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Monday, January 20, 2020
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Thursday, December 5, 2019 2:55 PM

How’s business? “Wonderful,” is the answer you’ll probably get from those who only know the stock market continues to rise. 

How is business in Indiana or in your sector of the economy? That answer is often hard to find. 

  • INDIANAPOLIS –  What is leadership?  It was a question posed to us, a group of two dozen Atlantic Council Millennium Fellows, as we sat in a small classroom at a secluded and rustic resort on the outskirts of Bogota, Colombia, this past May for a professional development retreat. What attributes constitute leadership, the session’s facilitator asked. How, more specifically, do you know a leader when you see one? The answers ran the gamut of available responses. Leadership was having a platform to share a worthwhile message, offered one fellow. It was casting an actionable vision, said another. We also heard that one could not be a leader without followers and that leadership meant exacting change or taking risk where others may otherwise disengage. In this lively exercise, our global focus group proved a universal point: Leadership has many definitions. This same question of leadership came to the fore when reading the Eurasia Group’s “Top Risks 2020” report. In it, authors Ian Bremmer and Cliff Kupchan write that “both U.S. allies and enemies over the past years have come to wonder whether the United States intends to lead – and they’ve hedged their bets accordingly.
  • BLOOMINGTON  — You know these words, but how often do you stop to think about them? “We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity …” They belong, of course, to the Preamble to the U.S. Constitution. That remarkable document is not just the blueprint for our political system. Its Preamble is also a profoundly aspirational call to arms. Because when you read it, it’s hard not to ask yourself how we’re doing — at establishing justice, promoting the general welfare, securing the blessings of liberty, and, in sum, creating a more perfect union. It’s especially hard to avoid asking this question now, when the warnings of democracy in retreat are all around us. For many, the creeping authoritarianism that has taken hold in any number of countries — Russia, China, Bolivia, Turkey, the Philippines, and Hungary, among others — seems alarmingly on the ascendant.
  • SOUTH BEND - Mayor Pete wasn’t known as a foreign policy expert while serving as South Bend’s mayor. But then Sen. Bernie Sanders never has been known as a foreign policy expert while serving for so long in the Senate. And the current president doesn’t exactly demonstrate expertise in relations with foreign nations, whether they be friends or foes. So, it will be interesting if foreign policy is — as it should be — a major focus of the Democratic presidential debate at 9 p.m. (ET) Tuesday at Drake University in Iowa. It will feature six candidates, former Vice President Joe Biden, former South Bend Mayor Pete Buttigieg, Minnesota Sen. Amy Klobuchar, Vermont Sen. Bernie Sanders, billionaire executive Tom Steyer and Massachusetts Sen. Elizabeth Warren. It comes as U.S. Sen. Cory Booker withdrew fron the race Monday morning after failing to make the debate stage. The only one of the debating Democratic candidates with real foreign policy expertise is Joe Biden, the former vice president who long was the top Democrat on the Senate Foreign Relations Committee back when it was powerful and prestigious. He knew the world. The world knew him.

  • INDIANAPOLIS – Ever buy hamburger? You pay more for less fat and more beef. I think of that whenever I hear about the blatant incompetence and arrogant ignorance of state or local government workers. Want less fat and more beef? Pay for it! The surprising element is so many excellent government workers remain diligent, dedicated and on the job. Some of these outstanding public servants report to unprepared elected officials or their political appointees. We don’t have sufficient numbers of people who understand their jobs and appreciate their responsibility to the public that pays them. But there is a light shining in the Governor’s office. Between Christmas and New Year’s Day, Gov. Eric Holcomb announced a range of pay increases for existing state employees. Based on merit reviews, employees can receive two, four, or six percent increases, beginning next month. That’s good. But recognize how bad it has been for so long and getting worse. In 1998, 20 years before our latest data, on average, Indiana paid state workers 22% less than the national average for state employees. In 2018, our state employees were paid 27% below the U.S. average. Indiana sank from 46th to 48th place among the 50 states in paying state workers, ahead of only South Dakota and West Virginia.
  • SOUTH BEND – As the new year dawned 25 years ago, back in 1995, there were two presidential prospects from Indiana. Neither was the mayor of South Bend, a post now a springboard to a top-tier spot in the quest for a presidential nomination. Joe Kernan, the mayor back then, was popular and went on to serve as lieutenant governor and governor. But nobody in 1995 was suggesting that Mayor Joe should launch a presidential campaign from South Bend the way Mayor Pete has done. The two prospects from Indiana back then were both Republicans, both following the more traditional political path to run for president. One was a senator. The other had been a senator and then vice president of the United States. Dick Lugar. Dan Quayle. Neither made it, of course, and for different reasons.
  • ANDERSON –  As the clock wound down on 2019, two things happened related to the state of journalism in this country. NBC’s Chuck Todd devoted an entire edition of “Meet the Press” to the topic of disinformation in the age of Donald J. Trump, and the Newseum closed its doors for what might have been the last time. Situated just down the street from the White House, the 11-year-old museum featured a gallery of Pulitzer Prize-winning photographs and a display dedicated to journalists who had been killed while doing their jobs. It included the bent and twisted World Trade Center antenna set against a backdrop of newspaper front pages reporting on the terrorist attack that brought down the New York City landmark. The Newseum was, in short, a monument to journalism and the 1st Amendment. In explaining its decision to close the museum, the Freedom Forum said it could no longer sustain the expense. Perhaps the facility had been overly ambitious. Too big, too expensive. 
  • MUNCIE  – With the year ending, the one enduring bright spot of the domestic economy is consumer spending. Over the past decade, consumer spending accounted for between 67 and 69% of our total economy or gross domestic product (GDP). Consumers are a large and stable share of total demand for goods and services. However, continued high demand for consumer goods is not the same thing as economic growth. It is mistake to think that consumer spending is causing GDP growth, when consumer spending is simply a measure of demand. Over the long term, economic growth is caused exclusively by productivity growth. That is simply, how much more, per worker, the economy can produce or supply. Globally, how much we produce is identically equal to how much we can consume. However, inside each nation, we can sometimes consume more than we produce because other nations lend us money to do so. To borrow money like this is an example of economic strength, which, by the way, leads to trade deficits. That is another story. 
  • INDIANAPOLIS -  Since House Democrats impeached President Trump on a mostly party line vote late last month, I’ve been pretty outspoken that his future should be determined by the voters at the ballot box in November. A historic first censure of a president should become a viable option. Having stated that, we appear to be in for a Senate impeachment trial, though Speaker Nancy Pelosi is refusing to send the two articles to the Senate until Majority Leader Mitch McConnell allows witnesses. Specifically, Democrats maintain that White House Chief of Staff Mick Mulvaney, Secretary of State Mike Pompeo, Trump's personal lawyer Rudy Giuliani, former White House counsel Don McGahn, former nation security adviser John Bolton, and several Office of Management and Budget officials should testify. President Trump wants Joe and Hunter Biden to swear an oath and talk before these Senate jurors. Since polarized Washington has foisted this debacle on to the American people, then it's only fitting to have a real trial, with real witnesses. If Trump wants us to believe there was no transgression, he should allow senior aides to testify.

  • INDIANAPOLIS - Indiana’s two most competitive congressional districts are both open seats in 2020 and are mirror images of each other. The 1st District being vacated by 18-term U.S. Rep. Pete Visclosky is in the heart of the state’s industrialized northwest Region. The 5th CD spans northward from Indianapolis, including the doughnut suburbs of Zionsville, Carmel, and Fishers, as well as Anderson, Marion and suburban Kokomo. Four term Republican Rep. Susan Brooks declined to seek another term. According to the 2017 Cook Partisan Index, the 1st is +9% Democratic (meaning a generic Democrat candidate in a normal election cycle could expect a 9% plurality) while the 5th is +9 Republican. These are the two most competitive districts in Indiana. The current maps drawn in 2011 stand to make history. If the 1st and 5th CDs stay in their current party columns next November, these maps will be the first time in the television age when not a single Hoosier congressional seat changed parties.
  • BLOOMINGTON - To me, it was a thunderclap. Years ago, when I was in Congress, we were in the midst of a tense, contentious debate. Members had gotten irritated, levying charges back and forth, and tempers were rising. It was starting to look like we might just go off the rails. Then one member stood up, asked for our attention, and said to us, “Let’s remember: Trust is the coin of the realm.” His statement at that moment hit me broadside: If we were to have any hope of progress, we had to have some faith in one another — even our opponents. Apparently, other members of Congress came to that same realization. The debate got back on track, with less acrimony and mean-spiritedness. It was a lesson I’ve never forgotten. Our system rests on all sorts of values: Open-mindedness, an informed citizenry, honesty, civility, competence. But at its heart, representative democracy is about how we resolve our differences in order to move the country forward, and if the parties lack trust, then it becomes hugely more difficult to do so. In many ways, trust is at the center of this democratic experiment.
  • KOKOMO  –  The casual observer of the recent “Red for Ed” teacher action day probably believes that it was very successful. A massive teacher turnout blanketed the Statehouse and let legislators and the governor know that teachers were fed up with the status quo and weren’t going to take it anymore. The event received the intended publicity across the state.  Newspapers skewered Republicans. Everyone in power felt the heat.  The last bit of good news regarding “Red for Ed” came on Dec. 10, when Gov. Eric Holcomb announced his 2020 Next Level agenda. Holcomb summed up his priorities by stating that “he will put Hoosier students, teachers and parents first. That means listening to our teachers and giving our students the best education possible.” Furthermore, Holcomb committed to: • Retaining and bringing the very best educators to teach in Indiana; • Changing career-related teacher professional growth points from required to optional; • Supporting the Teacher Compensation Commission and making Indiana a leader in the Midwest for teacher pay; • Working with educators to identify unfunded mandates and unnecessary requirements in K-12 education; • Holding schools and teachers harmless for 2018-2019 ILEARN scores. To most folks this looks like the governor and teachers are moving in symphony and that, soon, all will be right. This probably is not the case. There are deeply ingrained, philosophical issues that will not be resolved anytime soon. If you think that “Red for Ed” was about teacher pay and the educational success of little Johnny and little Mary, then you are living in the land of unicorns.

  • SOUTH BEND – This is a tale of two cities. Of two South Bends. And of how the contrast might be portrayed by a guy named Charles Dickens, famous for something. Was it as a legendary county Democratic chairman from long ago? The contrasting descriptions of South Bend do make it seem like two different cities. It was the best of times since Studebaker folded. It was the worst of times for crime and racial turmoil. It was the age of wisdom – smart streets, smart sewers, enlightened leadership by Mayor Pete. It was the age of foolishness – spending on a beautiful downtown and parks, when so many neighborhoods aren’t so pretty. It was the epoch of belief, with so many buying into the rallying cry of Mayor Pete: “South Bend is back!” It was the epoch of incredulity, with critics scoffing at claims of progress and telling of a terrible place. When Mayor Pete Buttigieg began his long, long long-shot campaign for president earlier this year, he was a salesman for the South Bend, telling at every appearance around the country and on national television that the city, described not so long ago as “dying,” had a new optimistic outlook, finally recovering from decades of doldrums after Studebaker, with economic development, more jobs and decent housing and population gain. The Chamber of Commerce couldn’t have afforded such positive publicity.
  • FORT WAYNE — F. Scott Fitzgerald issued a book called “Crack-Up” in 1945. He made an observation that “the test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.” Conservative writer R. Emmett Tyrrell wrote two books in the 1980’s called “The Liberal Crack-Up” and “The Conservative Crack-Up,” in which he discussed the incongruities within each movement. They, in his words, “resuscitated the term” F. Scott Fitzgerald had used. In other words, neither internal contradictions nor the seeming eminent break-up of political parties is a new concept. In recent state and city elections in Indiana, the Republican Party, particularly in the suburban and higher-income areas, is showing some very sharp fissures. The Democrat Party divisions could not have been more sharply illustrated than when the far-left flank shockingly toppled incumbent Congressman Joe Crowley of New York in a primary. He was a top favorite to be the replacement for leader Nancy Pelosi, until he was purged.

  • INDIANAPOLIS — There are no winners. We’re all losers, from President Trump down to my kids who will be facing a precarious future filled with climate and fiscal challenges. That’s what I was thinking Wednesday afternoon, watching the mind-numbing tribal parade of congressional Republicans and Democrats stating their rote impeachment talking points. They were all talking past each other, not to each other. It was a disgusting display of governance, across the board. By late that night, Donald John Trump became only the third American president to be impeached, and in payback Washington, perhaps only one of many to come before we know whether we can really keep our republic going. And you could see this coming from miles away, with “The Squad” talking about impeachment months before President Zelensky was even elected president of Ukraine, to Trump’s George Stephanopoulos interview last June when he was asked if he would accept foreign assistance to win reelection in 2020.  “I think you might want to listen, there isn’t anything wrong with listening,” Trump answered. “If somebody called from a country, Norway, ‘we have information on your opponent’ – oh, I think I’d want to hear it.”

  • MUNCIE - I released my 2020 economist forecast last week, projecting the U.S. economy to slow significantly next year. The model I use projects that annualized growth rates will slip from 1.9% in the first quarter of 2020 down to 1.7 percent by the year’s end. Here in Indiana, my forecasting model has growth slowing to 1.6% in the first quarter and to 1.4% by the year’s end.  This is agonizingly slow economic growth. Like most of the Midwest, Indiana’s economy slowed through 2019 and is almost certain to end the year with fewer jobs than we had last January. This is not a nationwide recession, though it seems likely Indiana will continue to shed jobs through at least the summer of 2020. 

  • INDIANAPOLIS - Last Sept. 19 in my publication Howey Politics Indiana, I wrote the cover story "Double Dog Impeachment Dare."  It came just as the whistleblower had surfaced, flagging President Trump's July 25 phone call with Ukraine President Zelensky. There were 146 Democrats (including Indiana's Andre Carson) and one former Republican backing the impeachment of Trump at that time. I acknowledged a sinking feeling about this Ukraine story. Just a day before his “perfect” July 25 phone call with Zelensky , Trump seemed to have dodged the Robert Mueller threat. But last June 16, Trump was asked by ABC's George Stephanopoulos if he would accept foreign intel heading into his 2020 reelection. "I think you might want to listen, there isn't anything wrong with listening," Trump answered. "If somebody called from a country, Norway, ‘we have information on your opponent' – oh, I think I'd want to hear it."  Federal Election Commission Chair Ellen Weintraub quickly released a statement on Twitter to make it "100% clear to the American public" that accepting such an offer is illegal. "This is not a novel concept," Weintraub said. "Electoral intervention from foreign governments has been unacceptable since the beginnings of our nation."
  • ANDERSON  — House Speaker Brian Bosma says his goal is simply to ensure a smooth transition. The plan is that his hand-picked successor, State Rep. Todd Huston, will spend much of the coming session as something of an understudy, learning the tricks of the trade during Bosma’s farewell tour.
     “Most of it you see, and most of the members see, is out here at the podium,” Bosma said. “The vast majority of the job is conducted elsewhere, behind the scenes trying to bring policies to a close and people together to move Indiana in the right direction.” The 62-year-old Bosma is Indiana’s longest-serving House speaker. He first  held the reins from 2004 to 2006, before giving them up when Democrats won control of the House of Representatives. He won the job back when Republicans regained power in 2010. The party’s leaders seem to be on board with Bosma’s succession plan. Take this statement from the party chairman, Kyle Hupfer. “During his service in the House, Todd has demonstrated the dedicated, thoughtful and principled leadership needed to serve as speaker,” Hupfer said in a prepared statement. “Brian Bosma leaves behind a historic legacy of accomplishment that will continue with Todd Huston now at the helm.” Republican Gov. Eric Holcomb issued a statement saying that Huston had already proven himself to be a strong leader. “Having a year to learn from Speaker Bosma will prove invaluable,” the governor said.
  • MUNCIE — I deliver my annual forecast later this week, so let’s review where we have come as an economy since the end of the Great Recession. The news is far more dismal than I prefer, but it is wise to know where we are coming from before discussing our future.  The Great Recession was deep and long. It stretched from December 2007 to June 2009, over which time U.S. employment declined by 5.2%. Indiana saw a deeper decline, with job losses accounting for 7.4% of our workers. Indiana actually fared better than should’ve been expected over this time. About half of recession losses to production occurred in consumer durable and business plant and equipment. As the nation’s most manufacturing-intensive state, we had to expect much higher job losses than a state like Florida, Virginia or California. We did, but the unemployment rate peaked well beneath the 1982 level, which is much lower than anticipated.  In 2011, I co-authored a study comparing Michigan and Indiana through the Great Recession. At its peak, I reported the unemployment rate in Michigan was a full 4.5% higher. Much of the difference was attributable to plant closures that were more concentrated in Michigan than in Indiana. I believe Indiana’s tax reforms, focus on fiscal solvency and more predictable business environment helped us weather the Great Recession.  This is good news so far, but states and regions with more volatile business sectors experience deeper recessions and more robust recoveries. So, from 2009 to today, Indiana should have enjoyed a far more robust economic recovery.
  • SOUTH BEND – In their frequent emails to me, Mayor Pete comes across as more confident, more hopeful, than Joe Biden. The former vice president, though he predicts ultimate victory, tells me often that he is worried, fearful of falling behind, and really needs help. Just consider some messages their campaigns sent to me as the end of November fund-raising approached. From Buttigieg: “Hey Jack, The more people get to know Pete, the more people understand that he is the leader we need. “We know that in order to keep growing our support, we have to reach as many voters as possible. We will continue to build our teams on the ground  –  and we know that television is still a great way to deliver key information about Pete’s policies to voters in a fast and effective way. “Our latest TV ad is up on the airwaves today. It shows Pete talking about one of the issues we know is most important to voters in 2020, education and affordability.” “Watch our new television ad and chip in . . . ”From Biden: “Judith, a poll from the Des Moines Register shows us tied for third in Iowa. And if we don’t hit our end-of-month goal, we risk not having the resources to persuade more voters to support Joe. So don’t delete this email. Don’t get distracted checking social media. And please chip in $5 right away!” Why does Joe Biden call me “Judith?” Surely, he knows better. And don’t call me Shirley.
  • INDIANAPOLIS  —  As Gaul was to Caesar, so too is personal income divided into three parts by the U.S. Bureau of Economic Analysis (BEA). This is important because political leaders have latched onto per capita personal income (PCPI) as a favorite measure of economic well-being. They are wrong, but it takes generations for old ideas and politicians to be retired.   The first and biggest part of Hoosier personal income is what we earn as workers. That’s 64.3% for us (15th among the 50 states), slightly higher than the nation’s 62.6% in 2018. Both figures are down from their 2008 levels; about two percentage points nationwide and 1.5 points in our Hoosier Holyland. The second part of personal income is composed of what we “earn” on our investments: Dividends, interest, and rent. Note: Neither the growth of your holdings in the stock market nor the increased value of your house is included.

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  • Parnas implicates Trump, Pence in Ukraine scandal
    “The announcement was the key at that time because of the inauguration and I told him Pence would not show up, nobody would show up to his inauguration. It was particularly Vice President Mike Pence.” - Lev Parnas, the indicted friend of President Trump's personal attorney Rudy Giuliani, in an interview on MSNBC's Rachel Maddow Show, where he implicated Trump, Vice President Mike Pence and Attorney General William Barr in the quid pro quo of the Ukraine scandal that prompted Trump's impeachment. Parnas said that Pence's attendance at Ukraine President Zelensky's inauguration was cancelled the day after Parnas called on Zelensky to announce an investigation of Joe and Hunter Biden, When asked if Pence was aware of the quid pro quo, Parnas said, “I’m going to use a famous quote from [Ambassador Gordon] Sondland. Everybody was in the loop.” 
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  • Pence, Holcomb, Buttigieg head 2020 HPI Power 50
    By BRIAN A. HOWEY in Indianapolis
    and MARK SCHOEFF JR., 
    in Washington

    As we unveil the 2020 version of the Howey Politics Indiana Power 50 List, Hoosiers appear to be relatively satisfied with their state government, unsure about the federals and specifically President Trump, and are most concerned about health care and the economy.

    These are the latest survey numbers from the We Ask America Poll conducted in early December for the Indiana Manufacturers Association. They accentuate the formulation of our annual Power 50 list headed by Vice President Mike Pence, Gov. Eric Holcomb, former South Bend mayor and Democratic presidential contender Pete Buttigieg, and the state’s two Republican senators who will likely sit in judgment (and acquittal) of President Trump in an impeachment trial later this month. 

    As Pence appears to be heading off thinly veiled attempts by Jared Kushner and Ivanka Trump to get him off the 2020 ticket, Hoosiers by 47.4% approve to 47.7% disapprove of President Trump’s job performance. This is consistent with 2019 polling by Ball State University and Morning Consult. On the national right/wrong track, just 37% of registered voters in Indiana feel that the country is headed in the right direction, while a majority, 52%, say that things have gotten off on the wrong track, including 51% of independents and 26% of Republicans. Among female voters, the right/wrong track split is 29%/58%.

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