Archive for July, 2011

Robert  Higgs

World War II Was Not the Quintessential Keynesian Miracle

by Robert Higgs

Someone must have imagined that my hopes for improved economic understanding might be excessively optimistic and thus needed to be curbed to restore my normal emotional balance, because that person undertook to smash any such hopes to dust by e-mailing me a link to a Huffington Post article by Paul Abrams, “Economically, World War II Was Stimulus on Steroids.” This screed turns out to be an ostensible macroeconomics lesson composed in equal measure of economic foolishness, historical ignorance, and ideological tendentiousness — the veritable epitome of a worse-than-worthless contribution to public enlightenment.

The opening paragraphs indicate the direction of Abrams’s argument:

The next time someone argues that the New Deal failed, and only the Second World War ended the Depression, as ‘proof’ that government spending does not work, one can respond with the details of economic growth and unemployment reduction up to 1940, or one can ignore the claim and thank them for making your case for massive government spending in a deep, broad recession.

Right wing politicians are loathe to credit the New Deal with any success in hoisting the United States out of the Great Depression, but credit World War II for that achievement, believing that that somehow disproves Keynesian economic theory.

That claim, however, undermines their entire premise.

Abrams concludes that “massive government spending at a time of severe economic downturn and dislocation can indeed get an economy humming again,” as World War II shows; the New Deal was merely too timid. He seems unaware that his argument merely restates the fallacy-ridden hodge-podge of conventional wisdom about how World War II “got the economy out of the Depression” that has dominated the thinking of economists, historians, and the public ever since the war itself.

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Derrick Roach

MALDEF: The Common Line of Controversy

by Derrick Roach

California State and Local Redistricting Commissions Drawing Fire Over Controversies

The non-partisan California Citizen’s Redistricting Commission is supposed to draw lines for new State Assembly, Senate and U.S. Congressional districts that evenly and fairly distribute the political balance of power among communities and groups of interest.  Instead, the commission has drawn fire from the start and recently came under attack by the California Republican Party after it was revealed Friday by CalWatchDog.com that Commissioner Dr. Gabino Aguirre concealed political contributions and was found to have ties to radical political organizations with a Democrat partisan agenda, including the Mexican American Legal Defense and Education Fund (MALDEF), which is actively lobbying the commission.

Californians may recall the words that were immortalized by the godfather of Democrat politics in California, former State Assembly Speaker Willie Brown who said, “In politics, a lie unanswered becomes truth within 24 hours.” Instead of repudiating the allegations of political favoritism and engaging in partisan gerrymandering of districts which tilt the political balance of power, a spokesperson for the commission said that Commissioner Aguirre would be unavailable for comment.  Perhaps Aguirre and other individuals from the 14 member panel were busy recalling another quote by former Speaker Brown when California’s electorate turned against Democrat policies. Speaking about Democrats Brown said, “We are in trouble” which proved to be an accurate assessment then and would seem to apply now.

In addition to the allegations of gerrymandering, Aguirre is accused of violating the California State Constitution, as recently amended by voters with the passage of Proposition 11 during November 2008, which legally mandates “strict non-partisan rules designed to ensure fair representation.”

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Danielle Saul

The Anti-Incumbent Sentiment

by Danielle Saul

In recent years the attitude against incumbents has dramatically increased. According to a 2011 Gallup poll, 63% of Americans believe most members of Congress do not deserve to be re-elected. This percentage went from 52 in 2007 to 65 in 2010.

This feeling only escalates during times of budget crises, which is exactly what we are in now. Although people elected Republicans to stand strong against spending and tax increases, their support stops when conflict begins. Common belief is both parties are just sticking to party platforms in order to prove a political point. This is not the case. They were sent there to get America back on the right track and that is exactly what they are trying to do. We all knew this wouldn’t be easy and it wouldn’t be fast.

There cannot be a compromise on the budget. Half of a bad thing is still a bad thing. This is an ideological battle. Do we want politicians who just “get along”, or do we want leaders that will represent the views of every day Americans? It is our job as voters to vote out the bad politicians, but we also need to use discernment and keep in politicians who will stand by their values.

You cannot just vote out every incumbent, every time.

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Brett Healy

‘Independent’ Group Stays Close to Moore Campaign

by Brett Healy
For a group that by law can’t coordinate with any political candidate or committee, the “We are Wisconsin’ PAC sure likes to stay close to Shelly Moore. How close?


Obama Nation: Making Cuts

by James Hudnall and Batton Lash

AWR Hawkins

By Refusing to Raise Debt Ceiling, Speaker Boehner Can End Obama’s Hopes for Re-election Now

by AWR Hawkins

In 2006, every Democrat Senator (including Senator Barack Obama) voted against raising the debt ceiling. Among the reasons Obama listed for voting against it was that doing so would be “a sign that the U.S. government can’t pay its own bills” and “a sign that we [were dependent] on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies.”

Of course, that was under George W. Bush. But now that Obama is president, and the debt ceiling of $14.3 trillion is about to end the spending spree Democrats have been on since January 2009, Obama has reversed course. Now, he not only favors raising the debt ceiling but also talks as if our nation’s very continuance depends upon doing so.

The truth, of course, is that Obama’s legacy and re-election are on the line and he knows it.

Thus everything we’re hearing from him about raising the debt ceiling is nothing more than the cry of a president who has spent his country into oblivion and is looking for a way to avoid the blame for doing so.

Senate Majority Leader Harry Reid (who also voted against raising the debt limit in 2006) is doing his best to lie to the public to save Obama from the consequences of reckless spending by pressuring Republicans into supporting he idea of raising the debt limit. To do this, he is giving them a fictional narrative of what life will be like if we decide to live within our means instead of continuing to spend money as fast as we can print it:

Default won’t just roil the financial markets, pushing interest rates higher, and tank the stock markets; it will affect every American’s wallet as well. Here are a few things that will happen. Social Security checks and veterans’ benefits and paychecks to our troops would stop.

Folks, think about it: This is a grand slam for Republicans. They can win by simply saying “no.”

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Robert  Higgs

Looming Treasury ‘Default’: Theater of the Absurd

by Robert Higgs

For weeks, we have been treated to comic opera in D.C.’s theater of the politically and economically absurd. On the stage, the actors—President Obama, the Secretary of the Treasury, congressional leaders—hop about, shouting moronic lines about the national “default” that will occur unless the government’s statutory debt limit is raised, reciting Chicken Little lines about how such a default will trigger worldwide economic catastrophe. According to a report in the July 5th issue of the Christian Science Monitor,

Facing an Aug. 2 deadline, Congress and the White House are stepping up face time to avert what the Treasury Department has called “catastrophic economic and market consequences” of a default on the national debt.

Think about this statement. Have governments defaulted in the past? Of course, they have, on hundreds of occasions over the centuries. Have these defaults triggered “catastrophic economic and market consequences”? No. When a government defaults, there are consequences, of course, including heightened reluctance of lenders to lend to the deadbeat government in the future or at least to lend at such favorable interest rates. Often partial payments of principal and interest are arranged or debts are restructured. The world keeps spinning.

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Publius

Sunday Open Thread: Bolshevik Edition

by Publius

Today, in 1918, Czar Nicholas and his family were murdered by the Bolsheviks. Tens of millions of Russians would soon follow. The culpability of the Media and Academia in white-washing what was going on and covering up what happened has never been adequately addressed.

AWR Hawkins

Which Was Worse: Iran/Contra or Operation ‘Fast and Furious’?

by AWR Hawkins

In the summer of 1985, persons within the Reagan administration sold hundreds of anti-tank missiles to Iran in exchange for the release of an American hostage named Benjamin Weir. For more than a year afterward, hundreds upon hundreds more missiles and missile parts were sold for the release of other hostages being held in Iran as well.

The money received for the missiles was then sent to Contras in Nicaragua to support their efforts against the communist Sandinistas. (The Sandinistas were revolutionaries who had seized power in Nicaragua a year before Reagan was elected president, while the Contras were counter revolutionaries whom persons inside the Reagan administration were relying on to curb the further spread of communism.)

With subtle changes along the way regarding the price paid for the weapons, the way the weapons were delivered, and the recipients of the weapons, the sales to Iran and the flow of money to the Contras continued unabated for over a year.

Then, in late 1986, everything came to light and what we all know now as the “Iran/Contra scandal” was underway. It would result in an independent prosecutor, Lawrence E. Walsh, charging 14 members of the Reagan administration, 11 of whom were convicted: included in these 11 were “employees of the National Security Council staff, the Department of Defense, the Department of State, and the Central Intelligence Agency.”

Reagan was not found guilty, as there was not sufficient evidence that he knew about the sales or the subsequent monies that were sent to the Contras. (There definitely weren’t any speeches wherein he boasted of overseeing the program, as there are with Obama’s Attorney General Eric Holder and Operation “Gun Runner.”)

Now, jump to 2011. It’s simply undeniable that Holder is smack dab in the middle of “Gun Runner” and “Fast and Furious.”

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Lawrence Meyers

Liberals Don’t Know What They Don’t Know

by Lawrence Meyers

A wealth manager, appropriately enough, once told me that when it came to life, information came in three categories:  What you know, what you don’t know, and what you don’t know that you don’t know.  It is the last category that is the most dangerous.

In following David Mamet’s public journey towards an alteration of his political philosophy, I recalled my own transformation.  How was it that I was a die-hard Liberal Democrat until the mid-1990’s, spent a decade in political exile, before emerging with an “Indepentarian” philosophy?

I realized it was because I started using my mind, in the manner a high school math teacher had taught me.  I used reason.

Join me as I go back in time and recount my journey.

1984

I went to a high school where the population was decidedly Liberal.  Consequently, upon arriving at Cornell University, I expected to find the same.  For the most part, I wasn’t disappointed.  Still, I found myself in the presence of a far greater number of Conservatives than I’d ever encountered before and, even worse, they were my intellectual superiors.  With the opportunity to vote in my first Presidential election approaching, and a palpable hatred for Reagan, I eagerly sought out discussion with other like-minded individuals (notice how I only sought the echo chamber).  When confronted with the boisterous Texans down the hall, who challenged my every assertion, I quickly turned away.

“Dave,” I asked the the short, nebbishy kid who lived in the adjacent dorm room, “you don’t believe any of that garbage, do you?”  I was totally confident that Dave would be an ally.

Wrong.  Dave was one of them.

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No Freedom Fries for Fatty

by Dr. Dathan A. Paterno

By now, you likely have heard of Dr. David Ludwig, Harvard professor and child obesity specialist at Children’s Hospital in Boston. He and attorney and research partner Lindsey Murtagh authored a piece in the Journal of the American Medical Association suggesting that severely obese children might require the government to remove them from custody of their parents.

If this doesn’t convince you that liberals support a nanny state, nothing will.

As a child psychologist with over 20 years of experience, I can say with supreme confidence that taking a child from his or her parents is almost always traumatic. Sometimes it is justified, of course; in cases of physical, sexual, or emotional abuse, the child is sometimes far better off living without the offending parent. Similarly, when a parent evidences a profound inability to provide the basic needs of a child, the child might be safer with a relative or, rarely, with a foster parent. But removing a child from the home because the parent doesn’t adequately assist the child in losing weight? This is nothing short of ridiculous.

Such a proposal includes several dangerous messages. First, the messages to children: your parents are so screwed up that they can’t take care of you. They aren’t good enough for you and you aren’t good enough to stay with them. Second, the messages to parents:  ultimately, you do not control the destiny of your child; the government does.  Also, the state has the right to take your children away if you don’t get their weight (or other variables) under control. Third, the message to departments of child protective services: now you have more power to control parents and children. Finally, the message to taxpayers: you will now bear the burden of paying for a state-run juvenile weight-loss program.

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Reason TV

Reason.tv: 3 Reasons Why The Debt-Ceiling Debate is Full of Malarkey

by Reason TV

All anybody in Washington can talk about these days is the debt limit or debt ceiling – the total amount of money the federal government is authorized to borrow at any given time. After a decade in which spending increased by more than 60 percent in inflation-adjusted dollars and the debt limit was raised no fewer than 10 times, the government is about to max out its $14.3 trillion credit line, leading to fears that Washington is going to default on its bonds, stop cutting Social Security checks, and destroy the economy more than it already has.

But the current debate over the debt ceiling is full of malarkey for at least three reasons.

1. August 2 is a phony deadline. Treasury Secretary Timothy Geithner has pushed back the drop-dead date when the U.S. finally reaches its limit a bunch of times already: March 31, April 15, May 31 were all cited as deadlines before August 2 was inked in as Armageddon. But this time, he means it, man, really.

2. Reaching the debt ceiling is NOT the same as defaulting on our debt – which would indeed be catastrophic.

Think about it: You can max out your credit cards but as long as you keep paying the minimum amount due each month, your creditors don’t go crazy. Interest on the debt is a small fraction of total outlays and the government has a series of tools – from using cash on hand to selling assets to scrimping on nonessential payments – to make sure interest payments are made and seniors aren’t put on an all cat-food diet.

3. Legislating-by-Panic is no way to run a country. The reason we’re in this mess is because government can’t stop spending. And the government can’t even pass a budget on a year’s notice. But we’re expecting them to come up with a good plan for the country’s borrowing in a couple of weeks? Trying to force through an expansion of the country’s credit line by promising cuts in spending down the road is exactly why we’re in this situation to begin with.

It makes far more sense to do something like sell some TARP assets — the government is sitting on $320 billion in outstanding direct loans and equities investments — to cover interest payments through the end of the fiscal year than to force Congress and the president to come up with a budget that cuts spending — and borrowing — for real, next year, not is some distant future.

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Kevin L. Martin

Rep. Shelia Jackson-Lee Uses Race Card to Cover for Obama’s Lack of Leadership

by Kevin L. Martin

As an American, who happens to be Black as well as Conservative, I publicly condemn the shameless attempt by Rep Shelia Jackson-Lee (D-Texas) to inject the President’s race into the ongoing debate between the President and Congressional Leaders concerning the debt ceiling.

Ms. Jackson-Lee took to the floor of the House and railed that the President’s political opponents were being disrespectfully in their opposition to raising the debt limit (something that he voted against as a Senator)and not compromise with him (in which compromise mean only agreeing with his position and his position only).

It would seem that Ms. Jackson-Lee and her fellow Progressives in Congress have sought to instill personhood upon their ideology and denounce anyone who voices their opposition to their policies as “a racist.”

Ms. Jackson-Lee also claims that she and her fellow Black Progressives speak for my community as a whole, but then avoid the fact that it has been the minority communities that have suffered the most under the failed policies of President Obama and now his supporters claim that the same minorities, who are now suffering are questioning his treatment as President because Conservative Republicans will not give him another 2 trillion dollar blank check to fund the same failed programs that did not work with the first 5 trillion dollars in spending.

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Christian Hartsock

What Sheila Jackson Lee and Eric Cartman Have in Common

by Christian Hartsock


Yeah, that just happened. Congresswoman Sheila Jackson Lee (D-TX) informed us all that her Republican congressional colleagues are only uneasy about raising the debt ceiling and allowing the president to spend more money we don’t have without any Democrat concession to a balanced budget amendment…because he’s black.

And it is not The Onion reporting this. Those who are familiar with Lee are aware that this insatiable impulse to carve open the long-healing wounds of America’s racially divided past is merely her signature leitmotif.

Last February, Lee took to the House to condemn a perfectly funny Super Bowl Pepsi commercial featuring a woman aggressively reprimanding her husband over his unhealthy diet yet surprising him with her lenience over his drinking Pepsi Maxx–only to throw the can at him after catching his pass on another woman and accidentally hitting the woman. Not that this would have consciously occurred to anyone other than Lee, but the couple happened to be black, thus the ad was obviously implying that all black people, you know, throw soda cans.

To be fair, Lee did begin her statement by clarifying: “Mr. Speaker I do have a sense of humor,” before explaining that she, well, has no sense of humor. (As if Pepsi hadn’t done enough by virtually emulating the Obama campaign symbol as their logo around the time of his inauguration.)

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Dan Mitchell

Mr. President, Here’s that Balanced Approach You Keep Demanding

by Dan Mitchell

At his press conference Friday, President Obama repeatedly said that a “balanced approach” is needed to deal with the fiscal situation.

The White House has obviously poll-tested and focus-grouped that phrase. But just because it’s gimmicky, that doesn’t mean balance is a bad idea. So I’ve decided to take the President’s challenge.

I want to know why America’s fiscal situation is so out of whack. I’m willing to take a dispassionate look at the numbers. And if those figures show that the President is right, and that “unaffordable tax cuts” have caused higher deficits, then I’m willing to support higher revenues (after all, I am a pragmatic, middle-of-the-road guy).

My first step was to go the White House website and track down the historical data from the President’s Office of Management and Budget.

Those numbers show that federal spending, on average, consumed 19.8 percent of GDP from 1950-2000.

Tax revenues, by contrast, have consumed an average of 18 percent of GDP.

If my math is correct, that means deficits averaged almost 2 percent of GDP over that period.

To determine why deficits are higher today than that long-run average, I decided to look at what spending and revenues will be over the next 5-10 years. I could have picked this year, but that seemed unfair since the economy is still weak, which causes abnormally high spending and unusually low revenue.

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Danielle Saul

Minnesota Possibly Reaching the End of Longest Shutdown in Recent U.S. History

by Danielle Saul

After 14 days of a Minnesota government shutdown Governor Dayton issued a letter offering to accept the tax-free Republican budget as put forward before the shutdown, with some modifications.

The shutdown has been costing the state millions of dollars every week. According to the Minnesota Senate Republican Caucus, each week the state is shutdown we are unnecessarily keeping thousands of Minnesotans unemployed, and costing the taxpayers millions. Between the estimated unemployment benefits, lost revenue, uncollected audits, delays in construction projects, and lost private sector the total spending could top $65 million a week.

After foregoing pressure from constituents during a state fly-around to make a deal, the Governor released the letter in attempt to make a deal with the Republicans. An article from the Washington Post quotes the Governor’s letter saying, “[D]espite my serious reservations about your plan, I have concluded that continuing the state government shutdown would be even more destructive for too many Minnesotans..  Therefore, I am willing to something I do not agree with — your proposal — in order to spare our citizens and our state from further damage.”

The letter specifically outlined three conditions of a compromise. First, all of the policy proposals are off the table. For example the voter ID laws and abortion/stem cell research restrictions will not go through. Second, Republicans must let go of their “arbitrary” across-the-board 15 percent cuts in the number of employees in all state government agencies. Finally, after the budget is completed in the special session, Republicans must help pass a bonding bill of no less than $500 million.

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Rebekah Rast

Unnecessary Government Intervention

by Rebekah Rast

In 1879, Thomas Edison developed the incandescent light bulb with a small carbonized filament and a vacuum inside a globe.

An electric lighting system was born—as convenient, safe and economical of a choice for consumers in his day as it would be for the next 100 years, and now beyond that thanks to a vote in the House of Representatives today.

A provision in the Energy Independence and Security Act of 2007 that requires traditional incandescent light bulbs to be 30 percent more energy efficient beginning in 2012,” failed in the House of Representatives earlier this week.  With 233 members of Congress voting in favor, 193 against and one voting present, the Better Use of Light Bulbs (BULB) Act failed to pass under the necessary suspended rules requiring a two-thirds majority.

However, this morning an amendment offered by Rep. Michael Burgess (R-TX) defunding the Energy Department’s new energy-efficient standards easily passed by a voice vote.

Consumers now might not be met with a 2012 deadline before incandescent light bulbs completely disappear from store shelves altogether.

Citizens and some members of Congress are up in arms over this government intervention telling consumers what light bulbs can and cannot be used in a home.  The Energy Act of 2007 did not outrightly ban incandescent light bulbs, but by requiring a 30 percent increase in energy efficiency, the bulbs effectively go away.

This begs the question, was government intervention into the light bulb industry necessary?

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Publius

Saturday Open Thread: Potsdam Edition

by Publius

Today, in 1945, Harry Truman, Winston Churchill and Joseph Stalin met in Potsdam, Germany to plan for a post-war Europe. Truman managed to condemn millions of Europeans to decades of totalitarian rule. Funny that a corrupt, big-city machine-politician wasn’t up to handling the world stage. Thank God that hasn’t happened again.

John Lott

Seven Myths About the Looming Debt-Ceiling ‘Disaster’

by John Lott

If Congress and the president don’t raise the debt ceiling, the consequences will be disastrous, politicians and pundits tell us, — the equivalent of an economic Armageddon. And President Obama warns that the consequences are so dire that he cannot possibly tolerate any delay in making an agreement. He announced yesterday that any debt deal must be completed by July 15th.

According to Treasury Secretary Timothy F. Geithner, failure to raise the limit will cause the US to default and “cause a financial crisis potentially more severe than the crisis from which we are only now starting to recover.” On Thursday, he renewed these warnings. And President Obama alarmed retired Americans this week: “I cannot guarantee that those [Social Security] checks go out on August 3rd if we haven’t resolved this issue. Because there may simply not be the money in the coffers to do it.”

But the list of terrible things to come, if the government is stopped from continued deficit spending, goes on. Failure to raise the ceiling, it is warned, will dramatically raise mortgage interest rates, cause housing sales to plunge, create panic on world financial markets, and destroy the value of the dollar.

Austan Goolsbee, Obama’s head of his Counsel of Economic Advisers, went so far this week as to blame the continued slow economic recovery on those few politicians who are against raising the debt ceiling. “[I]t’s important we remove this wet blanket of uncertainty that is permeating the private sector where they don’t know that the government — there are people actively advocating that the government declare it’s not going to pay its bills,” he told MSNBC. Yet, the slow recovery has been going on for over two years, well before Republicans obtained control of the House of Representatives.

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Jason Bradley

Stephen Marche Publishes Hilarious Parody On Obama Cult Worship In Esquire Magazine

by Jason Bradley

Stephen Marche — no doubt his pen name and stage name, probably pronounced Steffen (I picture a Bruno-like character) — mocks modern day journalism and it agents who openly display sycophantic behavior toward their liberal masters. In this case, he pretends to be an occult follower of President Obama, and he fittingly named his satirical piece of literature, How Can We Not Love Obama?


Steffen masterfully, and oh so subtly, captures the homoerotic tendencies that is, of course, absolutely essential in showing how (liberal men) deep their love affair and affection goes towards this man. That part is most important above all. Any good writer will strive for legitimacy, and Steffen almost makes you believe he is one of them. Since 2007, we have been witnesses to the adulation these cosmopolitan/metro-sexual liberal men have had for President Obama. In those regards, Steffen does a bang up job in this hit piece. It’s gut-wrenchingly funny and a little nauseating at the same time. Thank God it’s only an Onion-type parody. For example, no man could write this about another man and mean it. The art to this talented satirist’s humor is found in the absurd.

For example, Steffen writes about the Triune Nature of Obama :

“I am large, I contain multitudes,” Walt Whitman [FIG.3] wrote, and Obama lives that lyrical prophecy. Christopher Booker’s 2004 book The Seven Basic Plots, a wide-ranging study from the Epic of Gilgamesh on and a surprisingly convincing explanation for why we crave narrative, reduced all stories to a few plots, each with its own kind of hero. Amazingly, Barack Obama fulfills the role of hero in each of these ancient story forms.

….I just found out it wasn’t a hit piece pointed at the absurdities of liberals. It’s for real. And he is one of them. And now I have the creeps because Esquire actually published it knowing full well it was real. Run for your lives! The Liberal Zombies are coming back out of their crypts!

Before the fall brings us down, before the election season begins in earnest with all its nastiness and vulgarity, before the next batch of stupid scandals and gaffes, before Sarah Palin tries to convert her movie into reality and Joe Biden resumes his imitation of an embarrassing uncle and Newt and Callista Gingrich [FIG.1] creep us all out, can we just enjoy Obama for a moment? Before the policy choices have to be weighed and the hard decisions have to be made, can we just take a month or two to contemplate him the way we might contemplate a painting by Vermeer or a guitar lick by the early-seventies Rolling Stones or a Peyton Manning pass or any other astounding, ecstatic human achievement? Because twenty years from now, we’re going to look back on this time as a glorious idyll in American politics, with a confident, intelligent, fascinating president riding the surge of his prodigious talents from triumph to triumph. Whatever happens this fall or next, the summer of 2011 is the summer of Obama.