Wednesday, January 9, 2013

Trillion dollar coin an insult to the Fed, not common sense

Before I get to the proposed solution to the anticipated U.S. debt ceiling crisis of just printing the money to keep the spending flowing (by striking a $1 trillion coin) thus obviating a need for Congressional authorization for additional borrowing, I'll make a comment on the nomination of Chuck Hagel for Secretary of Defence.

The contributors to paleocon flagship The American Conservative are positively giddy, saying "No matter how the battle over his confirmation goes, it will  be educational and point the country in a better direction."  Libertarians who have distinguished themselves from and taken issue with neoconservatism in the past like the CATO Institute are also pleased, with Justin Logan of the view that "Hagel successfully running the DC gauntlet could be a perestroika moment in the American foreign and defense policy debate, and possibly even loosen the neoconservative stranglehold on the GOP."  Fact is, the conservative pundit class is far more neo-con heavy than popular support would suggest (implying the reality of an influential lobby), and neo-con nostrums are received wisdom across the "right wing" spectrum of talking heads, from David Frum to Charles Krauthammer.  The one palecon pundit with name recognition, 74 year old Pat Buchanan, is widely perceived as a crank.  If the Hagel nomination stays in the headlines it may create an opportunity for a new generation of paleocon voices to attract a following.  Last month the self-described neo-con John Agresto penned a very interesting piece on the need for neo-cons to re-evaluate.

Now what about #MinttheCoin?  Apparently the first appearance of this idea is a comment by a lawyer named "beowulf" (later identified as one Carlos Mucha) on Brad DeLong's blog in July 2010.  Beowulf expanded on the notion in his own blogpost in January 2011.  The concept then got traction on mainstream media hosts in July 2011 as the then debt ceiling debate caught fire.  The idea rests on a legal loophole created by Congress in 1996 that authorized the Secretary of the Treasury to mint "platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time."  Note that although there is a legal limit to how much paper currency can be in circulation, no such limit is specified here.  The U.S. Mint would book the difference between the coin’s face value and its cost of production as seigniorage (marketing and distribution is normally deducted as well but those costs should be negligible here).  As the Mint explains, seigniorage is part of "off-budget receipts" and "is deposited periodically to the [United States Treasury] General Fund where it reduces the government’s need to borrow."

A lot of the media hosted bloggers haven taken issue with the legality of the scheme.  But ask yourself if it is legal for the U.S. Mint to issue a $100 coin and use the seigniorage (which will be a little less than $100) to "reduce the government's need to borrow" by that amount.  Obviously it is.  Now why is it not legal to issue ten billion of those coins?  And if that's legal what's the substantive difference between that and a single trillion dollar coin?  Now Canada has a "general anti-avoidance" rule whereby the government can challenge your exploitation of a tax loophole if the Crown can prove that your schemes are "so inconsistent with the general scheme of the [Income Tax] Act that they cannot have been within the contemplation of Parliament."  But that sort of rule has to be specifically enacted, it's not part of the common law.

What about the economics?  Suppose Timothy Geithner stops off at the Mint to collect the trillion dollar coin in person and on his way over to the Federal Reserve to deposit it happens to stop at a cinema and see a show.  While sitting in his plush seat the coin rolls out of his pocket and ends up on the carpet.  After leaving the cinema he notices the coin is missing and rushes back to the cinema.  But it just so happens that you came upon the coin first and you are already on your way to your local bank to deposit it (knowing that you would have a hard time getting change at the local mall).  Now instead of the U.S. Treasury getting to write cheques on that trillion without having to borrow the money, you get to do so!  Now suppose the minting of the coin and Geither's actions happened to have been done in secret (perhaps to be announced later) and the management of your bank took no particular note of your deposit.  Without the public info that might create expectations of inflation (and no additional lending by your bank on the basis of your deposit) would there be any inflation?  Not so long as you haven't spent any of it.  But if you did spend it it would eventually drive up inflation because each or your purchases would add to the quantity of dollars while the supply of goods and services remained the same.  Note that this inflation would not happen if you borrowed the money because the borrowed money would have already been introduced into circulation.

Now Paul Krugman (visage at right from TPM) had me puzzled when he seemed to pooh-pooh the coin on January 2, saying "to prevent a sharp rise in inflation the Fed will want to pull back much of the monetary base."  Krugman, of all people, succumbing to inflation fears?  Krugman seemed to quickly refind the courage of his convictions, however, saying on January 8 "mint the darn coin."

If Krugman is correct that there isn't an economic policy objection, and there isn't a legal issue, then what's the problem?  Consider the case where you've just found that trillion dollar coin.  What could then stand between you and anything money could buy?  The bank, of course.  If the bank accepts your deposit, you're gold (or platinum?).  As a for-profit institution, your bank should be eager to take your deposit, since it could vastly expand its (loan) business, but the Federal Reserve is not a profit centre.  The Fed is not going to want to be a party to a major transaction that serves the government's fiscal purposes instead of its own monetary purposes.  Now the Fed might not object to accepting the coin if the transaction were guaranteed to be a one-off.  It already has close to $3 trillion on its balance sheet and plans to add another trillion in 2013 anyway (in part through purchases of more than double the average daily supply of mortgage-backed securities aka MBS) so what's another trillion.  The Fed could additionally "sterilize" the coin in terms of inflation by selling off a trillion of its other assets early.  The contemporary Fed furthermore has an inflation fighting tool at hand in that it can pay interest on reserves so that banks are content with that income and don't lend on said reserves (see again the hypothetical above where your local bank just happens to ignore your trillion dollar deposit instead of expanding its lending business).

Now to be sure, there are real risks to yet another expansion of the Fed's balance sheet, not least of which is the substantial risk that markets will not react well to the unwinding the Fed's oversized balance sheet (what is going to happen to housing if, or more precisely when, the Fed stops buying and instead dumps its trillion in MBS on the market?).  When you ask the people who say that there are no economic concerns at all, "why not mint $16 trillion in coins and pay off the whole debt?" they wave the question away as crazy talk but the question illustrates how the risk of inflation and financial instability is on a continuum.  Of greatest concern to the Fed, however, would be the precedent set with regard to who controls its balance sheet (and monetary policy in general).  At the end of the day, the trillion dollar coin "solution" to the debt ceiling means printing money instead of borrowing it.  In terms of the mechanics there isn't a lot of difference between quantitative easing to stimulate the economy and printing money to finance the government's deficit spending but politically the difference is huge.  The Fed wouldn't just be surrendering its independence, it'd appear to be doing so to Democrats in Washington over the objections of Republicans.  Imposing on the central bank like this is the sort of thing one expects of Hugo Chavez, not the U.S. Treasury.

Now a reasonable question to ask here is why the Fed's current handling of coinage doesn't amount to a threat to its independence.  After all, I've called attention to continuums (or, depending on your view, used the "slippery slope" argument) with respect to both the legality of a trillion dollar coin scheme and its economic consequences.  Coin currently counts for $2.1 billion or 0.07% of that $2.9 trillion in Fed assets but what is fundamentally different if that number changes to become closer to the $0.93 trillion currently in MBS?  The distinction here is that the current volume of coin reflects the public's demand for it, not the government's.  As the Economist points out, if financial institutions were actually requesting trillion dollar coins to use in private transactions then, yes, the Fed could go along with the scheme while plausibly arguing that it was not just dancing to the government's tune.  Note, however, that even if one were to mint a million million dollar coins (something that's more plausible in terms of economic utility than a single trillion dollar coin), in 2002 the total coin in circulation was only $32 billion, or 3.2% of a trillion, and the total of both U.S. currency and coin was less than two-thirds of a trillion.  Even a tenth of a trillion in additional coinage can't be justified except by admitting that it would have to be handled by the Fed and in order to facilitate Washington's deficit financing.

The trillion dollar coin scheme is thus unworkable, but it's unworkable because the Federal Reserve Board of Governors will refuse to cooperate.  It's not Obama's reputation but Bernanke's that will take this option off the table.  If somehow the Fed did go along, investors would become extremely nervous.  At a minimum, the Fed chair would feel compelled to spin the stunt as his own idea, applied to a unique circumstance.  On its face, yes, a fear that the U.S. will inflate away its debt is less grave than the shock of an outright default by not raising the debt ceiling (one can argue that various personal transfers like social security cheques could just be trimmed instead of any "defaults" but the brake on spending would be so great it would dwarf any "fiscal cliff" concerns to date).  But a default would surely never be allowed to happen again, whereas if the Fed steps in to help the Treasury Secretary manufacture a trillion or two out of thin air (or an ounce of platinum) what's to stop that from happening again?  The very fact that the consequences wouldn't be so immediately horrific would raise greater fears for the long term.

UPDATE January 10:

WIRED has a fuller background on "beowulf" and the origins of the idea.  Apparently the blogosphere discussion dates back to May 2010 on Warren Mosler's blog.

It's struck me that the best counter to the contention that the Fed would see this coin idea as a challenge to its independence is the fact that the Fed is already on track to have a balance sheet of four trillion by Christmas.  One could therefore reasonably argue that the only real issue is the optics of the Fed's desires as opposed to the Fed's desires (unless the Fed is particularly insistent that a large fraction of the money printing continue to support housing as opposed to general government expenditure).  By that angle, all the Whitehouse has to do is work behind the scenes to get some Fed people to raise the coin idea and make some public statement indicating that they're open to it.  That could both resolve much of the independence concern and make the move an easier sell politically.  Now the Fed might object anyway even if it didn't see an independence issue, but in that case their objection would be more like an objection to NGDP targeting that we've often heard from central bankers; that is, that a concern is not just the theory but retaining the confidence and understanding of the general public.

Friday, December 14, 2012

Lie of the Year? "$1.5 trillion spending cuts already passed"

For my undergraduate degree I majored in philosophy, and one of the ideas I picked up then that has stuck with me is that the "coherence" theory of truth has a lot to recommend it.  It answers many of the various objections that epistemological skeptics make and that subjectivists make to objectivists while retaining the primacy of logic and rejecting the metaphysical premises behind moral relativism.  To oversimplify, you might not agree with someone else's world view, but you still have to keep your own world view coherent, and once it is established that both you and another person both believe in certain basic principles, if you disagree on some derivative matter one of the two of you is more wrong than the other.

The moral status of abortion may be an example of an issue whereby the level at which disagreement begins is too fundamental for either side to prove the either side to be definitively wrong.  There just aren't many commonly held premises, even when drilling down to the metaphysical level.  One ends up appealing to a "correspondent" theory of truth, i.e. arguing that the other side's beliefs do not correspond to reality.  If one person's view of reality happens to be entirely materialist (that nothing, not even consciousness, exists apart from matter and energy) while the other is metaphysical dualist, the disagreement will be pretty fundamental.

But most debates between "subjectivists" and "objectivists" are over matters of degree within a coherence construct.  If the coherence test is applied to such an extent that the "edge" of its applicability circumscribes all of human consciousness, and that metaphysical premise itself forms a common cornerstone, then notions of "subjectivity" drop out as irrelevant, à la Wittgenstein's beetle in a box.  There might be another universe out there, but we are living in this one.

I write this as a preamble to making three comments about the U.S. economic and political debates.  Allow me to take as the first example what PolitiFact called the "Lie of the Year": the Romney campaign's Jeeps and China ad.
 How effective a criticism of PolitiFact's decision is it to note that every word of the ad is actually true?  Presumably not very, since that's held to not be the issue.  At the time, Politifact said, "In this fact check, we examine whether the sale of Chrysler came at the cost of American jobs" instead of examining what the ad actually claimed.  According to PolitiFact, the ad "presents the manufacture of Jeeps in China as a threat, rather than an opportunity to sell cars made in China to Chinese consumers."  Now that IS true, it is presented as a threat on the basis of the well established economic principle of opportunity cost (corporate resources spent on expanding plant in China are resources not spent on expanding plant in the U.S.) but the question is why outsourcing suddenly became an "opportunity" when Politifact treaded lightly on the Obama campaign's many charges that Romney was running to become Outsourcer in Chief.  Where is the coherency?  Now it's true that Romney could be challenged on his own "coherency" in choosing this line of attack by noting his track record at Bain.  But that's actually a charge of hypocrisy, not a truth claim.  As Ryan Chittum at the Columbia Journalism Review put it:
[The ad is] saying that Chrysler’s Italian owners “are going to build Jeeps in China.” But happens to be true, even if it was happening before 2009 under its German and private-equity ownership. Cars made overseas by an American company (even one with Italian owners) are cars that won’t be made in the U.S., and it’s fair to say those jobs are outsourced.
On the other hand, it’s high hypocrisy for Romney the free-trader private-equity guy to attack anyone for outsourcing production...

Glenn Kessler of the Washington Post dodged the fact that what the ad said was true by declaring that "The series of statements in the ad individually may be technically correct, but the overall message of the ad is clearly misleading."  Kessler assigned his most damning designation of Four Pinnochios on this basis, yet he assigned zero to Obama's claim in his second debate with Romney about his communications regarding Benghazi which were only technically correct and technically was not even technically correct.  The Columbia Journalism Review was founded by Victor Navasky, who has used his publication The Nation to, amongst other things, argue that Alger Hiss wasn't a spy for Stalin despite the overwhelming evidence to the contrary.  The CJR's Chittum nonetheless points out a mitigating factor re the Jeeps and China ad, namely that it started with a Bloomberg story with problematic wording and then was amplified inaccurately by a Washington Examiner blogger (before actually being dialed back in the Romney ad transcript from what the Examiner said).  No such mitigating factor exists with respect to Obama's misleading claim in the second debate.  Instead of getting "caught up in the liberal echo chamber," Obama's decision to create the impression that he called Benghazi a terrorist attack from Day 1 was a decision to create something, not picking up to forward on a liberal attack line already in circulation. Politfact, of course, also took a pass when it came to rating Obama's remarks, instead seeing the back and forth with Romney at the second debate as an opportunity to mark down Romney, calling his criticism of Obama on the point "half true."  The bottom line here is that it's a mug's game to try and expose "fact checking" bias by pleading the "facts."  One has to make an appeal to coherency, not correspondence.

There are other examples one could go into.  Romney's infamous "47%... pay no income tax" remark was taken to task by fact checkers in part because "nearly two-thirds of households that paid no income tax did pay payroll taxes."  Yet when it comes to trimming the growth of Social Security benefits, were these benefits paid for by tax revenue?  In that case, the payroll taxes are spun as being insurance policy payments or otherwise "earned" benefits; in other words, when the question is whether the 47% are carrying their share of the load, their payroll taxes are deemed to be building up the public pot, but when the question is limiting S.S. payouts, these same contributions are deemed to be building up a private entitlement.

Now the example I meant to talk about today (but which I've taken a while getting to) goes back to my last post about the extent to which U.S. unemployment is cyclical or structural.  In the context of the "fiscal cliff" debate the New York Times today claims that "Obama already agreed to more than $1.5 trillion in cuts last year."  This $1.5 trillion number comes courtesy of the Center on Budget and Policy Priorities, however it should be noted that these "cuts" nonetheless still not only allow "discretionary" programs to continue to grow with inflation, they allow for a further $65 billion in spending above and beyond that over the next decade.  How do you spin spending that exceeds inflation (and more) as "cuts"?  By reaching back to inflated 2010 appropriation levels and using that as the baseline.  The 2010 appropriation bills were actually adopted in 2009 when the demand on the social safety net was near its height and when Democrats enjoyed a filibuster-proof majority in the Senate in addition to their majority in the House, except for some special bills in 2010 for disaster assistance, border security, and the Patent and Trademark Office which the CBPP of course also included in order to further inflate its baseline.  The CBPP says that the 2010 appropriation "simply reflects the level that Congress deemed appropriate" at the time.  Well of course.  You could say the same thing about 2007, or 2013 (we're already more than than two months into the 2013 fiscal year), but of course then the claim of $1.5 trillion in "cuts" would collapse.

Now what would be an appropriate baseline?  The answer to that is what is most coherent with the view you have taken elsewhere.  Dean Baker, for example, has repeatedly insisted that the "graph that gives a better picture of the problem of the budget deficit in relation to the economy" is one that calls attention to projected deficits in January 2008 (I've copied his graph here).  The blogger Kevin Drum insists on using a graph that he cuts off at 2008 in order to argue that "Washington Doesn't Have a Spending Problem." Drum says he cuts off his chart because "numbers in the chart have spiked over the past four years because the recession has temporarily depressed GDP and temporarily increased spending, but that spike will disappear naturally as the economy recovers".  Yet Drum elsewhere tallies up "Discretionary spending cuts already passed in 2011: $1.5 trillion"  No "natural disappearance" here, it's "cuts already passed" by Congress!  Not passing another disaster relief bill like in 2010 becomes passing a cut.  Coherency here would mean tallying up the change in spending since 2008, although that would of course completely undermine the point about all the "cuts" that have occurred.

My last two blogposts about the U.S. prior to this one were about whether the current U.S. economic situation is the "new normal" and whether Obama's remarks at the second presidential debate were misleading or not.  People can disagree with the former and say that 2007 should be the touchstone, but if so, don't elsewhere start calling a level of federal government spending that was decided in 2009 the appropriate reference point.  People can disagree about my negative take on Obama's claim in October about what he said on September 12 by saying his words were narrowly true, but don't elsewhere say that Romney was a liar because while his ad was narrowly true it's what viewers were lead to believe that matters.  

Tuesday, December 4, 2012

the new normal: U.S. economy already nearing potential

The main argument that's been trotted against the "deficit scolds" is that Washington should wait until the U.S. economy has recovered.  When will it have recovered?  When it is approaching "full employment."

In economics, "full employment" is a rough synonym for "potential GDP" and it refers to the underlying productive capacity of the economy.  Potential GDP is the blue line in the graph below.  Although the U.S. emerged from the officially determined recession some time ago (indicated by grey shading), according to Keynesians a  large "recessionary gap" or shortfall in the aggregate demand for goods and services in the economy remains, as indicated by the gap between potential GDP and actual GDP (which is given in red):

Although there's no doubt about the red line, just where the blue line should be plotted is less than an exact science.  In this case, the blue line is plotted by the Congressional Budget Office or CBO, and what is of particular note here is that the CBO has been repeatedly shifting the line towards the right (i.e. towards the red line), as Brad DeLong has graphed, to the effect of steadily reducing the demand deficiency.  DeLong notes that the CBO has drawn down its potential GDP track by 8.5% since 2007, well in excess of the 2008-2009 contraction, which Dean Baker has pegged at 4%.  Here's a graph that has the potential GDP line coming very close to actual GDP:

This particular graph, which the President of the St Louis Federal Reserve, James Bullard, has been using, has come under a lot of attack by Keynesian economists because it challenges the hypothesis that there is currently a significant output gap.  The red dashed line here is generated by using a "Hodrick–Prescott filter," which is named after economists Robert J. Hodrick and Edward C. Prescott, who developed it to separate the "cyclical" element from the "trend" element.  Now an HP filter has various limitations, such as working with less information near its end point, but Mark Thoma takes issue with what it says in the middle: "the HP filter reveals a period of substantial above trend growth through the middle of 2008. This should be a red flag for Bullard. If he wants to argue that steady inflation now implies that growth is close to potential, he needs to explain why inflation wasn't skyrocketing in 2005. Or 2006. Or 2007."  One could start here by pointing to the fact that Paul Krugman has defended the use of data that uses a Hodrick–Prescott filter by arguing that a gap with potential GDP need not be defined exclusively by inflation.  Does Thoma believe that because the general consumer price index in Japan rose less than 4% between 1985 and 1989, the Japanese economy was not operating above potential despite real GDP soaring more than 20% during those four years?  Isn't there an obvious analogy between Japan's equity and commercial real estate bubble bursting in 1990 and the U.S. residential real estate bubble bursting in 2008?  Growth cannot always be below trend, meaning that unless Thoma is going to define a decade as the short term, he needs to acknowledge occasions where it has been above trend.

Notwithstanding his 2009 use of the IMF's HP filtered data, in July Krugman weighed in on the debate over Bullard's graph to note that back in 1998 he took issue with those who used a HP filter to conclude that Japan's economy was close to potential that year.  What Krugman doesn't tell you is that he took issue wrongly, claiming back then that "in retrospect it will seem clear that Japan's 1998 output gap was 8 percent or more... so that demand-side policies to close that gap are of very real importance."  In fact the OECD, which marked down Japan's potential growth to 1.6% in 1994 and forecast then that the estimated output gap for Japan in 1997 was, in Krugman's view, "remarkably small:  -  1.2  percent," has been vindicated.  According to the IMF's model (that would be the very same model Krugman used in 2009 to support his claim about the output gap in the U.S.) Japan's output gap for 1998 was less than two percent.  While Krugman argued that Japan was facing a prolonged slump in GDP growth below potential, the IMF correctly interpreted Japan’s lost decade as a slowdown in potential.  I might add here that the IMF also says that the U.S. had an "inflationary gap" (that is, a negative output gap) over 1% in 2005, 2006, and 2007.  Despite having wrongly prescribed aggressive "demand-side policies" for Japan in 1998, Krugman is currently pounding the drum for them to be applied in the U.S. in 2013.  

Ironically, Krugman exhibited a moment of worry in February 2008, noting that a HP filtered graph of productivity was flashing warning signs.  Productivity is a key component of potential GDP, meaning that he saw back then an explanatory factor for the U.S. economy's low growth that wasn't coming from the demand side.  Here is a graph of the year-over-year change in potential GDP as measured by the CBO:
Note the slump from 2000 to 2011.  The CBO optimistically believes the trend will reverse this decade, but if it doesn't, the CBO will continue to shrink its projected output gap by ratcheting down its potential GDP projections.

There are a variety of other metrics that one can point to that are inconsistent with the thesis that there is a large output gap, including the fact that inflation is running at 2%, pretty much right on the average since the late 1990s, the employment cost index (wages and benefits) is rising, and  U.S. capacity utilization has recovered to pre-crisis levels. 

But a Canadian now working for the St Louis Fed, David Andolfatto, makes a particularly compelling argument for deeming current U.S. unemployment structural as opposed to cyclical:
The Canadian unemployment rate is is blue, the U.S. rate in red.  Throughout the 80s and 90s, Canada's unemployment rate was consistently higher.  Although the Canadian unemployment rate rose around the 2001/2002 recession and again in 2008/2009, the rise was smaller than in the U.S., and Canada reformed its unemployment insurance program in the 90s, restricting benefits.  If it took Canada three decades to move in front of the U.S., why should we believe the U.S. will quickly reduce its unemployment to Canadian levels?  It's more likely that most of the "business cycle" adjustment has already occurred, such that remaining adjustment is subject to long term processes.

This brings us to yet another string of arguments, namely those advanced by Casey Mulligan.  Mulligan goes beyond the fact that the share of 25 to 54-year-old non-college educated men in the work force has trended down for decades to note how U.S. policy has encouraged non-participation in the labour force in recent years by easing eligibility rules for unemployment insurance, increasing the generosity of food stamps, etc:
The American Recovery and Reinvestment Act, popularly known as the stimulus, gave unemployment insurance recipients a weekly bonus, and offered to pay for the majority of their health insurance expenses. FDIC and Treasury reduced some “unaffordable” mortgage payments, which means that successful people need not apply. The list goes on and on.

The essential consequence for all of these is the same: a reduction in the reward to activities and efforts that raise incomes.

Dean Baker and Paul Krugman have occasionally taken issue with Mulligan, although Krugman frequently suggests that he considers Mulligan too much his inferior to engage.  At one point Krugman says "Mulligan and others keep emphasizing examples of individual groups that have managed to gain jobs by cutting wages or offering other attractions to would-be employers."  Why is this inconsistent with Keynes?  Because Keynes' was of the view that if you increased the skill level of all the unemployed in the economy in one swoop or reduced the wage cost to the employer of hiring them, this wouldn't reduce unemployment when there be an output gap because the problem is not with the supply of labour but on the demand side.  Krugman's reply is that a sub-group that reduces its unemployment says nothing about whether the whole group ("all unemployed in the economy") could realize the same success.  Everybody can't be an above-average potential hire, observes the Krugman.  I don't find this at all convincing, however.  Krugman ought to be be chastising Dean Baker instead of citing him if he were consistent.  Why?  Because Dean Baker's #1 policy prescription after the economy has returned to potential is a lower U.S. dollar.  I should think it would be obvious that not every country can depreciate its currency at the same time.  At issue here is the international competitiveness of the United States; if a particular group in the U.S. can take actions that improve its employability the Keynesians need to explain why it wouldn't work for the entire country to take a similar action.  

To be sure, I think Mulligan goes too far when he seems to suggest on occasion that the cause of the recession is to be found on the supply side.  But that's not the question at issue here on the doorstep of 2013.

UPDATE December 6:
Job vacancies continue to rise:

Monday, November 26, 2012

Wildrose 2013

For the past few years, I've given a run down of what I found noteworthy at the provincial party's AGM.  That won't be happening this year, because I didn't go.  I can, however, comment based on what I've seen reported.  Since this post is directed at current Wildrosers, I will be calling attention to some local constituency details that won't be of interest to a wider readership, and I'll be stepping back into my old shoes as a party activist to speak to social conservatives from an "us" perspective, issues I wouldn't say I've since "evolved" on but I would say would require more discussion of what things look like from the libertarian perspective were I addressing a broader audience.

First of all, I'll note that there seems to be a continuation of the mentality I took exception to at previous AGMs, namely, that the party's MLAs in particular seem to be of view that the party's popularity challenges are best overcome by making policy concessions as opposed to advocating for the party's policies more effectively.

The best example of this is not "conscience rights" since there is little room to advocate more effectively and convincingly on life issues.  Most people are already informed enough in that area to make a decision, rightly or wrongly, and it's a decision that is typically based upon an ingrained world view.  However, even here it could be pointed out to the media that anti-abortion and anti-gay marriage planks have been shot down continually by the party membership ever since "Wildrose" was first attached to a provincial political party name more than five years ago.  All that's left today is a plank that is consistent with a pluralistic society wherein a significant minority does not support either abortion on demand or state-approved gay marriage..  In theory, access to abortion or a marriage certificate could be constrained by finding that one's first point of contact is declining to offer the service.  But if my local medi-centre declines to perform brain surgery on me and I end up having to head down to the university hospital, have I been really been denied access to this surgery?  In a free society, coercion is a last resort and if someone is modestly inconvenienced by someone's freedom to decline a service, that may seen as a reflection of the fact that it's one thing for a society to come to a conclusion about a contentious issue and another to coerce conscientious objectors into helping implement that conclusion.  Surely the manpower of the dissidents is not necessary if community consensus is in fact so decisive.  The real problem for those requesting the service is not the inconvenience of moving on to the next provider but the audacity of the refusant to not recognize their entitlement.  If we can tolerate cops declining to ticket someone even though the letter of the law calls for a ticket, I should think we could allow some room for other representatives of the state to exercise their personal judgement.

But if the "conscience rights" clause must go nonetheless, the party would still have a raison d'être without it, even just on social conservative grounds (properly construed).  I've long been of the view that narrowing one's advocacy down to a pro-life agenda often ends up undermining the larger conservative social agenda, because, to take an example, it may end up increasing out-of-wedlock births instead of decreasing them.  I understand that the ends don't necessarily justify the means, but if one person is trying to get a guy to take more responsibility for his partner and his children and another is trying to convince him of the need to obey Levitical prescriptions concerning the eating of pork, do we decide which person we should ask to stop talking over the other so a single, less confusing message can get through based solely on who makes more references to Scripture?  I'm not trying to trivialize abortion by talking about clean and unclean food, I'm rather noting that not everything in the Bible is treated, or can be treated, as a litmus test.  What matters is whether the candidate's approach to public policy will advance or retard God's will for the family and society.  It's not impossible that an atheist could be used by the Lord.  Once a particular theological point assumes dealbreaker status, where you do you stop?  We saw the logical conclusion of how the issue plays out politically south of the border when GOP Senate candidates Richard Mourdock of Indiana and Todd Akin of Missouri were pressed on how far they would go in their opposition to abortion.  With respect to gay marriage my primary objection has been to the characterization of the matter as a "rights" issue when such characterization ought to be reserved for a call for the state to step out, not for a call for the state to step in.  And a "step in" is indeed the issue here because the issue is not striking sodomy laws off the books but recognition of gay marriage as a social norm.  It's the difference between the freedom to deviate and whether it's deemed deviant in the first place.  There's a fundamental difference between approving gay marriage via the legislature or by referendum, in other words, and approving it via courts citing "rights."  Once democratic support for gay marriage has been established, that may make no difference in terms of its rightness theologically or metaphysically, but it does make a difference in terms of the return one is going to get on one's political advocacy going forward.  I am not so much saying that social conservatives need to move on from the issue so much as I am saying that social conservatives need to look at advocacy holistically and the breakdown of the nuclear family in particular is an issue that not only provides more fertile ground for moving public opinion but has consequences that do not presume a particular metaphysical view to be identified as negative.  Even atheists can lament the number of single parent households.


So if abortion and gay marriage are not the best examples of where the party should dig in and just fight harder, how about the human rights commission plank?  I'll repeat here what I said after the 2010 AGM:
The question for me, however, was why there was any need to finesse this policy plank when even the Sheldon Chumir Foundation for Ethics in Leadership, which draws its name from a former Liberal MLA [photo at right from Foundation website], thinks a simple repeal of section 3 acceptable.
Here we have the best illustration of why the call by party poohbahs to move closer to the "centre line" represents a lack of creative thinking.  On abortion, OK, the lines have been set for a long time; - if someone had an idea about how to bust open that issue to new movement in public opinion, someone would have surely thought of it by now.  But this human rights commission issue is highly susceptible to framing.  The left has been dragging the centre line their way for a while now and the current situation calls for yanking on the other end of the rope, not capitulation.  The spectrum here consists of the left, the libertarians, and the conservatives.  On this matter it's already been dragged well into libertarian territory such that current policy can be, and should be, entirely defended on free speech grounds.  I call attention here, again, to the fact that Janet Keeping, president of the Sheldon Chumir Foundation, took exception to how this issue has been framed:
Here's one that especially rankles. The Alberta legislature recently confirmed the provincial commission's jurisdiction over offensive speech, but [chief commissioner of the Canadian Human Rights Commission, Jennifer] Lynch notes "not without a chorus of 'boos' from the far right." The Chumir Foundation, other organizations and individuals presented carefully constructed arguments against Alberta's hate-speech provision. It is disrespectful to dismiss our reasoned objections as "boos"...

Our most prolific provincial pundit, David Climenhaga, is of the view that it wasn't a "couple of candidates mak[ing] controversial comments" that brought Wildrose up short in April's election but "Wildrose policy".  Aside from the fact that Mr Climenhaga's thesis isn't supported by the polls ( it wasn't previously undisclosed policy that grabbed headlines late in the campaign but "comments") it requires far less reaching to contend that what voters took issue with was not the fact that Edmonton South West candidate Allan Hunsperger wasn't legally prosecuted by the human rights commission for referring to the "lake of fire", it's that he was a party candidate.  I assure you, dear reader, that "lake of fire" does not appear in the party's policy platform.  It's one thing for the party to defend Hunsperger's right to free speech as a private citizen and another to make him a potential legislator in a Wildrose government.

Tom Flanagan [photo at right from peacealliancewinnipeg.ca] says Wildrose should have been spent more money on oppo research, digging into the background of both Wildrose candidates and PC candidates.  Is it not a little odd that a prescription to spend more money is coming from someone seen as a conservative ideologue?  Is it not oddly ironic that someone with such a (well deserved, in my view) reputation for cynical, hardball politics, ended up the lamb before the lion of the PC's political attack machine?  Flanagan repeats the call for softening the party's policy book, when in fact it was the party's campaign tactics that were the problem, and if anything the tactics weren't hardball enough, substituting shrillness and sheer volume for sophistication in its criticisms of the governing party.  The idea of paying out energy revenue directly to Albertans didn't come from the policy book, or the grassroots, anyway.  This was entirely a creation of the head office brain trust.  One of the biggest arguments for conservative taxation and spending policies is that incentives matter and should be rewarded.  Paying out unconditional cheques for simply existing does pretty much zero in terms of creating additional incentives to work or otherwise add value to the economy.  Consigning entitlement schemes like this to the dust bin, in other words, would move policy to the right, not left.  The problem with the policy book is not that it is too right wing but that it isn't smart and innovative enough.

From: Brian Dell
To:  Wildrose VP Policy
Date: Tue, Nov 17, 2009
subject: Re: Making Policy
"We cannot simply call on... people that do not have a connection to us..."
Now where's that "can do" attitude, [...]?  If say, getting someone from the U of C's School of Public Policy to speak to the membership about trends in tax reform or an Edmonton-based academic economist to provide input to a policy task force is truly mission impossible, why not suggest to the policy committee that they consider and come to a consensus about whether to give me, or anyone with a public policy background, authorization to try and make it happen?  After all, I would only be failing where others have failed before, no?  Just be sure to have that Mission Impossible theme music in the background! ;)  If it is a requirement that the invited person be sufficiently "connected", just get specific about that in the mission details.  I don't think a "connection" of comparable strength to whatever the connection was that brought someone to speak to the membership twice this year about privatizing healthcare would be impossible to find or create.

I think you've struck upon precisely what I see as the issue, namely, that the people that have a "connection" to "us" are Calgarians, media people, oil patch lobbyists, or all of the above.  We can either move beyond that, or we can take that attitude that we can't build new "connections"....

For all of my frustrations about policy, I might have been able to deal with it, had it not also been for other factors including what seemed to me to be a shortage of professionalism when it came to local organization.  I lobbied for the early creation of a southwest Edmonton constituency association that I and others could work with in anticipation of Edmonton Whitemud's split and I couldn't find any takers at the stage when the association could have avoided ending up a runt. This brings us back to Hunsperger, the party's ultimate nominee for the new riding of Edmonton South West.  According to the Journal, "[Danielle] Smith repeated her stance that it was largely up to local constituencies to weed out problematic nominees."  But of course.  This means, however, having a developed local constituency association early in the game.

From: Brian Dell
To: [select local riding people from the southern part of Edmonton Whitemud]
Date: Tue, Nov 24, 2009
Subject: anticipated division of the Edmonton Whitemud provincial constituency
I'm Brian Dell with the Wildrose Alliance.  I may have left a message for you or sent you an email in recent weeks.

The Alberta Electoral Boundaries Commission is scheduled to release their preliminary report with respect to redrawing the province's ridings in late February.  Public hearings will be held in April, and a final report presented to the Legislature in July for the Assembly to consider and enact as law.

During preliminary hearings last September it was apparent that of the 4 ridings to be added to the province (for a new total of 87), at least 1 would be going to Edmonton and the #1 priority for placing this new riding would be Edmonton's southwest; - the Whitemud riding is currently the most overpopulated riding in Edmonton and one of the 2 or 3 most overpopulated in the province.

It follows that the chances of you gentlemen... remaining in the same constituency as those up in Brookside or Rhatigan Ridge is close to nil.

The two main proposals under consideration would either divide the constituency more or less east-west (as proposed by Edmonton's PC Party VP) or north-south.  See attached maps....
...the south of the riding will likely be in need of another individual or two who could be called on to form a nucleus for the new constituency in the south and east of Edmonton Whitemud.

... If you are interested in helping guide the development and success of the Wildrose Alliance in southwest Edmonton generally we encourage you to stand for a position as soon as possible on the executive to be established...

By meeting each other... we could become briefly acquainted and could have something of a game plan for avoiding the scenario whereby only 1 or 2 people from the south volunteer to serve on the [Edmonton Whitemud CA] executive or the south's representatives consist of self-promoters and/or oddballs who popped up out of the weeds.

From: Brian Dell
To: Eleanor Maroes
cc: [Edmonton Whitemud CA Assoc]
Date: Wed, Dec 2, 2009
Subject: a modest proposal re Edmonton Whitemud
Could we perhaps constitute the board with northern people and then just have it understood that the south is in development?  The idea here is that the north continues without so much as a hiccup post-split because it is the heir of the pre-split riding while the south formally launches upon the split, with people expected to be on the southern board having been meeting separately on an unofficial basis prior to the official division.  The south could conduct its own fundraising, general meetings, etc and have its own bank account.  For Elections Alberta purposes it would not be an official constituency bank account, of course, but that should not matter to the bank.
...The reality is that the south of the riding is going to be more of a challenge developmentally and I think southerners will be confident that there will be no conflicts of interest with respect to that development by having southerners handling it from day 1. 

From: Brian Dell
To: Link Byfield
Date: Sat, Dec 5, 2009
Subject: Fwd: Wildrose Alliance - Edmonton Leaders SAT DEC 1
...you may end up hearing on the grapevine that my view of the success of Edmonton Whitemud's founding deteriorated within a day or two of my talking to you on the phone and [X] and I are a little at odds over what happened.

Fact is, me and another organizer took to facilitating board nominations like we were a recruiting committee for a corporation, meaning skill sets and where vacancies existed in the board mattered and personal relationships didn't matter, [X]'s friend went and surprised us by nominating directly or indirectly about half a dozen people she was friends with and sit on James Rajotte's federal board.  There was a glaring omission in the minutes released after I talked to you that suggested that not only did this group not cooperate with the idea of ensuring representation from the south of the riding, the one southerner who nominated (another southerner) had his nomination fail to appear in the minutes.  I in turn ended up nominating this nominator because he was a month-long organizer who even went down to Calgary on the 29th but only when forced to because no one else would, and he later said that he wasn't surprised because for weeks now it was apparent that [X]'s friends were not interested in his input (or mine, in my view).  So he's actually quit the board before it even got started, costing us our most motivated volunteer in the riding.
...
This compromises the viabiltiy of the new southern Whitemud riding post-split and, re the "triage" argument, the polls here went 58.8% PC in 2008, which in my amateur strategizing indicates an area that should not be written off as unwinnable [especially with no PC incumbent].

From: Brian Dell
To: Eleanor Maroes
cc: Jane Morgan
date: Mon, Dec 7, 2009
subject: Re: comments
"Creating division at this point is not helpful to getting a strong CA executive."

WE ALREADY HAVE A DIVISION!  Sorry for the caps but in my opinion I was as accommodating as possible until the minutes came out and somebody resigned as a consequence. ...The message that his input would be routinely ignored could not have been clearer.  By proposing a division I am proposing a mechanism to keep this asset ("[Y]") engaged.  Now maybe he is a liability we are better off without.  But if that's the case I would like to see an argument since we are very short volunteers from the southern part of Edmonton Whitemud as it is.  And I have already received a complaint to the effect of why raise money in the south if the money is going to end up in a bank account controlled by northerners.  I am reacting to the division here and am trying to figure out a way to make the best of it. ...

The point of the above is to note that just "calling on local constituency associations to ask tough questions of anyone running to be a nominee in 2016" isn't going to cut it.  The local CAs have to be both able and willing to ask those "tough questions" and if they are not, vetoing the CA nominee treats the symptom, not the disease.  Is it going to go like this?
Local CA player #1: Danielle says our nominee is unacceptable!  Apparently they were suspicious that a person who has spent most of his adult life lobbying for home schooling might have said something eyebrow raising about the insidious corruptions of secular society at some point and apparently HQ indeed ended up finding something problematic.
Local CA player #2: No complaints here!  Nothing undemocratic about that!  Both we and the nominee himself are going to just nod and sit back down.
Local CA player #3: So else do we nominate?
Local CA player #2: How about approaching that business owner, you know, the one that's prominent in the community? That lady who also sits on the hospital board?
Local CA player #1: Of course, that's why we passed her over the first time!  Because that was just a practice run!
A problem CA is going to nominate a problem candidate.  Head office has to get involved in local CA politics by ensuring that every CA has a minimum number of volunteers and money.  The strategy of focusing resources on "winnable" ridings can be unraveled by having a fringe candidate emerge out of neglected riding.  You can't hide that person's record and trying to hide the policy book instead just creates suspicions about your agenda.  Stop apologizing for the policy book and get your hands dirty by intervening in local constituency politics.  Of course a group of friends is going to nominate each other to the board and then nominate one of their own to be the candidate!  Rubber stamping that sort of thing is respecting the local cabal, not the local grassroots.  If there's a controversy in the local CA the party needs to step in and adjudicate, and adjudicate with an eye to whether the procedure that was followed was appropriate, not whether it was followed or not.  It's easy to argue that you've followed the local rules when you're the one who made them up.

I might add that even if the Edmonton South West CA was a gong show, all head office had to do was ask me to throw my hat in the ring and I would have rigorously contested the nomination (if the nomination period was open more than just a few days) and I would have pointed to Hunsperger's blog, even if it was just to a tiny crowd at the nomination meeting.   I'm a graduate of Briercrest Bible College and accordingly wouldn't accept any Wildroser's contention that I was attacking Hunsperger because he's a believer.  "Lake of fire" may be biblical, but Hunsperger's view that public education is inherently evil is not part of the evangelical mainstream, never mind the secular mainstream.  Ethics Commissioner Neil Wilkinson once wrote to the Legislature Offices Committee requesting authorization for his office to post MLA financial disclosure statements on internet and the PC members on the committee said no.  That didn't stop me from physically going down to the Leg Annex to take a look at Dave Hancock's file, and I didn't bill Flanagan for doing oppo research.  All of this stuff is just a matter of making use of your motivated volunteers.

To anyone concerned about my quoting from email exchanges, you needn't worry about me not respecting expectations of privacy.  What I've repeated here is what I've wrote, except for a few phrases the attribution of which I've left ambiguous.  I'll repeat the most important bit that I said in those emails again: "me and another organizer [sic] took to facilitating board nominations like we were a recruiting committee for a corporation, meaning skill sets and where vacancies existed in the board mattered and personal relationships didn't matter."  I didn't feel that head office was going to back up those of us who had this view by intervening in CAs to ensure that that principle was followed, and so it was that I was essentially on my way out the door at that point.  If the party's floor crossing MLAs are too scared of special interests like the teachers' unions, perhaps their influence could be diluted by electing some longer serving party members.  But that requires professionalization of the how the constituency associations are staffed, as these CAs in turn "staff" the candidate slate, and it didn't appear that that was going to happen.  Would I do what I did again if I had the chance?  I'm not entirely sure about that because I alienated a lot of people by complaining to anyone that would listen that there was too much nepotism going on at the constituency level.  A person may consider himself a righteous crusader or whistle blower when reality he's just a pain in the buttinski!

Monday, November 19, 2012

Why Benghazi matters

On September 26, Eli Lake's article, U.S. Officials Knew Libya Attacks Were Work of Al Qaeda Affiliates within 24 hours appeared on the Daily Beast.  In the graph below of RCP's polling average from September 1 to election day, September 26 is highlighted:
Was Lake's article a poll mover?  Maybe!  Obviously, the first presidential debate is what gave serious momentum to whatever gains Romney started to make in the week before that October 3 debate.  The conventional wisdom is that after a summer of attack ads that defined Romney negatively, seeing Romney "unspun" on millions of TVs provoked a popular reassessment.  That's a thesis I'd agree with, however as an aside I'd ask a question here that I haven't seen asked, and that's where was the media?  The Obama campaign's "not one of us" ads created a caricature, but isn't it the media's job to create an accurate one?

If there was systemic media bias against Romney, Romney nonetheless had another chance to move the polls at the second debate.  Should he fail to do so, he'd be out of catalysts, because the third debate offered little opportunity, designated as it was a foreign policy debate coming at a time when the great majority was quite comfortable with the incumbent's foreign policy.

Just prior to the second debate was Obama's most precarious moment in the months-long campaign.  Democrat partisans at the Daily Kos complained of feeling "sick to [their] stomach," such were the stakes.  Having been widely panned for being too passive in the first debate, Obama was expected to come out swinging.  But how to go on offence with regard to the inevitable question about Benghazi?

With respect to what happened in Benghazi, Libya on September 11, you see, the administration's ongoing efforts to manage the message had hit a snag.  Normally, the objective truth doesn't matter.  It exerts a magnetic force on the media, but the administration exerts its own magnetic force.  It's like walking a dog without a leash, whereby it's the relative distance to the dog that is of concern from the administration's view.  You get the media to run with you, but if the media stubbornly insists on going its own way, you reluctantly run with them, in an ongoing dynamic.  Here, there were concerns that later developed into a very specific question, to whit, why "security at the consulate was so lax that protesters literally walked in and set fire to the facility" when 
  • an August 15 cable to Hillary said "RSO (Regional Security Officer) expressed concerns with the ability to defend Post in the event of a coordinated attack"
  • in the weeks before his death, Ambassador Stevens sent the State Department several requests for increased security for diplomats in Libya
  • there had been repeated attacks on western targets in Benghazi over the summer, including an IED explosion on that very same U.S. diplomatic mission on June 6 and a RPG attack on the British ambassador's motorcade on June 11
The dog was off the leash, running back to an earlier point in time and obsessed with digging into what it smelled there, and couldn't be coaxed to come back.  The administration then tiptoed back to the site of the digging as one would expect, but what to do about the footprints left behind?

Obama ended up deciding to try and cover the tracks in a high stakes gamble, by insisting that he had been at the same site all along.  You see, Obama had been dropping "restore points" along the way, for possible future use in narrative reversal.  If you find "restore points" dubious, you can just call it political speech that is deliberately ambiguous in order to allow for multiple narratives.  Politicians do this all the time, but they don't jump tracks back to another "forgotten" narrative like Obama later did here.

Had the ambassador perished accidentally in a protest that got out of hand, it'd just a bad news item.  You can only anticipate a "spontaneous" development so far.  But as Susan "give the finger to Richard Holbrooke" Rice so boldly stated on September 16,  the administration line was "We've decimated al Qaeda," such that a successful al Qaeda take-out of a sitting ambassador in the midst of an election campaign would have been "off message."  

But immediately or even during the Benghazi attacks, it was brought to Obama's attention that it might not be possible to just blame an American (uploading videos to Youtube) for what happened.  So at 4:17 of this clip of his 10:43 am September 12 Rose Garden remarks, Obama placed his "restore point" with the statement, "[n]o acts of terror will ever shake the resolve of this great nation, alter that character, or eclipse the light of the values that we stand for." 

Compare it with what he said at the Pentagon just the previous morning: "No act of terrorism can ever change what we stand for."  See the difference?  In both speeches the lines are similarly placed, coming near the end.  But the removal of "-ism" together with adding a "s" to "act" created enough ambiguity in the Rose Garden speech for The Hill to repeat "no acts of terror" and then promptly state that "[t]he attack occurred after an angry mob swarmed the U.S. consulate" and that "[t]he impetus for the attack appeared to be anger over a U.S.-financed film..."  The Hill had no reservations about associating "no acts of terror" with a description that applied equally to what happened in Cairo, minus the fatalities.  

One could argue that the addition of "s" to "act" was carefully chosen to create generality about what Obama was referring to, such that he could be referring to both Benghazi and Cairo, thereby emphasizing the similarities, but Obama did drop the plural after jetting to Nevada to campaign there later that same day, saying "[n]o act of terror will dim the light of the values that we proudly shine on the rest of the world..." and in Colorado the next day, saying "... no act of terror will go unpunished."  The fact remains that he could be referring to every "act of terror" that had been committed against the U.S. over the last two decades or more, such that there was no specific reference to Benghazi at all.  The most telling fact is that he could have referred to "this" act and didn't.

What did Obama know on September 12?   We know that on September 11 "by 5:10 EDT an unarmed surveillance aircraft was on station over the Benghazi compound" providing video feed back to Washington and it was several hours later, "at 11:15 p.m. -- around 5 a.m. Sept. 12 in Benghazi -- the second U.S. facility there, an annex near the consulate, came under mortar and rocket-propelled grenade fire."  The White House had reason to be watching the feed, since the Situation Room received an email at 6:07 pm stating "Update 2: Ansar al-Sharia Claims Responsibility for Benghazi Attack."  The London-based Quilliam Foundation had already announced that "[t]he military assault against the US Consulate in Benghazi should not be seen as part of a protest against a low budget film which was insulting Islam... [rather it] was a well planned terrorist attack that would have occurred regardless..." by the time of his Rose Garden speech on the morning of the 12th.  CNN reported within two hours of that speech that "[yesterday]'s attack on the U.S. Consulate in Benghazi, Libya, was planned in advance, U.S. sources told CNN" and just four hours after the Rose Garden speech said "U.S. sources say they do not believe the attacks that killed Stevens and three other Americans in Benghazi, Libya, were in reaction to the online release of a film mocking Islam, CNN's Elise Labott reports.  'It was not an innocent mob,' one senior official said."  As you can see by my edit of Wikipedia to reflect this information, this blogger was aware within 18 hours of the attack that at least "one senior U.S. official" knew that "it was not an innocent mob" and that "U.S. sources" knew that it was "planned in advance."   Within 14 hours of the attack Obama had told CBS' "60 Minutes" that "this is not a situation that was exactly the same as what happened in Egypt and my suspicion is that there are folks involved in this who were looking to target Americans from the start."

So how could Susan Rice do a Full Ginsburg (appearing on all five of the major English language Sunday talk shows) four days later to claim that there was a "spontaneous protest" that "escalated": 
BOB SCHIEFFER: But you do not agree with [Libyan President, Mohammed Magariaf, who just preceded you here on this show] that this was something that had been plotted out several months ago?
SUSAN RICE: We do not have information at present that leads us to conclude that this was premeditated or preplanned.
BOB SCHIEFFER: Do you agree or disagree with him that al Qaeda had some part in this?
SUSAN RICE: Well, we'll have to find out that out.

In the past couple of days, there's been questions about why "references to 'Al Qaeda involvement' were stripped from [the CIA's] original talking points," but the fact that there was a conflict between what those at the off-the-record, non-partisan civil service level were saying and what those at the political appointee level like Rice were saying ought to have been obvious on September 16 to anyone who paid attention to what unnamed "U.S. officials" had said to the media prior to that Sunday.

When the Rose Garden remarks had come and gone with the media having demonstrated that it would do its part by declining to link "acts of terror" to Benghazi at that time, Obama clearly reckoned that he was free to indulge his preferred scenario for what happened in Benghazi.  As one can see from an American Crossroads' ad, this was still going on on September 20.  See the following exchange (from 2:02 remaining in the video) with Univision in Miami regarding "the attacks in Libya":
THE PRESIDENT: ...What we do know is that the natural protests that arose because of the outrage over the video were used as an excuse by extremists to see if they can also directly harm U.S. interests --
Q Al Qaeda?
THE PRESIDENT: Well, we don’t know yet...

Note that Obama didn't find anything unreasonable about raging in the streets about a Youtube video that the U.S. government had nothing to do with.  The only problem was that these "natural protests" "were used as "an excuse by extremists."  What's particularly headshaking here is that Obama was still insisting on "extremists" despite his own official spokesman having already stated that "It is, I think, self-evident that what happened in Benghazi was a terrorist attack."

Key to the capacity to minimize the significance of any later backtracking to the "restore point" was the slapping of the "best available information at this time" caveat to every instance of narrative pushing.  But there's still a difference between minimization and a wholesale cover, which a triggering of the "restore point" would involve.  As I noted earlier, going into the second debate, Obama was under more pressure than he had been all year.  Evidently he concluded that he could and should try to sweep the entire matter through the loophole of an ambiguous reference.  To play a bit of amateur psychologist, it appears that Obama either consciously or unconsciously knew how dodgy it was of him to declare during the debate that "the day after the attack, Governor, I stood in the Rose Garden and I told the American people and the world that we are going to find out exactly what happened. That this was an act of terror..." because he immediately proceeded to work himself into tone of high dudgeon, thundering that "the suggestion that anybody in my team, whether the Secretary of State, our U.N. Ambassador, anybody on my team would play politics or mislead when we’ve lost four of our own, governor, is offensive."  Obama reprised this indignation on November 14 with the fury with which he defended Susan Rice in his first press conference in eight months.

Now most of America knows what happened next.  Romney said "I think it's interesting the president just said... that on the day after the attack he went into the Rose Garden and said that this was an act of terror" and instead of moderator Candy Crowley fact checking the word "this", Romney got fact checked on "act of terror."  Never mind that Crowley was wrong even there, because Obama didn't actually say "act of terror" either, he said "acts".  The damage was done.  The takeaway for millions of viewers not particularly interested in policy was that for all of Romney's rhetoric of moderation, he believes in "wingnut" conspiracy theories and was accordingly disqualified as a candidate.  The normally even-handed media watcher Erik Wemple of the Washington Post quoted a Twitter claim that Romney had "confused conservative spin for the truth" and concluded that Romney had, indeed, been "confused" by the "conservative media" bubble.

Romney's rise in the polls hit the wall, and he subsequently couldn't get around it to the finish line (if one wants to call attention to the last minute surge towards Obama in the polling graph above, I suggest looking at this study of media bias in the last week of the campaign).  The highlight point of the second debate was like the "show cards" scene in Lock, Stock, and Two Smoking Barrels.   Like then, there was cheating involved, but unlike then the pot here was the White House.

Now the media could have pointed out a glaring weakness in the wingnut echo chamber theory, and that's that it wasn't just Romney that got caught up in it, but the White House's own spokesman!
Q    No, I just hadn’t heard the White House say that this was an act of terrorism or a terrorist attack.  And I just --
JAY CARNEY:  I don’t think the fact that we hadn’t...

The media's sins of commission were various (such as Slate journo David Weigel's claim that that "On those Sunday shows, she said that extremists used a protest as a cover for their planned attack" when Rice not only made no claim that any element was "planned" but specifically rejected such a contention saying "we do not have information at present that leads us to conclude that this was premeditated or preplanned") but more grievous were the sins of omission.  Instead of reminding readers of Mr Carney's "we hadn't," for example, the New York Times told its readers that "some administration officials" "appeared to have forgotten" Obama's earlier references to "terror"!   How about actually naming those officials, which clearly included the White House Press Secretary as well as Rice, so that readers can decide for themselves whether there is just innocents"forgetting" here or whether there is something more Nixonesque at work.  In the case of Obama himself, on September 20 he not only would he have had to have "forgotten" his own references to "terror" on September 12 and 13, he would have had to then remember again between September 20 and the time of the second debate.

I've noted before that in 2009 a NPR journo viewed the administration's conduct as "Nixonesque," but he in fact wasn't the only one.  Anderson Cooper of CNN also asked at that time "do you see shades of Nixon here?" and Ruth Marcus of the Washington Post, who occasionally appears on PBS Newshour as the "left" voice to David Brooks' "conservative" voice, thought that the White House might have been giving off "a distinct Nixonian - Agnewesque? - aroma..."  Surrogates for the White House complained loudly about the comparison at the time, but I pointed out even then that there seemed to be a pattern developing, saying "[t]hat suggestion of mine that FOX will be frozen out in terms of participation has come true more thoroughly than I expected."  Now guess who was frozen out of a briefing on Benghazi...

UPDATE November 21:
Some have argued that I'm making too much out of "decimate," such that a contemporaneous acknowledgment of a terrorist attack with an al Qaeda link wouldn't have been significantly "off message."  Here I could point to the sentence immediately preceding Rice's claim here where she herself connects it to the campaign trail: "I think American people know the record very well. President Obama said when he was running for President that he would refocus our efforts and attentions on al Qaeda."  I could also note the sensitivity of administration officials elsewhere, such as the ferocity with which Hillary spokesman Philippe Reines went after CNN and, subsequently, Michael Hastings of Buzzfeed for being too nosy (as an aside, what happened in Benghazi doesn't seem to have stuck to Hillary at all, perhaps because so many State Department sources blamed Petraeus' CIA).  But Exhibit A here is New York Times' opinion pages editor Andrew Rosenthal trotting out the following as "The Benghazi Conspiracy":
[McCain] and other Republicans seem to think that the White House, and U.N. Ambassador Susan Rice, played down the possibility that Al Qaeda operatives were behind the attack, so that President Obama could boast on the campaign trail that his policies had decimated the terrorist organization. In other words he lied to the American public so that he could win re-election. 
Rosenthal seems to be of the view that his second sentence would readily follow his first if only there were some truth to the administration having having claimed that they had "decimated the terrorist organization."  Point being here that whether this blogger is using using the word "correctly" or not is beside the point because it is Susan Rice who is using it, and using it in the way a NYT editor believes would prove a "conspiracy."
  
I"ll also note here another support point for my thesis that "the takeaway for millions of viewers not particularly interested in policy was that for all of Romney's rhetoric of moderation, he.. 'confused conservative spin for the truth'" in the form of Joe Klein's TIME magazine piece.  What jumped out at me was: 
the President called the Benghazi attack an 'act of terror' the day after it took place – which proved a rather embarrassing moment for Mitt Romney in the third debate, when Candy Crowley corrected him on the point (Romney’s information throughout the campaign was defective, having been sourced by right-wing fantasy reports).

Would "right-wing fantasy reports" include the CNN-cited September 12 Quilliam report that directly contradicts your claim that "there would have been no terrorist attack if the film hadn’t provided the opportunity for mayhem," Joe?  I take it you'd rather believe that the attack was coincidentally on the 11th anniversary of 9/11 and that there were coincidentally no other "protests" in Libya regarding the film.  Perhaps, Joe, you should talk to you own colleague at TIME, James Poniewozik, about the dangers of "right-wing fantasy reports" given that Poniewozik linked to CNN's story "Pro-al Qaeda group seen behind deadly Benghazi attack" when the issue was whether "the deadly attack in Benghazi was planned independently of the movie protests" or not.  I suppose the report of a Libyan officer who was there for the attack on the safe house saying "I don't know how they found the place to carry out the attack. It was planned, the accuracy with which the mortars hit us was too good for any ordinary revolutionaries," is yet another "right wing fantasy report."  Joe Klein pops the right wing media bubble to advise us that not only was the "first [attack] a spontaneous response to the anti-Islamic film that had caused similar protests in Cairo and elsewhere," but the second attack raining precise mortar fire down on the secret safe house was also executed by "protesters."  Even the administration doesn't believe this anymore, Joe.