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Beyond the Front Page

Beyond the Front Page is a weekly summary of facts and figured, broadly focused on U.S. and international economic issues.

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Permanent Link to Allan Golombek
Allan Golombek

Allan Golombek has more than 20 years communications experience as a speechwriter, journalist, and public affairs consultant. His work has encompassed such public policy issues as financial and banking regulation, health care, trade, justice and criminal law reform, and housing.

Permanent Link to Rupert Darwall
Rupert Darwall

London-based Rupert Darwall has two decades’ experience in finance and public policy, specialising in the intersection of the two.

WHWG Perspectives

 The New Assault on American Corporations

In March 2010, the White House Writers Group along with Bloomberg, The Torrenzano Group, and CED held a Bloomberg Boards & Risk Briefing in New York City on changes to proxy rules that will have a tremendous impact on American corporations.

It was a half-day briefing on these new developments and what information, strategies, and techniques executives need to address them. There were discussions and presentations with leading experts in corporate governance, law, public policy, strategic communications, and investor relations.

Issue Overview

The regulatory reach of Washington is pulling together a qualitatively different kind of economy for America. The alphabet agencies – from the FCC to the FTC – are fighting with gusto and attacking with new and complex regulatory issues.

The SEC is preparing new access-to-the-proxy rules while legislators propose rules on “say-on-pay,” additional powers for financial regulators, as well as new legislative proposals on corporate governance and non-shareholder rights. The EPA is reversing judgments, thereby initiating sweeping reviews of scientific issues believed long settled.

At the individual company level, activists, unions, and special interest groups are skillfully using new technologies to drive their narrow agendas, affect board voting, and disrupt annual meetings.

Video

Behind Washington’s Closed Doors: What Will Happen Next?

Clark S. Judge, Managing Director, White House Writers Group

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Why Did Obama Scrap Nuclear Disarmament in the State of the Union?

U.S. News & World Report – February 26, 2013

On Sunday, February 10, the New York Times reported prominently that President Obama’s State of the Union address would feature a renewed drive by the president for nuclear weapons reduction toward his avowed goal of a nuclear-weapons-free world. There were ample details: U.S. nuclear forces to be cut by one third, taking our arsenal of actively deployed weapons down to a level of 1,000—well below the New START goal, ratified in 2009, of 1,550 such weapons by 2018.

There was a quote: Obama “believes that we can make pretty radical reductions—and save a lot of money—without compromising American security in the second term. And the Joint Chiefs have signed off on that concept.”

A game-plan was outlined: Obama would reach “an informal agreement” with Russia’s Vladimir Putin for mutual reductions within the New START framework. Ratification would be unnecessary. No need for the Senate to get involved.

National security adviser Tom Donilon would travel next month to Moscow, following on Vice President Joe Biden’s recent confab with Russian leaders attending a security conference in southern Germany, all to pave the way for a pair of Obama-Putin summit meetings this summer.

That was quite a wind-up. And then came the pitch: “At the same time, we will engage Russia to seek further reductions in our nuclear arsenals, and continue leading the global effort to secure nuclear materials that might fall into the wrong hands …”

That’s it?! That’s all President Obama had to say about his cherished goal of world-wide nuclear disarmament—the commitment that, largely, won him a Nobel Peace Prize—in his first State of the Union address after his historic re-election? What happened? How could the venerable Times have gotten the story so wrong?

Well, what happened is North Korea! Evidently its new dictator, Kim Jong-Un, doesn’t read the New York Times. Or perhaps he just has a timetable of his own. Because on the morning of the president’s speech, news reports around the world headlined North Korea’s third nuclear weapons test.

Well, that certainly must have “put the cat among the pigeons” in the White House preparations for the president’s address that same night. As a veteran of past administrations’ State of the Union “drill”, I can readily imagine the paragraphs of visionary, high-minded, man-of-peace prose, prefigured by advance reports like the Times‘s, being ripped out and tossed on the cutting room floor overnight before Obama’s speech. You can just hear the White House advisers muttering, “We can’t have the president looking so out-of-step with reality.” Even if he is.

North Korea’s blast underscored exquisitely the most fundamental contradiction of Obama’s nuclear disarmament ambitions. Its cornerstone rationale is to minimize and reverse the incentives for nuclear proliferation by the world’s ‘wannabe’ nuclear powers—mainly rogue states like Iran and North Korea implacably hostile to the United States and the West.

It just wouldn’t do to have the president announce his next down-payment on this idealistic goal right on the heels of North Korea, the biggest Non-Proliferation Treaty violator, taking another unmistakable step closer toward nuclear weapons capability, complete with bellicose threats against the United States and South Korea. To boot, eight weeks earlier North Korea launched a long-range missile, ostensibly a space launch, obviously intended to eventually threaten the United States with nuclear attack. Against this backdrop a big play on nuclear weapons reduction in the State of the Union address, justified as heading off precisely what had just happened, risked making Obama look dangerously naïve.

As it happens, the over-80 percent reduction in U.S. and Russian nuclear arsenals since their Cold War peak in 1986—and the 50 percent reduction in U.S. deployed and nondeployed nuclear weapons ordered by President George W. Bush after the 2002 Strategic Offensive Reductions Treaty—have had no impact on Iran and North Korea. But that’s not the only contradiction in Obama’s nuclear policy.

The rationale for further nuclear reductions rests heavily on the end of the Cold War—but Obama’s approach to nuclear arms reductions is completely rooted in the Cold War. It remains an entirely bilateral exercise between the United States and Russia, just like in the Cold War days. Other “lesser” nuclear powers—China, India, Pakistan, whose arsenals become more significant with each round of U.S.-Russian cuts—get to “sit this one out.” And there’s no pretense of trying to bring rogue proliferators like Iran and North Korea—the principal dangers—into any kind of multilateral bargain exchanging U.S.-Russian reductions for the unwinding of their nuclear programs.

The Obama team holds out the prospect that U.S. nuclear deterrence will protect our friends and allies abroad in case North Korea and Iran ultimately fulfill their manifest ambitions to deploy offensive nuclear arms. But how is this supposed to work when, at the same time, Obama’s policies continue to whittle down and weaken that deterrent force?

So, will Obama temper his quest for still further nuclear arms cuts in the face of North Korea’s latest provocation? Surely not. This is among the highest priorities of his national security strategy. But with the Senate losing its most knowledgeable and articulate voice on these issues as a result of Sen. Jon Kyl’s  retirement, and with Obama’s nomination of former senator Chuck Hagel—co-author of a “Global Zero” report advocating unilateral reduction of the U.S. nuclear deterrent—to be secretary of defense, the question is: Will anyone emerge in the Senate willing or able to apply the brakes?

The article appears here.

The 2012 U.S. Elections: What Happened??!!

Del Sur al Norte, December 2012 – The magazine of the Fundacion Centro de Estudios Americanos (Center for American Studies Foundation) of Buenos Aires, Argentina. The following article by Senior Director G. Philip Hughes was featured in the ‘Special Edition on the 2012 Elections in the United States’ issue. (Article available here in Spanish: Elecciones Presidenciales)

 

It wasn’t supposed to be this way.  At least not for Republicans.  And not according to Republicans.

A failed President – one who had presided over nearly four years of 8%+ unemployment; over the weakest economic of the postwar period; over economic growth barely above 1% and annual trillion dollar budget deficits – re-elected for another four year term!  A President whose major accomplishments in office have been pushing through a still-highly-unpopular national health care scheme and winding down wars in Iraq and Afghanistan according to pre-announced deadlines – a policy regarded by many national-security-minded Americans as a thinly disguised ‘cut and run’.  Defeating a Republican nominee with a successful business record and demonstrated ability to turn around troubled operations – one whose sole experience in elected office was as the moderate Governor of arguably the nation’s most liberal state, a state dominated by Democrats in which bipartisan compromise offered the only path to achieving anything whatever.

Not only did Obama win a second term; his Democrats, with twice as many Senate seats to defend as their Republican opponents (22 to 11), actually expanded their Senate majority by a net of two seats.  Practically the only consolations for Republicans were successfully defending their majority in the House of Representatives — despite a net loss of 11 seats, the Republicans retained control of the chamber by a comfortable 233-199 majority – and expanding (by 1, to a total of 30) their record number of Republican Governorships.

Republican and Republican-leaning commentators predicted a very different outcome.  Karl Rove, architect of George W. Bush’s 2000 and 2004 election victories and organizer of American Crossroads, a major independent group supporting 2012 Republican candidates, wrote in The Wall Street Journal on October 31: “My prediction: Sometime after the cock crows on the morning of Nov. 7, Mitt Romney will be declared America’s 45th president. Let’s call it 51%-48%, with Mr. Romney carrying at least 279 Electoral College votes, probably more.”  Michael Barone, author of The Almanac of American Politics, wrote in The Washington Examiner on November 2: ”Bottom Line: Romney 315, Obama 223.  That sounds high for Romney.  But he could drop Pennsylvania and Wisconsin and still win the election.”

Fat chance!  As it turns out, Obama won all but one of the so-called battleground states: Florida, Ohio, Virginia, Colorado, Nevada, Iowa, New Hampshire, Wisconsin.  Romney won – barely — North Carolina, a ‘battleground state’ that went for Obama in 2008.

How could this happen??!!  That’s the question many Republicans were asking themselves on Tuesday night, November 6, and in the days and weeks afterwards.  Obama won by only about 3 million votes, out of slightly less than 122 million votes cast for the two major parties’ candidates (62,611,250 to 59,134,475) but racked up a compelling advantage in the Electoral College (332 to 206; 270 are needed for election).  Republicans could console themselves that Obama’s vote total was some 9 million fewer than in 2008 – a record turn-out election year – suggesting that his support had slipped.  But Republican nominee, Mitt Romney, polled some 3 million fewer votes than John McCain – considered a weak Republican candidate –  received four years earlier.  If everyone who voted for McCain had turned out for Romney, he would have won.  So thought many Republicans.  If Obama’s margin could have been so easily overcome, how significant could his victory have been?

The answer is: very significant!  The close popular vote suggests the election was not as epochal or the total vindication that partisan Democrats may claim.  But neither was it a fluke or a merely temporary setback.  The election revealed – or, better, threw into relief – crucial demographic shifts in the American electorate with profound implications for future elections – the strategy, the tactics, the possible outcomes.  And it may have re-written the ‘play-book’ for U.S. electoral campaigns going forward.

So … what happened??!!  Let’s review the series of factors contributed to Obama’s victory, to Romney’s defeat, and to the Democrats’ success in fighting the Republicans to a virtual electoral standstill nation-wide.

Grand Strategy, Conventional Wisdom, Unconventional Tactics.  The contrast between the respective theories of and strategies for the campaign of the Obama and Romney teams was striking.  From all indications, the Romney camp’s theory of the campaign, and strategy for winning it, were based on very conventional thinking.  For them, the campaign was about one big, overarching issue: the economy.  It was lousy.  Obama had been President for four years.  However constantly Obama blamed his predecessor, George W. Bush, for the ‘economic mess’ he inherited, he couldn’t escape responsibility it.  Pocketbook issues are famously decisive with American voters.  Obama’s job approval ratings hovered persistently below 50%.  Polls consistently showed majorities of Americans thought that the country was ‘on the wrong track’ on the bell-weather polling question.  No incumbent President since Franklin Roosevelt had been re-elected with unemployment above 7.5% for over 40 months.

All the Republicans had to do, it seemed, was to present a plausible, non-polarizing alternative to Obama and Obama would get ‘fired’ by the electorate.  A resume of business experience and of successful ‘turn-around operations’ might help.  Emerging in May from a 6-months’-long, bruising Republican primary contest, Romney seemed like he might be ‘the right man for the job’ – of beating Obama.  Although his moderate record as Governor of Massachusetts and his ‘flip-flops’ on key issues left conservatives with lingering doubts, Romney generated, ironically, high ‘voter intensity’ among Republicans.  He also polled well with independents – a key to defeating Obama, who had carried the independent 52% to John McCain’s 44% in 2008.

All of this was fairly conventional thinking and strategizing – a page straight out of the standard playbook of American politics.

As it turned out, the Obama campaign wasn’t following the textbook of American politics; they were writing a new one.

Saddled with a weak record on the economy and an unpopular ‘signature accomplishment’ health care program, Obama’s campaign recognized that they needed a big theme, since the ‘big issue’ – the economy – worked against them.  That theme – “Forward” – conveyed the positive impression of progress while implying that the alternative was a return to ‘the bad old days’ of George W. Bush.  As a theme, it had the additional merit of offering no insight whatsoever into Obama’s goals and plans for a second term.  Remarkable!  A Presidential re-election campaign without a second-term agenda!

The solid block of states predictably supporting the Democratic candidate in national elections – California, New York, Illinois, New Jersey and Maryland; the New England states; the Pacific Northwest and Hawaii – enabled Obama’s team to focus on the battleground states mentioned earlier.  But, given recent demographic shifts in the electorate, Obama’s people saw the opportunity to build coalitions of minority voters – Hispanics, Asians and women to complement their traditional strength among blacks and Jews.  This, along with liberal white Democratic voters, ultimately proved more than enough to offset Obama’s losses among independent voters and Romney’s supposedly energized Republican base.

To reach these voters, Obama’s team assembled an enormous database of information on voters nationwide – not merely names, addresses, zip codes (a proxy measure of affluence), voting and political contribution histories, but also information derived from credit agencies about consumption patterns and property ownership – all geared to identifying and targeting their voters.  And they put together a team of ‘quants and stats’, an assemblage of quantitative analysts and statistical experts to analyze and ‘mine’ this data to maximize Obama’s vote.  Along the way, Obama’s team was able to identify sub-issues – even ‘non-issues’ – that resonated with subsets of voters.  (For instance, Obama’s team used the issue of women’s access to contraception – shown to resonate with urban single women in places like North Carolina and Virginia — to mobilize their voters and ‘turn them off’ to Romney’s appeal, even though no one and no issue in the election threatened this access in any way.)

By contrast, Romney and the Republicans deployed a much more conventional array of political campaign advisers and strategists who, working from more aggregate, ‘macro’ numbers, plotted their strategy through states whose combination could produce a majority in the Electoral College.  Cleverer and more unconventional than the Republican’s approach, Obama’s targeted ‘micro’ strategy simply beat Romney’s ‘macro’ one.

Character Assassination as High Politics.  According to press reports, Jim Messina, Obama’s chief campaign strategist, approached the President in late spring with a bold and unconventional advertising strategy.  Realizing that Romney was about to emerge as the Republican nominee after the long, costly primary battle – but with depleted coffers to cover the months between May and the August Republican convention — Messina urged Obama to ‘spend big, now’, especially in battleground states. The idea was to ‘define’ Obama’s opponent by savaging his business record (his principal ‘selling point’) before Romney could gather the resources to respond.  This bold stroke contrasted with the conventional wisdom – as practiced by the Republicans this year — of husbanding the campaign’s dollars so that they could ‘carpet bomb’ the battleground states with advertising in the campaign’s concluding 10 weeks.

Messina may have been inspired by the ‘Swift Boat Veterans for Truth’ campaign, launched against Democratic nominee, Senator John Kerry, by his former comrades-in-arms during George W. Bush’s 2004 re-election campaign.  The book and advertising campaign sponsored by this independent veterans group during the ‘August lull’ in the campaign impugned Kerry’s Vietnam War record and undermined his fitness to serve as Commander-in-Chie in the midst of on-going wars in Iraq and Afghanistan.

But even if Messina was inspired by the 2004 episode, he took the idea much further.  The attacks started much earlier – as soon as it was clear that Romney would be the Republican nominee – and went on all summer, not merely for a month.  They were highly targeted in battleground states.  And they were directly funded by Obama’s re-election campaign – then echoed by other supportive operations.  As post-election survey data subsequently revealed, Romney’s image in these states never fully recovered from this barrage.  And the Republicans’ ‘conventional wisdom’ advertising strategy couldn’t undo the damage in the campaign’s closing weeks.

Inside Your Own Echo Chamber.  For decades, conservatives and Republicans complained of one-sided, Democrat- and left-biased news reporting and commentary by the major U.S. broadcast networks and nationally important newspapers and maagaazines.  With the advent of conservative talk radio two decades ago and of Fox News Channel roughly 15 years ago, conservatives and Republicans found a series of media outlets more congenial to their viewpoint.  These outlets, however, may have done as much harm as good for the Republican cause in this election cycle.  While they helped focus attention on some issues helpful to Romney and harmful to Obama – e.g., the deaths of four diplomats during the destruction of the U.S. Consulate in Benghazi, Libya – their steady predictions of Obama’s defeat and their scenarios for a Romney victory helped blind Republican strategists and activists to the potency of Obama’s actual campaign plan.

Where Was the Tea Party?  Two years ago, when Republicans swept the mid-term elections on a wave of opposition to Obama’s first months in office, the stage seemed set for a Republican re-capture of the Senate and the White House in 2012.  Obviously, that didn’t happen.  The 2010 ‘wave’ election for Republicans was largely fueled by the voter activism and turn-out generated by the Tea Party (an acronym for ‘Taxed Enough Already’ that also evokes a Boston episode that led to the American revolution).  But in 2010, by backing of a handful of strictly conservative candidates over moderates with state-wide vote-getting appeal, the Tea Party may have cost the Republicans control of the Senate.  Tea Party Senate candidates – notably in Delaware, Colorado, and Arizona – lost.  So, the 2010 record of the Tea Party was mixed: Republicans couldn’t have swept the election without them, but couldn’t win the Senate with their candidates.

In 2012, Republicans reaped all of the Tea Party’s negatives with few of its benefits.  Tea Party-backed Senate candidates went down to defeat in heavily Republican Indiana and in Missouri, where the Senate’s most vulnerable Democrat hung onto re-election against a Tea Party candidate who pronounced, before the election, that women’s bodies had a natural defense mechanism against conception in cases of rape.  This candidate’s medical ‘epiphany’ triggered unanimous appeals from the Republicans leadership to withdraw from the race.  He refused.  Instead, he lost.  At the same time, the Tea Party apparently failed to generate the voter enthusiasm and turn-out for the Republican ticket that it contributed in 2010 – noticeable in Romney’s disappointing showing among white working-class, ‘blue-collar’ men.  So, between lost Senate opportunities and a disappointing voter mobilization, in 2012 the Tea Party fizzled.

Bottom Line.  In the 2012, President Obama’s campaign engineered a brilliant tactical victory – one that will be long studied and may well re-make the way future U.S. elections campaigns are fought.  Republicans misapprehended what Obama’s people were up to and underestimated the effectiveness of his tactics.  Whatever other mistakes Republicans may make in the future, they won’t repeat the ones of 2012!