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Because it’s New Hampshire Primary Day and because I haven’t blogged in a while – time to apply a facile analogy to party politics! For a limited time only, clickbait post title included, no additional charge.

If there is a thing that distinguishes the amorphous categories of “tech” companies from other companies, it’s that the structure of expected returns relative to time is different from non-“tech” companies. Unlike more conventional, competitive companies with consistent margins reliant on either extensive or intensive growth to grow in value, tech companies leverage scale to hopefully strike at a focal position in an existing or emerging network with a combination of quality and timing that allows them to seize that position, a position from which monumental rents can be generated.

This creates a disjuncture between a tech company’s present and future. By many conventional metrics, most tech company’s presents look a lot like a conventional company’s death throes. Tech companies generally spend most of their early life bleeding fantastic sums of money, in the hope that if their gamble pays off, they will reap future sums orders of magnitude larger. In that sense, the better analogy for the tech company is a political one than an economic one; tech companies are like Roman generals who ventured all-or-nothing gambles on seizing the capital, with death or imperial power as binary outcomes.

The Democratic Party, today, is in something analogous to that position. There seems to be a consensus that, should demographic voting patterns not substantially shift, the Democratic Party will have a hammerlock on governing the United States within the next decade or two, as its core coalition quickly approaching majority status in the electorate.

At the same time, the Democratic Party of the present looks for all the world like a failing political party. They face structural obstacles to achieving majority status in either house of Congress; they have a minority position on the Supreme Court, though this is a more complex and mixed situation; and  hold unified control of only seven states to Republicans’ 25. Given the power this gives to Republicans to gerrymander, it is entirely possible for many facets of this dismal state to persist even if demographic harvests prove as bountiful as predicted for the Democrats.

Indeed, the only plus side is that, on the most federalized level, those demographic tailwinds have already lead to a deceptively definitive structural advantage in presidential elections; barring the discombobulation a credible third-party or independent candidate would wreak, Republicans would need to win either an unprecedented share of the nonwhite vote or an unprecedented share of the white vote in order to crack 2016, neither of which seems terribly likely at present.

Therefore, the Democratic Party stands in an odd situation; presently, its goal is to cling to the Presidency and a few key states for dear life, whereas in the future it hopes to assert a position of unprecedented dominance that could only be toppled by some combination of vast leftward movement on the part of the Republican Party (an equal ideological, if not political, windfall for ideologically-motivated activists) and an unforeseeable reshaping of the political landscape.

This disjuncture has both manifestation and exacerbation in the present Clinton/Sanders divide. It is clear that the frankly stunning demographic divides within the Democratic Party signal that a politics and platform substantially to the left of the status quo is the future of the Democratic Party; just as the Democrats expect to reap the windfall of future demographics, the left expects to reap the windfall of seizing the Democratic Party as it comes into its dominance.

But that future is not yet here, and the high odds that a Democrat will sit in the Oval Office next year are the inverse of the odds of Democratic control of either house of Congress. Therefore, no matter who the nominee is, the actual job of the next Democratic POTUS will be twofold – on the one hand, succeed in getting four budgets and as many appointees and judges through a hostile Congress as possible; and on the other hand, give back as little of the legislative and regulatory gains of the Obama administration as possible. That many within the Democratic Party itself are coming to see those gains as inadequate only exacerbates the tensions that come from high expectations of near-future political transformations clashing with a present politics largely predicated on holding patterns and defense.

This is an inadequate guide to who the Democrats should nominate; while Sanders’ politics are the future of the Democratic Party, it’s clear that 74-year-old Sanders himself, and old white men in general, are certainly not; Democrats looking solely at filling the job of President for the next four years have to balance ideology, willingness-to-compromise, and, yes, electability in making what is frankly a non-obvious decision. But of course politics is rarely about careful consideration of filling a job, and Democratic voters are casting ballots, today and for months to come, for reasons well beyond a calculating and decidedly uninspirational assessment of loss minimization. In the past, revolutions were followed by bitter infighting about its meaning, implications, and future; the oddity of the Democratic Party today is that the order has been inverted. The 2016 primary, more than anything, is a fight over not just who controls the future, but when the future will happen.

Xavier Marquez – and if you’re not reading his blog, why the heck are you reading mine? – wrote an amazing and deeply insightful post about Francisco Franco earlier this month. Analogizing to Padgett and Ansell’s theory of Cosimo Medici, Marquez posits that Franco was so successful at retaining power in Spain for so long, not through bold, decisive, clearly-directed leadership, but instead by being the indecipherable cipher at the center of a diverse and incoherent coalition, a coalition whose individual components were dependent on Franco, and all of whom Franco indulged and foiled in equal measure, never committing.

i'll get right on that

This focus on “robust action,” action that more about an inability to be countered than expeditiously or effectively accomplishing a single goal, is rooted in the “multi-vocality” of one’s coalition. Essentially, Franco had the Church, the fascists, the monarchists, and the military all in his camp, and basically the only thing they had in common was anti-socialism; otherwise, their projects were contradictory. Yet by being the ambiguous lynchpin, Franco ensured that none of these sub-networks could break off and succeed in achieving more power without him, thus binding them all to him without committing to any of them, ensuring his longevity. His words and actions, when they came, could be interpreted by many different factions in different ways; his inaction and silence – he was “‘the man who keeps quiet best in all Spain” – allowed him to defer potentially fractious commitment, retain strategic flexibility, and maintain centralized control. (He also cannily use non-ideological means to enforce loyalty and control while also ensuring the incoherence of his own coalition). Talking about Medici now, Padgett and Ansell and then Marquez say:

…“[t]he result was an awesomely centralized patrimonial machine, capable of great discipline and “top down” control because the Medici themselves were the only bridge holding this contradictory agglomeration together” (p. 1307). By contrast, the coalition of Medici opponents was both far more “coherent” and narrow in terms of the interests it represented (and hence more predictable in its actions) and less susceptible to centralized control (and hence less effective and disciplined).

***

A few days later, Tyler Cowen cited the abstract of this paper from Jang, Lee, and Park; the key finding for this discussion:

Perhaps the most interesting finding is that users who have a large number of Facebook friends are less likely to talk about politics and gay rights issues on Facebook despite having access to increasing human and information resources.

Cowen calls this finding “depressing,” and speculates:

…one possibility is that popular people do not want to endanger their popularity with controversial discussions.  Another is that non-controversial people are simply more popular to begin with.

a small profile with a big shadow, liking in the midst of it all

from orgtheory

I’d posit a different hypothesis – sufficiently large and diverse networks and/or coalitions require hubs. A popular person might have liberal and conservative friends, religious and secular friends; were they to strongly express political views, some of those friends might be alienated. Some people do in fact express their opinions strongly, and have a louder voice within a smaller, more coherent subnetwork/subcoalition. But all these smaller, narrower groups are linked/bound at the hub points of people who can maintain pleasing ambiguity to a wide diversity of people, and this increases the maximum size, reach, and potential of networks. These people can be friends with everybody by being firm allies of nobody; what they can offer is non-ideological but nonetheless vital.

***

Josh Inglett is a college student in Wisconsin. He is a smart, amiable, pleasant-looking achiever. He is a Republican. And  he was publicly appointed by Wisconsin Gov. Scott Walker, also a Republican, to sit on the state Board of Regents, the public university oversight committee – until it was revealed that he signed the recall petition to support a vote to remove Walker from office. Inglett’s nomination was spiked, and indeed, across Wisconsin intra-Republican purges are taking place based solely on whether someone signed the petition. A quarter of Wisconsin’s registered voters signed it.

sure i'll sign, what's the worst that could happen?

***

Galaxy Trucker is a deliriously fun board game. In it, you have to build a spaceship very quickly, then send it off to face absurd obstacles and hope it doesn’t explode. A key challenge to Galaxy Trucker is connecting your ship – often times, a single central “hub” piece will be holding the whole ship together, and if that hub is destroyed, the ship will fly apart into multiple segments.

made the Kessel Run in less than twelve hundred parsecs

***

Mistermix, riffing off House of Cards, wrote the following a few days ago – I think it accurately captures both the facts and the spirit of the state of the Republican caucus:

Without giving away spoilers, perhaps the most unreal aspect of this piece of fiction, other than Frank’s electoral status, is the notion that the House Whip has power over his caucus. The centerpiece of Frank’s office is a whip count board that has color-coded magnetic pieces representing each member of his caucus. If Kevin McCarthy’s version of this board isn’t already in storage, can you imagine the layer of dust that has collected on each of his member’s names?

In a world where a functioning party has factions amenable to compromises that are brokered by party leadership, being the Majority Whip can be a seat of power and an interesting job. But what’s the point of being the Republican whip in the current Congress? I imagine it has all the job satisfaction of being the manager of the worst chain restaurant in the country, except that even a Red Lobster manager can comp a dessert. The Republican Whip is just a impotent spectator to Boehner’s excuse making, Cantor’s comically transparent scheming, and Ted Cruz’ Bieber-like hold over a bunch of white middle-aged dimwits.

bold effective leadership

***

If it’s not yet obvious, the dynamics identified above seem to capture quite aptly the differing natures of America’s two political parties today. The Democrats are a diverse and perhaps incoherent coalition – public sector employees, labor unions, blacks, Hispanics, Jews, (recently) Asian-Americans, gays, women, urban-dwellers, youth, and other creative sector and socially liberal types – all of whom have different and perhaps contradictory interests or beliefs in many fields but none of whom can act except through the Democratic party. Conversely, the Republican party is ideologically, demographically, and spiritually unified – while there are some differences, especially between the small elite of the party and the vast grassroots base, the party is much more unified than it was even a decade or so ago, with opposition to the President catalyzing the wholesale adoption of social conservatism by economic conservatives and vice-versa.

And thus, you’ve seen a Republican party that is constantly auto-purging, purifying its ranks but unable to be led or act coherently; conversely, the Democratic party has become very able to act centrally, but succeeds politically best when it can defer action. On immigration reform, where Republican obstruction is arguably superior politically to passage; on Keystone XL, where the decision to approve or reject the pipeline has been endlessly deferred; on gay marriage, where the President was “evolving” for years until his cover was blown by Biden – in many cases, at least, it seems as though the Democratic party binds its coalition via inaction as often as action, and no faction can act except through the party’s center, in this case Obama, Reid, and Pelosi.

you'll be running that proposal through us

What this means for America’s future, I will leave to you, with this message:

it was all just a bad dream...

Josh Marshall rightly extrapolates from the utterly insane and terrifying comments of Ted Yoho (R-Airstrip One) that we should all be very, very afraid. He’s not wrong, exactly (I just said he was “rightly,” after all) but I don’t think we’re going to default on the national debt. Here’s why:

40-50%: Debt limit compromise on process. Not enough, methinks, has been made of this report from Greg Sargent:

The principle articulated internally is simple. Never mind delaying or defunding Obamacare — there will be no policy concessions in exchange for a debt limit that would damage Dem priorities. Republicans must refocus on legitimate legislative means, i.e., the legislative process’ normal give and take. In exchange for the debt limit hike, there will be no medical device tax repeal. No Keystone pipeline. Obama administration officials are open to the possibility of face saving moves by Republicans being part of the endgame, but only ones involving process — not policy concessions — such as the McConnell provision, a device floated last year that would have largely transferred debt limit authority to the president.

This strikes me as being both politically and policy-wise the best solution. The Democrats and the President maintain that they did not offer policy concessions for ransom, the Republicans get to claim that they won something, and the potential of future debt ceiling crises is permanently defused in a wholly-legitimized manner. The main goal the President is trying to accomplish (and that the whole world should be behind) is that a faction of Congress cannot threaten massive catastrophe in exchange for unilateral policy concessions, and even a completely clean debt ceiling hike doesn’t wholly remove that possibility from the table in the future, though it would make it far less likely.

20-30%: Clean debt ceiling hike, AKA, the GOP caves. Who knows what lives in the addled mind of John Boehner? Of which GOPers are truly mad and which are eyeing the emergency exits on the crazy train? Certainly, though, it seems that if the Senate were to pass a clean hike soon, the pressure on the House to do the same on Oct 16-17 would be enormous, and it seems that wouldn’t be a too-unlikely scenario. This is certainly what the President wants, and it would hopefully defuse future crises of this nature, but of course, nothing is guaranteed.

20-30%: The financial crisis is substituted with a wholly political one. In this scenario, the President would emerge when the first payment is due beyond what is in Treasury’s coffers and above the legal borrowing limit and, legal memo in hand, declare the debt ceiling unconstitutional and order his administration to proceed as if it did not exist. (I don’t think the platinum coin, awesome though it is, has a snowball’s chance in hell of happening). What would happen then is – the government and debt markets proceed as normal, forever. The GOP would epically flip out, the House would pass a bill/resolution ordering the POTUS to respect the debt ceiling, but a) it wouldn’t pass the Senate and b) the POTUS/WH would simply lump that in with “unconstitutional threats to the credit of the US” and move along. The House would then impeach the President on a purely party-line basis, the Senate would acquit, and there it would lie. Certainly nothing would move forward in Congress through the rest of Obama’s second term, but it’s not like anything would anyway! Whether the POTUS’s decision was correct legally would be debated, but morally, pragmatically, and governance-ally the consensus would be sympathetic to him. This would have the effect of burying the debt ceiling as an issue forever, since it’s unlikely that the GOP would believe so strongly in this that, in 2017, a President Christie/Jindal/Cruz/Paul/Palin/whomever would take the oath of office and immediately order a cessation of payments on the national debt. It would also have the odd effect of making any US default ever, for any reason, untenable legally, and thus prevent the US from any kind of Argentina/Greece kind of debt restructuring/selective defaulting down the line, meaning an actual US debt crisis (as opposed to the political crisis nominally centered around the issue of the national debt) would have to be resolved through a combination of austerity and inflation.

…and that’s it. I truly do not believe that Obama and his administration has any incentive to elect to actually catastrophically default over taking the legal out above, and I think they would elect for that knowing full well it would result in impeachment.

But of course, they can’t say they’re going to do that, or even hint that they would, because that would eliminate all incentive for the GOP to cooperate in advancing either of the two other scenarios above. The GOP would love to paint Obama as a lawless debt-addicted tyrant and has been all-but-openly itching for a reason to impeach him since Jan 20 2009, so Obama in fact has to act like Option C is off the table even if he’s completely convinced that it’s the only alternative.

It’s going to be an interesting couple of weeks, folks.

Freddie deBoer’s post on Rand Paul’s filibuster has inspired three thoughts – one about why he’s mostly right, one about where he goes wrong, and one about how this all implicates our national institutional design.

Firstly, Freddie is generally speaking on-the-nose – there is nothing about Rand Paul’s positions on other issues or political ambitions that should prevent anyone who cares about restraining executive power and preserving civil rights and rule of law from cheerfully supporting his endeavors. Anything that brings more attention to these issues is good, anything that puts more pressure on the executive branch is good. This filibuster is a distinct act (though not wholly separable) from his other political stances, and thus can and should be supported in good faith and conscience.

However, I think Freddie has somewhat blinkered himself in not broadening his view. Forget about Rand Paul’s mostly-despicable views on almost every other class of public policy issues; on this particular issue, Paul is definitively in the minority amongst his own party. That, though, is what made this filibuster so politically clever for him. The Republican Party is split between those who are (mostly) consistent in favoring reduced government power and those who simply support low taxes on rich people and bombing undesireables, and the weight is largely towards the latter. However, the GOP is very much unified on the subject of hating Barack Obama. So by spontaneously creating a dynamic by which a question that leaves Paul in an intra-party minority into a referendum on spiting the President, he managed to frame himself as a leader on the issue and bring along most of his party with him since they were motivated by not wanting to look weak on the key GOP issue of sandbagging Obama. Especially when you look at the list of key GOP contenders for 2016 – in addition to Paul, you have Rubio, Christie, Jindal, Bush, Ryan, Hunstman, Santorum, McDonnell, Walker, Daniels, Portman, Cruz…any big ones I might be forgetting? – almost every other candidate is either explicitly or implicitly on the other side of this issue. What Paul did yesterday gained him a lot of exposure while simultaneously turning a weakness that isolated him into an instance of combative, Capra-esque leadership.

This is not to say that Paul’s motivations (or his internal ranking of those motivations) are the key factors for us as citizens – to the extend Rand Paul made supporting unchecked state power to do violence more costly, it was unambiguously a Good Thing. But the dynamics also expose a serious flaw in our Constitutional institutions. Namely, it really does seem as though many of the Framers bought their own hype and believed the major points of conflict in the state they designed would be a) inter-state and b) intra-federal-governmental. But political partisanship, as in retrospect seems inevtable, ended up playing a major role in political organization in the United States and totally threw a wrench into those dynamics, especially b). The expectation that "Congress," as a body, would check "the Executive" is perhaps-fatally compromised during high periods of partisan polarization, when the Executive is unified but Congress is deeply divided, and members of Congress may prioritize supporting their party over their institutional prerogatives. So you could have a dynamic whereby, say, one party is more inclined than the other to oppose state violence, but when that party has control of the executive branch they suddenly find state violence is really useful and their co-partisans in Congress prioritize winning partisan battles. This, of course, means that these kinds of issues can quickly become corrosive to the body politic and result in the kind of self-perpetuating cynicism that further empowers state violence. I’m not sure what to do about that, per se, but I am certain that this is the correct way to understand yesterday’s events and why I am cheered but still quite wary by the Paul filibuster.

In response to an email from my father-in-law re: the "six strikes and you’re still in but slightly less in" system of attacking the Dread Pirate Bay, I wrote this:

I think there are some major weaknesses in this approach:

Firstly, small business will be in a bad position:

https://www.eff.org/deeplinks/2011/07/content-industry-and-isps-announce-common

Secondly, file-sharing follows a power-law distribution – roughly 20% of file-sharers are reponsible for roughly 80% of file-sharing, and they know how to beat the system.

Thirdly, this is still a mostly-bogus problem:

http://business.time.com/2012/01/06/digital-music-sales-finally-surpassed-physical-sales-in-2011/

Digital music sales are up and growing, and for the most part if there was no file-sharing almost none of those downloads would be replaced by sales. In fact, artists themselves benefit from file-sharing, especially those outside the top tier, since it gives them broader exposure (and leaves more money in the pockets of their fan for concert tickets and merchandise, of which a larger share of proceeds end up in the artists pockets compared to record sales, from which many artists never see a penny).

And lastly, ISPs really don’t care at all about this and consider the RIAA, MPAA, etc, to be giant nuisances. So to the extent this ever becomes truly annoying to internet customers ISPs will quit this completely voluntary program because the content providers aren’t their customers.

So I expect this new enforcement mechanism to quietly fizzle out within the year.

I should have also said:

Now, this is how you kill a pirate:

http://www.nytimes.com/2012/01/26/world/africa/us-raid-frees-2-hostages-from-somali-pirates.html?pagewanted=all

cleardot.gif

Cantankerous archetype Don Boudreaux has apparently abandoned his job and family in order to rail fulltime against the minimum wage, writing no fewer than nineteen posts on the subject since the SOTU speech. There is a lot I could say about the subject – about the economics, about the social and political impacts of the policy, and about the patronizing and condescending way Boudreaux concludes that anyone who disagrees with him is an idiot trying to destroy the poor – but instead I’ll just post the below graph, which is the ratio of one hour worked at the minimum wage to NGDP-per-capita (log scale)*:

Firstly – note how awesomely the log trendline fits the data. Secondly, note that the last point, Obama’s proposal (assuming full implementation at $9/hr on Jan 1 2014) does “hop” outside the trendline a little, but still is below the level observed in 1991.

One of my firmest belief is that most differences in kind are really differences in degree, and thus the answer to the question “is raising the minimum wage a good idea?” is another question – namely, “by how much?” I am exceedingly doubtful that Obama’s proposal will have any substantial disemployment effects.

Lastly, note that I only used “new” minimum wages, so I’m really only tracking the politically-decided minimum wage at the moment of impelmenetation, not at every moment in time. Here’s the chart for the latter:

*The future data points for NGDP/POP were projected forward by Excel using…whatever it felt like using, I guess? Kind of magic. Anyway, the numbers didn’t seem absurd so I kept them.

UPDATE: Check out both Don Boudreaux’s response and my response to his response.

The Wizard:

Just a quick observation: for the past couple of days I’ve been seeing in a lot of places, including comments on this blog, the assertion that federal spending has risen 37 percent under Obama — that specific number. Does anyone know where it’s coming from? Because if I look at the actual data, I see federal spending rising from $3.475 trillion in fourth-quarter 2008 to $3.917 trillion in fourth-quarter 2012 — a rise of 12.7 percent.

Obviously this is coming from somewhere, and being broadcast by Rush or somebody. But it’s still kind of amazing how a totally wrong number can become part of what everyone on the right just knows to be true.

Not only that – look at this:

20130212-095947.jpg

That’s the natural log of federal spending per-capita. As you can see, it grows slowly, then a little more quickly, then back to slowly, then aaaaaalmost flatlines during the Clinton administration, then takes off during the Bush administration. When the recession hits it accelerates before hitting a total wall. That’s what austerity looks like.

You can also see this as a percentage change:

20130212-100053.jpg

That’s the first instance of federal spending per-capita shrinking in…well, how long?

20130212-100044.jpg

Looks like the answer is “since Eisenhower got us out of Korea.”

Nixon says, "let's not add fractions with different denominators"

I always enjoy going to zerohedge for the most intelligent, compelling, and engaging iteration of the sociopathic perspective on events. I was disappointed, however, to see Tyler Durden submit this guest post from Bill Buckler, who is apparently of this publication. Anyway, in the course of writing some positive things about Ron Paul, Buckler writes:

The root of the problem is perfectly illustrated in the fact that since August 1971, the funded debt of the US government has risen from $US 400 Billion to $US 15,236 Billion. The severity of the problem is illustrated by the fact that with Mr Obama having yet to complete his third full year as President, he has presided over $US 4,600 Billion (or almost one-third) of that increase. The root of the problem is the abandonment of money – the final legal connection between Gold and the US Dollar was ended in August 1971. The severity of the problem is the grotesque expansion of what has taken its place.

Of course this is a giant stink bomb of the “correlation equals causation” fallacy. But beyond that this is a comparison equivalent to comparing apples to zebras. This may be painfully obvious to most people, but let’s examine some other things that happened between 1971 and the present.

Firstly, we went from having 200mm people to 300mm. Secondly, NGDP went from $1.1 trillion to $14.6 trillion. And lest hard-money types wave that all away as ruinous inflation, the Inflation Calculator says that $1 in 1971 is equivalent to $5.32 today, which if you take it purely at face leaves today’s RGDP relative to 1971 at $2.7 trillion, a nearly three-old increase even though population increased 50%, leaving per-capita GDP much higher, which can be confirmed by looking at all kinds of measurements of quality of life in the United States over the last 40 years and seeing them all rise. So we are a much wealthier country now than we have been, and we have experienced a decent amount of inflation, so it makes no sense whatsoever to just throw up the nominal gross national debt numbers from 1971 and today and call it “the root of the problem.”

And look – the debt-to-GDP ratio, which is a very useful measurement since it complete controls for any nominal growth that isn’t reflected in real standards, has tripled! In 1971 it was below 40%, now it’s over 100%! If you wanted to push the idea that we are dangerously indebted (we aren’t, but if you did), that’s all you have to say. You don’t have to make grossly misleading comparisons to prove that point.

FWIW, I’m not even mentioning how deeply unfair this is specifically to the President, who was handed a $500b structural deficit and an economic implosion worthy of the Great Depression by his successor. I’m not sure it’s really possible to stabilize debt-to-GDP in those conditions unless you unilaterally abolish most government functions.

chris-christie-.jpg

I can understand why Republicans are not terribly thrilled with their current options in this whole nomination contest buisness, but I am mystified that the latest attempt at recruitment is focused on New Jersey Governor Chris Christie. When it was focused on Paul Ryan at least it made a snake-oil sort of sense – he was young, banally easy on the eyes, and had a notable plan to address a key issue (albeit a massively unpopular one). But speculation on Chris Christie is bizarre. He’s an arrogant lout most known for bullying his constituents in attempts to promote himself via YouTube. He has no record of note as governor, he has baggage from his previous position as US Attorney, and he was elected mostly as an expression of monumental loathing for his predecessor. His approval rating has rebounded from "bad" to "good," but there’s no reason to think he even has a good shot of carrying his own state against Barack Obama. I fail to see what, if any, problem a Christie candidacy solves for the GOP.

Taking The Bait

the gopfish has trouble resisting the allure of tax cuts

Brian Beutler’s piece over at Talking Points Memo aggregating GOP outrage over the President’s speech today is a clear sign the President did the right thing. As I mentioned above, the President has been dealt the better cards here – his position is more popular, he is more popular, he is an incumbent president running for re-election during a recovering economy, and the status quo – repeal of the Bush tax cuts – is an outcome far more favorable to him. Today’s speech was a display of strength, and a hostile reaction from Republicans was totally predictable.

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