Welcome! Here’s how you can get up to speed in a few minutes:

1) Start with this video introduction. If you have 5 minutes, try this version.

2) Ready to learn more about my stand on the issues?
- Here’s my policy platform centered around Responsibility, Growth, and Security.
- Here’s a list of 7 specific issues that I’m committed to pursuing for you.

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Still have questions? Send me a note.

Thanks!
Surya

Let’s acknowledge the real cause of high unemployment … and get to work addressing it.

It’s probably not wise for a candidate to pick a fight with a noted economist, but I had a strong reaction to a post this week from by Professor J. Bradford DeLong titled, “The Varieties of Unemployment” that I came across via Ezra Klein.

Prof. DeLong’s post is a bit technical. It addresses an academic debate among economists over whether our current state of high unemployment is “cyclical” or “structural.” In a nutshell, some smart people are arguing the issue is supply (not enough of a type of worker), a problem with the structure of the economy itself. Other smart people are arguing that the issue is demand (not enough employers seeking those skilled workers), which is a problem that comes and goes in cycles.

The big difference is the latter problem can be solved by pumping taxpayer-funded “stimulus” into the economy, essentially creating the missing demand. Prof. DeLong appears to be in the camp that thinks this would be an effective remedy.

Here is the key example Prof. DeLong uses to prove our 10% unemployment rate is not structural:

[S]uppose that you have many workers qualified and skilled to work in construction, but households have decided that their houses are more than large enough, and wish to fill them with manufactured goods …

In that case, we would expect to see construction depressed: firms closed, capital goods idle, and workers unemployed. But we would also expect to see manufacturing plants running at double shifts – the money not spent on construction has to go somewhere … We would expect to see manufacturers holding job fairs, and when not enough workers showed up, we would expect to see manufacturers offering higher wages to attract workers into their plants, and then raising prices to cover their higher costs.

The size and duration of the excess unemployment of ex-construction workers might be substantial and long lasting. It might require significant time to retrain construction workers and plug them into social networks in which they become good manufacturing workers. We might see prolonged and high unemployment in the construction sector, and in regions that had seen the biggest previous construction booms.

But depression in the construction sector and unemployment among its ex-workers would be balanced by exuberance in the manufacturing sector, rising prices for manufactured goods, and long hours and high wages for manufacturing workers.

He goes on to argue that since employment is down in almost every sector, the problem is clearly aggregate demand, which is cyclical, and not something structural.

My problem with Prof. DeLong’s argument is that while I’m sure it’s theoretically correct, it does not take into account the reality of our economy. That is, he only considers domestic production and employment. In our global economy, the collapse of demand in one country is often complemented by an increase of demand in another country and demand of certain types of goods in one country might be filled by production from another country.

By now, everyone gets that the American consumer is tapped out. In the past year, it has been the other economies of the world that have stepped up and are growing. In China, India, Brazil, Germany, etc. consumers are buying once again. These consumers didn’t gorge themselves on easy credit and artificial home equity like we did, so they don’t have the same need for a crash diet. In these economies, consumption is on the rise. There is an increasing need for products and services, and that need is being met – but not by Americans.

Of course, it’s no secret that American manufacturing has been declining over the past few decades. The secret is we are no longer talking about the loss of low-skill jobs. Politicians were quick to tell us not to worry when it started happening. We would always be high on the value chain, they said, because a country like China could never build high-quality technology products. But if you’ve purchased an Apple iPhone, Dell Laptop or HP printer lately, you purchased a product made at Foxconn in China. There, hundreds of thousands of people are hard at work right at this very moment.

This is our issue. Structurally we lost millions of manufacturing jobs and ended up replacing them with “service” industry jobs in retail, real estate that were fueled by the credit bubble or construction-type jobs fueled by the housing bubble. As our credit/housing bubbles exploded and these jobs disappeared, we were left with unemployment figures not seen in decades. As world economies recovered and spending returned, countries with strong manufacturing (and export-driven) economies also have recovered. However, structurally, we’re not making what the world wants and we haven’t really felt this recovery.

In my opinion, this is our most pressing national issue, and we continue to ignore it and move in the wrong direction. That’s why when I first heard President Obama speak rosily of our economic recovery in terms of quarters instead of years, I was shocked. At the time, I figured I must be missing something since all the DC “experts” were agreeing with him and talking about a coming “economic recovery” and “return to near full-employment.”

Now, after having been a candidate for Congress for almost a year, I think I understand. Our politicians can’t grasp “structural” issues. They are always hoping for a fast “cyclical” fix before the next election.
Unfortunately, there are no short-term solutions to this long-term problem. We need to get to work in a hurry on the tax, regulatory, educational and industrial policies that will finally turn this trend around. My next post will give an overview of the specific policies I’m recommending.

This is the second in the series “A Business Plan for America” that will outline critical public policy proposals that are free of partisan politics, ideology and dead ideas. http://votechili.com/businessplan

Sadly, each passing day brings with it more depressing economic news. Today’s latest is that housing sales dropped 27% in July, the weakest showing in 15 years. That the housing market remains a complete disaster, common knowledge to most of us, appears to still be a secret to those in Washington. This latest news reinforces that it is time to put aside the Washington “PR fixes” and get down to real solutions that address what is both a devastating crisis for many American families and a major barrier to any economic recovery.

To properly address the housing crisis we have to first stabilize the market. We can only stabilize the housing market by first stopping the downward spiral that it is currently caught in. What downward spiral? Today, each foreclosure, auction, and new house for sale puts increasing downward pressure on prices. As home prices drop, more mortgages become “underwater”, which leads to increasing cases of homeowners walking away and more bank foreclosures. This in-turn drives home prices down even further, and the cycle continues and continues.

To date none of the DC solutions have had a prayer of addressing this core problem; they were just band-aids. Not surprisingly, these DC solutions have only succeeded in allowing our politicians to say that they’ve tried to address our housing crisis versus actually doing so.

* The first attempt at a federally run loan-modification program appears to have failed: 50% of participants have dropped out since the program started.
* The recent homebuyer tax credit only succeeded in making folks who were going to buy a home anyway buy it earlier, so they could get $7,500 from Uncle Sam. Immediately after the credit expired, a huge decrease in home sales resulted.
* Ironically, the brutal economic climate, which has allowed interest rates to stay at historic lows, is the only federal intervention that has worked in the housing market’s favor.

We must go beyond these superficial gestures to fix a problem of this size. How about some fresh thinking on the subject? That’s why I’m proposing:

Banks becoming equity partners with homeowners. Let’s explain that with an example:

Jim has a $100K mortgage from the bank for his $120K house. If the house is currently appraising for $75K, the bank would readjust Jim’s mortgage to $75K and take, say, a 20% ownership stake in the house. The result would be that Jim’s monthly payment would be substantially reduced and he becomes much less likely to “walk away” from his house. The bank has a loan which has immediately become more solid and, say, in 10 years when Jim sells his house, the bank, as a 20% equity partner, can share in the upside.
While the fine print still need to be worked out, this type of private-sector administered program actually cuts to the core of the issue and establishes the foundation for a sustainable housing market. There are other measures as well — going to a 50 year mortgage (Japan and other nations already offer them), etc., that also warrant discussion and would also help.

Washington’s failure to deal with the housing crisis represents a truism in politics and life: there are no short-term solutions to long-term problems. Sadly, short-term thinking and fixes are all Washington appears to be capable of. Housing, jobs, our national debt – these are not intractable problems, just difficult ones. Yet until we elect officials who demonstrate the capability for fresh thinking and are focused on solutions not ideology, we’ll keep getting more of the same: band-aids.

This is the first in the series “A Business Plan for America” that will outline critical public policy proposals that are free of partisan politics, ideology, and dead ideas.

It’s always darkest before the dawn. Given our current campaign finance system, we should hope that this is true. Washington Monthly’s article “Show Him the Money” looks behind the curtain at the process by which big dollars get in the door to the legislative process. Here are some of my thoughts on choice passages:

“In other words, a large part of what the Chamber sells is political cover. For multibillion-dollar insurers, drug makers, and medical device manufacturers who are too smart and image conscious to make public attacks of their own, the Chamber of Commerce is a friend who will do the dirty work. “I want to give them all the deniability they need,” says Donohue.

Wow. Shouldn’t it scare us that special interests– those who create, manipulate, and defeat legislation– would so readily admit the degree to which they manipulate the process? The truly sad part is that their confidence/arrogance is well-founded. If there ever was a formal battle between “organized greed” and “disorganized democracy” it was won long ago.

But while the Chamber has as legitimate a claim to representing this sector as any organization around—96 percent of its members have fewer than 100 employees—it is also beholden to a cadre of multinationals whose interests are often inimical to those of small business. In 2008, a third of its revenues came from just nineteen companies.

This feels like one of the most consistent patterns of Washington. Special interests hide behind the banner of a group that we all agree on/believe in– in this case, small businesses– solely for marketing purposes.

“The worst thing to happen to Tom is to have an issue resolved, even to his own favor, because then he can’t raise any more funds on it,” says John Schulz, a former editor at the trade journal Traffic World, who’s covered Donohue for twenty-five years.

Isn’t this exactly what is happening in government today as well? Both parties are more concerned with scoring political points and posturing for the next election than in actually solving problems.

Oddly, while Donohue casts himself as the voice of business, he has never worked for a corporation or any kind of for-profit concern—only for trade associations, nonprofits, and the federal government.

One of the biggest problems with Washington is that the vast majority of these people have never worked in a business or run a real business. They are career bureaucrats or politicians who know how to peddle influence, raise money, and tell people what they want to hear. They leach off hard-earned taxpayer dollars and borrow from our grandchildren. Of course we end up with out of control spending, poorly run programs, and abysmal oversight of regulation. They’ve never worked in the real world where if you do these things you get fired.

“The Chamber views itself as a shadow-government policymaking body,” a former Chamber economist, Lawrence Hunter, said.

Isn’t this the real cause for hope? After all this time, and having spent well over $3 trillion last year lobbying, can you really call this kind of behavior “shadow-government”? That’s quite the shadow. Now that the “shadow” is blocking out the sun, people are increasingly reading and hearing about how corrupt the ways of Washington have become. We legalized bribery, and now that they’re rubbing our faces in it, I have hope that we’re finally read to tell them we’ve had enough.

We have an opportunity here in the 2nd District to send just such a message. Our Congresswoman has taken over 1.5 million dollars in special-interest money. The banks donated to her. The big banks got her vote to bail them out and hand them hundreds of billions of dollars (TARP). Later the banks also got their protection from regulation as hundreds of Congressmen, like Rep. Jean Schmidt voted against and watered it down. Had enough yet?

Washington’s passage of financial regulation last week served as a perfect reminder of so much that is wrong with DC.

Despite moderate legislation (I would say “watered down”), financial regulation only passed along essentially party lines. With elections having become endless year-round campaigns, we are left with a process where all legislation is examined only for political gain/loss and not policy implications. All of us, democrats and republicans alike, lose as a result.

Here in the 2nd District we have a front row seat to this disappointment. When Wall Street needed help, Congresswoman Schmidt was there to vote in favor of their bailout. However when the time came to vote to pass some basic, common-sense measures to ensure that taxpayers were not once again holding the bag for Wall Street’s excessive risktaking, Congresswoman Schmidt voted no. She has chosen to side with the interests of Wall Street bankers over those of her constituents.

All of this goes back to a climate in Washington that values winning elections and the preservation of power above all else. Preying on this, special interest groups are all too eager to step into the void with large checks to help their handpicked candidates win elections. So it is no surprise that groups like Wall Street get to write their own legislation and get hundreds of billion dollars in help when they need it. They have purchased the best representatives that money can buy.

Back to the financial regulation legislation– I don’t believe the present version of the bills go far enough. Sen. Sherrod Brown has proposed an amendment, Brown-Kaufman, which would be an excellent step to cap the size and leverage of the biggest banks. If we wish to ensure we don’t have a repeat of 2008′s disastrous events we must make “too big to fail, too big to exist.” So far this amendment has faced massive opposition from the army of lobbyists in Washington and their allies in Congress.

This is a great article on what’s going on behind the scenes of financial regulation. Great read.

Rep. Obey of Wisconsin announced his intention to retire after over 40 years in the US House. In his release, he clearly lays out so much of what is wrong with Washington and crippling our nation. The whole thing is very much worth a read, but here’s a must-read section:

“All I do know is that there has to be more to life than explaining the ridiculous, accountability destroying rules of the Senate to confused, angry, and frustrated constituents.

I absolutely believe that, after the economy returns to a decent level of growth, we must attack our long-term budget deficit. But, perhaps I expect too much because, in addition to an attack on the federal budget deficit, I also want to see an equal determination to attack the family security deficit, the family income deficit, and the opportunity deficit which also plague the American people.

I am, frankly, weary of having to beg on a daily basis that both parties recognize that we do no favor for the country if we neglect to make the long-term investments in education, science, health, and energy that are necessary to modernize our economy and decline to raise the revenue needed to pay for those crucial investments. I do not want to be in a position as Chairman of the Appropriations Committee of producing and defending lowest common denominator legislation that is inadequate to that task and, given the mood of the country, that is what I would have to do if I stayed.

I am also increasingly weary of having to deal with a press which has become increasingly focused on trivia, driven at least in part by the financial collapse of the news industry and the need, with the 24-hour news cycle, to fill the air waves with hot air. I say that regretfully because I regard what is happening to the news profession as nothing short of a national catastrophe which I know pains many quality journalists as much as it pains me. Both our professions have been coarsened in recent years and the nation is the loser for it.”

This is exactly why I’m running for Congress. This is exactly what our campaign is all about. We are picking up this fight to repair a Washington that has badly failed the American people. I look forward to working with you in our journey to November and then in making it a reality.

More details coming, but I wanted to thank everyone now for their amazing support!

http://news.cincinnati.com/article/20100504/NEWS0108/305040066/Yalamanchili+wins+2nd+Dist.+Dem+primary

The Third Frontier program (Issue 1) is on the ballot here in Ohio on May 4. I strongly support Third Frontier as a key investment in our future. It funds the future today, for jobs tomorrow. It’s a great example of smart, long-term thinking.

In a nutshell, it is a program that funds advanced technology development here in Ohio. Current funding runs out in 2012 and passage of Issue 1 extends the program until 2016. Third Frontier is a perfect example of what can be accomplished with bi-partisan cooperation and vision. It was started by Gov Taft in 02, and yet strongly supported by Gov Strickland.

Third Frontier will help Ohio create the homegrown advanced technology companies and jobs that we need to strengthen our economic foundation. After years of of having our manufacturing sector rust, it’s important that we create the incentives for businesses to invest in Ohio. It’s estimated that the program has already created over 10,000 jobs and 30,000 indirectly.

What can be done better?

As the Enquirer points out in their editorial, removing even the appearance of politics is crucial for public trust. Increased transparency throughout every stage of the process will go a long way to earning that trust.

We must make sure that we are not just funding the advanced R&D here in Ohio, but also the production and manufacturing. Too often, we have seen federal grants and R&D dollars invested in upstream work only to see the final production jobs created overseas. We should ensure that strong provisions exist that look out for Ohio’s public interest in having the multiplier effect of production jobs here.

I’m strongly in favor of Issue 1, Third Frontier and urge you to vote yes.

The Cincinnati Enquirer held their endorsement meeting a few weeks back. All three of us went and sat for an hour as we discussed health care, Jean Schmidt, government spending, and a host of other issues. I’m humbled by their thoughts so far.

Here’s what they said about me:

But a newcomer, Surya Yalamanchili, has racked up impressive support among party officials, and he demonstrates an equally impressive grasp of the issues.

A former Procter & Gamble brand manager and one-time “Apprentice” contestant, Yalamanchili is personable and polished.

While it’s not an overt endorsement, their statements about my opponents consist of saying that David Krikorian “enjoys name recognition” and that Jim Parker is “passionate about health care issues”. I agree wholeheartedly with both those statements.

This is latest sign of the clear choice in the primary. There’s a reason prominent Democrats have all only backed our campaign. There’s a reason why after speaking to all the candidates the Enquirer emphasizes my grasp of the issues as well as comments on electability with voters. We just need to continue to spread the word ahead of the May 4th primary.

The questions about health care are flooding in through the contact page. First, thanks! Second, below are some additional political thoughts on health care since I’ve already made my policy position clear.

This past Wednesday, the Cincinnati Enquirer held their group endorsement interview. There was much of interest at the meeting, but immediately relevant was that I was the only candidate who when asked if we would vote for health care, on the spot,, said that I would vote. One candidate essentially said no. The other just talked about the process and when pressed said he would call the Enquirer tomorrow with his answer after the CBO released their assessment. You’ll be happy to know that I pointed out that we already had CBO assessments on the different bills and they would all aid the deficit.

We don’t need politicians– we need leaders who are willing to make the hard calls. That’s what the 2nd District is looking for. Just yesterday at the Clermont County Donkey Dinner, I met another couple who lives under the threat of our health care crisis. They’ve both worked all their lives, but due to the current economic conditions she is looking for work, and he, though employed, lacks health care. They’ve lived responsibly and have saved for years to build a nest egg which allows them to get by. However, they’re just one health emergency from being completely wiped out. The leading cause of bankruptcies in America isn’t just a statistic. It’s a very real, incredibly destructive reality for millions of American families.

I’m the only candidate to have been on the record for comprehensive health reform since November:

Statement 1: Why we need Health Care reform

Statement 2: I attempt to explain what’s good in the guts of the current bill

Statment 3: A graphical look at the current dysfunction of our system (financially and results)

Statement 4: Way back in November, when I first announced, I was asked by Congressional Quarterly about heath care. In something rare for someone running for office– you’ll find consistency:

He said the health care bill the House passed last weekend was “better than what we have now,” but didn’t include enough consumer choice or “tort reform” to curb lawsuit abuse. He prefers a health bill promoted by Democratic Sen. Ron Wyden of Oregon and Republican Sen. Robert F. Bennett of Utah.

It’s been about five months since that interview and my statements haven’t altered much at all. The polling has changed, but to me, that’s irrelevant. The right thing to do is simply the right thing to do.

I firmly believe as details of the bill (I’ve actually read much of it) are better understood, it will be viewed in a very different, more positive light. Other candidates sense this and are already scrambling to change their positions and get behind the bill. That’s great. I welcome the company. It’s been lonely over here.