Barack Obama has only been President-elect for 36 hours, but seven major government reform groups are already making demands. In a joint press release Thursday morning, the Brennan Center for Justice, the Campaign Legal Center, Common Cause, Democracy 21, the League of Women Voters, Public Citizen and US PIRG set out a "government integrity reform" agenda for the next Congress. And the groups are using Obama's own words to convince him to adopt their plans, pointing out that Obama campaigned on a promise to "fix Washington." Fixing Washington, they argue, means fixing campaign finance.

The reform groups are calling on Obama to repair the existing presidential public financing system and create a new public financing regimen for congress. But there's one problem: Obama's campaign is largely responsible for the presidential public financing system's collapse. Obama, who initially promised to "pursue an agreement" to opt in to the public financing system, instead became the first candidate to turn down public financing for the general election. That decision allowed Obama to dramatically outraise and outspend John McCain, his Republican opponent. McCain was limited to $84 million in public financing during the general election campaign, while Obama raised over $150 million in September alone. The day after the election, McCain aides cited Obama's spending advantage as one reason their man lost. But Obama did promise to fix the system. "I am firmly committed to reforming the system as president, so that it's viable in today's campaign climate," he said this summer. The reformers are now pushing Obama to make good on that vow.

Does Republican Representative John Boehner, the in-the-dumps House minority leader, have a point when he criticizes President-elect Barack Obama for tapping Democratic Representative Rahm Emanuel to be his White House chief of staff? Boehner says:

This is an ironic choice for a President-elect who has promised to change Washington, make politics more civil, and govern from the center.

Boehner misunderstood--or is now, for political gain, misrepresenting--Obama's call for cooperation and productivity in Washington as a vow to govern from the center. The policy proposals Obama presented during the campaign were mostly progressive. Hey, doesn't Boehner remember that Obama was blasted as an anti-American liberal and socialist by Boehner's fellow GOPers? They didn't seem to believe he was going to govern from the center.

Despite the isn't-he-supposed-to-be-a-centrist spin, Boehner is not incorrect in noting that Emanuel is not known as a nonpartisan agent of change in Washington. As the leading fundraiser for Democrats in the House in the 2006 election, Emanuel, a fierce partisan, did do much to change Washington by winning the House back for the Democrats. But he's a walking advertisement for how Washington does business (see here and here)--as is the less-successful Boehner.

By selecting Emanuel as first big appointment, Obama teed up the this-ain't-really-change ball for Boehner. And Boehner whacked it down the fairway. On Friday, Obama is slated to hold a meeting with his top economic advisers. The speculation is that afterward he may have something to say about other appointments. Obama believers ought to hope he doesn't again make it easy for Boehner.

THE GREAT PERSUADER....PART 2....Yesterday I argued that although Barack Obama had campaigned on a platform of "change," he hadn't really campaigned on a platform of specifically progressive change — and because of this, he might have missed a chance to really move public opinion in a liberal direction. As an example, I suggested that the public face of his economic policy "was almost entirely based on tax cuts, a distinctly conservative notion."

Over at RBC, Andy Sabl demurs:

Obama, as most readers of this blog probably know, ran on repealing the Bush tax cuts for those earning more than $250,000 a year, and using the revenue raised by doing that to give a tax cut to everyone earning less than $200,000....This is, quite simply, the core of left-liberalism: straight-up redistribution.

....Obama did a great job during the campaign of re-framing the Reaganite meme that spending is simply bad and tax cuts simply good — that spending "costs the taxpayers money" while tax cuts "let you keep more of your money." Repeatedly, especially in the debates, Obama used, and made stick, the language that tax cuts for the wealthy "cost" money that we as a country need for urgent purposes.

This is an interesting counterpoint, but one that's hard to resolve because it's difficult to know what message people were really reacting to. My guess is that most low-information voters were reacting solely to Obama's surface message, which was clear as day: "Tax cuts for me! Hooray!" Via email, Andy agrees, but says, "My point was not that the tax proposal sounded redistributive but that it was redistributive: if Obama were able to get it through Congress, that itself would be a huge progressive victory."

Maybe so. I need to noodle on this some more. For one thing, the empirical evidence is unclear: large majorities of voters thought both Obama and McCain would end up raising taxes regardless of what they said, so maybe most people just tuned this message out completely. What's more, although I originally thought the "share the wealth" attacks at the end were gaining a bit of traction, the tracking poll numbers over the final week suggest that, in fact, they had no effect at all.

So....I'm not sure. Taxes have been hated since the dawn of time, so that's a tough place to make a big progressive stand in the best of times. But it's a worthwhile conversation. For a long time Obama's fans have been saying that he's a guy who can sound more centrist than he is, which makes him a very electable candidate. And obviously that turned out to be true. Now we get to find out if it also gives him a platform to become a persuasive cheerleader for a public turn to progressivism. We'll see.

ALASKA'S SENATE RACE....So what's the deal with all those "questionable" ballots in Alaska? Nate Silver speculates here.

CENTER RIGHT, CENTER LEFT....Just in case you're curious, here's the difference between a center right country and a center left country. If you squint, you can see it.

In the end, 90% of Republicans voted for McCain and 90% of Democrats voted for Obama — almost exactly the same as the 2004 election. The difference? Independents got bluer by about eight points compared to four years ago. The Republican Party lost the middle everywhere, and as a result the map got slightly bluer everywhere too.

CDS Demonization

CDS DEMONIZATION....Are credit default swaps a major villain in the global banking meltdown? Felix Salmon, responding to a piece by Nathaniel Baker, says no:

How do we know this? Well, just look at the magnitude of the exposures that Baker is talking about. Back in January, Bernstein Research analysts totted them up, and came to the conclusion that Lehman's unsecured exposure to triple-A counterparties in general — not just the monolines — was $4 billion: large, but certainly not large enough to bring down a bank with a balance sheet of over $600 billion. Bear Stearns's exposure was smaller still, just $330 million. What fraction of that exposure eventually turned up on the banks' income statements as a mark-to-market loss? That I don't know, but it's not necessarily very large: remember that AIG's troubles only really snowballed after Lehman and Bear had gone under — and AIG was by far the largest triple-A writer of CDS.

Salmon thinks the "CDS demonization meme" is dangerous, but I'm a little confused on this score. It's a little hard to get a handle on an exact figure, but within the U.S. banking system total losses on subprime mortgages themselves probably total around half a trillion dollars. That's a helluva lot of money, but it's nowhere near enough to crash the system. That can only happen if the losses are magnified several times over via derivative losses.

Now, Salmon's point is that the CDS market is only a small portion of the total OTC derivative market. And that's a fair point. But in a previous piece, Salmon wrote this:

I had lunch yesterday with Shane Akeroyd of Markit, and he had a more sophisticated take on what we're seeing. The problem isn't CDS specifically or even derivatives in general, he said: the problem is that the world had an enormous amount of leverage, and all that leverage is now being unwound at once. Do CDS make it easier to firms to lever up? Yes — but if CDS hadn't been around, some other instrument would have been found which had the same effect.

Well — OK. Maybe bankers would have found some other way to lever up. But in the event, Akeroyd is saying, they used CDS. So why then is it unfair to say that CDS exposure was a huge driver of the financial meltdown?

Salmon's larger crusade is to defend derivatives in general, and CDS in particular, as useful devices when they aren't abused, but it's not clear to me that this is especially controversial. The question is, how should they be regulated in the future to ensure that they aren't abused? I agree that leverage itself should be the primary target of regulatory reform, but surely, under the circumstances, some reasonably strict trading rules on derivatives of all kinds will end up being part of that. Leverage is a hard thing to get at directly, after all, and we're going to need to attack it from a variety of directions. A bit of CDS demonization might not be a bad place to start from.

UPDATE: More here, including a response from Salmon.

As the national media prepared to cover the historic 2008 election, Stars and Stripes, the Pentagon-funded daily newspaper, was making its own plans to report on the conclusion of the presidential race. As part of its election coverage, the paper planned to dispatch reporters to the common areas of military bases in order to chronicle the scene as the returns rolled on. A Stripes editor, Tom Skeen, advised the Pentagon of the paper's plans beforehand as a matter of "courtesy," but was "flabbergasted" by the response he received from the Office of the Secretary of Defense for Public Affairs: stand down. "As a matter of long standing policy, DoD personnel are to avoid engaging in activities that could associate the Department with any partisan election," the paper was told.

Copy Desk Watch

COPY DESK WATCH....I'd like to nominate this for misleading headline of the year:

Prop. 2 probably won't hike egg prices

Proposition 2 is the initiative that requires hens to be kept in cages that allow them to move around a bit. I voted for it, and it passed yesterday 63%-37%. But here's the story behind the headline:

Egg prices probably will not increase for Californians, according to a study by the UC Davis Agricultural Issues Center. That's because out-of-state farmers, who already supply Californians a third of their eggs — and could provide more — are not affected by the new law, so they won't have to change their housing.

...."The most likely outcome, therefore, is the elimination of almost all of the California egg industry over a few years," says the report.

So egg prices won't go up, but only because the California egg industry will be utterly destroyed. By this logic, the headline after Black Tuesday should have been, "Apple industry opens new distribution channel on Wall Street." Sheesh.

UPDATE: Actually, this is even weirder than it looks. The print version of this story bears practically no resemblance to the online version, and doesn't even include the quote about the elimination of the egg industry. Very strange.

He retired back in August, but for some reason he's back, spinning like always.

Here's what he said in 2004, when asked if Bush's victory over Kerry was a mandate from voters:

"Of course it is. It's a 3.5 million vote margin."

And here's what he wrote yesterday about Obama's victory over McCain:

"...he neither received a broad mandate from the public nor the needed large congressional majorities."

Of course, Obama is on pace to win by over 7 million votes. He won more electoral votes than Bush in 2004 and will have larger congressional majorities. This is the definition of hackery. Why on earth people continue to publish Novak, especially drawing him out of retirement to do so, is beyond me. Hat tip Think Progress.

Oregon Speaker of the House Jeff Merkley has defeated moderate Republican incumbent Gordon Smith for Oregon's junior Senate seat, bumping the Dems' roster in the Senate to 57. For a rundown on where they are in Georgia, Minnesota, and Alaska, the three races still outstanding, click here. Below, an illustration of what Oregon looks like politically (courtesy of the Oregonian). Can you guess where Portland and Eugene are located?