Divided for Obama

With his victory in North Carolina on Tuesday, Barack Obama took a giant step toward the Democratic presidential nomination. The irony is that he is doing this just when Hillary Clinton has finally exposed his potential weaknesses as a general election candidate.

The Illinois Senator can certainly breathe easier having dodged a loss in North Carolina, where he once held a big lead. As usual, he swept the under-30 crowd as well as the educated, upscale liberals in the central part of the Tar Heel State. He also seems to have fought the economic issue to a draw, suggesting that his opposition to Mrs. Clinton's proposal for a moratorium on the 18.4 cent federal gas tax didn't hurt.

But his victory in North Carolina depended heavily on his overwhelming (91%) share of the black vote, which made up about a third of the primary electorate. Mrs. Clinton won 61% of white Democrats in North Carolina, according to the exit polls, and 65% of white Democrats in Indiana. Mrs. Clinton also broke even among independents. Clearly Mr. Obama's early promise of a transracial, postpartisan coalition has dimmed as the campaign has progressed and voters have learned more about him.

The controversy over his 20-year association with his pastor, Reverend Jeremiah Wright, seems to have hurt in particular. About half of North Carolina Democrats said the Wright issue mattered to them, and they voted decisively for Senator Clinton. The former First Lady won easily among late deciders, which also suggests that Mr. Obama's rocky recent performance has cost him. And the Chicagoan continued his poor showing with rural voters, especially in white Democratic counties in Indiana. These are the voters John McCain will have a chance to get in November.

These are also the data points the Clinton campaign will now press with the superdelegates who will ultimately decide this contest. But the bitter political fact for the New York Senator is that her late-game rally may not matter. To nominate Mrs. Clinton now, party insiders would have to deny the nomination to the first African-American with a serious chance to be President, risking a revolt among their most loyal voting bloc.

The truth is that most Democratic pros are so confident of their November prospects that they believe either Senator will defeat John McCain. Mrs. Clinton also showed her own screaming liability yesterday, with nearly half of all Democrats saying she isn't "honest or trustworthy." This is the residue of the Clinton scandals, and it is one reason so many superdelegates have already begun to break their long co-dependence with Bill and Hillary by declaring for Mr. Obama.

Judging by his victory speech last night, the Illinois rookie has already begun to pivot to a general election strategy. He tried to address his vulnerabilities on national security and cultural values. And he began to recast his personal story as an affirmation of the American dream – in contrast to the image presented by his much-delayed condemnation of Rev. Wright's anti-American conspiracy theories.

One habit of modern Democrats is that they tend to fall in love with candidates who are both unknown and untested. The superdelegates will now have to decide if Mr. Obama is more like the Jimmy Carter of 1976 – or Michael Dukakis.

The Left Is Wrong

By John Stossel

She was once the darling of conservatives like Newt Gingrich, but now you can't watch a television news-talk program without seeing her calling for more government and showing scorn for those who want less.

She's Arianna Huffington, website impresario (http://www.huffingtonpost.com/) and author of "Right Is Wrong: How the Lunatic Fringe Hijacked America, Shredded the Constitution and Made Us All Less Safe" (http://tinyurl.com/5zrgwe).

I interviewed her for "20/20" last week (http://abcnews.go.com/Video/playerIndex?id=4728672) because I was impressed by the success of the website she created. In just three years she made the Huffington Post a hot liberal opinion site.

What happened to Huffington's beliefs? In 1994, she worked to promote the Gingrich Revolution. She appeared at political events with Bob Dole.

"I definitely called myself a conservative," she told me. "I actually believed that the private sector would be able to address a lot of the issues that I believed were very important, like taking care of those in need. And then I saw firsthand how difficult it was. ... One of the problems with the Right is that they don't believe in facts, and they don't believe in evidence. And I was willing to change my mind, confronted with new evidence. And we would all be better off if we were willing to look at new evidence."

So she turned to big government.

"What we need is serious government policies to address poverty."

But they don't work, I said.

"They don't work as well as they should be working, but there's a lot more we can do."

She believes the old AFDC (Aid to Families with Dependent Children) program helped the poor and therefore welfare reform was not a good thing.

"[Reform was] not a success. A lot of people have been left without job training and therefore without the ability to really lead productive lives."

I pointed out that since welfare reform, eight million people left the welfare rolls (http://tinyurl.com/5lcszs and http://tinyurl.com/6c8mam), and many found jobs they like, jobs that pay better than welfare. Although her favorite political candidates say life for the poor has gotten worse, incomes of the poorest Americans are actually higher today (http://tinyurl.com/3ybm72).

Confronted with a chart showing that, Huffington acknowledged that lower-income people are generally better off.

"In general. In general ... But you know we have over 30 million Americans living below the poverty line."

But the Census Bureau says the percentage of families living below the poverty line fell from 11 percent in 1996 to 9.8 percent in 2006 (http://tinyurl.com/r4hu8). The percentage of single mothers below the poverty line fell from 32.6 percent in 1996 to 28.3 in 2006 (http://tinyurl.com/r4hu8). That looks like progress to me.

But Huffington had this retort: "The fact that we used to live in caves is not a justification for the state of affairs right now."

Like most liberals, she believes America needs more regulation. OSHA (Occupational Safety and Health Administration) should be strengthened to protect workers.

I tried to acquaint her with the facts. While it's true that since OSHA started, deadly job accidents have dropped, the truth is, deaths were dropping before OSHA. Between the late 1930s and 1971, job fatalities fell from more than 40 to fewer than 20 per 100,000 workers. After OSHA was passed, fatalities continued to fall, but no faster than before. It's misleading to credit regulation for the improvement. Government gets in front of a parade and pretends to lead it.

Huffington's reply: "If you were the husband of one of the women who died recently because OSHA regulations were not sufficiently implemented, you would not be so cavalier about the speed at which things get better."

As if the government could guarantee zero job deaths.

Huffington has also joined the war on global warming. "We have two Priuses," she says.

I pointed out that she also has a $7-million house that burns more carbon than a hundred people in the Third World. She said:

"There is no question that the fact that I'm living in a big house, I occasionally travel on private planes -- all those things are contradictions. I'm not setting myself up as some paragon who only goes around on a bicycle."

That honesty is a relief. If only she and others would own up to the other contradictions in the Left's call for endlessly intrusive government.

Jerry Yang's Scorched Earth

Congratulations to Steve Ballmer. Not many CEOs would have the nerve – humility, cold-bloodedness, whatever – to float a gotta-have takeover offer, then back away over the difference between $33 and $37 a share.

Not many CEOs would have been willing nakedly to advertise strategic vulnerability and faulty execution vis-a-vis a rival like Google, then fail to consummate the deal marketed to investors as the remedy for that vulnerability and faulty execution.

Even more so because of Mr. Ballmer's Murdochian approach: He came at Yahoo with a rich 62% premium designed to foreclose a rival suitor and confront the Yahoo board with a choice of accepting Microsoft's terms or serving up a big ugly stock price drop to Yahoo's suffering shareholders. By laying such a dramatic premium on the table, he also sent a message to his own Microsoft shareholders that said: "This is the only way I see forward."

AP

Jerry Yang

But Mr. Ballmer didn't count on Jerry Yang, whose idea of what his company was worth became inflated by the perception that Microsoft needed it so much. When Mr. Yang said Microsoft's offer "undervalued" Yahoo, he meant it underestimated Yahoo's value to Microsoft, not to anybody else.

In a fashion, he outsmarted not only Mr. Ballmer but his own Yahoo shareholders and board. Having discovered how much Yahoo was worth to Redmond (and no one else), he set about destroying that unique value by ceding Yahoo's position in search to Google through an outsourcing deal.

All this so Jerry Yang can fulfill his dream of having an independent Yahoo whose halls he can continue to walk as the revered "founder."

Luckily for him, the media are too busy obsessing about the severance dished out to various Wall Street executives to make him the new poster boy for high-handed, unaccountable CEOs.

For his part, Mr. Ballmer's retreat was a rarer sort of act. Yahoo's value to Microsoft, after all, was as a weapon to impede Google's assault on Microsoft's core business, for which Microsoft could afford to pay almost any price.

A Yahoo acquisition would have allowed Microsoft to buy a position in Web eyeballs with which to attack Google's margins if not Google's market share. In turn, Google would have to think twice about throwing money regardless of potential return (as Microsoft itself was known to do) at undermining a rival's business model.

AP

Steve Ballmer

It was a plausible strategy. Then again, Microsoft might have ended up spending years and billions to build a Maginot Line.

Post-Yahoo, Mr. Ballmer says his company's counter-Google strategy remains intact; it will just be slower-going without Yahoo. But Microsoft here is perhaps showing too little imagination – or throwing up a smokescreen.

The alternative? The bravest would be to spin off Windows. Vista, its latest output, was not a triumph, even if Microsoft claims to be content with sales of the new operating system sold so far. InfoWorld, a magazine of corporate technology managers, has collected thousands of online signatures begging Microsoft to delay retiring its previous Windows version, XP, without which they'll be forced to upgrade and buy expensive new computers they don't want.

A liberated Windows unit could concentrate on developing the more streamlined and diverse operating system products the market wants (some of which could be supported by advertising), and it would still be a fabulous business for Microsoft shareholders. Meanwhile, the other Microsoft could devote itself wholeheartedly to building application businesses for the Web age, even an Office-based network for delivering ads and other services in competition with Google. With its $26 billion cash pile, Microsoft could set itself up as the host for an array of cutting-edge Web services being created by new start-ups, rather than trying to outgoogle Google in the search market.

Moral victories don't count for much with the stock market, but let's give Mr. Ballmer his moral victory. Big Yahoo investors like Capital Research's Gordon Crawford are slinging spitballs at Mr. Yang. Mr. Yang, in legal jeopardy, is spinning a tale about how Microsoft was the one that botched a deal. Yahoo's future as an "independent" company would seem to mean vassalhood to Google.

But "I told you so" doesn't brace up the Windows/Office fortress or throw a banana peel under an advancing Google. More interesting than Yahoo's fade to irrelevance (see you in Delaware Chancery Court!) will be Mr. Ballmer's Plan B.