aging senator/war hero the GOP coughed up for commander-in-chief, Bob Dole.

McCain's backers find this vital difference in the Arizona senator's support of "the surge" in Iraq, equal parts community policing on full-autopilot and cash money for well-armed Sunni tribes. This reduces to positive outcomes for U.S. policy in the Middle East and perhaps more broadly to a stronger, more grounded foreign policy in general. Sure enough, this stance contrasts sharply with Obama's come-home-and-save-money message.

The trouble with either camp counting on foreign policy differences to drive voters their way is the fact that neither McCain nor Obama can remotely control international events in the next few months. Another Abu Ghraib-type scandal and McCain is mortally wounded, while Obama must live in fear of another Live from a Cave tape featuring an endorsement from Osama bin Laden.

Not content with these undependable foreign policy differences, the economic plan Obama spun out in Wisconsin last week provided a curiously large target to the former fighter pilot. It was more—much more—from the Dukakis playbook, with ramped up federal spending on social programs, at least $500 billion worth, perhaps as much as $1 trillion. Better still for a GOP admittedly uneasy about how to attack a black candidate for president, Obama provided just enough of the soak-the-rich and class-warfare rhetoric that McCain will have raw material for a domestic policy counter-jab.

This is a tremendous risk for Obama given the fact that voters have repeatedly rejected such zero-sum policies when offered up by the left. Worse, a redistributionist—retrobutionist, actually—tax policy jars harshly with his positive "change" message that so clearly appeals to the independents and young voters filling Obama's campaign events. Suggesting blowing up the current wage cap on payroll taxes, as Obama has, would not only be a massive marginal tax increase to fund unreformed entitlements, it allows McCain to close gaps with the tax-cut wing of the GOP and ride into battle somewhat united. Not smart.

Once again we are confronted with a Democratic presidential candidate unwilling, unable, or afraid to clearly embrace a tax-reform message that could flatten the code, close loopholes, and eliminate corporate welfare, all while removing the dead weight loss of needless complexity.

We are the change we've been waiting for? Looks like we may have to wait a little longer.

Jeff Taylor writes from North Carolina.

Those Who Can't, Endorse

info@reason.com (Jeff Taylor) — Mon, 04 Feb 2008 16:30:00 EST

Former New York City Mayor Rudy Giuliani withdraws from the presidential race and endorses Sen. John McCain. Former North Carolina Sen. John Edwards suspends his campaign and endorses no one. Is there a difference? Not really.

The least surprising move of the season is Rudy's backing of McCain. Both ran as quirky, prickly "moderate" alternatives to lock-step conservatism. In fact, McCain is essentially advancing on the Giuliani strategy of watching the conservative base split itself among multiple candidates while locking down everyone else. But a vague strategic nod is all Rudy adds to the McCain effort—that and a brief momentum bump on the endorsement itself.

Voters at this late date—both historically and in this election cycle—are not looking for top-down direction on where to take their support. Their minds are not blank slates or devoid of information on the remaining candidates. As George Bush's evil political genius Karl Rove put it in a recent Wall Street Journal column:

Voters are discounting advertising. They may be blocking out ads, relying more on personal exposure, information from social networks, alternative information sources like talk radio and the Internet, and local media coverage. ... It is the age of the Internet, cable TV, YouTube, multiple news cycles in one day, and the need for really instantaneous response.

In other words, an endorsement from a failing candidate might not even rate as a prominent news story, let alone linger in the public forebrain days later. Neither the testimonial—one of the oldest forms of politica advertising—nor the photo op will, by themselves, move votes.

So if the endorsees don't gain from the failed candidate endorsement game, why do we still pay attention to it? Tradition, for one. The endorsers obviously can score a few brownie points for future use, like landing a federal job. In Giuliani's case, it is entirely plausible to imagine him as McCain's Homeland Security czar. But Rudy in the DC fishbowl seems a poor fit, especially considering that Giuliani is not looking to work that hard. It seems more likely that he will retire to Manhattan with his cadre of longtime yes-men to continue overcharging corporate America for speeches and advice.

Meanwhile, Edwards has been floated as a possible attorney general in an Obama administration, quite likely the earliest and worst cabinet trial balloon in American history. Even disasters like Janet Reno and Alberto Gonzales looked to be better fits for the top job at Main Justice, with both having previously served as government lawyers before. Edwards might wind up trying to sue China for lead paint on toys or conducting FBI stings on businesses with wet floors.

That's why a better place for Edwards' One America crusade might be the Labor Department, where he could team up with labor unions in working towards the $9.50 minimum wage he says America needs.

This is not completely crazy. By suspending and not shuttering his campaign, Edwards can string along both the Obama and Clinton camps right through the convention. He keeps his delegates and superdelegates, and should that knee-buckling, full-body orgasm of the poli-junkie—the Brokered Convention—actually come to pass, Edwards could name his price.

Motivation also figures into this scenario; Edwards needs somewhere to land. He cannot go back to North Carolina and run statewide again. Too many people are burned out on him and a newer, fresher crop of candidates is already active in the Tar Heel state. A once-duped University of North Carolina is not going to put him up in a "poverty center" for another four years, either. Electorally, Edwards best bet might be to hope that Rep. David Price (D) resigns soon, opening up a run in the liberal Research Triangle area. But voters are not exactly pining for him there either.

Nor will voters miss John or Rudy on Super Tuesday. Neither was going to win a single state had they stayed in the race. And now that they are gone, few going to the polls will even notice their absence.

Jeff Taylor writes from North Carolina.

Super Bowl Prediction Thread

info@reason.com (Jeff Taylor) — Sun, 03 Feb 2008 13:53:00 EST

Seventeen hours into the pre-game show and it is safe to say Super Bowl XLII will be an event for the ages. The quality of the game remains to be seen.

Other safe bets include a record sports book on the game, that New England's LBs are old, and whichever QB gets hit more today will lose. Here's to an actual game of the ages.

35-34. Jints.

MS Yahoo: The Real Deal

info@reason.com (Jeff Taylor) — Fri, 01 Feb 2008 10:40:00 EST

I haven't read every single story on Microsoft's $44 billion offer for Yahoo! but the ones that I have fail to emphasize the major factor in Redmond's thinking: Google Desktop.

Forget search engines and queries and ads -- Microsoft really does not care about that. It does care, however, that more and more folks are figuring out that distributed apps can be very handy. That you can do all kinds of things with wikis. That there is no reason to ever run Vista as your OS.

This is not an afterthought for MS, this is the primary play. Microsoft cannot afford to sit by while control of the PC desktop moves elsewhere.

Stimulant or Hallucinogen?

info@reason.com (Jeff Taylor) — Fri, 25 Jan 2008 14:10:00 EST

Not wanting to leave any doubt to his Worst President of the 20^th Century title, George W. Bush is all giddy over sticking the American people with an "economic stimulus" package.

News coverage of the package has been universally awful by failing to note the package is: A) Much too small to impact a multi-trillion dollar economy B) Not responsible for cheering Wall St. with the Keynesian fiscal pump-priming, but with the irresponsible lifting of the cap on "conforming" mortgages backed by Uncle Sam C) Fucking nuts.

Topic A is self-explanatory; B requires only the understanding banks had basically stopped writing jumbo loans in some markets because they have no idea what the actual value of real estate might be at the moment. This is a rational response to market uncertainty and can only speed along the necessary real estate correction along with encouraging banks to take losses on their books and move forward.

Sticking government-backed enterprises in the middle of this process removes market discipline from the mix. This brings us to topic C. Even the federal regulator charged with oversight of Fannie and Freddie says bumping the conforming loan limit to $700K (!) is a bad idea. But one look at Nancy Pelosi's rictus grin and it is clear Uncle Sam will permanently support California's real estate bubble.

To recap, in a matter of months we've gotten the Federal Housing Administration to guarantee up to 100 percent of loans up to $367,000, a federal fiat that adjustable rate mortgages will no longer adjust, and now federal GSE guarantees for mortgages of almost three-quarters of a million dollars. No wonder the mighty brain of Bill Kristol looks at the process and calls it a "win-win." We've nationalized the mortgage industry, surely a great thing of National Greatness.

Meanwhile one industry insider relates, "They are doing backflips at Lending Tree. Literally jumping up and down. Their business is going to go through the roof." So too all the bankers who have been saved by a President who quite likely has not a clue what he has done.

Addendum: I was evidently too cute by half by placing Bush in the 20th century by virtue of his November 2000 election, which to my mind makes him eligible for that time frame. Some commenters seem to disagree. Worst president of the last two centuries then?

Will SC AG Prosecute Huckabee Push-Poll Robo Calls?

info@reason.com (Jeff Taylor) — Wed, 16 Jan 2008 10:05:00 EST

Ah, the joys of the primary season. South Carolina Attorney General Henry McMaster has been asked to prosecute pro-Mike Huckabee push polling now underway in the state. State law bans such automated calls.

McMaster is a major John McCain supporter in the state, but the prime target of the calls -- at the moment -- seems to be Fred Thompson. In a call partially recorded last night by one South Carolina resident and sent to McMaster, Thompson's record on abortion and taxes was attacked.

This mirrors similar recent efforts in Michigan against Mitt Romney, where the same firm placed calls to voters blasting Romney's record on guns and immigration. One report pegged the number of such calls into Michigan at five million while South Carolina is on tap to receive one million calls.

Common Sense Issues seems confident that its calls are protected by the First Amendment, and they may well be. More interesting to my mind is the group's status as a 501(c)(4), which IRS regs say prohibits "direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office."

In fact, it is not clear where Common Sense ends and the Huckabee campaign begins. Voters should not have to Google the number calling them to find that out.

The Sure Thing

info@reason.com (Jeff Taylor) — Mon, 14 Jan 2008 14:11:00 EST

Even though the Democrats go to the polls a week later than the Republicans, who vote next Saturday, the Democratic race is somewhat easier to read. At least for now.

John Edwards's return to his storied home of Seneca will not be a happy one. Edwards is almost certain to drop out of the race following a Palmetto state tilt in which he is an afterthought, despite winning the state in the 2004 primary. His "son-of-a-mill worker" spiel has fallen flat in state that is either solidly Republican where the mills once were and/or too prosperous for Edwards' brand of class warfare to find purchase.

A disastrous trip to Clemson University, a fairly conservative campus where suburban and rural kids go to get degrees before landing in Atlanta, Columbia, Charleston, or Charlotte as architects and engineers—the oppressive hand of Edwards' evil oligarchy is fiendishly well-hidden in this process—told the tale.

Edwards staffers were having trouble getting Clemson University students to hold up his placards for the traditional campaign stop backdrop. Charlotte Observer reporter Taylor Bright captured this exchange:

"You guys want them?"

"Hell, no."

"I'll spit on it."

With Edwards defanged, is it going to be full-steam ahead for the Comeback Gal, Hillary Clinton? Well, no.

The other day Clinton, in trying to argue the need for experienced politicians to bring social movements into the realm of actual policy changes, seemed to suggest that Martin Luther King Jr. would have been nothing without LBJ to sign Great Society laws. Worse, Bill Clinton somehow managed to turn criticism of Barack Obama's dreamy personal narrative into an attack on "fairy tales."

This caught the political antennae of Rep. Jim Clyburn, the dean of black pols in the state and one who had thus far stayed neutral in the presidential campaign. To him, this sounded like the Clintons were dissing the civil rights movement of the 1960s.

This isn't semantics to pols like Clyburn or the network of black churches that continue to form the backbone of political life for blacks in South Carolina. The King Dream is not a distant rhetorical point for them, but a vital part of their own internal narrative and justification, one that is deployed weekly by these leaders. The Clintons have bumbled into attacking the legitimacy of the black leaders they carefully cultivated. Rumors are now afoot that Clyburn will endorse Obama as a result.

It was that black leadership support, along with what nascent labor movement there exists in a right-to-work state like South Carolina, that Clinton was counting on to counter Barack Obama's popularity with younger blacks in a very, very large pool of black votes in the state.

There is still time for Clinton to patch this rift up and the campaign is already moving to do so. And to paraphrase Robert Plant, crying won't help you but praying might do you so me good. Expect to see Hillary hit the black church circuit hard.

As for Obama, South Carolina is put up or shut time. His rally with Oprah Winfrey in Columbia several weeks ago drew a delirious crowd of 30,000. The state with both its large black population and sustained economic growth and prosperity seem ready-made for his uplifting and inclusive message. Maybe a book club, too. Obama is believed to be in the lead among South Carolina voters at the moment, but we all know how his supposed lead fared in New Hampshire. In addition, Hillary is on the air with a TV spot that hits all the liberal hot-buttons on health care and entitlements.

Did you know that the junior senator from New York single-handedly stopped George Bush from "handing Social Security over to Wall Street?" South Carolina voters do.

On the GOP side, it is Fred Thompson playing the role of John Edwards. Thompson has to make a dent or go home. To that end, Thompson spent last night's GOP debate beating on fellow Southerner Mike Huckabee and may have scored a few points on Huckabee's tax-hiking record.

Huckabee is in a dead heat with Arizona Senator John McCain, who seems to draw much support from the state's well of military and military retiree families despite his soft-on-immigration stance. Make no mistake, in Republican circles in South Carolina a border-long fence is an impossibly wish-washy position and the only open question permitted is when to round up the 12 million illegals in the country—now or two weeks from now. McCain may yet falter on this issue.

For that reason it is somewhat surprising to see Mitt Romney pack up and leave the state. The "CEO President" axed his line of ads last week.

Romney was endorsed by the state's hardcore "amnesty" opponent Senator Jim DeMint, while McCain has the support of major "amnesty" backer Senator Lindsey Graham. Romney backed up the endorsement with over $2 million in TV ads in the state, a campaign remarkable for the fact that no one seems to have seen the ads or taken in any of their stirring imagery and swelling music. This lack of impact together with the need to get a slam dunk in Michigan on Tuesday has Romney set to finish in the middle of the pack in Carolina.

To recap, we have a McCain-Huckabee tussle at the top, Thompson trying hard to get traction, Romney AWOL, with Rudy and Ron bringing up the rear. The Mayor of 9/11 is drawing his line in the sand in Florida among the high-walls of Del Boca Vista Phase II and is conserving resources to that end. Paul is merely playing out the string.

The only thing we know about the race is that, after the ballots are cast, half of these candidates will be lying flat on the field and unable to go on. It's about time.

Reason contributor Jeff Taylor writes from North Carolina.

HRC's Crying Jag

info@reason.com (Jeff Taylor) — Tue, 08 Jan 2008 14:02:00 EST

Hillary Clinton's show of emotion struck me as so calculated you've got to wonder if the questioner was a plant.

Let's go where a gullible and compliant -- Clinton chokes up, is applauded, at campaign stop -- national press corps refuses to go -- to HRC's history.

Monday's performance was not the first time she played the victim card, oh, no. In fact, in January 1992 it was very much Hillary the victim who saved the Clintons' political dreams. The pair's "pain in our marriage" sit-down on 60 Minutes stopped Bill Clinton's free-fall caused by the Gennifer Flowers scandal.

The interview told voters that Bill was sorry, Hillary was sad, but that the couple was together, resilient, and remade. A few days later, Bill "won" the New Hampshire primary by besting low expectations and finishing second to Paul Tsongas. Thus was born the "comeback kid," got Bill out of the Northeast with momentum and on to blacker and bluer-collar electorates. The rest is history.

Jump to 1994 - the Whitewater, cattle futures, and infamous pink suit press conference.

With a pinch of fake bottle-blonde self-deprecation -- she just did whatever Jim Blair or Jim McDougal said -- a dollop of amnesia -- Hillary could not remember just how the darn money got there -- and heavy closer of persecution and guilt-tripping -- "We don't fit easily into a lot of our pre-existing categories . . . And I think that, having been independent, having made decisions, it's a little difficult for us as a country, maybe, to make the transition of having a woman like many of the women in this room, sitting in this house" -- further reporting on the topics was ruled out of bounds. The DC press swooned.

By 1998 it was "the vast right wing conspiracy" at work against her and Bill. Today it is not widely recalled that phrase was initially deployed to pre-empt the wild notion that the President of the United States had bukkaked an intern in a White House butler's pantry.

In 2000, the on-the-rebound and righteous Hillary was running a Senate campaign so buttoned-up and repressed that reporters openly doubted a candy basket from Hillary was really meant as a gift and not some dark manipulation.

Yet when making the press rounds for her 2003 autobiography, everyone was more than willing to help Hillary wallow in her victimhood. It all started at Wellesley, you see, where she just did not fit in.

And a year ago it was the VRWC Mk. II messing with the phone lines in New Hampshire. To the extent the sneak-and-peak Bush administration was involved, we are all victims here -- but Hillary especially so, because those were Democratic phones, dammit.

In short, it is impossible to have been even slightly aware of politics in America the past 15 years and miss this trend. As such, the tears, properly understood, were far from "an uncharacteristic display."

Just more of Hillary Rodham Clinton saying and doing anything for power.

2007: The Year in Videos

Tue, 01 Jan 2008 12:06:00 EST

It's the first day of 2008, and outside of Iowa and Pakistan there's not much news and not much to worry about. Kick back and click the "play" button as reason editors and friends of the magazine remember the most striking, funny, historic, stupid, or impactful videos of 2007.

Update on January 2: Due to an editing error, some video picks were not included in the original posting of the article. Submitted for your viewing pleasure are three new selections:

Radley Balko
reason senior editor

I'm nominating the lot of police brutality and taser videos. The most popular this year were probably the "Don't Tase Me, Bro" video from a John Kerry event in Florida (see below) and a Missouri teenager's recording of an abusive police officer who had pulled him over. The genre as a whole is the result of the mass democratization of technology, and represents an important shift toward transparency and accountability in law enforcement. More than a few abusive police officers have lost their jobs after a video went viral, which likely wouldn't have happened were we still in the pre-Internet age. Mass watching of the watchers is a good thing, and we ought to be encouraging more of it, both to weed out bad cops and to protect the good ones from frivolous claims of abuse.

Ronald Bailey
reason science correspondent

Venezuelan President Hugo Chavez' weekly television talk show, Alo Presidente, infamously runs on for hours. In September, 2007 viewers were treated to more than eight hours of presidential bloviation. Chavez' hero, the notoriously long-winded Fidel Castro, has never even gotten close to that record.

In November at the Ibero-American Summit, Spain's King Juan Carlos told Chavez, "Why don't you just shut up!" Juan Carlos' words have been turned into a popular ring tone. I nominate it as the "best" video of 2007 because it was way past time that someone told Chavez to just zip it.

Nick Gillespie
reason editor-in-chief

I continue to laugh every time I watch the meeting of minds between singer-songwriter John Mayer and Justin Long (the Apple Computer guy) outside an L.A. nightclub. Mayer--drunk on booze or maybe just strict construction of the Constitution?--goes on a pro-Ron Paul rant that is magical not just for its intensity and heartfeltness but for its very existence in the first place. Years ago in reason, we excerpted Tyler Cowen's What Price Fame?, a study in how contemporary celebrities are impotent puppets we pay astronomical amounts to entertain us (Cowen's piece is not, alas, online). This is true, even when we agree with them. It's a great world where this sort of footage is widely available.

Katherine Mangu-Ward
reason associate editor

This mashup of the classic Apple 1984 ad and Hillary campaign footage ends with Obama's website address but wasn't approved by his campaign. When the maker's identity was feretted out by the Huffington Post, he said: "This ad was not the first citizen ad, and it will not be the last. The game has changed." Ne'er were truer words spoken in 2007.

Jeff Taylor
reason online columnist

A perfect creation of ad hoc media -- found it via Fark.com, builds on a previous YouTube upload of Hubble telescope images set to the Tool song Lateralus -- and adds immense value, meaning, and insight, all because some guy -- philriehl -- decided to do it. The 9:24 vid -- that number is important -- illustrates and explains a Fibonacci number sequence clearly enough for everyone to feel their inner gnostic stir. Beautiful, powerful, and inspiring.

Jesse Walker
reason managing editor

Who is the YouTube candidate? It might be Ron Paul, thanks to his ability to inspire hundreds of homemade videos, some of them gloriously weird. But Mike Gravel is the guy who makes weird videos, or at least sends them out with his stamp of approval. My favorite is this Lennonist rap featuring psychedelic animation and clips from Duck and Cover.

Matt Welch
incoming editor-in-chief of reason

I can never tell whether this surrealist attack on/celebration of John "Walnuts" McCain was based on any particular knowledge or point of view, or whether it was just a one-time burst of inspired guesswork, but I do know that it only gets better -- and creepier -- on the 200th viewing. "I want to help people... in their lives" may yet go down as one of the most chilling predictions of the 2008 presidential campaign.

Tyler Cowen
author of Discover Your Inner Economist

The best video clip I saw this year was John McLaughlin playing "Cherokee."

David Harsanyi
author of Nanny State

My favorite video of the year:

Markos Moulitsas
netroots paterfamilias

The Huckabee parody ad. Nothing captured better the absurdity of the GOP's entire field.

Brendan O'Neill
editor of Spiked Online

Mia Farrow in Second Life talking about Darfur: It's not my favourite video of the year. But in capturing the naked narcissism of celebrity activism, it's one of the most startling. Mia Farrow's young-looking, sexy avatar addresses a virtual audience of students, activists and lizards in Second Life. Like most Save Darfur activists Farrow says precisely nothing about the politics driving the conflict in Sudan; instead she describes horrific occurrences and shows photos of distressed Darfurians. As Mahmood Mamdani wrote in the London Review of Books (Essay of the Year), activists like Farrow "obscure the politics of the violence and position [themselves] as a virtuous, not just a concerned observer." It's fitting that Farrow's speech takes place in the cartoon world of Second Life, since the aim of Darfur activists is not to get to grips with the reality on the ground in Sudan but to create a virtual plane of moral superiority that they can occupy. Darfur is a "defining moment for the human family," says Farrow. She's so vain she thinks somebody else's war is about her. Watch this vid to glimpse Kipling's colonialism updated: the Web Surfer's Burden.

Teaser Freezer Burn

info@reason.com (Jeff Taylor) — Thu, 06 Dec 2007 14:20:00 EST

Given the amazingly complex world of high finance—full of derivatives, hedges, and tranches—Treasury Secretary Henry Paulson last week hit upon a stunningly simple plan to fix the nation's subprime mortgage mess: Lie. And don't just lie, but get everybody together and agree to lie, thereby making the lie become truth.

The fiction Paulson and the major banks are promoting is that extending the low "teaser rates" initially offered to many subprime borrowers fundamentally will help them and—here is a big lie—transform them from bad loans to good.

Put another way, if the problem of bad subprime mortgages was caused by delusion over lending risk, this latest solution enshrines delusion as the defining characteristic of the American banker—backed by a facile enabler in Uncle Sam and his trillions, of course.

Financial risk analyst Chris Whalen calls Paulson's plan "appalling." Whalen's Institutional Risk Analytics zeroed in on the banks' unwillingness to acknowledge risk in their lending portfolios back in 2005. Now he sees the so-called "teaser freezer" plan as an attempt to put Humpty Dumpty back together again and build a floor underneath uncertainty in the financial sector. Except that he estimates around one-third of teaser borrowers will default anyway, a measure of just how dumb lenders are in handing out loans to people with bad credit.

"It is probably in their best interest to walk away. They have no equity," Whalen says of the hapless borrowers.

The possibility of their underwater borrowers actually taking a walk terrifies the banks, however. Banks would have no choice but to write down and make real phantom losses lurking just off their books. What to do? How about pretending that the loans aren't actually bad. How do you do that? Pretend that the borrowers can pay them back. How do you do that? Pretend the teaser rate is the real rate. Presto, problem solved.

At this point, some adult would ideally step in and say, "no, that's fraud." But clearly Treasury is not that mature. And it appears the Fed has resigned itself to some form of greater idiocy coming out of Congress on the subprime front that maybe, just maybe, the teaser freezer can head off.

However, the stubborn fact remains that banks will lose money on teaser rates. Regulators and investors both know this. Who exactly are we trying to fool? Besides inattentive voters.

Meanwhile, by allowing big banks to keep their rot off the books, the potential exists for it to continue to spread. Whalen and other experts have wondered for months about losing the ability to price risk, or even recognize it given the complexity of the constructs floating around financial markets. The Paulson fix only exacerbates the problem by continuing to assert that real world constraints do not matter. And the stakes are already high.

"We could lose a money center bank next year," Whalen warns.

Should you duck your head out of Treasury's "let's pretend" camp for a second, one notices that there are major legal obstructions to rewriting millions of loan contracts by federal fiat. Contrary to the wish of some in Congress, mortgage lending is still largely an activity engaged in by two private entities, each of whom assume very specific obligations. This is not a federal program to be tweaked at the margins. Real estate lending contracts are a dozen pages long for a reason. And each contract is different yet just as legally binding, depending on a given state's law. That's right, state law.

It is unclear how federal action to extend low-low teaser rates can square with state lending laws which may require an actual change in the underlying contract. Unless the idea is just to do this all informally, with a notification letter from lender to borrower and as long as federally chartered banks get approval from their federal regulators to pretend.

After all, what is a little lie between friends?

Contributing Editor Jeff Taylor is a writer in Charlotte, North Carolina.

Rant: Unconnected Dots

info@reason.com (Jeff Taylor) — Thu, 22 Nov 2007 12:00:00 EST

For years federal authorities have argued that antiquated laws kept the cops from stopping 9/11. They said the failure to prevent the terrorist attacks demonstrated the need for the PATRIOT Act and every other proposed expansion of the government’s surveillance powers. But in testimony before Congress in September, Director of National Intelligence Michael McConnell changed tack, saying “9/11 should have and could have been prevented” after all; the authorities simply “didn’t connect the dots.”

McConnell did not draw the obvious conclusion: If greater federal power was not needed pre-9/11 to stop terrorists, then even more federal authority is not needed now. Instead, McConnell argued that the Protect America Act—which allows the attorney general and the director of national intelligence, without judicial oversight, to authorize surveillance of international phone calls and email involving people in the U.S.—made vitally needed changes to the Foreign Intelligence Surveillance Act.

How does the supposed need for greater surveillance power square with McConnell’s declaration that 9/11 was preventable and his lament that “we didn’t connect the dots”? How did we get the dots without the Protect America Act?

Via good old-fashioned police work that top officials in the Federal Bureau of Investigation ignored. Federal agents on the ground knew that hijackers Khalid al Mihdhar and Nawaf al Hazmi had sought pilot training. They knew Zacarias Moussaoui had sought the same sort of training; he was carrying 747 manuals when he was picked up on immigration charges. In the days leading up to 9/11, Minneapolis FBI agent Harry Samit repeatedly tried to obtain permission to search Moussaoui’s laptop computer and belongings. Headquarters refused to seek a warrant.

New details on just how costly that denial proved to be were first published in a widely overlooked September 10 story by Greg Gordon, McClatchy Newspapers’ Washington reporter. Gordon discovered that the FBI had enough information to arrest part of Al Qaeda’s financing network in the days before 9/11—information that could have stopped the hijackings. Cue McConnell’s dots.

Moussaoui’s fellow jihadists considered him a loose cannon and security risk. They were right: The key to the whole network was right there in his notebooks. Al Qaeda operative Ramzi Binalshibh wired $14,000 to Moussaoui in August 2001, and Moussaoui sloppily recorded the routing number.

But authorities never looked at that notebook. Instead, FBI brass rejected Agent Samit’s attempts to search Moussaoui’s belongings, citing lack of information that Moussaoui was a known terrorist or foreign agent. The notebooks were not searched until after the attacks.

Gordon notes that investigators almost certainly could have traced Moussaoui’s money back to an Al Qaeda moneyman in Dubai; Binalshibh’s transactions would have led them there. The Dubai contact used one of his Western Union receipts to jot down a phone number in the United Arab Emirates. That number received calls from 9/11 hijackers while they were living in Florida prior to their attack.

As Gordon reports, FBI agents at Moussaoui’s trial testified that had he confessed to the plot after his August 16 arrest on immigration charges, thus giving them access to his notebooks pre-9/11, they could have moved on 11 of the 19 hijackers. But Washington steadfastly refused to move on information developed from the field offices. Rather than endlessly tweaking the intelligence-gathering statutes, the White House should have spent the past six years addressing the “obstructionism, criminal negligence and careerism” that Samit cited as the roadblock in his investigation. It obviously has not.

It was bureaucratic hubris, not a lack of actionable intelligence, that allowed 9/11 to happen. The same hubris continues to demand that ever more raw surveillance data be dumped into the same slavering but useless federal maw.

Contributing Editor Jeff Taylor is a writer in Charlotte, North Carolina.

Your Liberty Dollar Raid Update

info@reason.com (Jeff Taylor) — Fri, 16 Nov 2007 10:35:00 EST

Updating from the previous post on the topic, the FBI did indeed raid the Liberty Dollar office in Indiana on Wednesday. Documents filed in U.S. District Court in North Carolina indicate that the raid was the culmination of a two-year undercover investigation of Liberty Dollar and its officers.

According to an affidavit (PDF) filed by FBI agent Andrew Romagnuolo in support of a federal seizure warrant obtained from a U.S. Magistrate last week, the feds have been investigating Liberty Dollar not just for violating federal bans on circulating alternative currency, but also for mail fraud, wire fraud, and money laundering.

As for the mysterious connection to the Western District of North Carolina, the document names William Innes of Asheville as a Regional Currency Officer for Liberty Dollar and an executive committee member of the company. Undercover government agents made Asheville a focus of their investigation as a result, attending area meetings of Liberty Dollar prospective buyers and sellers.

The affidavit further details Liberty Dollar's structure and terms it a "multi-level marketing scheme." The FBI claims the company realizes a profit by selling the Liberty Dollars into circulation. The feds also went back to October 2002 for bank records of Liberty Dollar principals and cite large sums of cash moving between accounts said to be controlled by those individuals.

The document also mentions that the company continued to circulate Liberty Dollars after it had been warned by the US Mint not to do so. Part of the evidence cited for this is an FBI agent purchasing a "The US Mint Can Bite Me" t-shirt at a Liberty Dollar University event in October 2006.

The affidavit concludes that because the Liberty Dollar operation uses Federal Reserve Notes to conduct its business, it is fraudulent. "This reliance upon FRN's by a group opposed to FRN's demonstrates that the American Liberty Dollar Monetary system is simply a drain on the United State Government's monetary system for financial profit via fraudulent means," the feds claim. The document further claims there is probable cause that violations of federal law took place as a result of these activities.

At no point in the affidavit are Ron Paul Dollars mentioned, although many other coins are mentioned including a Hawaii dala offering. As such, accounts of the raid focused on the Ron Paul angle seem off-base, at least given the available facts.

Rudy, the 700 Club and the Hilton Head Country Club

info@reason.com (Jeff Taylor) — Tue, 13 Nov 2007 07:15:00 EST

Last week, televangelist Pat Robertson's endorsement of former New York City Mayor Rudy Giuliani sent pundits scurrying to declare a watershed event: A social conservative had backed a pro-gay, anti-gun, pro-choice candidate. Giuliani thus had an inside track on the Republican nomination. Rudy rushed to Columbia to capitalize on the endorsement, underscoring where the campaign intended the news to matter.

But not so fast. Voters still have to vote. And they'll be voting in a series of idiosyncratic statewide races. Giuliani has already largely written off Iowa, and trails Mitt Romney in New Hampshire, where Romney's early money and name ID have had the biggest impact. Yet Giuliani nominally leads in South Carolina, whose primary actually comes a couple days ahead of the Granite State tilt on January 22nd.

This screams the question: If Robertson's support is so important, why was Rudy already looking good—leading in one Fox poll—in the Palmetto State without Robertson?

A couple of reasons.

For one, although South Carolina is still more socially conservative and Southern Baptist than many parts of the country, it grows less so by the year. Wealthy retirees with diverse corporate backgrounds stream to the state for its mild climate, low taxes, and golf. These are Republicans to be sure, but not necessarily of the social conservative bent.

For them, prosperity and security are voting issues, not gay marriage or abortion. And here Rudy's reflexive 9/11-because-9/11-remember-9/11 rap matters. These folks have reaped the benefits of America, and are not looking for the nation's savior, just a competent protector of their investment.

That may sound like a low bar, but after years of bumbling by the Bush administration, perhaps not so low. Besides, the competence question points to why I think Giuliani may also have appeal to state residents with longer memories and deeper Carolina roots. The Giuliani camp may or may not even know it, but his "steady executive in a time of crisis" meme echoes the career of Charleston Mayor Joe Riley. The Democrat was first elected in 1975 and won another four-year term last week with 63 percent of the vote.

It was Riley's take-charge attitude in the wake of Hurricane Hugo's 140-mph devastation of the Low Country in 1989 that cemented his reputation as a leader across most political divides, a guy who could be counted on in a crisis, a message that Giuliani never fails to try to drive home. And, what do you know, Rudy's looming terror threat was made real this summer in South Carolina by the strange case of the Goose Creek bombers.

You may recall the two young Islamic men who were detained by police near a naval weapons facility outside Charleston—the state is dense with such installations—and found to have pipe bombs. They were later tied to a bizarre video claiming to show how to use a remote-controlled model boat as a weapons-delivery device. That, in turn, had the rocket scientists at the Transportation Security Administration going ape over remote-controlled toys. Pack all this together and Benito Giuliani vowing to fight Islamo-terror may sound like your man from the bunker of your fairway spread on Hilton Head.

But not without a fight. Other candidates have zeroed in on Giuliani's high standing in South Carolina and are now moving to take him down a notch, especially the perplexing stealth candidacy of Fred Thompson. Thompson is starting to air TV ads in the state, yet has been shy about putting up any signage around the campaign's Columbia HQ. Thompson is practically required to have a good showing in South Carolina, with both Mike Huckabee and John McCain in similar binds. In other words, the beat-on-Rudy party is just starting in the state.

This is where we'll see what more liberal stances on gays, guns, and zygotes really means. At some point the Giuliani camp will have to trot out the likes of Robertson and other social conservative supporters to say, "yes, but..." and attempt change the subject, probably to the notion that only he can stop the Hillary Ascendancy and related Rivers of Blood. It will be an interesting, pivotal time in American politics. And, contrary to much conventional wisdom, it has not happened yet.

Jeff Taylor writes from North Carolina.

Sadly Comcastic!

info@reason.com (Jeff Taylor) — Thu, 25 Oct 2007 12:32:00 EDT

Let me make it perfectly clear: I hate Comcast. The years I was sentenced to the company's crappy CATV and broadband service were long, brutal, and demeaning. And that was just the time spent interacting with Comcast customer service.

Still, contrary to much of the recent vilification the company has received, Comcast has a hint of a justification in attempting to "shape traffic" on its network by throttling bandwidth hogs. More importantly, Comcast's misdeeds do not necessitate—as many have assumed—some sort of federal solution and associated broadband policing.

First, Comcast was absolutely wrong not to inform its customers that file-sharing apps like BitTorrent would be disrupted by active Comcast intervention. That is a deceptive business practice, plain and simple. However, there are still sound reasons for the traffic shaping goal—which the AP hysterically labeled "data discrimination"—that require no ill-intent to explain.

Any network—roads, broadband, canals—has peak usage times. The provider of that network wants to maximize the number of customers they can charge to use that network, of course. But you cannot attract customers unless you promise some reliable level of service and try to smooth out usage peaks and valleys.

Applied to the world of Comcast, who are often trying to service many customers through one access point, one or two BitTorrent or Gnutella freaks can eat away at the access promised to other customers. Comcast would have to be suicidal not to take note of this fact and try to address it.

This is not "data discrimination," but common sense. Likewise it is common sense that consumers would not actually benefit by turning broadband access into a quasi-public utility via a declaration that Internet service is a common carrier, with absolutely no differentiation in the traffic carried, and answerable only to regulators on that count.

Think about the kind of consumers we want to be—captive or coveted? In the old telco common carrier model, consumers had no choice in provider, and only scant choice for services. Maybe a choice of Bakelite handset color if they were lucky. Contrast that with today's hypercompetitive cell phone market, where consumers are courted by providers with hundreds, if not thousands, of options to reflect a user's needs.

This brings us to the major confusion with data discrimination/Net neutrality thinking: Bits may be bits, but users are not users. We should not mistake the binary, on-off nature of digital communication for the end result, which is the untold number of different ways that this means of communication can be used.

Old dial-tone voice service did only one thing, so it was fairly easy for regulators to handle. You either were able to make and receive calls, or you were not. Then the government decided that long distance calls should subsidize local service, and that was that. You heard a dial tone when you picked up your receiver, and that was your expectation as a consumer of telephone service.

A broadband consumer expects—what, exactly? Low-latency for gamers. Reliability for businesses and home offices. Upstream vs. downstream—which is most important to you? Downstream for most folks, but not all. Not someone trying to push a 15 megabyte Power Point presentation through 48K. Is voiceover IP a priority for you? IP TV?

A federal "Civil Rights Act" for Internet bits couldn't possibly address all of these competing uses for broadband service.

In fact, the best solution to providing competition and making broadband consumers coveted by providers does not lie in federal legislation; it is found in breaking the monopoly service providers like Comcast have with local governments. If we are really worried that consumer data will be discriminated against, then the best response is to ensure that consumers have multiple choices in local service providers.

Failing that, local governments can and should negotiate levels of service requirements into their franchising agreements with providers like Comcast. Such requirements have long been a part of cable TV franchise agreements, and explain why Comcast or Time Warner will roll a truck for reports of snow on your basic cable tier. But report flaky Net service? If you're lucky, they'll drop off a new modem in a day or two.

Robust and reasonable Internet service requirements would at least start to ensure that providers could not blame shoddy network performance on peer-to-peer users, or go on a witchhunt against them in order to avoid spending money on needed network upgrades. At a minimum, every franchise agreement should have some minimum up-time and advertised speed language.

Would that usher in Net utopia? No, but it would help ensure consumers get what they pay for without engaging the regulatory blunderbuss of Congress. And it would leave time for the truly important things in life.

Like hating Comcast.

Reason contributor Jeff Taylor writes from North Carolina.

An Act of Commissions

info@reason.com (Jeff Taylor) — Tue, 16 Oct 2007 15:00:00 EDT

Every so often Congress steps back from the monumental issues of war, peace, and radio talk show hosts to remind us that it is fundamentally about power. A case in point: Last week's bi-partisan passage by the House of the Regional Economic and Infrastructure Development Act of 2007.

Proudly modeled on the Great Society-era Appalachian Regional Commission (ARC), the legislation aims to spend $1.25 billion between 2008 and 2012 to set up five regional commissions that would hand out money to state and local governments, Indian tribes, and nonprofit organizations "to promote economic and infrastructure development."

Uh-oh.

Those buzz words signal an open-ended commitment to eventually spend billions and billions of federal dollars in pursuit of elusive "economic development"—much like the ARC itself. Long a target of federal pork busters, ARC constantly finds new "needs" to be met. Lately, that has involved millions to subsidize broadband deployment within its 13-state purview. The Senate recently passed legislation which would take ARC's funding from about $95 million in 2007 to $109 million by 2011.

No wonder so many members want their own commissions. Also, with earmarks in federal appropriations receiving so much negative press recently, a network of ostensibly independent commissions could prove a great way to funnel cash back home.

These new commissions would be the Delta Regional Commission, the Northern Great Plains Regional Commission, the Southeast Crescent Regional Commission, the Southwest Border Regional Commission, and the Northern Border Regional Commission. In total, all or parts of 26 states would be eligible to receive funds from a new commission were the bill to become law.

The Southwest border region alone is massive. It includes all counties within 150 miles of the U.S.-Mexico border. That's 11 counties in New Mexico, 65 counties in Texas, 10 counties in Arizona, and 7 counties in California for a combined population of about 29 million. Figure a Peru or Iraq-sized populace with needs to be serviced.

The Congressional Budget Office relates that "at least 40 percent of the authorized funds would be used for grants to develop transportation, telecommunications, and other basic public infrastructure. Remaining funds would be used for other economic development activities, such as providing job training, improving public services, and promoting conservation, tourism, and development of renewable and alternative energy projects."

If that mission statement sounds like a lot of overlap with existing local, state, and federal entities, well, no one cares. All that the backers of bill care about are more photo ops with giant checks and more ribbon-cuttings.

Bill opponent Rep. Lee Terry (R-Neb.) noted during debate on the bill that the commissions would spend millions in administrative overhead doing what other organizations already do in his state. He was politely ignored.

In addition, Rep. Jim Jordan (R-Ohio) noted that the bill does not forbid commission funds from being spent on lobbying efforts. Anyone familiar with the economic development racket at the state and local level knows what that means: lobbyists and consultants will be hired and directed to cook up various deals involving public money flowing to private hands for work of dubious quality. Jordan's attempt to fix this oversight was slapped down on the House floor.

And for all the talk of the commissions being a response to "grassroots" efforts to target persistent problems, bill sponsor Rep. James Oberstar (D-Minn.) does not sound like he has a free-form, problem-solving process in mind.

"We need standard procedures. We need a voting structure," Oberstar said in arguing for his bill. "Commonality establishment of local economic development districts, a consistent method for distributing economic development funds, a uniform set of procedures that will apply to all of the commission, and, finally, with commonality then we can have uniform evaluation standards of the results of these commissions."

In short, the feds want to play the economic development/economic incentives game along with the states, regions, counties, and cities. Wonderful. Not only that, but it is perfectly reasonable to expect that in the near future that development dollars from the Northern Great Plains Regional Commission will compete with a plan funded by the Southeast Crescent Regional Commission for a corporate relocation of a firm located in the zone of the Northern Border Regional Commission, which will probably be offering its own incentive package for the firm to stay put.

This sort of thing routinely goes on at the state and local level now. The proposed federal commission framework would only make it worse. But what reveals the plan as a totally self-serving political construct is the way one proponent framed the supposed problem the commissions would fix.

"In short, Mr. Speaker, our mills are closing, our young people are leaving, and too many of our workers are looking for work," one Maine congressman lamented.

In other words people are voting with their feet and moving to where they can find jobs in the great and wonderful American labor market. With a Census coming up and reapportionment after that, those private choices are a mortal threat to certain members of Congress who might be re-districted out of their seats.

If trying to reverse that trend is not worth a few hundred million dollars a year, what is?

reason contributor Jeff Taylor writes from North Carolina.

Get the Picture?

info@reason.com (Jeff Taylor) — Mon, 01 Oct 2007 15:51:00 EDT

Back in mid-2006—an epoch ago in the consumer electronics field—Toshiba and Canon wowed the trade show circuit with a next-generation flat-panel TV. Turning to old cathode-ray tube technology for low power consumption and inky, cinema-like blacks at low light levels, the sets were expected to replace both plasma and LCD screens in the near future. Then America’s convoluted intellectual property regime kicked into action.

Nano-Proprietary, a tiny Austin company with 35 employees and just over $1 million in 2006 revenue, sued Canon for breach of contract. The Texas court sided with Nano in February: Canon had licensed one of Nano’s many patents in the sketchy field of “carbon nanotubes,” and the court held that Canon couldn’t go into business with Toshiba to produce screens using that technology. Meanwhile, Nano found a component manufacturer in Taiwan and is trying to produce its own sets while turning down a new licensing deal with Canon/Toshiba.

The upshot is that surface-conduction electron-emitter display sets, described by Sound and Vision magazine as “potential plasma killers,” are nowhere to be found. Rival technology from a Sony-led group will beat the contested sets to market. But beware. Nano has floated the notion that “even companies developing…non-carbon based field emission displays may be required to license other portions of our patent portfolio in order to bring a product to market.”

So once again vague patents are blocking innovation rather than encouraging it. Nano’s “patent portfolio,” if it does reflect actual technical leadership in the field, should position the company to bring products to market, not just to charge a toll on others wishing to do so.

The Banality of Truth

info@reason.com (Jeff Taylor) — Fri, 21 Sep 2007 16:15:00 EDT

On Tuesday Director of National Intelligence Michael McConnell told the House Judiciary Committee things that, had a government official said them in the days, weeks, or months following 9/11, would have sparked public outrage—and may have significantly blunted the push for greater police and surveillance powers like the PATRIOT Act.

McConnell told lawmakers that "9/11 should have and could have been prevented."

Specifically, McConnell cited the pilot training sought by hijackers Khalid al Mihdhar and Nawaf al Hazmi and convicted terrorist Zacarias Moussaoui in the United States as an obvious warning sign that was ignored by Washington after feds on the ground flagged the activity.

"For whatever reason, we didn't connect the dots," McConnell said, not quite coming clean on the reasons.

Nevertheless, this position moved McConnell beyond previous remarks in June in which he held that "in his view" the terror attack was preventable, but that law adopted for a Cold War world prevented swift action to stop terrorists.

What happened to change the shading? For one, a widely overlooked story first published on September 10 by McClatchy Newspapers Washington reporter Greg Gordon happened.

In his dispatch, obviously timed to coincide with the sixth anniversary of the attacks, Gordon returns to the Moussaoui case. As the case unfolded in the spring of 2006 it became increasingly clear that top FBI officials likely missed an opportunity to stop the attack in late August 2001.

While the dogged investigation of Moussaoui by Minneapolis FBI agent Harry Samit and Samit's repeated attempts to get a warrant from FBI HQ in Washington to search Moussaoui's laptop and belongings has been well documented, Gordon's reporting uncovers new information that the FBI absolutely had information in its hands to roll up a large chunk of al Qaida's financing network in the days before 9/11 and stop the hijackings.

Moussaoui had long been regarding by his fellow jihadis as something of a loose cannon and security risk. Turns out they were right. Moussaoui's notebooks included Western Union routing numbers, routing numbers used by al Qaida operative Ramzi Binalshibh to send $14,000 to Moussaoui in August 2001.

But authorities never looked at those notebooks. Instead, FBI brass repeatedly blunted Agent Samit's attempts to search them, citing lack of information that Moussaoui was a known terrorist or foreign agent.

Gordon writes:

Instead, Moussaoui's tattered, blue spiral notebook sat in a sealed bag at an immigration office—unopened until after four hijacked jets slammed into New York's World Trade Center, the Pentagon and the Pennsylvania countryside, killing 2,972 people.

Gordon also notes that, leaping from the Binalshibh transactions, investigators pre-9/11 almost certainly could have traced his money back to an al Qaida moneyman in Dubai. The Dubai contact, in information developed after 9/11, turns out to have used one of his Western Union receipts to jot down a phone number in the United Arab Emirates. That UAE number received calls from 9/11 hijackers while they were living in Florida prior to their attack.

Given these connections, merely getting German authorities to nab Binalshibh may have been enough to derail the 9/11 mission in the United States. Teasing out the other contacts would have taken more effort, but would have delivered exponentially greater rewards. At the extreme, it is by no means stretch to think the authorities had the chance to quietly round-up 9/11 hijackers in the country prior to the attack. As Gordon notes, FBI agents at Moussaoui's trial testified that had he confessed—thus giving them access to his notebooks pre-9/11—they could have moved on 11 of the 19 hijackers.

Why didn't this happen anyway? For one there was Washington's steadfast refusal to move on information developed from the field offices without additional supporting intelligence. And here all the intelligence suggested that the United States had already degraded and "mapped out" al Qaida's financial network. For several years the National Security Agency was quite confident it had "broken" al Qaida security and had access to bank accounts and other communications points of contact for the global network. It does not appear, however, that anyone seriously considered the 150-year-old Western Union system as a viable method to fund a terror network. They were wrong.

Like the pointless search for a "bamboo Pentagon" in the jungles of Vietnam, American anti-terrorism efforts in the 1990s and pre-9/11 months assumed al Qaida was a terrorist CIA. It had a clear command structure to be infiltrated and advanced technology to be hacked into. We now know that it not true.

Or do we?

McConnell's admission of pre-9/11 mistakes came in service of defending greater surveillance powers for the federal government.