Mr. Right?

by Bruce Bartlett
The rise of the Obamacons.

The New Yorker is hardly the optimal vehicle for reaching the conservative intelligentsia. But, last year, Barack Obama cooperated with a profile for that magazine where he seemed to be speaking directly to the right. Because he paid obeisance to the virtues of stability and continuity, his interlocutor, Larissa MacFarquhar, came away with the impression that the Illinois senator was an adherent of Edmund Burke: "In his view of history, in his respect for tradition, in his skepticism that the world can be changed any way but very, very slowly, Obama is deeply conservative."

As The New Yorker's assessment shot across blogs, many conservatives listened eagerly. A broad swath of the movement has been in open revolt against George W. Bush--and the Republican Party establishment--for some time. They don't much care for the Iraq war or the federal government's vast expansion over the last seven-and-a-half years. And, in the eyes of these discontents, the nomination of John McCain only confirmed the continuation of the worst of the Bush-era deviations from first principles.

But it was hardly inevitable that this revolt would translate into enthusiasm for the Democratic standard-bearer. After all, you could see similar signs of unhappiness four years ago, and none of that translated into mass defections to the John Kerry camp. And, despite Ann Coulter's vow to campaign for Hillary Clinton over John McCain, the old bête noir of the right would have never attracted many conservatives. That's what makes the rise of the Obamacons such an interesting development. Conservatives of almost all ideological flavors (even, gasp, some supply-siders) have been drawn to Obama--out of a genuine affection and a belief that he may actually better embody movement ideals than McCain.

There have been a few celebrated cases of conservatives endorsing Obama, like the blogger Andrew Sullivan and the legal scholar Douglas Kmiec. But you probably have not have heard of many of the Obamacons--and neither has the Obama campaign. When I checked with it to ask for a list of prominent conservative supporters, the campaign seemed genuinely unaware that such supporters even existed. But those of us on the right who pay attention to think tanks, blogs, and little magazines have watched Obama compile a coterie drawn from the movement's most stalwart and impressive thinkers. It's a group that will no doubt grow even larger in the coming months.

The largest group of Obamacons hail from the libertarian wing of the movement. And it's not just Andrew Sullivan. Milton and Rose Friedman's son, David, is signed up with the cause on the grounds that he sees Obama as the better vessel for his father's cause. Friedman is convinced of Obama's sympathy for school vouchers--a tendency that the Democratic primaries temporarily suppressed. Scott Flanders, the CEO of Freedom Communications--the company that owns The Orange County Register--told a company meeting that he believes Obama will accomplish the paramount libertarian goals of withdrawing from Iraq and scaling back the Patriot Act.

Libertarians (and other varieties of Obamacons, for that matter) frequently find themselves attracted to Obama on stylistic grounds. That is, they believe that he has surrounded himself with pragmatists, some of whom (significantly) come from the University of Chicago. As the blogger Megan McArdle has written, "His goal is not more government so that we can all be caught up in some giant, expressive exercise of collectively enforcing our collective will on all the other people standing around us in the collective; his goal is improving transparency and minimizing government intrusion while rectifying specific outcomes."

In nearly every quarter of the movement, you can find conservatives irate over the Iraq war--a war they believe transgresses core principles. And it's this frustration with the war--and McCain's pronouncements about victory at any cost--that has led many conservatives into Obama's arms. Francis Fukuyama, the neoconservative theorist, recently told an Australian journalist that he would reluctantly vote for Obama to hold the Republican Party accountable "for a big policy failure" in Iraq. And he seems to view Obama as the best means for preserving American power, since Obama "symbolizes the ability of the United States to renew itself in a very unexpected way."

You can find similar sentiments coursing through the Boston University professor Andrew Bacevich's seminal Obamacon manifesto in The American Conservative. He believes that the war in Iraq has undermined the possibilities for conservative reform at home. The prospects for a conservative revival, therefore, depend on withdrawing from Iraq. Thus the necessity of Obama. "For conservatives, Obama represents a sliver of hope. McCain represents none at all. The choice turns out to be an easy one," Bacevich concludes.

How substantial is the Obamacon phenomenon? Well, it has even penetrated National Review, the intellectual anchor of the conservative movement. There's Jeffrey Hart, who has been a senior editor at the magazine since 1968 and even wrote a history of the magazine, The Making of the American Conservative Mind; and Wick Allison, who once served as the magazine's publisher.

Neither man has renounced his conservatism. Both have come away impressed by Obama's rhetorical acumen. This is a particular compliment coming from Hart, who wrote speeches for both Richard Nixon and Ronald Reagan. They both like that Obama couches his speeches in a language of uplift and unity. When describing his support for Obama, Allison pointed me in the direction of a column that his wife (who has never supported a Democrat) wrote in The Dallas Morning News: "He speaks with candor and elegance against the kind of politics that have become so dispiriting and for the kind of America I would like to see. As a man, I find Mr. Obama to be prudent, thoughtful, and courageous. His life story embodies the conservative values that go to the core of my beliefs."

But, if you're looking for the least likely pool of Obamacons, it would be the supply-siders. And you can even find some of those. Take Larry Hunter, who helped put together the economics passages in the Contract with America and served as chief economist for the U.S. Chamber of Commerce. He concedes that Obama is saying the wrong things on taxes but dismisses it as electioneering. Of far greater importance, in Hunter's view, is that Obama has the potential to "scramble the political deck, break up old alliances, and bring odd bedfellows together in a new coalition." And, what's more important, he views the Republican Party as a "dead, rotting carcass with a few decrepit old leaders stumbling around like zombies in a horror version of Weekend at Bernie's, handcuffed to a corpse." Unless the Republican Party is thoroughly purged of its current leadership, Hunter fears that it "will pollute the political environment to toxic levels and create an epidemic that could damage the country for generations to come."

I know what Hunter and the rest of the Obamacons are talking about. As a conservative, I share their disgust with a Republican Party that still does not see how badly George W. Bush has misgoverned this country. But, while I am sympathetic to the Obamacons and have a number of friends that are, I am not one of them. I'm not ready to join the other side.

Still, I have enjoyed watching the phenomenon, which has the potential to remake the political landscape. It will also produce some of the good comedy that inevitably accompanies strange bedfellows. The blogger Dorothy King, an archeologist and strong conservative, recently outed herself as an Obamacon. This was a culturally awkward position for her. She wondered, "Do I now, as a newly minted Obamaphile liberal elitist, have to serve my guests Chablis? Or would any old chardonnay do? ... Am I even meant to admit to going to the supermarket? Should I pretend to only go to the local Farmers' Market?" There, undoubtedly, will be much more of such dislocation in the months to come.

Bruce Bartlett is the author of Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy.

A Vote for McBama

By Robert Samuelson

WASHINGTON -- For the party faithful, this is a sweet moment. They have their candidates and, whatever the obstacles, can still imagine victory in November. But the rest of us ought to remember that the politics of winning and governing often collide. The first involves maximizing popularity. The second requires farsighted choices that ultimately benefit the country but may initially hurt a president's approval ratings. What have we learned about the candidates' capacity for governing? Enough, I think, to temper the excitement.

Start with Barack Obama. Even those who disagree with him ought to feel pride in his impending nomination, because it continues America's racial reconciliation and atonement for slavery. But symbolism can't substitute for policy, and any feel-good fallout from electing Obama would soon fade. He'd have to earn popular support, and this would be made harder by a problem of his own making: He'd have to disavow much of his campaign rhetoric. The reason is that his campaign is itself a contradiction.

On the one hand, he projects himself as the great conciliator. He uses the metaphor of his race to argue that he is uniquely suited to bridge differences between liberals and conservatives, young and old, rich and poor -- to craft a new centrist politics. On the other hand, his actual agenda is highly partisan and undermines many of his stated goals. He wants to stimulate economic growth, but his hostility toward trade agreements threatens export-led growth (which is now beginning). He advocates greater energy independence but pretends this can occur without more domestic drilling for oil and natural gas.

All this reflects Obama's legislative record. From 2005 to 2007, he voted with his party 97 percent of the time, reports the Politico. But Obama's clever campaign strategy would put him in a bind as president. Championing centrism would disappoint many ardent Democrats. Pleasing them would betray his conciliating image. The fact that he has so far straddled the contradiction may confirm his political skills and the quiet aid received from the media, which helped him by virtually ignoring the blatant contradictions.

And what does the straddle tell us of him? Aside from ambition -- hardly unique among presidential candidates -- I cannot detect powerful convictions in Obama. He seems merely expedient in peddling his convenient conflicts. He strikes me as a super-successful graduate student: the brightest, quickest, most articulate guy in the seminar. In his career, he has advanced mainly by talking and writing -- not doing -- and may harbor a delusion common to the well-educated: that he can argue and explain his way around any problem.

By contrast, no one can claim that McCain lacks convictions. He has often defied Republican-party orthodoxy, and his credentials to lead a centrist coalition are stronger than Obama's. According to the Politico, he sided with his party only 83 percent of the time from 2005 to 2007. Even in this election year, he has taken unpopular positions. Note his criticism of farm subsidies, which won't help him in the Midwest. The trouble with McCain is that he often mistakes stubbornness for principle.

He has a hard time changing his mind, even when the evidence overwhelmingly suggests he's wrong. He has stuck with "campaign finance reform" despite its dismal record. After three decades, it has entangled political campaigns in rules and paperwork without solving any notable problem (for example, people continue to believe that wealthy "special interests" have too much influence). On immigration, he still does not grasp what I think is the actual problem: not illegal immigration so much as too many poor and unskilled immigrants, whether legal or illegal. Like Obama, he seems oblivious to the possible unintended consequences of endorsing an anti-global warming "cap-and-trade" program.

Steadfastness and good judgment are qualities we value in a president, and McCain has often displayed these. He was early and correct in his criticism of the Bush administration's conduct of the Iraq War and of its treatment of prisoners. He has been consistent in his opposition to high and wasteful federal spending. But good judgment must accompany steadfastness, and there are enough instances of McCain's bad judgment to make you wonder which would prevail.

So, vote for McBama. The truth is that both candidates leave room for doubt, and neither has forthrightly addressed some of America's obvious problems -- costly government retirement programs, immigration, our energy appetite. But for me, McCain does have one provisional and accidental advantage. By most appraisals, the Republicans will get slaughtered in congressional elections, and I have a visceral dislike of one-party government. It didn't work well under Bill Clinton or George W. Bush. Divided government doesn't ensure good government, but it may limit bad government by checking the worst instincts of both parties.

How a Short Sale Went Wrong

Holman Jenkins

Like the pariah medieval animal renderers who traveled the highways and byways collecting carcasses to be made into soap and candles, short sellers do useful work and get mostly grief for it. Yet a growing strain of economic thinking holds we need more short selling, not less.

But this is old hat, and we won't repeat a column about the special problems of short selling during a bubble. It further stands to reason that the best short selling opportunities will be those presumably rare cases where rational, well-informed investors are misinformed about a company's value because of deliberate accounting fraud.

Which brings us to David Einhorn, the press's new favorite hedge-fund guru.

Readers who keep a cross-tabbed reference of this column may remember from six years ago his critique of Allied Capital, a Washington, D.C.-based company that lends to and invests in an array of smaller businesses, and pays most of its own earnings to shareholders as dividends.

Mr. Einhorn's short position since then apparently has failed to pay off, despite his persistently promoted case that the company was engaged in fraudulent overvaluation of its loans and other assets. One likely reason is that the market simply was never naive about Allied's accounting in the first place. If anything, Allied's share price benefited from Mr. Einhorn's badgering of management to improve an opacity that caused Allied's value to be discounted in the market.

So now he had to look to a regulatory crackdown to make his bet pay off. But such a crackdown hasn't been forthcoming, and Mr. Einhorn's frustration is cataloged in his new book, subtitled "A Long Short Story." He assails Allied and its CEO Bill Walton with words like "fraud" and "pyramid scheme." As with any vicious beast, when attacked, Allied defends itself. Thus an irate memoir is born.

Our long-ago column, of course, also merits mention in the book. Like many jejune newspaper readers, Mr. Einhorn seems to take a conspiratorial view of how columns come to be written. Like some who discover their names in the paper, he fails to notice the meaning, context or even existence of words that don't refer specifically to him.

He also misquotes the column as suggesting "we prefer" Allied CEO Walton to him. But the plain words said we preferred Mr. Walton's willingness to mix it up with his critics to those CEOs then yelping for Washington to fix the post-Enron "crisis of confidence" for them.

Never mind. Our point was exactly that such market debates were the necessary corollary of investor confidence, and we only regretted the easy recourse to insinuations of fraud (amid the Enron miasma) that would put shareholders in fear of their company being consumed by the legal furies regardless of any rights or wrongs.

In his final chapter, Mr. Einhorn bemoans what he imagines to be SEC Chief Chris Cox's attitude that "shareholders should not be punished for corporate fraud, because . . . they are the victims in the first place."

Bingo. A large and reputable body of legal thought sees already too much readiness to substitute the government's spanking hand for market discipline in policing corporate management. Who hasn't noticed, for instance, that class-action suits on behalf of shareholders only end up hurting shareholders? Mr. Einhorn laments that the SEC didn't rip Allied to pieces, driving its share price to $3. How would that have been justice for investors?

But the ending here is a happy one: The market works. Reams of studies show that short sellers tend to be well-informed, and even can help to balance out a market-access problem that sometimes biases stock prices to the upside. Allied was obliged, for one thing, to admit that an agent had stolen Mr. Einhorn's phone records and acknowledge a lending scandal at an affiliate (though the Small Business Administration's inspector general was apparently already on the case).

But that doesn't mean every short bet pays off. Mr. Einhorn may have failed to appreciate the market's already skeptical valuation of Allied – or misjudged the political system's willingness to serve up a corporate bonfire for his enrichment. He perhaps should have been a buyer rather than a seller, then launched his critique of management. Them's the breaks. And yet his intermittently enjoyable book is valuable for several reasons – not least for prompting one to wonder why a slush bucket like the Small Business Administration (a villain in his tale) even exists.