Credit to Harry Reid and the Senate Democratic caucus leaders for holding it together enough to get the health care bill to the floor. They needed every single Democratic vote to get to 60, and they did. That only gets them into the woods, though, not out of the woods. There are likely to be several balky Democratic votes for cloture, to end the debate, unless they get amendments they want--some of which could cripple the bill's effectiveness. Help from the only Republican who seems even to be considering cooperation, Sen. Olympia Snowe of Maine, seems unlikely as well, unless she gets her way.
Three thoughts on breaking the possible roadblock:
1) The nuclear option--to change the filibuster rules to say, 51 votes for cloture--requires only a simple majority. It's a good threat to make some Republicans agree to cloture or compromise, because otherwise they lose their leverage.
2) Deal: Sen. Blanche Lincoln (D-Ark.) is the balker with the most to lose or gain, because she's the one with a tough re-election coming up in 2010--give her a spot on the conference committee. She only gets to vote on resolving differences between the bills, but there will be plenety, and it will give her a chance to take a high profile and get some bone Arkansans want. The others may profit from her precedent.
3) I'm sure the hypotheticals of the reconciliation approach--in which the bill would be presented (in a single bill, or as multiple bills) as a fulfillment of budget requirements, which is exempted from the 60-vote cloture rule--have been discussed with the parliamentarian and Reid knows exactly what would get through. I'm no expert, but if the bill has enough budget-beneficial effects spread through it, a lot of it would.
It's not time to give up the p.o. w/opt-out (po-woo) provision yet, but in the end, I'd be satisfied with an up-or-down vote, then taking it out. Then we'd know who the insurance tools are, and they'd be drummed out of most Democratic funds.
Wednesday, November 25, 2009
Wednesday, November 11, 2009
Tax Policy Recommendations
I'm totally unconvinced by those shills for Big Business who argue for lower corporate taxes or continuation of the Bush tax cuts for the rich, particularly their notion that this is how one helps the recovery and the reduction in unemployment.
I would argue the opposite: we should raise the taxes on both of these groups, while providing opportunities to offset tax increases with credits if they perform useful services to our society. Examples of those would be investments in renewable energy, in reducing emissions, in education and re-training, and for hiring new American workers. The Federal government should assist small business lending by taking on some of the risk for banks making new loans to smaller companies and non-profit organizations (the latter, in particular, have been decimated by the credit freeze). I would suspend the tax deductibility of personnel restructuring costs: there are some productivity improvements we can do without.
We need not worry about an increase in capital gains taxes: those who have them are going to be few and far between. Tax increases for the wealthy and for corporations with bad social habits are the perfect answer for those who are worried about our deficits growing out of control.
I would argue the opposite: we should raise the taxes on both of these groups, while providing opportunities to offset tax increases with credits if they perform useful services to our society. Examples of those would be investments in renewable energy, in reducing emissions, in education and re-training, and for hiring new American workers. The Federal government should assist small business lending by taking on some of the risk for banks making new loans to smaller companies and non-profit organizations (the latter, in particular, have been decimated by the credit freeze). I would suspend the tax deductibility of personnel restructuring costs: there are some productivity improvements we can do without.
We need not worry about an increase in capital gains taxes: those who have them are going to be few and far between. Tax increases for the wealthy and for corporations with bad social habits are the perfect answer for those who are worried about our deficits growing out of control.
One Year On
There has been a spate of articles about Obama's first year as President. Let's leave aside the fact that his inauguration was January 20, so one-year assessments are premature; as Jonathan Alter pointed out in his piece on the subject in Newsweek, Election Night in 2008 began the Obama Era, and his team was on the move (and the Bushites on the move out) from that day.
Mostly, the articles are by people who somehow expected more, sooner (I haven't seen much by those of the right who were hoping for less, later). In particular, groups looking for environmental legislation, gay rights, and an end to military adventures in Asia have felt Obama has failed to deliver on their expectations, as have many who expected the economy to magically recover by now under his leadership.
My own expectation from the beginning was that many were going to be disappointed, as general expectations were raised to an unreasonable level, and the Washington swamp gas has yet to clear. I tried at least to moderate mine (see for example, my "Official Pre-Inauguration Post" and its expectations.)
I am not discouraged at all; I trust his judgment implicitly. I have rarely found his decisions to have been other than correct, or at least based on sound reasoning. I find that the improvement has been most distinct in the area of foreign policy, in which a President truly has a predominant influence. I also see his initial efforts in education to be extremely promising.
On health care, I will refrain from strong criticism; his greatest mistake has been to let others put forward their thinking too much rather than insisting on his own view, and that is merely showing too much respect for our messy legislative process. With regard to military policy, as with energy, immigration, and the economy, it's still too soon to draw judgments about his administration's footprint.
Katrina Vanden Heuvel's editorial in The Nation on the topic takes the right tone in the end. While we may not agree with all that has been done, or we may think that more should have been done, we must remain firmly in the camp of loyal supporters. Only from the inside can progressive forces guide the administration toward improving its policies, programs, and regulation. The overriding objective is Obama's re-election in 2012; only this will give the victory of 2008 a full measure of time to establish marked change in our nation. Obama is the horse we must ride; if he falls, the race (toward the future) is over, at least for the next decade or two.
It will be somewhat difficult to keep this in mind in 2010; the midterm elections are going to be ugly in many ways. Unemployment will surely be too high, which will work against the Democrats, so our reasonable expectation, especially in the House, should be to limit losses. Many of our party's representatives, especially many in tight races in conservative states, will have compromised themselves through their positions and votes on healthcare, and they will be undeservedly looking for our support. Prioritizing campaign funds for true Democrats who need assistance will be a difficult task for national organizations (and for discerning contributors), and they must not settle for marginally superior candidates when the preferences are based merely on party membership.
Mostly, the articles are by people who somehow expected more, sooner (I haven't seen much by those of the right who were hoping for less, later). In particular, groups looking for environmental legislation, gay rights, and an end to military adventures in Asia have felt Obama has failed to deliver on their expectations, as have many who expected the economy to magically recover by now under his leadership.
My own expectation from the beginning was that many were going to be disappointed, as general expectations were raised to an unreasonable level, and the Washington swamp gas has yet to clear. I tried at least to moderate mine (see for example, my "Official Pre-Inauguration Post" and its expectations.)
I am not discouraged at all; I trust his judgment implicitly. I have rarely found his decisions to have been other than correct, or at least based on sound reasoning. I find that the improvement has been most distinct in the area of foreign policy, in which a President truly has a predominant influence. I also see his initial efforts in education to be extremely promising.
On health care, I will refrain from strong criticism; his greatest mistake has been to let others put forward their thinking too much rather than insisting on his own view, and that is merely showing too much respect for our messy legislative process. With regard to military policy, as with energy, immigration, and the economy, it's still too soon to draw judgments about his administration's footprint.
Katrina Vanden Heuvel's editorial in The Nation on the topic takes the right tone in the end. While we may not agree with all that has been done, or we may think that more should have been done, we must remain firmly in the camp of loyal supporters. Only from the inside can progressive forces guide the administration toward improving its policies, programs, and regulation. The overriding objective is Obama's re-election in 2012; only this will give the victory of 2008 a full measure of time to establish marked change in our nation. Obama is the horse we must ride; if he falls, the race (toward the future) is over, at least for the next decade or two.
It will be somewhat difficult to keep this in mind in 2010; the midterm elections are going to be ugly in many ways. Unemployment will surely be too high, which will work against the Democrats, so our reasonable expectation, especially in the House, should be to limit losses. Many of our party's representatives, especially many in tight races in conservative states, will have compromised themselves through their positions and votes on healthcare, and they will be undeservedly looking for our support. Prioritizing campaign funds for true Democrats who need assistance will be a difficult task for national organizations (and for discerning contributors), and they must not settle for marginally superior candidates when the preferences are based merely on party membership.
Friday, November 06, 2009
Banking on Capital Requirements
The search for blame on the banking crisis which carved out our Great Crater has now passed on to the next phase: what to do next? Thank goodness for that, but so far I haven't seen much in the way of good ideas.
One suggestion, made this week in The Nation, is very simplistic: Break Up the Big Banks! If they're "Too Big To Fail," making them smaller will fix the problem. I doubt that antitrust law as constituted will support this approach, and the trend has been the opposite: permitting--rather, facilitating--big acquisitions of troubled large institutions by the superbanks. And, while all the America's largest banks received bailouts during the peak of the crisis, not all of them remain basket cases (I'd point particularly to J.P. Morgan Chase and Wells Fargo as having strong recovery prospects, ignoring Goldman Sachs and American Express as not really being banks, though they took advantage of the bailout offer to become officially "bank holding companies"). Further, not all the large banks abroad have had deep problems, particularly the likes of Standard Chartered, HSBC, and BNP. It's not size, it's what they do (or don't).
Mark-to-market accounting is another false bogey: some of the banks have gotten behind a proposal to change accounting practices again (an emergency change was made earlier this year to allow some of the toxic assets to be kept on the books at estimated value, rather than market value, when there was no market). A new proposal would give banks the ability to review their own accounting standards, by putting them on a review council on FASB, and taking that power from the SEC. An interesting discussion of this brings out the point that this proposal has the support of the community banks, which are viewed as innocent of causing the recent debacle and which have a very receptive ear from Congress.
Capital Ideas
I'm not in favor of putting these particular lunatics in charge of their accounting asylum. As far as mark-to-market, some emergency change may have been necessary in the peak of the crisis early this year (the toxic assets were not worthless, though no one cared to bid on them), but I remain incredulous toward the notion that these could not or cannot be valued, and I am strongly in favor of regulation both of all mortgage-backed-security offerings and of who may purchase them and for what purposes.
I do have some sympathy for the banks in a predicament they are currently experiencing, though. Rising credit losses such as virtually all banks are experiencing will cause both a decrease in capital available to backstop creating new loans and an increase in the amount of capital required to be dedicated to reserves against future losses for the loans on their books. Additional pressure on banks' capital comes for those who have Federal government assets from the bailout. The result is a continuation of scarce credit conditions on Main Street and political pressure on the banks to make loans that their rules of governance will not, and should not, permit.
One idea to address this double-bind is for the government to come to the aid of community banks with assistance--perhaps for a limited time--to reduce the risk of new loans to small businesses and non-profit organizations. Taking on a share of the potential losses for loans that are destined to produce new hires, or even to reduce job losses, would make such loans more attractive to banks, reduce the capital required for them, and thus bring a boost to employment.
A more fundamental systemic revision would address the nature of banks' loan-loss reserves. These are supposed to be forward-looking, in the sense of preventing direct capital charges to banks in the future when loans go bad. This works to some extent with very large individual loans, but for ordinary mortgages and consumer loans it has the effect of magnifying the effect of cyclical economic downturns and freezing up credit.
A sensible revision would encourage banks to take extra reserves earlier in the credit cycle, in order that the remaining loans would be fully reserved against a continuing downturn and that the banks would show improving reserve costs, allowing them to resume lending, sooner in a recovery. This would actually help banks' profitability through the cycle: the problem is that they would need to act more forcefully to recognize losses sooner. The means of encouragement could be several, ranging from regulatory guidance to some requirement to incentives.
Update, Nov. 19:
I neglected in my initial posting to include another idea I have had: the way to deal with the TBTF is to give them incentives to break apart on their own through capital requirements. Very simply, a bank that has both consumer loans and deposits and also speculates on buying mortgage-backed securities and extensive hedging in derivatives should be required to carry a higher percentage of capital (to protect the public's interest, not just the stockholders') than would two banks of the same combined size, divided up into a traditional bank and an investment bank. Given those incentives, to name names, Citibank, Bank of America, and J.P. Morgan Chase would likely make the smart move to protect their margins and divide up without being coerced into doing so.
I am happy to say that it appears that the draft financial reform legislation being introduced by Sen. Chris Dodd is including this concept.
One suggestion, made this week in The Nation, is very simplistic: Break Up the Big Banks! If they're "Too Big To Fail," making them smaller will fix the problem. I doubt that antitrust law as constituted will support this approach, and the trend has been the opposite: permitting--rather, facilitating--big acquisitions of troubled large institutions by the superbanks. And, while all the America's largest banks received bailouts during the peak of the crisis, not all of them remain basket cases (I'd point particularly to J.P. Morgan Chase and Wells Fargo as having strong recovery prospects, ignoring Goldman Sachs and American Express as not really being banks, though they took advantage of the bailout offer to become officially "bank holding companies"). Further, not all the large banks abroad have had deep problems, particularly the likes of Standard Chartered, HSBC, and BNP. It's not size, it's what they do (or don't).
Mark-to-market accounting is another false bogey: some of the banks have gotten behind a proposal to change accounting practices again (an emergency change was made earlier this year to allow some of the toxic assets to be kept on the books at estimated value, rather than market value, when there was no market). A new proposal would give banks the ability to review their own accounting standards, by putting them on a review council on FASB, and taking that power from the SEC. An interesting discussion of this brings out the point that this proposal has the support of the community banks, which are viewed as innocent of causing the recent debacle and which have a very receptive ear from Congress.
Capital Ideas
I'm not in favor of putting these particular lunatics in charge of their accounting asylum. As far as mark-to-market, some emergency change may have been necessary in the peak of the crisis early this year (the toxic assets were not worthless, though no one cared to bid on them), but I remain incredulous toward the notion that these could not or cannot be valued, and I am strongly in favor of regulation both of all mortgage-backed-security offerings and of who may purchase them and for what purposes.
I do have some sympathy for the banks in a predicament they are currently experiencing, though. Rising credit losses such as virtually all banks are experiencing will cause both a decrease in capital available to backstop creating new loans and an increase in the amount of capital required to be dedicated to reserves against future losses for the loans on their books. Additional pressure on banks' capital comes for those who have Federal government assets from the bailout. The result is a continuation of scarce credit conditions on Main Street and political pressure on the banks to make loans that their rules of governance will not, and should not, permit.
One idea to address this double-bind is for the government to come to the aid of community banks with assistance--perhaps for a limited time--to reduce the risk of new loans to small businesses and non-profit organizations. Taking on a share of the potential losses for loans that are destined to produce new hires, or even to reduce job losses, would make such loans more attractive to banks, reduce the capital required for them, and thus bring a boost to employment.
A more fundamental systemic revision would address the nature of banks' loan-loss reserves. These are supposed to be forward-looking, in the sense of preventing direct capital charges to banks in the future when loans go bad. This works to some extent with very large individual loans, but for ordinary mortgages and consumer loans it has the effect of magnifying the effect of cyclical economic downturns and freezing up credit.
A sensible revision would encourage banks to take extra reserves earlier in the credit cycle, in order that the remaining loans would be fully reserved against a continuing downturn and that the banks would show improving reserve costs, allowing them to resume lending, sooner in a recovery. This would actually help banks' profitability through the cycle: the problem is that they would need to act more forcefully to recognize losses sooner. The means of encouragement could be several, ranging from regulatory guidance to some requirement to incentives.
Update, Nov. 19:
I neglected in my initial posting to include another idea I have had: the way to deal with the TBTF is to give them incentives to break apart on their own through capital requirements. Very simply, a bank that has both consumer loans and deposits and also speculates on buying mortgage-backed securities and extensive hedging in derivatives should be required to carry a higher percentage of capital (to protect the public's interest, not just the stockholders') than would two banks of the same combined size, divided up into a traditional bank and an investment bank. Given those incentives, to name names, Citibank, Bank of America, and J.P. Morgan Chase would likely make the smart move to protect their margins and divide up without being coerced into doing so.
I am happy to say that it appears that the draft financial reform legislation being introduced by Sen. Chris Dodd is including this concept.
Wednesday, November 04, 2009
Jagged Little Pill: Review for Amazon
Pure Estrogen High
After Alanis Morrisette's "Jagged Little Pill" came out in 1995, radio played the heck out of several different songs on it. I liked what I heard, and I purchased the CD, but put it away and listened to it rarely if at all.
Now at a distance of more than 10 years, I pulled out the CD to give it a fresh hearing and decide how it stands up to the test of time. First observation is that it still stands alone--there is nothing really like it, and that includes the subsequent albums by Alanis herself. There are some suggestions of her pull-your-hair-back-and-belt-it-out performance in others` work--I'm thinking particularly of Katy Perry or, very differently, of Slater-Kinney.. I am still struck that this is a unique artistic work, though, the female equivalent of early albums by The Who, or The Rolling Stones in their most popular phase in the `70's and `80's: a pure expression of hormonal-driven emotion.
This is not to say that she did this all by herself: full props to her partner, musical accompanist, and producer Glen Ballard for his contributions. Some of the songs were just Glen and Alanis, take after take, layer after layer, but there are other strong musical contributions, especially Benmont Tench on keyboards and some guest guitarists (Michael Landau, and Dave Navarro and Flea of Red Hot Chili Peppers). Me, I love the layered sound, and Ballard brought it right up to the line of being overproduced. But not over it: the effect is to give a full, detailed frame to enhance the power of her vocal performances.
I would generalize those performances by saying they are fairly dripping with emotion. The range of emotions, and the dynamics suiting them, vary quite a lot, though: fury at the lover who scorned her ("You Oughta Know"), and at a record producer who didn't take her seriously ("Right Through You"), disgust at the weakness of others ("Wake Up", "Not the Doctor"), but also sympathy ("Mary Jane"), a pure expression of love for her companion ("Head Over Feet"), and some real , wise recognition of the ambiguity in life ("Perfect", "Hand In Pocket", "Ironic").
One of my two favorite cuts on the disk is "All I Really Want", which I take as humorous (if not, it would be insufferable!)--a puckish, self-mocking lyric set to a whiny, Oriental soundtrack (think "hippie chick") that includes her "short list" of deliverables: patience, deliverance, companionship, sincerity, purity, spirituality, profundity, intellectuality, peace, harmony, and justice. (I'm reminded of the Stones in "Some Girls" and their stereotypes of women: "American women want...everything in the world you can possibly imagine." OK, she's Canadian, but you get the idea.)
Catholic School as Metaphor for Universal Experience
My favorite song on the album, though, and one of my absolute all-time favorites, is "Forgiven", which I notice many of my fellow Amazon reviewers have shied away from trying to interpret. On the face of it, it's a rueful remembrance of her bad old days in Catholic school, from which she has managed to recover her faith. I think there's something more, though.
The framing of the message is a supremely long crescendo, from acoustic guitar and soft crooning, to a massive, wall-banging chorus with Alanis wailing the chorus at the top of her lungs, the notes tinged heavily with emotion. And what a chorus:
There, in a few short lines, is a summary of the entire lived experience of most of humanity, from the very beginnings of time all the way to the present, and well into the future. So, yes, I think there's something there. Whatever her sins, for those lines alone I would judge her to be "forgiven".
I can see how some might not like this album: for the purist, for example, she shows a beautiful voice, then abuses it terribly. She sounds screechy at times, and the anger can be off-putting: many of my brothers had defensive, cover-your-crotch reactions. (An acoustic version of the songs put out 10 years later might be a good corrective for those who thought it "too angry".) After JLP, though, it can never be said that women can`t rock just as furiously as men, and in their own mode, not merely a pale imitation of male rock. Her performance on this album was a pure expression of human nature (for at least half of humanity), and as such it demands at least our respect.
After Alanis Morrisette's "Jagged Little Pill" came out in 1995, radio played the heck out of several different songs on it. I liked what I heard, and I purchased the CD, but put it away and listened to it rarely if at all.
Now at a distance of more than 10 years, I pulled out the CD to give it a fresh hearing and decide how it stands up to the test of time. First observation is that it still stands alone--there is nothing really like it, and that includes the subsequent albums by Alanis herself. There are some suggestions of her pull-your-hair-back-and-belt-it-out performance in others` work--I'm thinking particularly of Katy Perry or, very differently, of Slater-Kinney.. I am still struck that this is a unique artistic work, though, the female equivalent of early albums by The Who, or The Rolling Stones in their most popular phase in the `70's and `80's: a pure expression of hormonal-driven emotion.
This is not to say that she did this all by herself: full props to her partner, musical accompanist, and producer Glen Ballard for his contributions. Some of the songs were just Glen and Alanis, take after take, layer after layer, but there are other strong musical contributions, especially Benmont Tench on keyboards and some guest guitarists (Michael Landau, and Dave Navarro and Flea of Red Hot Chili Peppers). Me, I love the layered sound, and Ballard brought it right up to the line of being overproduced. But not over it: the effect is to give a full, detailed frame to enhance the power of her vocal performances.
I would generalize those performances by saying they are fairly dripping with emotion. The range of emotions, and the dynamics suiting them, vary quite a lot, though: fury at the lover who scorned her ("You Oughta Know"), and at a record producer who didn't take her seriously ("Right Through You"), disgust at the weakness of others ("Wake Up", "Not the Doctor"), but also sympathy ("Mary Jane"), a pure expression of love for her companion ("Head Over Feet"), and some real , wise recognition of the ambiguity in life ("Perfect", "Hand In Pocket", "Ironic").
One of my two favorite cuts on the disk is "All I Really Want", which I take as humorous (if not, it would be insufferable!)--a puckish, self-mocking lyric set to a whiny, Oriental soundtrack (think "hippie chick") that includes her "short list" of deliverables: patience, deliverance, companionship, sincerity, purity, spirituality, profundity, intellectuality, peace, harmony, and justice. (I'm reminded of the Stones in "Some Girls" and their stereotypes of women: "American women want...everything in the world you can possibly imagine." OK, she's Canadian, but you get the idea.)
Catholic School as Metaphor for Universal Experience
My favorite song on the album, though, and one of my absolute all-time favorites, is "Forgiven", which I notice many of my fellow Amazon reviewers have shied away from trying to interpret. On the face of it, it's a rueful remembrance of her bad old days in Catholic school, from which she has managed to recover her faith. I think there's something more, though.
The framing of the message is a supremely long crescendo, from acoustic guitar and soft crooning, to a massive, wall-banging chorus with Alanis wailing the chorus at the top of her lungs, the notes tinged heavily with emotion. And what a chorus:
"We all had our reasons to be there/We all had a thing or two to learn/We all needed something to cling to/So we did";
and the second chorus:
"We all had delusions in our head/We all had our minds made up for us/We had to believe in something/So we did".
There, in a few short lines, is a summary of the entire lived experience of most of humanity, from the very beginnings of time all the way to the present, and well into the future. So, yes, I think there's something there. Whatever her sins, for those lines alone I would judge her to be "forgiven".
I can see how some might not like this album: for the purist, for example, she shows a beautiful voice, then abuses it terribly. She sounds screechy at times, and the anger can be off-putting: many of my brothers had defensive, cover-your-crotch reactions. (An acoustic version of the songs put out 10 years later might be a good corrective for those who thought it "too angry".) After JLP, though, it can never be said that women can`t rock just as furiously as men, and in their own mode, not merely a pale imitation of male rock. Her performance on this album was a pure expression of human nature (for at least half of humanity), and as such it demands at least our respect.
Tuesday, November 03, 2009
Offyear Election View
As I write, the polls have closed in Virginia, but no result has been announced in the governor's race. New Jersey's polls will close soon.
This election's significance can easily be overestimated; only a few states have meaningful contests, and low turnout will be the rule in all.
Virginia is a state with a solid 30% or so of Democrats, primarily in the D.C. suburbs and Tidewater area, and a solid 40% of so of Republicans. Republicans have a slight edge, but races are determined by a swing group of moderately conservative voters with loose party affiliations, if any. Virginia laws don't allow governors to run for re-election, so there is an unusual effect in which the swing vote punishes the incumbent's party if they don't like the state of affairs, an anti-incumbent effect which doesn't punish the incumbent (who can't run).
New Jersey is a state which normally votes Democratic, but politics there have been conditioned by a massive corruption problem for local politicians, primarily Democrats. Incumbent governor Jon Corzine is a rich banker, so resentment about the bank bailout may also work against him; countering that is an enormous advantage in spending for Corzine. This will probably be the race that will remain undetermined late into the evening.
The third race being closely watched is a special election in New York's 23rd Congressional District, from which the moderate Republican Congressman left to become Secretary of the Army for the Obama administration. The moderate Republican woman who had been nominated by the local party machinery was lagging badly behind a candidate from the Conservative Party (which has a long history of providing a check on tendencies of some Republican candidates to drift too far from the right wing). She dropped out last weekend and recommended her supporters vote for the Democrat (!)
The immediate result was a large increase in undecided voters and a small bump for the Conservative, probably among those who hadn't been able to decide between the Republican and Conservative when both were in the race.
There are some other races, like the mayoral race in New York City, where Michael Bloomberg is expected to win easily a third term.
This election's significance can easily be overestimated; only a few states have meaningful contests, and low turnout will be the rule in all.
Virginia is a state with a solid 30% or so of Democrats, primarily in the D.C. suburbs and Tidewater area, and a solid 40% of so of Republicans. Republicans have a slight edge, but races are determined by a swing group of moderately conservative voters with loose party affiliations, if any. Virginia laws don't allow governors to run for re-election, so there is an unusual effect in which the swing vote punishes the incumbent's party if they don't like the state of affairs, an anti-incumbent effect which doesn't punish the incumbent (who can't run).
New Jersey is a state which normally votes Democratic, but politics there have been conditioned by a massive corruption problem for local politicians, primarily Democrats. Incumbent governor Jon Corzine is a rich banker, so resentment about the bank bailout may also work against him; countering that is an enormous advantage in spending for Corzine. This will probably be the race that will remain undetermined late into the evening.
The third race being closely watched is a special election in New York's 23rd Congressional District, from which the moderate Republican Congressman left to become Secretary of the Army for the Obama administration. The moderate Republican woman who had been nominated by the local party machinery was lagging badly behind a candidate from the Conservative Party (which has a long history of providing a check on tendencies of some Republican candidates to drift too far from the right wing). She dropped out last weekend and recommended her supporters vote for the Democrat (!)
The immediate result was a large increase in undecided voters and a small bump for the Conservative, probably among those who hadn't been able to decide between the Republican and Conservative when both were in the race.
There are some other races, like the mayoral race in New York City, where Michael Bloomberg is expected to win easily a third term.
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