John Cassidy's Blog, page 91

Tampa Preview: Three Tasks for “Popeye” Mitt

With some of his campaign team privately conceding that his big speech on Thursday could still end up being cancelled if a natural disaster unfolds on the Gulf Coast over the next forty-eight hours, Mitt Romney faces three tasks as the G.O.P. convention in Tampa opens a day late on Tuesday afternoon. He needs to avoid the gaffes and controversies that have plagued his campaign; deliver a competent speech that reminds people why he got in the race in the first place; and, ironically enough, direct public attention away from himself and back towards his rival, Barack Obama.

Romney isn’t going to win the election this week, but he could easily lose it. With a new Washington Post/ABC News poll showing the race essentially level, the G.O.P. candidate-elect appears to be still in with a fighting chance, which isn’t too bad considering the beating he and his party have taken over the last couple of months. But he can’t afford any more mistakes on his own part, or any more Todd Akin-style distractions. In line with the strategy that Team Romney has been pursuing all along, the role of the convention is to reassure people that their man is a competent, pragmatic problem-solver, who is eminently qualified to be President.

At this stage, Romney and his advisers have practically given up hope of establishing an intimate bond between the candidate and the voters, which is probably wise. But they still think it is possible to persuade people that Romney is the right man for the moment: a doer rather than a talker or an emoter. “I don’t think everybody likes me,” Romney said in an interview with Politico, which the Web site for political junkies posted on Monday. He continued,

“I don’t believe that, by any means. But I do believe that people of this country are looking for someone who can get the country growing again with more jobs and more take-home pay, and I think they realize this President had four years to do that…. He got every piece of legislation he wanted passed, and it didn’t work. I think they want someone who has a different record, and I do.”

Romney also repeated a line from Popeye, which he trotted out over the weekend to Chris Wallace, of Fox News, saying: “You get what you see. I am who I am.”

Obviously, the progress of Tropical Storm Isaac still hangs over everything. On Monday, there were reports of some network anchors heading for New Orleans rather than Tampa. If the storm does a lot of damage, the G.O.P. faces the nightmarish prospect of President Obama flying into the Gulf region to oversee the recovery effort, while Romney and the G.O.P. attendees are left waving flags in Tampa.

Still, Romney and his staff are determined to make the best of a bad situation. All the publicity about Isaac has drawn attention to the convention, and the truncated schedule could end up aiding the G.O.P. With just three nights of prime time to fill, the convention organizers have big-name headliners to feature every night: Ann Romney on Tuesday, Paul Ryan on Wednesday, and Romney himself on Thursday. Assuming the storm doesn’t wreak too much havoc, that is more than enough time for Romney to get his story across.

At the risk of repeating a point that has already been made ad infinitum, most Americans have already made up their minds which way to vote. For both sides, the next ten weeks is about reaching out to the five or ten per cent of likely voters who can still be swayed. Many of them are disappointed in the performance of Obama, especially regarding the economy, but they don’t necessarily harbor any personal animosity toward him. In the detailed questioning for the new Washington Post/ABC News poll, sixty-seven per cent of respondents said they think the country is on the “wrong track,” and fifty-four per cent said they disapproved of Obama’s handling of the economy. But the President’s overall approval rating was still narrowly higher than his disapproval rating—by fifty per cent to forty-six per cent—and almost three quarters of the respondents (seventy-three per cent) said he has a strong personal character.

The challenge facing the Romney campaign is to exploit the generalized discontent with the state of America and focus it on the President. For the past couple of months, the Obama campaign has brilliantly frustrated the Republicans, diverting attention onto Romney—his record at Bain Capital, his refusal to release more tax returns, his slipups on his foreign trip, and so on. But for the next three nights, Isaac permitting, Romney has an opportunity to get his side of the story across, relatively unimpeded by Team Obama and the loathed liberal media.

That assumes, of course, that the week goes off without any distractions from the likes of Donald Trump, Sheldon Adelson, and the Koch brothers, all of whom will be in Tampa for at least part of the week. With more than seventy per cent of Americans already believing that Romney’s policies would benefit the wealthy, according to another new poll, this one from the Pew Research Center, the last thing he needs is more publicity about his unseemly rich backers, or any other G.O.P. nasties. One promising note: Congressman Akin has promised to stay away. (On Monday, no less a personage than Karl Rove predicted that Akin, if he stays in the Missouri race, would lose by the widest margin of any candidate in recent history.)

Assuming the G.O.P. can avoid more self-inflicted wounds, the division of labor is pretty clear. In her speech on Tuesday, Ann Romney will attempt to humanize her husband, and her appearances during the G.O.P. primaries, when she often introduced him, suggest she is well-equipped for the task. Doubtless, she will regale us with stories of Romney dating her in Bloomfield Hills and at Brigham Young, her introduction to the Romney family, and their years bringing up five sons. If only Seamus, the family’s Irish setter were still alive, she could bring him on stage to let people see he didn’t suffer any lasting damage from the infamous dog-on-the-roof trip. Sadly, though, he died of old age some years ago.

Come Wednesday, Ryan’s mission will be to beat up on Obama and enthuse the G.O.P. base. He, too, seems well-suited to the task. Herein, however, lay some potential dangers to the Romney campaign. Judged by his past speeches, Ryan will cast the election as a choice between national bankruptcy and rebirth, an epochal decision that will determine the fate of a great nation. That’s O.K.—as I just indicated, the polls suggest most people agree with Ryan that things are going to hell. But the Veep candidate will have to go easy on laying out his preferred alternative to Obama-style social democracy: privatizing Medicare, slashing government programs, cutting the top tax rate to twenty-five per cent. All the polls—the latest one from Wapo/ABC News included—indicate that Ryan’s conservative visionary shtick turns off at least as many people as it captivates.

Finally, it’s up to the Mittster, who, if he is to be believed, has been working hard on his speech. That’s a bad sign. As he showed in last fall’s debates, Romney is a competent debater, but an orator he isn’t. If he were truly the efficiency expert he claims to be, he would have outsourced the speechwriting duties months ago to somebody far more qualified than he is, such as Michael Gerson, George W. Bush’s point man for the English language, or, better still, Peggy Noonan, who put mellifluous words into the mouth of Ronald Reagan. While one good speech won’t turn around public perceptions of Romney, it could tear a hole in the portrait of a heartless plutocrat that the Obama campaign has been assiduously constructing.

The context is important. With Obama due to speak in Charlotte just a week from Thursday, Romney needs to lay down a challenge to the President and preëmpt his remarks. He told Politico that in preparing his own speech he went back and watched Obama’s oration at the 2008 Democratic convention in Denver. “I happen to know that he will deliver an eloquent speech,” he said. “I haven’t seen it, but I know it will be eloquent. I know it will have grand promises. What I hope people do is remember what he said in Denver, and look to the promises there and compare that with the record, and they will say he promised one thing and did entirely different things.”

From the beginning, the notion that Obama has failed to deliver has been the premise of Romney’s candidacy. All along, the intention in Beantown was to turn the election into a referendum on the President, with the promotion of Romney’s own candidacy taking a secondary role. Given the widespread discontent in the electorate, this was an eminently defensible strategy to pursue. But its success also depended on making a majority of voters comfortable with the notion of Romney taking over as President, a threshold he has so far failed to cross. This week, he gets another chance to reassure the country—one he simply has to take.

Despite all the fun I’ve had at his expense over the past months, my hunch is that he will make a decent fist of it. Like Reagan, back in 1980, he has one thing going for him: expectations are low, especially among the media classes. If he delivers a decent speech, including one or two memorable lines, a few self-deprecating remarks that puncture his image as a monumental stiff, and a sincere pledge to work his tail off to turn the economy around, he may well emerge from Tampa on Friday morning with a bit of momentum.

Once again, that’s Isaac permitting.

See our full coverage of the campaign season at The Political Scene.

Photograph by Mark Wilson/Getty Images.

Hand of God Threatens to Thwart G.O.P.

If God is a Republican (and can there be any doubt?) he has evidently decided to put his fellow flag-wavers to the test. On the eve of a carefully-scripted national convention that the G.O.P. has been banking on to persuade skeptical Americans that Mitt Romney is a living, breathing human—rather than a battery-operated android—the party is now facing the prospect of going head-to-head with a hurricane in prime time.

Day one of the Tampa gabfest has already been effectively cancelled, and big questions remain about days two, three, and four. With Tropical Storm Isaac evidently heading for the waters off the Gulf Coast, where it may well turn into a hurricane, and with New Orleans having been added to the possible-impact cone, the G.O.P. convention has been relegated to the status of second lead. Government forecasters are currently predicting landfall sometime on Wednesday evening, which is when Paul Ryan is set to address the convention. By the time Romney takes the stage on Thursday night, the storm may well have blown over without doing too much damage, but who knows? Certainly not the schedulers from Team Romney and the Republican National Committee, who are desperately trying to reshuffle their lineup.

It’s very bad luck for the Republicans, but, in part, they only have themselves to blame. In scheduling their late-August get-together for a low-lying city in coastal Florida, they were tempting fate. The Tampa Bay Times reported back in May that local and federal officials in Tampa were sufficiently concerned about the weather to start planning for the possibility of big storm disrupting the convention. Here is what the story said.

This week, state leaders will game-plan a convention hurricane, one that could ruin months of planning and waste millions in spending — not to mention deal a harsh blow to Mitt Romney’s presidential campaign, which will use the event to kick-start its stretch run. Those high stakes are the reason emergency officials picked the RNC as the subject of their annual disaster drill.

“If it’s in the realm of possibility, it’s something we need to at least plan for,” said Bryan Koon, director of the Florida emergency management division.”

As the Fix’s Aaron Blake, who directed me to this story, pointed out, G.O.P. officials were willing to take a gamble on Tampa because Florida is the key swing state in the country, and the I-4 corridor, which runs from Tampa-St. Petersburg, is a key swing area. (In 2004, it went for Bush; in 2008, it went for Obama.) But with heavy winds and rain forecast for the next couple of days, as well as the lingering threat of tornadoes, how many Floridians will be paying close attention to what happens in Tampa? Not as many as the boys in Beantown had been hoping for.

On the grounds that little really newsworthy happens at the conventions, and that most Americans would prefer to stick with their regular diet of reality shows and violent dramas, the entertainment networks—ABC, CBS, FOX, and NBC—had already scaled back their coverage plans to an hour a night in prime time. Just last week, before the hurricane watch began, the networks informed the R.N.C. that they weren’t planning to show any live coverage on Monday night, when Ann Romney had been expected to speak. Team Romney promptly switched her to Tuesday, where she will share the stage with Chris Christie, the governor of New Jersey.

With all eyes on the skies, the Mittster and other senior G.O.P. figures appeared, as planned, on the Sunday political shows and tried to talk up the coming days. Speaking to Chris Wallace, on “Fox News Sunday,” Romney gave little away about his big speech, but did say that in writing it he was seeking the inspiration of his late father. (Could that mean he is set to announce he will release twelve years of tax returns? Surely not.) On CBS’ “Face the Nation,” Senator Marco Rubio, the local boy wonder who will introduce Romney on Thursday, spoke glowingly of the G.O.P. candidate-elect, saying he was an inspiration and a role model, and adding: “Everywhere he has gone, in his community and in his church, he has made it better.”

Evidently, somebody had forgotten to inform Rubio that Paul Ryan had already nabbed the Veep slot. I switched over to NBC, where a dimly-lit Jeb Bush was making some more serious points about how Romney needed to shift the focus back to the economy and job-creation. David Gregory asked him about the latest NBC News/Wall Street Journal poll, which showed Obama/Biden leading Romney/Ryan by twenty-five points among hispanic voters. If Romney talked about growth and opportunity, he would start to make some inroads into this lead, Bush averred, and then he added this warning to his fellow Republicans: “But we have to have a better tone going forward, sure. You can’t ask people to join your party and also send the message that they are not wanted.”

When and if the convention gets going, Team Romney will be trying to take Bush’s advice. On Tuesday night, Shar Valenzuela, a Latino businesswomen who is running for lieutenant governor of Delaware, is slated to be one of the speakers. But will anybody be watching?

Photograph by Win McNamee/Getty Images.

Gawker’s Romney Files: Seven Takeaways

The curse of Gawker strikes again—and this time you can count me as one of its minor victims. There I was, on Thursday lunchtime, trudging stiffly but happily back to the press center out at Bethpage, having just walked roughly five miles with Tiger Woods and Rory McIlroy for a piece I was going to write for our sports blog as a mini-break from the election. Then came the message to call my editor: Nick Denton and his minions had posted nine hundred and fifty pages of internal financial documents from Bain Capital, replete with all sorts of revelations about its activities in the Cayman Islands.

Sorry, Rory and Tiger, I couldn’t hang about for your post-round interviews. I didn’t have time either to write my piece, although I’m sure it would have combined the wit of P. G. Wodehouse with the expertise of Herbert Warren Wind and the touch of Dan Jenkins. (Yes, I’m being sarcastic.) I had to get home, crank up the Web browser, and put on the green eyeshade. Serves me right, I guess. A couple of years ago, I wrote a mischievous little post about Gawker’s own links to the Cayman Islands, in which I pointed to Felix Salmon’s revelation that the Web site’s parent company had recently located to the Caribbean tax haven and asked why a smallish media company would choose to organize its finances like a hedge fund or a money-laundering operation. I knew Denton would get me back eventually, and he did, albeit inadvertently.

Twelve hours later, and I confess I still haven’t read all nine hundred and fifty pages, which consist of financial statements and letters to investors from twenty-one investment funds of various kinds that Romney and his family have invested in over the years, most but not all of them connected to Bain Capital. I have skimmed through most of the documents, read a few in detail, and looked at the instant assessments of other reporters and pundits. With the proviso that the trove turns out to be genuine—it certainly looks genuine—and that I may well have missed something, here is what I reckon:

1. As far as I can see, there are no bombshells to report. To that extent, I agree with what Dan Primack, a senior editor at Fortune, where I write a monthly economics column, and Business Insider’s Joe Weisenthal both wrote on Thursday. We already know, from Romney’s 2010 and 2011 tax returns, his financial disclosure forms, and from reporting by Bloomberg News, Vanity Fair, and other media outlets, that Bain Capital domiciled many of its investment funds in the Cayman Islands, and that the primary reason it did so was to allow its investors, Romney included, to defer, reduce, or avoid certain taxes. The documents confirm this picture and add many new details.

2. Despite the lack of a single earth-shattering scoop, the documents are interesting and well worth posting online. Here I disagree with those who say that they have little or no news value. There are several reasons why the managers of private-equity funds and hedge funds don’t make documents like these publicly available, and why they ask the investors who receive them to sign confidentiality agreements. They don’t want to give away their secrets to their competitors. They also don’t want the public to know in any detail how they make their money, and the (legal) lengths they go to in order to minimize the taxes paid by their partners and investors. Anything that makes the world of hedge funds and private equity a bit less opaque is to be welcomed. And then, of course, there is the Romney angle.

3. The documents provide a wealth of previously unseen information about how Bain Capital operates, and, by extension, how Romney created and manages his fortune. It is true, as Primack points out, that Bain Capital’s Web site provides a list of companies it has invested in, and that Sankaty Advisors, a Bain Capital affiliate that manages some of the debt funds Romney invested in, also has a Web site, albeit one that is largely inaccessible without a login code. But these documents go far beyond that.

Here, for example, is an audited 2009 financial statement from Sankaty Credit Opportunities IV, L.P., a fund in which Romney’s I.R.A. had more than a million dollars invested in 2011. And here are two 2010 letters to investors from a sister fund run that Romney also invested in. Given Romney’s low tax rate and his reluctance to release any more tax returns, any news organization worth the name would have seized upon the documents and mined them for stories. So kudos to Denton and to John Cook, the Gawker reporter who evidently had the unenviable task of going through the pile and deciding what was newsworthy. This isn’t WikiLeaks, but it is a significant “get.”

4. The documents raise questions about some of Romney’s statements. Last month, he told an interviewer that the reason Bain Capital bases so many of its investment funds in the Cayman Islands is to “allow foreign investors to invest in U.S. enterprises and not be subject to taxes outside of their own jurisdiction.” The documents show that the Bain Capital funds also utilize a number of financial dodges that enable some of their U.S.-based investors to avoid, defer, or reduce taxes owed on the income generated by the funds’ underlying assets. These tactics include setting up shell corporations, often called “alternative investment vehicles” or “blocker corporations,” wherein investors can shield their money, and carrying out transactions called “equity swaps,” which some experts regard as scheme to minimize taxes on dividend payments.

Again, there is nothing illegal about these tactics, and some of them help prevent tax-exempt U.S. investors, such as charitable endowments, from paying taxes they don’t need to pay. But the documents suggest that Romney wasn’t telling the whole truth in suggesting the only reason firms like Bain Capital use the Cayman Islands is to help foreign investors. C’mon Mitt. You can do better than that.

5. The documents don’t solve the mystery of why Romney won’t issue any more tax returns. We all know the main reason he has such a low tax rate: it is because almost all of his income is investment income, and, thanks to George W. Bush (and, to a lesser extent, Bill Clinton), taxes on investment income are scandalously low: fifteen per cent. Moreover, as a longtime equity holder in Bain Capital itself, Romney has benefitted tremendously from the so-called “carried interest exemption,” which allows the managers of hedge funds and private-equity funds to categorize many of the fees they charge their investors as investment income. The Cayman Islands connection doesn’t have anything much to do with this, and it probably doesn’t explain why Romney is so reluctant to open up. (In another development on Thursday, he offered up a new explanation to Parade magazine: he doesn’t want to make public the size of his charitable gifts to the Mormon Church.)

6. Another mystery that remains unsolved is how Romney accumulated between $20.7 million and $101.6 million in a tax-advantaged I.R.A. A story on the Web site of ABC News attempted to tie it the fact that some of the funds Romney invested in used blocker corporations to hold large sums of money, but I don’t get it. The issue remains this: given the modest contribution limits to retirement funds, Romney’s I.R.A. must contain some assets that have risen enormously in value since he obtained them. What are they?

7. One of the most interesting questions of all is how Gawker got hold of these documents. Did Cook or another Gawker reporter dig them up? Did they arrive in a brown paper bag? (It must have been a large one.) We don’t know, and Gawker isn’t saying. A number of the documents could have come from an investor in Bain Capital. But there are also financial statements and memorandums from hedge funds that have nothing to do with Bain Capital, but which are linked to Romney through his investments in a Goldman Sachs “fund-of-funds” which, in turn, made investments in them. (Here are a couple of documents from Viking Global Equities, a big hedge fund based in Greenwich.) Clearly, somebody has been doing a lot of research into Romney’s investments. Was it, perhaps, somebody connected with the Obama campaign or another organization affiliated with the Democrats? We may never know. But coming just a few days before the start of the Republican Convention, the timing was certainly unfortunate, shall we say, for Romney.

Photograph by Melina Mara/The Washington Post/Getty Images.

See our full coverage of the campaign season at The Political Scene.

Romney’s Biggest Problem: He’s a Republican

Spare a sympathetic thought, if you have one in you, for the Mittster. There he is, diligently preparing for his big week down in Tampa, when along come the hapless Todd Akin and some self-styled visionary called Paul Ryan espousing views that, if the Democrats and their media allies succeed in pinning them on him, would make it a near mathematical impossibility for him to be elected President. At a moment when the G.O.P. candidate-elect is understandably eager (make that desperate) to talk about debt and jobs, the political-news media is consumed with abortion and Medicare. What does a public-spirited private-equity tycoon, a devoutly religious fellow who tithes a tenth of his income to his church, have to do to catch a break?

Not for the first time in this campaign, it seems as if somebody from Team Obama is scripting the story, putting in pratfall after pratfall for the unfortunate Mitt. As my colleague Amy Davidson points out in her Daily Comment, yesterday brought news that the Republican Party’s official platform for Tampa includes calls for a constitutional amendment banning abortion, and a “right to life” plank for unborn children that rules out exceptions in the cases of rape or incest. This comes on top of the barrage of publicity about Ryan’s plan, endorsed by Romney, to convert Medicare to a voucher system. Ever since Ronald Reagan came to office, the G.O.P. has demonstrated that its grasp of elementary arithmetic isn’t the greatest. (Big tax cuts + big increases in military spending = deficit reduction.) But even the most math-challenged Republican strategist can surely figure out that if the Party alienates women and seniors, having already alienated Hispanics and young voters, it doesn’t have much chance of winning.

Actually, Team Obama shouldn’t be given too much credit for events largely beyond its control. As a new e-book about the Obama campaign makes clear, the political operatives in the White House and Chicago are hardly geniuses. Like all political campaigns, Obama 2012 has been plagued by missteps, miscalculations, and internal rivalries. If Axelod/Messina/et al. were going up against a stronger candidate representing a more attractive party, reporters might well be writing stories about the disastrous mistakes they and their boss had made. (Where is Obama’s positive message? How did the White House miss the rise of the Super PACs? Why did the President go out of his way to alienate businesses large and small?)

It would also be a mistake to place all of the blame for Romney’s troubles on him. Yes, in picking Ryan he invited all the stories about privatizing Medicare and slashing food stamps. But there’s something bigger going on here than than the political failings of one man. Romney, should he fail to turn things around before November, will be the fourth G.O.P. Presidential candidate out of five to come a cropper, joining George H. W. Bush, Bob Dole, and John McCain on the list of losers. The only Republican to defy the trend, George W. Bush, scraped home in 2000 despite losing the popular vote and then, following 9/11, rode a wave of nationalism to victory in 2004.

The problem isn’t the candidates: it’s the G.O.P. In its modern incarnation, it’s a protest movement rather than a party of government. Even in the most favorable circumstances, it’s barely electable at the national level. Take right now, for instance. In any place on earth where the unemployment rate was running at 8.3 per cent, and almost two in three people believed their country was going in the wrong direction, the opposition party, even one saddled with a weak candidate, should be running well ahead in the polls. But the G.O.P. is trailing the Democrats. In a CNN poll earlier this month, just thirty-three per cent of respondents said they approved of the Republican Party, and fifty-nine per cent said they disapproved of it. The Democratic Party scored much better: its approval rating and disapproval rating were both forty-seven per cent. Thanks to redistricting and the vagaries of electoral geography, the G.O.P. will probably hold on to its majority in the House of Representatives. But after the antics of Akin and other G.O.P. ultras, its hopes of taking over the Senate appear to be fast disappearing.

The reasons for the G.O.P.’s unpopularity aren’t mysterious. On social issues, entitlement reform, and immigration, its hardline policies are out of line with popular opinion. And after eight years of George Bush, the old mantra that tax cuts will solve everything has lost some of its appeal. Increasingly, moderates and independents view the G.O.P. as a radical organization, which is historically accurate, as the political scientists Thomas Mann and Norman Ornstein pointed out in their recent book, “It’s Even Worse Than It Looks”: “The Republicans have become ideologically extreme, scornful of compromise, and ardently opposed to the established social and economic policy regime.”

If you are running for national office representing a party that is unpopular, the logical thing to do is to distance yourself from its extreme elements. To a greater or lesser extent, that is what Bush Sr., Dole, Bush Jr., and McCain tried to do, at least for part of their campaigns. But the mechanics of modern campaigning make this a very tricky strategy to pursue. Since 1988, only Bush Jr., with his embrace of “compassionate conservatism,” has pulled it off—and he only just managed it.

It isn’t just a matter of having to appeal to the right in order to be nominated, although that’s part of it. In order to wage a national campaign, the successful candidate is utterly dependent on the support of G.O.P. activists, donors, and pundits, all of whom have views to the right of the mainstream. Hewing to the center immediately after the primaries might seem like the obvious thing to do. But for all but the richest candidate, who could afford to spend a billion dollars funding his own ads and constructing his own ground operation—a Michael Bloomberg, say—going moderate isn’t a practical option. Inevitably, the candidate-elect who emerges from the primaries finds himself still scrabbling for the support of the G.O.P. base. That explains why Bob Dole picked Jack Kemp as his running mate and why John McCain picked Sarah Palin.

Romney has met the same fate as his predecessors. On issue after issue—health care, immigration, abortion, tax cuts, gun control, environmental protection—he’s been obliged to veer to the right. The selection of Ryan, who in the past has co-sponsored some of the House G.O.P.’s most provocative anti-abortion legislation, amounted to a final public recognition on Romney’s part that his original idea of courting conservatives during the primaries and then shifting to the center wasn’t a practical one. His adviser Eric Fehrnstrom was wrong when he said back in March, “It’s almost like an Etch A Sketch. You can kind of shake it up and restart all over again.”

No, you can’t, Eric, not in today’s world. As long as the G.O.P. nominee represents the Republican Party, he has to run as a Republican. And that, right there, is the problem. Until the Party changes its policies and adopts a far more inclusive approach to Americans who don’t necessarily agree with all it stands for, it will never again be the Party of government that it was between 1952 and 1992, when it held the Presidency for twenty-eight out of forty years. And that is a potentially insurmountable hurdle for any Republican Presidential candidate, even one far more skilled than Romney.

Photograph by Aram Boghosian/The Boston Globe/Getty Images.

The Horse Race: Still Waiting for the Ryan Bounce

Having spent yesterday’s column castigating conservative thinkers, I’m going to start today by quoting one of them approvingly. Appearing on Fox News last night, Charles Krauthammer had this to say about Todd Akin and his “legitimate rape” gaffe: “It isn’t only that it was offensive and toxic. It was unbelievably stupid. There is enough stupidity in Congress. We don’t need to add to it—in this large amount. The guy has to leave.”

Enough about Akin, who still appears intent on taking the advice of his opponent, Claire McCaskill, to stay in the race. On to the other big story of the last few days, or, rather, the big non-story: the “Ryan bounce.” A week and a half after Mitt Romney surprised almost everybody and picked the Janesville hunk (well, my wife thinks he’s handsome, at least by Washington standards), it’s difficult to see any significant change in the race. The Gallup tracking polls show the choice of a running mate giving Romney a bit of a lift, but as Frank Newport, the editor-in-chief of Gallup, pointed out a few days ago, the bounce is smaller than in some previous elections, such as 1996 and 2000. And with the Democrats focussing relentlessly on Ryan’s controversial plans to reform Medicare, the downside of his selection is also becoming apparent.

Still, it’s too early to reach any definitive judgements. With the Republican Convention coming up next week, and the summer holidays drawing to a close, things could change. Ryan is attracting big crowds, the conservative editorial writers are enthused, and Romney seems energized by the presence of his young running mate. All things considered, the folks in Beantown will be mildly encouraged. But that has more to do with how bad things had gotten before Romney chose Ryan than with any genuine signs of a turnaround.

I remarked at the time that the entire point of Romney’s selection of Ryan was to shake things up. With the campaign narrative revolving around his record rather than Obama’s, the national and regional polls turning against him, and some people on his own side sniping about his campaign, Romney took a calculated gamble. In overlooking Rob Portman, Marco Rubio, and others, he sacrificed the opportunity to nail down a single crucial state, such as Ohio or Florida, in favor of recasting the entire campaign along the lines of the 2010 mid-terms: as a referendum on Obama and big government.

Given the dire circumstances he was facing, Romney’s gamble was a logical one. Its success depended on setting off a chain reaction in which Ryan’s presence fired up the G.O.P. base, switched the focus of the campaign back to the economy, and started to move the polls in his direction. So far, it has succeeded in the first aim and backfired on the second. The polling question remains an open one.

That’s partly because there isn’t very much new data to analyze. The big national surveys—ABC News/Washington Post; NBC News/Wall Street Journal; CBS News/New York Times—appear to be be waiting until the eve of the convention before releasing their monthly polls. All we have to go on are the two tracking polls, from Gallup and Rasmussen, which have consistently shown a close race. That remains true. In the week leading up to the Ryan announcement, August 5th to 11th, Gallup had the race tied at forty-six per cent for each candidate. In the most recent period, August 14th to 20th, Romney has been leading Obama by two points: forty-seven per cent to forty-five per cent.

That’s the good news for Romney. A two-point swing isn’t much—it’s well within the poll’s margin of error—but in a tight race it could prove crucial. The bad news for Romney is that Rasmussen, a polling organization that is sometimes criticized for producing numbers favorable to the G.O.P., has shown little evidence of a Romney surge, or even a blip. For much of the past two months, Rasmussen’s tracker has shown the Republican candidate leading by a point or two, and that hasn’t changed at all. In today’s update, Romney leads by forty-five per cent to forty-four per cent—a statistical tie.

Republicans would also point to a couple of state-level polls that have shown a bit of movement in Romney’s direction. Wisconsin certainly appears to be tightening up: a PPP poll out today shows him leading Obama by one point. But other polls of battleground states are mixed. A series of polls last week from Purple Strategies showed Romney gaining ground in Ohio and Virginia, but Obama gaining in Colorado and Florida. Since Romney almost certainly can’t win without carrying the Sunshine State, that’s hardly encouraging. And the Purple Strategies poll also confirmed that Ryan’s views on Medicare are a potential disaster for Romney. Asked which of the two Presidential tickets was more likely to protect Medicare, respondents in marginal states choose Obama-Biden by an eight-point margin.

With Tampa just days away, though, Republican supporters and pundits are understandably eager to look on the bright side. If the election were restricted to the staff of the National Review or the Weekly Standard, or the editorial page of the Wall Street Journal, the selection of Ryan would have sealed it for the Mittster. In a Journal op-ed this morning, Fred Barnes wrote, “Once Mr. Ryan entered the race, everything changed: the issues, the substance of the candidates’ speeches, perceptions of Mr. Romney and President Obama, the role of a running mate…. Mr. Ryan has given the Romney campaign what it lacked: the ideas and the energy that provide a clear path to the White House.”

That’s largely wishful thinking. But hey, a couple of weeks ago, the Mittster didn’t even have that going for him.

Photograph by Mary Altaffer/AP.

Ferguson vs. Krugman: Where Are the Real Conservative Intellectuals?

There’s nothing like a scrap between two seasoned brawlers to liven up a Monday in the dog days of August. In the red corner, Niall Campbell Douglas Ferguson, Laurence A. Tisch professor of history at Harvard and conservative bomb-thrower in residence at the Daily Beast/Newsweek. In the blue corner, Paul Robin Krugman, Nobel-winning economist, Princeton prof, and designated liberal curmudgeon at the Times.

As fans of political sparring will recall, these two have mixed it up before—numerous times, in fact, mainly over the Obama stimulus. The cause of their latest spat: a characteristically overstated Newsweek cover story by Ferguson arguing that it’s time to replace Obama. (Headline: “Hit the Road Barack: Why We Need a New President.”) Krugman, who has been spending the last few weeks hiking through some pretty-looking hills, interrupted his vacation to accuse his old nemesis of misrepresenting the facts in claiming that Obamacare will add more than a trillion dollars to the deficit over the next ten years.

Nothing very surprising there, you might say. Ferguson, a prolific author whose “end is nigh” worldview makes him a popular speaker on the hedge-fund/Davos circuit, has been railing away at the Obama Administration since 2009, warning that its profligate spending policies were sending the U.S.A. the way of Greece. The equally indefatigable Krugman has been lecturing Ferguson for almost as long about his ignorance of elementary (Keynesian) economics and the bond market. (If people in the markets truly believed Ferguson’s analysis, the U.S. government would never be able to issue ten-year bonds with a yield of well under two per cent.)

What is pretty remarkable about the latest dustup is the weakness of the arguments presented by Ferguson, a streetwise public intellectual who, according to his Web site, now holds positions at four different élite academic institutions. Most writers would, if called upon three months before an election to pen a provocative cover story in a national newsmagazine calling for the President to be chucked out, make every effort to avoid giving the other side easy opportunities to tear down their arguments. And yet, here comes Ferguson blatantly twisting a report from the Congressional Budget Office and presenting numerous other distortions and half-truths that anybody with access to Google could discredit in a few hours.

It all got me pondering anew a question that’s been been on my mind every day since Mitt Romney picked Paul Ryan as his running mate: Where are the real conservative intellectuals these days? Surely there must be some, but sometimes it seems like all the right has to offer is a soap-box mountebank like Ryan, a trio of embittered Supreme Court Justices, and a few gnarled old Washington fixtures like Bill Kristol, George Will, and Charles Krauthammer. Given this vacuum, it’s relatively easy for an energetic and disputatious blow-in like Ferguson to emerge as one of Obama’s most visible, if not exactly persuasive, critics.

The immediate bone of contention is the fiscal impact of the Affordable Care Act, a.k.a. Obamacare. On this, I have some sympathy for Ferguson’s argument that it is likely to be substantial. Providing tens of millions of uninsured Americans hefty subsidies to buy private insurance will surely be an expensive business. The history of other entitlement programs, such as Medicare, suggests initial cost estimates often prove overoptimistic, and that could well prove to be true here. But rather than making this argument, Ferguson took another tack, implying that the official actuaries had already said the reforms would add substantially to the deficit. He wrote,

The president pledged that health-care reform would not add a cent to the deficit. But the CBO and the Joint Committee on Taxation now estimate that the insurance-coverage provisions of the ACA will have a net cost of close to $1.2 trillion over the 2012-22 period.

Actually, that’s true as far as it goes. But it doesn’t go nearly far enough. In addition to providing subsidies for the uninsured, the A.C.A. included tax increases on premium insurance plans, the imposition of certain user fees, and significant cuts in Medicare spending. As Krugman rightly pointed out, when the scorers from the C.B.O./Joint Committee took these changes into account, they concluded that the A.C.A. would actually reduce the deficit slightly rather than adding to it. You don’t have to look very hard at the C.B.O./Joint Committee report (pdf) to see the relevant numbers. They are right there in Table 1 on page 2: over the period from 2012 to 2022, the A.C.A. would reduce the deficit by $210 billion.

Ferguson omitted any mention of this figure. Upon being challenged, he posted a rebuttal on the Daily Beast in which he tried to bluff his way through, calling Krugman’s objection “truly feeble,” and adding: “I very deliberately said ‘the insurance coverage provisions of the ACA,’ not ‘the ACA.’ There is a big difference.” There surely is—not that the readers of the Newsweek cover story would know that.

In assailing Krugman, though, Ferguson committed another no-no for journalists and historians: selectively editing a quotation to support his argument. In assessing the financial consequences of Obamacare, a lot depends on whether you believe it will succeed in slowing the annual growth of spending on Medicare from about four per cent, the average rate during the past two decades, to two per cent. Ferguson is skeptical. As it happens, so am I. But he didn’t just say that. Instead, he cited a passage about the Medicare cost cuts from the C.B.O./J.C.T. report, and ended with this quote: “It is unclear whether such a reduction can be achieved…”, thereby implying that the official bean counters had cost doubt on whether the economies would ever materialize.

But note the ellipsis at the end of the quote. Enter Dylan Byers, a media reporter at Politico, with a post entitled “Niall Ferguson’s ridiculous defense.” Byers called up the C.B.O. report and looked up what Ferguson had left out. Here is the sentence in full:

It is unclear whether such a reduction can be achieved through greater efficiencies in the delivery of healthcare or will instead reduce access to care or the quality of care (relative to the situation under prior law.)

Clearly, this has a rather different meaning than the one Ferguson intended to put across. Byers sums things up this way:

So contrary to what Ferguson leads readers to believe, the CBO report does not state that the reduction is “unclear.” What is “unclear” is whether the reduction will come through greater efficiencies in healthcare delivery or reduced access to care.

So, one more time: The Oxford-trained, Harvard-employed, Newsweek contibutor Niall Ferguson just edited the CBO report to change its meaning.

This isn’t a fair fight. It’s as if Ferguson were inviting Krugman and others to knock him to the canvas, which they are doing with great enthusiasm. At the Atlantic, Matthew O’Brien identifies twelve—yes, a dozen—claims in the Newsweek cover story that don’t stack up, including some misleading figures for job losses and a bizarre suggestion that the Administration’s Wall Street reforms didn’t tackle excessive leverage at the big banks. (A more accurate statement would be that excessive leverage was one of the few big financial issues the Administration did address.) At the Web site of the New York Daily News, David Swerdlick points out that “Niall Ferguson is wrong about Obama’s foreign policy, too.”

So, a bad day for Ferguson, not that I’d be overly concerned about him. A feisty and self-confident Glaswegian, he doubtless thinks his journalistic critics are missing the wood for the trees. And if all the attention he has brought to Newsweek helps it to sell a few more copies and survive for a few more months, the consequences of today’s brouhaha won’t be all bad. But what of the right in general? Where does that stand?

Reaganism/Thatcherism, for all its faults, was a genuine intellectual movement, or counter-movement. These days, the right seems unable to rise above rabble-rousing. The end of the Cold War robbed it of an external enemy. The tensions between its social and economic wings robbed it of any internal cohesion. The financial crisis and Great Recession robbed it of a creed—laissez faire. It’s still got plenty of willing foot soldiers, and a lot of big money behind it, but where is the fresh thinking and intellectual direction? All that’s left is anti-government posturing, waving the flag, and Obama-bashing. And even in pursuing this limited agenda, it often gets its facts wrong.

Photograph by Matt Carr/Getty Images.

Ryan’s Medicare Reform: An Early Supporter Recants

One of the things we’ll hear quite a bit from Republicans in the coming months is that the Ryan/Romney approach to reforming Medicare, which involves issuing vouchers to future retirees so they can choose from various health-insurance options, has bipartisan support. Up to a point, that is true. In the community of economists, policymakers, and policy wonks which has studied and debated this issue, there are some Democrats and progressives who favor moving to a voucher system, although they usually avoid that phrase and use the less controversial term “premium support.”

In an op-ed in the Wall Street Journal a couple of days ago, Joseph Rago, a member of the paper’s editorial board, pointed out that it was Alain Enthoven, a Stanford economist who informally advised the Clinton Administration about health-care reform, who in 1978 first suggested switching to a voucher system, arguing that competition among rival health-care providers would help keep down costs. In the mid-nineties, this idea was endorsed by other moderate economists, including Henry Aaron, of the Brookings Institution, and Bob Reischauer, the longtime president of the Urban Institute. It was Aaron and Reischauer who coined the term “premium support.”

More recently, some Democratic policymakers have put forward specific plans that involve shifting future retirees from traditional Medicare into a system based on vouchers. In November of 2010, as part of a long-term plan to balance the budget, former Senator Pete Domenici, a New Mexico Republican, and Alice Rivlin, who served as budget director in the Clinton Administration, suggested transforming Medicare into a voucher system starting in 2018. And in December of last year, Oregon Senator Ron Wyden—a Democrat—joined Paul Ryan in proposing a similar premium-support plan that would start in 2022. (Wyden subsequently voted against Ryan’s budget for 2013, which contained the voucher idea along with some hefty cuts in Medicare funding.)

So yes, there are some progressives who have supported the basic ideas underlying Ryan’s plan, even if they would criticize many of its details. (Ryan initially proposed issuing vouchers that wouldn’t keep up with the costs of rising health care, and he has failed to endorse the stringent oversight that would be necessary to prevent private insurance companies gaming the system.) But there are also a lot of progressive health-care specialists who are generally amenable to the idea of competition, but who have looked closely at Ryan’s solution and found it wanting. One of them happens to be Henry Aaron—the man who helped give “premium support” its name.

At a seminar organized by the Brookings Institution last December, Aaron, along with two other experts on health-care policy—Judy Feder, a professor at Georgetown, and Paul Van de Water, a senior fellow at the Center on Budget and Policy Priorities—explained why he now thinks it would be dangerous and foolhardy to switch to vouchers, and why sticking with a modified version of the existing system is a much better idea for seniors. “My text today is the remark attributed to John Maynard Keynes,” Aaron wrote. “When the facts change, I change my mind. What do you do, sir?”

And what are these facts?

1. Traditional Medicare works better, and more cheaply, than most private-insurance plans. With tens of millions of enrollees, Medicare can exploit its bargaining power to pay health-care providers less than private insurers do: that is the great advantage of a single-payer system. Typically, doctors and hospitals receive twenty or thirty per cent less from Medicare for a given procedure than they do from private insurers. They don’t like it, but they need the business.

2. Medicare’s big challenge is demographics, not cost inflation. We’ve all seen the projections: if nothing is done to constrain it, spending on retiree health care will virtually swallow the federal budget. But what’s driving that spending is the growing number of enrollees—another million and a half Baby Boomers every year—rather than rising spending per person. “[W]hen it comes to what health-care costs per person, Medicare’s growth rate is remarkably low,” Feder pointed out—about three per cent a year over the next decade, according to the latest projections, which is considerably less than the cost inflation in the private-insurance sector.

3. In the health-care industry, competition hasn’t produced the savings that economists expected, and it has led to other problems, such as gaps in coverage. Remember the rise of H.M.O.s, another idea promoted by Enthoven that was supposed to revolutionize health care and drive down costs? Part of the problem is the advance of costly treatments. But a bigger problem is that private insurers, rather than haggling with doctors and hospitals, try to make money by limiting the procedures they cover and by aggressively managing their risk pools—that is, taking on fewer sick people. This problem can be addressed through vigorous oversight, but that’s not an easy thing to implement, especially when half of Congress is controlled by a party that breaks out in hives at the very idea of government regulation.

4. Significant measures have already been taken to reduce the future growth of Medicare spending. Under the Affordable Care Act of 2010—“Obamacare”—the formula that governs payments to health-care providers was altered to reduce outlays significantly—about five hundred billion dollars over ten years. Assuming that these measures go into effect, their impact will be very noticeable. Citing numbers from the Congressional Budget Office, Feder wrote that “Medicare premiums, currently estimated to be 11 percent lower than private insurance premiums for the same benefit package, will be about 30 percent lower by the end of the next decade.” (This change in the growth in outlays accounts for much of what Romney has been referring to as money taken away from seniors.)

5. Retirees can already make choices about what sort of health-care coverage they want. Although Medicare is often regarded as a monolithic system, it has actually changed quite a bit. Aaron noted: “The sort of competitive system that voucher advocates say they want to create already exists. The average Medicare enrollee today may choose among an average of 24 plans, in addition to traditional Medicare, including 10 health maintenance organizations.”

6. For many elderly patients, choice isn’t necessarily a good thing. Back to Aaron: “The Medicare population contains many people with mental disabilities and early or advanced mental decline. The recently announced Wyden-Ryan plan promises to provide voucher recipients with ‘clear and easy to understand information’ on various plans. Has any of you actually read the clear and easy to understand (!) information that Medicare and private insurers now distribute to enrollees? To think that providing ‘clear and easy to understand information’ equips those with mental disabilities or early-state dementia to deal with competing insurers is delusional.”

Like Aaron, I find these points pretty persuasive. With the passing of the Affordable Care Act, the country has just embarked upon one costly and complicated exercise in health-care reform based upon private insurance, the consequences of which won’t be clear for years. Following this up by tearing apart Medicare, a costly but cost-effective program that has served seniors well for almost fifty years, would surely be a privatization experiment too far.

Photograph by Philip Scott Andrews/The New York Times/Redux.

A Banking Mystery: Who Shot Marcus Greene?

What with the LIBOR scandal, the loss-making exploits of JPMorgan’s “London Whale,” and the infuriating admission from Sanford Weill, the creator of the modern Citicorp, that he, too, thinks it’s time to break up the megabanks—better late than never, Sandy—you would be forgiven for thinking, in one of your grouchier moments, that it’s also time that one of these big-shot bankers got what was coming to him.

I’m not talking about early retirement with a golden parachute to soften the blow, of the sort that Weill received when he retired, in 2007; or even an early retreat to the golf course without such a handout, which was the fate of Bob Diamond, the former Barclays C.E.O. By the time these sorts of characters clear out their corner offices, they’ve stashed enough money away to live the rest of their lives in great comfort. No. I’m talking about what Treasury Secretary Timothy Geithner once referred to as “Old Testament justice”: prison sentences that carry possible parole sometime early in the twenty-second century; nervous collapses that cause their subjects to wake up at night clutching the sheets; painful degenerative diseases; panhandling on the subway; waking up in an alley—you know the sort of thing.

Perhaps you don’t. Perhaps you are a much more charitable than the average person who doesn’t work on Wall Street. Perhaps some of your best friends are senior bankers. Perhaps you are one yourself. Perhaps you think Wall Street has been unfairly maligned for the sins of Fannie Mae, the Community Reinvestment Act, Bill Clinton … (fill in your favorite liberal bête noir). That’s fine. If for whatever reason you are feeling charitably disposed to the likes of Weill, Diamond, Richard Fuld, and Lloyd Blankfein, you are excused.

For everybody else, I recommend to you the enlightening and grisly tale of Harry Shapiro and Marcus Greene, as told by John Gapper, a business columnist at the Financial Times, in his début novel, “A Fatal Debt,” which Ballantine Books recently published. As the book begins, sometime in 2009 or 2010, Harry and Marcus are the former and current C.E.O.s of a troubled Wall Street investment bank. Gapper calls it Seligman, but if you are like me you may choose to think of it, purely for the purposes of self-gratification, as Lehman.

Until disaster struck, both these Masters of the Universe were living large. Harry had a Park Avenue apartment, a beachfront home in the Hamptons, a Gulfstream, and his name on hospital wings. Marcus was one of his top underlings. Now, following Seligman’s near implosion during the financial crisis, Harry is “retired” and disgraced. Marcus is doing Harry’s old job and running the bank. Although the two men’s paths appear to have diverged, their fates are, in fact, inextricably linked.

The circumstances of Harry’s departure from Seligman lie at the heart of the plot, and I won’t give them away. Suffice to say, they involve a portfolio of sub-prime mortgages that goes sour, some dodgy accounting, and enough internal machinations to send Harry crazy, or so it appears when he and his wife show up in the E.R. of a big New York hospital, the very one on which Harry has bestowed some of his millions. Marcus, a former employee of a rival firm—Gapper calls it Rosenthal, but nobody would blame you if you mentally substituted Goldman—is sitting pretty, but that doesn’t last. Before long, he is laying face down in the drawing room of Harry’s Long Island mansion, his blood seeping through the carpet.

Whodunnit? Harry has the motive, the opportunity, the weapon, and the potential get-out-of-jail card: he’s gone nuts. But if things were that clear cut it wouldn’t be a mystery novel.

“A Fatal Debt” is tightly plotted and fast-paced. In addition to untimely deaths, there’s infidelity, psychiatry, and private jets. If that makes it sound like a beach read, so be it. I took it on my vacation and read it in two days. But it’s no potboiler. Unlike many novels about Wall Street, the financial bits are smart and believable, and the verisimilitude quotient is high. At various points, the story features credit-default swaps, questionable pricing models, defrocked math professors serving as quants, and a former banker from Goldman (sorry, Rosenthal) serving as Treasury Secretary. If some of this seems a bit clichéd, that isn’t necessarily a fault either. Wall Street is a clichéd place, but it’s also a fascinating one inhabited by some very driven and maniacal people. Gapper, a clean and felicitous writer, has concocted an entertaining yarn that takes us into their world, at least for a few hours.

London’s Lesson for Romney and Ryan: Government Works

Finally, it’s all over, and Team U.S.A. came out on top, with a hundred and four medals, forty-six of them gold. China came in second, with thirty-eight golds and eighty-eight in total. Rah! Rah! Rah! “The USA Crushed Every Other Country in the Medal Count. Why Is America So Awesome at the Olympics?” a headline at Slate asked.

The main reason is that the United States is a very big, very rich country, and it should come out on top. On a per-capita basis, other rich nations did equally well, perhaps better. If you combine the five biggest European countries (France, Germany, Great Britain, Italy, and Spain) they have practically the same number of inhabitants as the U.S: about three hundred and fifteen million people. Taken together, the European countries won a hundred and eighty-eight medals—almost twice the U.S. total—and sixty-two golds.

So, no, the real lesson of London 2012 isn’t that the U.S. is the most fantabulous country on the planet and that everywhere else stinks, although in Michael Phelps, Allyson Felix, LeBron James, and others we certainly have some incredible athletes. The real takeaway from the Games is one that might surprise Mitt Romney and his new running mate, Paul Ryan: government initiatives can work, and very effectively at that.

You may recall—who can forget?—that a day or two before the Games started, Romney questioned London’s preparedness to host the 2012 Olympics, saying there were “a few things that were disconcerting.” To be fair to the foot-in-mouth champ, he wasn’t the only one raising doubts about transportation arrangements, security, and other issues. The Brits were busy doing it themselves. Romney’s crime was to join in a family row, which instantly united the protagonists against him.

In the end, the British government made sure the Games went off without a hitch. The Home Office settled a dispute with customs and immigration workers, which averted a threatened strike at ports and airports. When a private firm failed to provide enough security guards to secure the various sites of the Games, British soldiers stepped in and did what by all accounts was a bang-up job. Answering Romney’s question about whether the host nation would “come together and celebrate the Olympic moment,” the British public packed the sporting venues and turned the two-week Games into a national celebration. Even the Queen played a role, joining Daniel Craig for a James Bond spoof in the opening ceremony, which got things off to a splendid start.

As Romney discovered in Salt Lake City, putting on such a show costs a lot of money, and inevitably much of those costs falls upon the public sector. British taxpayers put up £9.3 billion (about fifteen billion dollars) to finance the Games. (The London Organizing Committee raised another seven hundred million pounds from big corporations, such as Adidas and BMW, and the International Olympic Committee, which gets most of its money from television networks like NBC, kicked in about the same amount.) There is always a lot of debate about whether public investments in one-off events like the Olympics are worthwhile. In some cases, they certainly aren’t. But these Games could well turn out to be an exception. In staging them in Stratford, a run-down neighborhood, and investing heavily in transportation links, the organizers gave a boost to the rejuvenation of London’s eastern section, which was already happening anyway.

Finally, but by no means least, there is the outstanding performance of Team G.B., which came in third in the gold-medal count (it won twenty-nine) and fourth in the over-all medals table. Obviously, home-field advantage played a role, but that is only a small part of the story, which goes back to the Barcelona Games, in 1992, when Great Britain won just five gold medals, and Atlanta, in 1996, when it won only one gold.

In a country that is just as sports-mad as this one, the British showings in Barcelona and, especially, in Atlanta, were viewed as a humiliation that demanded remedial action. The solution came in the form of the National Lottery, which John Major, the Conservative Prime Minister, launched in 1994, promising to pledge most of the proceeds to “good causes,” which were defined as cultural activities, preserving historic sites, and funding the development of sports teams. Until then, Britain had nothing to match the excellent sports programs at American universities, or the big government-funded programs in countries like Russia and China.

In the past fifteen years, government spending on sports facilities and sports-training programs has steadily increased to a point where the British Olympic team now receives about a hundred and twenty-five million pounds (about two hundred million dollars) in annual funding. And guess what? The team’s performances have improved greatly. Four years ago in Beijing, the British team won nineteen golds and forty-seven medals over-all, putting them in fourth place behind China, the United States, and Russia. This year, Team G.B. leapfrogged Russia in golds.

“You do not get excellence on the cheap nor do you get all the virtuous outcomes that come from that without long term and predictable levels of funding,” Lord Coe, the great middle-distance runner who headed up the London Organizing Committee, said over the weekend. “That’s what we witnessed in Beijing, that’s what we witnessed here and if we want to maintain our position in Olympic sport then that’s what you will need to do.” Many of the British heroes from this year’s Games echoed Coe’s sentiments. “I was at Atlanta in 1996 when G.B. finished thirty-sixth in medal table,” said Ben Ainslie, a sailor who just won his fourth gold medal. “So to see where we are now in third place at London 2012 demonstrates just how successful this strategic investment has been.”

I haven’t seen Romney or Ryan asked about the financing of the Olympics. Their response would probably be that Team U.S.A. did splendidly without much government backing, and that’s true. The United States Olympic Committee, unlike its British counterpart, relies on individual donations and corporate sponsorship for funding. Such a system can produce great athletes, especially when it is combined with supportive parents and outstanding college programs. But government-financed initiatives can work, too: the British showed that.

In fact, the entire London Games was a testament to the productive role that governments can play. Yes, governments sometimes screw things up. But often—far more often than Romney and Ryan would like to admit—they make things happen that the private sector can’t manage by itself.

See our full coverage of the Games at The Olympic Scene.

Photograph by Jocelyn Bain Hogg.

Why Romney Picked Ryan: Let’s Change the Subject from Me

He put his foot in it—by now we’ve come to expect that. After appearing through a portal in the grand old U.S.S. Wisconsin at the National Maritime Museum in Norfolk, Virginia, and describing his choice of running mate as a good Catholic who “believes in the worth of human life”—nudge, nudge you wary Evangelicals—he went on to introduce Congressman Paul Ryan as “the next President of the United States” and left the podium.

For a moment, I entertained the thought that the Mittster was quitting the race and throwing his delegates behind the forty-two-year-old Wisconsin visionary. After the beating he’s taken over the past couple of months, who could blame him? But no, here he was again, putting his arm around Ryan. “Every now and then, I’ve been known to make a mistake,” he said with a rueful smile. “But I didn’t make a mistake with this guy.”

We shall see about that. But Ryan did pretty well on his introduction. Tieless, tall, and angular, he looked around the crowd. “Wow, hey,” he said. “And right in front of the U.S.S. Wisconsin, huh. Man!” Doubtless, this aw-shucks demeanor is the mask of a professional Midwesterner, but he carried it off effectively, coupling it with some ingratiating remarks about Romney and some telling shots at the President. “High unemployment, lower income, and crushing debt is not the new normal,” he said. “It is a result of misguided policies.” He ended his speech with a ringing recitation of Republican themes—freedom, personal responsibility, and limited government. “What kind of country do we want? What kind of people do we want to be?” he asked. And he went on: “We can turn this thing around. We can.”

This performance wasn’t out of character. Ryan does a good job of cloaking his radicalism in unthreatening everyday language. He doesn’t foam at the mouth or get too academic. He doesn’t blather on about Friedrich Hayek or Saul Alinsky. As he was standing up there saying, “we won’t replace the founding principles, we’ll reapply them,” he looked more like the youthful general manager of a baseball team—a Theo Epstein or a Brian Cashman—than a committed ideologue.

The crowd cheered. The two families gathered around the podium for the television cameras. Kid Rock’s “Born Free” rang out. For a moment, all was well in the Republican world. On Fox News, Karl Rove called in from Oregon to give the choice his seal of approval. Ryan is a skillful communicator, he said—the failures in this area at the top of the ticket remained unstated—and together he and Romney would take it to the Obama campaign on the economy and the debt.

As my colleague Ryan Lizza said earlier, it’s a bold and brave choice, and for that Romney deserves some credit. In forgoing the play-it-safe options—Rob Portman and Tim Pawlenty—and picking the architect of a Republican plan to privatize Medicare, he has made the campaign more interesting, and more substantive. The historical fact remains that Vice-Presidential candidates rarely make any difference to the result. But the road to November suddenly looks quite a bit different.

A couple of days ago, I remarked that if Romney selected Ryan or Marco Rubio it would show that he was in trouble, and needed to shake up the campaign. That still seems right. In placing a lightning rod like Ryan on the ticket, Romney appears to have decided that the best form of defense is attack. For months, he and his campaign have been trying to turn the election exclusively into a referendum on Obama’s record. That strategy has now been abandoned. Ryan’s mere presence ensures that the election will be framed in the way that Team Obama has wanted all along: as a choice between the President’s moderate progressivism and the anti-government radicalism of today’s G.O.P.

Maybe Romney can mount a more effective campaign on this terrain of clashing ideologies. At the very least, it will energize Republican activists, many of whom view Ryan as a budding philosopher king—a Newt Gingrich without the arrogance or the girlfriends. A couple of years ago, when the Republicans took over the House of Representatives, I asked Grover Norquist, the Republican Svengali figure, what part Ryan would play in the coming legislative battle about the budget. Ryan wouldn’t get involved in the day-to-day wrangling, Norquist said; he was above all that: his role was to point the way to the promised land.

Another upside of picking Ryan, from Romney’s perspective, is that it will shift some of the attention away from him. Whether you love Ryan or hate him, he’s an interesting figure with provocative ideas, and he gets a lot of media ink. It may seem strange for a Presidential campaign to wish to divert attention from the Presidential candidate. In this case, though, things have come to that. With the media focussing so much on Romney’s taxes, his record at Bain Capital, and his gaffes, his campaign was listing badly.

Ryan’s selection changes the subject. That, at least, is what Stuart Stevens, Romney’s campaign manager, and spokesman Eric “Etch-a-Sketch” Fehrnstrom will be hoping for. So far, their effort to wipe out Romney’s record during the primaries and reset the campaign narrative along lines more favorable to him hasn’t been nearly as successful as they were hoping. Maybe throwing Ryan into the fray will help do the trick and transform the election into a debate about big government versus small government. That has to be the thinking in Boston. If the price is that his conservative ideas will turn off some moderate voters, it’s a price worth paying. These are desperate times.

Will the new strategy work? Even before Ryan and Romney had left the stage, the cable networks were dredging up details of his plans to reshape the retirement system. CNN asked Newt Gingrich whether he still considered it “right-wing social engineering.” There’s a lot more of that to come. Democrats like David Axelrod and Chuck Schumer like nothing more than scaremongering on Social Security and Medicare. And in this case, their scaremongering isn’t even scaremongering. The original Ryan budget plan did envisage getting rid of Medicare as it currently exists.

Straight after the Veep announcement, Romney’s campaign rushed out a set of talking points devoted to Ryan’s proposals. They said, “Gov. Romney applauds Paul Ryan for going in the right direction with his budget, and as president he will be putting together his own plan for cutting the deficit and putting the budget on a path to balance.” Axelrod responded on Twitter: “Wow, Mittsters break land speak record trying to distance from radical Ryan budget. Problem: it looks just like Mitt’s.”

So, going with Ryan is a big gamble, but it may well be one, as Alex Koppelman writes, that Romney had to take. The other day, I said he’s only got about three weeks to turn things around. He needed to pick a credible running mate, sharpen his message, and establish a connection with the voters. The selection of Ryan helps fill in the first two boxes, no doubt about it. Ultimately, though, it will be up to Romney to persuade the American people that he’s got what it takes. Judging by how he looked this morning, though, the presence of Ryan will help lift his spirits for the task ahead.

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