The morning after an election

The morning after has headaches aplenty to go around.

For Democrats, it's hard to find any positives in the election results. Going into Tuesday's voting, they knew the cards were stacked against them in Senate elections — an unpopular president, more seats to defend to keep control of the Senate, and an anti-incumbent mood from coast to coast. Even so, Tuesday's shellacking was worse than most analysts expected. Republicans even managed wide victory margins in races that were supposed to be close in Kentucky and Georgia.

Few people expected Democrats to retain control of the Senate. Republicans needed to win only six seats to achieve majority status. But the GOP's seven gains were more than most expected, with a few races yet to be decided.

North Carolina's Senate race was perhaps the most surprising of the lot. Democratic incumbent Kay Hagan had maintained a narrow lead in nearly every poll leading up to Tuesday's vote. Early returns had her in the lead by single-digit percentages. But Republican Thom Tillis ended up with the most votes at the end of the night. Hagan had been seen as vulnerable almost since she won the seat in 2008. Her Senate record was undistinguished, and she was closely allied with an unpopular president.

And then there was the outside money. More than $100 million was spent on this election, most of it by outside interests on both the Republican and Democratic sides. Nearly all of the advertising was negative — ads attacking Hagan for being too much like Obama or attacking Tillis for controversial laws passed by the state House that he led.

Having Republicans in charge of both chambers of Congress will bring changes, but only the naive will think partisanship will wane. President Obama can be combative, and he is likely to veto Republican legislation that comes to his desk, setting off more controversy. The GOP Congress might feel empowered to place limits on the president's ability to establish policy through executive orders and other administrative actions, creating more conflicts.

Clashes are inevitable, and the 2016 presidential elections will hang over every day of the next 104 weeks.

The election is two weeks from today, and at my house, you don't really need a calendar to know that. The imminence of the election is obvious on the television, in the mailbox and even on our home answering machine.

Yesterday, my wife retrieved a message from the answering machine from some unnamed caller who addressed her as "Virginia" — her legal name but one that no one ever calls her. He used the name twice in his message, each time with a brief, awkward pause before enunciating her name. He wanted to tell her about "cap-and-trade," a failed proposal to reduce carbon emissions by creating a global market in emissions permits. The proposal would have cost thousands of jobs, the caller said, and Sen. Kay Hagan voted for it, as if she hated jobs and wanted thousands of North Carolina residents to be unemployed. Never once did he tell "Virginia" to vote against Hagan two weeks from today. Instead, he urged her to call the senator and complain about her vote for cap-and-trade.

The caller's script was eerily similar to fliers we had received in the mail. The slick, brightly colored, over-sized fliers accused Hagan of the cap-and-trade sin and urged us to call her office and complain. Two of these fliers — similar in design and printing but different — arrived in one day.

Yesterday's caller identified himself as calling from "Crossroads GPS," a group founded by Karl Rove, George W. Bush's campaign guru. I believe the fliers also came from Rove's group, but I've thrown them away and can't remember for sure.

These intrusions into our home privacy are evidence of the tens of billions of dollars that are being spent on the North Carolina U.S. Senate campaign this year by both Democratic and Republican supporters. Some of the money is being spent in the traditional way by the candidates' campaigns and some by their respective parties, but even more is being spent by "independent" groups, which have been legalized by legislation and court decisions.

All this makes me wonder about the "opportunity cost" — a term from my two semesters of economics. Opportunity cost is simply what one forgoes in spending money. For example, if you buy a couple of $100 tickets to a rock concert, you forgo the opportunity to spend that money on other things, such as groceries or a car repair or a chair for the living room.

What is the opportunity cost of the billions of dollars being spent on this year's election campaigns? Imagine what a few hundred billion dollars could do to control Ebola in West Africa or to invest in child care for the poor or to improve America's passenger rail system or to reform public education.

One simple lesson I learned from economics (and from life) is that everything has its cost. Are we spending wisely?

Republican economic plan flops

The new Republican majority in the N.C. General Assembly was going to fix the state budget and the state's economy. It's not working out that well.

Despite boasting by Gov. Pat McCrory, North Carolina's economy is, overall, not much to brag about. Unemployment remains high in many counties, with only the heavily populated and well educated areas around the Triangle, Triad and Charlotte enjoying much of an economic surge. Other counties in the east, mountains and middle of the state are still flirting with double-digit unemployment.

The legislature's solution of drastically reducing the length of time a laid-off worker could draw unemployment insurance and the amount of those payments has not fired up the state's economy. Backers of this change claimed the unemployed were out of work because they enjoyed being idle, not because there were no jobs to be found. The results thus far show the Republicans were dead wrong, but it's the unemployed who are paying the price for their miscalculation.

The latest refutation of the Republican economic strategy comes from the state treasury: the state's revenues are down sharply, and officials are blaming the reduction on the legislature's revamping of the income tax. Legislators cut the state income tax for everyone and did away with any semblance of a progressive income tax. Now all taxpayers pay the same, reduced rate. As a result, the state is getting reduced revenues, and that further cuts the money available for providing state services. Reducing taxes does not automatically increase job creation and spending.

The political makeup of the legislature is locked in until after the 2020 census, when electoral districts will be redrawn, so Republicans have little motivation to admit their errors and get the state back on track. The poor performance of the Republican majority's economic experiment, however, could have an impact on this year's U.S. Senate race. Thom Tillis, the GOP speaker of the House, had planned to run on his record, which he still claims has benefited North Carolina — lower tax rates, reductions in school funding and a punitive attitude toward those who are out of work. Kay Hagan, the Democratic incumbent, has not had a stellar record, but she has not been responsible for the sinking revenues, destitute out-of-work residents and defunding of public education. 

Projection sees Republican-controlled Senate with N.C. Democrat winning

This is an interesting projection. It shows the Republicans regaining control of the U.S. Senate, with all the ramifications that will bring. But it also gives North Carolina's Kay Hagan a 73 percent chance of winning re-election in what has been termed a very vulnerable seat for the first-term Democrat. Even though the Republican leadership got the candidate they wanted from the party primary — Speaker of the House Thom Tillis — the Post's analysis has Hagan hanging onto her seat.

The Washington Post graphic also give readers an opportunity to look at House races around the country. These projections should be flavored with the recognition that it is still nearly six months until the election, and a lot can happen in six months.

Lobbying is all about the wrong issue

Today's News & Observer story about Blue Cross/Blue Shield's lobbying against a public option in health care reform legislation should not surprise anyone. I received an automated telephone call asking me to look for an item in the mail that would include a post card to send to Sen. Kay Hagan (D-NC) urging her to support health care reform that strengthens Americans' right to traditional health care, or something slyly misleading to that effect. I threw the mailing in the trash.

Health insurers have been sending a lot of mailings this year urging support for Hagan's decision to let Americans keep their health insurance, yada, yada, yada. None of the mailings clearly stated that the true purpose was to oppose a publicly run health insurance option. I can't imagine how many millions of dollars have gone into this lobbying campaign. As angry insurance clients in today's N&O story have angrily realized, these are your health insurance premiums at work.

As the health care debate drags on in Congress, I am increasingly concerned that the debate is not about health care but only about health insurance. Reforming health insurance gives us an improved health insurance program, but it will be a system still plagued by the unintended incentives and consequences of the current system. In an earlier post, I recommended a David Goldhill article from The Atlantic, which advocated more radical reform of the health care system. If only health insurance is reformed, people with health insurance can still be bankrupted if the cost of treating a chronic illness exceeds their insurance company's lifetime cap.

While Blue Cross/Blue Shield and 100 members of the Senate nibble around the edges of a problem, they are ignoring the big picture. We need a national consensus that health care might not be a "right" (it's not mentioned in the Constitution), but it is a "public good," the same as education or parks. Health insurance is a huge industry, but it is standing in the way of essential reform that will make health care accessible for all.

Pass reforms we can agree on

September has arrived, and Congress is returning to Washington to continue its debate on health care reform and other weighty matters. While members of Congress were on vacation or canvassing their home districts, my household received an intriguing piece of mail. The colorful 7-inch by 10-inch flier on heavy paper was personally addressed to the two registered voters in our household. Its veiled message either lauded or lobbied Sen. Kay Hagan on the health care issue. "Sen. Kay Hagan is working to lower health care costs ..." one side of the flier said. "Kay Hagan Is Working To Pass Consensus Bipartisan Health Care Reform That Will Make Sure People Can Get Quality Health Care Today And In The Future," the other side said, concluding "Call Kay Hagan Today ... Tell her thanks for fighting for health care reforms we need ... ."

My reaction was "What's this all about?" Hagan, the freshman Democratic senator from North Carolina, is seen as a key vote on the health care issue. The fancy flier I received was paid for (according to the fine print on the flier) by Pharmaceutical Research and Manufacturers of America and Families USA. PhRMA, which represents major prescription drug companies, has fought some of the proposed reforms now before Congress. Families USA has pushed for reforms that would make health insurance more affordable. It's an interesting alliance, if nothing else. Is this coalition attempting to bolster Hagan's standing and keep her from getting cold feet on reforms, or is it trying to embarrass Hagan into following its lead? The vague praise of Hagan on the mailed flier carefully avoids addressing any of the divisive issues in the health care reform proposals.

After a month among "the people," members of Congress may be no closer to agreeing on reform proposals than they were in July. Perhaps instead of a 1,000-page comprehensive reform bill, they should concentrate on passing legislation that could garner majority, perhaps even bipartisan, support. For instance:

• Make it illegal for insurance companies to cancel coverage when someone contracts a chronic or fatal illness.

• Make it illegal for insurance companies to refuse coverage for "pre-existing conditions."

• Ban all prescription drug advertising aimed at consumers, including ads for Viagra, Cialis and all the rest. Only physicians can write the prescriptions, so they should be the ones to decide what prescription best suits a patient. This would save many millions of dollars.

• Allow multi-state, interstate insurance groups, expanding the group population and spreading risk, thereby reducing costs.

• Find a way to gradually wean American consumers from employer-paid health insurance. This accidental system is illogical. You don't expect your employer to pay your homeowner's insurance or your car insurance, and you shouldn't expect employers to pay your health insurance. Involving the consumer directly in health insurance decisions would reduce costs and waste.

• Use mandates, subsidies or whatever other means that is necessary to extend health care coverage to all Americans. This can be done by federal subsidies for low-income individuals and families or by allowing the uninsured to "buy into" Medicare by paying a premium equivalent to the government's costs for providing health care for the elderly.

• Agree on a simple principle: Health care is not an inalienable right (it's not in the Constitution), but universal health care is an economic necessity. America's competitiveness against other industrialized nations is hurt by the burden of health insurance and the inordinate costs of American health care. A Benson M.D. recently made this point.

• Medicare costs can be reduced by imposing sensible limits on reimbursements. When the Bush administration proposed this, Democrats in Congress killed it. Now Democrats are proposing to pay for health care reform, in part, by trimming Medicare expenses, and Republicans are whining. A pox on both your houses.

• Health care reform cannot ignore the impact on federal spending. The national debt, driven by anti-recession spending, is soaring. That debt must be brought under control. The nation's fiscal health is as important as its medical health.

Reform is needed. Simplify the debate; pass what's possible now and remove the specter of financial ruin that can easily result from a single accident or illness.

Dole's ineffective campaign continues

The latest kerfuffle in the U.S. Senate race between incumbent Republican Elizabeth Dole and Democrat Kay Hagan revolves around Dole's commercial attacking Hagan for attending a fund-raiser at the Boston home of a man who leads something called the Godless Americans PAC. The commercial implies that Hagan is part of an atheistic conspiracy, and Hagan is suing Dole for defamation.

The commercial has been widely criticized, even by Republican strategists, as going too far. Hagan probably has little chance of winning a libel lawsuit against Dole, but her quick reaction puts voters on notice that she's pretty ticked off. Dole's commercial does have the look of a desperate maneuver. Hagan is leading in most polls, and Dole's campaign has been pitifully ineffective in countering Hagan's smoothly running campaign.

Although a number of high-profile Democrats (including Gov. Mike Easley) declined to take on Dole, who, despite partisan ties to an abysmally unpopular president, seemed headed toward a comfortable re-election, Dole has run one of the most ineffective campaigns in recent memory. First of all, she nearly disappeared from the state over the past five years, apparently feeling comfy with her Washington apartment and her decades of social connections in the capital. Unlike Sen. Richard Burr, who has spent every congressional recess making the rounds in North Carolina's cities and small towns, Dole was rarely seen in North Carolina. Some news media have questioned how many times she actually spent the night in this state since being elected.

Making matters worse, Dole didn't seem to take Hagan seriously and did not gear up her campaign until she belatedly discovered how vulnerable she is. Dole's campaign ads have not been effective in changing the impression that she has been aloof and absent, that she has followed the lead of an unpopular president and that she was more concerned with Washington, D.C., than with Washington, N.C.

Hagan has been less than an ideal candidate. She has said and done things that should cost her support among generally conservative Tar Heel voters. But the Dole campaign, such as it is, has failed to exploit those openings. Hagan has come out in support of ending secret-ballot union elections (a curtsy to the labor unions who have contributed to her campaign) and of the right of N.C. teachers and other state employees to go on strike. She also was unwilling to take a stand on Congress' recent financial bailout package until Dole had already cast her vote against it. Against a more aggressive candidate — or a more effective campaign manager — gaffes like those would be blared to the masses.

So why is Dole ignoring these legitimate differences and harping on the Godless Americans PAC? Hagan was less than astute in attending this fundraiser, which was ripe for exploitation, but it is less of an issue and less of a distinction than Hagan's indecisiveness about big issues and her kowtowing to union directives.

If Dole loses this election, which it looks like she will, she has no one to blame but herself.

Coming soon: A very close election in N.C.

One week before the election, the candidates and the parties are in the home stretch, making their closing arguments and keeping their fingers crossed. And the conviction in Washington Monday of Alaska Sen. Ted Stevens could have an impact on races nationwide. Stevens, the longest-serving Republican in the Senate, was convicted on seven counts relating to upgrades done on his vacation home in Alaska. If his reliable seat is lost, which now seems likely, Democrats will be that much closer to a filibuster-proof 60-seat majority in the Senate.

It is that prospect, of having one party in charge of the White House and the same party with enough votes to ram any legislation it sees fit through Congress, that has animated John McCain's recent campaign speeches. No party has controlled the White House and a filibuster-proof Senate since 1977-79. That scenario also has provided the most effective campaign advertising for Elizabeth Dole, who is trying to hang onto her Senate seat in North Carolina. Democrats need to pick up nine votes to gain unstoppable control of the Senate. Normally, that big a sweep is not possible, but 2008 is a unusual year; Republican candidates everywhere are dragged down by the unpopularity of George W. Bush. Dole has abandoned her ineffective and silly "Fibber Kay" ads in favor of a more realistic and, perhaps, scarier prospect of a filibuster-proof Senate. Hagan, whose campaign is being bolstered by millions in Democratic Senate Campaign Committee money, seems to retain the upper hand with her reminder that her husband, unlike her opponent's, can vote for her.

Not being a betting man, I've generally avoided making predictions about political races. But since I'm no longer working for a newspaper, let me offer some predictions, or at least unscientific intuitions about Nov. 4. In the presidential race, Barack Obama will come close, but John McCain will eke out a win in North Carolina, even as he loses the presidency by a fairly wide electoral vote margin. In the Senate race, Hagan looks like she'll send Dole back home to Kansas (or is it Florida?), although Dole still could pull out a win if she works hard and hammers on the filibuster-proof Senate scenario. In the governor's race, Republican Pat McCrory has won the endorsement of most of the state's major newspapers, including the reliably Democratic Old Reliable News & Observer, the Greensboro News & Record, the Charlotte Observer and others. Democrat Bev Perdue, who comes across as so plastic on the campaign trail that she might be better off not campaigning, will be relying on Democratic loyalty and Obama's expected turnout of new Democratic voters to put her over the top. She might pull it off, but it will be very close. McCrory will need every vote he can muster in the Charlotte, Asheville and Triad areas to compensate for Perdue's eastern N.C. votes. This might be the tightest race in the state; I'll give a slight, very slight, edge to McCrory.

That's my seat-of-the-pants prediction seven days before the election, subject to change as events unfold in this final week.

Out-of-touch Dole or union-obligated Hagan?

I've read two newspaper endorsements of Democrat Kay Hagan for U.S. Senate, and I'm still unconvinced. It's not that incumbent Republican Elizabeth Dole has left me in a swoon, far from it. Dole, who seemed so overconfident that she made herself as rare as the dodo bird in North Carolina, was vulnerable from the start, especially in an election year that was already running against the GOP. She had incumbency and a big campaign treasury, but in 2008, that might not be enough.

Hagan, a state senator who was an insider with the secretive Democratic power structure in Raleigh, has not impressed me. She was picked for the campaign by New York Sen. Charles Schumer after the only Democrat willing to take on Dole turned out to be Jim Neal, an openly gay Chapel Hill resident with no electoral experience. The Democratic Senate Campaign Committee has poured millions into Hagan's campaign, and she has toed the party line. Beholden to the party's commitment to labor unions, Hagan has openly said she favors elimination of the secret ballot in union elections (a top union priority) and the right to strike by North Carolina's public employees, including teachers. As a state senator, Hagan was a member of the cabal that tried to disqualify White's Tire of Wilson from bidding on retread contracts. Oddly, Dole has done little to point out Hagan's kowtowing to union preferences.

Dole has run an ineffective campaign and has done little to counter Hagan's portrayal of the senator as too old and out of touch. Dole might be getting what she deserves, but North Carolina voters might get buyer's remorse when they discover their new senator is under the control of a New York senator and national labor unions.