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The Floundering, Fumbled First Fifty Days

Tuesday, March 10, 2009  |  posted by Hugh Hewitt

Lots of rookies bat below the Mendoza line in their first two months in the big leagues, so past performance by the new president is no guarantee that he won’t get his swing fixed.

But lots of the inside-the-Beltway folk are worried. Perhaps Democrats reading my interview with Mary Matalin from yesterday will dismiss it as just a Republican critique, even though most D.C. Dems know and admire MM’s sharp analytical skills. (The podcast of the Mary chat is here.)

But even if they don’t, they are going to have to pause as they read Newsweek’s Howard Fineman’s conversation with me. Key excerpts:

HH: Now Howard Fineman, I also want to spend some time here talking about the President and the stock market, and whether or not the sense is spreading that they’ve overreached, they’ve bit off too much. As Jack Welch said today, he’s not focused on the economy, as Warren Buffett warned today, they’ve got to stop a lot of this nonsense, as Jim Cramer…these are three supporters of President Obama blasting him. Do you think the word is getting through that their fundamental ambition is contrary to economic recovery?

HF: Well, it’s funny you mention that, because I’m just sitting here gazing at my laptop trying to write a column saying approximately that. So I can save your viewers, I mean your listeners the time of reading it. But yeah, I think the focus, I think you can’t try to do too much. I understand Obama’s urgency here, because 62% approval ratings don’t last, and nothing in Washington has the attention span of a flea, and you want to try to get your agenda through that you promised in the campaign. But just like you tell your kids, you can’t do everything. You have to make choices. I have two problems. First of all, I don’t think the stimulus…I agree with Paul Krugman, the stimulus package wasn’t big enough, but more important, it wasn’t focused. It wasn’t relentlessly focused on near-term economic stimulus, which would be a combination of tax cuts, more tax cuts, and more immediate spending. Double food stamps, I mean, I’m talking food stamps, welfare, you know, all that kind of stuff. So it wasn’t focused enough on immediate spending, there’s too much long range stuff in the stimulus package, so that wasn’t big enough. And then in the case of the budget, the budget’s too big in the sense that you can’t borrow…it’s okay to borrow money, I mean, I think I agree with most mainline economists that you’ve got to spend, you’ve got to spend. That’s true. But don’t pencil in things like cap and trade which probably aren’t going to happen, that there’s $650 billion dollars. Don’t talk about totally changing the health care and education system right now when we have to focus, to use an old term, like a laser beam on the economy. That’s so…and I think that’s a lot of valid criticism that you’re hearing from a lot of the guys that you just mentioned.

The podcast of the Fineman conversation is here.

Yesterday was a day in which a lot of the president’s friends got out of bed and began to speak very clearly about what the president must do to restore confidence in the markets and thus allow an economic recovery to gain traction –a set of steps that begins with “do no (more) harm. That is, President Obama has to scale back his wildly ambitious agenda and its legion of tax hikes and sweeping, radical reforms for that period of time that it takes the economy to hit sunnier weather. Some Democrats must be figuring that the Dow’s drop of 3,000 points since the president’s election is going to imperil their re-elections 19 months from now unless some or even most of that ground is recovered, and they aren’t going to stand by why the already-mocked-on-Saturday-Night-Live Tim Geithner continues as Hamlet not Hamilton.

Ronald Reagan inherited an economic mess from Jimmy Carter and set out, with Paul Volker, to fix it. It took a while even with a determined and not bumbling start, but the public nevertheless dismissed Reagan’s good intentions and voted their anger, and Republicans lost 27 Congressional seats in the 1982 elections. (The GOP was in the minority then, without a lot of seats to lose to begin with.)

Already some Senate Democrats have balked at the President Obama’s confused and at the same time hyperkinetic approach to the recession, and are balking at the massive and radical changes proposed in the tax system, such as taxing mortgage interest and charitable deductions. Some House Democrats refused to vote for the stimulus and more are showing signs of a refusal to go over the falls with the wilder ambitions of Speaker Pelosi and the president. Certainly the continued weakness on Wall Street isn’t being laid at the feet of George Bush by neutral observers who saw the wasted opportunity of the stimulus and the deeply worrisome announcements about the future of tax policy combined with the very silly growth projections.

Yesterday the release of the tape of the president’s “I am not a socialist” phone call to the New York Times reporter raised a lot of eyebrows. In the call the president sounded unnecessarily quarrelsome. Petulance doesn’t become presidents, especially young ones with enormous capacity to be charming. Good humor is his best weapon, and the would-be Plumbers who are advising him on attacking Rush and the previous Administration are giving him lousy advice.

In a stroke, with the announcement of a growth agenda made necessary by the weak economy –an agenda that would at a minimum postpone all tax hikes of any kind until four consecutive quarters of more than 2.5% GDP growth are behind us– would mark a bold pivot that reflects economic realities. A refusal to adapt to the economic forces at work –some of which he has triggered– will tell us that no matter what he calls his ideology, it is driving him, and not the best policies for the times at hand.

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Not The Plain Dealer!

Monday, March 9, 2009  |  posted by Hugh Hewitt

Time has a list of the ten most endangered newspapers, and my beloved PD (just its sports section to tell the truth) is on the list.

Memo to the PD Brass: get a Kindle subscription offered for a super-juiced sports section, led by Terry Pluto –America’s finest sports writer– and the talented gang he shares the pages with. Charge a three or four bucks a month. The Cleveland sports diaspora will support you!

As I wrote last week, and discussed on today’s show, Kindle 2.0 is an amazing technology, and it has the capacity to save the best of every segment of print journalism, including those papers with extremely loyal and far-flung fan bases. ESPN is fine, but it isn’t the hometown sports section.

More CPSIA Insanity

Monday, March 9, 2009  |  posted by Hugh Hewitt

Two weeks agoI interviewed Snell & Wilmer’s Gary Wolensky about the absurd and devastating impacts of the 2008 Consumer Products Safety Improvement Act on numerous industries including ATVs, childrens’ clothing and sporting goods. Since then other media outlets have begun to catch up to the story, and yesterday the Minneapolis Star Tribune had a breakthrough by getting one of the law’s key sponsors, Minnesota Senator Amy Klobuchar to admit that the law was not working out as it had been intended:

The bill’s sponsors, including Minnesota Sen. Amy Klobuchar, are equally adamant that such an absolute interpretation was not what they intended in the 2008 Consumer Product Safety Improvement Act.

“Their hands are not tied,” Klobuchar said. “We gave the commission the power to implement common-sense rules. Congress never intended it to be interpreted this way.

“We never thought children were going to be sucking on brake handles.”

Too bad for manufacturers, retailers and consumers that the Congress did –surprise– a lousy job in drafting the draconian law. Unfortunately, the law also empowers plaintiffs’ lawyers to sue non-compliant companies, so Senator Klobuchar’s protestations of innocence do nothing for those thousands of businesses seeing hundreds of millions of dollars of superb product go to waste.

The Strib unfortunately failed to ask the obvious question of Klobuchar and Senator Jay Rockefeller –also quoted in the piece: “Why not fix the law right now to exempt all product in the pipeline for another12 to 24 months?” Such a revision could be attached to the appropriations bill moving through the Congress just as various special provisions striking at property rights and upping the reach of the polar bear “threatened species” listing are being stapled on.

As I have noted before, CPSIA was a very simple law and the Democratic Congress managed to so mangle it as to cause a billion dollars in unintended damages. Imagine what the Democratic Congress will do when it takes up the infinitely more complicated issue of health care “reform.”

I will have Wolensky back on later in the week for an update on the effort to get Congress to repair the damage that Congress has done. Send you CPSIA questions to him via gwolensky@swlaw.com.

Lawyers and the Recession

Monday, March 9, 2009  |  posted by Hugh Hewitt

The Washington Post reviews the impact of the recession on “big law,” the large firms that account for most of the high profile business and litigation work in the U.S. As with recessions past, law firms are laying off partners and associates and cutting rates as well as giving fee caps for discrete matters such as appeals. Lots of lawyers are suddenly exploring new careers.

This is a particularly sharp downturn, but it is the third I have watched since leaving government in 1989. My own firm was begun in the deep recession of 1991 when my partners and I decided we could offer substantially lower hourly rates to large corporate and real estate clients which were if course eager to save on their legal costs. There’s thus an echo for me in these graphs from today’s story:

“Everyone realizes the big law firm model is broken,” said Willard, a partner in Silicon Valley-based Virtual Law Partners, who works out of his office — adjacent to his kitchen and family room — at his Reston home.

Although thousands of lawyers and staff members across the country have been let go during the past six months, Willard and Virtual Law’s founder say that since June they have been adding three partners per month. “When you tell people, ‘I’m going to drop my rates 25 percent,’ it’s a pretty easy decision” for them to hire you, Willard said.

I don’t think the big firm model is “broken,” just undergoing one of its regular contractions and spin-offs that reintroduce efficiency and competitiveness into service and rate structures. It is a cycle that is good for the law and very good for clients.

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