Ways to Stimulate an Economy: the Pittsburgh Plan

In case you haven't noticed, the economy is reeling. Reeling not in a 'I just ate two Burger King Whoppers', but reeling in a 'I was just forced to go to a reunion show of Backstreet Boys' reeling. Yes, it has gotten that bad and it continues to deteriorate day after day. The Dow closed below a volume of 8,000 yesterday. There is strong risk of deflation pushing the markets down further. The credit market has fallen to record lows pushing the beckoning recession deeper and deeper. Yes, things have gotten bad. How will the Obama Administration handle this hell in a handbasket present on Jan. 20th?

Now, I am not normally a commentator on policy prescriptions, but things have gotten bad enough for me to leave my normal political reality and enter into an economic one.

The Obama transition team continues to promise an economic stimulus package as its first act. This is a necessity, but what will that stimulus look like and at how large a cost? Most commentators claim the package to be anywhere between $300 and $500 million. I am inclined to agree with Paul Krugman's analysis, as he states that the larger the better (the man won a Nobel Prize for a reason, folks). If you buy any kernel of Keynesian economics, then you believe that a large influx of government spending will act as an injection that will stimulate GDP knowing government spending is one function of GDP (along with consumer spending, investment (business and household) and net exports). However, my conservative critics will remind me that the stagflation of the 80s dissproved Keynesian economics (as there was both inflation and high unemployment). But, this is not the time for a philosophical debate. Consensus is beginning to build around continued injection of government cash into a flagging economy. And I believe that a stimulus package must be large and must be targeted.

The New Deal of the 1930s will inform some of our analysis. FDR did not pull us out of the Great Depression by himself, he had the help of a stop-gap now known as World War II. FDR's policies, it can be argued, actually did not go far enough to lessen the Great Depression, because after winning the 1936 elections, he raised taxes, pulled-back on government spending and spurred on the 1937-1938 recession. It was not until massive government spending on WWII did we find our way out of the Great Depression. Knowing that we do not now have a global war on our horizon, the lesson to be learned is to not be too tempid in government's response to the crisis. This is no Great Depression, granted, but we have the opportunity now to focus on social ills knowing that our government spending is not irresponsible but as responisble as we can be. What should those programs do?

It likely that health care and a green economy will be the focus of the next stimulus package. I teeter back and forth between the benefits of a large check given to American families. Consumer spending has been falling drastically in recent months as people watch their pocket books more closely. This is bad news knowing that consumer spending makes up roughly two-thirds of our GDP. That would be a reason to give everyone a shiny check to use at their will. But, as some commentators have noted, "saving is back" and it likely that the money would be used to pay off credit card debt and not to buy a new Chevy. I think we would be better served by a more long-lasting cash influx seen through tax cuts (also, more politically feasible).

But, I believe that one target of the stimulus should be to push back against the growing unemployment rate now above 6.8%. A green economy can achieve this in the long-run, but a short-run gain can be seen through an infrastructure-works program akin to the Works Progress Administration and the Civilian Conservation Corps of the New Deal. The WPA built the infrastructure that we now use. According to the Office of Government Reports, "By the summer of 1938, 280,000 miles of roads and streets had been paved or repaired and 29,000 bridges had been constructed. Over 150 new airfields and 280 miles of runway were built [by the WPA]." Spurred on by the disaster in Minneapolis, we again need to focus on our infrastructure.

The next stimulus package must include what I will call the Pittsburgh Plan. Pittsburgh is known as the City of Bridges, even though it has the second highest concentration of urban bridges in the US to New York City. Pittsburgh and the state of PA cannot afford to repair the massive number of 'structurally deficient' bridges in the city. For comment, here is the Pittsburgh Tribune:

"The reality is they don't have the resources they need to address the entire problem," said bridge expert Kent Harries, an assistant professor of civil and environmental engineering at the University of Pittsburgh. "People are not willing to accept the level of taxation that would be required to make it enough."

In Allegheny County, nearly 32 percent of the state's 1,176 bridges are considered "structurally deficient," ranking them among the worst. The rate is higher than the statewide average of 24 percent.

Infrastructure, obviously, does not just include bridges, but also roads, schools, airports, and government buildings. Focusing on infrastructure in a massive economic stimulus package could alleviate the short-term effect on the taxpayer. Yes, it would be huge deficit spending, but the program would help finance our recovery and produce thousands of jobs in the process. The Pittsburgh Plan could cure a growing ill of our society, failing infrastructure, and act as a step to feeding a hungry economy.

From where would the workers come? Granted, we live in a more specialized and skilled labor market than we did in the 1930s, but the manufacturing sector has been shrinking for decades and those workers would find employment through the Pittsburgh Plan. Likely not helped would those being laid off from the financial sector (i.e. CitiGroup's thousands of displaced workers). But, it must be remembered that a government agency focused on infrastructure would not just utilize construction workers - a lot more goes into an agency. Other skill sets would be in demand.

The Pittsburgh Plan is just one component needed and just one idea for ways to stimulate an economy, but it serves a social and material need in our society. Infrastructure is never sexy to campaign on, as there are little voters passionate about the process, but find me one voter who would not want this scenario: their child boards their bus and turns onto the newly done road, which leads over the recently rebuilt bridge as it enters the redone parking lot outside the recently renovated school - all programs financed through the Pittsburgh Plan. The results speak for themselves, not all we need is the political will to make it happen.

- Wyatt

On Holliday

I thought long and hard (that's what she said) about using a vacation/festival-related pun. But then I realized that I didn't suck at life and bad writing. Maybe the latter.

My A's traded for Matt Holliday. WTF? This the team that ripped my puny heart out when I learned they had dealt Tim Hudson and Mark Mulder within weeks of each other. And then ripped through the scar tissue to jettison Danny Haren. This among the myriad of small-market minded decisions that see high-talent and high-priced players leave the East Bay. Some A's fans miss said players like crazy (see above), some not so much (riod ragers like Giambi and Tejada).

But I digest. We just landed arguably the best bat on the trade or free agent market. This is doubly notable considering how putrid the A's offense was last year. I attended one game in Oakland the past September and they were shut down by the magnificent Dustin Nippert (read: not magnificent). Last year, Oakland was 27th in runs scored per game (a stinky 4.01). Holliday is sure to change the make up of the A's lineup. Let's explore how. Together.

Last year, Matt Holliday was ranked the 9th most valuable player in all of baseball according to baseball prospectus based on the value called VORP (Value Over Replacement Player). VOPR essentially compares a players statistics to that of the average ball player. The higher the VORP, the better the hitter/pitcher is than the average player. In 2008, Holliday was more valuable than the AL MVP, Dustin Pedroia. What did he do to accomplish such lofty numbers, you ask? Oh, he was only 3rd in the NL in batting average (.321), 4th in on base % (.409) and 5th in OPS (.947). If you're wondering, all of those numbers would have led the A's by leaps and bounds. That's right leaps AND bounds.

Holliday will bat third in Oakland's lineup, most likely in front of Jack Cust. But there is an argument to be made to plop Custy in front of Holliday to give the latter more RBI opportunities. I can only assume that manger Bob Geren will toy with this for the first few weeks of the season to see which works best.

But as for numerical impact on the A's lineup, look no further than Holliday's awesome 127 runs created last season. The next highest team performer on the A's was Cust, at 94. With Holliday in left field, Cust will move to the DH spot for most of the season, leaving both in the lineup. For argument's sake, let's say that Holliday is replacing 80 runs created worth of offense between all the other players that started in LF for the A's. That's an arbitrary difference of 47 RC. Plug that into the A's 4.01 runs scored/game last year and you get a boost to 4.30 RC/G. Obviously that exercise was crude and inaccurate, but you get the idea. Holliday is good.

Seismic Fail of the Week: Political Edition

THE ALASKAN PEOPLE

After learning that your Senator of 40 years was convicted on seven counts of corruption charges, you went to the polls. After knowing that he used ties to an oil executive to get lavish furnishings for his house and then lying about it, you went to the polls. And what did you do at the polls? You nearly re-elected the guy!

You had the option to unequivocally reject corruption (which most other states are against - LA is most certainly for it), but you chose to just narrowly, barely, insignificantly, reject corruption. Whatever is a lesser offense than slapping ones wrist is the electoral penalty you served to not only Ted Stevens but corrupt politicians elsewhere (see: Mark Foley, Tom Delay).

SEISMIC REDEMPTION
However, you did win one gold star. You didn't have the presses report that Ted Stevens had lost his re-election bid until the day of his 85th birthday. That was a stroke of genius. After realizing that you did not win a moral victory on Nov. 4th, you decided to hit him right in the heart just as he's blowing out the candles. Classic, Alaska.

Despite the Seismic Redemption, you are still this week's Seismic Fail in Politics.

- Wyatt

Overcoming the Unit Rule: Caught at the Warning Track (Part III)

While it is an interesting proposition, overcoming the unit rule by adopting one of the three proportional allocation scenarios mentioned will be politically impossible. The reforms would have to be adopted one of two ways: state-by-state or nationally.

If the reforms were adopted based on the initiative of one state (as in Nebraska and Maine), the results could be catastrophic to one of the two parties, depending upon the state. The best example is recently California entertained the notion of adopting the Congressional District Method. The effects in 2008 would have minimal due to Obama's overwhelming victory, but the change is still telling. Let's assume, without sufficient data, that electoral votes would be apportioned based on the 61% to 37% Obama victory in CA. Obama would have won 35 electoral votes instead of 55, and McCain would have won 20 instead of 0. This would have brought their total electoral vote totals to Obama (344) to McCain (193). Still a huge victory, but if any number of Bush states (namely, Ohio or Florida) had adopted this method in 2000 or 2004 then George W. Bush would not have been president. Harm would be caused to one party if individual states moved to this method at independent times. Coordination is the only way for success.

However, states have very little incentive to coordinate with each other. States have been viewed as the "labrotories of democracy" because they can experiment with creative policy proposals. But, experimentation, as stated above, would cause more harm than national good. The parties need to take the initiative to demand reform of the electoral college from states. Or it could go as far as a law from Congress or a constitutional amendment (not really necessary, though).

Why would states want to do this? There is incentive for smaller states like Maine or Nebraska to experiment because it could give more attention to their other-wise electorally insignificant state. The Obama campaign proved this theory in 2008 by flooding resources into Nebraska's 2nd Congressional District. However, larger states like California would lose electoral power through proportional allocation. Instead of guaranteeing 20.4% of the electoral votes needed to win, it could represent a 50-50 split between the two major party candidates and not be as significant a dividend. Therefore, this reform could never reach fruition if larger states refuse to enter into the system. We are again debating the divide between large and small states, just as we were during the creation of the electoral college.

Another reason NOT to do this would be that it would create very close elections. If we are indeed a 50-50 nation (a purple nation), then proportional allocation should (under best circumstances) reflect that 50-50 divide. Since 1900, we have had eight elections where the victor did not receive a majority of the popular vote. Those elections, in our model, could all be sent to the House of Representatives, if the winner does not get a majority (instead of just a plurality) of electoral votes. So, adopting this method may cause even more unrest with the legitmacy of our electoral process.

In conclusion, I do not think this reform is likely to pass any time soon, if ever. No one state is likely to want to take the initative on this, and the national parties historically have little power to dictate policy to states. This would likely only ever come into effect through national referendum. However, the prospects of that are even more unlikely.

Well, it was fun to ponder, at least.

- Wyatt

Overcoming the Unit Rule: 2008 Remix (Part II)

As promised, below are the electoral results had we used two of our alternate scenarios.

First scenario is the Straight Up Allocation, where states award electoral votes based solely on the proportion of popular vote earned by a given candidate. In 2008, the election would have been much closer because the electoral vote would have almost exactly reflected the national popular vote differential. However, Obama still would have achieved a clear majority of electoral votes.

STRAIGHT UP
ALLOCATION
Electoral Vote EV (%) Popular Vote (%)
Obama/Biden 283 52.6% 52.6%
McCain/Palin 255 47.4% 46.1%


The second scenario is Winner-Take-Some, where the congressional district electoral votes are awarded based on the percentage of the statewide vote (i.e. Obama gets 55% of the 19 electoral votes from PA). And the two senatorial electoral votes are awarded to the winner of the statewide popular vote (i.e. Obama gets two more votes in PA for winning popular vote). The election results here are still closer than the actualy 2008 results, but not as close as in our first scenario. Obama is rewarded for winning more states than McCain by building up those two senatorial electors across the country. However, the number does not reflect the popular vote differential as closely.

WINNER-TAKE-SOME
Electoral Vote EV (%) Popular Vote (%)
Obama/Biden 291 54.1% 52.6%
McCain/Palin 247 45.9% 46.1%


These results are interesting, at the least, and telling at the most. They possibly reveal an Electoral College that is more responsive to each individual vote. I am partial to the Winner-Take-Some Allocation over the Straight-Up Allocation, because there needs to more incentive for winners of states then in a direct proportion to the popular vote. It also allows for a greater probability of a majority winner.

However, I do not feel that state parties would accept these reforms, as discussed in Chapter Three. At the very least, it is interesting to see our democratic system through the lens of alternative scenarios.

- Wyatt

Overcoming the Unit Rule: The Nebraska Way (Part I)

Nebraska has done it again; it has made history. The state is well known for taking risks and breaking barriers, and the 2008 presidential election is just another notch on its corn-infested belt (sarcasm is the author’s). Forty-eight states (and the District of Columbia) use something called the “unit rule” in their apportionment of their electoral votes. This system is commonly referred to as “winner-take-all”, meaning that if Candidate X gets 51% of the popular vote in a given state they will be awarded 100% of the electoral votes from that state. Only two states do not use this practice: Maine and Nebraska.

Maine and Nebraska use the Congressional District Method. Under this method, one electoral vote is granted to the winner of the popular vote in each individual congressional district. Also, two electoral votes are awarded to the winner of the statewide popular vote. The system was used in the colonial and post-colonial days, notably by Massachusetts from 1804-1820. When Maine seceded from Massachusetts (now that’s looking backwards), they continued the practice until 1828. However, Maine reconvened the method in 1972 and has used it since. Nebraska began using the Congressional District Method in 1992. Until 2008, neither state had awarded electoral votes to more than one candidate. Enter Nebraska.

The Obama for America campaign realized something early in the general election season: they had an honest-to-God chance at winning one electoral vote in Nebraska’s 2^nd Congressional District, represented largely by Omaha. And through massive spending and a commendable field campaign, Obama did just that: he won one electoral vote from Nebraska.

I am going to make a case for the outlaw of the Unit Rule. The Congressional District Method is just one method of what I call Proportional Allocation. If we should be considering the political science theory of “one person, one vote” then the Unit Rule does it a drastic disservice. (I will use Pennsylvania’s 2008 election results as the prime example for the rest of the article) The Unit Rule ensures that votes for a losing candidate do not count toward electing a president, because they are not reflected in the electoral count. Although Senator McCain received 44% of the vote in PA, he received 0% of the electoral vote. Therefore, those 2.6 million people who voted for him in PA are not counted (reflected) in the Electoral College. If they were counted then we would see a variation in the electoral count based on the number of McCain voters below Obama’s total. However, this is not the case. If McCain receives anywhere from one vote to 3.1 million votes, he still receives zero electoral votes in PA.

For further redundancy, each of Obama’s 3,192,316 voters in PA represents 0.0007% of PA’s total electoral count – they are counted. While each of McCain’s 2,586,496 represents 0.0% of PA’s total electoral count – they are not counted.

However, the Nebraska system allows each vote to have a better chance at being counted. For instance, in 2008, Obama voters in the 2^nd Congressional District had their vote count towards one electoral vote, while McCain voters in the 2^nd Congressional District still had their votes counted towards the 2 statewide electoral votes given to McCain. Granted, Obama voters in the 1^st and 3^rd Congressional District did not have their votes counted toward a larger whole, but Nebraska still offered a better chance at all votes counting toward the electoral count.

The Nebraska example demonstrates the possible need for a second (or third) option for Proportional Allocation. If there are still votes not being counted, then there must be a better alternative. In my assumption, two other possibilities exist (titles are mine): Straight Up Allocation and Winner-Take-Some.

Straight Up Allocation: In this model, the electoral votes for each state would be divided in proportion to the popular vote garnered in that state. In 2008, therefore, Pennsylvania’s 21 electoral votes would have been divided 55% for Obama to 44% for McCain, just as the popular vote was. This would come out to 12 electoral votes for Obama and 9 for McCain (rounding went to the victor).

Winner-Take-Some: In this model, only congressional district electoral votes would be divvied up based on the popular vote. The two senatorial electoral votes would be awarded to the winner of the popular vote. Under this model, we have 19 electoral votes to divide 55% to 44% (11 to Obama, 8 to McCain). But, we award the two statewide electors to Obama as the winner of the statewide popular vote (just as in the Congressional District Model). Obama wins 13 electoral votes to McCain’s 8.

Congressional District: In Pennsylvania, based on my own rough (extremely rough) estimates, I believe that Obama would win 11 electoral votes from 11 Congressional Districts, while McCain would win 8. However, Obama would have won the two statewide electors bringing the allocation to 13 to 8 for Obama and McCain, respectively.

Under the Straight Up Allocation, each Obama voter counts for 0.0003% while each McCain voter counts for 0.0003% of the total allocation.

Under the Winner-Take-Some Model each Obama voter counts for 0.0004% for the allocation while each McCain voter counts for 0.0003%.

As you can see by this number, this type of allocation allows each vote to have the same weight as we inch closer to the democratic principle of “one person, one vote.”

This article is not centered on scientific analysis, but offers a perspective on the Electoral College that is not discussed, especially in lieu of an Obama electoral blowout. However, it will be interesting to see how the electoral vote would have looked had one of these three scenarios been used across the country (the Congressional District Model will not be possible to calculate until vote tallies are finalized in early December).

Expect two more chapters to this saga. Chapter Two should have complete electoral counts based on Straight Up and Winner-Take-Some allocation. Chapter Three will look at why the Unit Rule will be politically impossible to overcome.

- Wyatt

Tim Kaine for (Decoy) Vice-President

Selection of a vice-president is a laborious process that requires absolute secrecy to be effective. If ones selection leaks to the press before necessary, the process could be sunk by a round of bad press stories. Therefore the helpful adage is: those who know don’t talk and those who talk don’t know. Recently, vice-presidential hopeful Governor Tim Kaine (D-VA) has been talking quite a bit. What does this mean to the process?

Despite press speculation, the vice presidential process must be coming to a close shortly. The Conventions are a month away and offer the deadline for selecting a VP. As the press gets antsy, they will begin to run cover-stories on every potential VP selection for both candidates. This could be disastrous for a campaign, because you want to control your VP candidate’s biographical story (Campaign 101: if you don’t control your message then you don’t control the outcome). If the press beats you to the punch through a tell-all biography then you may never be able to define your candidate. How then do you keep the press from running said stories? Give them someone to feast upon. Enter Tim Kaine.

The Democratic Governor of Virginia would be a great choice for Vice-President. Virginia has been, like the country as a whole, trending blue for some time. It elected Jim Webb (D) to the Senate in 2006 by a narrow margin and is likely to elect Mark Warner (former Democratic Governor) to fill retiring Republican John Warner’s (no relation) seat in 2008. The only thing Tim Kaine could do to sink his chances at becoming Vice-President are as follows: talk to the press.

Kaine must not be familiar with the strategy, because talking to the press is just what he has been doing. He was quoted by ABC News saying, "There has been a long list. It seems to be getting shorter. And I'm still being mentioned. A lot can change day-to-day. But we'll see." He was quoted by NBC News saying, "It's nice to be speculated about." Then he did a brief tour on the press circuit stopping at the Charlie Rose Show. He was even quoted saying, ""It's flattering to be mentioned. My mom loves it. I still think it's more likely that he'll go in another direction. I don't spend a lot of time thinking about it." While Kaine would still be a great VP candidate, see this Wall Street Journal article, his undisciplined talking to the press has to raise questions inside the Obama campaign. Unless there is another option to explain it all.

Here is a theory: Tim Kaine is being used by the Obama campaign as a decoy candidate. If the press continues to cover Kaine with as much frequency as they are then the Obama campaign is spared the potentially damaging press stories on other candidates under consideration. This allows the Obama camp breathing room to vet their short list. Kaine can still benefit from this role as his national profile is rising dramatically. The press is running stories on his record and what he would bring to the ticket. This could possibly even set up Kaine’s own run at the presidency in the future.

This is not necessarily the case, rather, Kaine may have stepped into this role voluntarily. This is unlikely because Kaine served as a National Co-Chairman of the Obama campaign during the primaries. He knows what he is doing (doesn't he?) Regardless, the Obama camp can thank him for this service while they do background checks on Gov. Kathleen Sibelius (KS), Senator Evan Bayh (IN), and other candidates. I do believe that Kaine ruined his own chance by speaking out, even as he is raising his profile.

As Kaine does the speaking circuit, the Obama campaign is running at submarine depth to avoid detection. Regardless of whom, we will know of Obama’s (and McCain’s) decision – the biggest of their careers - in the next couple of weeks.

- Wyatt