Welcome to the 17th issue of The Outsider Perspective, brought to you by The Beltway Outsiders.
Good Friday Morning! We’re 45 days away from the US General Election. The first Presidential debate is just days away. We’re seeing some initial results from the very first early votes and campaigns are adjusting. I’ll be covering new election news, the latest movements by both Presidential candidates, the ever moving chessboard decisions in the Senate and House races by Democrats and Republicans, as well as news impacting your world in foreign policy and the economy. But leading off today, I want to cover two major stories that I believe are intertwined and tell us more about the state of the American public than any opinion poll: Two terrorist attacks in Minnesota and New York/New Jersey, and two more police shootings involving black men in Tulsa and Charlotte.
Terrorist Attacks and Police Shootings
The first major story to note is the return of ISIS-inspired terrorism against soft targets on American soil. The major threat Americans face from terrorism right now is homegrown radicals in American communities. These people are disaffected American citizens. Just like Europe, our threats are local. And once again, the FBI investigated but found nothing early on.
The first attack happened in Minnesota. ISIS claimed responsibility for helping radicalize a man who went into a mall and started stabbing people. This type of terrorist attack is a common tactic among terrorists in Israel. The man entered the mall armed with a knife and stabbed 8 people before being shot by an off-duty officer. In what is currently an unrelated attack, Ahmad Khan was arrested by authorities after he planted pipe and pressure cooker bombs in different places across New York and New Jersey.
What is unusual about Khan’s attack is that in his journal he referenced being inspired by ISIS and its leadership. He wanted to become a martyr for ISIS. However, ISIS hasn’t claimed Khan’s attack like it did with the Minnesota attack. Further confusing experts is the US Government omitting ISIS references in the criminal complaint filed against Khan (reminiscent of when the US redacted references to ISIS in the Orlando Pulse Nightclub attacks). While Khan claims he was a warrior for ISIS, neither the US Government nor ISIS are admitting to this fact. Given these facts, and the unusually poor methods chosen by Khan, it has led some experts to suggest this was a probing attack by ISIS. As John Schindler noted:
Given the incompetence shown (a dumpster, really?) these could be merely ISIS probing attacks to test Intel/Law Enforcement response. Be safe out there.
Given what we know, and how ISIS likes to claim attacks, their decision here is odd. As is the government purposely omitting information… again. We know from the recently released 28 pages of the 9/11 report, Saudi connected terrorists ran a dry run of hijacking a plane years before ever committing the act. It’s possible Khan is just an incompetent terrorist that ISIS doesn’t want to claim. But until that is proven, it makes more sense to assume something more is here.
The second major story is the police killings two black men. First was Terrance Crutcher in Tulsa, Oklahoma. Prosecutors have filed first degree manslaughter charges against the officer involved after she shot Crutcher during a stop. Protests erupted even louder after Keith Lamont Scott was shot by police in Charlotte, NC. Police claim Scott was shot after not dropping his weapon. A third, less known story, is three New York state correctional officers have been charged with torturing a black inmate, falsifying records and injuries to hide abuse, and tearing the inmate’s dreadlocks off for a “trophy.”
The overarching theme here: the mistreatment of blacks by the judicial system. Numbers don’t lie:
According to the most recent census data, there are nearly 160 million more white people in America than there are black people. White people make up roughly 62 percent of the U.S. population but only about 49 percent of those who are killed by police officers. African Americans, however, account for 24 percent of those fatally shot and killed by the police despite being just 13 percent of the U.S. population. As The Post noted in a new analysis published last week, that means black Americans are 2.5 times as likely as white Americans to be shot and killed by police officers.
U.S. police officers have shot and killed the exact same number of unarmed white people as they have unarmed black people: 50 each. But because the white population is approximately five times larger than the black population, that means unarmed black Americans were five times as likely as unarmed white Americans to be shot and killed by a police officer.
I believe there are lessons we can take from both these stories. There are two broad trends: Fear and anger. People live in fear and they want security. And as their fears go unanswered by leaders, people get become resentful and angry. People don’t feel the government or society is adequately protecting them. If you acknowledge the anger uneducated whites have against politicians and why they support Trump, you should also acknowledge why blacks are mad at police and American society. The same reason a person wears a “Make America Great Again” hat while supporting Trump is the same reason a black person like Colin Kaepernick refuses to stand during the anthem. Anger at a society that refuses to acknowledge a wrong has occurred. Democrats and Republicans don’t want to acknowledge that government and culture have left uneducated whites behind. And those same politicians don’t want to acknowledge that government and culture are responsible for ignoring the plight of blacks. Anger shouldn’t be surprising. It should be expected.
When you add in the fear and uncertainty from terrorism, you get the combustible atmosphere we live in now. Fear and terror reign. It will take more than a Presidential election to calm those forces. If either Clinton or Trump wins, fear and terror will only increase. There is a path to overcome this. NFL Tight-End Benjamin Watson had the best words on solving this problem in a piece at All Pro Dad:
We all have specific lenses and, as humans, we will struggle against our own pride, prejudice, selfishness, and racism. Before we can hope to raise a loving generation we must first identify and be remorseful of our own missteps in this area. Because we are human this will be a continual process as our sensitivity heightens and our shortcomings are revealed.
Pray with your children. After the protests in Baltimore, my daughter prayed for forgiveness between all the people involved for months and months. (We actually had to tell her it was okay to stop praying about that particular situation!) I believe this issue is one God cares about and we need His power and wisdom in confronting and solving it.
Teach them about contributors to our country who came from all backgrounds as well as those who courageously stood in the gap even when it may have been unpopular. This will encourage them to stand for what’s right even if their group does not. As important as race and culture are to our identity, as for me and my family, our allegiance is to God and what He says above all else.
His words should be heeded. Fear and anger cannot build without release forever. Anger at police and government is continuing to grow. The anger and fear from these two events must be quelled.
2016 Presidential Race
The first votes give us a small glimpse of the election
We’ve started seeing the first early votes be tallied in the 2016 race. While official results aren’t available, we do know the trends in who is requisition absentee ballots. From the Associated Press:
Seven weeks before Election Day, the earliest numbers from advance voting for president show initial strength for Hillary Clinton in swing state North Carolina, good news for Donald Trump in battleground Iowa and a record number of requests for ballots in Ohio.
Of particular note to me were the North Carolina numbers. Long time readers will know I and other election watchers have been pointing to the Tar Heel State being ground zero for the hardest campaigning of the cycle:
In North Carolina, a must-win state for Trump, more than 53,000 voters had requested ballots, and 2,939 had been returned, according to data compiled by The Associated Press. That’s up from 47,313 ballots requested during a similar time frame in 2012.
Broken down by party, Democrats made up 40 percent of the ballots returned so far compared to 33 percent for Republicans. At this point in 2012, Republicans were running slightly ahead, 43 percent to 38 percent, in ballots submitted.
The bad news for Trump here is that the GOP numbers are running behind 2012’s results. Mitt Romney won North Carolina by the slimmest of margins. Clinton has been showing a small lead there this year in the polls. Absentee ballots and seeing which sides are generating quicks votes can show signs of enthusiasm. It’s also a sign of how well a ground game is working. In North Carolina, Donald Trump just recently opened his first field office. Meanwhile, Clinton has more than 30 offices in the state, many of which have been running for months.
Worth noting: Republicans have seen a 10 point drop in ballots from 2012, while Democrats are seeing a meager 2 point increase. This suggests two possibilities: 1) GOP voters are waiting longer to decide, or 2) This is the first canary in the coal mine showing a collapse in GOP support for Trump. Only time will tell. For Clinton, it suggests her Get-Out-The-Vote (GOTV) effort is running slightly ahead of 2012 Obama. If she can win this state, it will help local politicians turn the entire state blue.
Trump is seeing encouraging numbers out of Ohio, with increased numbers of potential supporters there. But it should be noted: Trump could win Florida AND Ohio, and still lose the Presidency. He MUST crack through another state. I’ve yet to see polls suggesting that happening anywhere right now. Until he can pull that off, his gains in Ohio and Florida are empty.
Shifting dynamics continue
Last week I wrote I believed the race was undergoing a change. We were seeing shifting dynamics in the race where the end result would be governed by news cycles instead of electoral fundamentals. At the time I wrote that, Trump decided to jump back into the birtherism news fracas involving President Obama. It was a dumb unforced error on his part. He made that jump just as I was speaking well about his polls and clicking send. I still feel good about last week’s prediction because I didn’t think the birtherism storyline would affect Trump long term. Other news cycles will end up deciding the election. I’m not the only one who thinks this way. Larry Sabato of the University of Virginia had the following observation in his recent prediction column:
Now Clinton is getting questions about her health (or, more appropriately, questions about how transparent she is being about her health) and Trump has succeeded, at the moment, in making the election less about him than about her. As former Obama speechwriter Jon Favreau observed, the race tends to get tighter when Clinton gets more attention and widens out to a bigger Clinton lead when Trump gets more attention, with an exception being the Democratic convention, which was essentially a big campaign ad for Clinton. This makes sense, particularly when the public views both candidates so poorly and coverage often focuses on their negatives (Trump’s lack of qualification for office and controversial statements versus Clinton’s lack of transparency and ethical challenges).
Generally, when the campaign has been more about Trump, he has suffered, and when it’s been more about Clinton, she has suffered. Gallup has been asking Americans if they have heard or seen anything about Clinton and/or Trump in “the last day or two,” which allows us to get a rough feel for which candidate is getting more attention on a given day. Over the period of July 5 to Sept. 13, there’s a weak negative correlation (-.29) between Trump’s polling margin in the HuffPost Pollster average and the margin between what percentage of respondents say they’ve heard about Trump minus the percentage who say they’ve heard about Clinton. That is, there appears to be at least a little bit of an inverse relationship between the relative level of coverage of Trump on the campaign trail and his polling margin. The more coverage, the worse his margin is, and vice versa. This correlation is stronger (-.49) over the past month (Aug. 13 to Sept. 13), moving beyond the convention period.
What’s problematic for Trump is that while we’ve seen this race yo-yo quite a bit over the past several months, it generally moves from a big Clinton lead to a small Clinton lead (where we are now). What we have not seen in polling is a period where Trump takes a consistent lead nationally and in a significant number of state-level polls. The key question of the moment is whether the race is clearly trending in Trump’s direction, and he soon will start to take consistent leads, or whether Clinton will reassert herself. Or, if this is just where the race will stay until Election Day, with Clinton holding a small edge.
This goes to the point I made last week: support for candidates depends on who is leading the news coverage. The indecisive voters goes for whoever is NOT making the news in that minute because the candidate in the coverage sees their massive unfavorables focused on intensely. As a person who has said for a while now, Clinton has a lot to lose in the debates, a steady barrage of bad news from “losing” the debates and Wikileaks releases in mid-October would drive her negative coverage through the roof. Something that could affect her during the last 2 weeks could be Obamacare, as people get ready to reenroll again.
If Trump is to win, that is the perfect storm it would take. A constant broadside of negative Clinton coverage through the month of October. If anything happens to refocus attention on her health, that would also hurt. Why is this the case? Voters are less sticky this election. Normally, a voter goes with the candidate they naturally lean towards. But with negatives this high for candidates, it means voters are going to swing back and forth more often. Campaigns have noticed this too…
Clinton’s reinvention and Trump’s media blackout
Both campaigns are taking different tactics with the media during the last stretch of the campaign. They realize they need to get outside the negative news cycle. Both are taking using completely opposite strategies. Clinton is going for a reinvention:
After a year and a half of running for president, the Democratic nominee has concluded that many Americans still do not have a clear understanding of what motivates her or what she would do as president. So in the campaign’s home stretch, Clinton is trying to reintroduce herself and her ideas to the country.
Clinton has been unable to break through the cacophony of attacks and counterattacks she and Republican nominee Donald Trump have been yelling at each other. But she tried to do just that here Wednesday with a speech about what she envisions as an “inclusive economy” in which everyone, including the disabled, has a responsibility to contribute and an opportunity to get ahead.
Clinton’s objective is twofold: To lift her sagging approval ratings as well as build trust in her agenda and earn a mandate that could help her, should she be elected, govern in a divided Washington.
After over a year of running, Clinton has realized voters don’t like her. Nor do they trust her. And she should probably give them a reason to vote for her. A month and a half before the election and the Clinton campaign is pitching the world a “reintroduction.” My eyes can’t roll hard enough. It also reeks of desperation. They desperately want a different media narrative. Meanwhile, while Clinton tries reinventing herself, Trump has gone silent:
It’s seven weeks before Election Day, five days before the highly anticipated first debate, and Donald Trump’s television advertisements have all but vanished.
Trump’s ads last ran nearly a week ago in four battleground states: Florida, North Carolina, Ohio and Pennsylvania. Since then, the GOP presidential nominee has ceded the airwaves to Hillary Clinton — and is only poised to launch a limited, less-targeted ad campaign in the days before next week’s debate.
Not only have Trump’s ads vanished. His TV presence has shrunk too. Since July, Trump has cut back almost entirely on interviews on any news station other than Fox News. This past week, he’s exclusively been on Fox News and not appeared on any other network. He’s basically using Sean Hannity as a non-stop infomercial. He’s also scaled back his press conferences and limited press availability. Much like Clinton spent the past year running from the press, Trump is now running from the press.
Neither candidate wants to be the center of attention. They’ve learned one thing: let the other person lead the news cycle. If they could skip the debates, I’d expect both of them to skip.
The Senate and House race continues to change
Democrats have effectively given up hope on Florida and Ohio. As I’ve been reporting the last few weeks, Democrats have been steadily canceling media and ground resources in those states and moving them elsewhere. After announcing large buys in North Carolina and Missouri last week, Democrats are doubling down on those states this week. Republicans, feeling some room in Ohio and Florida, are moving to counter Democrats, announcing large ads buys of their own:
The National Republican Senatorial Committee placed its first, $270,000 ad buy supporting Blunt in St. Louis, the source said, but more ads are on the way. The ad buy comes just days after independent polling for the first time showed Democratic Secretary of State Jason Kander leading Blunt. Senate Democrats are increasingly shift their sights to Missouri, where they believe Blunt’s long time in Congress makes him vulnerable against the 35-year-old Kander, a military veteran.
Republicans, already spending big in North Carolina, are expected to drop more there soon. As I’ve said before, the reason the Senate has been such a push for Democrats is because they risk losing big in 2018. And they see little chance of taking the House. Daily KO’s, a liberal site, put together a House ad tracker to watch where money was actively being spent by House leadership committees for Democrats and Republicans. They found that while Republicans are being outspent, Democrats don’t have enough seats in play to flip the House:
So, what does all this data tell us? The first thing that jumps out is just how small both parties consider the House playing field to be: There are only 33 districts on the entire list, 26 of which are held by Republicans and just seven by Democrats. So even if Democrats were to run the table, they’d still fall short of the 30 seats they’d need to take back the House, meaning that either other races will have to come online or that Team Blue would need to pull off some out-of-the-blue upsets in order to put the chamber in play.
Democrats currently plan to spend about $84 million, which is quite a bit larger than the $73 million the GOP is expecting to laid out. Team Blue likewise has bookings in many more districts than Republicans. There’s just one race the GOP has reserved time in that Democrats haven’t, NY-03, a swingy open seat on Long Island. By contrast, seats on the Democratic target list that aren’t on the GOP’s include AZ-01, CO-03, FL-07, FL-13, IL-12, MI-07/MI-08, NJ-05, NY-23, and UT-04.
In other words, right now Democrats don’t see a way to retake the House from Republicans. They can make some inroads, but retaking the House isn’t an option. They don’t see a way to win Ohio or Florida in the Senate. And they’re in bad shape in other Senate races. Congressional Republicans are pushing back extremely well against both Trump and Democrats. It’s rather amazing given the headwinds for them this year.
This isn’t all the month being spend though. Major private donors are also shaping the race. Republican mega-donor Sheldon Adelson has decided to spend $45 million on the race for Congressional Republicans. Only $5 million of that is going to GOP efforts on the Presidential side. Democratic mega-donor Tom Steyer is spending $20 million of his own money, $55 million overall with labor groups, to turn out 8 million voters for Clinton and support Congressional Democrats. So we’re seeing the pocketbooks of the rich donor class open up, in different ways, for Democrats and Republicans.
Evan McMullin – Traction continues for the independent conservative candidate
I get asked about McMullin’s campaign quite often. As a supporter of his effort, I’m not unbiased in hoping he does well. Which means I’m also incredibly happy to see him add more states and see more progress this week:
As reports will show today, between August 8th and 31st, just 18 business days, we raised over $320,000 (slightly above our initial estimates) from small donors, almost exclusively online and without spending any money on advertising for contributions. The grassroots outpouring has been incredible. Our movement is supported by regular Americans from across the country who are sacrificing their hard-earned money. We are also increasingly encouraged by traditional political donors who realize we are building a movement – they are hosting fundraisers in various states and helping us achieve our goals.
Just a few weeks in, pollsters began to include us in their national and state polls and we were, frankly, surprised at how much traction we already have. In just three weeks we were at 9% in Utah, 3% in Virginia, and 1% nationally. While these numbers may seem modest, they indicate immediately that we can make a decisive impact in this election in a variety of key states.
As of today, voters in 27 states can vote for Evan and we project that number will reach over 40 by election day. This includes, per our plan, a combination of traditional ballot access, minor party nominations, and write-in filings. We are committed to giving as many Americans as possible the chance to vote their conscience and vote for the future by voting for Evan McMullin.
As I’ve pointed out, several times, Utah is key. If McMullin can climb up into a spoiler position there and a few other states, it will encourage more GOP supporters to help him. Romney and the Bushes are who I would look to for this potential support. I doubt these groups will stay quiet much longer. Romney, in particular, appears to be testing whether or not he should endorse the Libertarian candidate Gary Johnson. But McMullin is making an impression.
That impression was felt by the campaign when they received a racist tirade phone-call from a Trump supporter. Racism from the alt-right and Trump supporters has been far too common this election cycle. But the campaign’s response was on point:
It says a lot about the troll in question, but it says more about where American politics and public life is headed in the age of Donald Trump. This is a guy who didn’t think twice about leaving a voicemail filled with grotesque ethnic and religious slurs. To him, and too many of Trump’s backers, that is normal political discourse now.
This is only a small drop in the ocean of hatred that defines not just Donald Trump, but also his team, and even members of his family. They work hard every day to divide America – to mainstream this kind of behavior.
His allies on the alt-right love this game. They want an America not just where different races and religions don’t talk…they want an America where they live in separate homelands. They want an America where the Republican Party becomes a white nationalist party. And, they may very well get their way.
Not every Trump supporter is a racist; many are simply misled, many are angry with two failed parties…but it sure looks like all the racists around these parts are Trump supporters.
Just as these trolls wouldn’t act this way without Trump’s encouragement, Trump himself couldn’t play these games if the leadership of the Republican Party stood up, called him out, and told him his constant stoking of racial hatred is unacceptable.
Far too many members of Congress have told us privately how much they hate Trump, and hate what he’s doing to this country. Some have stood on stage with him, smiling and waving, and yet they admit they lack the moral courage to do the right thing. They’ve told us behind closed doors how scared they are of becoming his targets.
Far too many elected officials, and too many party leaders, use the excuse that they’re endorsing Trump and not his followers.
But the truth is, they’re not just his endorsers. They’re his enablers.
Other news for your election radar:
Trump has completely divided the evangelical vote. He’s lost Catholics in droves. And FiveThirtyEight analysis has found that Trump is winning 5% of the Jewish donor vote. Majorities in both groups are moving to Clinton. Protestants are the only remaining group. – WashPo & FiveThirtyEight
Old Reddit posts appear to show Clinton’s email server technician asking for ways to delete emails and data from her server. This data would have been the subject of Congressional subpoena. For those counting at home, this would be destruction of evidence and obstruction of justice. He was given immunity by the FBI. – HotAir
Long time Clinton aide, Sid Blumenthal, says that while he didn’t “push or start birtherism,” he did tell reporters they should go check out “rumors” about Obama being from Kenya in 2008 primaries. Insert hard eye roll here. – Politico
Syrian cease-fire collapses
The US brokered cease-fire with Russia and Syria has collapsed. Both Russia and Syria declared the deal dead after an airstrike hit a Red Crescent humanitarian aid convey headed to Aleppo, Syria:
One unconfirmed report said 12 people were killed in the attack near the town of Urum al-Kubra.
A UN spokesman said at least 18 of 31 trucks had been hit but could not confirm it was by an air strike.
UN Special Envoy for Syria, Staffan de Mistura, said it was an “outrage”.
“The convoy was the outcome of a long process of permission and preparations to assist isolated civilians,” he said in a statement emailed to Reuters.
The Syrian Red Crescent said the convoy had been making a routine delivery from Aleppo to rural rebel-held areas. Images posted online showed lorries and trailers engulfed by flames.
US officials and intelligence points to Russian or Syrian aircraft hitting the convoy. Both Russia and Syria deny the allegations and blame a US drone strike region, quoting “anonymous sources” saying a US spy plane was flying high overhead near the strike zone. US Intelligence says otherwise:
Two Russian Sukhoi SU-24 warplanes were in the skies above the aid convoy at the exact time it was struck late on Monday, two U.S. officials told Reuters, citing U.S. intelligence that led them to conclude Russia was to blame.
Russian or Syrian forces purposely striking aid convoys would fit with earlier news saying that the cease-fire was being violated by Syrian forces blocking convoys from entering Aleppo. The next escalation would be attacking those same humanitarian groups. The end of cease-fire is just another black eye for US negotiations in the region. Regional allies see the current administration is incapable of enforcing their own deals and won’t back up any warnings with force. Putin and Assad see this as a means of pushing US influence out of the region. Which is why attacking innocent humanitarian aid convoys is fair game.
Ploughshares, the organization responsible for the media echo chamber supporting the Iran Deal, is now trying to completely dismantle the US Nuclear arsenal
From Real Clear Defense:
If you don’t think nuclear weapons will ever be used against the United States, the Ploughshares Fund has some new ideas that could make a nuclear attack on the United States more likely.
Ploughshares says the USA should get rid of all our 450 land-based Minuteman missile silos and missiles, cut the number of Ohio Replacement submarines to 10, eliminate the long-range cruise missile the B-22 bombers would carry and eliminate the only modern aircraft-based theater nuclear weapon we have in the arsenal—the B-61. They think this will make us safer.
But as the new Vice Chief of Staff of the Air Force has warned, such a plan is very unstable, as it would reduce our nuclear “platforms” to ten targets or less. This, he says, would give a country like North Korea the capability to wipe out most of the U.S. nuclear arsenal even with their minimal arsenal of a dozen nuclear weapons.
Why would we do anything so reckless?
This reckless policy is brought to you by the same group that falsely sold the American public the Iran Deal. Its supporters believe any form of force used by the US is wrong. They called anyone opposing the Iran Deal a warmonger. And now they’re back with plans to reduce the US Nuclear platforms to below that of North Korea, a third world country. This is safety to Ploughshares and their liberal allies.
Real Clear Defense calls this reckless. I call it stupid. When rogue nations like Russia, Iran, or North Korea become the top dogs in nuclear threats worldwide, you lose the very power that makes you a super power. The US reducing to this small of a nuclear arsenal guarantees other nations would rush to build nuclear arms. The Middle East would immediately rush to develop nuclear arms because the US could no longer be counted on to counter the Russian or Iranian threat. And M.A.D. would not apply to these countries. First use would be the go-to-policy.
Thankfully, the US is rejecting this plan. But, Ploughshares is the definition of an anti-American group. Their ideas deserve no other place than a Russian propaganda network.
Other foreign policy news for your radar
The Obama administration spent money trying to unseat Israeli Prime Minister Benjamin Netanyahu. Congress decided to investigate this decision. When they requested all emails relating to this transaction, they found the State Department deleted all emails relating to the decision to unseat Netanyahu. – Washington Free Beacon
The US “accidentally” granted citizenships to 858 immigrants from countries with that pose national security concern or countries involved with rampant immigration fraud. – Associated Press
ISIS is suspected of having used chemical weapons (mustard gas) against US and Iraqi forces. Assad is accused of using similar. Iraq, Syria, and Libya all had/have chemical weapons caches and factories. The US has been trying to destroy / remove them all. – CNN
The US made two wire payments to Iran on two different occasions in the process of negotiating the nuclear agreement. This news comes after President Obama claimed wire transfers were impossible and would violate sanctions levied against Iran. – Politico
The US military is requesting 500 more troops be sent to Iraq ahead of the battle for Mosul expected to commence soon. – WSJ
IED’s come home: How terrorists are adapting battlefield strategies to hit soft targets at home. – Real Clear Defense
The Federal Reserve maintains interest rates – with dissent
The Fed decided to maintain interest rates for the time being. While heavily hinting that December would see a rate hike. This sounds right to me. It’s either December or the first of the year. I would have been shocked if the Fed raised rates before the November election. Janet Yellen can claim Fed decisions aren’t affected by politics or sudden market movements, but Fed decisions to raise or keep interest the same reject both of those notions. We’ve seen plenty of instances where the Fed reacted to sudden market swings. And no one thought the Fed would raise rates before the election. The one interesting note out of this meeting: the dissents on maintaining rates. More Fed Committee members wanted to raise rates:
“This seems to have been one of the most divisive FOMC meetings in recent memory. As many as three of the current 10 voting members dissented, preferring an immediate rate hike, with Loretta Mester and Eric Rosengren joining previous hawk Esther George. At the same time, however, looking at the new projections, three of the 17 Fed officials at the meeting now expect no rate hike whatsoever this year. Nevertheless, that means 14 of those 17 officials still expect at least one rate hike this year, presumably in December, which is the next meeting with a press conference.” — Paul Ashworth, Capital Economics
The best bets right now are for a December rate hike. The Fed wants to raise rates. That much is clear. The question is whether or not they’ll actually do it. One bad month or two of data near the December meeting could push rate hikes off again.
Obama is stepping in to save Obamacare
Deep into the final year of his presidency, Barack Obama is working behind the scenes to secure Obamacare’s legacy, struggling to bolster a program whose ultimate success or failure will likely be determined by his successor.
With no lifeline coming from the divided Congress, Obama and his administration are redoubling their pleas for insurers to shore up the federal health care law and pushing uninsured Americans — especially younger ones — to sign up for coverage. The administration is nervously preparing for its final Obamacare open-enrollment season just a week before Election Day, amid a cascade of headlines about rising premiums, fleeing insurers and narrowing insurance options.
On Monday, Obama met face to face at the White House with leading insurance executives, asking for their continued commitment to the health law despite its recent spate of difficulties. Insurers have come to the White House periodically as the law has rolled out; this time the president made a direct plea for their ongoing support. They in turn pressed their case for steps the administration can still take to strengthen the Obamacare markets.
Notably absent were two of the national insurers that have already bailed on most Obamacare marketplaces — Aetna and UnitedHealth Group.
Speaking of October surprises, I’m surprised we haven’t seen more from the Clinton campaign trying to prepare for the inevitable sticker shock from the insurance rate-hikes expected. All indicators from the past year say the hikes will be steep, the plans worse, and networks narrower. More people are going to be asking why they’re being forced to pay for horrible products. Will Clinton defend Obamacare? I have my doubts…
US Growth is stagnate because we’re dealing with “bad” inflation
There’s a good case to be made that one of the reasons US growth is so stagnate is that we’re facing bad inflation. From Yardeni Research:
There are also two kinds of inflation. There’s the kind that stimulates demand by prompting consumers to buy goods and services before their prices move still higher. The other kind of inflation reduces the purchasing power of consumers when prices rise faster than wages. That variety of inflation certainly doesn’t augur well for consumer spending.
During the 1960s and 1970s, price inflation rose faster than interest rates. The Fed was behind the inflationary curve. So were the Bond Vigilantes. However, wages kept pace with prices because unions were more powerful than they are today, and labor contracts included cost-of-living adjustments. Back then, the University of Michigan Consumer Sentiment Survey tracked rising “buy-in-advance” attitudes. Those attitudes remained particularly strong in the housing market through the middle of the previous decade. On balance, inflation stimulated demand more than weighed on it. Borrowing was also stimulated.
A few Fed officials believe that the core is close enough to 2.0% to hike the federal funds rate again soon. Others say that having stayed stubbornly below 2.0% for most of the time since October 2008, what’s the rush to raise rates? This afternoon, we will all find out whether the doves or the hawks won the debate at the latest meeting of the FOMC.
Both sides are missing an important development on the inflation front. The variety of inflation that the US is experiencing isn’t the kind that stimulates economic growth. On the contrary, it has been led by rising rents, and more recently by rising health care costs. It is very unlikely that buy-in-advance attitudes cause people to rent today because rents will be higher tomorrow, or to rush to the hospital to get a triple-bypass today because it will be more expensive tomorrow! Higher shelter and health care costs are akin to tax increases because they reduce the purchasing power available for other goods and services.
He goes on to point out the reasons for bad inflation: bad rent – people are paying more for housing, and higher healthcare costs due to Obamacare. These rising costs decrease the buying power of consumers. They have less excess money to put into the economy to drive demand up. He gives a more technical discussion in his post, for those wanting the numbers. But for those wondering about policy, driving down costs on these two fronts would go a long way to spur consumer spending in other areas. In the event of a recession, housing and healthcare costs will become even more prominent.
What I’m reading
“Clinton’s Samantha Bee Problem” by Ross Douthat, The New York Times.
Douthat is a conservative columnist at the New York Times. He ruffled a number of feathers this week when he noted that modern liberal culture is nothing more than an echo chamber with little imagination. That echo chamber bears responsibility for leading to the rise of political extremism, like Trump. The following paragraphs are what irked liberals the most:
On late-night television, it was once understood that David Letterman was beloved by coastal liberals and Jay Leno more of a Middle American taste. But neither man was prone to delivering hectoring monologues in the style of the “Daily Show” alums who now dominate late night. Fallon’s apolitical shtick increasingly makes him an outlier among his peers, many of whom are less comics than propagandists — liberal “explanatory journalists” with laugh lines.
Some of them have better lines than others, and some joke more or hector less. But to flip from Stephen Colbert’s winsome liberalism to Seth Meyers’s class-clown liberalism to Bee’s bluestocking feminism to John Oliver’s and Trevor Noah’s lectures on American benightedness is to enter an echo chamber from which the imagination struggles to escape.
Douthat fleshes out his point by arguing that Trump’s candidacy has functioned as a sort of rejection of this liberal cultural ascendancy. Trump is the “punk rock” on the scene, breaking guitars, speakers, and rules. Liberals, of course, rejected Douthat’s argument. But if you take a broad view of culture, his point carries considerable weight. The power of the cultural left is being deflated. The irony is that they’ll never be able to tell because of the echo chamber.
Quote of the Week
On September 21, 1937, J.R.R. Tolkien’s novel “The Hobbit” was published. It has never been out of print since then. As several people were celebrating the birth of Middle-Earth this past week, I thought I’d wrap up this week with one of my favorite lines from the Lord of the Rings universe:
“All that is gold does not glitter,
Not all those who wander are lost;
The old that is strong does not wither,
Deep roots are not reached by the frost.
From the ashes a fire shall be woken,
A light from the shadows shall spring;
Renewed shall be blade that was broken,
The crownless again shall be king.”
J.R.R. Tolkien, The Fellowship of the Ring
Thanks for reading!