Thursday, August 7, 2008

Big donors are the key to Obama's record haul

In an effort to cast himself as independent of the influence of money on politics, Senator Barack Obama often highlights the campaign contributions of $200 or less that have amounted to fully half of the $340 million he has collected so far. But records show that a third of his record-breaking haul has come from donations of $1,000 or more - a total of $112 million, more than the total of contributions in that category taken in by either Senator John McCain, his Republican rival, or Senator Hillary Rodham Clinton, his opponent in the Democratic primaries.

Behind those large donations is a phalanx of more than 500 Obama "bundlers," fund-raisers who have each collected contributions totaling $50,000 or more. Many of the bundlers come from industries with critical interests in Washington. Nearly three dozen of the bundlers have raised more than $500,000, including more than a half-dozen who have passed the $1 million mark and one or two who have exceeded $2 million, according to interviews with fund-raisers.

While his campaign has cited its volume of small donations as a rationale for his decision to opt out of public financing for the general election, Obama has worked to build a network of big-dollar supporters from the time he began contemplating a run for the U.S. Senate. He tapped into well-connected people in Chicago before the 2004 Senate race, and, once elected, set out across the country starting in 2005 to cultivate some of his party's most influential money collectors. He courted them with the savvy of a veteran politician, through phone calls, meals and one-on-one meetings; he wrote thank-you cards and remembered birthdays; he sent them autographed copies of his book and doted on their children.

The fruit of his efforts has put Obama's major donors on a pace that almost rivals the $147 million that President George W. Bush's Pioneer and Ranger network raised in $1,000-and-larger contributions in 2004 during the primary season.

Given his decision not to accept public financing, Obama is counting on his bundlers to help him raise $300 million for his campaign for the general election and another $180 million for the Democratic National Committee.

An analysis of campaign finance records shows that about two-thirds of his bundlers are concentrated in four major industries: law, securities and investments, real estate and entertainment. Lawyers make up the largest group at about 130, with many working for firms that also have lobbying arms. At least 100 Obama bundlers are top executives or brokers from investment businesses - nearly two dozen work for financial titans like Lehman Brothers, Goldman Sachs and Citigroup. About 40 others come from the real-estate industry.

The biggest fund-raisers include people like Julius Genachowski, a former senior official at the Federal Communications Commission and a technology executive who is new to big-time political fund-raising; Robert Wolf, president and chief operating officer of UBS Investment Bank; James Torrey, a New York hedge fund investor; and Charles Rivkin, an animation studio head in Los Angeles.

"It's fairly clear that this is being packaged as an extraordinary new kind of fund-raising, and the Internet is a new and powerful part of it," said Michael Malbin, executive director of the Campaign Finance Institute. "But it's also clear that many of the old donors are still there and important."

The care and feeding of top Obama fund-raisers underscores their significance to his campaign. Members of his National Finance Committee who fulfill their commitment to raise at least $250,000 are being rewarded with trips to the Democratic National Convention in Denver.

Finance committee members participate in biweekly conference calls with top campaign officials. The fund-raisers meet quarterly, often with Obama dropping in. He lingered after the meeting last month in Chicago, telling his staff he wanted to thank every person in the room. Some fund-raisers who knocked on doors for Obama in places like Iowa, Pennsylvania and Indiana got to spend time with Obama backstage before and after speeches on primary nights.

His fund-raisers invariably say their support for him is not rooted in any kind of promise of access but in their belief in him. "This is about Barack Obama and changing the direction of our country," said Jonathan Perdue, a business consultant in Mill Valley, California, who has raised more than $250,000 for Obama's campaign.

Obama has pledged not to accept donations from federally registered lobbyists or political action committees. But some top donors clearly have policy and political agendas. Hedge fund executives, for example, have bundled large sums for Obama at a time their industry has been looking to increase its clout in Washington.

Kenneth Griffin, chief executive officer of Citadel Investment Group in Chicago, has collected more than $50,000 for Obama. But Griffin, whose $1.5 billion in income in 2007 made him one of the top hedge fund earners, has given generously over the years to Republicans and recently helped host a fund-raiser for McCain. Citadel has spent more than $1.1 million since 2007 lobbying against higher tax rates for hedge funds. (Obama has supported the higher tax rates.)

Similarly, Paul Tudor Jones, a billionaire hedge fund manager from Connecticut, has raised more than $100,000 for Obama. But he also gave to McCain, and two of McCain's Republican rivals in the primary campaign, Rudolph Giuliani and Mitt Romney. Jones, who has given more than $900,000 over the past decade to federal candidates and political organizations, helped form a trade association that has fought hedge fund regulation.

Many fund-raisers sit on the campaign's array of policy working groups, getting a chance to weigh in on policy positions and speeches. Genachowski, a Harvard Law School classmate of Obama's, chairs the technology working group. Fund-raisers from private equity and hedge funds sit on Obama's economic policy group.

Even as Obama seeks to contrast himself with McCain as a political outsider, updated bundler lists released recently by their campaigns show they have a similar number of high-dollar fund-raisers. Despite Obama's newcomer image, many of his bundlers are Democratic stalwarts, including some of the top fund-raisers for the party's 2004 nominee, Senator John Kerry.

The Obama fund-raising operation is meticulously organized. Bundlers are assigned tracking numbers, and the finance staff sends them quarterly reminders of how they are doing in meeting their goals. "There's no price for admission," said Alan Solomont, a top Democratic fund-raiser in Boston who earned his fortune in the nursing home industry and has given more than $1.5 million to Democratic candidates and causes. "We value every donation and every donor equally, but we are a performance-based organization. We want everybody to feel like they're included, but at the same time we're not here to have tea together."

More here

The Green Hornet

Al Gore said the other day that "the future of human civilization" depends on giving up fossil fuels within a decade -- and was acclaimed as a prophet by the political class. Obviously boring reality doesn't count for much these days. Even so, when Barack Obama wheels out an energy agenda nearly as grandiose as Mr. Gore's, shouldn't it receive at least some media scrutiny?

On Monday, Mr. Obama said that the U.S. must "end the age of oil in our time," with "real results by the end of my first term in office." This, he said, will "take nothing less than a complete transformation of our economy." Mark that one down as the understatement of the year. Maybe Mr. Obama really is the Green Hornet, or some other superhero of his current political myth.

The Senator calls for $150 billion over 10 years to achieve "energy independence," with elevated subsidies for renewable alternatives and efficiency programs. He also says he'll "leverage billions more in private capital to build a new energy economy," euphemistically referring to his climate plan to tax and regulate greenhouse gases. Every President since Nixon has declared "energy independence," as Mr. Obama noted. But this time, he says, things will change.

They won't. And not because of "the old politics," or whatever. Currently, alternative sources -- wind, solar, biomass, hydroelectric and geothermal -- provide less than 7% of yearly domestic consumption. Throw out hydro and geothermal, and it's only 4%. For the foreseeable future, renewables simply cannot provide the scale and volume of energy needed to meet growing U.S. demand, which is expected to increase by 20% over the next two decades. Even with colossal taxpayer subsidies, renewables probably can't even slow the rate of growth of carbon-based fuel consumption, much less replace it.

Take wind power, which has grown rapidly though still only provides about two-thirds of 1% of all U.S. electricity. The Energy Department optimistically calculates that ramping up merely to 20% by 2030 would require more than $2 trillion and turbines across the Midwest "wind corridor," plus multiple offshore installations. And we'll need a new "transmission superhighway system" of more than 12,000 miles of electric lines to connect the wind system to population centers. A mere $150 billion won't cut it. Mr. Obama also didn't mention that this wind power will be more expensive than traditional sources like coal.

Wind, too, is intermittent: It isn't always blowing and can't be accessed on demand when people need electricity. Since there's no cost-effective way to store large amounts of electricity, wind requires "spinning reserve," or nonalternative baseload power to avoid blackouts. That baseload power is now provided largely by coal, nuclear and natural gas, and wind can't displace much. The same problem afflicts solar energy -- now one-hundredth of 1% of net U.S. electric generation. One of the top uses of solar panels is to heat residential swimming pools.

Mr. Obama also says he wants to mandate that all new cars and trucks are "flexible fuel" vehicles, meaning that they can run on higher concentrations of corn ethanol mixed with gasoline, or second-generation biofuels if those ever come onto the market. Like wind and solar, this would present major land use problems: According to credible estimates, land areas larger than the size of Texas would need to be planted with fuel feedstocks to displace just half the oil America imports every day. Meanwhile, the economic distortions caused by corn ethanol -- such as higher food prices -- have been bad enough.

And yet there's more miracle work to do. Mr. Obama promises to put at least one million plug-in electric vehicles on the road by 2015. That's fine if consumers want to buy them. But even if technical battery problems are overcome, this would only lead to "fuel switching" -- if cars don't use gasoline, the energy still has to come from somewhere. And the cap-and-trade program also favored by Mr. Obama would effectively bar new coal plants, while new nuclear plants are only now being planned after a 30-year hiatus thanks to punishing regulations and lawsuits.

Problems like these are the reality of "alternative" energy, and they explain why every "energy independence" plan has faltered since the 1970s. But just because Mr. Obama's plan is wildly unrealistic doesn't mean that a program of vast new taxes, subsidies and mandates wouldn't be destructive. The U.S. has a great deal invested in fossil fuels not because of a political conspiracy or because anyone worships carbon but because other sources of energy are, right now, inferior.

Consumption isn't rising because of wastefulness. The U.S. produces more than twice as much GDP today per unit of energy as it did in the 1950s, yet energy use has risen threefold. That's because energy use is tethered to growth, and the economy continues to innovate and expand. Mr. Obama seems to have other ideas.


Obama as a state senator

A close-up look at Barack Obama's years in the Illinois State Senate reveals someone different from the post-racial Barack Obama we thought we knew. Stanley Kurtz writes a must-read article on "Barack Obama's Lost Years", and it is in the Weekly Standard.

Kurtz has gone through old issues of the Hyde Park Herald and the Chicago Defender (the nationally prominent African-American Chicago newspaper) from the period of Obama's service in the Illinois State Senate. He appears prominently in the political coverage of both papers, and this Kurtz finds a portrait of his actual political positions and activities during those years. It's not the Barack Obama we knew from his national campaign. No post-racial Obama is to be found. Two samples:
In 2004, a U.S. District Court disallowed the ordinance under which Chicago required the use of at least 25 percent minority business enterprises and 5 percent women's business enterprises on city-funded projects. In the immediate aftermath of the ruling, Obama and Jesse Jackson were among the prominent voices calling for a black leadership summit to plot strategy for a restoration of Chicago's construction quotas. Obama and his allies succeeded in bringing back race-based contracting.

A Chicago Defender story of 1999 features a front-page picture of Obama beside the headline, "Obama: Illinois Black Caucus is broken." In the accompanying article, although Obama denies demanding that black legislators march in perfect lockstep, he expresses anger that black state senators have failed to unite for the purpose of placing a newly approved riverboat casino in a minority neighborhood. The failed casino vote, Obama argues, means that the black caucus "is broken and needs to unite for the common good of the African-American community." Obama continues, "The problem right now is that we don't have a unified agenda that's enforced back in the community and is clearly articulated. Everybody tends to be lone agents in these situations."

Speaking in reply to Obama was Mary E. Flowers, an African-American state senator who apparently broke black caucus discipline and voted to approve the casino's location in a nonminority area. Said Flowers: "The Black Caucus is from different tribes, different walks of life. I don't expect all of the whites to vote alike. Why is it that all of us should walk alike, talk alike and vote alike? I was chosen by my constituents to represent them, and that is what I try to do."

Given Obama's supposedly post-racial politics, it is notable that he should be the one demanding enforcement of a black political agenda against "lone agents," while another black legislator appeals to Obama to leave her free to represent her constituents, black or white, as she sees fit.


The Tax Rebate Was a Flop. Obama's Stimulus Plan Won't Work Either


Congress enacted the tax rebate program earlier this year because it perceived a growing risk of recession. In addition, it feared monetary policy alone would not be effective because of the dysfunctional credit markets. As American taxpayers know, most of the rebate checks have now been mailed and cashed.

Those of us who supported this fiscal package reasoned that the program would boost consumer confidence as well as available cash. We hoped the combination would cause households to spend a substantial fraction of the rebate dollars, leading to more production and employment. An optimistic and influential study by economists at the Brookings Institution projected that each dollar of revenue loss would increase real GDP by more than a dollar if households spent at least 50 cents of every rebate dollar.

The evidence is now in and that optimism was unwarranted. Recent government statistics show that only between 10% and 20% of the rebate dollars were spent. The rebates added nearly $80 billion to the permanent national debt but less than $20 billion to consumer spending. This experience confirms earlier studies showing that one-time tax rebates are not a cost-effective way to increase economic activity.

These conclusions are significant for evaluating the likely impact of Barack Obama's recent proposal to distribute $1,000 rebate checks to low- and middle-income workers at an estimated cost of approximately $65 billion. His plan, to finance those rebates with an extra tax on oil companies, would reduce investment in refining and exploration, keeping oil prices higher than they would otherwise be.

Here are the facts. Tax rebates of $78 billion arrived in the second quarter of the year. The government's recent GDP figures show that the level of consumer outlays only rose by an extra $12 billion, or 15% of the lost revenue. The rest went into savings, including the paydown of debt.

For a more comprehensive picture, we can see how households divided their overall increase in disposable personal income -- that is, household income including the rebates and net of income taxes and payroll taxes -- between additional consumer outlays and saving. The official GDP figures show that disposable personal income increased between the first and second quarters by some $98 billion (one-fourth of the annualized figure of $393 billion shown in the government report), up from an increase of $22 billion between the final quarter of 2007 and the first quarter of 2008. So disposable personal income rose by an additional $76 billion, a bit less than the rebates because of declining employment and reductions in other sources of income. The corresponding rise in consumer outlays increased to $36 billion from $24 billion. So the additional $12 billion of consumer spending was less than 16% of the extra $76 billion of disposable personal income. By comparison, savings rose by $62 billion, or five times as much.

These quarterly GDP figures are supported by the more detailed monthly data on income and spending in May and June. According to the government statisticians, the tax rebates in May were $48 billion, accounting for almost all of the $50 billion rise in household disposable income between April and May. In contrast, consumer spending in May rose by less than $6 billion. In June, the rebates were $28 billion. Consumer spending rose by only $5 billion, showing no evidence of an additional delayed effect of the May rebates.

The evidence of a very limited effect on spending is also clear in the monthly retail sales -- a measure that is narrower than total consumer outlays because it excludes things like utility bills and rent. Retail sales were $342 billion a month in January through April and rose to only $346 billion in May and June.

Although press stories emphasizing that the rebates induced additional consumer spending were technically correct, they missed the important point that the spending rise was very small in comparison to the size of the tax rebates.

A recent, widely reported academic study by Christian Broda and Jonathan Parker showing that the rebates led to increased spending on nondurable items (like food and drugs) does not contradict the implication of the more comprehensive data -- on national retail sales and total consumer spending -- that the induced rise in consumer outlays was small relative to the size of the rebate.

The small rise in spending in response to these tax rebates is similar to what previous studies of one-time tax cuts found. It also corresponds to what both basic economic theory and common experience imply. Although someone who receives a permanent annual salary increase of $1,000 typically would increase his annual spending by an almost equally large amount, a $1,000 rise in wealth caused by a share price increase or a tax rebate would raise spending only gradually over a number of years.

All of the evidence on one-time tax rebates implies that the Obama plan to send $1,000 rebate checks would do little to raise consumer spending and stop the decline in employment. If the past is an indicator of what would happen, the $65 billion he proposes to spend on this plan would raise consumer spending by only about $10 billion, or less than one-tenth of 1% of GDP.

The distinction between one-time tax rebates and permanent changes in net income is also important for the debate about Mr. Obama's proposal to raise income and payroll taxes. Because those tax increases would be permanent, they would cause a substantial reduction in consumer spending and aggregate demand. Moreover, as taxpayers begin to focus on the possibility of such a future tax hike, they will reduce spending without waiting for such legislation to be enacted. If Mr. Obama is looking for a way to stimulate the economy, he could begin by discarding his proposal to increase future taxes.


AP Lies About Obama's Red Mentor

The influential Associated Press (AP) wire service has belatedly run a story about Barack Obama's Marxist mentor without mentioning the smoking-gun evidence that the mentor, Frank Marshall Davis, was a Communist Party member. The dishonest story, which represents damage control for the Obama campaign, was written by AP writer Sudhin Thanawala. AP is one of the largest news agencies and serves thousands of print and electronic media outlets.

Under the innocuous headline, "Writer offered a young Barack Obama advice on life," the story calls Davis, a member of the Communist Party USA (CPUSA) when it faithfully echoed the Stalinist line, merely a "left-leaning black journalist and poet" known for "leftist politics" and someone who might be accused by some of having "allegedly anti-American views."

Davis was not a "journalist" in any real sense of the term. He was a propagandist and racial agitator for the CPUSA. He was also a recruiter for the communist cause. The slanted AP story features quotes only from supporters or friends of Davis and Obama. But those picked to defend Davis are themselves interesting.

Ah Quon McElrath, identified as merely "a friend" of Davis's and quoted by AP, was actually an organizer for the communist-controlled International Longshore and Warehouse Union (ILWU). The ILWU was led by Davis's friend and associate, secret CPUSA member Harry Bridges. Davis wrote for a newspaper, the Honolulu Record, which was controlled by the CPUSA and subsidized by the ILWU. McElrath is quoted by AP as saying, "You could get a lot of strength from a person like Frank who had suffered all the discrimination...that a black man goes through in America."

Davis went to Hawaii in 1948 after consulting with Bridges and Paul Robeson, another secret CPUSA member. He was a mentor to Obama during the years 1975-1979 and died in 1987. Obama supporter Dr. Kathryn Takara is quoted in the AP piece as saying that "Frank was part of a group of black vanguard intellectuals." Takara was the associate producer of a program about Davis that, like the AP story, ignored his CPUSA affiliation. So while she knows a lot about Davis, she seems blind to the evidence of Davis's service to the communist cause.

In fact, Davis was a hard-core but secret CPUSA member with a history of involvement in CPUSA fronts who was so much of a Stalinist that he opposed U.S. participation in World War II during the Hitler-Stalin Pact, but then supported U.S. involvement after Nazi Germany invaded Soviet Russia.

Strangely, the AP article quotes John Edgar Tidwell, a University of Kansas professor who edited Davis's books, as declining by e-mail an interview request because Davis has allegedly become the victim of a "McCarthy-era strategy of smear tactics and condemnation by association." Tidwell knows that Davis was a secret CPUSA member and cites evidence in one of his books, including from one of Davis's private letters, to prove it. Davis refused to deny his CPUSA membership as late as 1956, when a congressional inquiry had named him as a member of the communist underground.

So "McCarthyism" has become telling the truth about communists? Why has Tidwell taken such a low-profile during the presidential campaign when he should have so much to offer about Davis?and possibly Obama? Why the silent treatment? ....

AP quotes John Edgar Tidwell in a book as saying about Davis, "He made his vision into a beacon, a light shedding understanding and enlightenment on the problems that denied people, regardless of race, national origin or economic status, their constitutional rights." But AP doesn't quote Tidwell as confirming that Davis was a Communist, a member of a political party funded and controlled by Moscow. And AP doesn't note the evidence that Davis and his comrades tried to take over the NAACP in order to transform its Honolulu branch into a front for the Stalinist line.

What's more, AP doesn't note that Davis accused prominent black author Richard Wright of "treason" for breaking with and exposing the CPUSA. "In spite of his writings," AP says, "Davis scholars dismiss the idea that he was anti-American." Why not tell us what was in those writings? Like the private letter in the possession of Davis scholar Tidwell in which Davis tries to recruit a prominent poet to the CPUSA. Which of course raises the disturbing questions that must be asked:

- Did Davis recruit Obama?

- Was Obama, like Davis, Bridges and Robeson, ever a secret CPUSA member?

- Could Obama's possible secret relationship with the CPUSA help explain why the first person ever to publicly mention that "Frank" was Frank Marshall Davis, and that he had a relationship with Obama, was Gerald Horne, a writer for a CPUSA publication? .....

The blatant fraud and deception in the AP story may reflect thinking at the highest levels of the Obama campaign that, if the complete truth about the Obama-Davis relationship were made known, the candidate would be sunk. They must understand that Obama's baggage would prevent him from getting a security clearance in the U.S. Government (none is required for a presidential candidate). After all, they must be asking themselves, what American in his or her right mind would vote for a candidate who took "advice about race and college" ?to quote AP?from a Communist pawn of Moscow?

Viewed in a national security context, the Frank Marshall Davis scandal is far more serious than Obama and his wife and children hearing Jeremiah Wright's anti-American and anti-white sermons. Indeed, the Davis influence on Obama may help explain why Obama would attend Wright's church, take his children there, and be receptive to his message for many years. It also may explain why Obama would admittedly attend socialist conferences and pick Marxist professors as friends in college before launching his political career in the home of communist terrorists Bill Ayers and Bernardine Dohrn. But if you didn't know that Davis was a Communist, this pattern of associations with unsavory characters cannot be traced back to Obama's formative high-school years.

So the AP story looks like an attempt to put the best possible face on something that could fatally wound Obama and leave him in the position this November of being perceived as a fringe McGovern-style candidate without McGovern's legislative credentials and war record.

Much more here

Stall that Slide to the '70s

There aren't many who long for a return to the 1970s. Those of us old enough to recall that decade tend to think of gas lines, a hostage crisis and Watergate. President Carter never used the word "malaise," but he acted as if America was doomed to decline, and it was his job to make sure it went smoothly.

There's some malaise around today, too.

High gasoline prices are back. Petroleum-producing nations (such as Venezuela, Iran and Saudi Arabia) again hold us hostage -- this time for petro-dollars, even as the value of our currency slides. And polls show both the president and Congress have their lowest approval ratings in decades.

With so much discontent, who would want to go back to the policies of the 1970s? None other than the self-professed presidential candidate of "change," Barack Obama.

Sen. Obama recently unveiled an economic plan that revolves around raising taxes on the wealthy. His plan would jack up the top marginal rate to roughly 50 percent for those making more than $250,000 a year. And that doesn't include state and local taxes.

Obama promises to "soak the rich" three times over by 1) repealing the Bush tax cuts on capital gains and dividends, 2) bumping the top two tax rates back up to 36 and 39.6 percent and 3) slapping them with additional Social Security taxes. The total tax pain would be greatest for those who live in high-tax cities and states, including New York, Maryland and California. Some there would have to pay up to 66 cents in taxes on every new dollar they earn. Confiscatory tax rates like that only encourage high earners to work less and produce less.

Those sort of tax rates would take us right back to the Carter era. That's the last time rates were that high.

Of course, when tax rates are high, wealthy people spend their time developing tax shelters instead of reinvesting in their businesses. That may be great news for lobbyists and tax attorneys, but it's bad news for everyone else.

It was a true "candidate of change" who rescued the U.S. from the doldrums of the '70s. "Reaganesque lower taxes and deregulation," economic historian John Steele Gordon wrote in The Wall Street Journal recently, "sparked an enormous economic boom that has now lasted, with two brief and shallow recessions, for more than 25 years."

The rest of the world learned Reagan's lesson, too. Most countries slashed tax rates after we did, and generated growth of their own. By reversing that policy, Sen. Obama would put the U.S. in with an ever shrinking group of nations that cling to the failed policies of the past, and are suffering for it.

Only six of the top 30 industrial nations have a tax rate for all levels of government combined that adds up to more than 55 percent. Obama's tax plan would give us a higher top rate than such high-tax nations as Sweden and Denmark. And these sorts of tax rates slow the economy.

Among those six high tax countries the average unemployment rate is 7.35 percent. Contrast that with our own unemployment rate, which recently rose to 5.5 percent -- still a low figure by historic standards.

The math is simple: Lower tax rates encourage more economic growth and lower unemployment. Higher tax rates lead to slower growth and lower wages. In 2001 and 2003, President Bush pressed Reagan's tax-cutting policies even further, slashing tax rates and boosting the economy into several more years of growth. The sensible policy today would be to make those cuts permanent, so business owners and entrepreneurs could plan for the future.

The only other option is a return to the discredited policies of the '70s. And that's a change we simply can't afford.



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