Talking With The Taliban?

A better element of Obama's interview with the New York Times is a willingness to discuss reconciliation in Afghanistan, including with elements of the Taliban.

President Obama declared in an interview that the United States was not winning the war in Afghanistan and opened the door to a reconciliation process in which the American military would reach out to moderate elements of the Taliban, much as it did with Sunni militias in Iraq.

Mr. Obama pointed to the success in peeling Iraqi insurgents away from more hard-core elements of Al Qaeda in Mesopotamia, a strategy that many credit as much as the increase of American forces with turning the war around in the last two years. “There may be some comparable opportunities in Afghanistan and in the Pakistani region,” he said, while cautioning that solutions in Afghanistan will be complicated [...]

Asked if the United States was winning in Afghanistan, a war he effectively adopted as his own last month by ordering an additional 17,000 troops sent there, Mr. Obama replied flatly, “No.”

Mr. Obama said on the campaign trail last year that the possibility of breaking away some elements of the Taliban “should be explored,” an idea also considered by some military leaders. But now he has started a review of policy toward Afghanistan and Pakistan intended to find a new strategy, and he signaled that reconciliation could emerge as an important initiative, mirroring the strategy used by Gen. David H. Petraeus in Iraq.

“If you talk to General Petraeus, I think he would argue that part of the success in Iraq involved reaching out to people that we would consider to be Islamic fundamentalists, but who were willing to work with us because they had been completely alienated by the tactics of Al Qaeda in Iraq,” Mr. Obama said.

At the same time, he acknowledged that outreach may not yield the same success. “The situation in Afghanistan is, if anything, more complex,” he said. “You have a less governed region, a history of fierce independence among tribes. Those tribes are multiple and sometimes operate at cross purposes, and so figuring all that out is going to be much more of a challenge.”

I think that's a mostly correct view of the situation. So far, what outreach has been offered to the Taliban has not been met with really any success. It's more of a theory at this point. We have to figure out if we have a partner in the Afghan government before we start to find colleagues for it. Ultimately, this is part of the overall framework of how we get out of Afghanistan, but I question whether it's all that possible at this point.

Better Wingnuts, Please

I understand the concept of the loyal opposition, and when my party was in that position I urged them to oppose a bit more. But I don't think it's in any way hypocritical to ask that, if Republicans must oppose, they can come up with better ideas than calling for a spending freeze at a time when only government is spending. I mean, Herbert Hoover wouldn't have gone this far.

And of course, this is at the level of the Minority Leader of the US House. The spiritual leader of the party is busy taunting that Ted Kennedy is about to die. And when you get into the individual wingnuts, you have the completely insane Birther faction.

A federal judge on Thursday threw out a lawsuit questioning President Barack Obama's citizenship, lambasting the case as a waste of the court's time and suggesting the plaintiff's attorney may have to compensate the president's lawyer.

In an argument popular on the Internet and taken seriously practically nowhere else, Obama's critics argue he is ineligible to be president because he is not a "natural-born citizen" as the Constitution requires.

In response last summer, Obama's campaign posted his Hawaiian birth certificate on its Web site. But the lawsuit argues it is a fake and that Obama was actually born in his father's homeland of Kenya, even though Hawaiian officials have said the document is authentic.

"This case, if it were allowed to proceed, would deserve mention in one of those books that seek to prove that the law is foolish or that America has too many lawyers with not enough to do," U.S. District Judge James Robertson said in his written opinion.

I mean it. We need better wingnuts. The times are too challenging. Somebody take over the Republican Party. I beg of you.

You Kids Just Don't Understand

Barack Obama, the President of the United States, with about 10,000 things to do, doesn't read blogs. That's not a big deal - he's a busy man and can have whatever reading list he wants. What may be a big deal is the almost fetishistic desire to reject certain solutions based solely on their perceived ideological moorings.

Q: Sir, we’re landing here, but what are you reading these days? What kind of newspapers do you read, do you read the clips, do you read actual papers, do you watch television?

A: Other than The New York Times?

Q: Other than The New York Times. Do you read Web sites? What Web sites do you look at?

A: I read most of the big national papers.

Q. Do you read them in clips or do you read them in the paper?

A. No, I read the paper. I like the feel of a newspaper. I read most of the weekly newsmagazines. I may not read them from cover to cover but I’ll thumb through them. You know, I spend most of my time these days reading a lot of briefings.

Q: And television? Do you watch? Web sites?

A: I don’t watch much television, I confess.

Q: And Web sites?

Q: No blogs?

A: I rarely read blogs [...]

Q: Has anybody said to you, No, sir, you can’t do that? Has there been a moment in these last six weeks where you tried to do something and somebody said, Sorry, sir, it doesn’t work that way?

A: Well, I mean, I think what we were talking about earlier in terms of Guantanamo. People didn’t have to tell me, No you can’t do that. It was simply, Well, sir, here are the challenges that we face in terms of making a decision about that. In the entire banking sector – we spend every day, myself, Rahm Emanuel, Tim Geithner, Larry Summers, Christina Romer, every single day, we will spend at least an hour of my time just talking through how we are approaching the financial markets.

And part of the reason we don’t spend a lot of time looking at blogs is because if you haven’t looked at it very carefully then you may be under the impression that somehow there’s a clean answer one way or another – well, you just nationalize all the banks, or you just leave them alone and they’ll be fine, or this or that or the other. The truth is this is a very complex set of problems and bad decisions can result in huge taxpayer expenditures and poor results.

Part of the reason I don't spend a lot of time looking at Obama's opinion on blogs is because if you haven't looked at them very carefully, you may be under the impression that somehow they all advocate a clean answer one way or another. The truth is they have offered a very complex set of opinions across the spectrum, and bad impressions can result in mass stereotyping and poor analysis.

What's at issue here is that he's not really talking about blogs, per se, so much as he is talking about critics, from the right to an extent but particularly from the left, the financial bloggers who are disappointed at the Administration's halting efforts thus far. What this suggests is that any point of view with goes ideological on the liberal side of the ledger is dismissed because of extenuating circumstances. That is a recipe for groupthink, a feedback loop where only the opinions of Geithner and Summers are respected. In particular, he namechecks blogs in relation to the banking situation, the one area where he is getting the most criticism. The reaction to criticism here is to reject the perspective of the critics because they lack information. That's just not good. Especially when the critics are experts in the field.

I've heard quite a lot of this in my time - veterans of the political scene telling me that I just don't understand the complexities and settle for simple-minded solutions. They're frequently wrong when the full accounting is done. This is a dangerous mindset, almost a bunker mentality, for the Administration to have.

Also, um, bloggers are individuals, lots of them on the left voted for the President, they have opinions, and there's simply no reason for them to be insulted by their chief executive.

No Ruling

The good news is that the Supreme Court vacated the lower-court ruling that the President is allowed to indefinitely detain individuals who are legal residents of the United States, like Ali al-Marri. The bad news is that the SCOTUS did not opt to take up the case themselves, and thus set a precedent against indefinite detention, instead approving the transfer of al-Marri to civilian custody awaiting trial.

The ACLU wanted this case to go to the Supreme Court, so we could get a definitive ruling that indefinite detention of this sort is illegal and unconstitutional. Sadly, we won't.

Jonathan Hafetz of the American Civil Liberties Union, Al-Marri’s lead lawyer, called the order vacating the lower court decision an “important step,” and added: “We trust that the Obama Administration will not repeat the abuses of the Bush Administration, having now chosen to prosecute Mr. Al-Marri in federal court rather than defend the Bush Administration’s actions in this case.”

The Justice Department had no immediate comment on the Justices’ order. That order spares the new Administration from having to take a formal position on the detention issue that was at stake.

It would be nice, however, to have that ruling for posterity instead of putting our trust in successive Presidents.

Nationalization: The Popular Alternative

Dr. Doom sez that the pain isn't likely to stop anytime soon:

The global recession may continue until the end of 2010 as the response by governments to rectify it is “too little, too late,” said Nouriel Roubini, the New York University professor who predicted the financial crisis.

“Governments are falling behind the curve,” Roubini said at the India Today Conclave in New Delhi today. “This recession can end up becoming even worse.”

The situation can be improved by appropriate policies, including governments taking over insolvent banks, cleaning them up and re-selling them to private investors, he said. The Group of Seven and the Group of Twenty economies “must act together to get out of this mess,” Roubini said.

"The appropriate policies" do not include a plan to giving $1 trillion to hedge funds in the hopes that they'll have better luck making bets this time around. They do not include paying off US and European banks through the subsidiary of AIG, who owes out so much from this collapse that paying them back would effectively cost all the money in the world. They do not include a perhaps faulty assumption that toxic securities have an inherent value that will surely go up once a market is created.

What they do include is the plan that is supported by 56% of the public:

11. Temporary nationalization is another way for the federal government to deal with large banks in danger of failing. This is where the government takes over a failing bank, cleans its balance sheets, and then quickly sells it off. In general, which do YOU think is the better way to deal with failing banks…

29 Government financial aid WITHOUT any government control of the bank, OR
56 Nationalization, where the government takes temporary control?
11 Neither/Other (VOL.)
4 (DO NOT READ) Don’t know

Now, the American people can't be expected to be the most enlightened sort on policies of Swedish or Japanese banking. But the experts who are enlightened basically say this is the solution. And the Obama Administration's claims that such a strategy is not politically viable is only true if you take that to mean "rich people would lose a lot of money and power."

We may be moving toward a tipping point, however. The head of the Kansas City Fed yesterday criticized Treasury in Roubini-like language:

"We ... are drifting into a situation where institutions are being nationalized piecemeal with no resolution of the crisis," Thomas Hoenig remarked in a speech in Omaha, Neb.

The architects of the government response -- primarily Fed Chairman Ben Bernanke, former Treasury Secretary Henry Paulson and Paulson successor Timothy Geithner -- have argued that, because there were no rules to take over big but weak bank-holding companies, they have been forced to play a bad hand and keep the institutions operating and pushing in government money to strengthen them.

But as the cost of this approach keeps expanding beyond the initial $700 billion price tag, there is a growing sense that good money may be being thrown after bad. The fact that the government deals with Citigroup Inc. and American International Group Inc. have been rewritten has added to uneasiness that the rescue plan in on the wrong track [...]

In essence, Hoenig urged the government to scrap any notion that an institution is too big to fail.

"If institutions -- no matter what their size -- have lost market confidence and can't survive on their own, we must be willing to write down their losses, bring in capable management, sell off and reorganize misaligned activities and businesses and begin the process of restoring them to private ownership.

"In fact, for failed institutions that have proven to be too big or too complex to manage well, steps must be take to break up their operations and sell them off in more manageable pieces," he said.

Sounds like Hoenig might be a good candidate to replace Tim Geithner. I know it's early, but Geithner seems in thrall to Wall Street, and unwilling to take the necessary steps that go beyond his preconceived notions. This is too critical a time to have the second-most important person in America with such a perspective. If the Administration doesn't fix the crisis with the banks, they'll never see a recovery of the economy. Not in their single term, anyway.

Media-Financial Complex

CNBC decided to respond to the righteous Jon Stewart rant against them on a Friday so he couldn't talk about it on that night's show. Their claim is that Stewart is "bizarrely obsessed" with their network, and Stewart was repeatedly calling Rick Santelli to come on the show. That's, um, called BOOKING A GUEST. Maybe CNBC doesn't do much of that, they just have a "CEO room" in Manhattan and just put the camera on whoever shows up there. It's not like they ask much of a variance of questions: "How great is your company doing? Is it awesome to be rich?"

Meanwhile, the network and other right-wing market populists continue to push the idea that Obama is responsible for the Dow's fall since Inauguration Day. I guess the business climate and the job loss has nothing to do with it.

The argument that Obama is somehow responsible for the collapse of Wall Street is absurd. First, every major policy that led to this collapse occurred under George W.'s watch (or, more accurately, his failure to watch). The housing and financial bubbles were created under Bush and exploded under Bush. The stock market began to collapse under Bush.

Second, it's inevitable that stocks, led by the bloated financial sector, would lose their remaining hot air as the new administration begins "stress-testing" the big banks, many of which are technically insolvent. After all, their share prices were built on a tissue of lies and dreams. Other sectors whose values were similarly distorted and distended by years of financial deception and regulatory disregard, such as housing and insurance, will also have to return to the real world before they can recover. Which could mean more stock losses.

Finally, none of the financial wizards who are now charging Obama with leading America into the abyss have offered an alternative plan for getting us out of the mess that, not incidentally, many of these same wizards happily led us into. For years, the Wall Street Journal editorial page and the financial gurus of cable news cheered as Wall Street leveraged its way into oblivion.

Obviously, Wall Street rage is aimed at getting the biggest banks paid off and the shareholders made whole so that only taxpayers will bear the burden of the collapse. There may be a very good reason, however, for outlets like CNBC, in particular Jim Cramer, to claim that Obama is responsible for the fall of the market. It deflects the blame from themselves. The story of Deep Capture is epic and needs to be read in full by the investigators who followed it for years to really understand. But TocqueDeville at Daily Kos does a pretty decent summarizing job.

This rabbit hole involves the thugs surrounding Jim Cramer and some of the top financial "journalists" from the New York Times, WSJ, Fortune magazine and BusinessWeek, top hedge funds, the Mafia, and the DTCC. It also includes "blackmail, smear campaigns, espionage, fraud, harassment, extortion, bribery, rumor-mongering, sabotage, off-shore money laundering, political cronyism, frivolous lawsuits, witness tampering, biased financial research, false identities, bogus credit ratings, bribery, libelous blogs, bad science, forgery, wiretapping, counterfeiting, collusion, lying, cheating, threats and theft."

And if that wasn't fun enough, it may be the underlying story of what collapsed the entire, global banking system or at least served as the catalyst for the collapse.

We're talking about financial journalists using the power of their megaphone to trash a stock, or even tout it at the last minute, and then, through naked short-selling, earn millions while destroying public companies. And Jim Cramer is perhaps the greatest offender.

I have analyzed well over a thousand stories written by this clique of journalists. The vast majority of them were sourced from a small group of short-sellers who are also friends of Cramer. Other popular sources for this group of journalists include convicted felons, mobsters, dubious private investigators, crooked lawyers, hired stock bashers, and gun-toting goons - most of whom are tied to the Cramer constellation of short-sellers.

Some of the stories written by these reporters are accurate enough. But many are not. The journalists misconstrue data with seemingly purposeful intent. They exaggerate and obfuscate. They publish innuendo or merely repeat, Deus Optimus Maximus, the words of their hedge fund and criminal friends. A single negative story by one of these reporter-thugs can send a company’s stock tumbling by more than 50% — pure profit for their hedge fund sources, who of course sell the company short (often right before the articles are published). Meanwhile, an overwhelming majority of the companies targeted by these journalists will also be the victims of phantom stock selling and other shenanigans. The journalists do not mention this in their stories, and in fact go out of their way to deny that phantom stock exists.

Anyone who says otherwise is subjected to a vicious media smear.

It doesn't take much these days to persuade you that anyone on Wall Street is a crook. But Mark Mitchell had the goods. Cramer understood the value of information, like any inside trader. Then he got the power, through his own TV show, to control that information. And the method that Cramer and his cronies apparently preferred, naked short-selling, has been brought up as a possible culprit in the fall of Bear Stearns. Sen. Jon Tester even brought it up in a hearing with then-SEC chair Christopher Cox in April 2008.

This financial meltdown isn't entirely due to the people who made money on the way down. But the corroded relationship between the Masters of the Universe and the subjects who cover them - the Media-Financial Complex - is absolutely a part of this tale. And the phantom stock - invented wealth that can appear and disappear - is just another of the exotic financial instruments created by people who push paper and add zeroes to their balance sheets and call it work, paper and securities that are then leveraged and bet upon and sliced and diced until nobody understands them and just doesn't want to get left holding them when the organ stops playing and the big dance ends.

Read the story of Deep Capture. It's a through-the-looking-glass experience. Anyway, I can think of a guest for Stewart's next show...

Movement On Iran

Gary Sick notices a lot of attention being paid to Iran by the Obama Administration in just the first six weeks.

There is a flurry of signaling by the US -- both positive and negative: keeping pressure on Iran (Stuart Levey and restrictions on banks), reassuring Israel (appointment of Ross) & Arabs (Hillary's downplaying of expectations at Sharm el-Sheikh), providing some funding for the Palestinians while pressing Israel to relax entry into Gaza, renewing an opening to Syria, talking about cutting US nuke stockpiles (US Ambassador Schulte in Vienna), talk of including Iran in Afghan security discussions (Holbrook), willingness to remove (anti-Iran) missile defense in E Eur while cajoling Russia on Iranian missile development, nice words from Obama (sometimes), harsh words from Susan Rice (always?), tough words from Adm Mullen, more soothing words from SecDef Gates, unified declaration about Iran by all five UN veto powers at the IAEA (without threatening new sanctions or return to the UNSC), etc etc.

We've seen nothing like this for as long as I can remember. Almost none of this would have been possible under Bush. It's actually possible that what we are seeing is (gasp) diplomacy, or preparation for it. It includes pressure on Iran, which I think was inevitable, but it potentially allows for much more.

In particular I think the invite of Iran to talks on Afghanistan is huge. Iran actually did aid NATO forces in the early stages of that war, and they are the direct neighbor to the west, with a stake in what happens in the region. One can already see bargains and deals that could be made, similar to the deal offered by Iran in 2003 that Cheney summarily dumped in the garbage. The Afghans seek positive relations with Tehran as well, so this would satisfy multiple interests.

The other interesting part of this is that, because it would be an Afghanistan conference, Richard Holbrooke would take the lead:

Holbrooke is the obvious diplomat to send here, given his portfolio; Dennis Ross was never going to participate, since his new brief doesn't include negotiations, but he'll surely advise Holbrooke and Clinton from Washington.

Now to see how the Iranians respond. We've apparently entered a period where Washington and Teheran are basically talking through the press. We make a statement (Obama's inaugural address), they reply (Apologize to us!), and so forth. If international momentum lines up for this conference -- and it's really hard to see how Clinton would have made a public statement if she didn't have this conference worked out, to some degree, behind the scenes -- Iran will be hard-pressed to refuse. Nor is it clear why it would.

Ross is seen as more belligerent toward Iran and more skeptical of their intentions, the bad cop on this beat. I'm much more comfortable with him advising from Washington than on the front lines of negotiation.

It's time to engage Iran. National security advisers from across the political spectrum agree. This conference is tentatively slated for March 31 in the Netherlands. Let's hope Iran shows.

Friday Random Ten

Tons to write, but I got caught up with some things today, so you'll have to settle for music. Related to the first of the Random Ten, can it really be true that the Legendary Roots Crew is the house band for Jimmy Fallon's late night show? That's a cultural injustice right up there with the attacks on civil rights protesters at the Edmund Pettus Bridge in Selma, Alabama, 44 years ago tomorrow. No I don't think that's hyperbole. Seriously, ?uestlove? Black Thought? Late Night with Jimmy frickin' Fallon?

Thought @ Work - The Roots
Street Fighting Man - The Rolling Stones
Backstage Girl - DJ Shadow feat. Phonte Coleman
Rollin' - Luscious Jackson
Herculean - The Good, The Bad & The Queen
Steam Engine - My Morning Jacket
Corona Radiata - Nine Inch Nails
John Saw That Number - Neko Case
The Brides Have Hit Glass - Guided By Voices
Seven Months - Portishead

The Full Jindal

Arnold Schwarzenegger got a lot of good press from going on ABC and saying that he would take the stimulus money of any GOP governor who refused a portion of it.

"Well, Governor Sanford says that he does not want to take the federal stimulus package money. And I'll say to him, I'll take it," Schwarzenegger said. "I'm more than happy to take his money or any other governor in this country that doesn't want to take this money. I'll take it, because we in California need it. I think it's a terrific package. I think if you ask a thousand people for their opinion, what is their ideal stimulus package, you will have a thousand different answers. So everyone's is a little different. I think he's done a great job and I think California benefits tremendously from that $80 billion of tax benefits there, for around $35 billion. There are other advantages: $45 billion of money that go to transportation, to education, to health care, all those different areas. There's even some money that could benefit our revenues or, I should say, our budget itself...."

As you may know, what Sanford and Bobby Jindal and Haley Barbour and these Southern Republican Governors were objecting to is changing their unemployment eligibility statutes so they could accept millions in additional funding through the stimulus to give to the jobless. It's the best kind of stimulus there is and would probably keep some of the retail sector in business, but these Governors feel that once the federal money to fund the new eligibles ran out, it would be too burdensome on business to raise the funds. So they have, rhetorically at least, sided with the corporate community in rejecting the funds.

Which is exactly what the Governor appears to be doing.

At a hearing of the Assembly Insurance Committee Wednesday, Republican Governor Arnold Schwarzenegger's representative, Labor and Workforce Development Agency Undersecretary Steffanie Watkins, refused to support AB 3x 23, legislation that makes California eligible for $839 million in one-time federal unemployment insurance funds available at part of the President's economic stimulus package.

This from the same Governor who just last week was all over the national media circuit criticizing Louisiana Gov. Bobby Jindal and other Republican Governors who were spurning economic stimulus funds.

What a difference a week makes.

In the end, the bill made it out of committee by an 8-2 vote with members of the Yacht Party crossing the aisle, suggesting that the legislature would have the 2/3 vote necessary to override Schwarzenegger, if it came to that. But take note of the extreme hypocrisy here. Mr. Governor-by-Magazine-Cover, the media darling, goes on national TV and wags his finger at fellow Republicans who won't take stimulus money. Then he signals that he won't take stimulus money FOR THE EXACT SAME REASON as those governors he criticized.

Incredible.

From The People That Brought You Zombie Banks...

Come zombie wars.

I don't know how else you can react to this assessment from military leaders in Afghanistan, pushing for a commitment of 100,000 troops for up to a decade.

Called a 'conceptual document,' the plan, authored by CENTCOM Commander Gen. David McKiernan, is based on a vast pacification scheme that would involve deploying large conventional U.S. forces to prevent the seizure of Afghan villages and towns by the Taliban while the United States and its allies strengthen support for the Afghan central government through a broad range of civil action programs, land reform, village autonomy, and expanded political participation by the populace, these sources said.

"It's a huge undertaking," said a former senior U.S. official who had reviewed the plan. "It would take 20-25 infantry brigades to implement."

He added that implementation of the plan would require a U.S. presence in Afghanistan for "at least a decade or more."

This is a pittance compared to Jack Murtha, who is saying that it would require 600,000 troops to stabilize the country. And that's if you even think the country can be stabilized - Canadian Prime Minister Stephen Harper thinks we are never going to defeat the insurgency. Hoo-boy. This must be why nobody who understands counter-insurgency wants to do it - it's too labor-intensive, too costly, too difficult.

Obama is not stupid, and surely he knows that this kind of outlay is not feasible, both from an international relations standpoint and an economic standpoint. And even a manpower standpoint - we don't have the forces to undertake endless, multiple occupations for 15-20 years. Yet there seems to be a strategic drift in Afghanistan. The commanders aren't offering anything new, the policy reviews aren't yielding fruit, but everyone seems to know that "something must be done" so a bunch of troops are being thrown into the situation without a sense of mission. Meanwhile those troops are increasingly targets (a major US base was attacked this week) as the Taliban-aligned insurgency are uniting to fight the expanding occupation. Joe Klein's story on the situation is increasingly grim:

Obama's civilian advisers fear a quagmire. But they know that some middle ground, between a "Central Asian Valhalla," as Secretary of Defense Robert Gates put it, and the current slide into chaos, has to be found. "We have to stabilize the military situation," said an Obama aide. "Continue to build up the Afghan army, and help the government to become more effective." In other words, hope that the disintegration of Afghanistan can be prevented while waiting — and hoping — for the Pakistanis to take effective action against the al-Qaeda and Taliban safe havens.

Taken together, the emerging Pakistan and Afghanistan policies sound ... impossible, but unavoidable. They will also be politically treacherous. Already, John McCain has made it clear that his position on Afghanistan will be the same as it was on Iraq — in favor of more troops. Obama could easily find himself in the same sort of hawk-vs.-dove debate that has boggled American Presidents from Vietnam to Iraq. Traditionally, Presidents favor more troops — and precipitously lose public support. In this case, Obama's margin for error is minuscule, given the enormity of the economic crisis. He simply can't get bogged down in Afghanistan. And he simply can't allow al-Qaeda and the Taliban free rein. And every option in between seems either a gamble or a fantasy.

As we get a sense of Obama's vision for the way forward in the region, we see only two things that are encouraging. One, he understands that Harper is right, we're not ever going to "defeat" the insurgency, and we need to lower our goals to somewhere in between chaos and a shining beacon of democracy. That is why he is skeptical of Hamid Karzai, whose bid to subvert the elections by moving up the date was rebuffed this week by the election commission, revealing further fault lines and an inability for Karzai to manage what little of the country he controls.

The other sign is that Obama understand that Pakistan is where the real battle is being waged. That understanding does not necessarily equal a solution, however.

The fourth policy review was ordered up — this one conducted by Bruce Riedel, a scholar at the Brookings Institution. The Riedel review won't be done until the end of March, but it has already achieved some clarity about U.S. goals and priorities: "Afghanistan pales in comparison to the problems in Pakistan," said an official familiar with Riedel's thinking. "Our primary goal has to be to shut down the al-Qaeda and Taliban safe havens on the Pakistan side of the border. If that can be accomplished, then the insurgency in Afghanistan becomes manageable."

That sounds reasonable enough, except that historically it has proved to be impossible. "People talk glibly of 'the total disarmament of the frontier tribes' as being the obvious policy," wrote the young Winston Churchill, who gallivanted, a bit too gleefully, with a 19th century British expeditionary force through the areas where al-Qaeda and the Taliban are now ensconced. "But to obtain it would be as painful and as tedious an undertaking as to extract the stings of a swarm of hornets, with naked fingers."

Through sheer brutality, the British were able to manage the area — now called Pakistan's North-West Frontier Province — but never quite subdue it. The chances of subduing it today are even more remote. "Obviously, we're not going to invade Pakistan," said a senior member of the Riedel review. "We have to convince the Pakistanis to do the job. But we haven't had much luck with that in the past." In fact, the Pakistani army and Inter-Services Intelligence agency have supported the Taliban as a counterforce against India's influence in Afghanistan, just as they supported jihadi groups like Lashkar-e-Taiba, which carried out the Mumbai massacre. "Our hope is that the Pakistani army is beginning to understand that the Taliban represent an existential threat to their country," said the Riedel team member. "Certainly, President Zardari understands that. The Taliban killed his wife, Benazir Bhutto, and he's now target No. 1. But does he have any influence over the army? And is the army really concerned about the threat? I'll believe it when I see it."

Since this went to press, Sri Lanka's national cricket team was brazenly attacked in broad daylight in Lahore. The Indian government compared Pakistan to Somalia, a lawless, anarchic state (this is actually the GOOD news, as India may tone down the rhetoric and stop approaching Pakistan as a military rival). Taliban militants in the northwest regions blew up a Sufi shrine, with echoes of the destruction of the Buddha statues in Afghanistan years earlier. And today, UK Foreign Secretary David Miliband said Pakistan is under a mortal threat:

Mr Miliband told the BBC that politicians must unite to face a "very grave situation" that was worsening.

He was speaking as Pakistan continued to probe this week's attack on the Sri Lankan cricket team in Lahore.

Mr Miliband told BBC Radio's Today programme that Pakistan's internal instability was "a grave situation and... it has got worse".

He pointed to the fallout between President Asif Ali Zardari and former PM Nawaz Sharif, who was last week banned from elected office by the Supreme Court.

Mr Miliband urged politicians to unite, saying: "I think that the degree of political disunity that exists at the moment is only contributing to the problem."

He added that country's economic decline in the global credit crunch was also a major factor.

This is our "partner" upon whom success in Afghanistan rests.

Perhaps we will get a handful more NATO troops involved. And maybe those Afghan security forces will snap to it and become a superior fighting unit. And perhaps Pakistan will stabilize, the military and intelligence services will effectively neutralize the Taliban, and the border crossings will stop. And through regional diplomacy, an uneasy peace will commence.

Do you really believe any of that?

John Kerry Campaign, 2006 Democratic Agenda Promises Kept

After a month or so of uncertainty, Barack Obama will sign an executive order reversing the limits on funding for embryonic stem cell research. This will allow for expanded stem cell lines and a faster track toward potential cures.

Which is great, even if the research on stem cell alternatives that don't impact embryos is becoming safer without being as ethically questionable, sidestepping the need for the sturm und drang about this. On balance, it's great to expand funding for the embryonic version as well, and make scientific study more available, increasing the chance to wipe out debilitating diseases. But ultimately, this issue, like others like it that Obama has acted upon, are relics of a bygone age, way back in 2004 and 2006, where they were the most important things to worry about. I'm glad he's doing them, but we're in an economic meltdown right now where the top officials are unwilling and unable to reverse course. So I'm not going to jump for joy at the news that these side issues are being progressed forward when the zombie banks are still eating what's left of the country.

(I'm in a foul mood today, aren't I?)

Our Best Defense

At times like these, you can do nothing but laugh. And when you're done with that, you can laugh at CNBC, which has taken a major hit during this financial crisis, exposed as they are to be a cheap fraud.

The Daily Show With Jon StewartM - Th 11p / 10c

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Joke of the Day

CNBC has no response because they couldn't possibly have a response. There's nothing that can be said. They are a network dedicated to offering zillionaire CEOs a platform to lie, and spinning pro-business and anti-worker policies as good for America. That's what they do, that's all they do. And when a crisis hits, they look foolish.



I actually thought the best takedown of them all was Stephen Colbert inviting Jim Cramer on The Colbert Report and then playing pictures of cute kittens and puppies behind whatever he said. That's basically CNBC in a nutshell leading up to this crisis, when Bush was still in office. They've only done a 180 now and gone market populist because they think they're protecting their bottom lines. CNBC is a farce, and Colbert basically proved it last night.

Culture Of Arnold Claims First Victim

I wrote last week about the growing scandal among Schwarzenegger cabinet officials, who were living very well on the public dole while the rest of the state sunk into a deep recession and double-digit unemployment. Well, after additional disclosures, the scandal has claimed its first victim.

Gov. Arnold Schwarzenegger appointee Rosario Marin resigned Thursday from her post as secretary of the State and Consumer Services Agency after accepting tens of thousands of dollars in speaking fees in defiance of administration policy and possibly state law.

Marin faces an investigation by the Fair Political Practices Commission after declaring the speaking fees on income statements she must file as a public official.

The Los Angeles Times reported Thursday that Pfizer paid $15,000 in 2007 for Marin to speak, while Bristol-Myers Squibb paid $13,500 in 2008 for another speech. Both companies indicated on state forms that they had business before departments under Marin's authority.

It's amusing that taking speaking fees from pharmaceuticals was enough to force a resignation - and I agree that it's unseemly and possibly illegal - but there's no mention of the same cabinet official and practically all the others stealing, essentially, from the state treasury to finance their lifestyles. That's because in the culture of Arnold, such largesse is completely acceptable.

This is one reason why the Governor has worn out his welcome with the people of California and can't poll above 31% in a Republican primary anymore. He has lost the trust of the electorate. He also happens to be a piss-poor lawmaker who has pushed the state to the brink of collapse. But you know that.

Not A Good Time To Shut Down The Government

I'm struggling to find the explanation for why Democrats are aiding an abetting a potential government shutdown. Today Congress passed a continuing resolution to avoid this, but the threat remains. This is all over earmarks, about 2% of the bill, for a measure that Republicans and Democrats created together, last year. And given the current state of the economy, there's no such thing as wasteful spending if it means a job is created.

Even if there is principled opposition, there's no reason to vote against cloture on the part of Dems like Russ Feingold or Evan Bayh. If they don't like the final bill, they can vote against it. There's no reason to hold up the government's business by engaging in obstructionism.

Idiots.

Nobody's Home

One of the more pernicious parts of this economic crisis is that it's unspooling with Timothy Geithner practically working alone at the Treasury Department. Whether it's because of inertia or the vetting process being too stringent or practically everyone who's ever worked in finance being too compromised to take the job, almost all of the top deputy positions at Treasury haven't been filled, and two candidates just dropped out of consideration:

WASHINGTON -- Two candidates for top jobs at the Treasury have withdrawn their names from consideration, complicating efforts by Treasury Secretary Tim Geithner to staff his department at a time of economic crisis, according to people familiar with the matter.

Annette Nazareth, who was expected to be tapped as deputy Treasury secretary, and Caroline Atkinson, who was being considered to oversee international affairs, have both taken their names out of the running, these people said. Ms. Atkinson's name was withdrawn weeks ago and Ms. Nazareth withdrew several days ago.

The withdrawals come amid growing concern about the lack of staff at Treasury as it tries to grapple with an unrelenting financial crisis. Mr. Geithner is the only official to be nominated, let alone confirmed.

Paul Volcker, an economic adviser to President Barack Obama, recently called the lack of staff "shameful" and said Mr. Geithner "shouldn't be sitting there alone."

Let's add that Geithner is not exactly "sitting alone". There are holdovers from the reign of Emperor Paulson sitting in those seats. Feel better?

Meanwhile, the economic advisory team is being held up out of pure petty politics.

President Barack Obama’s economic advisers are increasingly concerned about the U.S. Senate’s delay in confirming the nominations of Austan Goolsbee and Cecilia Rouse to the White House Council of Economic Advisers.

Without Senate confirmation, the two economists are barred from advising the president as the administration tackles the worst financial crisis in 70 years and tries to advance the spending plan Obama submitted to Congress last week.

“It’s frustrating,” said Christina Romer, who heads the three-member CEA. “These are hard economic times and we desperately want to get them through the Senate and definitely on the job.”

“They are both superb economists,” she said. “I can’t imagine what the holdup is.”

Goolsbee and Rouse appeared before the Senate Banking Committee on Jan. 15 and were slated for a full Senate confirmation on Inauguration Day, Jan. 20, according to a senior administration official. Instead, they were approved by the panel Feb. 10.

They weren’t placed on the confirmation slate for the full chamber, leading some administration officials to conclude that Senate Republicans were retaliating against the Democrats because President George W. Bush’s nominations for the same slots languished in the Senate for months at the end of his second term.

It's not like Goolsbee, from the University of Chicago, is some socialist radical. This is purely political at a time when the economy is melting down. There's a lot of blame to spread around here.

Drug War Backlash

The last thing we need in these economic times is to waste resources putting in jail people who have medical problems and need treatment. It would save money, time, and opportunity cost. New York State is looking to roll back the Rockefeller drug laws that have not made the streets safer and serve only to create a permanent underclass.

The Times reports Sheldon Silver says "the stars are aligned" (translation: the votes are in the bag) for Bill A06085, which would restore judges' discretion in sentencing and allow minor drug offenders to get supervised treatment instead of lengthy prison terms. The vote's today and the state senate will conference tonight; if it goes through, Governor Paterson is expected to sign. When that great day comes, we're gonna run out and score a dime bag to celebrate.

This may not help David Paterson get re-elected, but it would certainly make the world a little better place. Drug offenders in jail only leads to more repeat drug offenders. Drug offenders in treatment can lead to a return to productive society. Between this and the Justice Department stopping the raids of medical marijuana outlets in California, you're finally starting to see a backlash to the drug wars. They haven't worked and need a reboot.

They Won't Have Us Follow The Money

The Politico writes a hit piece about Alan Grayson today (no link, they're trolling for one). They, and by proxy the Villagers and Republican concern trolls, are just horrified at his uncouth statements like calling Rush Limbaugh a "has-been hypocrite loser” who “was more lucid when he was a drug addict.” (I think Rush is a constituent, so good luck winning back his vote!)

What they're really mad about is that he hired a blogger, Matt Stoller, as his senior policy adviser, and he asked officials of the Federal Reserve what they're doing with nearly $2 trillion dollars of taxpayer money. This has become a feature of the financial meltdown - the utter lack of disclosure.

Banks like BofA will not disclose the timing of the bonuses Merrill Lynch handed out when they were on the verge of collapse, to the extent that people like Andrew Cuomo have to issue subpoenas to get some transparency. UBS will not disclose the names of thousands of Americans hiding their cash in Swiss bank accounts to dodge taxes, to the extent that Congress is attempting to rewrite the laws to crack down on offshore tax havens. AIG will not disclose the counterparties who are getting hundreds of billions of dollars in bailout money from the government, which is a major and evolving scandal that Josh Marshall and the TPM crew are trying to wrap their arms around. This in particular appears to be an unbelievable scheme, almost a black bag job, where the Fed drops money into an account and AIG picks it up so that everyone can maintain the fiction that it isn't a direct cash transfer. There's more here, including a description of how derivative counter-parties got away with murder in the 2005 bankruptcy bill, and how their taking all the equity if AIG went down would trigger a real and thoroughgoing collapse (as if one isn't imminent anyway).

But it's more than just AIG. The Fed won't release the names of any of the recipients of nearly $2 trillion in loans over the past two years. Bernie Sanders has legislation to force disclosure. CREW is filing a Freedom of Information Act request to find out. In fact, such requests have already been filed, by Bloomberg News and Fox News, only to be refused, despite being subject to FOIA.

As CREW explained in its request, the documents it seeks are essential to understanding and assessing the government's response to the devastating economic financial crisis our nation faces. CREW's Chief Counsel, Anne Weismann, put it like this:

Telling Americans that they are not entitled to know which banks are receiving 2.2 trillion dollars of taxpayer money is unacceptable under any terms. This administration has promised transparency and we expect it to deliver.

What is pretty clear is that a lot of this money is going to the banksters in backdoor bailouts that do nothing for the greater economy. Noriel Roubini writes:

“In the meantime, the massacre in financial markets and among financial firms is continuing. The debate on “bank nationalization” is borderline surreal, with the U.S. government having already committed–between guarantees, investment, recapitalization and liquidity provision–about $9 trillion of government financial resources to the financial system (and having already spent $2 trillion of this staggering $9 trillion figure).

Thus, the U.S. financial system is de facto nationalized, as the Federal Reserve has become the lender of first and only resort rather than the lender of last resort, and the U.S. Treasury is the spender and guarantor of first and only resort. The only issue is whether banks and financial institutions should also be nationalized de jure.

. . . AIG, which lost $62 billion in the fourth quarter and $99 billion in all of 2008 and is already 80% government-owned. With such staggering losses, it should be formally 100% government-owned. And now the Fed and Treasury commitments of public resources to the bailout of the shareholders and creditors of AIG have gone from $80 billion to $162 billion.

News and banks analysts’ reports suggested that Goldman Sachs got about $25 billion of the government bailout of AIG and that Merrill Lynch was the second largest benefactor of the government largesse. These are educated guesses, as the government is hiding the counter-party benefactors of the AIG bailout.”

The inability to disclose is intuitively linked to an inability to tell the truth - the banks are insolvent, the government already essentially owns them, and this inability to admit what's completely obvious is destined to cripple the economy permanently unless action is taken.

Here’s how the pattern works: first, administration officials, usually speaking off the record, float a plan for rescuing the banks in the press. This trial balloon is quickly shot down by informed commentators.

Then, a few weeks later, the administration floats a new plan. This plan is, however, just a thinly disguised version of the previous plan, a fact quickly realized by all concerned. And the cycle starts again.

Why do officials keep offering plans that nobody else finds credible? Because somehow, top officials in the Obama administration and at the Federal Reserve have convinced themselves that troubled assets, often referred to these days as “toxic waste,” are really worth much more than anyone is actually willing to pay for them — and that if these assets were properly priced, all our troubles would go away [...]

So why has this zombie idea — it keeps being killed, but it keeps coming back — taken such a powerful grip? The answer, I fear, is that officials still aren’t willing to face the facts. They don’t want to face up to the dire state of major financial institutions because it’s very hard to rescue an essentially insolvent bank without, at least temporarily, taking it over. And temporary nationalization is still, apparently, considered unthinkable.

But this refusal to face the facts means, in practice, an absence of action. And I share the president’s fears: inaction could result in an economy that sputters along, not for months or years, but for a decade or more.

This is why the establishment is mad at Alan Grayson. He's willing to say this kind of thing out loud.

-651,000

The job numbers are terrible.

A top White House economic aide said Friday no silver lining could be seen in a surge in unemployment in February but that pieces of a recovery plan are in place and the country needs to "power through" hard times.

"There's no way that we could or should put a positive spin on these," Christina Romer, chair of the White House Council of Economic Advisers told CNBC, referring to a report that the jobless rate hit 8.1 percent.

"The American people are clearly, we're suffering."

Romer spoke on news that the nation's unemployment rate bolted to 8.1 percent in February, the highest since late 1983, as cost-cutting employers slashed 651,000 jobs.

Both figures were worse than analysts expected and the Labor Department's report shows America's workers being clobbered by a relentless wave of layoffs.

It's actually better than I expected, I was thinking 700,000.

The jobs picture could improve as stimulus money comes on line, but I'm feeling very pessimistic about things right now. As long as the zombie banks are hanging out there, we're not going to see a recovery.

PA-Sen: Specter's Ghost

Looks like Pat Toomey changed his mind:

Former Rep. Pat Toomey (R-Pa.) will challenge Sen. Arlen Specter in a primary for the second straight cycle, according to Pennsylvania GOP sources.

The Allentown Morning Call reported Thursday that two friends of Toomey’s have said the Club for Growth chief has decided to enter the race.

Toomey narrowly lost to Specter in a 2004 primary by less than 1 percent and recently said he was considering another run.

This means the NRSC will likely spend a lot of time and money having to deal with Specter during the primaries instead of on candidates challenging Democrats. It also means that all good candidates for the Pennsylvania Senate on the Democratic side should apply, because if Rick Santorum couldn't break 41% as a sitting Senator, Toomey, who's probably to Santorum's right, can't break 35%.

As for Specter, his only way out is to pull a Lieberman and either become an independent or switch parties entirely (he was a Democrat early in his career).

From this vantage, the only way Specter wins another term (and it's hard for me to envisioning him not wanting this) is if he leaves the Republican Party (though not necessarily the Republican caucus) and calls himself and independent for 2010. In a three-way race against Toomey and a Democrat, Specter wouldn't have to carry a majority of Republican primary voters, or indeed even a majority of Republicans overall. Instead, he would only have to pull in perhaps a third or so of Republicans, as well as a good chunk of independents and Democrats (which he has fairly consistently done). In such a scenario, Specter would be freed up to vote on measures like the Employee Free Choice Act, among others, as he would be competing not only for the votes of conservatives but also the votes of moderates and liberals.

It's his choice, but either way, the Republicans are losing a seat.

CA-Gov: Way-Too-Early-Field-Isn't-Even-Set Poll Coverage!

Two polls were actually released today on the 2010 California Governor's race. The Field Poll did an extensive poll of the race, including favorability ratings, and Lake Research, a Democratic firm, did their own poll which included some head-to-head matchups.

Field's poll included Dianne Feinstein and I don't think the results were all that great for her. In the primary she polls well under 50%, compared to earlier polls which had her closer to that number.

Dianne Feinstein: 38%
Jerry Brown: 16%
Antonio Villaraigosa: 16%
Gavin Newsom: 10%
John Garamendi: 4%
Steve Westly: 2%
Bill Lockyer: 1%
Jack O’Connell: 1%
Undecided: 12%

Considering she's the most well-known figure in California politics, and that there won't be that many competitors in the final field, that's not a runaway at all. Plus, her net favorables with the electorate (+23) are less than Jerry Brown's (+25), despite her being more well-known (Among just Democrats, her unfavs are slightly higher than Brown's but so are her faves). If anything, this shows that she would have a tough race, maybe too tough for her to want to try it rather than luxuriate in her position whitewashing Bush's war crimes on the Senate Intelligence Committee.

Without DiFi in the race, it's a packed field. Here's Field's poll:

Jerry Brown: 26%
Antonio Villaraigosa: 22%
Gavin Newsom: 16%
John Garamendi: 8%
Steve Westly: 2%
Bill Lockyer: 2%
Jack O’Connell: 2%
Undecided: 22%

DiFi's votes are, then, basically evenly distributed. Lake's primary poll (they didn't poll with DiFi) was similar:

Jerry Brown: 27%
Antonio Villaraigosa: 20%
Gavin Newsom: 14%
John Garamendi: 8%
Steve Westly: 3%
Jack O’Connell: 1%
Undecided: 27%

Big undecideds there, and obviously Villaraigosa is benefiting from being the only SoCal candidate in the field, although given his re-election performance he may have some work to do with his southern base. As for everyone else, there's time, but they're all pretty far back.

The Republican primary? Nobody's heard of any of the candidates, and the undecideds are off the charts, but it's early.

Meg Whitman: 21%
Tom Campbell: 18%
Steve Poizner: 7%
Undecided: 54%

Surprised to see Campbell that close, but it's probably just name ID; he's run statewide before. At least 63% of all voters, and at least 67% of Republicans, have no impression whatsoever of any of these candidates. Their favorables are miniscule. Given that, Poizner and Whitman will have to spend a lot of their millions just to introduce themselves to the public.

Finally, Lake Research did some (selected) head-to-heads.

Brown: 41%
Poizner: 30%
Undecided: 29%

Brown: 43%
Whitman: 27%
Undecided: 30%

Newsom: 38%
Poizner: 29%
Undecided: 33%

Newsom: 40%
Whitman: 25%
Undecided: 35%

Long story short, DiFi wouldn't have a cakewalk, Villaraigosa appears to have strength based on geographic isolation, Brown looks well-positioned, nobody knows the Republicans, and any Democrat can win.

The Contractors Strike Back

Looks like the military industry-welfare lobby isn't going to take kindly to Barack Obama's call to end waste in government contracting and procurement. They're preparing for battle like you'd expect of people who build weapons systems for a living.

Defense bloat has stunned auditors. A report last year from the Government Accountability Office found that 95 ongoing major defense programs exceeded their budgets, providing an accumulated excess cost of $295 billion to taxpayers. The programs include big-ticket items beloved by the military services, including the Army’s Future Combat System, the Navy’s Littoral Combat Ship and the Air Force’s Joint Strike Fighter, which are built by defense-industry giants like Lockheed Martin Corp., Boeing Co., and Raytheon Company, all of which have aggressive lobbying arms and excellent relationships with defense barons on Capitol Hill. According to the government’s Federal Procurement Database, which tracks federal contracts, the Defense Department reported over $394 billion worth of business with private contractors in fiscal 2008 alone.

Defense contractors and their allies in government will not let that money go without a confrontation, say defense reformers [...] Their “ground game,” the official said, will be run from the services’ legislative outreach and public-affairs offices, feeding talking points and strategy information to sympathetic members of Congress — something that “got the services in trouble in 2002″ with Defense Secretary Donald Rumsfeld when the Army resisted his ultimately-successful plan to scrap an archaic artillery system called Crusader. An “air game” will feature “a lot of ominous whispers on background to the press and conservative think tanks and commentators about endangering the American people and costing lives in some future fight.”

Gates, whom Obama tasked with working closely with OMB, has told confidantes that he views a sustainable long-term rebalancing of defense priorities as one of his most important tasks now that Obama has given him the chance to continue on as Pentagon chief. His service under the Bush administration was more about supporting the immediate needs of the Iraq war after Bush fired Rumsfeld in November 2006. “The services are accustomed to reviews that start out with a lot of talk about setting priorities and making tough choices but in reality usually end with leaving everything more or less intact,” the Pentagon official said. “This time they have a secretary who really means it.”

As Matthew Yglesias notes, what we're talking about here is the armed services - part of the federal government - using their own taxpayer-funded public affairs shops to lobby for more wasted contracting and against reform. The fact that the door between the Pentagon and the defense industry is constantly revolving means that a government official who steers contracts to the right company is simply fattening their own resume for the inevitable post-public service career. This is why it's called a military-industrial complex, after all.

And under the Bush regime, this kind of coziness between government officials and their cronies was simply rampant. In a little-discussed tidbit in yesterday's press briefing, Secretary of Agriculture Tom Vilsack mentions a $400,000 consulting contact with the USDA that he recently cancelled because career staffers considered it "inappropriate." There's a follow-up, and the information had to practically be dragged out of Vilsack, but the picture he eventually paints is one of a mob boss creating make-work jobs for his henchmen (Major Garrett is the questioner, trying to make some case for the necessity of useless contracts to avoid lawsuits, or something):

Q Secretary Vilsack, you talked about a $400,000 consulting contract deemed inappropriate. What was inappropriate about it? And just generally, to both of you, one of the problems in federal contracting is when you cancel a contract, sometimes a contract will sue the government because they disagree with the cancellation. How do you end up saving the taxpayers money if you get involved in protracted litigation if it's not for cause?

SECRETARY VILSACK: Well, I don't want to go into great detail about this particular contract, other than to say that the career folks who watched this process unfold in the last waning days of this last administration were very concerned about the process, the connections and relationships between people receiving this half-a-million-dollar contract, and what they intended to do with the resource, which the career folks felt was unnecessary and inappropriate.

They made a very strong and powerful case to me that the process wasn't followed as it should have been; their input was not valued as it should be. We put a lot of confidence in people who have been through this process before, in terms of knowing precisely how best to use these tax dollars. And this particular consulting contract -- I've looked at the details -- I didn't see any value to USDA from it. I will tell you that it was rather startling to see that a substantial amount of money had already been spent on foreign travel, which, under the circumstances, we did not think was appropriate.

In terms of litigation, I feel fairly confident on this one that we will prevail, and I'd be surprised if it's questioned.

Q Can you tell us, Mr. Secretary, who this involved and more details? It sounds like a rather startling discovery that you've made, and taxpayers probably would like to know more about it.

SECRETARY VILSACK: Well, I think what taxpayers need to know is that every single department of government has now been charged by the President to review in detail the nature of contracts that we've entered into. In order to do what American families are doing -- American families are sitting down today and trying to decide, how do we save money, how do we eliminate unnecessary spending -- their expectation is the government does the same.

I don't want to get into details about this, but I will tell you that I think it's appropriate for us to do this. I'm glad the President has instructed us to do this, and I think we'll probably continue to find savings.

Q But why not get into details? This is government funds -- the public has a right to know, with all due respect.

SECRETARY VILSACK: I'm happy to share -- I don't want to step on protocol here -- I'm happy to share, if Mr. Gibbs expects it to be --

Q Transparent? (Laughter.)

MR. GIBBS: Lay it out. I'm all for it.

SECRETARY VILSACK: Well, it involves an individual by the name of Stan Johnson who had a close connection with the previous administration. It was a consulting contract for half a million dollars; a substantial amount of money was spent for foreign travel. To be honest with you, we saw very little, if any, value to the USDA. And a number of career folks were very concerned about how the process unfolded. And had their input been valued, the contract would not have been entered into.

Q Is this like a favoritism thing, Mr. Secretary?

SECRETARY VILSACK: You know, I don't know about that. I don't know. I just know that there was a close connection. It was a contract that I think was unnecessary, and I know the career people were very concerned about the way in which it unfolded.

Q Consulting on what issue, sir? Consulting on what issue?

SECRETARY VILSACK: Well, that's a good question, and I can't answer it.

Q Can we get more details from your department later?

SECRETARY VILSACK: Yes, be happy to.

Here's a little interview with Stan Johnson. He tried to give some background to what he actually did for the USDA, but mainly it appeared to involve flying from his home in Reno to Washington to work for something called the National Center for Food and Agricultural Policy. Their senior fellows include John Block, the Secretary of Agriculture under Ronald Reagan, and Dan Glickman, Agriculture Secretary under Bill Clinton. And by the way, the NCFAP still has two other contracts with the USDA.

As these things go, NCFAP doesn't even sound all that bad, but this is just one example of the insidious web of official Washington, between think tanks and contractors and politicians and journalists and staffers and hangers-on, that Obama is basically taking on with this effort. It's necessary, but it's going to be a very hard road that's bound to be more than a little disappointing along the way.

Biden on Employee Free Choice

Here are the relevant remarks by Joe Biden at his "hidden" address, which I have all the words of, to the AFL-CIO in Miami. I have to say that the Vice President is very good in these settings.

U.S. labor doesn't say that corporations and government must tolerate workers forming unions. It doesn't say that corporations and government must allow unions if after using every trick in the book they can’t stop them. Here's what the U.S. government says in the bargain made back in the '30s: It said, the National Labor Relations Act explicitly says -- and that came later -- the National Labor Relations Act explicitly says, this nation's policy is to encourage -- encourage -- collective bargaining, encourage unions. (Applause.)

But all kidding aside, look, folks, the fact of the matter is as President Obama said -- and he means it -- you can't have a strong middle class without a strong labor movement. And you heard what we said, what I said independently and what we said together: We will judge the success or failure of our administration at the end of our four years based on whether or not the standard of living of the middle class has increased, or not. That's the bottom line measure. And guess what. Neither one of us believe it can get better without you getting stronger. (Applause.)

Well, in this country today, legal industry -- excuse me -- the legal industry spends hundreds of millions of dollars exclusively in an effort to block workers from pursuing their legal rights, from unions being able to get collective bargaining agreements.

I mentioned the productivity increased by almost 20 percent from 2000 to 2007, but wages fell by $2,000. If our basic bargain had been intact, if paychecks rose with productivity growth, as they did from World War II to the early '70s, families would have gained $10,000 over that period, instead of losing $2,000. (Applause.)

So, folks, that's why there's no one thing we have to do. This is all going to be difficult, and one of the most difficult things will be to reinstitute that basic bargain. And I think the way to do that is the Employee Free Choice Act. (Applause.)

Folks, let's get it straight -- we're not asking -- we're not asking for anything we don't deserve. And we're not asking for anything that wasn't intended when the NLRB said we should be encouraging -- encouraging -- unions. We just want to level this playing field again [...] I have a simple, basic belief, one that we're going to work hard to put into action: If a union is what you want, a union you're entitled to have. (Applause.)

He's obviously preaching to the choir, but there's nothing in there to suggest the Administration is backing off of Employee Free Choice. Nor should they. All it would do is end the criminal enterprise that management has gotten away with for 30 years.

The Miami Herald has more.

...You can thank Biden for his stance here.

Ballot Measure Courtroom Action!

Robert Cruickshank has a good roundup of the Prop. 8 hearing in San Francisco today (so does the LA Times). Joyce Kennard, who voted to overturn the ban on same-sex marriage last May, seemed strongly against reversing the Constitutional amendment and didn't even want to take the case to begin with, so a total reversal seems unlikely. Unfortunately, the "slippery slope" argument that this would open up the ability to deny fundamental rights through ballot measures didn't seem to do much for Kennard. On the question of the 18,000 same-sex marriages already legally performed, it does look like the justices were more inclined to uphold them, which turns the whole thing into a legal quagmire IMO, because who's to say that the conferring of legal rights is just a question of when you exercise them? Robert notes a couple other points:

• Justice Ming Chin, a right-winger, implied that maybe the answer is to get the state out of the marriage business altogether. Look for that to become an increasingly popular concept, especially if Prop 8 is upheld.

• Several justices, including Chief Justice George, strongly implied that they think the constitution is too easily amended and that there needs to be some order brought to that part of the initiative process.

To that end, there is actually another major hearing going on in the state today, in Sacramento Superior Court. Various plaintiffs are suing to change the title and summary on two of the ballot measures in the May 19 special election, on the grounds that they were fraudulent and misleading. And there's already been one victory today.

The May 19 ballot measure to temporarily take money from a 2004 mental health initiative has a new overview that will be presented to voters, after a settlement to a legal challenge was reached this morning.

The challenge to Proposition 1E's ballot title and summary, and its ballot label, was centered on charges by opponents that the Legislature wrote a "false and misleading" overview, in order to make Prop 1E's redirection of some $450 million in mental health funds more palatable.

The new summary makes it more clear that earmarked mental health funds will be taken away from the voter-approved Prop. 63 and used to balance the state budget. Earlier, the weasel words "provides temporary flexibility" were used.

The other dispute is over Prop. 1A, the state spending cap. John Myers is Twittering from the courtroom, and the plaintiffs are making the same clear and obvious points about the legislature's treachery in this matter that George Skelton made this morning. The title makes no reference to the spending cap OR the extension of tax increases that was part of the deal, and the summary only alludes to the taxes near the end of the description as part of the fiscal analysis. The summary uses words and phrases like "rainy day fund" and "overspending" and "reform" in ways clearly designed to persuade the voter. Defense lawyers claim that the fleeting reference to revenue in the fiscal analysis is all that is needed, and anyway voters "already understand all the underlying budget issues" so there's no need for any changes.

As I've said, this now is starting to look more like a cover-up, which is very bad for a legislature and a Governor who aren't seen by the voters as trustworthy, and in at least the Governor's case, for good reason. If the aftermath of the ruling is a court order that the legislature deliberately wrote the title and summary in a way to obscure the truth about what Prop. 1A would do, there's your fodder for commercials for the next 2 months. And it's a potentially fatal blow.

We're awaiting a decision...

UPDATE: So here's the answer - the judge would like some of the more misleading language removed, but isn't inclined to add in big bold letters "THIS MEANS YOUR TAXES ARE GOING UP." This obviously can be exploited by whatever campaign coalesces around the No side - the "hidden tax," et al. - but it won't be on the ballot beyond the bit in the fiscal analysis. We'll see what the final language will read.

How Long Must We Sing This Song?

This GM report really doesn't offer a lot of hope that they can survive. They're borrowing money to pay their bills. It's impossible to become profitable once you start down that road. We can react in one of two ways. We can pump money into them to prop them up, or we can structure a bankruptcy that isn't really called bankruptcy, which might take down a lot of suppliers in the process since they'll see less revenue from outstanding bills with GM. Chrysler is probably in worse shape, by the way.

I just don't know if enough consumer demand for automobiles is going to ever return to the degree it would need to bail GM out. And just because we're propping up zombie banks and it's wrong, that's not a good enough argument to say that we have to prop up the automakers too. I'm genuinely conflicted by this. The consequences of the failure of the auto industry are massive and could unspool the entire manufacturing economy. Yet their viability is severely threatened and it's unclear if even an AIG-like series of bailouts will make a difference. Clearly, if the government would stop giving the banksters every dime they want, there would be some more capital to work with. But it's all China's money, anyway.

This is just a really frightening time.

Banksters Still Banksting

There is an expected vote today on the compromise "cramdown" bill in the House. There has already been a recorded vote on the rule today, and not one Republican voted for it, but it passed anyway. They are truly sinking further into irrelevance.

The compromise bill, as I've said, is not bad, although the major concessions are that people "underwater" in their homes (owing more principle than current value) won't get help, and the reductions are likely to be on interest rather than principle. Not great, but if people can stay in their homes as a result, probably OK. Right now 1 in 8 homeowners in the country are behind in payments, so they need whatever relief they can get.

However, the group likely to get the most relief out of the eventual loan modification process are the lenders themselves.

By the Obama administration's account, its new housing rescue plan, which goes into effect on Wednesday, will pull up to 4 million homeowners back from the brink of foreclosure. It also offers another 5 million or so excessively indebted borrowers the chance to refinance into lower-interest loans.

But the biggest winners in the government's $275 billion homeowner bailout just might be the mortgage brokers who were largely responsible for creating the disaster in the first place. Many are now reinventing themselves as heroes of the mortgage crisis by offering loan modification services. And between its new cash support and the refinancing program, through which they can benefit from the federal aid via brokers' fees, the Obama homeowner bailout might as well be a full employment program for them. The Treasury Department's FAQ for borrowers warns, "Borrowers should beware of any organization that attempts to charge a fee for housing counseling or modification of a delinquent loan, especially if they require a fee in advance." But nothing in the homeowner bailout prevents these middlemen from stepping in and taking a cut.

In California, home to nearly one-fourth of all the foreclosures in the country, there are now applications pending from some 500 brokers and real estate agents seeking to get in on this new line of business, which hardly existed six months ago (but now has its own trade group). California's Department of Real Estate, which licenses mortgage brokers and real estate agents, has so far authorized more than 200 companies to negotiate with mortgage lenders to modify loans, and the list grows longer every week. They may charge borrowers whatever they choose for this service, as long as they only collect a portion of the fee upfront and take the rest once the job is completed. The going rate ranges from a flat $2,985 to about 1 percent of the amount of the mortgage, or $4,000 on a $400,000 loan.

The problem is that the majority of loan mods are lousy deals for homeowners. Federal banking regulators recently determined that more than half of all mortgages that were modified by lenders in early 2008 ended up heading into foreclosure again in less than six months. Most loan modifications, in fact, dig borrowers deeper into debt.

Especially when you consider that the Administration sets the average price of this modification at around $10,000 a home, which is a pittance, but with interest accruing over 30-40 years could be massive, you see the game being played here. And this is just one way for disgraced brokers to make money out of this chaos. Here's another.

...it may come as a surprise that a dozen former top Countrywide executives now stand to make millions from the home mortgage mess.

Stanford L. Kurland, Countrywide’s former president, and his team have been buying up delinquent home mortgages that the government took over from other failed banks, sometimes for pennies on the dollar. They get a piece of what they can collect.

The Times doesn't call it fraud, but that's a credible accounting of things.

These are the consequences of condensed power, yes, but also the consequence of a lack of accountability for those who caused this crisis. Government could actually go ahead and strip these people of the license to do business in this industry - especially Countrywide, known to have defrauded their customers.

UPDATE: The bill has passed the House. On to the Senate.

CA-48: Could Beth Krom Beat John Galt?

Last week, OC Progressive (which has really attracted a good group of writers and provided a vital progressive voice in Orange County) revealed that Beth Krom, an Irvine City Councilwoman, is considering a run against Rep. John Campbell. In a subsequent post, Joe Shaw explained why Krom would make a worthy challenger.

She can win elections.
Beth Krom has won five campaigns, In 2006, she garnered 60% of the vote in her re-election as Mayor and in 2008, won her current City Council seat with 8000 votes more than the next candidate.

She gets things done.
We need elected officials who have experience getting things done for their constituents. Beth Krom is a strong advocate for environmental stewardship. Her vote was instrumental in cleaning up the water along the Orange County coast: she was the first "inland" representative to advocate for full secondary treatment of the effluent the OC Sanitation District pumped out into the ocean and was the "swing vote" in getting the board to fund implementation.

She's a visionary.
Beth Krom understands that Orange County needs leadership that will advance innovative, integrated transit solutions, sustainable development practices and green technology and jobs initiatives.

She can work across party lines.
Beth Krom has the respect of so many people throughout Orange County because she works with people, regardless of political affiliation, to get things done.

Irvine is one of America's best run cities.
What other Orange County elected, at the local, state or federal level, can lay claim to the legacy of forward-thinking leadership that Beth Krom has provided in the City of Irvine? "Safest City in America" four years straight; a balanced budget and more than tripling city reserves during her term as Mayor, and advancing a project of regional importance - the Orange County Great Park.

I'm a little gun-shy to out and out predict victory in these California Congressional races. We are know that they are tough slogs, and were disappointed by the performance of many promising candidates last cycle. Nonetheless, we cannot leave these red areas behind, and there's no question that the threat of candidates like Bill Durston and Debbie Cook forced the national GOP to spend money where they didn't want to spend it, leading to other losses around the country. Everything is connected, and thus solid candidates should continue to be recruited everywhere.

What's more, President Obama actually beat John McCain in CA-48, despite the district's Republican tilt. And, far from distinguishing himself, Campbell has most recently looked to Ayn Rand novels for inspiration in setting public policy:

Rep. John Campbell (R-Calif.), who gives his departing interns copies of Ayn Rand’s novel “Atlas Shrugged,” told me today that the response to President Obama’s economic policies reminded him of what happened in the 51-year-old novel.

“People are starting to feel like we’re living through the scenario that happened in ‘Atlas Shrugged,’” said Campbell. “The achievers, the people who create all the things that benefit rest of us, are going on strike. I’m seeing, at a small level, a kind of protest from the people who create jobs, the people who create wealth, who are pulling back from their ambitions because they see how they’ll be punished for them.”

It would be a terrible thing if the titans of industry that have burned through trillions of dollars in American wealth were to pull back and not be so ambitious, wouldn't it? And it's certainly a rational reaction, to forcibly crumble what's left of the American economy due to an increase of 4 cents in the top marginal tax rates. Even more certainly, there's no question that it would turn out just like the fictional novel - that every high-earner would leave their job and nobody would pick up the slack. Conservatives are nothing if not selfless. And daring, rational men who live by their minds.

This guy is obviously a buffoon, but we know that is sadly not enough in these districts. And repeat candidates, who have built up their name ID and volunteer base, always have a better shot. If I were to forecast the early prospects for a flipped seat in California right now, I would go:

CA-44: Bill Hedrick is already announced as a candidate, and he lost by just 2.6% to Ken Calvert last time.
CA-03: The trendlines in the district are favorable, but it's unclear if Bill Durston will make a third try.

And then, pretty much, nothing, until there's clarity about who's running. Charlie Brown writing an op-ed in the Auburn Journal trashing Tom McClintock suggests he might try again in CA-04, but I'm not sure. Given the current state of affairs, I'd say CA-48 isn't looking too badly, though it's early.

Principled Conservatism

The long-awaited health care summit is today, and dozens of members of Congress and stakeholders are at the White House in the first step to reforming a broken system. Here is an excerpt of the President's prepared remarks:

In the last eight years, premiums have grown four times faster than wages, and an additional nine million Americans have joined the ranks of the uninsured. The cost of health care now causes a bankruptcy in America every thirty seconds. By the end of the year, it could cause 1.5 million Americans to lose their homes. And even for folks who are weathering this economic storm, and have health care now, all it takes is one stroke of bad luck – an accident or illness; a divorce or lost job – to become one of the nearly 46 million uninsured or the millions who have health care, but can’t afford it.

Well, let’s be clear: the same soaring costs that are straining our families’ budgets are sinking our businesses and eating up our government’s budget too. Too many small businesses can’t insure their employees. Major American corporations are struggling to compete with their foreign counterparts. And companies of all sizes are shipping their jobs overseas or shutting their doors for good.

That is why we cannot delay this discussion any longer. And that is why today’s forum is so important. Because health care reform is no longer just a moral imperative, it is a fiscal imperative. If we want to create jobs and rebuild our economy, then we must address the crushing cost of health care this year, in this Administration. Making investments in reform now, investments that will dramatically lower costs, won’t add to our budget deficits in the long-term – rather, it is one of the best ways to reduce them.

That's the basic mainstream Democratic argument at this point - that health care costs are strangling our businesses, our budget, and most importantly our families, and that we have to fundamentally address this before it spirals completely out of control.

I now give you the conservative counter-argument.

REP. ZACH WAMP: Listen, health care is a privilege. […]

MSNBC: Well, it’s a privilege? Health care? I mean if you have cancer right now, do you see it as a privilege to get treatment?

WAMP: I was just about to say, for some people it’s a right. But for everyone, frankly, it’s not necessarily a right.

Wamp went on to claim that many Americans are uninsured by choice because they “rejected” the insurance plan offered by their employers. Asked to respond to Wamp, Sen. Sherrod Brown (D-OH) remarked “Well my reaction is that it was said by somebody who has a really good health [insurance] plan as a member of the House of Representatives.” “More importantly than that [health care] is a right in this country,” Brown concluded. Watch a compilation:

This should be on a billboard in every city in the nation by Friday. It's a concise and sharp expression of the conservative worldview. They think health care is a privilege. And if you get shot at work trying to ward off an attacker, and your fast-food company's insurer (the name rhymes with Bickdonald's) refuses to pay your medical bills, tough, you don't have the privilege. If you aren't privileged enough to have health insurance, hospitals can use your lack of leverage or purchasing power to charge you ten times as much for the same treatment - sorry, you don't have the privilege. If you have insurance, and your insurer decides they don't want to pay your claims, sending you into a choice between treatment and bankruptcy or illness and solvency, well - you don't have the privilege.

(Interesting that Villager Karen Tumulty wrote that last link, drawing on the experience of her brother's travails through the health care system. It's the typical story of personal experience trumping the expected groupthink.)

In the upside-down value system of Republicans, they think that health care is a privilege, but the ability for health insurers to profit off of it is an inalienable right.

McConnell suggested there were areas in which Republicans won't compromise, particularly the creation of a new public insurance program to compete with private insurers.

"Forcing free market plans to compete with these government-run programs would create an unlevel playing field and inevitably doom true competition," the letter stated.

As David Sirota notes, these are the same people who claim that the free market is a universal good and nothing can be run more efficiently or excellently than private enterprise. Somehow, though, if a public option was offered to compete with the free market, it would cause the insurance industry to crumble. Those titans of industry, the masters of the universe, just can't compete with those government bureaucrats everyone is supposed to hate. This could be a mite bit of a flaw in their logic.

The GOP sees polls showing the public supports the concept of government-sponsored health care (and loves government programs like Medicare) - that is, the party knows that if given the choice, many Americans would choose a government-run program over private health insurance. But because the party is so owned and operated by the private health insurance industry, it is willing to effectively undermine its entire macro-argument about the supremacy of the free market so as to shill for its moneyed benefactors.

The health care industry as a whole is generally supportive of the initial Democratic plans because they think they can deep-six the public option and negotiate a "reform" favorable to their interests, that maintains the for-profit insurance middleman and maybe even gives them a forced market. To the Administration's credit, there are also single-payer advocates at the summit, and their argument for a side-by-side Congressional Budget Office comparison of HR 676 against any other proposal is completely reasonable and worthy of consideration. If the numbers are presented, it will become clear that the most "radical" system also happens to produce the best savings for the taxpayer as well as providing the most care to the greatest number.

So let's be clear. The GOP thinks health care is a privilege and that insurance industry gouging is a right. More people besides blog readers should know this.