Bill's Big Diamond Blog

The Minnesota Supremes' Final Review a Good Step: Minneapolis Star Trib

The Minneapolis Star Tribune is running an editorial this morning, outlining its point of view on the Senate race recount and the Coleman campaign's court challenge to its legitimacy.  In it, the paper strongly endorses the work of the State Canvassing Board for its thoroughness and transparency.  The editors endorse a review of the board's work by the Minnesota Supreme Court as a last step— and believe the Supremes should have the final call on the specific issues Norm Coleman now asks about.  I agree.

 As I wrote last night, that review should be forthcoming soon and will be limited to three key disputes, each of which is limited to hundreds, not thousands, of identifiable ballots.  A timely and decisive review of these three questions by the court, not by the Canvassing Board, will make for an unassailable and non-political certification of the winner, whoever that turns out to be.

 Just looking at the numbers, it’s hard to imagine that such review will change the outcome, but the review itself should provide clarity and reassure the Minnesota voters that the result reflects their choice, however narrow the margin of victory.

 Some news reports, including the Star Tribune's own news story this morning, state that the Equal Protection arguments in the Coleman suit make it likely to end up in the federal Supreme Court.  This would, in my non-expert view, be more likely to be granted if the Minnesota Supremes were not now reviewing the county-by-county rejections of the remaining uncounted 654 absentee ballots and able to find a uniform standard for counting them during this challenge phase.  

There’s no reason to lack confidence in the court’s ability to make sure the standards by which those remaining ballots are counted— or not counted— will be fair and will reflect a single standard throughout the state.  As long as the Supremes apply a uniform statewide standard for their decision on these ballots, it will be difficult indeed for the Coleman campaign to argue that Minnesota did not give equal weight to the voting rights of every eligible voter.  

This is not a Florida 2000 scenario by any stretch of the imagination.  Let's hope the Minnesotans finish the job they have so ably taken on—and make a final clean decision in one of the tightest races in US Senate history.

Postscript on Franken Senate Victory: The Coming Court Challenge

It appears that the Minnesota Supreme Court is going some distance towards limiting the damage that might have been caused by a detail in an earlier Supremes ruling (December 18) in the by-a-hair Franken-over-Coleman Senate election, now just finished recounting, with Al Franken ahead by only 225 votes out of about 3 million cast.

 For those of you who are really into election minutia, you may have read here that I was earlier quite concerned about an aspect of the  December 18 MN Supremes’ election decision.  That provision was that the justices allowed either campaign, on its own, to request that canvassing officials strike an absentee ballot, before it was opened and taken out of its envelope, to which that campaign objected.  That ballot would then be set aside and excluded from the recount total. 

 The particular universe of ballots concerned here were previously uncounted absentee ballots, mailed in time and received by election clerks by election day, but uncounted in the original Senate election totals. The ballots were identified already, during the recount, as having been improperly rejected for minor clerical reasons.  They presumably should all have been counted in the first place.

 While the ballots hadn’t yet been opened and counted, they had been identified and set aside by the state canvassing board for the recount.  The Coleman campaign had originally objected to these ballots being counted at all, but by the time the Supreme Court ruled on their validity, they were becoming key to the Republican’s chances of actually holding onto his seat.  Coleman had by the end of December fallen behind by 49 votes during the recount.

 Since the Coleman campaign was against the wall already, once the Supremes’ ruling was made in December, the GOP Senator’s strategy was to turn around and immediately object to counting huge percentages of those same absentee ballots particularly in two heavily Democratic counties, thereby excluding almost all the ballots in one county and about 30% of those in another.  They didn’t object with the nearly the same vigor in other GOP-dominated counties, thinking this tactic would skew the vote totals among the remaining newly-counted absentee ballots.  More ballots from GOP areas counted, less from Democratic areas, probably a plus for Coleman in the total, no?

 The strategy backfired, yielding instead an unexpectedly large number of the remaining now-opened absentee ballots as Franken votes.  This had the effect of increasing, not decreasing or erasing Franken’s lead. 

 So now, with the recount finished, Coleman went back to the Supreme Court this morning to request that the absentee ballots not be included after all—and that the canvassing board not certify the recount totals today showing Franken the presumptive winner.

 Coleman claimed an equal protection argument, complaining of different standards used in different counties, even while his own campaign was largely responsible for those differing standards.  The Supremes refused Coleman’s request to delay the recount announcement, but issued the following language in doing so:

 

“… the threshold question before us in this motion is whether disputes over rejected absentee ballots can be resolved in this automatic recount proceeding, or whether they must await an election contest proceeding.”

 

The Supremes are apparently smarter than they seemed, or at least more able to recover from a badly framed earlier point than one might have expected.  They seem to have brought unanimity to their decision this morning by taking on the responsibility to deal with the remaining ballots as part of an “election contest” (read: Court Hearing) after the canvassing board certified their work this afternoon.

 Now, the Supremes need only deal with ruling on the 654 absentee ballots not yet counted, due to objections by either the Franken or Coleman campaigns among the group in question.  Even the dissenting Justice on the December ruling, Alan Page signed onto this morning’s decision.

 The shorter explanation of all this is:  If you think Franken was ahead today, wait till the Supremes throw most of the rest of the disputed ballots back into the recount totals, now that both the Franken and Coleman campaigns agreed on the rest of the ballots’ validity together.  Game, set, match.

 Other arguments included in the Coleman contest will be their claim that 150 or so votes may have been double-counted in machine failures and that 130 ballots that were counted, accounted for in the voting rolls, but since the paper ballots corresponding to them were later lost in the process of storage, they should be struck from the total.  These arguments will not likely change the new balance in Coleman’s favor, even if each point is decided his way.

 It's now a matter of time.  Franken has declared victory and will doubtless be moving to Washington soon.  Meanwhile, the MN Supremes will be tidying up the last of the longest recount in memory.  Boy, those Minnesotans are meticulous!

Swift, Bold Action Required: Krugman

Paul Krugman is on fire again this morning.  His concern is that the Obama stimulus package won’t be bold enough, or be passed by Congress soon enough to stop the country from sliding into a second Great Depression.  It’s worthwhile reading.

 Krugman’s points to the danger of attempting to make the legislation into a compromise intended to forge a Democratic/Republican consensus (one he argues won’t be forthcoming anyway).  The size and scope of the stimulus is of critical importance.  Since so many mistakes have been made in addressing the financial system meltdown, the only way Krugman sees to head off further deterioration is with a stimulus package large enough to counter the loss of jobs coming our way out of the private sector.

 Obama says we need swift, bold action.  Let’s hope we get it— and nothing less.

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(See Memeorandum for discussion.)

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UPDATE— It might be time for Barack Obama to remember that, as Chicago political writer Peter Finley Dunne once said, “Politics ain’t beanbag.”  If Barney Frank and Paul Krugman are right, the Congressional Republicans are never going to sign on the a stimulus package coming from the White House.  So, rather than looking for ways to help them learn to love the new President, by bearing tax cuts and cutting back spending plans, wouldn’t it be better to push through a bill that actually addresses the rolling disaster that has become our economy?  

MORE UPDATE-  I like the way Kevin Drum puts it in his post/comment, "negotiating with themselves":  "The American public really doesn't know or care if this bill passes by one vote or thirty votes. So why waste time on this? It's just a gold-embossed invitation for Republicans to obstruct and posture endlessly, something they hardly need any encouragement for."

(More Memeorandum discussion...)

Franken Wins Recount in Minnesota

Al Franken is the winner of the Minnesota Senate recount.

 Surprisingly, Franken’s numbers look better than they did before the Canvassing Board started in on the absentee ballots which had been kept off the original totals, due to clerical error.  Despite Coleman’s strategy of excluding huge percentages of those absentee ballots from Blue counties, Franken’s plurality actually increased after the remaining ballots were tabulated. The final margin of victory is standing at around 225 votes, up from 49 before the absentee votes were included.  That lead is out of around 3 million votes cast in November.

 The official announcement will be made this afternoon by the board at 2 PM CT. 

The next step will be up to the Coleman campaign, which can still file to contest the recount in court.  Meanwhile, the Senate will have to decide whether to go ahead and seat Franken while legal action may still be underway.  

 

A Prescient Worry... Unheeded

Here’s a smart but unfortunately unheeded worry about the risks of securitization, from a 2005 paper presented by economist Raghuram Rajan at a Jackson Hole conference that was mostly dedicated to celebrating Alan Greenspan’s brand of thinking:

 

“…perhaps the most important concern is whether banks will be able to provide liquidity to financial markets so that if the tail risk does materialize, financial positions can be unwound and losses allocated so that the consequences to the real economy are minimized.  Past episodes indicate that banks have played this role successfully.  However, there is no assurance that they will continue to be able to play this role.  In particular, banks have been able to provide liquidity in the past, in part because their sound balance sheets have allowed them to attract the available spare liquidity in the market.  However, banks today also require liquid markets to hedge some of the risks associated with complicated products they have created, or guarantees they have offered.  Their greater reliance on market liquidity can make their balance sheets more suspect in times of crisis, making them less able to provide the liquidity assurance that they have provided in the past.”

 

(A hat tip to Paul Krugman for citing how Rajan was verbally beaten up on for having the temerity to question the safety of the markets in the paper.  See Krugman’s blog this morning.)

Learning from the Meltdown

How the financial collapse is understood and dissected will be of crucial import as Americans draw lessons from the painful experience we’re now enduring.  On the right, there’s no shortage of pundits who are ready to blame the whole thing, amazingly enough, on poor people.  After all, they claim, it was giving loans to those who can’t now pay them back that started this mess, wasn’t it?

 If we fall into the trap of believing that kind of simplistic and misleading claptrap, we stand a good chance of being mired in a long and stagnant economic mess for years to come.  It’s critical that we draw the right lessons from the collapse.  Fortunately, Joseph Stiglitz, Nobel laureate and former Chairman of the Council of Economic Advisors, has outlined five crucial causes of the collapse in January’s Vanity Fair magazine.

 Stiglitz’s piece is a very readable tour through the era of neocon economics—and it shows how a belief in markets over prudence led inevitably to the meltdown.  From throwing over competent management of our central banking, as Reagan did when he replaced Paul Volker with Ayn Rand devotee Alan Greenspan, to the refusal of Greenspan’s Fed and the SEC to regulate the WMDs of economic instruments, derivatives, Stiglitz makes the case that the belief in market “innovation” as a greater good than prudent regulation sits at the core of our current disaster.

 In addition, the ferocious combination of investment banking with commercial banks, accomplished by the repeal of Glass-Steagall during the 1990’s, allowed the alpha dogs of investment markets to dominate the financial services sector.  This hasty power shift away from the traditional separation of banking and trading spelled the demise of an era of financial firewalls, without any real discussion of new regulations that might have prevented a collapse.  To hasten this seismic cultural shift, the SEC decided in 2004 to allow investment banks to increase their debt-to-capital ratio from 12:1 to 30:1 or higher.

 Stiglitz points out that during the early part of this decade, the aftermath of the tech bubble would have ordinarily been a time of serious economic retrenchment and realignment. Instead, Greenspan hit the gas pedal, dramatically lowering interest rates.  Simultaneously, Bush’s tax cuts for the rich and a cut in the capital gains rate led to more “innovative” approaches to real estate speculation and derivatives trading, at just the moment reasonable people should have been looking for safer ground during tough times. 

 Of course, even with all the incentives for the well-to-do, the stock market wouldn’t have been as attractive an investment if there hadn’t been for another incentive: the prizes given to top executives who fudged their numbers with inflated earnings and off-balance-sheet assets.  As long as the markets rewarded CEO’s and other top execs with stock options and huge bonuses, based on constantly increasing valuations, the incentive to find a way, any way, to inflate quarterly earnings figures with every report was just too tempting to resist for many. Go ask Bernie Madoff if you think constant investment gains are easy to accomplish in the real world.

 Finally, we’re in a worse mess because geniuses like Hank Paulson and the Bush White House wouldn’t take off of their rose-colored glasses when the whole thing started to crumble.  They thought letting Lehman Brothers fail would show the rest of Wall Street the way to salvation— and that simply giving the taxpayers a bag of toxic mortgages to hold would fix the problem.  They didn’t get it till way too late, even into the fall of 2008, that the whole scenario was a house of cards and was tumbling fast. Paulson didn’t realize that letting even one card go was going to collapse the entire deck.  Paulson’s belief that bad mortgages were identifiably separable from the complex of indecipherable derivative products based on them and the insurance swaps that the market was betting on to protect those derivatives was sadly mistaken.

 Even now, the conservatives are still baying at the markets-are-always-right moon.  They lament that the whole mess goes back to legislation like the Community Reinvestment Act of 1977, once again attempting to identify the poor as the problem.  They conveniently forget that CRA loans in low-income neighborhoods have actually defaulted at a lower rate than other mortgages.  The conservatives are now also constantly repeating the mantra, “Freddie Mac and Fannie Mae did it,” even though these mortgage lenders are, surprisingly enough, on better financial footing than most of the Wall Street finance giants the government hasn’t actually taken over, but merely bailed out to the tune of $700 billion and counting (see “Fannie Mae’s Last Stand,” also in Vanity Fair).

 No, the mess is far more systemic than the conservatives would like to pretend.  But don’t think that won’t keep them from continuing to work at rewriting economic history.  They know that a simple lie, repeated endlessly, grabs more news headlines than a complex truth.  So they’ll be busy shaping simple slogans for the press and looking for demons in all the usual places.  The challenge for journalists and observers seeking real answers will be to ask themselves, “Are these the same guys we listened to before the collapse”

 Since the meltdown (and before it), observers like Stiglitz, Daniel Roubini, Paul Krugman, and other critical thinkers have done an excellent job of doing forsenic accounting on the decades-long American deregulatory experiment.  We need to take their advice and learn from the mistakes that were made in the name of a convenient combination of conservative ideology and economic self-interest for the most powerful.  Once we begin to take serious stock of how the supercapitalists got us where we are, it will be easier to make decisions on a rational basis about how we want to go forward into the post-collapse future.

Minnesota Recount Update— Coleman Campaign Tactic Skews Absentee Count

 It’s becoming apparent that the Minnesota Supreme Court has unwittingly opened a door to monkey business that will be difficult to shut during the current phase of the Senate race recount between Al Franken and Norm Coleman.  I originally wondered about a provision in the court’s ruling last week that required agreement between officials and both campaigns on counting any remaining absentee ballot, but since most election law experts seemed not to pay it a lot of attention, I figured there must be less to worry about than it seemed. It struck me that no one party should have the right to set a ballot aside unilaterally.  A minority of one could therefore strike any ballot from the totals.

However, the MN Supremes left it to state canvassing officials and both campaigns to agree on standards for counting absentee ballots erroneously left out of the original results— and gave the camps until Friday to do so.

 In response, the Coleman campaign turned around and rejected almost all ballots in at least one blue county (59 out of 60 ballots), a huge percentage in other blue counties, and also adopted a policy of stonewalling any statewide agreement on overall standards that might allow the count to go forward easily.  They wanted to count some ballots that hadn’t been in the agreed upon group of improperly rejected ballots, their numbers didn’t add up, and their grounds for counting some ballots didn’t jive with their grounds for rejecting others. 

 It shouldn’t have been a surprise that they’d make outrageous demands, since the Coleman team had nothing to lose by screwing with all individual Franken votes but had nothing to gain by letting the count go forward toward predictably certifying a Franken victory.  Coleman was behind and the absentee ballots statewide had been running Franken’s way anyhow.  Why not try to make up the difference on any grounds, no matter how specious?

 This seems to be exactly what’s up on the Coleman side.  The effect of their tactics in blue counties, along with the Franken campaign’s absence of any reciprocal scorched-earth policy against Coleman ballots or red counties, will almost certainly mean that Coleman gains ground in the remaining absentee ballot count, while many Franken votes will be left off the certified recount total. 

 What has been a plurality of 49 votes for Franken—with an expected increase in the Franken plurality to come— might well become a substantially slimmer margin—or actually go towards Coleman, before the whole tally goes back to court again. 

 Nate Silver at fivethirtyeight.com points out that Team Franken would have been within its rights to adopt a similar approach to Coleman red county ballots that the Colemanites took to Franken ballots in blue counties—and just object to absolutely everything possible  in those counties where they’d be likely to run behind, no matter what the state rules for ballot acceptance are, since their lone objection would automatically keep any ballot out of the recount total. 

 Silver suspects that the Franken team is more interested in taking the high moral ground, thinking that they leave the door open to an Equal Protection argument in any ensuing court action if the Coleman campaign takes radically different positions on ballots in counties where they are ahead as opposed to counties where they trail.  This equitable approach presupposes that a court will ultimately look at all the votes.

 My own growing concern about this position is that, as we saw in Bush v. Gore, the courts don’t always look at all the votes, sometimes only at where the tally is at a moment when the majority of the court wants to freeze the result— and certify a winner.  Hence, staying ahead in the interim tally sometimes becomes more important than ultimately being the candidate with the most votes legitimately cast for your side at some theoretical perfect end.  Hopefully, a court decision won’t be made with the same kind of partisan underpinnings as Bush v. Gore, but winning now is better than being able to say you were right for the next six years.

(see Memorandum for comments)

Justice Department Needs to Investigate Post-Katrina Killings

Journalist A.C. Thompson has uncovered troubling evidence of militia killings in New Orleans’ overwhelmingly white Algiers Point neighborhood during the aftermath of Hurricane Katrina, as well as a three-year stonewall of official silence since then, during which no investigations were undertaken into eleven shootings there.  The message Thompson found was clear: the New Orleans Police Department wasn't—and isn’t— prepared to hold residents of that community responsible for violence during the period, because it views all actions taken to “protect” their neighborhood to have been presumptively justified.

Even members of the armed band of 15-30 Algiers Point residents who shot African American men for daring to walk from the flooded areas of the city into their neighborhood are surprised that only journalist Thompson has been asking questions about the killings.  One of the militia group expected more scrutiny himself by police, telling Thompson, "Aside from you, no one's come around asking questions about this."  "I'm surprised," he continued, "If that was my son, I'd want to know who shot him."

 Thompson’s lengthy piece, Katrina's Hidden Race War, appears in the December 17 issue of the Nation Magazine.  It should be followed up on by the incoming Justice Department’s Civil Rights Division.  If there will be no official local investigation of these apparent homicides, many of which seem to have been committed without the slightest provocation, except for the appearance of a black face in a frightened white community, it is the obligation of federal officials to step in.

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(For more information on the Algiers Point killings, see Thompson’s Nation article, journalist Rebecca Solnit’s blog post at TomDispatch.com, an audio interview with Solnit at TomDispatch’s media site, Amy Goodman’s 2005 interview with resident Malik Rahim, the documentary, “Welcome to New Orleans,” and an interview with militia shooting victim Donnell Herrington in Sam Pollard and Spike Lee’s, HBO documentary, “When the Levees Broke.”)