Let’s redraw the map to get better campaigns, better elected officials

Every year about this time, the approaching elections make me face an uncomfortable fact: I am philosophically out of synch with my neighbors. I live in an overwhelmingly Democrat area where Republican candidates for office have virtually no chance of winning. My votes are completely meaningless for state legislative offices and for the Fifth District Congressional seat. In the context of the state as a whole, my vote is meaningful, thankfully, in the race for Governor and U.S. Senator.

The race for Congress in my area pits Keith Ellison, a Democrat, against Alan Fine, the Republican. Ellison is a state legislator from north Minneapolis. Although the Star Tribune called Ellison a “flawed candidate,” he will win easily. History suggests that Fine will get about 25 to 30 percent of the vote with the remainder going to Ellison, whose views are the exact opposite of mine on most major issues.

Because the result is so predictable, we don’t get much of a campaign. And what campaigning does take place is largely ignored by the media. I would like to live in a place where there is a real race for Congress. Where door-knocking matters. Where candidates really have to articulate their views on a wide range of issues. Where we could all feel as if the winner worked for the victory. But, not in Minnesota’s Fifth.

The Fifth District is the smallest congressional district in the state in terms of geography, consisting mostly of Minneapolis and some first-ring suburbs. Minnesota’s eight congressional districts are distinct along definitions related to population density. The Fifth and the Fourth (mostly St. Paul) are inner-city urban; the Third is suburban; the Second and Sixth are exurban; and the First, Seventh and Eighth are decidedly rural. Generally speaking, people with a liberal philosophy tend to live in urban areas and people with conservative philosophies tend to live in more rural areas. I guess I am an anomaly.

The Sixth District seems to be the only congressional district in Minnesota where the election outcome is not a foregone conclusion. People in that district seem to be pretty evenly divided between Republicans and Democrats, and therefore you get competitive campaigns there. Two women are fighting it out for that seat: Democrat Patty Wetterling against Republican Michele Bachmann. At this point, the race is too close to call, although the Star Tribune gives Wetterling the edge.

I wish they would come up with a new map of congressional districts for the state. I think it is a mistake to lump a vast majority of people of one philosophy into a single district so the outcome of these elections is so predictable. I think it would be good if all the districts included people from the urban core, from the suburbs and exurbs, and from rural areas. Rather than pitting residents of these geographic subdivisions against one another, I think you could get a lot more cooperation on national policy if House members had to represent some people from all these groups. It is too easy to think of “rural” districts and “urban” districts and pigeon-whole the thinking of the Congressmen who represent them. I would prefer that our representatives be forced to consider the needs and interest of people living in all these settings.

So if I could redraw the Minnesota map into eight congressional districts, it would look like the rays of the sun, with all eight districts converging in the center of the Twin Cities. It would consist of eight wedges, expanding out from the center cities all the way to the borders of the state. Since the urban core is located in the east part of the state, the wedges on the east would be short and wide, and as the map spans to the west, the wedges would become narrower and longer. Each of the districts could then include people who live in the urban core, people who live in the suburbs and exurbs, and people who live in the country.

I think this kind of mapping would result in more competitive races, where candidates would really have to campaign and really have to let voters know where they stand. I could get excited about participating in an election like that.

Dr. Sohn sees soft landing in 2007

I got to know Dr. Sung Won Sohn when he worked at Norwest Bank in Minneapolis. He is a former White House advisor and associate of Alan Greenspan, the former Federal Reserve Board chairman. Sohn worked at Norwest for many years, through its transition to Wells Fargo Bank, but left in January 2005 to become president at CEO of Hanmi Bank in Los Angeles.

I got a chance to visit with Sohn last week, when we were both in Phoenix for an industry meeting. I was intrigued to hear his optimistic comments about the economy. While the media bombards us with stories about the slowing housing market, Sohn isn’t so worried about it.

“We do not have a housing bubble,” he said. “That is a rapid increase in prices followed by a rapid decrease, and that has not happened.”

Sohn said the best way to predict the housing market is to assess the economy. “If people think the economy is going to go well, housing prices increase,” he said. “If they think it is going to do poorly, housing prices decline.” As mortgage rates decline, however, he noted that home sales generally begin to pick up, which encourages sellers to increase prices. “If short term rates fall, the yield curve will flatten. Housing will get a second wind,” Sohn said. “Despite all the bad predictions, housing is not going as bad as people thought.”

Sohn said there isn’t much discussion about increasing the federal funds rate much more, even in light of an increase in the core inflation rate (consumer price index minus energy and food costs). “The question is ‘should we be cutting interest rates or should we wait?’” Sohn summarized. “My personal prediction is the federal funds rate has topped, and will not be going up very much, if at all, in the future. So in the near future we will see the federal funds rate moving sideways.” The federal funds rate is currently 5.25 percent. The Federal Reserve's Federal Open Market Committee, which officially sets the rate, met today and left the rate unchanged.

Sohn sited the Chicago Mercantile Exchange, which is indicating a drop to 5 percent or lower for the fed funds rate by June 2007. “I think the market expectations are reasonable,” Sohn said. The federal funds rate is near the top, if not at the top. In 2007, we will actually see lower interest rates. That is what the market is saying.”

Sohn noted a drop in the price of energy, which is stimulating the economy. The price of natural gas and oil is down. Sohn said that 9 percent of all goods are derived from energy – “from plastics to shoes.” Energy prices, he said, have a huge impact on the economy.

“When the price of gasoline goes down by 10 cents, it is like putting $1 billion in our pockets. It is like a tax cut.” Sohn said. “So when the price of gas drops 70 cents, it is like a $7 billion tax cut. Eventually energy prices find their way into the core inflation rate because of its impact on so many other goods. So as energy comes down, the price of these other products should begin to come down. The result is the inflation outlook improves.

Sohn warned, however, that on-going demand for energy from China and India will keep oil and natural gas prices from falling very much.

Sohn concluded: “Economic growth rates will slow, but not a great deal. Long-term economic growth is about 3 percent. I am very optimistic about the economy.”

You might find Dr. Sohn’s web site to be of interest, at www.drsohn.com.

Gergen sees one last push in Iraq coming

David Gergen, the editor-at-large for U.S. News and World Report, spoke to a business group in Phoenix on Oct. 16. He spoke on a wide range of issues, but I thought his comments on the war in Iraq were particularly interesting. Gergen has worked for four presidents -– three Republicans and one Democrat. His comments are about as even-handed as any I have ever heard from a Washington insider.

“There is a sense in Washington that we are in a holding pattern until after the election,” Gergen said of the Iraq situation. “When Sen. John Warner (R-Va.) recently came back from Iraq, he said, ‘We are moving sideways in Iraq.’ He said we’ve got a couple months and then we’ve got to re-evaluate.

“There is a great sense in Washington that we are moving toward Plan B, that Plan A has not worked, and that we are going to move to Plan B. Everybody is asking, what is Plan B? It will not be cut and run, it will not be airlift everybody out of there in the next six days. Clearly this president has the inner fortitude not to do that. That would be a bad mistake, to pull the plug on this thing like that.

“But what we are doing is not working either, so you have got to find something in between. We don’t want Plan C; Plan A is not working. You’ve got to come up with Plan B.”

Gergen noted that former secretary of state Jim Baker (Republican) and Lee Hamilton (Democrat) are co-chairing a commission on Iraq. The commission includes former Supreme Court Justice Sandra Day O’Connor.

“The commission is going to come up with a set of proposals,” Gergen said. “It is widely believed that those proposals will be Plan B.”

Gergen said Baker is a master at getting people out of tight spots. The commission will quietly brings its conclusions to President Bush and the President will likely agree to them before the commission goes public. The President will say it is time to re-evaluate and he will endorse the proposals of the commission, Gergen said.

“When he comes up with Plan B, I think it is also very possible that he will suggest the architects of Plan A might want to do other things in life. That that might be a good time to change teams,” Gergen said. “That’s what Lyndon Johnson did in the Viet Nam war. He had Bob McNamara there; that wasn’t working and he sent McNamara to the World Bank. He brought in Clark Clifford as his Secretary of Defense. I don’t know whether Jim Baker would do that or not. He is 76. I don’t know whether he would be willing to be Secretary of Defense at this point. It’s a lot to ask of him. But the President could reach out to a Sam Nunn. Democrat, Georgia, that would be a marvelous choice. A really smart, smart choice.

“There is a lot of talk in Washington about Plan B requiring us to send a lot more troops. There is a lot of loose talk in Washington that we are talking as many as 100,000 troops who would go in for a short period of time, maybe six months to a year, to try to stabilize this place. The idea is if you put a lot more troops in there you can quiet everything down. That’s the idea. Problem is, we don’t have enough military. We have maybe 20,000 you could throw together, unless you drew down from future assignments.”

Gergen said he believes the American people have not completely given up on the President. “I think the President has one more shot,” he said. “I think the President can go to the country and say ‘This is not working.’ He has to eat some crow, which is not easy for him to do. He is a rightfully proud man. But he can say to the country ‘I need you,’ to the Democrats, ‘I need you. Iraq is too important to let go down the drain. Let’s give it one more shot. Let’s give it one more big push. Let’s see if we can’t succeed here, and if we can’t then we will have to go to Plan C.’ I think the president can get people to go along with him.

“When you look down into the abyss and say ‘Do you really want to let Iraq go down?’ I think most Americans will say no. Let’s try.”

A Father for All Seasons

I have written in the past about the importance of ordinary people writing their stories, and one person who has done so is Bob Welch, a columnist for The Register-Guard newspaper in Eugene, Ore. Welch is the father of two kids and he has compiled a number of moving stories in a book called “A Father for All Seasons.” It was published eight years ago, but until a friend gave me a copy of the book two weeks ago, I had never heard of it. I read it, and now I want to make sure as many people as possible hear about this book.

Welch is a pretty ordinary guy with a lot of ordinary stories. But those are precisely the stories that should be told and preserved. History should not be limited to the fantastic, the horrible and the amazing. Books like the one Welch wrote present a much more accurate reflection of life than do newspapers and television news.

Welch writes about the things that are important to him and does a great job weaving in comments about his faith. So many writers are afraid to deal with religion in their work. But they shouldn’t be. Every work of memoir, in my opinion, needs to deal with the writer’s relationship with God. If the writer doesn’t have a relationship with God, then that should be discussed in the book. Welch, however, has a pronounced relationship with God and he writes about it, seemingly without effort. Welch and I might quibble over some doctrinal points, but I found his seamless integration of spiritual reality into his work to be one of the strengths of the book.

As the title implies, the stories are presented in sections named after the seasons, starting with springtime. He walks us through stories that depict summer, fall, winter, and then a second spring. He writes about his parents, the death of his father, the birth of his sons, about the death of a friend’s son, about two boys who went off to Viet Nam, about his son going off to college, and about another father and son who struggle with a drug habit. Some of it is pretty heavy stuff, but almost all of it is stuff that is common to anyone alive today.

At one point, Welch writes about a father’s role as teacher: “Better to teach our sons the selfless character of Christ than the flawed character of ourselves…” he writes. “We should not teach our sons with flash cards that do nothing but embed in their minds memorized facts. Instead, we should teach our sons to seek wisdom from the Word. We should teach them less calculation and more character. We should teach them not to blindingly follow the world, but to faithfully follow the truth.”

At another point, he writes about a boy reaching the age of 21. The only way society acknowledges adulthood, he notes, is by giving him the right to purchase alcohol. He comments: “…manhood had much more to do with responsibilities than with rights. Manhood isn’t found in a bottle. It’s found in the hearts of men, in the form of such attributes as courage, humility and vulnerability.”

There is a chapter in the book where Welch makes reference to Jon Krakauer, the adventurer who chronicled his climb to the top of Mount Everest in the best-selling book “Into Thin Air.” Welch was a classmate of Krakauer and Welch comments that while he settled into a community and raised two sons with his wife, Krakauer and his wife chose not to have children so he could travel around the world and write fantastic adventure stories. Krakauer’s life seems so glamorous.

I think a lot of fathers feel that way. We can all identify a former acquaintance who went onto glamorous living while we fathers chose a relatively conventional life involving the raising of kids, a mortgage, and relative anonymity. You don’t win any notoriety for fatherhood, of course. It’s a thankless pursuit (that is, trying to be a good parent). If you’re lucky, your kids will thank you some day. They will say you were important in their life. But there’s no guarantee. It might not work out that way. In fact, parenting is a pretty big gamble.

But that is why it is so worth writing about. That is why Welch’s collection of stories, which seem so simple, is really quite fabulous.

Sen. Hagel offers comments on fiscal situation

U.S. Senator Chuck Hagel (R-Neb.) used sobering language to describe the country's fiscal situation during a speech he delivered in Omaha on Sept. 22. There is talk that he may run for president in 2008; I think his candor is necessary but he will have to frame his message in a more hopeful fashion to develop any kind of a nationwide following.

Sen. Hagel said runaway spending by Congress jeopardizes the future of the country. “Without economic power, we have nothing,” he said, stressing the importance of a sound national economy. He said the budget deficit for this year is running about $260 billion. Although that sum is lower than it was a year ago, and although many people are hailing the figure as a sign of fiscal restraint, Sen. Hagel said deficit spending is still dangerous. “This takes a toll on our currency, on our competitive ability,” Sen. Hagel said. “We are going to have to get control of our spending; when that happens it is going to get a little uncomfortable.”

Sen. Hagel said that politicians usually come home with news about all the money they have brought back to constituents. They then head back to Washington with promises about reigning in the budget. “We want to have it both ways,” Sen. Hagel said. With Congressional approval ratings coming in between 25 percent and 28 percent, Sen. Hagel commented that “the American people do not think we are doing a very good job. And they are right.”

Sen. Hagel said Congress needs to tackle the major entitlement programs if it hopes to make any progress on fiscal reform. “The entitlement issue alone hangs as heavy over this country as the threat of terrorism,” he said.

The second-term Senator cited a study by the Federal Reserve Bank of Cleveland which noted the country has $42 trillion in unfunded liabilities over the next 75 years related to Social Security, Medicare and Medicaid. He said in 2016-17, the Social Security Trust Fund will begin to pay out more money than it collects. The country currently spends $380 billion per year on Medicare and $190 billion per year on Medicaid. Three-quarters of the budget, he said, goes to pay these three entitlement programs, as well as other so-called “non-negotiables,” such as interest on the debt and pension obligations. Interest on the debt alone, he said, runs about $300 billion per year.

Even more troubling, he said, is our dependence upon foreign investors to finance that debt. “You know that $2 billion to $3 billion has to come in every day from off shore to cover our debt,” he explained. “We are at a record low for savings in this country, and individuals are at record high debt levels.

“If we do not get our house in order,” Sen. Hagel said, “if we don’t make some tough decisions one of these days, if we don’t prioritize our resources and where we want to go, then we are headed for a lot of trouble.”

Articles show why I’m skeptical of the things I read in the newspapers

I am skeptical of much of what I read in the newspapers because I am so often unable to determine the motives behind the publication of certain stories. The motivation to publish a page one story, for example, should be obvious to the reader. The story should describe an important, obviously newsworthy, event or issue. The gossip and speculation and hearsay should be reserved for columns appearing deep within the newspaper. But increasingly, I find that the front page is barely discernable from most poorly written editorial pages.

To provide examples, consider two front page stories that appeared over the weekend: one on Saturday in the Minneapolis Star Tribune and the other on Sunday in the New York Times.

The Start Tribune article was about domestic troubles Alan Fine had with an ex-wife 11 years ago. Fine is the Republican candidate for the Fifth District congressional seat in Minnesota. The Fifth District is overwhelming populated with Democrats and Fine has virtually no chance of winning the open seat against state legislator Keith Ellison, who is running with the DFL endorsement.

I cannot figure out why the Star Tribune ran this article. The article focuses on a 1995 domestic violence charge made by his wife at the time. She dropped the case against him, and two years ago, Fine had the record expunged. So why is an argument between a husband and wife who eventually divorce worthy of a front page story? No case was ever tried and all we have is a ‘he said, she said’ account from more than a decade ago. I would be happy to read articles about real political issues, but I don’t believe any of my fellow voters in the Fifth District care about Fine’s marital troubles.

I think, although I can’t be certain, that the Star Tribune’s reason for running the story appears in the last paragraph, where it says “Fine has repeatedly said ‘character matters’.” So I get the sense that the newspaper is calling Fine a hypocrite. But I really have to laugh at that. Of course character matters. Is the newspaper telling us that Ellison thinks character doesn’t matter? And if that’s really the point of the story, then why isn’t the lead something like: Congressional candidate Alan Fine’s comments about character mattering are hypocritical, unconfirmed events from 11 years ago suggest.

As for the New York Times, the Old Gray Lady ran a story about religious organizations getting exemptions from certain state and federal laws. It is an absolute non-story that was started above the fold on page one and jumped inside where the remainder of the copy took up two entire pages.

The article starts by describing two day care facilities in Alabama. One is subject to inspection and regulation, the other, which is affiliated with a church, is not. The tedious article goes on to note that churches get tax breaks unavailable to typical commercial businesses. There is absolutely no news here. Any commercial business that competes with a non-profit entity is well aware of the inequities.

One paragraph in the article: “These organizations and their leaders still rely on public services – police and fire protection, street lights and storm drains, highway and bridge maintenance, food and drug inspections, national defense. But their tax exemptions shift the cost of providing those benefits onto other citizens…”

Wow. Are they actually saying that it is wrong for Americans who don’t pay taxes to enjoy these services? There are thousands of low-income people in Minnesota who don’t pay income taxes who enjoy all of these things and no one has any problem with that. And if it is the fact that churches are specifically exempt from paying taxes rather than unable to because of their limited means, consider the many very profitable credit unions across the country that enjoy all these benefits and pay no income tax. Only a small group of citizens, mostly made up of bankers, complain about that.

The Times never comes out and says it, but I think they are implying that churches should not get these breaks. I think they see it as a violation of the constitution which guarantees the separation of church and state. I am not aware of anyone who sees it that way, except people who are openly hostile to organized religion. Remember, people came to North America in the first place to get away from oppressive government regimes that tried to interfere with the practice of religion.

So the New York Times story just doesn’t make any sense. Their motivation for running this story is very unclear and leaves me only to speculate. This piece just makes the newspaper look hostile to organized religion.

Economist sees slowing economy, maybe even recession

The next Federal Open Market Committee meeting is Oct. 24-25. If you have a mortgage with an adjustable rate, or if you have tapped into a home equity line of credit that charges a floating interest rate, you should pay attention every time the FOMC meets. This is the Federal Reserve board committee that sets interest rates, specifically a rate called the Federal Funds rate. All other interest rates fall or rise correspondingly.

The last two times the committee met, it decided to hold the rate at its current level (5.25 percent). This is important, because the 17 previous meetings in a row, it elected to raise the rate. Some people are now beginning to say the Fed will lower rates, and the process could start as soon as the meeting later this month. Most people who watch this stuff, however, expect the Fed to hold rates through the end of the year and perhaps begin to lower rates in the first quarter of 2007.

I had an opportunity to listen to Michael Gasior deliver a synopsis of the economy on Tuesday. Gasior is an economist who founded an institutional investment firm called American Financial Services. He thinks the Fed will lower rates early next year, but he doesn’t see that as necessarily good news. He is afraid the economy will need rejuvenation and the Fed will lower rates to stimulate an economy that he sees headed for recession.

Here are the points he made about why he believes the U.S. economy is headed for recession:

*) Foreigners are financing our debt. He noted that since 2000, the U.S. government has issued $1.3 trillion in new debt and foreign investors have bought virtually all of it. Plus, he notes, U.S. private domestic investors have reduced their holdings of U.S. Treasuries by $300 billion. That means foreign investors have actually bought $1.6 trillion in U.S. debt in the last six years. Gasior says it is not a good sign that Americans are unloading their Treasury bonds and that they are not buying the bonds being issued currently.

Gasior noted the uneasiness of the country’s growing dependence upon foreign investors. If the Japanese or Chinese stopped buying U.S. Treasury bonds, bond rates would have to increase, which would make everything in the United States more expensive. This kind of pressure really handcuffs the Federal Reserve. It may want to lower rates to stimulate the economy, but if it does, foreign investors may not be as willing to finance our debt.

*) He doesn’t like the inverted yield curve. When long term interest rates fall below short term interest rates, it almost always leads to recession, Gasior said.

*) Gasior said he does not like the fact that the U.S. dollar is weaker now than it was four years ago. Today, a dollar will buy you 0.78 euros or 117 yen; four years ago a dollar would have bought you a full euro or 134 yen. A weak dollar is a plus for American manufacturers selling abroad, but it makes it much more difficult for foreign companies that attempt to sell their products in the United States. We need those foreign companies to do well, so their economies do well, so they will continue to buy our debt.

*) Gasior said he also is concerned about the contracting real estate market. Particularly troubling is the fact that the contraction is taking place during a relatively good economic period. If interest rates were to rise one or two more times, it would really send real estate into a nosedive.

Gasior concluded: “We are already slowing down, but by the first, maybe second quarter of next year, it will be very evident the economy is slowing, perhaps to the level of recession. I don’t think the Fed is going to wait that long to begin cutting rates. It will have to do something in order to keep things stimulated, to keep things from melting down.”

Law set to beef up internet gambling prohibition

Rep. Jim Leach is getting his internet gambling law. (See Sept. 20 post.) The Unlawful Internet Gambling Enforcement Act was tacked onto the Port Security Improvement Act, which the Senate passed late Friday. The bill now goes to President Bush, who is expected to sign it into law this week.

Although I am not a gambler and I feel for people who struggle with gambling additions, I really wonder whether this is the right approach. Internet gambling is a problem worthy of congressional scrutiny, but does the answer really necessitate the involvement of the banking industry and the credit card companies? I don’t think so.

Internet gambling currently is illegal but since most of the gambling web sites operate in other countries, the prohibition is nearly impossible to enforce. The Federal Reserve and the U.S. Treasury already have a comprehensive regulatory enforcement mechanism in place for the banking industry, so Rep. Leach proposed to tap into that mechanism to mitigate internet gambling. Good intentions not withstanding, going after the credit card processors does not solve the problem. Private industry facilitating the payments system shouldn’t be saddled with the cost of Congress’s attempt to resolve yet another social problem.

It is true that many of the credit card companies and big banks favor the new gambling enforcement rules. Those companies, however, would be far better off implementing the bill’s provisions voluntarily rather than under the threat of fines and incarceration. In fact, banks and credit card companies build a world of good will when they take on serious social ills on their own.

The thing about money is there will always be people who choose to spend it foolishly, whether it be on gambling, pornography, recreational drugs or other nonsense. As people of goodwill, we have an obligation to help others make wise decisions about living well. That is a responsibility that falls on all of us, not just those who work in the credit card industry.