Why ask them to swap when both Clinton and Biden are by all accounts doing a great job? Mainly because it would revitalize and unify the Democratic ticket, which will face a formidable opposition, contrary to popular wisdom. I don’t know whether the Republicans will nominate Perry or Romney, but I have a pretty good idea of who the short list for VP will be — and Sarah Palin and Michelle Bachman don’t need to wait by the phone.

The strongest VP candidates for Perry or Romney are David Petraeus and Mario Rubio. Petraeus is unlikely to do it. He is a Rockefeller Republican, who Romney could not appoint. He just began a job running the CIA, which takes him out of domestic politics. I hope. He is not Tea Party certified and while he clearly brings huge strengths to any ticket, is not an experienced campaigner (military campaigns don’t count, although the differences are fewer than many realize).

Rubio is a different matter entirely. He is young, son of Cuban exiles, the politically savvy former Speaker of the Florida House, telegenic, and a Senator from a battleground state. He is fully credentialed by the TP crowd. A Romney – Rubio ticket will begin with massive strength in the south and will be very tough to beat in Florida. Romney will play well in the Midwest, where his father was a popular governor, and to conservative parts of New England. Rubio would energize Hispanic voters and extend the Republican base beyond the rich, the pugnacious, and the certifiably looney. It would be a tough ticket to beat — and Obama knows it.

Hillary helps Obama to rally Democrats and Independents. She is a formidable, even relentless, campaigner and she works harder than anyone in politics. It is not simply that she has handled problems in North Korea, Iran, and Israel without upstaging Obama, or that she has been supportive of the president and has been serious, intelligent, and energetic. It’s not just that people in the State Department like her — and some like her a lot — or that she has kept her husband out of the limelight, despite the fears many had. It’s that, unlike Joe, Hillary has a devoted constituency. She draws women, independents, and blue collar voters in much larger numbers than Biden or Obama. She adds deeply to the ticket.

The case for Biden as Secretary of State is also clear: it is the job he has always wanted and he would be very good at it. He was the ranking member and often the chair of the Senate Foreign Relations Committee, he has the requisite rolodex, and he likes diplomacy. He will rely more on personal relationships with foreign leaders than Hillary has, but that’s fine. Biden has built a very solid relationship with Obama and would continue as a senior advisor — a role he enjoys and excels at.

The timing of the Great Swap is constrained by the Constitution. Section 2 of the 25th Amendment states that “Whenever there is a vacancy in the office of the Vice President, the President shall nominate a Vice President who shall take office upon confirmation by a majority vote of both Houses of Congress.” At the moment, that confirmation would be far from assured, so Obama is not likely to ask Biden to resign, appoint Hillary VP, then appoint Biden to State (where his Senate confirmation would be a cake walk). Instead, if he decides to do this, he would plan the move now and nominate Hillary at the convention. Once nominated, Hillary would resign her position and Obama would name Biden to fill it immediately. No House vote needed.

Will Obama make the Great Swap? A lot can go wrong with moves like this — but Obama knows better than anyone that a Presidential campaign requires imagination and energy. Much can and will change before the convention, but we can count on this: Obama is considering this move.  

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According to current polls, Whitman will shortly join Democrat Al Checci, conservative Republican Michael Huffington, and very long list of others who have invested millions of their own dollars in vain pursuit of higher office. Whitman is the latest candidate to make two arguments to voters: first, that private sector executive experience is a meaningful qualification for public sector executive office and second, that she was in fact a successful CEO at eBay.  (For the record, Whitman was also briefly CEO of FTD, the floral delivery company, an experience so thoroughly embarrassing that the Republican Party never refers to it). 

Both assertions are flat wrong. If Whitman would make a fine governor, it would not be for either of these reasons.

CEOs often discover too late that the skills of a good public leader are quite different from those of a company leader. Political leaders have executive authority, but significantly less control over the organization. They frequently cannot allocate resources or replace people — two things that CEOs do all the time. The scope and complexity of the problems are vastly different, as is the complexity of the organization. Public leaders have much less flexibility than private ones and the standards of success are much less exact. 

A few CEOs are the exceptions that help prove the rule. Michael Bloomberg is has proven a talented mayor of New York City, Jon Corzine has been a credible Senator from New Jersey, and both George and Mitt Romney were CEOs of significant organizations before becoming the respective governors of Michigan and Massachusetts. Note that in each of these cases however, “executive experience” was backed by a very substantial personal fortune -- it is by no means clear that experience alone would have won them the office.

Also, each of these individuals was, in fact, an exceptional business leader. I would have voted for any of them (including Mitt Romney as governor, but excluding his recent and inexplicably craven run for President). There is something to be said for practical problem solvers replacing ideologues in public office.

So, was Meg Whitman such an exceptional leader and practical problem solver at eBay? Absolutely not. First, eBay did not actually require talented leadership. A member of the senior leadership team was once quoted as saying “A monkey could run this business” because eBay was the online flea market whose only real job was to collect tolls from sellers. Meg was the monkey in charge and she was strapped to a rocket that made her rich — but that is hardly the same thing as leadership.

But she held the reins for ten years and made some important decisions. Let’s review them by first looking at what Whitman did not do. Crucially, like a deer in headlights, she took no advantage of eBay’s extremely high stock price. 

When new technology companies first attract capital, the value of the company’s stock often skyrockets as investors swarm in. Are they being irrational? Perhaps, but what they really are is uncertain as to the economic potential of the business. So they effectively say to a CEO “for you, money is almost free — so we want you to expand your business rapidly and acquire any other business that will help you do this.”

In 1999 Business Week ran on its cover a picture of a bat-wielding Meg Whitman facing off with Amazon.com CEO Jeff Bezos. That year, Bezos three times announced three acquisitions the same day — much as Google does today. Business Week fawns on the powerful and profitable eBay business model and heaps scorn on the unprofitable Amazon. But Bezos used his cheap equity to enter new markets and related businesses. Today Amazon is earth’s largest retailer and provides a huge array of corporate services, from fulfillment, to payment processing, to cloud-based hosting. It’s market value, which was a fraction of eBay’s at the time of the article, is now more than double eBay.

Whitman was a deer in headlights because she is at core a corporate manager, not an entrepreneur. She did not start the company or risk her own money on it. She was handed a magical business — truly a goose that laid golden eggs — and told not to mess it up. 

Whitman did acquire businesses — and reliably overpaid and under integrated them. In 2000, she paid $350 million for Half.com, a terrific company that was only six months old, but never integrated it into the core eBay shopping experience. She bought shopping.com a very strong shopping engine, long after it was clear that search engines like Google would supplant them in the marketplace. She overpaid massively for PayPal — even though she was the company’s only customer! And relative to Google, Facebook, Apple, or Amazon, Whitman has left both eBay and PayPal strategically paralyzed, locked into their current business models and positioning. PayPal should have become the next Visa. Instead, it is about to be dismembered by Apple, Google, and about a dozen startups. 

And famously, Meg Whitman purchased Skype for $4.1 billion. A phone company. There was chatter at the time about customers being able to call sellers that made not a lick of sense. She sold it later for $2.75 billion before the buyers learned that they would have to pay even more for the core IP of the company — which eBay had neglected to buy! Sort of like overpaying for a house and selling it for a loss only to realize that you only owned the front lawn. When this was revealed, it was a howl heard ’round the valley. 

Even as a custodial leader, Whitman managed to embarrass the company on more than one occassion. She resigned her Goldman Sachs directorship amidst revelations that she had been privy to inside deals “spinning” IPO stock — activity that has always been ethically felonious but was legal at the time. She once got so angry with one of her subordinate, communications employees, Young Mi Kim, that she shoved her. Kim sued and settled for $200,000. Today  Whitman dismisses the matter quicker than stories of her undocumented nanny or her failure to vote for two decades, saying “In any high-pressure working environment, tensions can surface.” 

We might forgive Meg Whitman for a crappy website, backwards-facing technology, and sullen inattention to user experience — although most online businesses get killed if they behave this way. But we should not forgive desultory leadership. Meg Whitman is no Michael Bloomberg. She is running for governor only because she is able to write very large checks. For Whitman, eBay was a stroke of unbelievable luck. Californians can do better — and evidently will.   

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To find out, ask how the 2008 presidential election would have turned out if only white men had voted. Paul Rosenberg at Open Left worked out the answer and drew the picture, which is fascinating.

Had only white men voted for President, Obama would have carried only eight states and lost in a landslide. 

Now suppose that white men were excluded from the vote. Suppose, in other words, that only voters enfranchised since the Civil War could have voted in 2008. The results are remarkable:

Obama carries 36 states instead of 28 and does better in every state. 

Now what?

US suffrage, Rosenberg concludes, expanded in three steps: first, more people became citizens, then more citizens got voting rights, and finally voting rights were strengthened to make voting easier.

We continue to debate these matters today.

• Who becomes a citizen is the essence of our current national debate on immigration reform.

• Which citizens can vote is a more settled topic, but questions of voting rights for citizens of Washington DC or or federal territories like Guam are far from resolved. And many have advocated lowering the voting age (perhaps a youth ballot worth a half vote starting at age 16) and even of restoring voting rights for felons.

• Strengthening voting rights is an ongoing struggle, whether DOJ enforcement of the Voting Rights Act, debates about same day or DMV  ("motor voter") registration, voting security, and a national voting holiday.

And what the pictures tell you is that how we answer these questions will determine what kind of country we will be. Leaving it to the white guys was never a great idea. The fight to enfranchise voters has been worthwhile and has made a huge difference.

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Iran has crossed into promising and dangerous ground

Events in Iran owe more to YouTube than to Twitter. Phone videos of crowds in different towns, of Basij brutality, and of the range of ages, incomes, and genders that make up the demonstrations all paint a compelling picture. A video of a young woman dying of gunshot wounds in the streets will be viewed a million times today and nobody who watches it will feel more charitably towards the Iranian government afterward. A poem read over the eerie sound of dozens people singing prayers into the black Tehran night is stunning even if you know no Farsi. Watch and listen to it below.

This does not, of course, mean that the folks with the white hats will win. Freedom fighters got crushed in Tienanmen two decades ago and in Burma recently. It helps perhaps that the Iranian revolution now has a definable color: green (the color of Hamas, Hezbollah, and all things Islamic). Orange in Ukraine, Rose in Georgia, and even Cedar in Lebanon or Velvet in Czechoslovakia suggest that branding one's revolution helps. (The overthrow of Saddam has been called the purple revolution because of the inked fingers at election time. It may have been purple, but it was no revolution. To their eternal shame, Iraqis played a trivial role in the overthrow Saddam Hussein.

Iranians are taking huge risks and their movement will have major repercussions. It helps that a huge portion of the population has internet access that the government cannot block. Using VPN, proxy servers, and services designed to circumvent censors, thousands of Iranians have broadcast recent events in real time. Twitter streams on Friday peaked at over 200,000 tweets per hour (perhaps !% of all tweets contain new information, videos, or photos — but that's still huge). John Perry Barlow predicted a decade ago that the Internet regards censorship as damage and simply routes around it. So, it turns out, do citizens who wish to be free of oppressive governments.

Iranians have pioneered new street tactics. They organize at pro-government rallies, because it is a good time to build support. When demonstrations were made illegal, some people took to their cars, jamming streets and shutting down cities. As the above You-Tube demonstrates, people singing from their homes into the urban night is eerie, inspiring, and really hard to shut down.

Iran is a great country and an important one — something few places can claim. The US is also great and important, but we are the last country that should try to insert itself here. The people who criticize Obama for not being more outspoken on behalf of Iranian insurgents have forgotten history — unlike most Iranians. They forget that the CIA overthrew the left-leaning government of Mohammad Mosaddeq in 1953 after the threatened to nationalize US oil companies. Having restored the Shah, the CIA, led by Norman Schwarzkopf's father, helped set up the Savak — the despised Iranian secret police. By the time the ayatollahs overthrew the Peacock throne three decades ago, nearly a third of all Iranian men were Savak agents or informers. Obama has remained supportive but determined to not let the US become an issue in an insurgency that is and needs to be Iranian.

Tonight and in the coming nights, send your hopes and prayers to the people of Iran. There is a good chance that they will need it.

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Most clichés about California are true: we are both America’s most urban state and its most agricultural. We are home to more national parks, more immigrants, and a better public university than any other state. We have Silicon Valley, Hollywood, and Yosemite. We fashion ourselves seekers of talent, lovers of risk, and inventors of the future, gamely shrugging off earthquakes, fire, and drought. My family has been here since the 20s and we won't leave.  

We take for granted that California is the Golden State. When our comically dysfunctional state government cannot agree on a budget, we mutter about idiot politicians, shake our heads, and chalk it up to local color.

But our problems today are no laughing matter. The complete failure of state government now threatens everything we love about California. Today's special election would extend temporary
taxes, free up some spending categories, and borrow against future
lottery proceeds but would not solve our problems and is unlikely to pass in any case.

Tomorrow morning, Californians will confront their failed state. There will be blame and recrimination enough for everybody. Increasingly however, citizens will contemplate the conclusion reached this week by the Economist: our governance process is broken and in need of fundamental reform. A new batch of politicians will not do the trick. The evidence of failure is not hard to find:

• The home of the property tax rebellion is now a high tax state. Californians famously limited property taxes by passing Proposition 13 in 1978 but now lead the nation in sales taxes, car taxes, and gas taxes. Personal income taxes are the second highest of any state, corporate income taxes are the highest in the West, and capital gains the fourth highest in the nation.

• State spending has skyrocketed. State employment is up from 719,000 in 1997 to 895,000 in 2007 – an additional 176,000 employees. That means the state created more than 60 new positions every working day for ten years. Adjusted for inflation, state government spending per person is up nearly 20 percent. We have the nation’s seventh highest GDP/capita but our unionized prison guards, teachers and nurses are the highest paid and among the most powerful in the nation.

• Our public service needs have exploded. California currently has the fourth highest unemployment rate in the nation – a shocking 11.5%. We are home to the nation’s two largest traffic-jams – Los Angeles and the San Francisco Bay Area. Our desert economy depends on a creaky water system with a 75 percent chance of catastrophic failure in the next few years and Sacramento’s ancient levees expose that city to greater danger of catastrophic floods than New Orleans. State prisons are so overcrowded that a federal judge has ordered the release of 10,000 inmates. The University of California, an engine of mobility for generations, is being ravaged. 20% of all residents of Los Angeles County receive public welfare of some kind. This is a big deal: with 10 million people, LA County would be America’s eighth largest state and the world’s twentieth largest country by GDP.

• Talent is leaving. In the past ten years, 1.4 million more Americans moved out of California than moved in. The loss of talent is much worse than the net numbers suggest, since most who leave the state are employable taxpayers while many who arrive are immigrants with few marketable skills. Out-migration has slowed in the past year mainly because Californians cannot afford to sell their homes for an enormous loss.

• Our fiscal house has collapsed. Combine the above with a devastating economic downturn, and California now has the lowest bond rating of all 50 states. We face a $42 billion gap between revenue and spending. The state has halted income tax refunds, public works projects, federal stimulus spending, and may kill 20,000 state jobs.

How did the Golden State come to political and fiscal ruin and where to from here?

California's problems go beyond lousy politicians. It is true that most of California's Democratic leaders are craven, unimaginative, and unable to prioritize or restrain spending. And yes, many of our state Republicans are paleolithic knuckle-draggers. But most states get by with lousy politicians and historically California did too. The sources of our current failure run deeper than that.

California’s government is dysfunctional because we accidentally engineered it to fail. More than any other state, we have embraced a series of reforms that inadvertently designed sectarianism, paralysis, and waste into our state government. None of the reforms were by themselves terrible, but in combination with each other and with a deep economic crisis, they are devastating. Before we fix them, we need to understand the three design features of our government that build sectarianism, paralysis, and waste into our system.

To Design A Deeply Partisan Government, Let Politicians Select Voters, not Vice Versa
The central and unyielding promise of any democracy is that voters elect their leaders. California stands this core principle on its head: we let politicians select their voters with a system of bipartisan gerrymandering. 

In politics, if you draw the map, you control the election. After the 2000 census, the legislature set new boundaries for both for state Assembly and Senate districts and for federal congressional districts. Democrats and Republicans agreed to gerrymander the boundaries to preserve the balance of political power. They assigned voters to districts that were dominated by one or the other party, with few districts that could be considered competitive.

The electoral result was exactly as planned. In 2004, 2006, and 2008 all incumbent parties were returned to power. Not one of eighty Assembly seats, 40 Senate seats, or 53 Congressional seat changed parties. In nearly all of these 172 districts, the margin of victory was at least ten percentage points – a landslide. Incumbents frequently ran unopposed.

The less obvious result of bipartisan gerrymandering is that it elects partisans. In a solidly Republican District, I win if I appeal to the average Republican, not the average voter. We exaggerate partisanship with a second feature: the closed primary. Only party members may vote in primaries (which dampens turnout to partisans so much that candidates have been nominated with the support of fewer than 7% of the registered voters in their district).

We engineer swing voters out of the system. The paradox is that parties imagine that they will be stronger if they design partisan districts. In fact, they are often weaker because local candidates do not need their parties. In Oakland, “Barbara Lee Speaks for Me” is a bumper sticker designed not to reach out to Republicans (who are utterly irrelevant here) but to taunt moderate Democrats.

California was not always this way. In 1938, California had open primaries. That year a young Oakland District Attorney entered the California Republican primary to run for State Attorney General. To cover his bases, he also entered the Democratic Party primary and the Progressive Party primary as well. He won all three primaries and was nominated by all three parties. Naturally, he was elected in a landslide.

Eight years later, the Attorney General decided to run for governor as a Republican. But again he entered the Democratic and Progressive Party primaries. And again he was nominated by all three parties. To this day, Earl Warren remains the only person ever elected three times as governor of California. He presided over a huge and bipartisan infrastructure boom, including the expansion of the University of California, which has been an engine of California social mobility for decades.

To Design a Paralyzed Legislature, Let the Minority Rule
Upset by property taxes that increased with skyrocketing home values, California voters passed Proposition 13, which required that a two-thirds majority in both legislative houses approve all future
increases of state tax rates or amounts of revenue collected,
including income tax rates. It also requires a two-thirds majority
in local elections for local governments that wish to raise special taxes. The result: we reduced our property taxes by an average of 57% but we also enabled a political minority to block any state or local economic initiative.

Prop 13 was partially copied by Rhode Island and Arkansas, which require a two-thirds vote to increase state spending. Twelve other states require a two-thirds vote to increase taxes. But according to the Economist, only California requires both. As a result, no legislative majority can govern this state. When you marry this requirement to a legislature that is engineered for partisanship, agreement on a budget will produce political paralysis even in normal times. In an economic crisis, it is governance designed for disaster.

Minority rule fails California’s direct democracy as well. California is one of 24 states that allow referendums, recalls and ballot initiatives but the only state that does not allow its legislature to override successful initiatives. California’s cherished right of referendum and recall date from 1911 when Governor Hiram Johnson wanted to ensure the ability of citizens to challenge large corporate trusts – especially the powerful railroad interests. It made sense. Direct democracy always holds out the possibility that it will provide a check on a captured legislature as it does in Switzerland and other countries.

In modern times however, referendums are purchased by interest groups. Hiram Johnson could not have imagined an industry devoted to paid signature gathering that permits any group with money to place a proposition on the ballot. He could not have foreseen propositions so convoluted that educated citizens debate not their view of a proposition -– but what the text actually means. Californians now vote for an average of ten initiatives each year – nearly all thanks to paid signature gatherers. Most fail, several have been overturned by the courts, and none have addressed the state’s fundamental problems. The abuse and overuse of initiatives further weakens a paralyzed legislature and contributes to our reputation as the land of fruits and nuts. In July, 2003 a millionaire Congressman paid for enough signatures to initiate the recall of a governor who we had elected nine months earlier. The recall succeeded – only the second in US history – and brought Arnold Schwarzenegger to office.

To Prevent Significant Legislative Compromise, Outlaw Experience

It is very difficult to pass a budget in a legislature designed for paralysis unless you have senior lawmakers with the power to make deals and enforce legislative discipline. Anyone who served in the State Assembly under Willie Brown knows exactly what this sort of head-knocking looks like. It is not the attractive part of the sausage-making, but especially in a legislature of officials who are guaranteed reelection, it is a critical element of a productive legislature.

California has outlawed senior legislators by mandating term limits on all elected officials. Term limits, like partisan redistricting and partisan primaries, look progressive at first because they appear to strengthen activists and weaken incumbents. But frustrating the will of voters does not improve the quality of democratic decision-making. Outlawing legislators with the skills, experience, and relationships to pass laws and enforce bipartisan compromises is not simply undemocratic, it is profoundly unwise. (Term limits on the executive appear to cause fewer of these unintended consequences).

Few voters appreciate how complex and specialized modern lawmaking has become. I once had the honor to join a small legislative strategy session between Teddy Kennedy and Robert Dole, then the ranking members of their respective parties. The topic was labor legislation that touched on a variety of issues of concern to both parties and to Kennedy’s Ed and Labor Committee. The two men, who would bash each other publicly without hesitation, spoke a language that few in the room could follow. In minutes, they agreed on what could get done. They outlined the scope of the legislation, what procedural tactics would enable which Senators to vote which way on different amendments and parts of the bill. They sorted out the likely time line and Congressional reconciliation issues, decided what amendments would be permitted at each stage, and what pieces of the opening bill would likely be traded off to secure the support of key Senators. My simple Aristotelian universe plotted the shortest distance from A to B as a straight line but Dole and Kennedy understood how mass distorts the space time continuum and how the instruments given to them were large and unbelievably blunt. In decades of practice, they had learned how to get legislation done.

Whether this is craftiness or craftsmanship is a longer debate — but is unquestionably how work gets accomplished in an effective legislature. Personally, I was awestruck to see legislative architects at work. It is unbelievably dumb to outlaw the expertise and relationships that take years to build and enable deals between adversaries. Voters can and do decide whether the cost of an incumbent is worth the benefit — that's why we have elections. But Californians banned experienced legislators outright, so today we have no Teddy Kennedys or Robert Doles and we are much worse off for it.

What is to be done?

California needs both short and medium term fixes — and splitting up the state is not a silly idea either. Near term, eliminating bipartisan gerrymandering and partisan primaries is a big step forward. Fundamentally however, California needs a constitution that will nourish the civic culture and political compromise that are the foundation of any effective government.

• Redistricting.  In 2008, California voters narrowly passed Proposition 11 over the objections of the California Democratic Party, Barbara Boxer, and Nancy Pelosi. Prop 11 shifts responsibility for drawing the new boundaries for Senate and Assembly districts from the Legislature to a 14-member commission made up of five Democrats, five Republicans and four independent or minor-party voters who would draw new maps every 10 years, corresponding with the census cycle.

This is a reasonable start that needs two improvements. First, the goal of the commission should be to create coherent and competitive legislative districts.  The commission should strive for geographically rational districts with equal Democratic and Republican registration. In Oakland or Orange County this is not going to happen, but in much of the state it can. The result would be a core of centrist legislators who are forced to work across party lines to get elected and to get things done. Second, the commission should have responsibility for Congressional Districts. No reason to leave those to party officials either.

• Open primaries In order to pass a state budget earlier this month, lawmakers agreed to place before voters a constitutional amendment for an "open primary".  The proposal would allow any registered voter to vote for any candidate in a primary for legislative, statewide elected positions, and congressional districts but not presidential primaries.

The two candidates who receive the most votes would square off in the November general election even if they were from the same party. As a result, two Democrats or two Republicans would often end up in the run-off. In this case, if independent voters and voters from the minority party voted for the more moderate of the two candidates in the general election, it would tend to reduce the ideological polarization of the state legislature.

Open primaries also eliminate the nasty tendency for elections in heavily Democratic or Republican districts to end with the primary. Together with redistricting, the competitive intensity of political races would go up, with significant benefits for citizen involvement and a meaningful penalty for extremists of either party. Naturally, both political parties oppose open primaries. Explain it to Earl Warren.

(Open primaries are a complex topic because those that get past voters often do not get past the courts, which have a rich case history in this area. California voters narrowly defeated another open-primary measure in 2004 and the Supreme Court invalidated an earlier, different California open-primary law in 2000.)

• Term limits for programs, not legislators. Instead of limiting the terms of legislators, we should limit the term of the programs they create. Otherwise our constitution ends up chock full of agencies, boards, and commissions that have outlived their usefulness or overlap with each other or with local agencies. Texas actually has a Sunset Commission which automatically abolishes nearly all of the state’s 150 agencies after 12 years unless legislation is enacted to continue them. It analyzes and proposes solutions to overlapping programs and jurisdictions.

Constitutional Convention
The Bay Area Council, a coalition of Bay Area companies impressively led by McKinsey Director Lenny Mendonca, has put forward a public case for a California constitutional convention. They note that our current constitution is a sclerotic document with more than 500 amendments and recently compared it to San Jose's “Winchester Mystery House – with rooms and stairways leading nowhere”.

The risk of a constitutional convention of course, is that it attracts wingnuts who hijack the process. To address these concerns, the Council proposes that delegates to the convention be chosen through the general jury pool to ensure that the constitution is revised by representatives of the population, not organized interest groups. Second, they suggest that the scope of the constitutional convention be explicitly limited to governance issues and the budget mechanism and exclude all others. These are both splendid ideas.

This process would enable reform of the two-thirds requirement for budgets and taxes. It could mandate two-year as opposed to annual budget cycles, give local governments more access to local revenues, enforce competitive redistricting, normalize rules about signature collection for ballot initiatives, and introduce a Texas-style “sunset” commission. It is a fine and timely idea — we need to make it work. At present, both Democrats and Republicans are getting on board.

Break up California
American states are designed to be laboratories of democracy where small groups of citizens can have a meaningful impact on their government. No group of 33 million people can possibly operate as our founders expected an American state to operate.

California today is larger than most large countries, including Canada and Australia. We are larger than Belgium, Portugal, and Greece combined. And we are not an especially coherent state: Northern California is green, technological, and vaguely European. Los Angeles combines massive immigrant communities with Beverly Hills. The region from Orange County to San Diego looks, feels, and votes like Arizona. Central Valley farmers have more in common with those in rural Nevada or Texas. We should pick a commission, set a timeline, and run smaller states that give more people a voice. Even if we broke California in five, each state would be bigger than the entire country at the time consititution was written.

At one level, California has always been too big, which is why proposals to divide the state began before we were admitted to the Union in 1850. In the first 150 years of statehood, there have been 27 serious proposals to split the state.  Although Article IV of the  Constitution allows the creation of new states so long as the state legislature and Congress approve, only Maine and West Virginia have actually done this. (Maine separated from Massachusetts at the time of the Missouri Compromise. West Virginia cheated – it seceded from Virginia during the Civil War and was admitted by Lincoln without congressional consent. Oops.) Both Carolina and the Dakota Territories divided before they became states. 

Dividing California is a good idea. Indeed dividing
any state that reaches a threshold of ten or fifteen million residents
makes sense.  But it is a formidable political challenge and not a solution to our immediate crisis. Our focus now should be to fix the state we are in.

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• Obama runs the deficit up to $1.5 trillion next year – more than 10 percent of GDP. He hopes to bring it back down to 3 percent of GDP by ending both the war in Iraq and the Bush tax cuts. But he assumes the economy will shrink only 1.9 percent this year, then grow 2.1 percent in 2010 and 4 percent annually after that. This year is likely to be much worse. And real GDP growth for the last 28 years has averaged only 2.8 percent annually. When the dust settles in 2013, Obama hopes that the economy, health care, energy, and education are all vastly improved by federal outlays. This is an enormous gamble.

• Obama gives his domestic cabinet agencies an average budget increase of 7 percent. Why? Many of these agencies could absorb a 7% cut and never miss a beat. He gives the Pentagon
  a 4 percent bump — but holds them to increases of 2 percent or less
  after that. And they have wars to fight and F-22s to build. If we really are to believe that Congress can bring deficits down as well as take them up, the chefs need to toss more sacred cow into the sausage.

• Obama proposes to create a $634 billion health care fund to expand coverage to some of the 48 million
  uninsured Americans. Note that the anticipated revenues from cap and trade total $645.7 billion over the decade — so we are paying for health care by taxing oil. Works for me — but only if health care spending begins to shrink as a share of GDP. Another gamble.

• But most of all, Obama proposes the largest income transfer since the New Deal.
  Repealing the Bush tax cut raises taxes on the highest earners from 35 to almost 40 percent. Mortgage and charity deductions are capped, which
  makes sense, and taxes on capital gains go from 15-20 percent. Higher
  income Medicare beneficiaries pay higher drug premiums. Obama grabs
  $24 billion over nine years from hedge and venture fund managers by
  rightly declaring their carried interest to be income, not capital gains (these folks have become huge Democratic contributors, so props to the prez for doing the right thing here). The politics of this budget will be anything but bipartisan. 

This document is just meat for the grinder however, because presidential budgets are policy documents, not fiscal ones. A President is not a Prime Minister — he or she cannot authorize anyone to spend anything. Congress does that. They are the sausage-makers.

• First Congress slices the President's budget into pieces and hands it to the relevant House and Senate committees. The committees debate the budget, consult their lobbyists and campaign contributors, add a bit of horsemeat, and revise it to suit. 

• These committee budgets (which are still advisory) are then reassembled and chopped up again — this time into tax and spend. The revenue budget goes to the two Ways and Means Committees, the spending budget goes to the Appropriations Committees. Now the master chefs enter the room, each with their own spices and techniques.

• The drafting of actual budget language is a specialized process that many legislators turn over to lobbyists (remember, each legislator has 70 registered lobbyists at his or her beck and call. And budget committee members get more than their share). Lots of cooks and a tendency to substitute pork for beef at this stage. 

• With sausage being made in two committees in both the House and the Senate, at some point there is a budget reconciliation process. More spice and gristle. The tax bill and appropriations bills that emerge may or may not be on speaking terms.

Will the Congressional sausage bear any resemblance to the Obama budget?

It probably will. For one thing, the President is a lot more popular than Congress. For another, Democrats control Congress and are within one vote of a filibuster proof Senate if Al Franken is seated.

But will it work? Politically, sure. Conservatives will challenge the wisdom of aggressive federal intervention in the economy — and they will lose. Even in those cases where the evidence is on their side (face it, when Congress raises and spends this much money, a bunch of it will be wasted or stolen).

Will it taste good? When you are hungry, anything tastes good. But is it healthy for America over the long term? Ask my grandkids.

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I

Until today, the governor of New York was trying to decide which of two Kennedy clansmen to appoint to a Senate seat being vacated by a fellow political heiress. It looks like David Patterson will not appoint the plainly unqualified Caroline Kennedy. Hopefully he avoids Andrew Cuomo or any other political scion to replace the talented Senator who leveraged her famous and dysfunctional marriage into high office. 

Dynasties pervade American politics and seldom for the better. Obama considered Evan Bayh and Chris Dodd for VP, even though in the tradition of Al Gore, both men hold Senate seats handed to them by their fathers. He instead picked Joe Biden, who is by all appearances scheming to hand his Senate seat to his son. The Kennedy's have produced three senators, two Congressmen, two
ambassadors, a President, a duchess, and numerous political spouses
including Andrew Cuomo (son of Governor Mario) and our own Arnold Schwarzenegger. Obama comes out of Chicago politics dominated by Richard M. Daley, who inherited his office from his dad, Richard J. Daley. He is represented in Congress by Jesse Jackson, Jr.

Nor is the problem mainly Democrats: Colin Powell's son Michael ran the FCC (that was old fashioned nepotism — a variation on the problem). The Bush dynasty has produced two Presidents and a governor — the Rockefellers two governors and a senator. Admiral's son and grandson John McCain beat governor's son and governor Mitt Romney for the nomination.

The problem is worse in big states — and most states get bigger over time. California campaign professionals estimate that it costs about $50 million to achieve the statewide name recognition of a prominent political family. Small wonder that political scions like Jerry Brown (son of governor Pat Brown, sister of former State Treasurer Kathleen Brown) start off with an enormous advantage.

What to do? How to encourage the Bill Clintons, Barack Obamas, and Ronald Reagans? Matt Miller toys with the idea of trampling the first amendment (as many campaign reforms do) and forcing generation skipping. A nonstarter.

Miller asserts that the core problem is that copies fade — that heirs are pale imitations of the original. Plenty of anecdotal evidence suggests otherwise. Jeb is easily the most skilled Bush. The current Mayor Daley puts his father to shame. Jerry Brown is arguably more gifted than Pat and Al Jr. is plainly more talented than his father. The children of many politicians don't have to leap very high to do better than their parents.

The cost of political scions is an opportunity cost – they stifle competition and so induce mediocrity. People with a family brand name have a head start (and limited ability to imagine alternative careers) that lets them crush competitors — especially in big states. And when the people's business becomes a family business, the business suffers.

Reducing the power of famous heirs is one of many advantages of requiring a State's Supreme Court to break in two any state that reaches eight million residents. The Republic would regularly acquire new states — something we did routinely until recently. We would break California in four, Texas and New York in three each, Florida, Illinois, Pennsylvania, Ohio, Michigan, Georgia, North Carolina, and New Jersey in two, so we would today have 65 states and be much better off for it.

Each of the resulting states would be larger than the entire country at the time the founders wrote the Constitution and the potential for civic participation would rise accordingly.

This is hardly a cure-all: obviously the Kennedys are from Massachusetts, the Bayhs from Indiana, and the Gores from Tennessee. Dynasties form in smaller states, but they may not pose as formidable an economic barrier as they do in big states. There are a lot of good reasons to have smaller states anyway — all related to the increased possibility of innovation and citizen influence.

There is a second part to the solution. Vow to never, under any circumstances, support a political heir or heiress. Tell Jeb Bush, Jerry Brown, Mitt Romney, Andrew Cuomo, Jesse Jr., Chelsea Clinton, and Malia Obama that you will not vote for them out of respect for the achievements of their parents. If we want candidates as entrepreneurial as the original Clintons, Browns, Cuomos, and Obamas, their heirs must inherit profound political liabilities.

Sorry Malia.

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Obama delivered a fine inaugural address but oddly, he chose prose over poetry. Instead of words to lift souls, we got a sermon that was sober, serious, and smart. The address was as sensible as a good pair of sneakers and about as inspiring.

It also struck the right political notes. We are in a hole and before Obama tries to dig us out, he wants it very clear that it was the other guy who who got us in. But no Obama inaugural should be devoid of poetry and at yesterday's festivities nobody confused the meandering Elizabeth Alexander with Robert Frost.

Obama attracted what may be the largest crowd ever assembled on American soil and almost surely the the largest media audience for a speech in world history. But little of what he said will end up etched in granite. For his inaugural, Obama decided not to move the crowd to weeping, shouting or cheering as he had the day before at the Lincoln Memorial on Martin Luther King Day.

THE SERMON

He chose instead to brace Americans for battle by restating traditional  values and reshaping our political purpose. There was no talk about "hope" or "change" and that's fine. The time for campaign hubris is gone. At 18 minutes, the speech was short (believe it or not, Clinton's first was even shorter).. At his address in Grant's Park the night he won the election, Obama also kept his message brief and canceled the fireworks. Maybe serious is the new soaring.

Or not. If you don't haul out the grade A oratory to inspire and motivate people in large numbers in a crisis and on the occasion of the largest media event in human history, exactly when do you haul it out?

Ultimately of course, most people did not care what Barrack Obama said. For many of the gathered millions, Obama was all the symbolism they needed — a cool, smart anti-Bush, African-American president. He could have told campfire stories.

But his address lacked not only stories — it lacked themes. He
of course did what all inaugural addresses do: praise the indomitable
American spirit, call for personal responsibility and bipartisanship,
and face the future bravely and optimistically. In addition, Obama laid
out an intelligent, matter-of-fact summary of American values and what
he intends to do to restore them. He avoided State-of the Union wonkery
and it is safe to predict that if his presidency is successful the
inaugural address will be well-regarded. But it is hard to see how the speech helps him succeed. 

The remarkable civil rights preacher Joseph E. Lowery was more thematic than Obama. My jaw dropped when he opened his benediction by reciting the third stanza of the Negro National Anthem — a frequently controversial  hymn that has given hope to progressive political activists of all colors for over a century. He closed his prayer with a reinterpretation of Big Bill Broonzy's "Black, Brown and White" that sounded like Jesse Jackson channeling Dr. Seuss ("when brown can stick around; when yellow will be mellow…"), but Dr. Lowrey's opening was beautiful and courageous:

God of our weary years,

God of our silent tears,

Thou who has brought us thus far on the way;

Thou who has by Thy might

Led us into the light,

Keep us forever in the path, we pray.

Lest our feet stray from the places, our God, where we met Thee,

Lest, our hearts drunk with the wine of the world, we forget Thee;

HIGHLIIGHTS

If Obama's sermon was less inspirational than the occasion called for, there was still a lot to like about it.

• He recovered gracefully from a klutzy Chief Justice. The job of Chief Justice John Roberts' was to  recite 35 words strictly as constructed in the Constitution. He flubbed it horribly. He moved the adverb to avoid a split infinitive and ended up with "…to execute the office of the President faithfully" instead of "to faithfully execute the office…". Obama politely paused to let him correct himself, whereupon Roberts dropped the work "execute". Having tried twice to help Roberts recover, Obama did the respectful thing and recited the presidential oath incorrectly. Good chance that he will now be forced into a private do-over to silence the nutjobs who will use the botched public effort to question his legitimacy. What a needless embarrassment.

• His tone was realistic, sober, and steady. Most people remember not what you say but how you say it. As befits a world leader in a time of crisis, Obama was serious — there was not a single throwaway applause line in the speech. His preternatural calm approached sangfroid. But after twenty years of guys who mangle the language, the office, or both, I'll take it gladly.

• His pacing was up and to the right. The speech got better as it went — sort of like the campaign. The discussions of Gross Domestic Product were pedantic — GDP does not belong in an inaugural address. But he followed it with a reference to "timeless values and truths like hard work and honesty and courage, to which we must all return" that worked well.

• He gave us a muscular speech with a clean political break. This was more Churchill "Blood, Sweat, and Tears" and "we will fight on the beaches" than FDR "…fear itself". Perhaps Obama decided that he was inspiration enough. His political dominance, communication skills, and sense of the economic crisis gives him an amazing opportunity to rewrite the social contract, redefine the Presidency, and reshape the role of government. Most presidents never get a shot at any of this. 

• He spoke to the world not just to Americans.

• 

  He understood the moment: With the surviving Tuskegee Airman and Civil Rights veterans (including the heroic Congressman John Lewis) in attendance, swearing on Lincoln's Bible on the eve of the Great Liberator's bicentennial, and on the day after Martin Luther King Day, Obama did not need to dwell heavily on civil rights progress. He sounded a fine note with:

• He married hope to virtue. Nothing wrong with hope, but it only takes you so far as an engine of political change. In his call for responsibility, his parable of Washington ("…in the depth of winter, when nothing but hope and virtue could survive…") and his recitation of timeless values, Obama tied hope to virtue. This is potent political combination was well known to the Greeks, the Puritans, Machiavelli, and the Founders. The strongest case for the Obama inaugural address being historic would be built on this important change.

• He found some great phrases. If the speech lacked poetic passages, it nonetheless contained some fine phrases.

• "We chose our better history".

• “The question we ask today is not whether our government is too big or
  too small, but whether it works.” — as concise a description of pragmatism as you will ever hear.

• "Our economy is badly weakened, a consequence of greed and
  irresponsibility on the part of some, but also our collective failure
  to make hard choices and prepare the nation for a new age.,” (here I would argue he easily bettered FDR: “The rulers of the exchange of mankind’s
  goods have failed.”)

• “a nation cannot prosper
  long when it favors only the prosperous”

HUH?

Three phrases got past Obama and his speech writers.

• A mixed metaphor.  He took a sweet alliteration: “we have tasted the bitter swill of civil war and
  segregation…." and closed the sentence with "…, and emerged from that dark chapter stronger and more
  united.” I think I just tasted a chapter

• Lousy use of passive voice. In his opening stanza, Obama declared "Today I say to you that the challenges we face are real, they are
  serious and they are many. They will not be met easily or in a short
  span of time. But know this America: They will be met."  The line fell so flat, I winced. The active voice (…We will not meet them easily or quickly. But know this America: we will meet them") is fully serviceable and removes any possibility that he plans to wait for the Chinese to meet our challenges.
  

• Miscount. Obama declared that "Forty-four Americans have now
  taken the presidential oath." But trivia buffs know that the real number is 43, because Grover
  Cleveland was both our 22nd and our 24th President. Had he corrected
  this technical error however, Obama would have confused 99% of all listeners.

DOES IT MATTER?

It would be interesting to hear how Obama thought about his speech. Why did he soar higher in the talk he gave to 400,000 people the day before at the Lincoln Memorial? Why did he decide to give an intelligent but somber inaugural address instead of the realistic but transcendent one that the occasion deserved?

Perhaps he had studied some of the great inaugural addresses of the past, including this one — termed "shockingly good" by liberal New Yorker columnist and former Carter speech writer Hendrik Hertzberg. The speech declared that

".. the stakes for America are never small. If our country does not lead the cause of freedom, it will not be led. If we do not turn the hearts of children toward knowledge and character, we will lose their gifts and undermine their idealism. If we permit our economy to drift and decline, the vulnerable will suffer most.

We must live up to the calling we share. Civility is not a tactic or a sentiment. It is the determined choice of trust over cynicism, of community over chaos. And this commitment, if we keep it, is a way to shared accomplishment."

This was from the first inaugural of the man who left town in disgrace yesterday. Purely as a speech, George W. Bush's first inaugural was arguably better than Barack Obama's. Which tell us all we need to know about the predictive power of inaugural addresses.

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This week, Obama has been dog whistling and the effect is almost artistic. Those who listen in on  political frequencies saw him all but bitch-slap Paul Wolfowitz and Don Rumsfeld
without mentioning their names. He signaled that he is as serious about science and alternative energy as he is about health care. And he let his Commerce Department nominee know that it is time for a long overdue apology.

Watch closely – this is high order political craftsmanship.

Shinseki
On Pearl Harbor Day Obama nominated a
Japanese-American general with a Purple Heart to run the VA. The choice of Eric Shinseki was inspired – and once again, almost nobody saw it coming.

 Shinseki is the four star general who was publicly trashed by Deputy
Defense Secretary Paul Wolfowitz, a man not worthy of carrying
Shinseki's briefcase. Shinseki is a careful warrior — a man who was
wounded in combat in Vietnam and became America's first Asian-American
four star general. As Chief of Staff of the US Army, he hated Defense
Secretary Don Rumsfeld — a man he perceived as ideological, not
practical. Shinseki testified before Congress that we needed  a force "of several hundred thousand" in
Iraq to maintain order and control a fractious
population. Military leaders and scholars
universally believe that Shinseki was right and Rumsfeld/Wolfowitz were
wrong and that the consequences of these errors were grievous. When
Shinseki would not comply, the Bushies forced him to resign. The appointment of Shinseki repudiates them utterly without bothering to say so.

Chu
Tonight Obama did
it again. The media are reporting that he will name Nobel Prize winning Physicist Steven Chu to be
to serve as Secretary of Energy. This appointment may be even more astonishing
than Shinseki. Nobel Prize winning scientists do not often lower themselves to the task of running federal agencies and most, unlike Chu, would not be good at it.

First, local pride. If confirmed Chu would be the third currently
active professor nominated by Obama in addition to Larry Summers (to
the National Economic Council) and Christina Romer (to the Council of
Economic Advisers). So it's UC Berkeley 2, Harvard 1 – and yes, we keep score.
UC Berkeley is a national treasure, easily the best public education on
the planet per tax or tuition dollar spent, so we are very proud tonight.

Who is Steven Chu? To start
with, he is one of America's top physicists. Chu won the Nobel Prize
for Physics in 1997 for his research in laser cooling and trapping of
atoms (I'm guessing that cooling traps the little buggers, although I
have no idea how a laser cools anything).

Chu is the highly esteemed director of the Lawrence Berkeley National
Laboratory, effectively a large public agency. He is known here for having pushed his scientists to develop technologies
that conserve energy and reduce pollution. He has been the cornerstone of an
unprecedented multi-million dollar Energy Biosciences Institute, funded by UC Berkeley,
British Petroleum, and the University of Illinois. He is on the board of Nvidia, a prominent and innovative technology
company and Chu is a vocal proponent of teaching science, not
creationism.

Chu is an inspired choice for Energy Secretary. His
selection and apparent willingness to serve sends a powerful message
about Obama's alternative Energy agenda. He is exactly the kind of internationally credible scientist
the Bush administration disliked, which is why more than one member of the superstitious right heard the whistle.

Richardson
Although it has been a great week for Asian Americans, many prominent Chinese Americans are not
happy about the nomination of Bill Richardson for Commerce Secretary.
Everyone in Silicon Valley knows why — Richardson made a hash out of the Wen Ho Lee affair.

Refresher: as Bill Clinton's Energy Secretary, Richardson indicted Lee,
a Taiwan-born American scientist who worked for the University of
California at the Los Alamos National Laboratory (effectively part of
the DoE). Lee was charged with stealing US nuclear secrets and passing
them to China, arrested, and held in solitary confinement for several months.

The accusations fell apart, in part because FBI officials lied under oath.
Lee received a $1.6 million settlement from the federal government for
having his name dragged through the mud. On Lee's release from jail,
U.S. District Judge James Parker said,

"I
sincerely apologize to you for the unfair manner in which you were held
in custody by the executive branch. The Departments of Energy and
Justice have embarrassed our entire nation and each of us who is a citizen of it."

Bill Clinton declared himself "troubled" by the way the case was handled, but Richardson has never apologized. Many people believe that his handling of the Wen Ho Lee matter is the main reason that Al Gore did not ask Richardson to be his running mate in 2000.

Chinese Americans, especially in Silicon Valley, are justifiably riled at Richardson. The online petition here
had four thousand signatures against Richardson when friends sent it to me five days ago. Today it has 8,000 signatures — many from serious,
respected scientists and technologists.

Richardson must be confirmed by the Senate Commerce Committee, whose
chairman is Daniel Inouye. Inouye is the third most senior US Senator and the most accomplished Asian-American legislator in US history. He is a Congressional Medal of Honor winner who lost an arm with the legendary 442nd in World War II and is not remotely bashful about exercising his duty to advise and consent to presidential cabinet nominations.

If the online petition has 25,000 signatures on it when Richardson comes before Inouye's committee, Richardson either will apologize for his disgraceful behavior or remain Governor of New Mexico.
Richardson should put the matter behind him as a bad mistake in an
otherwise decent public service career. His model should be Attorney
General designate Eric Holder, who has apologized for his appalling decision to support Clinton's pardon of fugitive financier and
mega-donor Marc Rich.

With the appointment of two Asian Americans of extraordinary and undisputed competence and the prospect of appearing before a third, Bill Richardson may hear a faint, high
pitched whistle suggesting that this would be a very good time to get
that Wen Ho Lee apology behind him.

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Your weaknesses will slow you down, but your strengths can kill you. You know your weaknesses, and you tend to compensate. But your strengths cast  shadows — blind spots that create real vulnerability.

Smart leaders know this. They build leadership teams that help check their blind spots. There is early evidence that Barrack Obama is unusually thoughtful in this respect.

The Obama transition has been almost as thrilling as the campaign. It has been a second political masterpiece that has left even Republicans mouths agape (neocon Max Boot declared himself "gobsmacked" by the appointments and Rush Limbaugh actually endorsed Hillary for State.) His appointments validate my hope that he will be a more centrist President than candidate. Overall, I like his appointments more than the ones I recommended here.

Obama’s strengths include the ability to think about large scale problems, a natural celebrity, and a remarkably gentle disposition. Which is why he now needs to think small, pop his celebrity bubble, and get ready for tough love.

THINK SMALL

In Washington, size matters. The city even prohibits any building taller than the Washington Monument so that our ten story national phallus can dominate the geometric center of our capital.

The Obama economic advisory team
reflects this preference for large institutions. It consists of two economists (Laura Tyson and
Larry Summers), both former Clinton officials from large
universities. It is mostly made up of current or former heads of large government organizations and includes the CEOs of Google, AOL, and Xerox, as well as mega-finance
icons Bob Rubin, Paul Volker, and Warren Buffett.

It’s a great group. The seven of these folks that I have encountered closely enough to have a view are highly capable and I’d bet the rest are as well.

But it is full of people from large and/or public institutions. The group contains no entrepreneurs who have started, financed, or grown small businesses. This matters less because this group will get the answers wrong than that important problems or solutions will not be on their screen.

Remember Chris Hughes. At age 24,
Hughes had already co-founded a little start up called Facebook with his college
roommate when he decided to leave his company to serve as coordinator
of online organizing for the Obama campaign. Hughes’
contribution was absolutely critical in electing Obama
President. It’s not just that traditional campaign advisers did not
understand how to use social media in a political campaign — it’s that
they did not fully grasp either the question or the opportunity.

Obama had the good sense to bring entrepreneurs into his campaign and
to get out of their way. By the same logic, his economic advisers
should include people like Sequoia Capital’s Mike Moritz, Draper Fisher’s Steve
Jurvitson, Amazon’s Jeff Bezos, or Saleforce.com founder Marc Benioff. Obama needs entrepreneurs as well as talented Mandarins on his economic advisory team. Otherwise, he will end up trying to drive from the caboose.

POP THE BUBBLE

The bubble
descends on most politicians so slowly that like, the frog in the
proverbial kettle, they gradually adjust to changes to their
environment that eventually prove toxic. Obama has felt the bubble
descend quickly. Two years ago, he could bike Lake Michigan and barely
get noticed. Now he is surrounded by supplicants and security, about to
unplug his Blackberry, and increasingly managed by events and staff.
The problem will not get better once he is in the White House. He can’t
exactly sneak into the local bar, ask for a beer, and get a quick read
on how America is doing.

Here is the solution: a monthly dinner for eight Americans with the President.
If you want to have dinner with Obama, sign up online and
indicate whether you are a community leader of some kind. Each month
four community leaders and four other citizens, selected without regard to political affiliation, income, table manners, or
ability to complete a coherent thought would be brought to Washington
for a two hour discussion with the President. (We can screen
babbling lunatics like the McCain supporter who had proof
"from the Internet" that Obama was Muslim). I’d give a slight
preference to community leaders simply because they are people who
choose to be accountable to someone for something — the local Red
Cross, the PTA, the City Council, whatever. I’d do a
different region of the country each month because you get a clearer signal to noise ratio that way.

It will be the best dinner Obama has every month, probably
for him, and surely for the country. The annual cost of the program
including airfare and hotels would be less than a White House state
dinner and the political optics are all good. He should do this.

TIME FOR TOUGH LOVE

It has been widely noted
that Obama possesses not only a first class intellect, but also a
first-class leadership temperament. This is incredibly important. The
job is ridiculously demanding and it takes a rare combination of listening deeply and deciding quickly. Obama seems to handle all of this as well as
any human in memory.

He rarely gets angry — which is why we elected him. In his case, he can’t get angry because Americans don’t like angry black men. It’s a legacy of racism, indeed it is racist — but it is unquestionably true. Jesse Jackson and Malcom X both have had their moments, but neither ever had a hope of a truly national constituency.

Obama does not need to get mad, but he needs to be exceedingly tough. Not just with our enemies — any politician worth her salt can be tough with Iran or North Korea. Heck, that’s fun. The test for Obama is how tough he can be with his friends — especially friends who voted for him. 

We are about to find out thanks to the Big Three automakers. As noted here, these guys
are a pathetic sight and if millions of jobs were not at stake it would
be fun to laugh them out of town. A week ago we were treated to the
tres amigos with their multimillion compensation packages and
multibillion dollar business failures swooping into DC on private jets
to ask for a $25 billion taxpayer handout. This week they drove into
town in hybrids, cut their (irrelevant) base salaries to $1, promised
to ditch the jets — and asked for $10 billion more than they asked for
the previous week. Evidently it was a bad seven days.

Oh, and they may may need more than this and could we please send the money immediately or else they will die all over us. Reminds me of the old definition of chutzpah — a guy who murders his parents and then begs the judge for mercy because he is an orphan.

Bush will punt this crisis to Obama — as he should. Obama cannot say no – losing three million jobs in the middle of an economic meltdown is insane. And he cannot say yes to an irresponsible and unworkable request from Detroit.

 In the spirit of tough love, Obama should announce two things:

1. We will float small loans on odious terms. Any CEO who wants money must resign. Shareholders are wiped out. Debtors take stock just like they would in a bankruptcy. Ford has all but said it
doesn’t really need the money and on these terms, they won’t take it. In the meantime, Chrysler and GM will
remain solvent at our expense.

2. We are naming a federal trustee to oversee a bankruptcy-like restructuring of GM and the sale or liquidation of Chrysler. As I noted here,
Jerry York would be a fine trustee. Even better would be Mitt Romney.
He is from Detroit, he is an experienced and unsentimental turnaround
guy, and his dad turned around American Motors. Obama would instruct
the trustee to follow the plan laid out this morning by Paul Ingrassia:

• reduce the number of GM dealers to not exceed Toyota’s and
  reduce the GM brands to Buick, Chevy, GMC, and Olds (the trustee would
  sell or liquidate Saturn, Pontiac, Hummer, and Saab).

• impose the NUMMI UAW contract everywhere. Quit screwing around — this is a UAW deal that is cost competitive with the Japanese because it is a deal with the Japanese. Close enough and the politics are manageable.

• sell Chrysler for a dollar. Since the last owner paid
  to have the thing hauled away, there is a good chance the company is
  worthless. If so, it has to be liquidated or absorbed into GM if
  there are assets that they can use.

• take a three year exemption from fuel standards while we get a tax
  on gas in place. It worked in Europe, it makes economic sense, and otherwise the
  smart business move is to keep producing dumb trucks and SUVs (as even
  Honda is discovering). Businesses respond blindly to
  economic incentives — so get the incentives right.

• take the company public again. Once the business is profitable,
  sell shares and repay the Treasury. Our goal is not a state-owned
  enterprise — just a crisis managed by the state because the normal
  process is unlikely to work fast enough.

Will this cost jobs? Of course it
will, just not all at once and not all now. (Did you hear what the execrable GM CEO Rick
Wagoner said about giving up his private jet? Ingrassia reports that he
complained that it would be "unfortunately impacting approximately 50
hourly and salaried employees." Lousy grammar aside, this might be the
new definition of chutzpah.)

More fundamentally, will it save Detroit? Nope. Americans will design cars, advertise cars, make cars, and sell cars. We will even invest in car companies.  But the companies that we work for and invest in will be based in Germany, Japan, Korea, and China. Not Sweden, not the UK, not Italy and not the US. Within a few years, China (home to some dozen auto companies and already a major exporter to the developing world) will be a major player — bet on it. Most of us have not driven a Chery, Geely, BiYaDi, Harbin, JiangXi,  Dongfeng, or Brilliance — but there is a good chance we will. One of these companies may buy Chrysler (Chery took a close look and said no. Which is fine, since the name sounds too much like a Chinese "Chevy"). At base, sustaining a car industry requires a dense and competent supplier infrastructure, management talent, market access, complex design, manufacturing, logistics, legal, and marketing skills. It takes decades and a lot of effort to build and decades and a lot of effort to destroy. We did both and have forfeited our competitive advantage to countries that did a much better job than we did. The car game is over — taxpayers are now providing a bit of hospice care before the lights go out for good. 

Imposing a financially intelligent, tough-love restructuring
on the auto industry will give Obama political capital to burn, even if he is just giving them a soft landing. A series of blank checks however, will burn through a large pile of public and political capital.
Obama needs to offer up tough love now — for banks as well as car
companies. Undeserved generosity is the biggest risk of all.

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