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Cracker Squire


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Location: Douglas, Coffee Co., The Other Georgia, United States

Sid in his law office where he sits when meeting with clients. Observant eyes will notice the statuette of one of Sid's favorite Democrats.

Sunday, November 30, 2008

Savannah: Antebellum mansions & Victorian homes fan out from the river here, clustering near rectangular plazas originally laid out in 1734.

The New York Times has an article today about Savannah -- one of my favorite cites -- and how the downturn is chipping away at expansion and prosperity there, dimming a 20-year boom.

Friday, November 28, 2008

"Don't tax you, don't tax me. Tax that fellow behind the tree." -- Don't blame you, don't blame me. -- Rubin, Under Fire, Defends His Role at Citi

Rubin's reaction reminds of a saying Sen. Russell Long had about tax reform: "Don't tax you, don't tax me. Tax that fellow behind the tree."

From The Wall Street Journal:

Under fire for his role in the near-collapse of Citigroup Inc., Robert Rubin said its problems were due to the buckling financial system, not its own mistakes, and that his role was peripheral to the bank's main operations even though he was one of its highest-paid officials.

Mr. Rubin, senior counselor and a director at Citigroup, acknowledged that he was involved in a board decision to ramp up risk-taking in 2004 and 2005, even though he was warning publicly that investors were taking too much risk. He said if executives had executed the plan properly, the bank's losses would have been less.

Its troubles have put the former Treasury secretary in the awkward position of having to justify $115 million in pay since 1999, excluding stock options, while explaining Citigroup's $20 billion in losses over the past year and a government bailout of at least $45 billion.

Mr. Rubin's salary made him one of Wall Street's highest-paid officials -- and a controversial figure among Citigroup shareholders and some executives, who questioned whether his limited duties justified the big paydays.

Mr. Rubin said it is a company's risk-management executives who are responsible for avoiding problems like the ones Citigroup faces.

Still, Mr. Rubin was deeply involved in a decision in late 2004 and early 2005 to take on more risk to boost flagging profit growth, according to people familiar with the discussions. They say he would comment that Citigroup's competitors were taking more risks, leading to higher profits. Colleagues deferred to him, as the only board member with experience as a trader or risk manager. "I knew what a CDO was," Mr. Rubin said, referring to collateralized debt obligations, instruments tied to mortgages and other debt that led to many of Citigroup's losses.

[Crazy Wall Street and the Trio. But don't fight the tape (I don't); the trend (that is, bailouts) is your friend, etc. I felt confident the trio would bailout Citigroup as the stock tanked last week, and by Friday, when the stock was at its 52 week low of $3.05, time was running out for the trio to act and thus I bought at $3.35. The bailout came over the weekend, and today the stock closed at $8.29 and is headed higher next week. These times are strange indeed. Right? No. Logical? No. Fair? No. Consistent? Hell no. Just strange, but hey, as I said, don't fight the tape.]

Obama: "I don't oppose all wars." And his response after 9/11: "I would willingly take up arms myself to prevent such tragedy from happening again."

E.J. Dionne, Jr. writes in The Washington Post:

In electing Barack Obama, the country traded the foreign policy of the second President Bush for the foreign policy of the first President Bush.

That is the meaning of Obama's apparent decision to keep Robert Gates on as defense secretary and also to select Hillary Clinton as secretary of state.

With strong ties to the military and a carefully cultivated image of tough-mindedness, Clinton will protect the incoming president's back from those on the right ready to pounce at any sign of what they see as weakness.

As for Gates, Obama has found the ideal figure to help him organize his planned withdrawal from Iraq, and to bless it.

What's most striking about Obama's approach to foreign policy is that he is less an idealist than a realist who would advance American interests by diplomacy, by working to improve the country's image abroad, and by using military force prudently and cautiously.

This sounds a lot like the foreign policy of George H.W. Bush, and it makes perfect sense that Obama has had conversations with the senior Bush's closest foreign policy adviser, Brent Scowcroft. Obama has drawn counsel from many in Scowcroft's circle, and Gates himself was deputy national security adviser under Scowcroft.

The truth about Obama's worldview was hidden in plain sight in his most politically consequential foreign policy speech. Antiwar Democrats cheered Obama for addressing a rally against the Iraq war in Chicago's Federal Plaza on Oct. 2, 2002. His opposition to the war was a major asset in his nomination struggle with Clinton.

Obama did indeed denounce the impending war as "dumb," "rash" and "based not on reason but on passion." But in retrospect, the speech may be most notable for other things Obama said that separated him from some in his antiwar audience.

Not once but five times did Obama declare, "I don't oppose all wars." The first several paragraphs of the speech were devoted to the wars that Obama thought were justified: the Civil War, World War II -- in which, he said, "that arsenal of democracy . . . triumphed over evil" -- and the battle against terrorism after the attacks of Sept. 11. "I would willingly take up arms myself to prevent such tragedy from happening again," he said.

The thrust of his argument against the Iraq invasion was a classic realist's critique of a war he denounced as "ideological." It would, he said, "require a U.S. occupation of undetermined length, at undetermined cost, with undetermined consequences." It also would "fan the flames of the Middle East" and "strengthen the recruitment arm of al-Qaeda."

In fact, Obama sounded a great deal like -- Brent Scowcroft. In a widely noted 2002 op-ed piece in the Wall Street Journal, published six weeks before Obama gave his speech, Scowcroft warned that an invasion of Iraq "very likely would have to be followed by a large-scale, long-term military occupation." Going to Iraq, Scowcroft said, would "divert us for some indefinite period from our war on terrorism," and it could "destabilize Arab regimes in the region," "stifle any cooperation on terrorism" and "even swell the ranks of the terrorists." Clinton, who once said that "we have to be both internationalists and realists," is a natural fit with the new Obama-Scowcroft-Gates establishment. In explaining the appeal of Clinton, a senior Obama adviser recently spoke several times of the president-elect's respect for her "toughness" and described the practical reasons for choosing a figure who would have instant credibility around the world.

Even before the possibility of Clinton's appointment was broached, Obama was relying heavily on foreign policy specialists closely associated with her. For example, Michèle Flournoy, a co-chair of Obama's Defense Department transition team, is president of the Center for a New American Security, which the New York Times observed last year "looks an awful lot like a shadow policy apparatus for Hillary Rodham Clinton's presidential campaign." The center, in turn, has warm ties with Richard Armitage, another Republican realist who had grave doubts about going into Iraq.

Obama's national security choices are already causing grumbling from parts of the antiwar left, even if Obama made clear six years ago that while he was with them on Iraq, he was not one of them.

Ironically, Obama is likely to show more fidelity to George H.W. Bush's approach to foreign affairs than did the former president's own son. That's change, maybe even change we can believe in, but it's not the change so many expected.

Been there, done that. -- And please don't tell my wife Sally to read this post.

My dear wife Sally does not particularly care about politics, and cares even less about any blog her husband might pen. Another way of saying she knows about but never reads this blog.

I hate this admit this, but unfortunately I can relate to and identify with yesterday's Doonesbury strip. How about you with respect to your spouse? Even though I am going to try to do better, still, if you run into Sally, please don't suggest that she read this post.

Happy Thanksgiving to all!!

(And today's Doonesbury strip is also a keeper.)

Thursday, November 27, 2008

Port Slowdown Hits Charleston; Savannah Port Traffic Up

From The Wall Street Journal:

For years the Port of Charleston was one of the busiest points of entry for ships and goods coming into the U.S., but a global shipping slowdown and competition from rival cities are threatening one of the oldest port economies in the country.

On both coasts of the U.S., ports that not long ago were anticipating virtually limitless growth in ships arriving packed with mostly Asian imports are struggling as freight traffic declines sharply.

With its relatively deep water and central location in the Southeast, one of the fastest-growing regions of the country, Charleston's port was a key gateway for goods including lumber, electronics and pharmaceutical products.

In recent years, Charleston has been losing market share to more innovative and aggressive East Coast ports, particularly Savannah, Ga., 100 miles to the south. From 2005 to 2006, as large retailers such as Target Corp. and Ikea began building massive distribution centers near Savannah, Charleston's container traffic dropped 9%, followed by a 7% drop in 2007, according to U.S. Department of Transportation statistics.

Poultry news is not good news for our State.

An 8-30-08 post entitled "Damn. This is not good news for the State of Georgia. Russia was the biggest importer of U.S. chicken meat in 2007," noted:

Amid fraying trade relations between Moscow and Washington, Russia said it would slash U.S. import quotas for chicken and pork, both big export products to the region from the U.S.

After U.S. officials said Russia's war with Georgia had cast doubt on Russia's bid to enter the World Trade Organization, Prime Minister Vladimir Putin Monday called for pulling out of trade deals that Russia had signed when it was expecting quick admission into the trade body.

Then Russian Agriculture Minister Alexei Gordeyev said Wednesday that Moscow plans to reduce quotas for imports of chicken and pork by "not tens but hundreds of thousands of tons."

Russia has helped the American meat industry grow for the past decade. Russia was the biggest importer of U.S. chicken meat in 2007, spending $741.5 million on U.S. imports, according to the USA Poultry and Egg Export Council.

Today an article in Global Atlanta has the headline "Georgia Poultry Farmers Face Russian Cutbacks." The article notes:

Georgia’s poultry industry is bracing for a 20 percent cut in exports to its largest overseas customer, Russia.

Russia is expected to announce Dec. 1 that it is cutting the amount of chicken it buys from the U.S.
The Russian reductions will hit an industry that already was having a tough year, said John McKissick, an agricultural economist at the University of Georgia. Feed prices jumped in 2008, but market prices for white meat, mostly sold domestically, were soft, Mr. McKissick said.

However, prices for dark meat, the chief export product, were up, said Mr. McKissick. “That was the shining star for the industry - exports,” he said. “Any kind of reductions in exports will be harmful.”

Georgia led the U.S. in poultry exports from January to September 2008, shipping out 539,395 metric tons valued at $601.8 million, according to the Export Council. Georgia poultry exports to Russia during the same period were 33,888 tons, valued at $37.3 million.

Most Georgia poultry farmers work under contract for large companies such as Pilgrim’s Pride Corp., which acquired Goldkist Inc. in 2006.

When the big companies cut production, poultry farmers make less money because they have fewer birds to raise.

For an article on how things are not going so well (to put it mildly) at Pilgrim's Pride, see this Wall Street Journal article.

A 5-25-08 post entitled "Chicken Producers in Price Pinch; Costs up 65% in Just Two Years," notes in part:

Until last year, Gold Kist was an important Georgia business headquartered in Atlanta. It had operations in Florida, Alabama, North and South Carolina, and in Georgia, including a hatchery, feed mill, and large processing plant in Douglas.

Last year after prolonged resistance from Gold Kist, the board members of both companies voted unanimously to combine the two companies, in what was actually an acquisition of Gold Kist by Pilgrim's Pride. Prior to the acquisition, Gold Kist was the third largest chicken company in the country.

The facilities here in Douglas continue to operate much as before the acquisition.

Ford Resists Pressure to Cut CEO Compensation & Use of Corporate Jets -- No problem Sir, and don't bother applying for an undeserved taxpayer bailout

Reducing executive compensation should not have to be all the down to a $1/year, but no reduction at all? (Ford's Mulally says he is OK with his $2 million salary and his 2007 $22 million compensation. I reckon he is OK.) This is just fine. Keep doing what you are doing fella, and forget applying for an undeserved taxpayer paid bailout.

From The Wall Street Journal:

Ford Motor Co. is so far resisting pressure to cut the salary of its chief executive despite increasing scrutiny of top management at all three Detroit auto makers seeking emergency help from the federal government.

Ford, General Motors Corp. and Chrysler LLC have asked Congress to make $25 billion in loans available to shore up their finances and keep them going through a deep trough in auto sales. Congress has said the companies will have to accept limits on executive compensation as part of any bail-out program.

Mr. Mulally was asked last week by members of Congress whether he'd cut his $2 million salary to $1. Mr. Mulally demurred, saying, "I think I'm ok where I am." His total compensation in 2007 was $21.67 million, according to Securities and Exchange Commission filings. In the same year, Ford posted a loss of $2.72 billion.

Testifying before a House Committee, GM Chief Executive Rick Wagoner also brushed back a request to trim his salary to almost nothing, saying "I don't have a position on that today." His 2007 compensation package totaled $15.7 million. GM reported a loss of $38.7 billion last year.

The three CEOs also come under fire from Congress and the target of late-night comic jokes for flying in private jets to ask for a taxpayer bail-out. Earlier this week GM and Ford said they are giving up some of the corporate jets they've been using.

Ford wouldn't say if Mr. Mulally was reducing use of the company's corporate jets, or if he or his family is using the aircraft to travel over the Thanksgiving holiday, citing safety concerns. Mr. Mulally's contract allows him to use Ford's corporate jets for personal travel. Another top Ford executive who was allowed the same kind of privileges drew a wave of negative media reports and eventually gave up the perk.

Despite the pressure, Ford has so far failed to yield on the issue of top executive compensation beyond a companywide cut to white-collar employee bonuses announced earlier this month. It also comes as voices in Congress and the Bush Administration have pressured organized labor to make its own concessions in wages and benefits to help keep the auto makers afloat.

This is just not right. It must be addressed, somehow, by someone. -- Georgia Runoff Exposes Gaps in Finance Law

From The Wall Street Journal:

The runoff for a U.S. Senate seat in Georgia is providing a stark example of how candidates in the 2008 election have been able to skirt campaign-finance limits -- without actually breaking the law.

Federal campaign-finance law limits individuals to donating $2,300 to a candidate per election. Yet Republicans and Democrats are soliciting donations more than 10 times that amount for the Dec. 2 runoff in Georgia. GOP fund-raisers are asking people to give as much as $65,500 toward incumbent Sen. Saxby Chambliss's campaign, while Democrats are seeking donations up to $30,800 for challenger Jim Martin.

So how are the caps legally dodged? By using a "joint fund-raising committee" to steer chunks of outsized donations to various accounts that technically aren't part of a candidate's war chest, but that nonetheless are spent on his or her behalf.

In Sen. Chambliss's case, the $65,500 is divided among his campaign, the Republican National Committee, the Georgia Republican Party and the campaign arm of Senate Republicans. Mr. Martin's operates similarly. Both campaigns declined to comment.

The Senate candidates in Georgia are hardly the only ones to use this hugely popular loophole this year. In fact, both President-elect Barack Obama and Republican Sen. John McCain of Arizona relied on special accounts that accepted donations up to $70,000 to raise $350 million of the total $1 billion they collected during the presidential race.

The number and size of joint fund-raising committees has exploded since a 2002 law banned companies, labor unions and individuals from donating unlimited funds to the Republican and Democratic parties. The rationale for the $2,300 individual limit was that any larger donation gave the appearance of buying influence over government officials. The joint accounts, then, undermine the spirit if not the letter of the statute.

Monday, November 24, 2008

Virginia Panel on Immigration Steps Back From Hard Line

From The Washington Post:

Virginia, known for some of the nation's toughest policies on illegal immigration, appears to be abandoning its hard-line approach as state officials consider proposals to help foreign-born residents assimilate, including increasing the number of English classes.

Those on both sides of the issue say interest in immigration has waned because of the growing economic crisis, a clearer understanding of the state's limitations on a largely federal issue and backlash at the voting booth.

[S]tate officials appear to be shifting their focus from fighting illegal immigration to assimilating the ever-growing population of legal immigrants.

Sunday, November 23, 2008

Jim Galloway has a great post entitled "The case against a Georgia visit from Barack Obama."

Have you noticed how Galloway has been on fire this year? After December 2 he needs to recharge his batteries so he will be ready for the General Assembly convening in January 2009.

Today Jim has a great post that confirms my 11-10-08 post entitled "Will Obama come to Georgia to campaign for Jim Martin? No. Count on it. You can take it to the bank."

One part of Jim's post in the AJC's Political Insider notes:

Very quietly, the Obama team has let it be known that the new administration will not immediately reassess the U.S. military’s policy of “don’t ask, don’t tell,” which permits gays to serve in the armed forces — as long as they don’t discuss their sexual orientation. Raising the topic of gays in the military was considered by many to be the second of two out-of-the-box decisions that ended badly for a newly elected President Bill Clinton.

The first was a November 1992 trip to Georgia, as president-elect, to campaign for Democratic incumbent Wyche Fowler in this state’s last U.S. Senate runoff. Fowler was defeated by Republican Paul Coverdell.

The second paragraph from the above post in italics reminds me of a 10-29-06 post I did that provides in part:

What he does not note is that it was not only the country that voted for Clinton. Clinton also carried Georgia. Although I was among those who pulled the lever for Clinton, I also know that his carrying our State was something that truly burned up many who could not imagine this man being elected, much less carrying Georgia.

It was for this reason, something I sensed especially in South Georgia, that I thought it was a mistake for Clinton to come to Georgia for Fowler during the runoff election. For many, it was salt in the wound, and many of these went and voted in the runoff for Coverdell when but for Clinton's trip to Georgia, they either would not have voted or would have voted for Fowler.

I shared my thoughts with the Fowler campaign on Veteran's Day while Fowler was in Douglas, and strongly urged it to reconsider Clinton's planned visit. The campaign did not agree with my way of thinking.

I am not at all implying that my thinking that Clinton's visit to Georgia hurt Fowler means that an Obama trip to Georgia would hurt Martin. On the contrary.

Obama's rationale, as stated by Jim Galloway, is (among other reasons) that a "president-elect aiming for a post-partisan administration isn’t likely to pick a heated, red-blue Senate contest as a backdrop for his first Southern appearance."

Tom Friedman: Bush should appoint Geithner now as a Bush appointment and let him take over immediately.

Tom Friedman writes in The New York Times:

What we can do now [says] the Congressional scholar Norman Ornstein, co-author of “The Broken Branch,” is “ask President Bush to appoint Tim Geithner, Barack Obama’s proposed Treasury secretary, immediately.” Make him a Bush appointment and let him take over next week. This is not a knock on Hank Paulson. It’s simply that we can’t afford two months of transition where the markets don’t know who is in charge or where we’re going. At the same time, Congress should remain in permanent session to pass any needed legislation.

The current runoff between Chambliss & Martin sent Dick Pettys back to the archives & other reference materials for a little memory tuneup.

Dick Pettys writes in InsiderAdvantage Georgia:

The current runoff between incumbent Republican Saxby Chambliss and Democratic challenger Jim Martin sent me back to the archives and other reference materials for a little memory tuneup. (Hey! The last big runoff was 16 years ago when Paul Coverdell upended Wyche Fowler.)

Herewith, some political trivia about the race:

* The seat that’s up for grabs is referred to as the Few line of succession, named for William Few, who held it from 1789 to 1795. Robert Toombs, who would become Secretary of State for the Confederacy, was in the seat when Georgia seceded. Richard Russell held the seat from 1933 until his death in 1971. Sam Nunn held it from 1973 until his retirement in 1996. Democrat Max Cleland narrowly beat Republican Guy Millner for the post in 1996 and, himself, was defeated in 2002 by Saxby Chambliss.

* The 1992 Fowler-Coverdell runoff was for the other seat, known as the Gunn line of succession for James Gunn, who held it from 1789 to 1801. Other holders of the office have included former Confederate Gen. and Gov. John B. Gordon and a pair of senators who, between them, held the post for almost 60 years – Walter F. George and Herman Talmadge. Talmadge, battered politically, lost to Mack Mattingly, a Republican, in 1980. Mattingly lost to Fowler, a Democrat, in 1986. Fowler lost to Coverdell, a Republican, in 1992. (Zell Miller was appointed and then elected to fill the unexpired term following Coverdell’s death. Johnny Isakson holds the seat now.)

* The rule requiring runoffs if no candidate receives a majority of the vote was imposed following the 1966 election of Gov. Lester Maddox. In that election, no one hit the magic number due to a write-in campaign by former Gov. Ellis Arnall. Under rules in effect at the time, the election then defaulted to the Democrat-controlled Legislature, which elected Maddox. Election law was changed thereafter to require a runoff. Georgia is the only state that has this requirement in a general election.

* Aha. But should that be a majority or a plurality? At first the threshold was set at 50 percent. But the problem with that became clear to Democrats in the 1992 election in which Fowler got 49.23 percent, Coverdell got 47.67 percent and the Libertarian, Jim Hudson, got 3.1 percent. Because no one got 50 percent, the state’s first-ever statewide runoff was required for a major office. And in that race, Fowler lost by a mere 16,237 votes out of the 1.2 million cast.

* The solution? Lower the threshold to 45 percent. The Democrat-controlled Legislature did just that in time for the next U.S. Senate race in 1996. Cleland won by a scant 30,000 votes out of nearly 2.3 million cast, and only with 48.9 percent of the vote. But that exceeded the reduced threshold and there was no runoff.

* Had the 45 percent threshold remained in effect this year, Chambliss wouldn’t be in a runoff. He received 49.8 percent of the vote on Nov. 4. But the Republican-controlled Legislature had switched the standard back to 50 percent in 2005.

* One more little piece of trivia. The architect of the Coverdell effort in 1992 was Tom Perdue, who also is Chambliss’ chief political advisor for this runoff.

Clinton-Obama Future Relationship: From Top Rival to Top Aide, and a Little History

From The New York Times:

Few are predicting that this new relationship born of mutual respect and self-interest will grow into a tight bond between the new president and the woman who will be the public face of his foreign policy, though some say it is not impossible. They argue that a close friendship between the two powerful officials is useful but not essential, and is not a predictor of the success of the nation’s chief diplomat.

While James A. Baker III was extraordinarily close to the first President George Bush and is widely considered one of the most successful recent secretaries of state, Dean Acheson was not a friend of Harry S. Truman and Henry A. Kissinger did not particularly like Richard M. Nixon.

Mr. Obama’s advisers said . . he had the self-confidence to name a global brand as his emissary to the world. He recognizes, they said, that after Jan. 20, he will have to build the kind of relationship that ensures that foreign leaders know that when Mrs. Clinton speaks, she is speaking directly for him.

Martin bought into letting the Employee Free Choice Act become a campaign issue. Of all issues he could have chosen to champion, why this one in Ga.?

In a 11-1-08 post entitled "Economy Heightens Debate Over Bill to Ease Union Organizing -- I remain opposed to this legislation that has passed the House," I wrote:

As I wrote in a 8-1-08 post, I am opposed to the Employee Free Choice Act.

This Wall Street Journal article about this controversial bill that would make it easier for unions to sign up new members that has intensified as the economy declines discusses how business and industry groups say the legislation will lead to massive job losses and hobble the economy, while labor groups argue that it will give a historic boost to the middle class.

InsiderAdvantage Georgia notes this:

A controversial bill making it easier for employees to unionize took a back seat to the personalities in the presidential campaigns.

But an effort is under way to propel the federal Employee Free Choice Act to the forefront of issues separating Republican Sen. Saxby Chambliss and Democrat Jim Martin as they compete for votes in the run-up to the Dec. 2 runoff.

The union-backed measure, which President-elect Barack Obama said he would sign, would permit labor unions to represent a company's workers if a majority sign an authorization petition. It could also eliminate the practice of secret ballots employees have traditionally cast to join unions.

Ironically, Georgia -- where unions have never had strong footing -- could be key to the act's fate.

A win by Martin -- and by Al Franken in Minnesota, where a recount is under way -- would give Democrats a 60-vote supermajority that could bust up a Republican filibuster, which stopped a vote on the act in June 2007, two months after it cleared the U.S. House.

But a Chambliss runoff victory would give the Republicans a crucial vote they need to again prevent the act from coming up for a vote.

The act's opponents, who are rallying behind Chambliss, say removing the secret ballot process will lead to coercion and intimidation of employees who do not want to join a union.

Martin's campaign said passage of the act would help create good-paying jobs for Georgia families.

"The Employee Free Choice Act simply protects the right of Georgia workers to organize free of intimidation from any employers," Martin campaign spokeswoman Kate Hensen said in an e-mail.

A federal mediator could intervene and set a two-year labor contract if employees and the employer are unable to reach an agreement.

State Sen. Chip Rogers, R-Woodstock, said that could cripple employers in the midst of the worst economy the nation has seen in decades.

"This could really put a damper on the effort we are making to really try to turn this around," Rogers said.

I am in favor of it (although the Legislature won't give it to them, they should): DOT Board Members Want Increase in Per Diem

From InsiderAdvantage Georgia:

The state Department of Transportation board is considering asking lawmakers for a per diem increase of almost 65 percent at the same time the agency freezes funding for local construction projects.

[B]oard members defended the idea of increasing their per-day allowance for conducting official business to $173 from $105.

Board members say the proposals are justified because of the time they spend on the job and the costs of coming to Atlanta, where most of their meetings are held, on a regular basis.

"We get $105. When I check out (of a hotel), I pay $130 for my room," said board chairman Bill Kuhlke of Augusta.

Board members have attended a large number of meetings this year dealing with the relationship between former board chairman Mike Evans and DOT Commissioner Gena Evans, then named Gena Abraham, and a massive funding shortfall caused by the agency's overstatement of federal funds and use of accounting standards state auditors and attorneys considered unconstitutional.

For a typical reaction to this request that came with bad timing (in fact, is it possible to imagine any worst time to make such a request), see the Athens Banner-Herald.

Saturday, November 22, 2008

The Obama campaign virtually ignored Tennessee; and Republicans dramatically increased their power in Tennessee

From The Wall Street Journal:

President-elect Barack Obama chalked up prizes among the South's formerly red states, but Republicans dramatically increased their power in Tennessee -- a state that not long ago looked ripe for the Democratic revival.

Republican Sen. John McCain defeated Mr. Obama by 15 points in the state. Republicans held their four U.S. House seats, took control of both chambers of the state legislature for the first time since Reconstruction, and Sen. Lamar Alexander became the first Republican to carry all but one county in his re-election win . . . .

Tennessee Republicans seemed immune to the national dissatisfaction toward the party that laid the groundwork for Mr. Obama's historic win and caused the ouster of prominent Republicans in Congress. That discontent helped propel Mr. Obama to victories in Virginia, North Carolina and Florida.

Republicans routed Tennessee with a moderate, bipartisan style that could offer a path to recovery for the national party. Using a "Take the Hill" campaign to win the legislature, they largely avoided hammering such issues as abortion and immigration in favor of campaigning on lower taxes, among other economic issues, to appeal to independents, who make up 30% of the state's electorate. Several candidates, most prominently Sen. Alexander, burnished their records of building bipartisan coalitions.

In 2006, when Democratic Rep. Harold Ford Jr. came within three percentage points of becoming the state's first African-American senator, observers believed that an influx of northerners and westerners had begun to break up entrenched racial and cultural attitudes, favoring Democrats.

The rapidly growing region around Nashville, where thousands of transplants are drawn by the health-care industry and Nissan Motor Co.'s North American headquarters, is driving the kind of change found in larger abundance among its Southern neighbors. Nearly 20% of Tennesseans were born outside the South, compared with 13.5% in 1990.

But while similar demographic changes in neighboring Virginia and North Carolina helped push both states into Mr. Obama's column, other factors in Tennessee played against the Democrats. Tennessee's population of blacks, who vote overwhelmingly Democratic, is one of the lowest in the South, at 17%. The state also has a large base of religious conservatives that pulls the state slightly right of center on social issues.

The Obama campaign virtually ignored Tennessee, given its recent history of favoring Republican presidential candidates, including when it shunned its own Al Gore in 2000. The Clinton-Gore ticket did win Tennessee in 1992 and 1996.

Upon launching his bid for a second term, Sen. Alexander, a former two-term governor known for his populist positions, rolled out the support of roughly 50 leading Democrats.

"There are lessons learned in our re-election for the rest of the party," said Tom Ingram, who managed Sen. Alexander's campaign. "Lamar was re-elected in large measure because of his longstanding appeal to Democrats and independents, which he's earned by learning that the way to get things done is by working across the aisle. What we've heard top to bottom this year is people are tired of hearing elected officials bickering with each other. They elected people they think will do things differently. If they don't they'll throw some more of us out the next go-round."

My Man Richardson Is Leading Candidate for Secretary of Commerce

From The Wall Street Journal:

New Mexico Gov. Bill Richardson is the leading candidate for secretary of Commerce . . . .

Mr. Richardson, also a candidate for the 2008 presidential nomination, left the race shortly after placing a distant fourth in the Iowa caucuses in January. After dropping out, he endorsed Barack Obama, who was, at the time, locked in an intense fight with Hillary Clinton for the nomination. The endorsement drew sharp rebukes from some of Mrs. Clinton's top supporters, especially given his long career in the administration of her husband, former President Bill Clinton. Under Mr. Clinton, Mr. Richardson served as energy secretary, as well as U.S. ambassador to the United Nations.

As New Mexico governor, Mr. Richardson has drawn accolades for turning around New Mexico's reputation as one of the most backward and poorest states in the nation. During his first term, he rolled back taxes, instituted education reforms, and embarked on an ambitious public works program for the state.

Mr. Richardson was an early tout for secretary of state, in part because of his U.N experience but also because of the reputation he has built over the years for dealing with rogue regimes around the world.

I love it: Chávez and his brand of "21st Century Socialism" -- a mix of populism, intervention and anti-U.S. rhetoric -- being challenged.

From The Wall Street Journal:

Venezuelan President Hugo Chávez's hammerlock on state and municipal governments will likely loosen for the first time in years, as voters in several key states appear poised to reject pro-Chávez candidates in statewide elections Sunday.

The president has [threatened] to cut off funding -- or send in tanks -- to states where Chávez opponents are elected.

Governors and mayors loyal to Mr. Chávez are expected to remain the majority, and several seats hotly challenged by the opposition could go either way. But the outcome is almost sure to highlight a growing opposition -- as well as divisions in Mr. Chávez' own party, posing an increasingly tricky political outlook for the president.

Just four years ago, Mr. Chávez won all but two of the nation's 24 governorships, riding a wave of support for his brand of "21st Century Socialism" -- a mix of populism, economic intervention and anti-U.S. rhetoric.

Key to the outcome are several tight races in the densely populated, prosperous states that set the nation's political tone. Underscoring the stakes, Mr. Chávez has brought criminal charges against some opposition candidates.

Mr. Chávez came to power in a 1998 election promising to lift the poor by distributing the nation's vast oil wealth in a more equitable manner. The stipends, free meals, and improved access to basic health care have built up a deep reservoir of support among the nation's majority poor.

Um, I don't know . . . . I hate it for anybody, but things are rarely the same after such -- Sup't Kathy Cox has filed for Chapter 7 bankruptcy.

According to the Athens Banner-Herald, State School Superintendent Kathy Cox has filed for Chapter 7 bankruptcy due to losses incurred by her husband's home building business, with $3.5 million in liabilities and just shy of $650,000 in assets.

And to think that just a couple of months ago she gave away the million bucks she won on “Are You Smarter Than a Fifth Grader?” I am curious, very curious, what her husband's creditors are going to have to say about that. They will have something to say I assure you . . . .

Cox said she didn't intend to step down or allow the personal crisis to interfere with her public duties.

Oh how I love it! Just how I told everyone (who would listen) he would do: Obama Tilts to Center

From The New York Times:

President-elect Barack Obama won the Democratic nomination with the enthusiastic support of the left wing of his party, fueled by his vehement opposition to the decision to invade Iraq and by one of the most liberal voting records in the Senate.

Now, his reported selections for two of the major positions in his cabinet — Senator Hillary Rodham Clinton as secretary of state and Timothy F. Geithner as secretary of the Treasury — suggest that Mr. Obama is planning to govern from the center-right of his party, surrounding himself with pragmatists rather than ideologues.

Of all the choices Mr. Obama has made so far, it is the selection of Mrs. Clinton that appears the biggest gamble, in part because she has never had to engage in the give-and-take of high-stakes diplomacy, and in part because no one really knows how she will mesh with the Obama White House.

In her discussion with the president-elect, several members of his transition team said, Mrs. Clinton expressed no doubt that she could be a loyal member of the Obama team . . . .

Friday, November 21, 2008

President-elect Obama is hittings on all cylinders. Great news: Geithner to be Treasury Secretary

From The Wall Street Journal:

New York Federal Reserve Bank President Timothy J. Geithner is to be nominated as President-elect Barack Obama's Treasury secretary, according to a person close to the transition process.

Mr. Obama plans to introduce his entire economic team early next week, hoping to sooth the roiling financial markets and answer rising pressure on the president-elect to become more involved.

Wednesday, November 19, 2008

DOT Comm'r Gena Evans: “I firmly believe we can’t continue to invest in road projects based on political reasons. That’s why I’m always in trouble.”

DOT Commissioner Gena Evans: “I firmly believe we can’t continue to invest in road projects based on political reasons. That’s why I’m always in trouble.” (Quote from the LaGrange Daily News.)

Now come on Commissioner, don't be like Fox News and claim to be fair and balanced when this is not the case.

What about the relationship? As noted in a 4-25-08 post entitled "Damaged goods? (1) Bookman writes: DOT chief's stumble compromises her credibility; (2) Shipp recalls that "Dirt shows up more on a white hat":

And even The New York Times has a story on the topic:

Ms. Abraham had said on Friday that she would resign. But she backed away from that position after Lt. Gov. Casey Cagle raced to the department’s offices and called her into a meeting in a stairwell there, with a guard posted outside the door.

The revelations about Ms. Abraham and Mr. Evans surfaced just three weeks after she sent a memorandum to all department employees saying she would not tolerate misconduct or violations of department policy.

“The sheer number of offenses that we are discovering is staggering and embarrassing to the department,” she wrote in the memorandum, which was dated March 31, and she added that she would not hesitate to fire employees for unethical or unlawful behavior.

Ms. Abraham later admitted that when she sent the memorandum she was already romantically involved with Mr. Evans.

And who doesn't know about the "salacious" emails that has been "the" topic in the capital city as of late.

Please understand that I am not calling for your head. But I am suggesting that you don't blame all of what is going on on others, and be responsible enough (edited my initial "man enough") to shoulder some of the blame yourself.

Obama's smart move # 1: Taping Emanuel as chief-of-staff. Obama's smart move # 2: Giving his blessings to Lieberman retain key chairmanship.

So far he is two for two.

First came his selection of Rep. Rahm Emanuel, D-Ill., to be his White House chief of staff, the subject of a 11-05-08 post entitled "A good first move: Emanuel accepts job as White House chief of staff."

Although not as significant a move as his selection of Emanuel, this second step is important. Without Obama's blessings (or as The Washington Post put it, "Obama endorsed reaching a compromise that would keep the independent in the caucus"), the Senate Democrats would not have voted as they did, and Lieberman would have been driven across the aisle to caucus with Republicans.

This is leadership, and I hope recognized as such.

Mitt Romney: Let Detroit Go Bankrupt (ouch say The Detroit Three, formerly known as The Big Three)

Mitt Romney writes in The New York Times:

If General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed.

Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.

I love cars, American cars. I was born in Detroit, the son of an auto chief executive. . . . I have several prescriptions for Detroit’s automakers.

First, their huge disadvantage in costs relative to foreign brands must be eliminated. That means new labor agreements to align pay and benefits to match those of workers at competitors like BMW, Honda, Nissan and Toyota. Furthermore, retiree benefits must be reduced so that the total burden per auto for domestic makers is not higher than that of foreign producers.

That extra burden is estimated to be more than $2,000 per car.

Second, management as is must go. New faces should be recruited from unrelated industries — from companies widely respected for excellence in marketing, innovation, creativity and labor relations.

The new management must work with labor leaders to see that the enmity between labor and management comes to an end.

The need for collaboration will mean accepting sanity in salaries and perks.

Investments must be made for the future. No more focus on quarterly earnings or the kind of short-term stock appreciation that means quick riches for executives with options. Manage with an eye on cash flow, balance sheets and long-term appreciation. Invest in truly competitive products and innovative technologies — especially fuel-saving designs — that may not arrive for years. Starving research and development is like eating the seed corn.

[D]on’t ask Washington to give shareholders and bondholders a free pass — they bet on management and they lost.

The American auto industry is vital to our national interest as an employer and as a hub for manufacturing. A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.

In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate with a bailout check.

Tom Friedman: When it comes to appointing a secretary of state, you do not want a team of rivals.

Tom Friedman writes in The New York Times:

So President-elect Barack Obama is considering Hillary Clinton as secretary of state. How should we feel about that?

Mrs. Clinton is a serious person. She is smart, tough, cunning, hard-working and knows the world — all key qualities for a secretary of state. She would also bring a certain star quality to the top of the State Department that can be useful. I don’t know if she is the best person in America for that job right now, or if she’ll get it, but if one is just looking at qualifications, Senator Clinton certainly passes the bar.

The important question, the answer of which is not at all clear to me, is about the only relationship that matters for a secretary of state — the kind of relationship he or she would have with the new president. My question: Is Obama considering Mrs. Clinton for this job in order to get her off his back or as a prelude to protecting her back?

I covered a secretary of state, one of the best, James A. Baker III, for four years, and one of the things I learned during those years was that what made Baker an effective diplomat was not only his own skills as a negotiator — a prerequisite for the job — but the fact that his boss, President George H.W. Bush, always had Baker’s back. When foreign leaders spoke with Baker, they knew that they were speaking to President Bush, and they knew that President Bush would defend Baker from domestic rivals and the machinations of foreign governments.

That backing is the most important requirement for a secretary of state to be effective. Frankly, Obama could appoint his dear mother-in-law as secretary of state, and if he let the world know she was his envoy, she would be more effective than any ex-ambassador who had no relationship with the president.

Our current president never cared about this, so neither of his secretaries of state were particularly effective. Rather than having Colin Powell’s back, President Bush, Vice President Dick Cheney and Secretary of Defense Donald Rumsfeld delighted in stabbing Powell in the back, particularly when he was on the road. But being close to the president is not enough. Condoleezza Rice had a close relationship with Bush, but Bush had no coherent worldview to animate her diplomacy, so all her travels added up to less than the sum of their miles. The two most impactful secretaries of state in the last 50 years were Baker and Henry Kissinger. Both were empowered by their presidents, and both could candidly talk back to their presidents.

Foreign leaders can spot daylight between a president and a secretary of state from 1,000 miles away.

My question is whether a President Obama and a Secretary of State Clinton, given all that has gone down between them and their staffs, can have that kind of relationship, particularly with Mrs. Clinton always thinking four to eight years ahead, and the possibility that she may run again for the presidency. I just don’t know.

Every word that is said between them in public, and every leak, will be scrutinized for what it means politically and whether there is daylight. That is not a reason not to appoint Mrs. Clinton. But it is a reason for everyone around the president-elect to take a deep breath and ask whether they are prepared to have the kind of air-tight relationship with Mrs. Clinton that is required for effective diplomacy.

When it comes to appointing a secretary of state, you do not want a team of rivals.

Tuesday, November 18, 2008

Whew -- Stevens Loses Alaska Senate Race

From The Wall Street Journal:

Alaska Sen. Ted Stevens has lost his bid for a seventh term.

The longest-serving Republican in the history of the Senate trailed Anchorage Mayor Mark Begich by 3,724 votes after Tuesday's count.

That's an insurmountable lead with only about 2,500 overseas ballots left to be counted.

Sen. Stevens, who turned 85 Tuesday, also revealed that he will not ask President George W. Bush to give him a pardon for his seven felony convictions.

Vintage Vernon Jones

From the AJC's Political Insider:

“He [Martin] could not come to grips with voting for an African-American for president,” Jones said. “And he couldn’t come to grips with voting for a woman [Hillary Clinton]. So he voted for a man [John Edwards] who was not even running for president.

Clout Has Plunged for Automakers and Union

From The New York Times:

When the leaders of the three Detroit auto companies and the United Automobile Workers union travel to Washington to make their case for a federal bailout, they will be flying into stiff headwinds of public opinion.

Thus far, much of the commentary in Washington, in the pages of major newspapers and on the Web, has been against providing financial support for the companies, which they will say they desperately need in hearings beginning on Tuesday.

The waves of criticism have been so strong that Susan Tompor, a columnist for The Detroit Free Press, was moved to write on Sunday’s front page: “I never knew Detroit was a dirty word.”

It is a remarkable shift for an industry that has long wielded considerable clout in Washington.

But that support has dwindled for many reasons, leaving backers of a bailout, including the House speaker, Nancy Pelosi, and Senate majority leader, Harry Reid, having a tough time making their case that Detroit should be saved.

So how did the famous 1953 quotation from the former General Motors president Charles E. Wilson — that what was good for our country was good for G.M., and vice versa — become a dated notion to so many people?

Analysts and longtime observers of the industry say several strategic missteps have hurt Detroit’s standing.

The carmakers, for example, fought hard in recent years against two Congressional efforts to raise fuel economy standards, at a time when Americans were struggling with more expensive gasoline and had become more environmentally conscious.

They won the 2005 fight, when 67 senators, including Hillary Rodham Clinton and John Kerry, sided with Detroit’s argument that it did not have the technology to meet a modest increase.
Thus far, much of the commentary in Washington, in the pages of major newspapers and on the Web, has been against providing financial support for the companies, which they will say they desperately need in hearings beginning on Tuesday.

The waves of criticism have been so strong that Susan Tompor, a columnist for The Detroit Free Press, was moved to write on Sunday’s front page: “I never knew Detroit was a dirty word.”

It is a remarkable shift for an industry that has long wielded considerable clout in Washington.

But that support has dwindled for many reasons, leaving backers of a bailout, including the House speaker, Nancy Pelosi, and Senate majority leader, Harry Reid, having a tough time making their case that Detroit should be saved.

So how did the famous 1953 quotation from the former General Motors president Charles E. Wilson — that what was good for our country was good for G.M., and vice versa — become a dated notion to so many people?

Analysts and longtime observers of the industry say several strategic missteps have hurt Detroit’s standing.

The carmakers, for example, fought hard in recent years against two Congressional efforts to raise fuel economy standards, at a time when Americans were struggling with more expensive gasoline and had become more environmentally conscious.

They won the 2005 fight, when 67 senators, including Hillary Rodham Clinton and John Kerry, sided with Detroit’s argument that it did not have the technology to meet a modest increase.

But Detroit lost last year’s effort to block an increase to 35 miles a gallon by 2020. Some senators criticized the industry’s failure to sell cars like the Toyota Prius, which was built only as a hybrid — a vehicle that G.M.’s vice chairman, Robert A. Lutz, dismissed early on as a public relations move.

The U.A.W. program, called the Jobs Bank at G.M., provided nearly full pay for laid off workers while they waited for new jobs. A new version of it is less generous, but has left an impression in the public imagination of a place where workers sit around getting paid for doing nothing.

So far this year, G.M. has spent $10 million on lobbying, out of $95 million in the past 10 years, placing it at No. 16 on the site’s “top spenders” list. Ford, which ranks No. 19 on the list, has spent $5.7 million this year, out of $80.6 million the last decade.

Cherokee County continues bottom-up approach of keeping the heat on illegal immigrants.

From the AJC:

The Cherokee County Commission is making another stab at cracking down on illegal immigrants with an ordinance that makes renters prove they’re here legally and threatens the business licenses of companies with undocumented workers.

Buzz Ahrens, chairman of the Cherokee County Commission, said the new ordinance is meant to send a strong message on a problem that the federal government has failed to address.

“Something needs to be done, and this is a bottom-up approach,” Ahrens said.

Ahrens said he expects the commission will “get a lot of flak” over the provision on renters and could end up modifying the ordinance so it deals only with businesses.

He said county officials are convinced that illegal immigrants are costing locals jobs, adding to the burden on the county’s hospitals and government services and even playing a role in the gang problem.

County Manager Jerry Cooper said, at one point, more than 20 percent of the inmates in the county jail were illegal immigrants. “That’s a direct cost,” he said. “That’s a significant cost.”

Monday, November 17, 2008

General Motors should not be fed while still caught, because that will leave it trapped until we get tired of feeding it. Then it will die.

Michael E. Levine, a former airline executive and a distinguished research scholar and senior lecturer at NYU School of Law, writes in The Wall Street Journal:

General Motors is a once-great company caught in a web of relationships designed for another era. It should not be fed while still caught, because that will leave it trapped until we get tired of feeding it. Then it will die. The only possibility of saving it is to take the risk of cutting it free. In other words, GM should be allowed to go bankrupt.

Consider the costs of tackling GM's problems with some kind of bailout plan. After 42 years of eroding U.S. market share (from 53% to 20%) and countless announcements of "change," GM still has eight U.S. brands (Cadillac, Saab, Buick, Pontiac, GMC, Saturn, Chevrolet and Hummer). As for its more successful competitors, Toyota (19% market share) has three, and Honda (11%) has two.

GM has about 7,000 dealers. Toyota has fewer than 1,500. Honda has about 1,000. These fewer and larger dealers are better able to advertise, stock and service the cars they sell. GM knows it needs fewer brands and dealers, but the dealers are protected from termination by state laws. This makes eliminating them and the brands they sell very expensive. It would cost GM billions of dollars and many years to reduce the number of dealers it has to a number near Toyota's.

Foreign-owned manufacturers who build cars with American workers pay wages similar to GM's. But their expenses for benefits are a fraction of GM's. GM is contractually required to support thousands of workers in the UAW's "Jobs Bank" program, which guarantees nearly full wages and benefits for workers who lose their jobs due to automation or plant closure. It supports more retirees than current workers. It owns or leases enormous amounts of property for facilities it's not using and probably will never use again, and is obliged to support revenue bonds for municipalities that issued them to build these facilities. It has other contractual obligations such as health coverage for union retirees. All of these commitments drain its cash every month. Moreover, GM supports myriad suppliers and supports a huge infrastructure of firms and localities that depend on it. Many of them have contractual claims; they all have moral claims. They all want GM to be more or less what it is.

And therein lies the problem: The cost of terminating dealers is only a fraction of what it would cost to rebuild GM to become a company sized and marketed appropriately for its market share. Contracts would have to be bought out. The company would have to shed many of its fixed obligations. Some obligations will be impossible to cut by voluntary agreement. GM will run out of cash and out of time.

GM's solution is to ask the federal government for the cash that will allow it to do all of this piece by piece. But much of the cash will be thrown at unproductive commitments. And the sense of urgency that would enable GM to make choices painful to its management, its workers, its retirees, its suppliers and its localities will simply not be there if federal money is available. Like AIG, it will be back for more, and at the same time it will be telling us that it's doing a great job under difficult circumstances.

Federal law provides a way out of the web: reorganization under Chapter 11 of the bankruptcy code. If GM were told that no assistance would be available without a bankruptcy filing, all options would be put on the table. The web could be cut wherever it needed to be. State protection for dealers would disappear. Labor contracts could be renegotiated. Pension plans could be terminated, with existing pensions turned over to the Pension Benefit Guaranty Corp. (PBGC). Health benefits could be renegotiated. Mortgaged assets could be abandoned, so plants could be closed without being supported as idle hindrances on GM's viability. GM could be rebuilt as a company that had a chance to make vehicles people want and support itself on revenue. It wouldn't be easy but, unlike trying to bail out GM as it is, it wouldn't be impossible.

The social and political costs would be very large, but if GM fails after getting $50 billion or $100 billion in bailout money, it'll be just as large and there will be less money to soften the blow and even more blame to go around. The PBGC will probably need money to guarantee GM's pensions for its white- and blue-collar workers (pension support is capped at around $40,000 per year, so that won't help executives much). Unemployment insurance will have to be extended and offered to many people, perhaps millions if you include dealers, suppliers and communities dependent on GM as it exists now. A GM bankruptcy will make addressing health-care coverage more urgent, which is probably a good thing. It would require job-retraining money and community assistance to affected localities.

But unless we are willing to support GM as it is indefinitely, the downsizing and asset-shedding will have to come anyway. Even if it builds cars as attractive and environmentally responsible as those Honda and Toyota will be building, they won't be able to carry the weight of GM's past.

GM CEO Rick Wagoner says "bankruptcy is not an option." Critics of a bankruptcy say that GM won't be able to get the loans it will need to guarantee warranties, pay its operating losses while it restructures, and preserve customers' ability to finance purchases. While consumers buy tickets from bankrupt airlines, electronics from bankrupt retailers, and apartments from bankrupt builders, they say consumers won't buy cars from a bankrupt auto maker. But bankruptcy no longer means "liquidation" or "out of business" to a generation of consumers used to buying from firms in reorganization.

GM would guarantee warranty support with a segregated fund if necessary. And debtor-in-possession (DIP) financing -- loans that provide the near-term cash for reorganizing companies -- is very safe, because the DIP lender has priority over all other claimants. In normal markets, it would certainly be available to a GM that has assets to sell, including a viable overseas business. Such financing is probably available even now.

In any event, it would be lined up before a filing, not after, so any problems wouldn't be a surprise. As a last resort, we could at least consider a public DIP loan to support a reorganizing GM with a good chance to survive -- as opposed to subsidizing a GM slowly deflating.

The fate of Daewoo -- the Korean auto maker that collapsed in 2000 after filing for bankruptcy, leaving about 500 dealers stranded in the U.S. -- is often cited as "proof" that a GM bankruptcy won't work. But Daewoo was headquartered in a part of the world where bankruptcy still carries a major stigma and usually means liquidation. Daewoo's experience is largely irrelevant to a major U.S. company undergoing a well-publicized positive transformation, almost certainly under new management.

GM as it is cannot survive without long-term government life support. If it gets that support, it can't change enough and won't change fast enough. Contrary to Mr. Wagoner's brave declaration, bankruptcy is an option. In fact, it's the only option that merits public support and actually has a chance at succeeding.

Cracker Squire and auto-parts makers latest to get in line requesting access to the $700 billion financial-industry rescue fund.

From The Wall Street Journal:

Auto-parts makers are requesting access to the government's $700 billion financial-industry rescue fund, and Democratic lawmakers are planning tough conditions -- including a government oversight board -- on a proposed aid package for Detroit's troubled auto companies.

Democratic lawmakers Monday plan to unveil a bill that would give the Big Three auto makers access to the $700 billion Troubled Asset Relief Program set up in October to help ailing banks and other financial firms. As written, the legislation wouldn't include auto-parts makers.

Parts makers are seeking to change that in a letter signed by nearly 100 companies and being sent to the House and Senate on Monday. In the letter, the Motor and Equipment Manufacturers Association, a trade group, will ask that its members get equal access to TARP funding sought by the car makers.

Sunday, November 16, 2008

Powerful: If they choose to follow Obama, their self-identification will sink in & their vote will come to seem not a decision but an affiliation.

Peggy Noonan writes in The Wall Street Journal:

A week and a half after the election, the idea has settled in that America just threw long. People hadn't heard of Mr. Obama two years ago, they know they don't really know him now, and they just gave him the presidency. America threw long, and America is praying for a dazzling reception. People want him to catch the ball.

What is striking is how much hopeful support there has come to be. Mr. Obama's approval ratings this week hit 70%. They'll go higher. Part of this is people saying: We want you to do well. As you prosper, our nation prospers.

The vote will prove to be a realigning one if Mr. Obama does well enough over a long enough period that people come to see themselves not as voters who picked him but as people who are his followers. If they choose to follow him, their self-identification as Democrats will sink in and formalize, and the vote they cast in 2008 will come to seem not a decision but an affiliation. Without affiliation, everything remains in play and will be in play in the coming years. If Mr. Obama doesn't catch the pass and cross the goal line, it will mean this election marked a moment, not a movement.

It is obvious that Mr. Obama's people have learned from the experiences of Bill Clinton and will continue to try not to begin with a gays-in-the-military, my-wife-is-revolutionizing-health-care series of errors that will self-brand them as to the left of the mainstream. They do not want to do anything that will leave the middle-right saying "Uh-oh" and begin to push away.

Yet another look at those U.S. Senate primary numbers.

Dick Pettys writes in InsiderAdvantage Georgia:

[T]here is a gap of 181,654 votes between the number of Georgians who voted for John McCain and the number who voted for Chambliss, a drop off of 8.9 percent.

The falloff was only about half that for Martin, who got 86,718 fewer votes than Obama – a decline of 4.7 percent.

In Chambliss’ case, had he gotten as many votes as McCain in Cobb and Gwinnett, two big hotbeds of Republican fervor, there would be no runoff.

Obama will probably have to give up his Crackberry

From The New York Times:

Sorry, Mr. President. Please surrender your BlackBerry.

Those are seven words President-elect Barack Obama is dreading but expecting to hear, friends and advisers say, when he takes office in 65 days.

For years, like legions of other professionals, Mr. Obama has been all but addicted to his BlackBerry. The device has rarely been far from his side — on most days, it was fastened to his belt — to provide a singular conduit to the outside world as the bubble around him grew tighter and tighter throughout his campaign.

“How about that?” Mr. Obama replied to a friend’s congratulatory e-mail message on the night of his victory.

But before he arrives at the White House, he will probably be forced to sign off. In addition to concerns about e-mail security, he faces the Presidential Records Act, which puts his correspondence in the official record and ultimately up for public review, and the threat of subpoenas. A decision has not been made on whether he could become the first e-mailing president, but aides said that seemed doubtful.

For all the perquisites and power afforded the president, the chief executive of the United States is essentially deprived by law and by culture of some of the very tools that other chief executives depend on to survive and to thrive. Mr. Obama, however, seems intent on pulling the office at least partly into the 21st century on that score; aides said he hopes to have a laptop computer on his desk in the Oval Office, making him the first American president to do so.

Mr. Obama has not sent a farewell dispatch from the personal e-mail account he uses — he has not changed his address in years — but friends say the frequency of correspondence has diminished. In recent days, though, he has been seen typing his thoughts on transition matters and other items on his BlackBerry, bypassing, at least temporarily, the bureaucracy that is quickly encircling him.

A year ago, when many Democratic contributors and other observers were worried about his prospects against Senator Hillary Rodham Clinton, they reached out to him directly. Mr. Obama had changed his cellphone number, so e-mail remained the most reliable way of communicating directly with him.

Give the Devil his due. Bush may be one of worst presidents in U.S. history, but the fact that relations with Russia have soured is not all his fault.

From The New York Times:

President Dmitri A. Medvedev of Russia expressed hope Saturday that President-elect Barack Obama’s election would improve relations that have soured under President Bush, but he remained unwavering on the issues that have most starkly divided the countries in recent years.

Mr. Medvedev, in Washington for the first time since his election last spring, reiterated Russia’s opposition to the expansion of NATO and vowed that Russia would not reverse its recognition of two separatist regions in Georgia, South Ossetia and Abkhazia, after the war there in August.

He also repeated his threat, first made the day after Mr. Obama was elected, to deploy missiles in Kaliningrad if the United States moved ahead with plans to build missile defense systems in Poland and the Czech Republic. As he did in France on Friday, however, he said he was prepared to hold talks on the issue.

“There is no trust in the Russia-U.S. relations, the trust we need,” Mr. Medvedev said, speaking before the Council on Foreign Relations in Washington after participating in the summit meeting on the financial crisis Saturday that brought together the leaders of 20 countries. “Therefore we have great aspirations for the new administration.”

Mr. Medvedev’s remarks, while conciliatory, could put Mr. Obama in a difficult position politically, presenting him with an explicit quid pro quo in the case of missile defense.

Mr. Obama has expressed more tepid support for missile defenses than Mr. Bush, suggesting he would deploy only a proven system rather than proceeding with the construction of radars and other facilities while testing continues. But reversing the program now, after agreements had been negotiated with Poland and the Czech Republic, both NATO allies, could be seen as backing down in the face of Russian threats.

See also The Washington Post.

Saturday, November 15, 2008

President of UAW: The union will not make concessions to seal a deal for governmental aid. -- OK boss, but are you the one calling the shots here?

From The Wall Street Journal:

[UAW president Ron Gettelfinger told The Wall Street Journal Saturday that t]he union will not make concessions in order to seal a deal for governmental aid . . . .

Many analysts believe the concessions will eliminate the labor cost advantage foreign auto makers have had in their non-union plants in the U.S.

From David Yermack, a professor of finance at New York University's Stern School of Business, writing in The Wall Street Journal:

If the government wants to spend $25 billion to protect auto workers, it would do better to transfer the money to them directly (perhaps by cutting each worker a check for $10,000) rather than by keeping their unproductive employer in business.

[I]t is suggested that the failures of the U.S. financial industry, which have cost us something like $700 billion, justify bailouts of other sectors of the economy. This makes no sense. If the government diverts our national savings into businesses that have long track records of destroying investment capital, eventually we'll end up with an economy like France's -- or Zimbabwe's.

Other arguments are on the table as well. Some see the troubles at GM and Ford as opportunities to retool the auto industry to produce environmentally friendly cars. Given their long track records of lobbying against fuel economy standards and producing oversized gas guzzlers, this suggestion seems ridiculous, sort of like asking cigarette companies to help with cancer research.

Hillary Clinton as Secretary of State -- Obama should remember the rule that you never hire anybody you can’t fire, especially as secretary of state.

From The New York Times:

Both Obama and Clinton advisers say that the relationship between the two is much more complex than one simply inspired by a keep-your-friends-close-and-your-enemies-closer philosophy. While Mr. Obama never seriously considered Mrs. Clinton as his running mate, one of his aides described him as “self-confident enough to want to send a message to the world about America and all that it can be — and Hillary Clinton as secretary of state would do that.”

The aide said that in the last few months of the campaign Mr. Obama came to appreciate the effort she made to rally her supporters on his behalf.

Should he pick her, Mr. Obama may further unite and energize his party, make clear to the world that he is serious about diplomacy, and send a substantive political signal to women.

It is not clear what room Mrs. Clinton’s presence as the nation’s top diplomat would leave for Vice President-elect Joseph R. Biden Jr. to be an influential player in his specialty of foreign policy.

John Bolton, the former United States ambassador to the United Nations, who forecasted as early as this past July that Mrs. Clinton could wind up at the State Department, laughed as he offered the incoming president this piece of advice: “Obama should remember the rule that you never hire anybody you can’t fire, especially as secretary of state.”

Government to Limit Planned Crackdown on Illegal Immigrants in Response to U.S. Chamber of Commerce and Business Groups

From The Washington Post:

The Department of Homeland Security has significantly narrowed the scope of a planned crackdown on federal contractor's employment of illegal immigrants.

The agency announced yesterday that it would go forward with a new policy requiring federal contractors to check the work documents of existing workers and subsequent hires using an electronic government system. The new policy will apply to contracts and solicitations issued after Jan. 15, but it will apply to far fewer contractors than would have been affected under the original proposal.

The Bush administration has made the work eligibility system, called E-Verify, a main pillar of its fight against illegal immigration, proposing to make its use mandatory for nearly 200,000 government contractors, covering about 4 million U.S. workers. Participation in E-Verify is now generally voluntary, although 13 state legislatures have enacted similar legislation for state contractors.

However, a revised final rule to be published today in the Federal Register would limit its application to contracts worth $100,000 or more, instead of $3,000, and require employers to check the eligibility only of workers on those contracts, instead of all their workers. The changes would apply to solicitations or awards made after Jan. 15, and exempt workers who have already received security clearances, contracts for commercial, off-the-shelf items, and contracts lasting less than 120 days.

Randel K. Johnson, vice president and spokesman for the U.S. Chamber of Commerce, said the administration "had been responsive to a substantial amount of business concerns," particularly by limiting the rule to large contractors, to new contracts and to workers on those contracts.

See also The Washington Post.

Friday, November 14, 2008

On the Heels of a Revised Bailout, AIG Shows Gratitude to Taxpayers By Proceeding to Pay Millions To Top Workers. Amazing, truly amazing.

From The Washington Post:

American International Group plans to pay out $503 million in deferred compensation to some of its top employees, saying it must tap the funds to keep valuable workers from exiting the troubled insurance giant. [Let 'em go. Where are to going? To one of the other insurance companies that are sinking but which the government has not [yet] bailed out.]

News of the payments to top AIG talent comes as the federal government has just put more money into saving the company from bankruptcy, beefing up the total public commitment to $152 billion. Meanwhile, members of Congress are questioning the company's expenditures -- including lavish business trips to resorts -- during a time when taxpayers are on the hook for the bailout.

David Brooks: Bailout to Nowhere for the Detroit Three (no longer the Big Three)

David Brooks writes in The News York Times:

Not so long ago, corporate giants with names like PanAm, ITT and Montgomery Ward roamed the earth. They faded and were replaced by new companies with names like Microsoft, Southwest Airlines and Target. The U.S. became famous for this pattern of decay and new growth. Over time, American government built a bigger safety net so workers could survive the vicissitudes of this creative destruction — with unemployment insurance and soon, one hopes, health care security. But the government has generally not interfered in the dynamic process itself, which is the source of the country’s prosperity.

But this, apparently, is about to change. Democrats from Barack Obama to Nancy Pelosi want to grant immortality to General Motors, Chrysler and Ford. They have decided to follow an earlier $25 billion loan with a $50 billion bailout, which would inevitably be followed by more billions later, because if these companies are not permitted to go bankrupt now, they never will be.

This is a different sort of endeavor than the $750 billion bailout of Wall Street. That money was used to save the financial system itself. It was used to save the capital markets on which the process of creative destruction depends.

Granting immortality to Detroit’s Big Three does not enhance creative destruction. It retards it. It crosses a line, a bright line. It is not about saving a system; there will still be cars made and sold in America. It is about saving politically powerful corporations. A Detroit bailout would set a precedent for every single politically connected corporation in America. There already is a long line of lobbyists bidding for federal money. If Detroit gets money, then everyone would have a case. After all, are the employees of Circuit City or the newspaper industry inferior to the employees of Chrysler?

It is all a reminder that the biggest threat to a healthy economy is not the socialists of campaign lore. It’s C.E.O.’s. It’s politically powerful crony capitalists who use their influence to create a stagnant corporate welfare state.

If ever the market has rendered a just verdict, it is the one rendered on G.M. and Chrysler. These companies are not innocent victims of this crisis. To read the expert literature on these companies is to read a long litany of miscalculation. Some experts mention the management blunders, some the union contracts and the legacy costs, some the years of poor car design and some the entrenched corporate cultures.

There seems to be no one who believes the companies are viable without radical change. A federal cash infusion will not infuse wisdom into management. It will not reduce labor costs. It will not attract talented new employees. As Megan McArdle of The Atlantic wittily put it, “Working for the Big Three magically combines vast corporate bureaucracy and job insecurity in one completely unattractive package.”

In short, a bailout will not solve anything — just postpone things. If this goes through, Big Three executives will make decisions knowing that whatever happens, Uncle Sam will bail them out — just like Fannie Mae and Freddie Mac. In the meantime, capital that could have gone to successful companies and programs will be directed toward companies with a history of using it badly.

The second part of Obama’s plan is the creation of an auto czar with vague duties. Other smart people have called for such a czar to reorganize the companies and force the companies to fully embrace green technology and other good things.

That would be great, but if Obama was such a fervent believer in the Chinese model of all-powerful technocrats, he should have mentioned it during the campaign. Are we really to believe there exists a czar omniscient, omnipotent and beneficent enough to know how to fix the Big Three? Who is this deity? Are we to believe that political influence will miraculously disappear, that the czar would have absolute power over unions, management, Congress and the White House? Please.

This is an excruciatingly hard call. A case could be made for keeping the Big Three afloat as a jobs program until the economy gets better and then letting them go bankrupt. But the most persuasive experts argue that bankruptcy is the least horrible option. Airline, steel and retail companies have gone through bankruptcy proceedings and adjusted. It would be a less politically tainted process. Government could use that $50 billion — and more — to help the workers who are going to be displaced no matter what.

But the larger principle is over the nature of America’s political system. Is this country going to slide into progressive corporatism, a merger of corporate and federal power that will inevitably stifle competition, empower corporate and federal bureaucrats and protect entrenched interests? Or is the U.S. going to stick with its historic model: Helping workers weather the storms of a dynamic economy, but preserving the dynamism that is the core of the country’s success.

Dr. Charles Bullock: A Look Inside The Runoffs

From InsiderAdvantage Georgia:

Chambliss missed the majority required for victory by less than 9,200 votes. Martin trailed by three percentage points.

While most of the Libertarian votes would have probably gone to Chambliss had these voters chosen between the nominees of the two major parties, another set of voters would have gone to Martin had they selected between the Democrat and the Republican. Exit polls revealed that African Americans cast 30 percent of the vote for president but only 28 percent of the vote in the Senate contest. If the exit poll estimates are accurate, then 125,000 blacks who voted for President expressed no preference for senator. If these voters had behaved as blacks who made a selection did, giving 91 percent of their votes to Martin, the Democrat would have gotten an additional 114,000 votes and overcome Chambliss’ 110,000 vote lead.

Zell and others show up at Sen. Chambliss rally in Cobb on Thuursday.

From the AJC's Political Insider:

Until this evening, Zell Miller had stayed out of the U.S. Senate race — and the presidential race, too, for that matter.

A number of heavyweights have climbed to the stage — foremost among them former U.S. senator and governor Zell Miller. Public Service Commission candidate Lauren “Bubba” McDonald, also in a runoff, is on the stage.

Gov. Sonny Perdue is not here — he’s at the Republican Governors Association in Miami. U.S. Rep. Tom Price has joined Westmoreland here. U.S. Sen. Lindsay Graham, over from South Carolina, is here as well. Big ally of McCain in D.C.

House Speaker Glenn Richardson and U.S. Sen. Johnny Isakson named as being here as well.

And from The Wall Street Journal:

Arkansas Gov. Mike Huckabee is scheduled to campaign for Sen. Chambliss on Sunday. A Chambliss spokeswoman said the campaign hopes to get several other big-name Republicans to visit the state, such as Alaska Gov. Sarah Palin, former New York Mayor Rudy Giuliani and former Massachusetts Gov. Mitt Romney.

Thursday, November 13, 2008

Democrat has 3 vote lead in Alaska's U.S. Senate race.

From The Wall Street Journal Online:

Politico: Democrat Mark Begich has taken his first lead of the election over scandal-plagued Republican Sen. Ted Stevens in Alaska's U.S. Senate race, as absentee votes continue to be counted by the state's elections officials. With about 41,000 absentee votes tabulated yesterday, Begich led Stevens by a three-vote margin, 125,019 votes to 125,016. There were still about 50,000 outstanding absentee ballots left to be counted.

G.M.’s Troubles Stir Question of Bankruptcy vs. a Bailout

From The New York Times:

Momentum is building in Washington for a rescue package for the auto industry to head off a possible bankruptcy filing by General Motors, which is rapidly running low on cash.

But not everyone agrees that a Chapter 11 filing by G.M. would be the disaster that many fear. Some experts note that while bankruptcy would be painful, it may be preferable to a government bailout that may only delay, at considerable cost, the wrenching but necessary steps G.M. needs to take to become a stronger, leaner company.

Although G.M.’s labor contracts would be at risk of termination in a bankruptcy, setting up a potential confrontation with its unions, the company says its pension obligations are largely financed for its 479,000 retirees and their spouses.

Shareholders have already lost much of the equity that would disappear in a bankruptcy case. Shares of G.M. rose 16 cents Wednesday, to $3.08, but they have fallen 90.5 percent over the last 12 months, amid sharply lower auto sales and fears about G.M.’s future.

And as companies in industries like airlines, steel and retailing have shown, bankruptcy can offer a fresh start with a more competitive cost structure to preserve a future for the workers who remain.

Wednesday, November 12, 2008

Obama Enters Georgia Race, Symbolically -- Both Sides in Senate Runoff Invoke the President-Elect's Name to Sway Voters

I did a 11-11-08 post entitled "Will Obama come to Georgia to campaign for Jim Martin? No. Count on it. You can take it to the bank."

That post linked to an excellent discussion of the topic in an article by Jim Tharpe in the AJC.

Jim Galloway of the AJC's Political Insider first set the stage for this high national profile runoff on October 26, 2008, when he wrote:

A scenario is quickly unfolding in which you’re likely to see much more of Barack Obama in Georgia.

Not now, not before next Tuesday.

We’re talking afterwards, when the U.S. Senate race in Georgia becomes the only important, unresolved contest in the nation.

Whether Democrats reach a filibuster-proof 60 seats in nine days makes no difference. A Georgia Senate run-off would not only be the final act of the nation’s 2008 political season, but would provide a first political test for a President-elect Obama — if he should accept the challenge.

African-Americans in Georgia might not turn out a second time for the less-than-charismatic Martin, one strategist told us. But they would walk across hot coals if President-elect Obama personally asked them to.

Today The Washington Post has a great article on this runoff. It notes:

One week after his historic victory, President-elect Barack Obama has become a critical figure in Georgia's runoff election for a Senate seat, a contest that will help determine the size of the Democratic majority Obama will have to help move his agenda.

In campaign commercials and surrogate appearances for the candidates on the Dec. 2 ballot, Obama has been symbolically injected into the race, putting his political clout to an early test.

Former state representative Jim Martin (D) has embraced Obama in advertisements touting Obama's stirring election-night speech and in issue statements proclaiming his willingness to work with the incoming president. More than 100 Obama campaign volunteers, mostly foot soldiers from neighboring states, are heading to Georgia to help with voter turnout operations.

Sen. Saxby Chambliss (R), the first-term incumbent, has called the runoff the first race of the 2010 midterm elections. A parade of top Republicans is stumping for Chambliss, including Sen. John McCain (Ariz.), who on Thursday will make his first political appearance since losing to Obama last week. McCain's former running mate, Alaska Gov. Sarah Palin, has a standing invitation to appear for Chambliss, as do several other aspirants for the Republican presidential nomination in 2012.

"It all comes down to Georgia. Don't give Obama a rubberstamp Senate," the National Republican Senatorial Committee declares in an advertisement that dominates its Web site's home page. The ad includes images of newscasters announcing the results of the presidential election and the growing Democratic majorities in Congress.

The Georgia race is one of three undecided Senate battles in the 2008 campaign, all of which Democrats need to win to reach their goal of a filibuster-proof 60 seats.

[T]he overriding issue in the race is Obama's election. His advisers declined to comment on whether Obama would campaign in Georgia, as then-President-elect Bill Clinton did in a runoff Senate election in the state in December 1992. In that race, the Democratic candidate eventually lost.

Turnout is expected to drop precipitously in the runoff, with no other statewide race on the ballot and -- particularly for African Americans, who turned out in huge numbers in Georgia last week to help make history -- no Obama to vote for. That is why Martin is crossing his fingers that Obama will stump on his behalf.

Chambliss has invited every prominent Georgia Republican to appear with him and McCain in Atlanta. Former Arkansas governor Mike Huckabee is expected over the weekend, and former Massachusetts governor Mitt Romney may appear soon. The approach is simple, aides said: to appeal to the state's traditionally conservative base.

Tuesday, November 11, 2008

How can I forget that a Ga. congressman, right after Nov. 4, said: "In my opinion, we've elected a Marxist to be president of the United States."

I did a 11-08-08 post entitled "Record these words for future (meaning 2010) reference. Rep. Broun: "In my opinion, we've elected a Marxist to be president of the United States."

Today the AJC's Political Insider reports that Paul Broun expresses "regret" for calling Obama a Marxist, and said that he didn’t mean to call Obama a Marxist, or a dictator. "Nothing could be further from the truth."

But as noted in the above-referenced post, what Broun said was:

"In my opinion, we've elected a Marxist to be president of the United States." This is a quote from a luncheon of the Martinez-Evans Rotary Club.

What he said may not be close to the truth, but that he said it is not only not far from the truth, it is the truth.

I am a forgive and forget type guy. But a United States congressman calling the President-elect a Marxist, a Marxist, is going to take me some time to forget.

I so regret that the congressman that said this is from Georgia, my Georgia, the Empire State of the South. Damn his soul.

Palin on the possibility that she would again seek to join the presidential ticket four years from now: "Putting my life in my creator's hands."

From The Wall Street Journal Online:

"Putting my life in my creator's hands -- this is what I always do. I'm like, OK, God, if there is an open door for me somewhere, this is what I always pray, I'm like, don't let me miss the open door ... And if there is an open door in '12 or four years later, and if it is something that is going to be good for my family, for my state, for my nation, an opportunity for me, then I'll plow through that door," Alaska Gov. and Republican vice presidential nominee Sarah Palin said on Fox News, about the possibility that she would again seek to join the presidential ticket four years from now.

For South, a Waning Hold on National Politics

From The New York Times:

What may have ended on Election Day . . . is the centrality of the South to national politics. By voting so emphatically for Senator John McCain over Mr. Obama — supporting him in some areas in even greater numbers than they did President Bush — voters from Texas to South Carolina and Kentucky may have marginalized their region for some time to come, political experts say.

The region’s absence from Mr. Obama’s winning formula means it “is becoming distinctly less important,” said Wayne Parent, a political scientist at Louisiana State University. “The South has moved from being the center of the political universe to being an outside player in presidential politics.”

One reason for that is that the South is no longer a solid voting bloc. Along the Atlantic Coast, parts of the “suburban South,” notably Virginia and North Carolina, made history last week in breaking from their Confederate past and supporting Mr. Obama. Those states have experienced an influx of better educated and more prosperous voters in recent years, pointing them in a different political direction than states farther west, like Alabama, Arkansas, Louisiana and Mississippi, and Appalachian sections of Kentucky and Tennessee.

Southern counties that voted more heavily Republican this year than in 2004 tended to be poorer, less educated and whiter, a statistical analysis by The New York Times shows. Mr. Obama won in only 44 counties in the Appalachian belt, a stretch of 410 counties that runs from New York to Mississippi. Many of those counties, rural and isolated, have been less exposed to the diversity, educational achievement and economic progress experienced by more prosperous areas.

The increased turnout in the South’s so-called Black Belt, or old plantation-country counties, was visible in the results, but it generally could not make up for the solid white support for Mr. McCain. Alabama, for example, experienced a heavy black turnout and voted slightly more Democratic than in 2004, but the state over all gave 60 percent of its vote to Mr. McCain. (Arkansas, however, doubled the margin of victory it gave to the Republican over 2004.)

Less than a third of Southern whites voted for Mr. Obama, compared with 43 percent of whites nationally. By leaving the mainstream so decisively, the Deep South and Appalachia will no longer be able to dictate that winning Democrats have Southern accents or adhere to conservative policies on issues like welfare and tax policy, experts say.

That could spell the end of the so-called Southern strategy, the doctrine that took shape under President Richard M. Nixon in which national elections were won by co-opting Southern whites on racial issues. And the Southernization of American politics — which reached its apogee in the 1990s when many Congressional leaders and President Bill Clinton were from the South — appears to have ended.

“I think that’s absolutely over,” said Thomas Schaller, a political scientist who argued prophetically that the Democrats could win national elections without the South.

The Republicans, meanwhile, have “become a Southernized party,” said Mr. Schaller, who teaches at the University of Maryland, Baltimore County. “They have completely marginalized themselves to a mostly regional party,” he said, pointing out that nearly half of the current Republican House delegation is now Southern.

Merle Black, an expert on the region’s politics at Emory University in Atlanta, said the Republican Party went too far in appealing to the South, alienating voters elsewhere.

“They’ve maxed out on the South,” he said, which has “limited their appeal in the rest of the country.”

Even the Democrats made use of the Southern strategy, as the party’s two presidents in the last 40 years, Jimmy Carter and Mr. Clinton, were Southerners whose presence on the ticket served to assuage regional anxieties. Mr. Obama has now proved it is no longer necessary to include a Southerner on the national ticket — to quiet racial fears, for example — in order to win, in the view of analysts.

Several Southern states, including Arkansas, Louisiana and Tennessee, have voted for the winner in presidential elections for decades. No more. And Mr. Obama’s race appears to have been the critical deciding factor in pushing ever greater numbers of white Southerners away from the Democrats.

Here in Alabama, where Mr. McCain won 60.4 percent of the vote in his best Southern showing, he had the support of nearly 9 in 10 whites, according to exit polls, a figure comparable to other Southern states. Alabama analysts pointed to the persistence of traditional white Southern attitudes on race as the deciding factor in Mr. McCain’s strong margin. Mr. Obama won in Jefferson County, which includes the city of Birmingham, and in the Black Belt, but he made few inroads elsewhere.

“Race continues to play a major role in the state,” said Glenn Feldman, a historian at the University of Alabama, Birmingham. “Alabama, unfortunately, continues to remain shackled to the bonds of yesterday.”

David Bositis, senior political analyst at the Joint Center for Political and Economic Studies, pointed out that the 18 percent share of whites that voted for Senator John Kerry in 2004 was almost cut in half for Mr. Obama.

“There’s no other explanation than race,” he said.

This post was noted in the AJC's Political Insider on 11-11-08.