Joe Or No Joe

With the calendar turning to August, it’s officially the silly season in American politics.  On the Republican side, a loudmouthed, self-promoting, angry anti-politician is leading in the polls, and 10 of 17 declared presidential candidates will crowd onto the stage to have a “debate” on Thursday.  And on the Democratic side, politicos and pundits are talking seriously about drafting Joe Biden to throw his hat in the ring.

Wait a second . . . Joe Biden?  72-year-old, two-time also-ran, vice president Joe Biden?

Evidently so.  There’s apparently concern in some Democratic quarters about Hillary Clinton being damaged goods.  Her trustworthiness numbers aren’t good — whether it is because of her State Department email server fiasco, or because everything she does and says seems so carefully scripted and calibrated, or for some other reason — and she hasn’t exactly been lighting it up on the campaign trail.  In fact, there seems to be a lot more excitement about Vermont Senator Bernie Sanders, a socialist who has been drawing big crowds in the early decision states.  So while Hillary has raised tons of money and signed up legions of heavyweight staffers and fundraisers, people are beginning to wonder whether her nomination is as inevitable and certain as, say, Ed Muskie in 1972.

But if you think Hillary Clinton may not be the best candidate to carry the Democratic banner, where do you turn?  America isn’t likely to elect a 70-something socialist, and former Maryland governor Martin O’Malley doesn’t exactly have people buzzing.  Most of the leading Democratic politicians on the national scene don’t seem especially keen to take on the Clinton political machine.  That leaves good old Joe.  He’s been on the national Democratic scene forever, he’s a known commodity, and although he’s been a gaffe machine in his prior races he’s one of those pols who seems to love being on the campaign trail — whereas Hillary Clinton seems to consider it to be a painful hassle.

I have no idea whether Joe Biden will end up running — he’s just lost his son to cancer, but once the presidential bug bites it’s hard to shake the obsessive lure of the Oval Office.  What’s more interesting to me is that the national Democratic bench seems so shallow — and, with the exception of O’Malley, so long in the tooth.  Why aren’t the party bigwigs talking about Democratic governors (other than California’s Jerry Brown, who is 77), or Senators like Ohio’s Sherrod Brown?  Why aren’t more up-and-coming Ds willing to risk a long-shot run, like Bill Clinton did in 1992?

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When The King Goes To Canada

Burger King has announced that it is buying Tim Horton’s, a Canadian doughnut and coffee chain, and moving its headquarters to Canada as part of the move.  From the frenzied reaction to the decision, you’d think the head guys at Burger King had set fire to the American flag and then used the remains to mop the floor by the deep frying machine.

Ohio’s Democratic Senator, Sherrod Brown, seems to be the one who has gone the deepest off the deep end; he’s urging a boycott of Burger King in favor of American burger outlets like Wendy’s and White Castle.  In an email he sent out yesterday, Brown calls what Burger King is doing “abandoning your country” and says it is part of a “growing trend in which companies get rich in the United States, then move to a foreign tax haven with the stroke of a pen.”  Bernie Sanders, the Independent Senator from Vermont, says the move shows “contempt” for the “average American.”  Dick Durbin, the Democratic Senator from Illinois, also has ripped Burger King for being un-American.

It’s not entirely clear that Burger King’s motive in pursuing the Tim Horton’s deal is to avoid taxes.  The company says they are making the move not to dodge taxes, but because they want to buy Tim Horton’s and think the move will be more palatable to Canadian regulators if the combined company’s headquarters is in Canada.  It seems undeniable, however, that the move to Canada will change how the new company pays taxes — companies that are headquartered in the U.S., under U.S. tax laws, pay the steep 35 percent corporate income tax on all income earned anywhere in the world (even in countries that have no corporate income tax), whereas companies headquartered in Canada (and many other countries) pay the different corporate tax rates in the countries in which the income is earned.

The overreaction to the Burger King move seems like pretty obvious, and silly, political posturing.  So Canada, our friendly neighbor to the north with whom we share a peaceful common border that is thousands of miles long, is now a despicable “tax haven” like, say, the Cayman Islands?  So corporations that see a better deal and pursue it are now unpatriotic if that deal reduces the taxes they pay in the U.S.?

As a reminder to our Senators, corporations don’t exist to funnel as much money as possible to the U.S. government.  Instead, corporations are principally answerable to their stockholders and, in most instances, have the primary goal of making money, not shelling it out unnecessarily.  Burger King isn’t breaking any laws by buying Tim Horton’s and moving its headquarters, and if doing so will help it save on unnecessary tax payments and realize better shareholder value, what’s wrong with that?  If American tax policy is out of step with that of Canada and other countries, maybe America needs to revisit its policy rather than blaming companies for making entirely rational economic decisions.

One other point on this:  there’s a Burger King near my house.  I’m not sure how many people it employs, all told — 50, perhaps? — but how do you think those people would be affected if Sherrod Brown’s call for a boycott were successful?  If Burger King moves to Canada its restaurants will continue to employ thousands of Americans, and it will continue to pay taxes on the money it earns here.  That seems fair to me.

Raise The Minimum Wage?

This week I received an email from U.S. Senator Sherrod Brown, of Ohio, about the federal minimum wage, which currently is $7.25.

Senator Brown supports raising the minimum wage for several reasons.  First, a minimum-wage worker would earn $14,500, which does not allow families to make ends meet and would put a family of four below the poverty line.  Second, the minimum wage hasn’t been raised since 2007.  Third, 30 million people are paid the minimum wage, and Senator Brown describes them as hard-working people who “bring in the same paycheck year after year” while the price of other goods increases.  Fourth, Ohio and other states have slightly higher minimum wage rates.  Finally, he says a raise is a “good, common-sense idea” because “[t]he more money in people’s pockets, the more they’ll spend.”

I don’t buy the arguments.  By definition, the minimum wage is reserved for low-skill, entry-level jobs — the kind high school kids get as their first work experience.  Workers then move up the scale as they gain experience and skills.  I’m skeptical there are many families of four whose income is wholly dependent upon one minimum-wage worker, or that such people are paid the minimum wage “year after year.”  Even if those families exist, we shouldn’t build federal economic policy around such outliers.  The fact that the minimum wage hasn’t been raised since 2007 also means nothing.  Since 2007, America has been mired in a brutally long recession, and unemployment still remains far too high.  There’s nothing in our economic performance since 2007 that supports raising the minimum wage.  To the contrary, with employers already skittish about the economy and nervous about hiring — particularly given the still-uncertain impact of the Affordable Care Act — the likely effect of raising the minimum wage will be to discourage hiring.  In short, far from putting money in people’s pockets, raising the minimum wage is likely to make it even harder for kids to find that first job and to leave more people unemployed.

If Ohio and other states want to require employers to pay a bit more, that’s fine — but it doesn’t mean the federal wage must follow suit.  If the stronger economies and hiring patterns in some states warrant higher rates, let the state governments that are more familiar with local conditions make that decision.  We don’t need edicts by the faraway federal government to control every aspect of our economy.

I think raising the minimum wage right now is a bad idea.

What If They Gave A Debate And Nobody Cared?

With all of the focus on the Buckeye State in the presidential election, we Ohioans can be excused for forgetting that we will be voting on many races on November 6.  For example, we’ll be deciding whether to retain incumbent Democratic Senator Sherrod Brown or elect Republican Josh Mandel instead.

Normally a Senate race is a big deal, but this year I’m not hearing anyone talk about the Brown-Mandel contest — and I work in an office where many people, from both parties, are very interested in politics.  The candidates have had three debates, but only one was broadcast on TV and I don’t know anyone who watched it.  I’m sure that all of the debates were fully covered in the daily newspapers, but Kish and I don’t subscribe to a daily newspaper any longer, and I haven’t seen any coverage of the debates when I’ve visited state news websites.  As a result, I assume that not much happened — no gaffes, no knee-buckling zingers, and probably not much of in the way of any kind of news.

I think that means lots of people will be voting on Election Day without much information.  If Ohioans know anything about the race, they know that Sherrod Brown backed the GM-Chrysler bailout.  Brown mentions that whenever he can; if he could walk around carrying a large flashing billboard advertising that fact, I think he would.  Mandel, on the other hand, is a relative newcomer to politics who presents himself as a fiscal conservative tax-cutter; if most Ohioans know anything about him, it is that he served in the military post-9/11.  The campaign ads haven’t done much to address the information deficit, either.

An electorate with ADD is going to be unpredictable, and therefore the polls — which indicate that Brown is ahead by anywhere from one to nine points — probably don’t mean much.  People will get into the voting booth and make a decision, and name and party affiliation will likely tell the tale.  Fortunately for the incumbent, Brown has always been a magical name in Ohio politics.  If Mandel is going to win, he’d better hope that Mitt Romney wins and has very long coattails.

Sherrod And Josh

This November Ohioans will be electing a U.S. Senator.  We’ll be choosing between incumbent Sherrod Brown, a Democrat, and Republican Josh Mandel.

Sherrod Brown is a prototype Democrat.  He is a forceful advocate for  labor unions, and strongly supported the government bailout of GM and Chrysler — but ardently opposes bailouts of banks and touts an “end too big to fail” petition that seeks to break up the big banks.  Brown has a decidedly liberal voting record and is a reliable supporter of President Obama’s legislative agenda.  He’s been a figure on the Ohio political scene for years and he possesses the magical Brown name, which has given Ohio politicians a leg up on their opponents since the dawn of time.

Josh Mandel, in contrast, is a relative newcomer.  He’s 34, but looks younger.  Mandel is a former Marine who served two tours in Iraq, is a strong proponent of cutting federal spending and balancing the federal budget, and is the darling of many conservative pundits.  He was elected to the Ohio House of Representatives in 2006 and currently serves as the state’s Treasurer — although he’s criticized for not doing much in that position while focusing on running for the Senate.

It’s an election that will present some sharp contrasts of liberal versus conservative and experience versus youth.  With Republicans trying to regain control of the Senate, the race has attracted enormous attention and buckets of money from outside the state, which means we’re already seeing lots of negative ads about both candidates.  The early polls show Brown in the lead.

The Brown-Mandel match-up is another instance in which Ohio — as is so often the case — may be a bellwether state.  Come Election Night, the results of this contest should tell us a lot about the direction in which the country is heading.

Calling With Another Update On That GM Investment

Hello, Mr. Webner.  It’s one of your friendly securities analysts at the Treasury Department.  Hot enough for you?  Ha, ha!

What?  Oh, no!

Yes, Mr. Webner.  It’s me again.  Time for you to get another update on that GM investment.  This time, I’ve got good news and bad news.  Which would you rather hear first?

The bad news, I suppose.

Well, I’m sorry to say that GM’s stock price has hit another new low.  GM has lost more than one-third of its market value since it went public less than two years ago.  We’re shocked.  We thought those great commercials with likable folks talking about how smart they were to buy Chevy Volts would really cause a boom in sales.

So, how much have we lost?

Between the plummeting value of our GM stock and the tax breaks we’ve given the company to try to help it recover from decades of mismanagement, bad decisions, and short-sighted labor contracts, we’re out $35 billion.

$35 billion?!?!  But I thought my Senator was boasting about what a smart move it was to bail out GM?

He’s saying it saved jobs, Mr. Webner.  They just happen to be jobs that have been heavily subsidized by your tax dollars.

Wait — you said you had bad news and good news.  What’s the good news?

Oh, yes!  Right now, it looks like President Obama, the Democrat-controlled Senate, and the Republican-controlled House won’t be able to agree on an extension of the Bush era tax cuts.  So, after the end of the year everyone’s taxes will probably increase, and we’ll have even more of your money to invest!

Click.

Citizens United Is Not My Top Priority

I’m on Ohio Senator Sherrod Brown’s email list.  Lately, his emails have focused on the Disclose Act, legislation being pushed by Senate Democrats that would require non-profit groups to disclose the identity of their donors.

The bill is a response of sorts to the Supreme Court’s Citizens United decision, which struck down limits on independent spending by corporations and unions.  Senator Brown’s most recent email, sent Saturday afternoon, says that such special interest money is having a “distorting effect” on elections and that the “flood” of money is “is threatening to wash away the voice of America’s middle class.”  (Of course, because we don’t know the identity of the donors to these groups, we obviously don’t know for sure whether those donors are members of the middle class or not.)  Not surprisingly, Senator Brown views all of this through the lens of his own experience; if you read his emails, they all discuss, in great detail, how much groups opposing his reelection are spending on that race.

What’s of interest to me is not the merits of Citizens United, or the merits of campaign finance reform generally.  Instead, I find it curious that the Senate seems capable of debating and acting on issues like the DISCLOSE Act, but not on the issues that are of real import to Americans given our current predicament — like passing a budget, or dealing with our debt problems, or figuring out how to get our economy out of the doldrums in which it has been mired for four years.

Why is the DISCLOSE Act more worthy of the attention of the Senate than legislation that addresses our ongoing economic problems?  Because political spending affects Senators, of course, and therefore legislation that addresses political spending must necessarily be their top priority.  It’s a good example of how the interests of Senators vary from the interests of their constituents.  If you asked Americans — middle class or otherwise — what topics the Senate should be focused on these days, how far down the priority list do you think you would need to go before your reached Citizens United and campaign finance reform?