How To Make the Bailout Bill (More) Acceptable.

Is the Axis of Arrogance—the bipartisan bunch supporting the bailout bill—plotting to get rich(er) off your $700 billion? Of course they are! That’s why they are so desperate to get the bill enacted, so desperate that they are practicing economic terrorism on nervous Americans, threatening to crash the economy, just to get their way.

For this Axis of Arrogance, some things are worth fighting for. Such as $700 billion, with the promise of plenty more where that came from—that’s worth fighting for. But here’s a way to take away most of their fun: Put into the bailout bill a stipulation that all governmental transactions have to be online, in real time, so that everyone can see what everyone else is doing.

One of the many reasons to oppose the bailout bill is the looming prospect that lobbyists will circle that $700 billion like “birds of prey,” as John McCain so memorably observed. Back rooms in Washington DC aren’t smoke-filled anymore, but the rooms where lobbyists meet are well in the back, out of sight. And you can be sure that every lobbyist in town is waiting to open up a new “practice,” which will consist mostly of figuring out how to help banks sell distressed financial instruments to the government at a higher price than they would otherwise get. (One suggested name for the new entity, by the way, is the Securitized Housing Insurance Trust.)

And of course, Members of Congress, and activist groups such as ACORN, will seek to oversee the process of doling out that $700 billion. That’s right, the same people who brought you Fannie Mae and Freddie Mac—and before that, the Savings & Loan bailout—are looking forward to “serving” the public once again. They just don’t want you to know about it—and they certainly don’t want you to see it.

But there is a solution: full disclosure. As Supreme Court Justice Louis Brandeis observed nearly a century ago, “sunlight is the best disinfectant.” And that has always been true. In the 90s, then-House Speaker Newt Gingrich put actual drafts of legislation online, through the Thomas system. More recently, Sen. Barack Obama has teamed up with conservative Republican Sen. Tom Coburn of Oklahoma to begin making federal spending more transparent. And conservative activist Grover Norquist has teamed up with Ralph Nader to make state government spending fully transparent; already, in nine states, you can go online and see how they are spending your money.

So now, before anybody even thinks about enacting a bailout bill, let’s make it totally transparent. As in totally transparent. That is, put all the distressed financial instruments on the Internet, via eBay—or better yet, some totally open-access system—so that everyone can analyze the documents and make a bid for them. That would set a fair-market price for each of these pieces of paper.

Now Secretary Paulson, of course, has said he wants to pay more than fair-market price for these securities, as a way of paying off his friends. Oops, I meant to say, “injecting liquidity into the system”! Forgive me.

But if the Securitized Housing Insurance Trust, or whatever it’s called, chooses to overpay for an instrument, well, that will all be online, fully visible to one and all. And Presidents and the rest of the political class will be held visibly accountable.

Now let’s add a provision mandating that all lobbying and “consulting” fees be fully disclosed. We might still get a legislative turkey, but at least we’ll know how badly we’re being ripped off. Down to the penny.

Posted on FoxForum this afternoon.

Two more takes on the financial crisis. First, I invoke Andrew Jackson.

And then, Howard Beale.

The Bailout: Why Are President Bush and the Democrats Working Against Congressional Republicans?

Another post this morning:

In Washington, it’s a showdown between the representatives of Wall Street and the representatives of Main Street. But have you noticed that the old partisan alliances are reversed? It’s the Democrats who are now the Wall Street Party. And Republicans—with the conspicuous exception of President Bush—are now the Main Street Party.

Consider: President Bush proposed the $700 billion plan; after days of hiding behind the Secretary of Goldman Sachs, Henry Paulson, Bush finally emerged from the sidelines Wednesday night to tout the plan in prime time. Just this morning, he spoke again in favor of his plan, while again taking no questions from pesky reporters.

But the Congressional Democrats, who mostly despise Bush, are also mostly for the Bush plan. Sure, they made some cosmetic changes in the bailout proposal, but they have never wavered in their basic endorsement.

So who’s against the plan? It’s Congressional Republicans who are getting in the way. They are the heroes of the hour. Although outnumbered, these brave Capitol Hill GOPers have stopped official Washington in its tracks. Why? Because the Democratic majority, supporting the bailout, doesn’t actually dare to vote for it unless they know that most Republicans will vote for it, too. And that’s because the Democrats fear that this bailout legislation is deeply unpopular with the country. So the only way that Democrats can vote for the bill and be safe this November is if Republicans also put their names on the legislative dotted line. Not a profile in courage for Democrats, of course, but it’s smart practical politics for them to demand some “cover.”

But let’s step back a minute. How did it come to pass that President Bush is siding with Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi? What thought process led the Administration to support a big-government bill that the Republican grassroots all despise? Bush, of course, never met a Cheney-esque secret plan that he didn’t like. And it would also seem that seven-and-three-quarters years in office have totally disconnected him from rank-and-file Republicans. Remember his support for the ill-fated immigration “amnesty” bill back in 2004? And after that misguided legislation was beaten back, he proposed it again in 2007. What was he thinking?

For their part, the Democrats are emerging as the new party of the rich, the party of Wall Street, the party that champions financiers at the expense of producers. For years now, the most affluent precincts in the country—mostly on the two coasts—have been solidly Democratic. And in 2008, the polls show that upper-income voters mostly support Barack Obama. And Obama, of course, guided by the likes of Robert Rubin, has been quietly supportive of the deal. Indeed, Obama personally epitomizes the Democrats’ new political arrangement: He was raised mostly poor, then worked mostly with the poor, but now he is rich and works mostly with the rich—his campaign is a well-financed corporation. Yet he has maintained his popularity with the poor. For their part, the Republicans now represent the majority of middle-income voters—Main Street. But the Democrats, with their political pincer movement, from the rich above and the poor below, have the clear electoral advantage in 2008.

So it’s understandable that the Democrats would want to take care of “their” people at the top. That’s the revised Democratic model: The same old socialism for the poor, of course, in the form of the bureaucratic welfare state, and a new kind of socialism for the rich, in the form of this bailout.

In addition, the Democrats have some sordid secrets to protect—and Paulson & Co. are helping them keep hidden. Much of the overall financial crisis can be traced back to bad mortgages made to unqualified buyers at the behest of Democratic poverty advocates; it was a neat arrangement, poor Democrats got houses, as rich Democrats got richer by manipulating the financial paper. But the Bush administration, eager for a deal with the Democrats, has made it clear that it won’t point fingers. For their part, Senate Banking Committee chairman Chris Dodd (D-Conn.) and House Financial Services Committee Chairman Barney Frank (D-Mass.) are returning the favor by pushing the bill forward.

So only Congressional Republicans—the single most implacable figure being Sen. Richard Shelby, the Rock of Alabama—are taking a firm stance against this monstrosity. They even seem to have brought along John McCain, who has taken various positions on the bailout over the last few weeks. But bravo for the Congressional Republicans. After years of embarrassments and scandals, the Capitol Hill GOP has rediscovered principle and honor. And so rediscovered the glory of genuinely representing the people, against the powerful.

I am reminded of Aragorn’s Battle Speech at the Black Gate in the third of the “Lord of the Rings” trilogy. The King tells his outnumbered troops:

I see in your eyes the same fear that would take the heart of me. A day may come when the courage of men fails, when we forsake our friends and break all bonds of fellowship, but it is not this day.

An hour of wolves and shattered shields, when the age of men comes crashing down, but it is not this day!

This day we fight!!

By all that you hold dear on this good Earth, I bid you stand, Men of the West!!!

And so, in the Tolkien story, the Men of the West are triumphant. But today, in the real world, could the Republican Men and Women of Capitol Hill yet prevail? The Washington DC conventional wisdom, as of Friday, is that the Bush Administration/Democratic/Wall Street juggernaut will eventually bring the Congressional GOP to heel. If so, that would be the final victory of Wall Street over Main Street.

But maybe not. Maybe ordinary people will win this epic struggle.

Let’s Bail Out Main Street NOT Wall Street

I just posted this on the FoxForum at Foxnews.com

Who should we bail out: Wall Street? Or Main Street? According to today’s reports, Washington has made its choice clear—Wall Street will get the bailout. The White House and Congress, Republicans and Democrats, seem to agree: Help Goldman Sachs, not Joe Sixpack. But there are alternatives, if the people will order their “leaders” to pay attention to them, instead of the lobbyists and bankers who are currently calling the shots.

The emerging bipartisan consensus—the original bailout, plus a few new provisions concerning oversight—is the epitome of “trickle down.” Wall Street made bad decisions, but Wall Street is too big to fail, so we must give them $700 billion, so that the rest of us can avoid a recession. Got that? The Wall Street message is, “We screwed up, so give us money, otherwise, you’ll be sorry.”

Amazingly, that argument—top-down piracy at its most naked—is carrying the day in Washington. If one ever needed proof that the government is the tool of the ruling class, this is Exhibit A.

So what’s the alternative? Mallory Factor, a South Carolina businessman, has a better idea: “Bail out homeowners, not lenders,” he says. “Any qualified buyer who wants to buy a house,” he says, “could buy one at a guaranteed low interest rate, of, say, 3.5 percent. And any qualified homeowner who wants to refinance could get the same rate.” If that happens, Factor predicts, “There would be a flood of liquidity into the system, as people bought houses again, which would also help reduce the housing-stock overhang. In addition, as people refinanced, all these instruments, such as collateralized mortgage obligations, which Fannie Mae and Freddie Mac have choked on, would once again start performing. And that would save the banks and many investors, by saving homeowners and homeownership.” In other words, trickle up, not trickle down.

The current interest rate for a standard 30-year mortgage is around 6 percent. At that rate, the payments on a $300,000 mortgage work out to $1,799.65 a month. By contrast, at Factor’s proposed rate 3.5 percent, the payment would be just $1,347.13 a month. That’s a whopping difference, especially for homeowners who might have paid more for a house than it is currently worth. And at 8 percent, which many adjustable rate mortgages (ARMs) have shot up to, the monthly bill is a prohibitive 2,201.29 a month.

This interest-rate buy-down is the elegant heart of Factor’s plan. And who would do the buying down? “The federal government,” Factor answers bluntly. “This is a government buy-down of interest rates, but it would benefit homeowners first, and only then, second, the banks.” But, he notes, the buy-down is only for qualified borrowers. So the banks would still lose a lot of money. Which is good, since they need to be reminded not to make this mistake again. And since there’s no Fannie or Freddie any more to buy these dubious loans in the future, the banks will have to be careful, once again, about who is a qualified borrower, and who is not. The government, Factor reminds, would only be on the hook for the costs above 3.5 percent—the banks would be responsible for the first 3.5 percent, and for the principal.

That’s bad news for bankers, Factor adds, but good news for taxpayers: He estimates that his interest-rate buy-down plan would cost Uncle Sam perhaps $200 billion (more if interest rates rose, less if interest rates fell). But it would surely be cheaper, he suggests, than the trillion or more that the Washington plan seems destined to cost. And once again, Factor’s plan would focus on Main Street, not Wall Street—surely a substantial virtue in and of itself.

“The Washington plan,” Factor observes, “is like the government going to a bunch of car dealers, and saying, ‘You’ve got a bunch of cars in your warehouse that nobody wants to buy, because most of them are lemons. How did this happen? Because you didn’t bother to kick the tires or otherwise examine them before you ought them from the factory. But because we’re the government, Uncle Sugar, we will buy them off you, deliberately overpaying, big, so that you can take our cash and get back in the car-retail business.’”

And yet there’s an obvious “moral hazard” in that arrangement: How do we know that these myopic car dealers will do a better job tire-kicking the next time?

Washington’s answer is “more regulation,” but that regulation generally just creates another layer of bureaucracy, as opposed to genuine protection. Factor’s approach is much simpler: Under his plan, banks will get a bunch of new mortgage applicants all seeking the government-subsidized rate of 3.5 percent; then the banks, for their own protection, will have to figure out who will be able to pay back their loans.
Of course, if the rate were a guaranteed 3.5 percent, plenty of homeowners would rush to refinance their existing higher-rate mortgages. That’s fine with Factor: “That would create the liquidity that banks need.”

Factor freely concedes that his solution is not perfect: “There are no really good answers to this disaster,” he allows. “There are just less-bad answers, that minimize the cost to the taxpayers, and that teach the banks and Wall Street a harsh but useful lesson in market economics.”

And of course, to the rest of us, weary of being ripped off by Wall Street shysters who are using Washington to rip us off a second time, the Factor Plan sounds like a pretty good deal.

Jim Pinkerton's takes on the financial crisis, published in Politico.com's "Arena" section. I published this last Sunday:

The biggest flaw in the Administration bailout package: It could all happen again. The system doesn’t need just fixing, it needs decentralizing. Financial institutions should be big enough to fail—and never any bigger. We need compartmentalization, also known as federalism.

The current crisis was caused by mega-financial institutions that could gamble their money—and lose it. And they did. But first, they grew to the point where they couldn’t be allowed to fail. That’s why even a staunch free-marketeer such as Larry Kudlow supported the AIG bailout. “A collapse of AIG would have been unfathomable,” he wrote on Saturday. “It is simply too interconnected globally.”

Well OK, then, AIG was too big. When even free-marketeers want the government to step in, that’s proof that size matters. In a bad way. But the American people cannot let themselves be hostage to the financial megalomania of casino-capitalist empire builders.

It might, indeed, be the responsible thing to vote for a bailout, but it is irresponsible to allow such a meltdown to happen again. And it will happen again if banks, investment houses, and insurance companies are allowed to grow this big once again. Adding another layer of regulations and record-keeping will make work for more lawyers and more accountants, but if the basic business model survives—gambling with other people’s money, and lots of it—then we will right back into deep doodoo soon enough, except that the dollar totals will have a few more zeroes. Remember Sarbanes-Oxley? What good did that do?

As my colleagues at the New America Foundation, Sherle Schwenninger and Michael Lind, have argued for years, we need different kinds of banks to do different things. So the Depression-era Glass-Steagall Act—which solved this problem once before—should be restored, so that the bank down the street once again is limited to only accepting deposits from its neighborhood and only making loans to locals. That’s a boring low-margin business, to be sure, but it’s mostly a safe business. Meanwhile, on Wall Street, investment bankers and speculators would be free to speculate, but they wouldn’t be free to speculate with the capital base of Main Street.

In addition, the states should reclaim their role as laboratories of democracy—and laboratories of the economy. Leaders of each state should figure out how much money they are losing in this deal—that is, how much of that projected $1 trillion they are “contributing.” Or, to put it another way, how much of an income transfer is the state of New York reaping? How much is Manhattan gaining at the expense of all the rest of us?

Politicians across the 50 states might be tempted to demagogue these wealth-transfer data, but there is the not-so-little concern of avoiding a depression.

Instead, politicians should say, “I will vote for this bailout, AND I will also insist that we compartmentalize, or federalize, the solution. How? We should establish a state bank, or a regional bank, to keep capital right here in (fill-in-the-blank) state or region.” If South Carolina and North Dakota keep more of their money in the first place, to be invested in local projects, that will be good news for South Carolinians and North Dakotans. And it will be bad news for money-hungry Manhattanites, plotting their next incomprehensible derivate swap; they will be free to gamble their money, and nobody else’s.

And that would be good news for the rest of us.

And this today, Wednesday:

If the Bush administration really believed that the Paulson proposal was absolutely vital, it would be accompanied by a) the President's prime time speech to the nation; b) the resignations of top administration officials who have been overseeing the situation heretofore; or c) a tax increase, specifically, a "Tobin Tax" on speculation, perhaps balanced with a reduction in the tax rate on long-term capital gains. But if the administration can't rouse itself to even do a), then it's obviously not that serious a situation.

The situation of Paulson himself is particularly egregious. Having been in charge at Treasury for more than two years and issued innumerable "sunny skies" forecasts, he now wants a $700 billion blank check to oversee the bailout of his once and future colleagues.

His swift exit from the scene ought to be a rock-bottom minimum requirement.

Al-Qaida hikes 'dirty bomb' efforts/ British intelligence issues global-wide warning

That's the headline today atop an important article in Joseph Farah's G2 Bulletin.

Here's the most important material:

LONDON -- Britain's MI6 intelligence service has issued a global-wide priority warning to all security services that Islamic terrorists now are closer to obtaining material to create a "dirty bomb" to launch against Western targets, according to a report from Joseph Farah's G2 Bulletin.

Osama bin Laden long has made this a priority and reinforced it with regular messages from his mountain redoubt in the northwest province of Pakistan. He repeatedly has said every "true Muslim must make it his duty to assist in all ways possible to find the next powerful weapon to destroy our enemies."

Last weekend, Pakistan elected a new president, the controversial Asif Ali Zardari. He had served a nine-year jail term on corruption charges he has strongly denied. But MI6 agents fear he has little ability to provide strong leadership against the new wave of Islamic extremism al-Qaida has launched across the country.

Groups such as the newly formed Pakistan Taliban have proclaimed they are focusing on creating a "dirty bomb."

MI6 agents based in Islamabad fear the mounting instability in Pakistan will make it easier for them to do so.

While Pakistan is the only Muslim country with a nuclear arsenal, it has in the past provided its expertise to Iran.

Pakistan's Islam bomb was developed in the 1990s by the rogue scientist, Dr. Abdul Qadeer Khan. He sold the results to pariah states like North Korea and Libya. He was placed under house arrest by Pervez Musharraf.

SEVEN YEARS AFTER 9-11: THE PYRAMID OF PREPAREDNESS

Seven years ago today, America was attacked.

So now, seven years later, what to do Americans think about the prospects for another attack? And the aftermath? A new nationwide poll provides some answers.

According to the Washington DC-based Benenson Strategy Group, nearly two-thirds of Americans say that they are aware of the danger of a “dirty bomb” (that is, a radiological dispersion device). But less than half, 47 percent, say that they are confident that the government is prepared. And only 42 percent say that they themselves would know what to do in the wake of a dirty-bomb attack. Just 34 percent say that the government has done a good job of informing people about what to do.

A dirty bomb is especially insidious because components for such a weapon are spread so widely across the United States. Deadly “dual use” materials are found in medical offices, industrial sites, and, in minute quantities, even in household devices, such as smoke detectors. And yet radiation is radiation: If enough radioactive material is gathered together, and then dispersed in a malevolent manner, thousands of Americans, even millions, could be at risk. That’s a problem.

The Radiological Threat Awareness Coalition (R-TAC), which commissioned this opinion survey, believes that the government has indeed done much to prepare for a dirty bomb—but it needs to do more. R-TAC believes that the government has been less effective at communicating information about what to do in the wake of a dirty-bomb attack. And yet public awareness isn’t just a job for the government, it’s a job for all of us.

Interestingly, just 27 percent of Americans know that a medical antidote to radiation poisoning exists. Broadening awareness of post-attack medical solutions might not be everyone’s duty, but if—some say when—such an attack comes, everyone will surely want to receive treatment. So now is the time to look ahead, and think ahead.

The challenge for all those involved in homeland security, in both the public and the private sector, is to strike the right note. We must not be naïve about the risks, but we must also not give in to either panic or fatalism. With the right mix of duty and diligence, we can protect our country while at the same time protecting our civil liberties.

To keep us safe, R-TAC envisions a Pyramid of Preparedness. Here’s the architecture: At one of the four corners of the base, there’s the government—federal, state, and local. These are the people and agencies tasked with overseeing and coordinating the effort at detection, and, if that fails, response and recovery. At another corner of the pyramid are the men and women of science—those who can build the sensors, those who can invent the cures. At another corner is the business community—those who can mass-produce, at the lowest possible cost, the tools for protection and remediation. And at the fourth corner is the citizenry. As individuals and as groups (including R-TAC), we all have an obligation. In a time of possible emergency, we are all our brother’s, and sister’s, keeper.

Together, R-TAC hopes, the four corners at the base of this Pyramid will converge into an Apex of Awareness—alert to threats, quick to respond. We have seen the pyramid on the back of a dollar bill, the one with the eye in it. That image is a reminder: If we are looking out together, we are more likely to be safe.

The results of the R-TAC public opinion survey tell us that the America people are aware of the dirty-bomb danger, but they need to know more. They need to see more—and that’s where the Pyramid of Preparedness comes in. It might seem visionary, but we have all seen what happens when there is no vision.

I am have been writing a lot of late, here, there, and everywhere.

I have a new piece up at The Huffington Post, explaining how the 44th President of the United States, and the 38th Governor of California, teamed up to solve the energy and environmental crises.

And you can also watch me on "Fox News Watch," at 6:30 pm ET on Saturdays.

I am now blogging regularly for the "FoxForum" at Foxnews.com.

Voting With My Feet--Why I Quit Everything to Go Volunteer for Mike Huckabee.

(From the January 28 issue of The American Conservative .)

Warren, Michigan -- I love Ed Rollins like a brother, but it’s Mike Huckabee who inspired me to return to politics—for such a time as this.

Rollins was my boss at the Reagan White House in the early 80s, and then I followed him to the Reagan-Bush ’84 re-election campaign—and thus into morning-in-America glory. We have kept up ever since. And over the last few years, we have both returned to the church; he’s Catholic, I’m Protestant. And we both, from our different perspectives, became fans of Governor Huckabee. Ed and I both agreed that Governor Huckabee combined solid conservatism, a gentle manner, and a willingness to try new things that reminded us of, yes, Ronald Reagan.

So when the call came, I was ready to hear it. I resigned from Fox News and from Newsday, and signed on as a Senior Adviser, traveling around with the campaign. (I don’t know what my status with TAC is; if this piece runs, I’ll know I’m still a contributing editor.) But don’t let my fancy new title fool you: Among my greatest accomplishments has been figuring out how to print a document from my laptop at Kinkos. And yes, I’m re-experiencing campaign life: such as not being able to tell whether your heart is beating faster because you hear something inspiring, or because you think you might have made an error in a policy paper, or because you have drunk too much coffee and eaten too many donuts.

Actually, not donuts, because the Huckabee campaign is lean, if not mean. Without anywhere near the sorts of resources commanded by some other candidates, we bump along without the perks that many campaigns enjoy. Don’t get me wrong: It’s not The Grapes of Wrath for us out here, but it’s not the J.W. Marriott, either.

As for Governor Huckabee, he is a low-cal man. Many people know about his epic diet—the loss of more than 100 pounds—but what sets Governor Huckabee apart from most weight-losers is that he was governor of Arkansas at the time, and so he had the opportunity to convert his own experience into a teachable moment for the citizens of his state. Some will call it sappy, others will call it “Love Thy Neighbor.” Now he is a believer in prevention, including both better diet and more exercise; as he says on the stump, “We don’t have health care, we have sick care.” That is, people stop taking care of themselves, they get sick prematurely, and somebody pays the tab. There’s not enough money for that kind of health care.

But the governor is not judgmental; he knows he came from the sort of family where eating too much wasn’t such a bad idea—because you could never be too sure about that next meal. As he reminds audiences, “I know the stone from which I was hewn, I know the rock from which I was quarried.”

Like the minister he once was, he pauses to offer a word of encouragement—to an old lady in a walker, to an unemployed husband and father, or to a gymnasium full of Christian homeschoolers in St. John, Michigan; he first apologized for interrupting their basketball game. Then he said to them, “You will face giant challenges in your life, but you are never taller and stronger than when you are on your knees praying to God.” Then he wrapped up, told them to have a good game—and “remember to show sportsmanlike conduct.”

But for adults, Governor Huckabee has a more serious message. Here’s the headline of The Detroit Free Press on Tuesday, January 15: “Huckabee appeals to working class/On factory tour, he cites tax plan, family-friendly efforts.” The Governor is for free trade, but he is also for fair trade. If the Chinese are “cheating” by putting lead paint on toys and poison in dog food, well, that’s not fair. If American workers have to meet stringent labor and environmental standards, then they shouldn’t be left unprotected to compete against workers who don’t get the benefit of those social-contract basics. Makes sense to me. Is it really a good idea to export our factories overseas, so that the American middle class is hollowed out? So that others can generate CO2 without regard to emissions controls? So that China, say, can develop its arsenal of non-democracy? I don’t think so.

Mike Huckabee, mindful of the Truman precedent, wants a new Fair Deal for Americans. He cares about their jobs, but he also cares about traditional family values, including the rights of the unborn. Plus, he was a great governor, he is a great speaker, and he is a very nice guy.

So that’s why I’m here.

Ends Against the Middle

Are the Democrats really the party of the rich? Well, they certainly are the party of the plutocratic chatterers, from Robert Rubin to George Soros on the east coast, to David Geffen and the Googlers on the west coast. Meanwhile, in the heartland, Warren Buffett holds lonely liberal court.

And they all, of course, read The New York Times, still a rich man’s publication, even if the Sulzbergers themselves are fading fast. Yes, plenty of rich Republicans remain, but even among their ranks, many of the old GOP dynasties—Rockefeller, Heinz, Harriman—are now notably Democratic.

The phenomenon of limousine liberals has been around since the 60s—ever since the Ford Foundation started funding radical multiculturalists, ever since Leonard Bernstein hosted a fundraiser for the Black Panthers, ever since rich liberals such as Teddy Kennedy embraced forced busing while sending their own kids to private schools. In 2005 Michael Barone took note of “the trustfunder left”; the San Francisco Bay Area, for example, voted 70 percent for John Kerry, while on the other coast, Kerry picked up 73 percent of the Martha’s Vineyard vote. In addition, the 2004 Democratic presidential nominee won such rich-nomad spots as Aspen, Sun Valley, and Boulder.

On November 5 of this year, The Heritage Foundation’s Michael Franc, op-ed-ing in The Financial Times, calculated that Democrats now represent the majority of the nation’s wealthiest Congressional districts. “More than half of the wealthiest households are concentrated in the 18 states where Democrats control both Senate seats,” Franc observed—which would include, of course, such obviously affluent states as New York, New Jersey, Connecticut, Massachusetts, California, and Washington.

Franc’s findings provoked a furious reaction. “Silly New Wingnut Meme: Democrats Are The ‘Party Of The Rich’” headlined TalkingPointsMemo.com; DailyKos.com was similarly nasty. Those two liberal websites, of course, are more notable for their Democratic partisanship than for any consistently lefty ideology. And so naturally, those two sites sought to inoculate the Democrats from the charge that they are now belong to bloggers and billionaires—that being precisely the thesis of Matt Bai’s recent book, The Argument: Billionaires, Bloggers, and the Battle to Remake Democratic Politics.

Bai is a reporter for The New York Times, and that’s probably the only reason he got close enough to his subjects to hear them refer to evangelical Christians as “lizardheads” who live in “Dumbf__istan.” To be sure, Democrats have no monopoly on arrogance or asperity, but it is a Democratic Congress, now, that is showing no interest in closing the obvious capital-gains loophole that benefits hedge funders, of the type that hired John Edwards.

Meanwhile, journalists have made the same point as Franc: This is The Wall Street Journal, from November 16: “Affluent Voters Switch Brands/Stands on 'So-Called Moral Issues' Prove Costly for Republicans.” And here’s a headline from The Huffington Post—speaking of rich-Republicans-turned-rich-Democrats—from November 25: “Fortune 500 CEOs Favor Dems: Gobs Of Green Go To Blue Candidates.” Indeed, in their unguarded moments, even partisan Democrats seem giddy with their gilt; I found this August 21 headline, “Democrats Outraise Republicans 2-to-1,” on the website of the Democratic National Committee.

Of course, it can’t really be said that the Democrats are the party of the richest of the rich—because they have the poorest of the poor, too. From East LA to the Rio Grande Valley to the Deep South, donkeys rule.

So that’s the dual reality: The Democrats are safe in Manhattan and Beverly Hills, but they also rule among the poor. Look at Jesse Jackson and Al Sharpton—they themselves are poor, right?

So what, pray tell, do Barbra Streisand and Charlie Rangel actually agree on? Probably only this: The Americans in between them, the Middle Americans, are the common enemy. In* this reckoning, small towns and suburbia are subtly racist—except when they are overtly racist—toward people of color. And everybody on the port side of politics knows that “family values” is thinly disguised code for sexual repression and homophobia.

In fact, the normal, historic pattern of small “d” democratic politics is for the very rich and the very poor to ally themselves against the bourgeoisie. The poor look up at the working stiff of a foreman and see the hated Simon Legree. The rich look down the social ladder and see nothing but Babbitts and other small-minded reactionaries, who might well be pro-life.

For their part, the Republicans might as well get used to their new status as the middle class party. Being the party of the rich is good for fundraising, being the party of the poor is good for invoking moral authority—plus provoking the occasional riot—but being the party of the Silent Majority is the best for winning elections.

Published in the 12/17/07 issue of The American Conservative.

THE SCHWARZENEGGER DOCTRINE


News item, October 27, 2007:

Governor Arnold Schwarzenegger today spoke of the arsonists who set killer brushfire blazes in California: “We will hunt down the people that are responsible for that.” In addition, Schwarzenegger expressed special thanks to President George W. Bush for “being such a tremendous partner.”

Future news item, c. 2008:

In a major policy shift, Gov. Schwarzenegger today announced that he was no longer actively pursuing the arsonists, believed hiding in Nevada, who had devastated California last year and caused billions of dollars in property damage. “I know I pledged to ‘terminate’ those arsonists, but now we have new priorities. History summons us in a different direction. Our intelligence experts have identified even greater arson threats to California, as well as to our friends and neighbors. So now we must act immediately against grave and gathering threats, which could be launched at any time by remorseless pyromaniacs who hate us for no reason.”

Schwarzenegger, who early in his gubernatorial career seemed uncomfortable with soaring rhetoric, is now confidently using lofty language to describe the enemies of the Golden State. In particular, he has identified three states—Kansas, Nebraska, and Vermont—which form, he says, the “axis of ignition,” guilty of “state-sponsored pyromania.” Now, he continues, this axis poses an even greater danger than last year’s arsonists. And the danger could grow worse: “If these state-sponsors could gain access to WMC (‘weapons of mass conflagration,’) the fires of October 2007 would look, by comparison, like backyard barbeques.”

In the past, Schwarzenegger had warned, “Those who could become arsonists in the future are as bad as those who committed arson in the past.” More recently, the governor’s Sacramento-based “brain trust” enunciated a new policy agenda, which some dub “The Schwarzenegger Doctrine,” calling for “pre-emption” of fire-starting state governments across the US.

But Schwarzenegger insists that low-level enforcement efforts will continue in Nevada, where Golden State police agents are working with local authorities to apprehend suspected arsonist cells within in the Silver State. However, most analysts believe that the leading arsonists have fled even further, into the badlands of Utah. But Schwarzenegger dismisses any continuing danger from the 2007 arsonists, wherever they might be: “We have those arsonists on the run; they are ineffective, hiding in canyons. The real danger, now, comes from the ‘axis of ignition.’”

In particular, Schwarzenegger has singled out Kansas, led by Democratic governor Kathleen Sebelius. Schwarzenegger, a Republican, told reporters, “The weapons of mass conflagration that we know she is hiding could cause enormous damage in California.” Reminded that Sebelius says she does not possess such weapons, Schwarzenegger shot back: “OK, let her prove that she is not hiding WMC in Kansas.”

Schwarzenegger refuses to negotiate directly with Sebelius, but he has been persuaded to work with the National Governors Association (NGA), issuing demands to the Sunflower State—demands that neutral analysts equate to full surrender. And yet as those NGA negotiations drag on, Schwarzenegger says, “Time is running out.”

The California governor is believed to be preparing a pre-emptive strike against WMC sites in Kansas, with or without the NGA. Schwarzenegger is developing a “coalition of the willing”—including Indiana, Rhode Island, and Delaware—as allies in possible joint action against Kansas.

However, Schwarzenegger denies that any action is imminent. “Violence is our last resort.” But, he adds, “While I have no war plans on my desk, nothing is off the table.” He continues, “Kansans have just as much right to live their lives free from fire as Californians.”

Some have expressed concern about Schwarzenegger’s policy, fearing possible chaos in the Sunflower State. But Schwarzenegger dismisses those worries—“We are planning carefully for every possibility”—reminding Californians of the stakes as he sees them: “If you saw what I saw, the fires burning, from Malibu to San Diego, you would understand the need to take this fight to the enemy. We will make Kansas the central front in our war against fire—not that I have made any final decision about Operation Kansas Freedom.”

In fact, some Schwarzenegger advisers speak grandly of a “Greater Midwest Initiative,” to transform fire-usage across Middle America.

In other late-breaking developments, Schwarzenegger denied reports that he was building a secret prison site for suspected arsonists in Humboldt County. “That’s nonsense. We have all the prison space we need, now that we have re-opened Alcatraz and can give arson suspects the punishment—I mean, fair trials—that they deserve.”

Meanwhile, the Schwarzenegger administration brushes off reports of infiltration, into California, from Mexico. “There’s no danger to the south,” said a spokesman, “only folks coming across the border who need our help. Compassion does not stop at the Salton Sea.” The adviser added, “The Governor is looking east, laser-like, to the real threat—Kansas.”

Reprinted from the 11/19/07 issue of The American Conservative.

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