When making a rational and objective examination of the credentials and experience of Gov. Sarah Palin to hold the position of Vice President, the context says it all. Her experience may be objectively judged in terms of what her job actually entailed and whether such experience could objectively be said to prepare a person to step into the job of President at a moment’s notice. We must remember that John McCain is 72 years old and has had significant health issues. As a result, the risk is that he may become incapacitated even if a health crisis is not fatal. In such situations, the Vice President must step in and take the reins of government. Often, there is a power struggle between the sitting Vice President and strong willed Cabinet officials, as occurred in the case of Gen. Alexander Haig. While any person under the stress of the Presidency may be subject to incapacitation, it is certainly valid to look a bit more closely at the GOP ticket where the risk factors are higher. Any competent physician would consider McCain a greater health risk than Obama would be. Departing from name calling and schoolyard bullying tactics, let’s just examine the facts, positions and context.
Palin claims that her experience handling the responsibilities of mayor has prepared her for the Vice President position. The town she governed as mayor had a population at the time of about 5,500 persons, about the size of a medium-sized private college or a small university. The town had a budget of $6 million and 53 employees. This writer has held the position of Chair of the Board of Directors [elected] for a school district with twice as many students as Wasilla and with at least 4 times as many employees. Yet this writer also would not hesitate to disclaim such experience as qualification the job and tremendous responsibilities of Vice President.
In fact, the documented record is even less charitable to Palin. Her responsibilities as mayor of a very small town limited her exposure to or appreciation of the complex issues that even a mayor of a large city would comprehend. In Wasilla, for example, management of responsibilities for firefighting and schools are handled by the Matanuska-Susitna Borough, the regional government for central Alaska where Wasilla is located. In addition, state jurisdiction over social services and environmental regulations such as storm water management for building projects further limits the scope of executive responsibilities of the mayor. The full extent of Palin’s responsibilities as mayor included overseeing a small police department, the public works department, the parks and recreation department, a planning office, a library and a small history museum. Add to these limited duties the fact that Palin hired a City manager to take on the responsibilities of day to day management of Wasilla affairs.
Palin has been governor of a state that has a total population smaller than some of the larger cities in the US. She has held that position for less than two years. Both at the city and state level, Palin has not had to deal with any complex issues of tax policy due to the tremendous oil and natural gas based revenue that has virtually eliminated property taxes and sales taxes.
Contemporaries who are inclined to speak well of Palin acknowledge that they were shocked to hear that Sarah Palin was actually chosen as a running mate for McCain. They noted her charisma, public speaking ability and obvious political ambition. Yet they also commented that the opportunity came along before Palin was properly prepared and experienced to justify or handle it.
Perhaps the most disconcerting aspect of the contextual analysis is the factor of one being completely unaware of what they do not know. Dianne Keller, the current mayor of Wasilla, who believes Palin qualified for the job of Vice President, actually stated the following: "Executive experience is executive experience. Whether you are a mayor or a governor or an executive at a company, the duties and responsibilities are the same." This level of oblivious confidence based upon clearly false assumptions says a great deal about the conviction with which the GOP ticket claims that Palin is “qualified” to be next in line as President of the United States.
If Palin has no better understanding of the scope of responsibilities of a chief executive than to believe that her meager experience is equal to that of a CEO of a business that has a multi-trillion dollar budget and more than a million employees, it is extremely scary to envision her actually holding the position and discovering, after the fact, that the actual job is magnitudes of difference greater than she ever imagined.
Sunday, September 14, 2008
Sunday, September 07, 2008
Economic Sense or Nonsense?
The public announcement of the US government takeover of Fannie Mae and Freddie Mac this Saturday comes as no great surprise to those watching the precarious state of the credit markets. Following a period of deregulation of credit institutions during the past 8 years or more, with Sen. Phil Gramm passionately leading the charge as Chair of the Banking Committee, a series of imprudent lending and investment decisions has led these credit giants to the verge of collapse. Some of those decisions were caused by misplaced euphoria as the country was floating along on the housing bubble that has now burst. With the plunge in the housing market, the value of the mortgage based credit instruments held by these large financial institutions also plummeted. As their asset base fell, their ability to lend and the marketability of the assets they hold also declined. As a primary source for home mortgage and other consumer and business credit, the failure of Fannie Mae or Freddie Mac could seriously affect the ability of consumers to secure financing for typical purchases that drive the US economy. Thus, the pressure to take some form of action to stabilize these institutions in the face of a staggering economy became intense.
Why was it so important for the government to intervene? The answer to that question is also not complicated. The strength or weakness of the housing market depends upon the availability of credit and mortgage financing. Indeed, the ready availability of mortgage financing to borrowers who previously would not have been deemed qualified was a major factor inflating the housing bubble. The drive for deregulation opened the door for unwise, and in some cases unethical, lending practices. Those lending mistakes have led to record levels of foreclosure and tens of thousands now face loss of their homes. These companies hold or guarantee more than $5 Trillion in home loans, or about half the total in the US. Obviously, the failure of Fannie Mae and Freddie Mac would have a major negative impact on the US housing market and economy overall.
The current dilemma is not a debate over whether these institutions should exist, but rather what is to be done about the current economic crisis to stabilize the market and reduce the risk to taxpayers in the face of the necessary intervention. Since the problem will not be rectified by the end of this year, and any action needs to be based upon a longer term strategy, the positions of the current candidates for the White House are of interest.
Obama campaign has been critical of the deregulation and the indiscipline that led to the mortgage lending crisis. The Obama campaign has indicated a belief that some form of government intervention was necessary. His campaign has announced that it wants to study the details of the proposed bailout carefully to see whether it contains the requisite and appropriate elements for an effective immediate response and the foundation for a longer term remedy.
Saturday, the response from the McCain campaign through its Vice Presidential candidate regarding the Bush administration intervention on behalf of Fannie Mae and Freddie Mac was that: “The McCain-Palin administration will make them smaller and smarter and more effective for homeowners who need help.” Sarah Palin said Fannie and Freddie “have gotten too big and too expensive to the taxpayers.”
The former response seems considered and rational, while the latter seems muddled and nearly incomprehensible. It appears to be the kind of response that a person who grasps neither the history of the situation nor the fundamental economic functioning of these companies or the credit market. For a person who is striving to dispel the idea that she is a backwoods and unsophisticated politician, Palin has chosen her words poorly. It is the management of the companies, not their size that presents the current predicament. The “cost” to the taxpayers would come essentially only in the need to rescue the companies from poor management. The role of government in their functioning is primarliy regulatory. Thus, it appears that Gov. Palin lacks a basic understanding of federal credit markets. It also appears that Palin is another example of the GOP style of leadership that prizes ideology over competence, slogans over substance.
The economic turmoil in the US and globally, and the complexity of factors that impact and will continue to influence credit markets, require much more than hollow slogans about "big government." The companies in question came into being in order to facilitate housing finance options and to make the purchase of housing available to average citizens on terms that were affordable. That strategy and the vehicles that made such financing available have fueled the American dream for millions of families for decades. Only by reemploying fiscal prudence and by restoring such institutions to financial health and vigor can the American people hope to regain confidence in the housing market and reverse the downward momentum we currently experience.
Only such inexperience and lack of comprehension would generate such a simplistic and economically nonsensical response. Further inquiry would probably reveal that Palin and her family have directly benefitted from the operation of these institutions. It is understandable that a neophyte who lacks exposure to the complexities of national finance, other than the specific quests for federal funding earmarks for local pet projects, would misunderstand the significance of the government intervention on such magnitude. The real question is whether the American people can risk entrusting the leadership of the country to someone so obviously unprepared to deal with such critical domestic issues.
Why was it so important for the government to intervene? The answer to that question is also not complicated. The strength or weakness of the housing market depends upon the availability of credit and mortgage financing. Indeed, the ready availability of mortgage financing to borrowers who previously would not have been deemed qualified was a major factor inflating the housing bubble. The drive for deregulation opened the door for unwise, and in some cases unethical, lending practices. Those lending mistakes have led to record levels of foreclosure and tens of thousands now face loss of their homes. These companies hold or guarantee more than $5 Trillion in home loans, or about half the total in the US. Obviously, the failure of Fannie Mae and Freddie Mac would have a major negative impact on the US housing market and economy overall.
The current dilemma is not a debate over whether these institutions should exist, but rather what is to be done about the current economic crisis to stabilize the market and reduce the risk to taxpayers in the face of the necessary intervention. Since the problem will not be rectified by the end of this year, and any action needs to be based upon a longer term strategy, the positions of the current candidates for the White House are of interest.
Obama campaign has been critical of the deregulation and the indiscipline that led to the mortgage lending crisis. The Obama campaign has indicated a belief that some form of government intervention was necessary. His campaign has announced that it wants to study the details of the proposed bailout carefully to see whether it contains the requisite and appropriate elements for an effective immediate response and the foundation for a longer term remedy.
Saturday, the response from the McCain campaign through its Vice Presidential candidate regarding the Bush administration intervention on behalf of Fannie Mae and Freddie Mac was that: “The McCain-Palin administration will make them smaller and smarter and more effective for homeowners who need help.” Sarah Palin said Fannie and Freddie “have gotten too big and too expensive to the taxpayers.”
The former response seems considered and rational, while the latter seems muddled and nearly incomprehensible. It appears to be the kind of response that a person who grasps neither the history of the situation nor the fundamental economic functioning of these companies or the credit market. For a person who is striving to dispel the idea that she is a backwoods and unsophisticated politician, Palin has chosen her words poorly. It is the management of the companies, not their size that presents the current predicament. The “cost” to the taxpayers would come essentially only in the need to rescue the companies from poor management. The role of government in their functioning is primarliy regulatory. Thus, it appears that Gov. Palin lacks a basic understanding of federal credit markets. It also appears that Palin is another example of the GOP style of leadership that prizes ideology over competence, slogans over substance.
The economic turmoil in the US and globally, and the complexity of factors that impact and will continue to influence credit markets, require much more than hollow slogans about "big government." The companies in question came into being in order to facilitate housing finance options and to make the purchase of housing available to average citizens on terms that were affordable. That strategy and the vehicles that made such financing available have fueled the American dream for millions of families for decades. Only by reemploying fiscal prudence and by restoring such institutions to financial health and vigor can the American people hope to regain confidence in the housing market and reverse the downward momentum we currently experience.
Only such inexperience and lack of comprehension would generate such a simplistic and economically nonsensical response. Further inquiry would probably reveal that Palin and her family have directly benefitted from the operation of these institutions. It is understandable that a neophyte who lacks exposure to the complexities of national finance, other than the specific quests for federal funding earmarks for local pet projects, would misunderstand the significance of the government intervention on such magnitude. The real question is whether the American people can risk entrusting the leadership of the country to someone so obviously unprepared to deal with such critical domestic issues.
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